Connecticut law allows the court to reduce the economic damages portion of a verdict by certain collateral source payments after trial, with important offsets and exceptions. The reduction only applies to economic damages that collateral source payments (such as health insurance or auto med-pay) have paid. You can offset this reduction with premiums you or your family paid for coverage. If your health insurer has a right of subrogation, no reduction occurs at all.
These rules can significantly impact car accidents, slip-and-fall cases, and other personal injury cases throughout Waterbury and New Haven County. Injury victims often face significant medical bills. When health insurance covers those bills, the collateral source rule comes into play after a jury awards damages.
At DeFronzo & Petroskey, P.C., Waterbury personal injury attorney Dan Petroskey helps injured clients work through the complex collateral source reductions. This guide explains when reductions apply, how to maximize offsets, and what happens at the collateral source hearing. Contact us today at (203) 756-7408 to learn more about how we can help you.
What Is Connecticut’s Collateral Source Reduction Statute?
Connecticut General Statutes § 52-225a requires judges to reduce economic damages by amounts paid through health insurance and similar sources. The statute applies after a jury awards damages but before the court enters final judgment.
The rule prevents “double recovery” where an injured person receives insurance payments and a full jury award for the same medical expenses. However, the calculation involves multiple steps that can protect significant portions of your award.
Under Connecticut law, the reduction applies only to economic damages, not pain and suffering or other non-economic damages. Economic damages include medical expenses, lost wages, and other financial losses with specific dollar amounts.
Key Takeaway: Connecticut’s collateral source rule reduces economic damages by the amounts health insurance paid, but only after accounting for premiums paid and subrogation rights. Non-economic damages remain untouched.
Personal Injury Attorney in Waterbury – DeFronzo & Petroskey, P.C.
Dan Petroskey, Esq.
Dan Petroskey is a dedicated personal injury attorney who has represented injured clients across Connecticut since 2004. He focuses exclusively on plaintiff-side cases involving car accidents, slip-and-falls, premises liability, and dog bites, combining legal skill with a genuine commitment to client care. Known for his thorough preparation and compassionate approach, Dan has helped thousands of clients recover compensation while handling the challenges of serious injuries. He is recognized by Super Lawyers and Best Lawyers for his experience in personal injury law.
A Connecticut native, Dan earned his law degree from Albany Law School and is admitted to practice in both Connecticut and New York. He is an active member of the Waterbury and Connecticut Bar Associations and currently the President of the Waterbury Bar Association. Dan lives in Wallingford with his wife and children, where he volunteers as a mock trial coach at a local middle school, has coached youth sports and fosters rescue dogs. His deep ties to the community reflect the same care and commitment he brings to every case.
Can the Insurance Company Reduce My Settlement for Medical Bills Paid by Health Insurance?
The § 52-225a reduction is applied by the court after liability and damages are determined by the trier of fact and before judgment is entered. If your case settles, § 52-225a doesn’t get applied through a court reduction hearing, but defendants and insurers may still consider these issues when negotiating value.
When your case goes to trial at Waterbury Superior Court on Grand Street, the jury sees your full medical bills. They do not know which bills insurance paid. After the verdict, the defendant can request a collateral source hearing where a judge calculates the reduction.
The two-step process under § 52-225a first determines total collateral source payments. Then it subtracts premiums you or your family paid to secure those benefits. Only the net amount reduces your economic damages award.
Connecticut courts have clarified that employer-paid premiums count as payments “on behalf of” the employee. This means you can offset reductions even if you did not personally write checks for insurance premiums.
Key Takeaway: Health insurance payments reduce jury awards for economic damages through a post-trial hearing. You can offset this reduction with all premiums paid by you, your family, or your employer to obtain coverage.
What Health Insurance Payments Count as Collateral Sources?
Connecticut General Statutes § 52-225b defines collateral sources as payments from health insurance, automobile accident insurance with health benefits, and similar coverage. This includes most private health insurance plans, Medicare Advantage plans, and medical payments coverage under auto policies.
The definition does NOT include life insurance benefits, settlements from other cases, or amounts your employer paid to continue your wages. Social Security disability benefits are also excluded.
Connecticut courts have held that debts voluntarily forgiven by a medical provider are not “collateral sources,” so it’s important to distinguish actual payments from voluntary forgiveness. At the collateral source hearing, the court focuses on the amount actually “paid” as collateral sources. Under § 52-225a(b), evidence that a provider accepted less than the billed amount, or that an insurer paid less, may be used as evidence of the total collateral sources paid.
Key Takeaway: Most health insurance payments qualify as collateral sources, including Medicare, private insurance, and auto medical payments coverage. Life insurance, wage continuation, and Social Security disability do not count as collateral sources.
How Do I Offset the Reduction with Insurance Premiums?
Connecticut General Statutes § 52-225a(c) allows you to offset collateral source reductions with any premiums paid by you or your immediate family members. The Connecticut Supreme Court clarified in Alvarado v. Black that this includes premiums your employer paid on your behalf.
The court reasoned that employer-paid premiums are not gratuitous because they represent part of your compensation package. You indirectly pay for this coverage through reduced wages or other trade-offs in your employment arrangement.
To claim the offset, you must present evidence of premium payments at the collateral source hearing. This typically requires documentation from your employer or insurance company showing total premiums paid during the period you incurred medical expenses from the injury.
If your spouse’s employer provided your coverage, those premiums also count. The statute permits offsets for premiums paid by members of your immediate family, which includes spouses.
The offset calculation is straightforward. If your health insurer paid $30,000 in medical bills and you or your employer paid $25,000 in premiums during the relevant period, the net collateral source reduction would be only $5,000.
When Does the Right of Subrogation Prevent a Reduction?
Connecticut General Statutes § 52-225a(a) contains a critical exception: there shall be no reduction for any collateral source for which a right of subrogation exists. This exception can eliminate the entire collateral source reduction in many cases. Connecticut appellate authority explains that if a collateral source has any right of subrogation (even partial), the court may not apply a collateral source reduction for that source.
Many health plans, especially self-funded ERISA plans, include reimbursement/subrogation language, but whether it’s enforceable can depend on the plan and applicable law. Medicare and Medicaid also maintain subrogation rights under federal and state law.
If your health plan includes subrogation language, you receive the full jury award for economic damages with no reduction. The insurer can then assert its lien separately to recover what it paid. This prevents the double penalty of having your award reduced and then paying back the insurer.
A key Connecticut Supreme Court decision, Marciano v. Jimenez, 324 Conn. 70 (2016), reinforces this rule. The Court held that when any valid right of reimbursement exists, no collateral source reduction is allowed under § 52-225a. In those cases, the plaintiff is awarded the full amount of the medical bills, even if the lien amount is far lower. For example, if the bills total $50,000 but the lien is only $10,000, the plaintiff still recovers the full $50,000 at trial because a reimbursement right exists.
Connecticut also generally prohibits collateral source providers from recovering those benefits from the defendant or others unless otherwise provided by law, so subrogation/lien rights are a case-by-case issue.
| Insurance type | Subrogation/right of reimbursement? | § 52-225a reduction? |
| Source with an enforceable subrogation right | Yes | No reduction for that source |
| Source with no subrogation right | No | Reduction may apply (minus premium offsets) |
Determining whether subrogation rights exist requires careful review of your insurance documents. Personal injury attorneys at firms like DeFronzo & Petroskey, P.C., analyze insurance policies to identify subrogation clauses that prevent collateral source reductions.
Key Takeaway: If your health insurer has any right of subrogation, Connecticut law prohibits collateral source reductions entirely. Your economic damages award remains intact, though the insurer may assert a lien to recover its payments.
What Happens at the Collateral Source Hearing?
After a jury returns a verdict at Waterbury Superior Court, the defendant can request a collateral source hearing. This happens before the judge enters final judgment. Both sides present evidence about insurance payments and premium costs.
The plaintiff must prove the total premiums paid to secure health insurance coverage. This requires pay stubs, employer documentation, or insurance company statements showing premium amounts. Testimony from human resources personnel or insurance agents may support the premium calculations.
The defendant presents evidence of the amounts the health insurer actually paid to medical providers. This includes explanation of benefits forms and payment records showing reduced negotiated rates rather than billed charges.
The judge calculates the reduction using the formula: total collateral source payments minus total premiums paid equals net reduction. The judge then subtracts this net reduction from the economic damages portion of the verdict only.
For example, if the jury awarded $100,000 in economic damages and $50,000 in noneconomic damages, and the judge determines a $20,000 net collateral source reduction, the final judgment would be $80,000 in economic damages plus $50,000 in noneconomic damages for a total of $130,000.
In New Haven County, judges handle dozens of these hearings annually. These hearings are usually brief, but the length can vary depending on how many policies and payments are at issue.
How Does This Affect My Personal Injury Case?
The collateral source rule significantly impacts case valuation and settlement negotiations. Insurance adjusters in Waterbury and throughout Connecticut factor potential collateral source reductions into settlement offers.
If your health insurance paid $40,000 in medical bills but your employer paid $35,000 in premiums, the net reduction might be only $5,000. Understanding these calculations helps you evaluate whether settlement offers fairly compensate your losses.
When a subrogation right exists, it can change negotiation dynamics because the defendant may be unable to seek a § 52-225a reduction, while the plaintiff may still have to address reimbursement issues separately.
The rule also affects which medical bills to present at trial. Some injury victims treated at Saint Mary’s Hospital have both health insurance and medical payments coverage under auto policies. Coordinating these benefits and documenting all premiums paid becomes essential to minimizing reductions.
Connecticut’s comparative fault rule adds another layer of complexity. Under Connecticut General Statutes § 52-572h, if you are found partially at fault for your injuries, your award is reduced by your percentage of fault. The collateral source reduction cannot exceed the amount of your economic damages remaining after the comparative fault reduction.
Key Takeaway: Understanding collateral source calculations helps you evaluate settlements and prepare for trial. Cases with subrogation rights and substantial premium payments often preserve more of the jury’s economic damages award.
Experience Legal Guidance for Injury Victims in Connecticut
Dealing with insurance companies after a serious injury is challenging enough without dealing with the confusing collateral source rules that can reduce your recovery. These technical rules can cost you thousands of dollars if not properly addressed in settlement negotiations or at trial.
Dan Petroskey has represented personal injury clients throughout Waterbury and New Haven County since 2004. At DeFronzo & Petroskey, P.C., our personal injury attorneys gather insurance documents, calculate premium offsets, and present evidence at collateral source hearings. We handle cases at Waterbury Superior Court and work with medical providers at Saint Mary’s Hospital and Waterbury Hospital to document your treatment and bills.
Call DeFronzo & Petroskey, P.C. at (203) 756-7408 for a consultation. Our office at 255 Bank Street in Waterbury serves clients throughout New Haven County and Connecticut. We work on a contingency fee basis, so you pay nothing unless we recover compensation for your injuries.
from DeFronzo & Petroskey, P.C. https://www.defronzolawfirm.com/what-happens-connecticut-car-accident-51-percent-fault/
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