Disability benefits not excluded under collateral source rule

Law Reporter, Apr 2003

Rotolo Chevrolet v. Superior Ct., 129 Cal. Rptr. 2d 283 (Ct. App. 2003).

A California appellate court held that disability retirement benefits are not a collateral source to damages in a personal injury lawsuit.

Here, a retired fire captain sued a car dealer, claiming that he was injured and forced to retire because the dealer supplied his employer with a defective vehicle. Plaintiff estimated that his early retirement cost him more than $870,000 in regular retirement benefits. Plaintiff is also slated to receive about $840,000 in disability retirement benefits, but he moved to have that evidence excluded from trial. The trial court granted the motion, reasoning that the disability retirement benefits constituted money received in connection with an injury from a source wholly different from defendant, so that evidence of the payment is barred by the collateral source rule. Defendant petitioned for a writ of mandate to reverse the court's action.

Granting the petition, the appellate court said that while the collateral source rule in effect allows "double compensation" for an injury, the trial court's ruling here would give plaintiff "triple compensation," in that he could receive damages based on lost income, additional damages based on lost regular retirement benefits, and his actual disability retirement benefits. The court agreed that plaintiff's former employer is a collateral source, but the fact that the employer provides two potential types of pension benefits does not make one type "collateral" to the other.

The court distinguished a recent ruling that allowed the plaintiff in a wrongful death action, the decedent's widow, to claim the decedent's lost pension benefits as damages and precluded the defendant from offering evidence that she was receiving Social Security payments as well as a surviving spouse benefit under the pension plan. McKinney v. California Portland Cement, 117 Cal. Rptr. 2d 849 (2002). In that case, the court explained, the collateral source rule was applied to Social Security benefits that replaced benefits that had stopped, and to pension payments that had been constructively paid for, thus triggering the traditional rationale for the rule. Here, however, plaintiffs disability pension payments do not replace anything; they are alternative payments to a regular pension.