EvidenceProf Blog

Editor: Colin Miller
Univ. of South Carolina School of Law

Friday, November 21, 2008

Collateral Damage: North Carolina Opinion Notes That There Is No Reverse Collateral Source Rule

The collateral source rule is a well established evidentiary rule which states that a defendant cannot present evidence that the plaintiff was already compensated partially or completely by a collateral source (such as an insurance company) for his injuries.  The reasoning behind the rule is that the trier of fact might improperly use this evidence to undercompensate the plaintiff for his injuries.  As was correctly noted by the Court of Appeals of North Carolina in its recent opinion in Kor Xiong v. Marks, 2008 WL 4906384 (N.C. App. 2008), however, there is no "reverse collateral source rule."

In Marks, June 2005 Kor Xiong was riding in the back seat of a motor vehicle operated by his nephew. While the nephew's car was stopped to wait for traffic to pass before making a left turn, a vehicle operated by Ingrid Diane Marks struck the nephew's vehicle from behind.  Nearly a month after the accident, Kor Xiong sought medical treatment at Stanly Memorial Hospital, and the treating physician at the hospital diagnosed him as having "facial nerve palsy" and "neck and back pain secondary to trauma." The next day, Kor Xiong was seen by Dr. John Kilde, who confirmed the earlier diagnosis of facial nerve palsy and prescribed prednisone and eye ointment.

Kor Xiong thereafter sued Marks, alleging personal injury resulting from the collision, and Marks actually admitted that she failed to reduce her speed and conceded that she was "careless in the operation of her vehicle."  She alleged, however, that the accident was not the proximate cause of Kor Xiong's injuries.

During Kor Xiong's case, his counsel elicited answers from him about his age, marital status, and wages at the time of the accident.  Defense counsel thereafter requested a bench conference to discuss the admissibility of further evidence of Kor Xiong's financial condition.  During this conference,

     "Plaintiff argued that the jury needed to understand that plaintiff was young, married and made only $8.50 per hour. Plaintiff argued to Judge Craig that this was very relevant evidence as it explains why plaintiff waited for several weeks before seeking medical attention despite his symptoms. Defendant argued that...evidence of plaintiff's ability to pay medical bills [was prohibited by] the 'reverse collateral source' [rule]."

After the conference, Judge Craig instructed Kor Xiong's counsel not to ask further questions regarding his financial status.  After the jury rendered a verdict for Marks, Kor Xiong appealed, claiming, inter alia, that this ruling was erroneous.

The court rejected this challenge, noting that, "[i]n a civil case, appellate review is limited to questions actually presented to and ruled on by the trial court."  And, according to North Carolina Rule of Evidence 103(a)(2),

     "Error may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the party is affected, and...[i]n case the ruling is one excluding evidence, the substance of the evidence was made known to the court by offer or was apparent from the context within which questions were asked."

The problem for Kor Xiong was that "[t]he record contain[ed] no indication that [he] made an offer of proof as to any evidence of [his] financial condition beyond" the answers he gave to his counsel's initial questions.

The court noted in dicta, however,

     "We wish to emphasize that our ruling in defendant's favor sub judice does not imply recognition of a 'reverse collateral source rule' in any way. As far as we can tell, no such rule exists. While the well-established 'collateral source rule' excludes evidence that the plaintiff's injury was compensated from another source,...we are not aware of a 'reverse collateral source rule' which categorically excludes evidence of a plaintiff's overall financial condition or lack of another source for compensation for his injuries."

Of course, even there is no explicit "reverse collateral source rule," courts usually preclude evidence of the financial status, good or bad, of any party.  As a Texas court concluded in a case I recently posted about, "[n]either a plaintiff's poverty nor a defendant's wealth can help a jury decide whose negligence caused an accident."



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