Set-off Under the Contribution and Collateral Source Statutes

Publication year1992
21 Colo.Law. 1421
Colorado Lawyer

1992, July, Pg. 1421. Set-Off Under the Contribution and Collateral Source Statutes


Vol. 21, No. 7, Pg. 1421

Set-Off Under the Contribution and Collateral Source Statutes

by Alan Epstein and Ann E. Edelman

The Colorado contribution and collateral source statutes both have been held to permit set-offs against jury verdicts for amounts received or to be received by a plaintiff from third parties in compensation for the same injury or wrongful death. However, the statutes each contain different set-off formulas and are in apparent conflict. On April 23, 1992, in Gutierrez v. Bussey,(fn1) the Colorado Court of Appeals announced a decision which specifically attempted to reconcile the statutes. Nevertheless, the law in this area appears to remain unsettled.

The Contribution Statute

At Colorado common law, the release of one joint tortfeasor released all joint tortfeasors from liability.(fn2) The theory behind this rule was that when tortfeasors act in concert to cause an injury, the act of one of the participants is attributable to all of the participants.(fn3) Thus, each tortfeasor was liable for the plaintiff's entire loss and all would be relieved of liability by the plaintiff's execution of a release to one of the tortfeasors. However, the law allowed a plaintiff to preserve a cause of action against a joint tortfeasor by explicit language in the release instrument.(fn4) The rule also was inapplicable when tortfeasors acted independently, causing separate injuries to the plaintiff.(fn5)

The Colorado legislature abrogated the common law rule in 1977 by adopting the Uniform Contribution Among Tortfeasors Act ("1977 Act").(fn6) With respect to a release or covenant not to sue, the 1977 Act provides that a good faith release or covenant not to sue given to one joint tortfeasor does not release the other joint tortfeasors from liability for the same injury or wrongful death.(fn7) The Act also provided that the amount the plaintiff received as consideration for the release or covenant not to sue would accordingly reduce the amount of a judgment that the plaintiff obtained against the non-settling joint tortfeasors.(fn8) As such, the 1977 Act operated as a set-off or reduction for partial satisfaction of the plaintiff's total damages.

Under the 1977 Act, liability was joint and several. Thus, the nonsettling joint tortfeasor could be liable for a portion of the settling joint tortfeasor's liability if the settlement amount was less than the settling joint tortfeasor's share under the judgment. As the Colorado Supreme Court explained in 1985,

[t]his result evinces a legislative intent to provide full compensation for the plaintiff even at the expense of equitable apportionment of damages among tortfeasors.(fn9)

The 1986 Colorado tort reform legislation changed the set-off rule for cases brought on or after July 1, 1986, but retained the 1977 Act's provision that a good faith release or covenant not to sue obtained by one joint tortfeasor does not discharge the other joint tortfeasors from liability.(fn10) The revised Act requires that judgments be entered against each joint tortfeasor for his or her percentage of liability only.(fn11) Under the reformed set-off rule, the total judgment is reduced only by the percentage of fault attributed to the settling joint tortfeasor.(fn12) The actual amount paid in settlement is irrelevant.

The Collateral Source Statute

On the same date that the 1986 amendment to the contribution statute became effective, the Colorado legislature enacted the collateral source statute.(fn13) Under the common law collateral source doctrine, a tortfeasor could not set off from the judgment against him or her compensation or indemnity that the plaintiff received from a collateral source independent of the tortfeasor.(fn14) The courts had used the doctrine both as a rule of damages,(fn15) preventing a set-off, and as a rule of evidence,(fn16) excluding as irrelevant evidence of collateral source payments.

In 1986, the Colorado legislature codified and changed the collateral source rule.(fn17) The statute provides the following:

In any action by any person or his legal representative to recover damages for a tort resulting in death or injury to person or property, the court, after the finder of fact has returned its verdict stating the amount of damages to be awarded, shall reduce the amount of the verdict by the amount by which


such person, his estate, or his personal representative has been or will be...

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