Chapter 27 - § 27.6 • REMEDIES

• Jurisdiction: Colorado

§ 27.6 • REMEDIES

Injured plaintiffs may recover both economic and noneconomic damages in negligence actions.¹⁵³ Economic damages include items such as medical expenses and lost wages. Noneconomic loss or injury is defined as follows: "nonpecuniary harm for which damages are recoverable by the person suffering the direct or primary loss or injury, including pain and suffering, inconvenience, emotional stress, and impairment of the quality of life."¹⁵⁴ An injured plaintiff may also recover for physical impairment or disfigurement.

The collateral source rule allows a plaintiff to seek full recovery from a tortfeasor in some circumstances even though an independent source has compensated the plaintiff in full or in part for the loss.¹⁵⁵ The rule has two components: (1) a post-verdict setoff rule, codified in C.R.S. § 13-21-111.6; and (2) a pre-verdict evidentiary component, precluding the admission of evidence about the plaintiff's receipt of collateral source compensation.¹⁵⁶ At common law, the collateral source rule provided that "compensation or indemnity received by an injured party from a collateral source, wholly independent of the wrongdoer and to which he has not contributed, will not diminish the damages otherwise recoverable from the wrongdoer."¹⁵⁷ The Colorado legislature has abrogated the common law collateral source rule except as to benefits received as a result of a contract. C.R.S. § 13-21-111.6 states:

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 . . . has been or will be wholly or partially indemnified or compensated for his loss by any other person, corporation, insurance company, or fund in relation to the injury, damage, or death sustained; except that the verdict shall not be reduced by the amount by which such person, his estate, or his personal representative has been or will be wholly or partially indemnified or compensated by a benefit paid as a result of a contract entered into and paid for by or on behalf of such person. The court shall enter judgment on such reduced amount.

(Emphasis added.) The italicized language is commonly referred to as "the contract exception to the collateral source statute."¹⁵⁸ "By including the contract exception, the General Assembly 'chose to allow a plaintiff to obtain the benefit of his contract, even if the award resulted in a double recovery.'"¹⁵⁹ The contract exception includes Medicaid benefits.¹⁶⁰ The contract exception also applies in cases involving the damages cap under Colorado's Health Care Availability Act, C.R.S. §§ 13-64-101 to -503.¹⁶¹

Regarding the evidentiary component of the collateral source rule, the rule "excludes evidence of collateral source benefits because such evidence could lead the fact-finder to improperly reduce the plaintiff's damages award on the grounds that the plaintiff already recovered his loss from the collateral source."¹⁶² The collateral source rule prohibits the admission into evidence of amounts paid "even for the purpose of determining the reasonable value of medical services rendered."¹⁶³

The economic loss rule that applies to breach of contract actions may bar recovery when the plaintiff has alleged a negligence claim, has only economic losses, and a court decides that no duty exists independent of the parties' contractual obligations.¹⁶⁴ In Town of Alma v. Azco Constr., Inc., the supreme court distinguished between duties owed under contract law and tort law: "a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law."¹⁶⁵ Thus, the applicability of the economic loss rule turns on the source of the duty that forms the basis of the action. "For a claim to escape the economic loss rule, the duty must arise independently of any contractual obligation."¹⁶⁶ If there is an independent common law rule duty of care separate and apart from any contractual duty, then a plaintiff may bring a negligence action irrespective of the existence of a contract between the parties.¹⁶⁷

In 1986, the Colorado legislature set the limitations on recovery for noneconomic damages in civil actions other...