The “collateral source rule” in Texas actually is two distinct, but related common law rules—a rule of evidence and a rule of damages. As a rule of evidence, it prevents the defendant in a personal injury case from introducing evidence that any part of the plaintiff’s damages was paid by a collateral source. As a rule of damages, it prevents any offset of the plaintiff’s recovery by the amount of damages paid by a collateral source.
The most common exception to the collateral source rule is when the plaintiff gives testimony inconsistent with the receipt of collateral benefits. When that happens, evidence of the receipt of collateral benefits may be admissible for impeachment purposes. Trial courts have wide latitude in determining whether the plaintiff has opened the door to the admissibility of this impeachment evidence, and the holdings of the reported cases are not always consistent. The clear lesson from the cases, however, is that a plaintiff who is not careful in testifying about financial hardship resulting from an injury risks opening the door to the admission of otherwise inadmissible collateral source evidence.
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