Health Insurance Paid Your Bills — Do You Still Have a Claim? Virginia's Collateral Source Rule Explained
It is one of the questions injured people ask us most often, usually with a note of resignation: "My health insurance covered most of my treatment. Doesn't that mean my case is worth almost nothing?"
The answer in Virginia is an emphatic no — and the reason is a doctrine with deep roots called the collateral source rule. It is one of the most plaintiff-protective principles in Virginia law, and insurance adjusters count on claimants not knowing it.
The rule
Virginia's formulation comes from Schickling v. Aspinall, 235 Va. 472, 369 S.E.2d 172 (1988): compensation an injured person receives from a source independent of the wrongdoer — health insurance, disability benefits, sick leave, a generous relative — is not credited against what the wrongdoer owes. The defendant pays for the harm the defendant caused. Full stop.
The logic is about who deserves the benefit of your foresight. You (or your employer) paid premiums for that health coverage, often for years. If your insurance reduced the defendant's bill, the wrongdoer would pocket the value of your prudence. Between a windfall to the person who bought insurance and a windfall to the person who caused the crash, Virginia law chooses the insured — every time.
The write-off question: Acuar v. Letourneau
Modern medical billing raised a harder version of the question. Health insurers do not pay hospitals' sticker prices; they pay negotiated rates, and providers "write off" the difference. So which number does the defendant owe — the amount billed, or the smaller amount actually paid?
The Supreme Court of Virginia answered in Acuar v. Letourneau, 260 Va. 180, 531 S.E.2d 316 (2000): the full amount of the reasonable medical bills, including the written-off portions. The write-offs are part of the benefit of the plaintiff's contractual arrangement with his health insurer, and the tortfeasor gets no credit for any of it. At trial, the jury hears the full reasonable charges — not the discounted insurance ledger.
Does my health insurer get paid back? Virginia's anti-subrogation statute
The natural follow-up: if I recover my full bills, doesn't my health insurer take its share back out of my settlement? Here Virginia has a second, less famous protection. Va. Code § 38.2-3405 forbids Virginia-regulated health insurance contracts from including subrogation or reimbursement provisions for personal injury recoveries. For many Virginians, that means the health plan that paid the bills has no right to claw anything back from the injury settlement.
The major exceptions to keep in mind:
| Who paid your medical bills | Can they demand repayment from your recovery? |
|---|---|
| Virginia-regulated health insurance | Generally no — § 38.2-3405 forbids it |
| Self-funded employer (ERISA) plan | Often yes — federal law preempts the Virginia statute; plan terms control |
| Medicare / Medicaid | Yes — federal and state repayment rights apply |
| Workers' compensation | Yes — statutory lien in third-party cases |
| Your own med-pay coverage | Generally yours to keep |
Sorting out which category a client's coverage falls into — which turns on plan documents, not the logo on the insurance card — is a routine but critical part of maximizing what the client actually keeps.
How the rule plays out at trial
The collateral source rule also shapes what a Virginia jury is allowed to hear. Evidence that the plaintiff had health insurance, or that bills were paid by someone else, is generally kept out of the trial entirely — it is irrelevant to what the defendant owes and unfairly invites the jury to discount the verdict. Motions in limine enforcing that line are standard practice, and defense attempts to smuggle in insurance references ("but who actually paid this bill?") are objectionable. The jury's job is to value the harm; the law handles the bookkeeping afterward.
What this means for injured people in Virginia
Three practical takeaways:
1. Never let an adjuster value your claim by "out-of-pocket" costs. Under Acuar, the measure is the full reasonable value of the treatment, not your copays. 2. Use your health insurance for treatment. Some clients fear that using coverage will hurt their case. In Virginia, the opposite is true: treatment gets paid, the bills remain fully recoverable, and in many cases the insurer has no reimbursement right. 3. The rule extends beyond medical bills. Sick leave, disability payments, and similar independent benefits likewise do not reduce the defendant's responsibility.
The collateral source rule reflects a simple moral judgment that Virginia courts have defended for decades: the person who caused the harm should not profit because the person they hurt was responsible enough to be insured.
If you or a loved one has been hurt, call Posey Lebowitz at (202) 524-0123 or send us a message for a free consultation.
Part of our DMV case law archive, compiled in 2026 to reflect the archive of some of the most important decisions in injury law.
Update: In 2019, the Supreme Court of Virginia extended collateral-source protection to a plaintiff's settlement with her own UIM carrier — see our post on Llewellyn v. White.