Nevada’s application of its collateral source rule has been relatively strict. The only known exception thus far is statutory and concerns workers’ compensation benefits. But things might be changing given a recent decision by the Supreme Court of Nevada. 

Nied v. State of Nevada is a criminal appeal resulting from a motor vehicle accident following a wild night in Reno. The driver was convicted, and during the sentencing process the district court ordered that the driver pay restitution of $459,147.26 for medical costs and $4,678.33 for vehicle damage to the victim. The driver challenged that amount on appeal. First, he argued the restitution should be limited to out-of-pocket costs, such as co-pays. That argument was rejected. 

The Issue of Collateral Source

The driver’s second argument was that restitution “should be based, at most, on the negotiated amounts that the victim and the victim’s insurance provider actually paid, rather than the higher amounts the medical providers initially billed but subsequently wrote off.” The court agreed. It explained restitution is designed to compensate a victim for costs incurred due to the criminal act: “As compensation is the primary purpose, restitution is limited to that amount which adequately compensates a victim for any economic loss or expense as necessary to make the victim whole, but without providing the victim a windfall.” Consequently, the restitution should have been based on the amount that was accepted by the medical providers as payment in full for their services to the victim, rather than the amount billed.

Nied then evaluated whether the amount the driver’s auto insurance company paid to the victim should be credited against the restitution amount, less attorney’s fees. It distinguished this scenario from a typical collateral source argument, stating “reimbursement of the victim’s losses by the victim’s insurance provider is distinct from payments to the victim by the defendant’s insurance provider.” Nied concluded “a district court must offset the defendant’s restitution obligation by the amount the defendant’s insurer paid to the victim for losses subject to the restitution order.” 

Analysis

This decision raises the question that if the amount paid to a victim’s medical providers, etc., is the appropriate measure for restitution damages, and these same damages can be pursued in tort, then why wouldn’t the amount paid to a plaintiff’s medical providers, etc., also be the measure of damages in tort? The Nied court further concluded that restitution should be offset by the amount paid by the criminal defendant’s insurance carrier to the victim for losses subject to the restitution order. While some might argue that restitution is different from tort damages, the Nied decision seems to indicate an overlap, at least in this particular scenario. Defendants looking to argue this position would need to pursue discovery to gather supporting evidence, but it is now perhaps debatable.