Georgia’s collateral source rule keeps a defendant from reducing what they owe you by pointing to payments you received from insurance or other outside sources, but Senate Bill 68, signed in 2025, carved a major exception into that protection for medical expenses. Under the new O.C.G.A. § 51-12-1.1, juries in personal injury and wrongful death cases can now see both what your providers billed and what your insurer actually paid to settle those bills. If you are pursuing a claim in Georgia, the rule still matters, but it no longer works the way it did before April 2025.
What the Rule Protects
The traditional principle is simple: a wrongdoer should not pay less because you had the foresight to carry insurance. If your health plan covered $40,000 in surgery costs, the person who caused your injury does not get to claim credit for that payment or ask the jury to reduce your damages by that amount.
The Georgia Court of Appeals stated this plainly in Hoeflick v. Bradley (2006), holding that the collateral source rule bars a defendant from presenting evidence of third-party payments toward the plaintiff’s injury expenses and from taking any credit for those payments. The reasoning was that a tortfeasor should not benefit from wrongful conduct or reduce liability through collateral sources provided by others.1Justia. Hoeflick v Bradley The protection covered payments from insurers, employers, and even generous relatives.
In practice, plaintiffs’ lawyers filed pre-trial motions to keep any mention of insurance out of the courtroom. If the defense tried to tell the jury that Blue Cross had already paid the hospital bill, the judge would shut it down. The jury’s job was to assess what the defendant owed based on the harm caused. That was the rule for more than three decades.
What Senate Bill 68 Changed in 2025
In April 2025, Georgia enacted Senate Bill 68, a broad tort reform package that created a new statute, O.C.G.A. § 51-12-1.1, specifically targeting medical expense evidence in personal injury and wrongful death cases.2Georgia General Assembly. Senate Bill 68
The new law limits special damages for medical and healthcare expenses to the “reasonable value of medically necessary care, treatment, or services” as determined by the jury. If you have public or private health insurance, including workers’ compensation, evidence of both the amounts charged by providers and the amounts actually necessary to satisfy those charges under your insurance contract is admissible at trial. That is a sharp break from the old rule, where the jury saw the full billed amount and heard nothing about what the insurer negotiated down to.
Whether the new statute will survive a constitutional challenge is not settled. Georgia’s Supreme Court struck down a similar 1987 attempt to admit collateral source evidence, and the same constitutional questions could be raised again. For now, though, § 51-12-1.1 is the law, and medical evidence rules have changed.
Billed Amounts Versus Paid Amounts
The distinction between what a hospital bills and what an insurer pays is where the new law does its real work. A hospital might bill $80,000 for surgery, but your insurer’s negotiated rate means the hospital accepted $25,000. Before SB 68, the jury saw $80,000. Now the defense can present both figures and argue that the reasonable value of your care sits closer to the paid amount.
Medical damages are often the largest component of a personal injury award, and juries tend to anchor toward the lower number when they see both. Plaintiffs’ attorneys now need to build a case that billed amounts reflect the true cost of care, while defense counsel will push the negotiated rate as the market’s answer to that question.
Letters of protection, where a provider agrees to defer payment until your case resolves, are also affected. Under SB 68, these arrangements are discoverable and open to challenge. A defendant can argue that treatment obtained under a letter of protection was inflated or unnecessary.
Federal courts had already been moving in this direction. The Eleventh Circuit held in Higgs v. Costa Crociere S.P.A. Co. (2020) that the appropriate measure of medical damages is a reasonable value determined by the jury on all the relevant evidence, and that both billed and paid amounts are admissible. That decision arose under maritime law and did not bind Georgia state courts, but it signaled the direction the law was heading.
Subrogation Still Takes a Cut
The collateral source rule keeps the defendant from benefiting from your insurance, but it does not necessarily let you keep both the insurance benefits and the full court award. Subrogation gives an insurer that paid your bills the right to recover that money from your settlement or judgment.
Georgia’s workers’ compensation subrogation statute shows how this plays out. Under O.C.G.A. § 34-9-11.1, when an employer or its insurer has paid workers’ compensation benefits and you recover from a third party, the employer or insurer holds a subrogation lien against that recovery. The lien cannot exceed the actual compensation paid, and it can only be enforced if you have been fully compensated for all economic and noneconomic losses.3Justia. Georgia Code 34-9-11.1 – Employees or Survivors Right of Action Against Third-Party Tortfeasors The attorney who secured the third-party recovery is entitled to a reasonable fee from the subrogated amount.
Private health insurers and self-funded employer plans also assert subrogation rights, usually based on language in the insurance contract you agreed to when you enrolled. Negotiating these liens down is a routine part of settling a Georgia personal injury case. A $100,000 settlement shrinks quickly when a workers’ comp carrier claims $30,000, a health insurer claims $15,000, and attorney fees take another third off the top.
Federal Reimbursement Rules Override State Protections
Georgia’s collateral source rule does not shield you from federal reimbursement obligations. Two federal programs regularly claim part of personal injury recoveries regardless of state law.
Medicare Conditional Payments
Under the Medicare Secondary Payer Act, Medicare is not supposed to pay for treatment when another party is responsible. When Medicare does pay, those payments are conditional, and Medicare expects reimbursement once you settle or win at trial.4Office of the Law Revision Counsel. 42 USC 1395y – Exclusions From Coverage and Medicare as Secondary Payer This obligation exists independent of the collateral source rule and cannot be negotiated away.
The process runs through the Benefits Coordination and Recovery Center. After a settlement, you or your attorney must report the recovery to the BCRC, which issues a Conditional Payment Notification identifying what Medicare paid. You have 30 days to respond and dispute any charges you believe are unrelated to the injury. Miss that window and the BCRC will issue a demand letter for the full conditional payment amount with no reduction for attorney fees or costs.5Centers for Medicare & Medicaid Services. Conditional Payment Information Failing to reimburse Medicare can trigger penalties and interest.
ERISA Self-Funded Health Plans
If your health coverage comes through a self-funded employer plan governed by ERISA, that plan can enforce its reimbursement rights even where Georgia law would block subrogation. ERISA’s deemer clause prevents states from treating self-funded plans as insurance companies, so state anti-subrogation protections do not apply. The U.S. Supreme Court confirmed this in FMC Corp. v. Holliday (1990).
The distinction matters. A fully insured plan (where the employer buys a policy from an insurance company) is governed by Georgia law, which may limit subrogation. A self-funded plan (where the employer pays claims directly, often through a third-party administrator) is governed by ERISA and its written reimbursement terms. Many large employers use self-funded plans, so this comes up more often than people expect.
What This Means for Your Settlement
The collateral source rule has always been a lever in settlement talks. When defendants knew a jury would see the full billed amount and hear nothing about insurance payments, the risk of a large verdict pushed them toward settling. That gave Georgia plaintiffs real bargaining power.
SB 68 shifts that calculus. With juries now seeing what insurers actually paid, defendants have less reason to settle at the full billed value of medical care. Plaintiffs’ attorneys will need to invest more in expert testimony establishing that billed amounts reflect the reasonable value of treatment, or lean harder on noneconomic damages like pain and suffering, which the new medical expense rules do not touch.
Attorney fees typically come off the gross settlement before liens and costs are deducted. In a standard contingency arrangement, the lawyer takes their percentage (commonly one-third) from the total recovery, litigation costs are subtracted, medical liens and subrogation claims are paid, and whatever remains is your net recovery. A $200,000 settlement can leave you with well under half after fees, costs, and lien payments. Before you accept any offer, work through the full math with your attorney so the number you deposit is the number you actually expected.