Earlier this month, a state appellate court issued an opinion explaining how the collateral source doctrine is applied under Virginia personal injury law. The case actually involved a breach-of-contract claim, however, in answering whether the collateral source doctrine applied to breach-of-contract claims, the court thoroughly explained the collateral source doctrine, its origins, and how it applies in Virginia personal injury accidents.
In this case, the claim was between a power plant and contractor what was paid to perform certain work at the power plant. According to the court’s opinion, there was a boiler accident at the power plant that resulted in the deaths of three workers. The families of the deceased workers filed claims against the power plant, the contractor, and several other parties.
Evidently, there was a contract between the power plant and the contractor that required the contractor to obtain certain insurance coverage. However, the contractor did not purchase the specified insurance coverage. Nonetheless, after the power plant paid out nearly $5 million to settle the cases, and incurred nearly $10 million in legal fees, the power plant was fully reimbursed by all available insurance policies. However, the power plant pursued a breach-of-contract claim against the contractor, arguing that it failed to obtain the specified insurance. The court had to determine if the power plant could pursue such a claim, given the fact that it had undisputedly already recovered for the total costs of defending and settling the lawsuit.