Collateral Source Rule Arizona
In general, the collateral source rule allows a plaintiff to fully recover from a defendant for an injury even when the plaintiff has recovered from a source other than the defendant for the same injury. See Bustos v. W.M. Grace Development, 192 Ariz. 396, 399, 966 P.2d 1000, 1003 (App. 1997).
In Arizona, the rule most often finds application in tort cases in which there is a recovery from both a tortfeasor and an insurer. See, e.g., In re Pima City Juvenile Action No. 45363-3, 151 Ariz. 541, 541, 729 P.2d 345, 345 (App. 1986).
Arizona law is clear, however, that the collateral source rule does not apply to ordinary breach of contract claims. See Grover v. Ratliff, 120 Ariz. 368, 370, 586 P.2d 213, 215 (App. 1978).
This distinction is derived from the policy underlying the rule:
The collateral source rule is punitive; contractual damages are compensatory.
The collateral source rule, if applied to an action based on breach of contract, would violate the contractual damage rule that no one shall profit more from the breach of an obligation than from its full performance. Id. (quoting Patent Scaffolding Co. v. William Simpson Construction Co., 256 Cal. App. 2d 506, 64 Cal. Rptr. 187, 191 (1967)).