Double Recovery by Plaintiff

The Prohibition of Double Recovery in U.S. Federal and State Law: Principles and Applications

I. Introduction

The principle that a plaintiff should not achieve a "double recovery" for a single injury is a fundamental tenet of the American legal system, deeply embedded in both federal and state jurisprudence. While the system aims to ensure that injured parties are made whole and adequately compensated for their losses, it concurrently guards against plaintiffs receiving a windfall or profiting from their misfortune. This prohibition stems from notions of fairness, the prevention of unjust enrichment, and the efficient allocation of resources. As articulated in Texas law, "Texas law does not permit double recovery."[6] This principle is not merely a procedural nicety but reflects a substantive limitation on the extent of a plaintiff's entitlement to damages. This article will analyze the doctrine prohibiting double recovery, its conceptual underpinnings such as the one satisfaction rule and the election of remedies doctrine, and its varied applications across different legal contexts in United States federal and state law, drawing extensively upon judicial interpretations and statutory frameworks.

II. The Core Principle: The One Satisfaction Rule

At the heart of the prohibition against double recovery lies the "one satisfaction rule." This rule dictates that an injured party is entitled to only one full compensation for a single harm, irrespective of the number of legal theories advanced or the number of parties potentially liable for that harm.[6], [7], [10] The Supreme Court of Appeals of West Virginia has succinctly stated, "It is generally recognized that there can be only one recovery of damages for one wrong or injury. Double recovery of damages is not permitted; the law does not permit a double satisfaction for a single injury."[10]

The Court of Appeals of Texas in Marin Real Estate Partners, L.P. v. Vogt explained that a double recovery exists when a plaintiff is awarded more than one recovery for the same injury, and that this prohibition is a corollary to the one satisfaction rule.[6] Similarly, the New Mexico Court of Appeals in Gonzagowski v. Steamatic of Albuquerque, Inc. reiterated that "full payment of a plaintiff's judgment for his loss and satisfaction of his claim prevents its further enforcement," emphasizing that this applies "to an award of compensatory damages ('the measure of a loss'), and then only to the extent that a judgment is paid."[15] The primary purpose of this rule is to prevent the plaintiff from receiving more than fair compensation, thereby avoiding unjust enrichment.[18]

III. Manifestations of the No-Double-Recovery Rule

The general prohibition against double recovery manifests in several distinct but related legal doctrines and scenarios.

A. Alternative Theories of Liability

Plaintiffs are generally permitted to plead and pursue alternative theories of liability for the same underlying injury. For instance, a plaintiff might assert claims in both contract and tort arising from the same set of facts. However, while a plaintiff "is entitled to bring suit and seek damages on alternative theories... the plaintiff may not recover on both theories because these would amount to a 'double recovery.'"[6], [7] As stated in Slack v. Kanawha County Housing, "A plaintiff may not recover damages twice for the same injury simply because he has two legal theories."[10]

A clear illustration is found in Simulados Software, Ltd. v. Photon Infotech Private, Ltd., where the court awarded fraud damages but explicitly denied recovery for contractual damages, stating, "Plaintiff may not recover the $18,848 in contractual damages as this would permit duplicative recovery."[14] Courts often instruct juries carefully to avoid this pitfall. In Luciano v. Olsten Corp., the district court provided a model jury instruction: "If you find that the plaintiff proved both discriminatory claims, you must remember, in calculating the damages, that the plaintiff is entitled to be compensated only once for the monetary damages and injures she actually sustained... you must be careful... that you do not award double compensation for a single monetary damage or injury resulting from violation of two different claims."[8]

B. Election of Remedies

The doctrine of election of remedies is another mechanism to prevent double recovery. It provides that when a party has two or more coexisting but inconsistent remedies for the same wrong, the choice of one may preclude resort to the others.[18] The purpose, as articulated by the Court of Appeals of South Carolina in Brown v. Felkel, "is to prevent double redress for a single wrong."[18] In that case, the plaintiff, having obtained a judgment on a promissory note (a contract claim) against the defendant, was barred from pursuing a subsequent professional negligence (tort) action against the same defendant based on the same underlying facts and seeking recovery for the same financial loss. The court reasoned that while the plaintiff could have pleaded and proved both theories in a single suit, he would have been limited to one recovery; invoking one remedy to final adjudication constituted an election.[18]

However, the doctrine of election of remedies is not always rigidly applied, particularly where statutory schemes are involved or where the remedies sought are not truly duplicative of the same measure of loss. In United States v. Hougham, the Supreme Court held that the government did not make an irrevocable election of remedies by initially filing its complaint under one subsection of the Surplus Property Act and could amend its complaint to seek damages under a different subsection.[2] This suggests that an initial choice of remedy, especially at the pleading stage, does not necessarily bar pursuit of a more appropriate or complete statutory remedy, as long as it does not result in recovering more than what the law ultimately permits for the harm.

C. Multiple Defendants and Joint Tortfeasors

When multiple defendants are responsible for the same injury, the plaintiff is entitled to full satisfaction of their damages, but only once. A plaintiff "can sue any number of parties, and obtain a judgment against any one, or several of them, but can gain but one satisfaction, even though that person may pursue numerous possible avenues of relief simultaneously."[15] Consequently, any payment or settlement received from one defendant typically reduces the amount recoverable from the remaining defendants. In Boston Edison Co. v. Tritsch, the Supreme Judicial Court of Massachusetts noted that under G.L.c. 231B, § 4, where one multiple tortfeasor settles in good faith, the claim against non-settling tortfeasors is reduced by the settlement amount, thereby preventing double recovery by the plaintiff.[16] This ensures the plaintiff is made whole without being unjustly enriched through multiple payments for the identical harm.

D. Statutory Damages and Penalties

Certain statutes provide for damages beyond actual compensatory losses, such as double or treble damages, or fixed forfeitures. These are often intended to be punitive or to serve as a strong deterrent. The calculation of such statutory damages must be handled carefully to effectuate the statutory purpose without leading to an unintended double recovery of the underlying actual damages from multiple sources. In United States v. Bornstein, the Supreme Court addressed the False Claims Act (FCA), which provides for double damages and forfeitures.[5] The Court held that the government's actual damages should be doubled *before* deducting any compensatory payments already received from other parties (in that case, a prime contractor).[5] This method ensures that the statutory multiplier (intended as a penalty and deterrent) is applied to the full amount of the fraud-induced loss, and the defendant (subcontractor) does not benefit from payments made by others to reduce its own liability for the enhanced statutory damages. While the plaintiff (government) receives more than its bare compensatory loss, this is a deliberate statutory design, not an impermissible double recovery of the *same component* of damages from different sources.

IV. Specific Contexts and Applications

A. Insurance Contexts

The insurance arena provides numerous examples of the application of the no-double-recovery rule.

Subrogation: The doctrine of subrogation allows an insurer that has paid a loss to its insured to step into the shoes of the insured and pursue recovery from the tortfeasor responsible for the loss. This prevents the insured from recovering for the same loss from both the insurer and the tortfeasor. As seen in Sun Insurance Office v. Morris Hohenstein, if an insured prejudices the insurer's subrogation rights (e.g., by releasing the tortfeasor) after receiving payment from the insurer, the insurer may be entitled to recover the amount it paid from the insured to prevent a double recovery by the insured.[12] The court noted, "He should not be permitted to retain both payments. Insurance of the kind involved in this action is a contract of indemnity under which there can be no recovery in the absence of loss or in excess of the actual loss proven."[12]

Personal Injury Protection (PIP) Benefits: In states with PIP or no-fault auto insurance systems, benefits paid for medical expenses or lost wages are often deducted from any subsequent tort recovery for the same elements of damage. In Holt v. Lester, the Massachusetts Appellate Division ruled that a motion to alter or amend a judgment is an appropriate method to reduce the judgment by PIP benefits paid, to prevent double recovery by the plaintiff.[17]

Uninsured/Underinsured Motorist (UM/UIM) Coverage: Insurance policies frequently contain setoff provisions that reduce UM/UIM benefits by amounts recovered from liable third parties. The purpose is to prevent double recovery. However, courts scrutinize these provisions in light of public policy. The Supreme Court of Illinois in Hoglund v. State Farm Mut. Auto. Ins. Co. held that while setoff provisions act to prevent double recovery, they should not be applied in a way that deprives the insured of full compensation for damages that exceed the tortfeasor's payment, up to the UM policy limits.[20] The court emphasized that the purpose of UM coverage is to place the insured in substantially the same position as if the tortfeasor had been adequately insured.[20] A setoff is generally permissible only to the extent it prevents actual double recovery for the same damages.[21]

B. Workers' Compensation

Workers' compensation schemes are designed to provide swift, no-fault benefits to employees for workplace injuries, typically as an exclusive remedy against the employer. However, employees may retain the right to sue third-party tortfeasors. To prevent double recovery, employers or their insurers are often entitled to a lien or offset against the employee's tort recovery to recoup the workers' compensation benefits paid. The New Jersey Superior Court, Appellate Division, in Manuel Calalpa v. Dae Ryung Co., Inc., discussed how an offsetting credit for workers' compensation benefits against a tort recovery prevents a "double recovery."[11] Similarly, Travelers Ins. Co. v. District of Columbia recognized the propriety of an equitable lien against an employee's recovery from a third party to reimburse the compensation payer, justified by "the possibility of double recovery by the plaintiff [employee]."[22]

The nature of the injury is crucial. In Hawkes v. Commercial Union Ins. Co., the Supreme Judicial Court of Maine held that a lump sum settlement for a workers' compensation claim (for a physical back injury) did not bar subsequent tort claims against the insurer for intentional infliction of emotional distress and invasion of privacy arising from the insurer's investigation tactics.[3] The court reasoned these tort claims were for distinct injuries not covered by the Workers' Compensation Act and for which the Act provided no remedy, thus no double recovery was threatened.[3] In maritime contexts, similar principles apply; for instance, erroneous payments under the Longshore and Harbor Workers' Compensation Act (LHWCA) may be credited against a Jones Act recovery to prevent double recovery.[23]

C. Contractual Remedies

In contract disputes, a party generally cannot obtain remedies that are inconsistent and would result in a duplicative recovery. For example, a party typically cannot both rescind a contract (which undoes it and restores parties to their pre-contract positions) and also recover damages for breach of that contract as if it were affirmed, if this would lead to recovering more than their actual loss. However, the specific circumstances matter. In Foley v. Huntington Company, the Appellate Court of Connecticut found that the trial court's subsequent award of a deposit did not constitute a double recovery where the jury, in awarding damages for breach of contract, was not permitted to take the deposit into account.[9] This highlights the importance of careful accounting to ensure distinct elements of loss are compensated without duplication. As previously noted, Simulados Software also illustrates that a plaintiff may recover fraud damages (a tort theory) but not also duplicative damages under a breach of contract theory for the same economic loss.[14]

V. Procedural Mechanisms for Preventing Double Recovery

Courts employ various procedural mechanisms to enforce the prohibition against double recovery:

  • Jury Instructions: Trial courts instruct juries to award damages that fairly compensate the plaintiff for their actual losses but to avoid awarding compensation more than once for the same injury, even if multiple claims or theories are successful.[8]
  • Post-Trial Motions: Motions to alter or amend a judgment, or motions for satisfaction of judgment, can be used to adjust awards to account for prior payments, settlements, or statutory offsets, thereby preventing a double recovery.[17]
  • Offset and Credit: Courts will apply offsets or credits for amounts already received by the plaintiff from other sources for the same injury, such as settlements with joint tortfeasors[16] or payments from collateral sources where permitted by statute.[19] The Minnesota collateral source statute, for example, explicitly aims "to prevent double recovery by the plaintiff."[19]
  • Judicial Determination: Ultimately, whether a plaintiff has received or is seeking an impermissible double recovery is often a question of law for the court to determine.[6]

VI. Challenges and Nuances

Applying the no-double-recovery rule is not always straightforward and involves certain challenges and nuances.

Defining the "Same Injury": A critical aspect is accurately defining the "same injury." If a plaintiff suffers distinct harms, even if arising from a related series of events, recovery for each distinct harm is generally permissible. As emphasized in Slack v. Kanawha County Housing, for a plaintiff to recover under multiple theories, the damages claimed must be "separate and distinct."[10] The Hawkes case also turned on the finding that the tort claims against the insurer involved injuries distinct from the physical workplace injury compensated by workers' compensation.[3]

Statutory Overrides or Modifications: As discussed with the False Claims Act in Bornstein,[5] some statutes explicitly authorize recoveries that exceed simple compensatory damages (e.g., treble damages, civil penalties). These are legislative policy choices and are not considered impermissible "double recovery" in the common law sense, as they serve additional purposes like punishment or deterrence.

The Collateral Source Rule: The common law collateral source rule traditionally provides that a plaintiff's tort damages are not reduced by payments received from sources wholly independent of the tortfeasor (e.g., private insurance benefits). This rule can sometimes appear to allow a form of "double recovery." However, many states have modified or abrogated the common law collateral source rule by statute, often with the express purpose of preventing such windfalls, by allowing evidence of collateral source payments or mandating offsets.[19] The interplay between these statutes and the common law rule requires careful navigation.

VII. Conclusion

The prohibition against double recovery is a cornerstone of damages law in the United States, reflecting a commitment to fairness and the principle of unjust enrichment. Plaintiffs are entitled to be made whole for their injuries, receiving full and fair compensation, but they are not entitled to profit from their harm by recovering multiple times for the same loss. This principle is enforced through various doctrines, including the one satisfaction rule, election of remedies, rules governing settlements with joint tortfeasors, and statutory provisions concerning offsets and credits in specific contexts like insurance and workers' compensation.

While the concept is straightforward, its application can be complex, requiring careful judicial analysis of the nature of the injuries, the types of damages sought, the sources of payment, and the interplay between common law principles and statutory enactments. The legal system continuously strives to balance the plaintiff's right to adequate compensation with the imperative to prevent unwarranted windfalls, ensuring that justice is served for all parties involved.

VIII. References

  1. GENERAL TELEPHONE CO. OF S.W. v. UNITED STATES (449 F.2d 846, United States Court of Appeals, Fifth Circuit., 1971)
  2. UNITED STATES v. HOUGHAM (364 U.S. 310, U.S. Supreme Court, 1960)
  3. HAWKES v. COMMERCIAL UNION INS. CO (764 A.2d 258, Supreme Judicial Court of Maine., 2001)
  4. UNITED STATES v. HARRIS (403 U.S. 573, U.S. Supreme Court, 1971)
  5. UNITED STATES v. BORNSTEIN (423 U.S. 303, U.S. Supreme Court, 1976)
  6. Marin Real Estate Partners, L.P. v. Vogt (Court of Appeals of Texas, San Antonio., 2011) [Calstar Props., L.L.C. v. City of Fort Worth, 139 S.W.3d 433, 440 (Tex.App.-Fort Worth 2004, no pet.); Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182, 184 (Tex.1998); Foley v. Parlier, 68 S.W.3d 870, 882 (Tex.App.-Fort Worth 2002, no pet.); Parkway Co. v. Woodruff, 901 S.W.2d 434, 441 (Tex.1995); Utts v. Short, 81 S.W.3d 822, 833 (Tex.2002)]
  7. FOLEY v. PARLIER (Court of Appeals of Texas, Second District, Fort Worth., 2002) [Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182, 184 (Tex. 1998); Birchfield v. Texarkana Mem'l Hosp., 747 S.W.2d 361, 367 (Tex. 1987); Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991)]
  8. LUCIANO v. OLSTEN CORP., (E.D.N.Y. 1996) (United States District Court, E.D. New York., 1996)
  9. FOLEY v. HUNTINGTON COMPANY (Appellate Court of Connecticut, 1996) [Williams v. Breyer, 21 Conn. App. 380, 384, 573 A.2d 765, cert. denied, 215 Conn. 812, 574 A.2d 542 (1990)]
  10. SLACK v. KANAWHA COUNTY HOUSING (Supreme Court of Appeals of West Virginia., 1992)
  11. MANUEL CALALPA and AUGUSTINA CALALPA, Plaintiffs-Appellants, v. DAE RYUNG CO., INC., and C K MOULDING CO., INC., Defendants-Respondents. (N.J. Super. App. Div., 2003) [Millison v. E.I. du Pont de Nemours, 101 N.J. at 187; 6 Arthur Larson and Lex K. Larson, Larson's Workers' Compensation Law, § 110.02 at 110-3 to -4 (2002)]
  12. SUN INSURANCE OFFICE, Plaintiff, v. MORRIS HOHENSTEIN, Defendant. (N.Y. Misc., 1927)
  13. THE MIDVALE COAL CO. (PITTSBURGH PLATE GLASS CO., SUBSTITUTED PLAINTIFF), APPELLANT v. CARDOX CORP., APPELLEE. (Ohio, 1949)
  14. SIMULADOS SOFTWARE, LTD., Plaintiff, v. PHOTON INFOTECH PRIVATE, LTD., Defendant. (N.D. Cal., 2020) [Robinson Helicopter Co. v. Dana Corp., 34 Cal.4th 979, 102 P.3d 268 (2004)]
  15. RICHARD JAMES GONZAGOWSKI, Plaintiff-Appellee, v. STEAMATIC OF ALBUQUERQUE, INC. d/b/a STEAMATIC OF ALBUQUERQUE & SANTA FE, INC., and GEB, INC., Defendants-Appellants, and ALLSTATE INDEMNITY COMPANY and GERARD BECKER, Defendants. (N.M. Ct. App., 2021) [Sanchez v. Clayton, 1994-NMSC-064, ¶ 5, 11; 47 Am. Jur. 2d Judgments § 769 (2021)]
  16. BOSTON EDISON CO. v. TRITSCH (370 Mass. 260, Supreme Judicial Court of Massachusetts. Suffolk., 1976) [G.L.c. 231B, §§ 1 (b), 3 (e), 4; Tino v. Stout, 49 N.J. 289 (1967); O'Neil v. National Oil Co., 231 Mass. 20 (1918); George W. Gale Lumber Co. v. Bush, 227 Mass. 203 (1917); Wadsworth v. Boston Gas Co., 352 Mass. 86 (1967); Sluckus v. Fraktman, 322 Mass. 379 (1948)]
  17. HOLT v. LESTER (1997 Mass. App. Div. 163, Massachusetts Appellate Division, Western District., 1997) [G.L.c. 90, § 34M; Mester v. Barrett, 1995 Mass. App. Div. 38; Page v. New England Tel. Tel. Co., 383 Mass. 250; Mumma v. Reading Co., 247 F. Supp. 252 (E.D. Pa. 1965)]
  18. BROWN v. FELKEL (320 S.C. 292, Court of Appeals of South Carolina., 1995) [Tzouvelekas v. Tzouvelekas, 206 S.C. 90, 33 S.E.2d 73 (1945); Save Charleston Foundation v. Murray, 286 S.C. 170, 333 S.E.2d 60 (Ct.App. 1985); Robert Harmon and Bore, Inc. v. Jenkins, 282 S.C. 189]
  19. GRAFF v. ROBERT M. SWENDRA AGENCY (776 N.W.2d 744, Minnesota Court of Appeals., 2009) [Minn. Stat. § 548.251; Heine v. Simon, 702 N.W.2d 752 (Minn. 2005); W. Nat'l Mut. Ins. Co. v. Casper, 549 N.W.2d 914 (Minn. 1996)]
  20. HOGLUND v. STATE FARM MUT. AUTO. INS. CO (148 Ill. 2d 272, Supreme Court of Illinois., 1992) [Hoglund, 211 Ill. App.3d 600; Greenawalt, 210 Ill. App.3d 543]
  21. ZDEB v. ALLSTATE INSURANCE (Appellate Court of Illinois, First District., 2010) [Banes v. Western States Insurance Co., 247 Ill. App. 3d 480 (1993)]
  22. TRAVELERS INS. CO. v. DISTRICT OF COLUMBIA (District of Columbia Court of Appeals., 1978) [Allen v. Texaco, Inc., 510 F.2d 977 (5th Cir. 1975); Fontana v. Pennsylvania, R.R., 106 F. Supp. 461 (S.D.N.Y. 1952), aff'd sub nom. Fontana v. Grace Line, Inc., 205 F.2d 151 (2d Cir.), cert. denied, 346 U.S. 886 (1953); The Etna, 138 F.2d 37 (3d Cir. 1943)]
  23. CORTEZ v. TOTAL TRANSP., INC (Court of Appeal of Louisiana, Fifth Circuit., 1991) [Barrett v. Chevron U.S.A., Inc., 752 F.2d 129 (5 Cir. 1985), rev'd on other grounds en banc, 781 F.2d 1067 (5 Cir. 1986)]