Rules against Double Recovery Prevent Compensation for the Same Expense in an Accident Benefits Claim and Tort Action

Statutory Accident Benefits are benefits under a vehicle insurance policy that are available to Ontario residents who are injured in a motor vehicle accident, whether as a vehicle occupant, cyclist or pedestrian.

These benefits provide compensation for any expenses that were incurred in treating injuries resulting from an accident, expenses for ongoing medical care, and the replacement of income that was lost while the injured person was recovering from the accident.

They are governed by the Statutory Accident Benefits Schedule (SABS), which is regulated under the Insurance Act of Ontario. Anyone involved in a motor vehicle accident is entitled to apply, regardless of fault.

Applying for Statutory Accident Benefits does not preclude a person from filing a personal injury lawsuit against the individual(s) responsible for the accident. Anyone who was injured in an accident caused by another person's negligence, whether in a collision, slip and fall incident or any other type of accident, is eligible to initiate a tort claim for injury compensation. Damages for pain and suffering are only available through a lawsuit against the 'at fault' party.

In the event of a motor vehicle accident, a personal injury lawyer has the prerequisite expertise to best advise an accident victim whether they can receive optimum compensation in an accident benefits claim, tort claim or both. However, sometimes the award in tort claim is reduced by the amount of accident benefits the injured person already received, which was the issue to be decided in a 2015 appeal of a previous judgement in Mikolic v. Tanguay.

Case example

The plaintiff, A.M., was injured in a car accident and filed a personal injury lawsuit against the other driver, David Tanguay.

At the conclusion of a 2013 trial to decide this matter, the jury ruled in A.M.'s favor and awarded him $100,000 in damages, including $30,000 for future loss of income and $15,000 for cost of future care. 

Prior to the trial's conclusion, the plaintiff had been paid a total of $158,496 in income replacement benefits (IRB) through his vehicle insurance policy, including $77,500 for past and future income replacement.

While both parties agreed on a deduction of past income loss, they disagreed on the issue of future income loss. Mr. Tanguay's counsel argued that the future income replacement amount should be deducted from the $100,000 awarded by the jury, while the plaintiff's counsel disagreed.

The presiding judge in the 2013 trial ruled in the plaintiff's favor, denying a deduction for the following reasons.

First, he regarded the IRB benefits A.M. received as a lump sum award and decided that these awards are not deductible because they are essentially a compromise made to settle a legal obligation one party has to another. Also, the judge cited the decisions of  Tsiaprailis v. Canada, Cromwell v. Liberty Mutual Insurance Co . and Vanderkop v. Personal Insurance Company of Canada , and concluded that because the benefits were not provided as a weekly payment for loss of income in the future, they did not constitute as payments received for statutory income replacement of future benefits and thus, could not be deductible from an award that included future income benefits.

Counsel for the defendant argued that none of the three cases which the judge relied on to make that decision were relevant to the present case. It was further argued that nothing in the relevant sections of the  Insurance Act indicate that payments made in a lump sum, weekly or otherwise has anything to do with determining the deductibility of benefits for income loss.

The trial judge also held that the IRB settlement awarded to A.M. under his vehicle insurance policy did not specify how much of this total constituted an award for future income. Therefore, it was concluded that there is no certainty that a deduction would be taken specifically from future payments and not simply from payments in general. Mr. Tanguay and his counsel appealed the trial judge's decision. 

The key issue for Justice Sanderson to decide in the 2015 appeal was whether or not the trial judge, by refusing to order the deduction, had erred in interpreting sections of the  Insurance Act.

One of the first decisions Justice Sanderson considered and agreed with, was the trial judge's assertion that ultimately, in a case like this, the onus was on the defendant to prove that the payment given clearly fell within the statutory definition and therefore, a deduction from the jury award would not result in the plaintiff being under-compensated.

The ruling in Gilbert v. South was cited as a standard for deciding the rationality of a deduction: a deduction should only be made if it is absolutely clear that the plaintiff's entitlement to collateral benefits is certain and the plaintiff received compensation for the same benefits in the civil suit. In other words, a deduction should only be made if the plaintiff is  twice awarded the same specific benefits for which they are eligible, such as both an award for income replacement benefits under their 'no fault' insurance and again in a tort action. 

In such cases, the plaintiff would be receiving double recovery and would therefore require a deduction. Under Subsection 267.8(4) of the Insurance Act, any statutory accident benefits paid to a plaintiff for a specific health care expense or benefit must be deducted from an award for damages for the same health care expense.

Justice Sanderson disagreed with the trial judge's ruling that deductions from statutory income replacement benefits in the past could only be deducted from damages awarded for past income loss and similarly, future income replacement benefits could only be deducted from damages specifically awarded for future loss of income.

This reasoning in the 2013 trial contributed to the conclusion that the exact amount the plaintiff received for future income replacement benefits was uncertain, thus making it impossible to fairly deduct from the damages awarded in the jury trial. A key concern was that a deduction could possibly result in money being taken from an amount for something other than income replacement benefits. Justice Sanderson rejected this premise due to the settlement disclosure document that was signed by both parties.

In a Settlement Disclosure Notice Form signed by the plaintiff, it was recorded that $77,500 of the $175,000 settlement was clearly allocated for statutory income replacement - past and future. Justice Sanderson concluded that it seemed unlikely that the trial judge would not know exactly how much needed to be deducted. Accordingly, he ruled in favor of Mr. Tanguay and granted the appeal.

Individuals injured in a motor vehicle accident have two available options for receiving injury compensation: their motor vehicle insurance policy and a lawsuit or claim against the 'at fault' party.

At Gluckstein Lawyers, our expert team can simplify the process of deciding on the option(s) that will best serve your unique situation and needs. Call us today to schedule a free initial consultation to review the specifics of your case and forward.