Court Of Appeal Clarifies Collateral Benefits Issues

There has been a steady reduction in the damages that innocent motor vehicle accident victims recover from the at fault driver. The Ontario Government, working with the insurance industry, has been passing more and more restrictive laws and regulations to cut down on damage awards to innocent accident victims. The Ontario Court of Appeal recently released two decisions that will have a significant negative impact on the amount of money innocent car accident victims will be able to recover from at fault drivers.

COA1In El-Khodr v. Lackie the innocent driver, Mr. El-Khodr, was seriously injured when the tow truck he was operating was rear-ended. Following a trial the jury awarded him damages totaling $2,931,006.

The trial judge had instructed the jury to regard the Ontario Drug Benefit Plan as a “contingency” meaning that it was not certain that the plan would still exist in 2028, the year in which Mr. El-Khodr would turn age 65 and first qualify for it. The Court of Appeal held that judge should have instructed the jury to award damages based on the law as it existed and that the Ontario Drug Benefit Plan should not be considered a “contingency”. Mr. El-Khodr would be eligible under the plan at age 65, and therefore the at fault party’s insurance company should only be required to pay for Mr. El-Khodr drug expenses until he turned 65.

Mr. El-Khodr qualified for life long benefits from his own insurance company (so called “collateral benefits”) because he was found to have suffered “catastrophic” injuries. The trial judge did not order Mr. El-Khodr to turn over (assign) these future benefits to the defendant’s insurance company. Several previous cases had required a strict “matching” between the types of damage recovered by the innocent party and the specific type collateral benefit he received before there could be such an assignment. The questions the jury had been asked to answer about the Mr. El-Khodr future damages did not identify each type of damage and the amount awarded for it. This meant that the required “matching” of the damages awarded at trial and future collateral benefits was not possible in this case.

The Court of Appeal held that in the case of Mr. El-Khodr it was not necessary to match both the specific kind of damages awarded by the jury with a specific kind of future collateral benefit. It was also not necessary to match the time when the future damage expense would be incurred with when the collateral insurance benefit would be available (“strict qualitative and temporal matching requirements should not be applied”). It held that “matching” was not necessary because Mr. El-Khodr was entitled to his other future collateral benefits for life. This meant that the jury’s damage award included all future expenses that would be paid by Mr. El-Khodr’s own insurance company as collateral benefits. This meant that if there was no assignment of the future benefits which Mr. El-Khodr received for medication, assistive devices and professional services, he would be over-compensated. His receipt of both damages after the trial and future collateral benefits for the same expenses would constitute double recovery.  

The Court of Appeal ordered that any collateral benefits received by Mr. El-Khodr for future medication, assistive devices, professional services (psychological, physiotherapy, occupational therapy, massage therapy, kinesiology/ personal training, case management), and travel to medical or other specialist were assigned to the at fault driver’s insurance company.

 The assignment of future collateral insurance benefits will significantly reduce the “net” amount of money Mr. El-Khodr and all other innocent accident victims will recover from all sources. Instead of using future collateral benefits to cover these expenses he will have to give the money to the at fault driver’s insurance company.

In Cobb v. Long Estate, Mr. Cobb suffered chronic pain that prevented him from working and performing household tasks. A jury awarded $220,000 in damages but after deducting the collateral benefits Mr. Cobb received from his own insurance company and the statutory deductible for damages for pain and suffering, the judge calculated a final judgment amount of $34,000.

Prior to the trial Mr. Cobb had entered into a final lump sum settlement with his own insurance company of his collateral benefits  including his Income Replacement Benefit. The correspondence between the insurer and Mr. Cobb’s lawyer regarding the settlement did not indicate that any portion of the $130,000 settlement was being made for any reason other than to compensate for his income loss.  The court decided that the entire $130,000 was to be deducted from the damages the jury awarded Mr. Cobb for loss of both past and future income.

The Court of Appeal also said that it was proper to deduct the entire $9,150 that Cobb received from his own insurance company for housekeeping from the jury’s awards for past and future loss under this heading of damages. It found that there was no reason to distinguish between past and future losses where the insurance company had not done so in the settlement.

In order to ensure that appropriate “matching” of benefits and assignment occurs plaintiffs’ lawyers must present their clients’ damage claims according to the categories of collateral benefits available form their own insurance companies. They should make one claim for past and future losses that have collateral insurance coverage and a separate claim for any past and future losses that do not have other coverage. In cases involving non-catastrophic injuries, the presentation of the claim should account for the both the monetary and time limits on benefits available to their client under their own insurance policy.

Edward (Ted) Masters is a personal injury lawyer in Ottawa with over 35 years of experience representing those seriously injured in car accidents. He can be contacted by his direct phone number, 613-566-2064, or by email at ted.masters@mannlawyers.com.

Advertisements

Changes to the Ontario Insurance Act that will directly impact on your Auto Insurance Benefits – Consumers Beware

Auto Insurance

Effective June 1, 2016, the Ontario Government has introduced changes to the automobile insurance system which will greatly affect the coverage consumers select and the price they will pay for auto insurance.   Many of these changes affect the statutory accident benefits that a person will receive if they have been injured in an automobile accident regardless of who is at fault.   Some of these benefits have been reduced and some options for increased coverage have been eliminated or changed.

Accordingly, it is absolutely vital for an individual to speak with their auto insurance broker to determine what the best coverage is for them and in many cases the increased coverage can often be provided at a minimal cost.

These changes will apply only to auto insurance policies issued or renewed after June 1, 2016.

Previously, medical and rehabilitation benefits for non-catastrophic injuries (less serious) provided a maximum of $50,000.00 in benefits with an additional $36,000.00 available for attendant care if deemed necessary.   Under the June 1, 2016 changes these benefits have been combined and reduced to $65,000.00 total.    A party can now choose to increase the benefits to a total of $136,000.00.

The 2016 changes also effectively cut in half coverage available to those with catastrophic injuries (serious brain injuries/spinal cord injuries).   Prior to June 1, 2016, the limit for medical care and rehabilitation and attendant care was 1 million dollars each.   Under the new policy these benefits have been combined and reduced to 1 million dollars in total.    An insured can now choose to add on an additional 1 million dollars for a total of 2 million dollars available for catastrophic injuries.

Disability claim

Prior to June 1, 2016, if an individual is unable to work they can receive income replacement benefits reflecting 70% of one’s gross income up to a maximum of $400.00 per week.   The new policy does not cause any changes.  However, an individual can now choose to increase their weekly limit of income replacement benefits (if eligible) to $600.00; $800.00; or $1,000.00 per week.

Other benefits/coverage including housekeeping and home maintenance expenses, death and funeral benefits and dependent care benefits can all be increased or modified for additional premiums.

It is important to speak to your auto insurance broker to determine what the best option for you is and how much any additional premiums will be.

It may very well be that a very minor increase in premium can afford you significant increased benefits.   If no changes are made one’s insurance, coverage will automatically default to the current new low standard benefits.

Changes to Statutory Accident Benefits

In an effort to reduce insurance premiums, the Government has promised to make significant changes to statutory accident benefits.

The changes include:

  1. An amendment to the test for catastrophic impairment;
  2. Including attendant care services with the $1 million medical and rehabilitation benefit for catastrophic impairments;
  3. Reducing the standard duration of medical and rehabilitation benefits from 10 years to five years for all claimants except children; and,
  4. Eliminating the six month waiting period for non-earner benefits, and limiting the duration of non earner benefits to two years post accident ;

Tort claims

In addition to the above Statutory Accident Benefit changes, the Government has indicated that it will propose amendments to the Insurance Act, these amendments are as follows:

  1. An adjustment to the deductible on awards for pain and suffering damages to reflect inflation and future changes in inflation;
  2. An adjustment to the monetary thresholds beyond which the tort deductible does not apply to reflect inflation.

These changes will serve to increase the $30,000.00 deductible introduced in 2003.

The full list of proposed changes to both SABS and Tort Claims can be found at http://www.fin.gov.on.ca/en/budget/ontariobudgets/2015/papers_all.pdf.

With the amounts available to victims of motor vehicle accidents set to be dramatically reduced, it is important to ensure that those involved in accidents receive the full amount they are entitled to. A lawyer familiar with the legislation can help you make sure you receive your entitlement.

If you have been injured in a motor vehicle accident, please feel free to contact a member of the Mann Lawyers personal injury team at 613 722 1500.

Fernandes v. Penncorp Life Insurance – long-term disability

In a recent decision, the Ontario Court of Appeal awarded a totally disabled man the sum of $236,773 in unpaid long-term disability benefits, $200,000 in punitive damages and $25,000 in damages for mental distress. This occurred when a disability insurance company refused to pay the man in the face of significant evidence of medical disability and even though its own expert suggested the man might be totally disabled. The man was also awarded substantial costs of the litigation of over $180,000.

FAMILY PROTECTION ENDORSEMENT – OPCF-44R

An Ottawa court case decided in January that the Family Protection Endorsement (OPCF-44R) did apply to cover a young man (not named in the policy) who received serious injuries in an accident caused by an uninsured driver.  Despite the fact the young man had a pattern of living at more than one location, the court found the coverage was available to him since one of the ‘residences’ belonged to his mother, who was the named insured under the policy.

Every driver on the road should have this coverage because if you are involved in an accident with an uninsured or underinsured driver, it will provide between one to two million dollars of additional insurance coverage in the event you are injured in the accident.  If you are not sure whether you have this coverage you should contact your insurance agent right away.

FSCO Backlog means problems for injured persons in Ontario

FSCO backlog means problems for injured people in Ontario

FSCO backlog means problems for injured people in Ontario

The Financial Services Commission of Ontario or FSCO provides mediation and dispute resolution services to injured persons who are involved in a dispute with their insurer over the availability of Accident Benefits.  Under the current law, these disputes must be sent to mediation first before they are determined on the merits by an independent arbitrator or Judge.

The mediation backlog has been well documented and at one point there were approximately 30,000 cases in the system and it was taking up to one year to schedule mediation with an FSCO mediator.  The Ontario government was forced to act and spent $38 million dollars to hire an outside consultant to help reduce the backlog.

As a result, the 2012-2013 Auditor General’s report has announced that the mediation backlog in Ontario has been virtually eliminated.  It now only takes two to three months for mediation to proceed in a case.  However, unfortunately, the wait time for arbitration has increased such that if the case cannot be settled at mediation it may take upwards of a year before an arbitration hearing date is set.  There are presently 15,000 arbitration cases in the queue.

The result is that injured persons in Ontario will continue to be disadvantaged by a system that is in crisis.

Victims of the OC Transpo/Via Rail crash and their families are eligible for Accident Benefits.

OC Transpo crash

Victims of the OC Transpo/Via Rail crash, along with their families, are eligible for Accident Benefits. (Photo: Wayne Cuddington/ Postmedia News)

Those individuals injured on the OC Transpo bus on Wednesday September 18, 2013 and the families of those who lost their lives are eligible to apply for and receive Statutory Accident Benefits or “SABS”.  These benefits may include death benefits, income replacement and medical/rehabilitation benefits.

Due to the priority payment rules in the Insurance Act, the application for accident benefits (OCF-1) must be submitted to the insurer that insures the injured person.  If the injured person is not insured under any policy of motor vehicle insurance then the application must be submitted to the City of Ottawa, Rick Management, 110 Laurier Avenue West, Ottawa K1P 1J1.  The city processes claims that are made in connection with OC Transpo.

 The OCF-1 form may be obtained from the Financial Services Commission of Ontario website (www.fsco.gov.on.ca/en/auto).

On behalf of Mann & Partners, LLP, Jonathan and I wish to extend our thoughts and prayers to all those affected by this tragedy. If you need any assistance with the forms, we would be pleased to help at no cost.

Kevin Butler and Jonathan Wright are Ottawa-based lawyers practicing in civil litigation, including personal injury, motor vehicle accidents and insurance litigation at Mann & Partners, LLP. The articles on this blog are not intended to provide legal advice. Should you require legal advice, please contact Mann & Partners, LLP at 613-722-1500 or fill out our form to be contacted within 24 hours.