There is never a good time to be seriously injured in a motor vehicle accident, but with recent changes, it has become worse for people in Ontario.
Twice in the last decade, the Ontario government has reduced the maximum coverage in some categories of no-fault benefits in the Statutory Accident Benefits Schedule (SABS). The government may have had good intentions – trying to reduce car insurance premiums and the incidence of frivolous lawsuits – but this has come at a great cost for accident victims.
Many plaintiffs will have access to other sources of collateral benefits beyond the minimum requirement for automobile insurance under the SABS. This can include employer-paid policies, private health insurance policies or other such benefits.
Although collateral benefits can increase a plaintiff's access to medical and other healthcare services, defendants are entitled to receive a credit for these benefits. Collateral benefits already received by the plaintiff are entitled to be deducted from tort awards in these cases, and a defendant is entitled to take an assignment of future benefits to reduce tort obligations accordingly.
This blog post will discuss the recent Court of Appeal ruling that has clarified the rules around collateral benefits deductions and, unfortunately, how this has left some plaintiffs with additional challenges in their lawsuits.
How to Calculate Collateral Benefits Deductions and Assignments
Previous cases point to two different approaches when it comes to the deductibility of benefits.
The first approach is known as the "apples to apples" or strict matching principle. Under this principle, the courts have held that "apples must be deducted from apples and oranges from oranges".1 There must be a temporal and qualitative matching of the benefits in question to the heads of the tort damages. This means, for example, that if a plaintiff was awarded tort damages in his or her lawsuit for future physiotherapy services, only those collateral benefits dedicated to physiotherapy services for the same time period will be deducted from the tort award.
The second approach is known as the "silo" approach, which only requires the tort award to match generally with the broad corresponding SABS categories.2 It does not take into account the specific service or the timing of the service. This means that if a plaintiff received medical and rehabilitation benefits through the no-fault system, this entire amount could be deducted from a tort award, regardless of the type of service received. For example, if a plaintiff received funding for physiotherapy treatment through the SABS, this amount would be deducted as part of the healthcare costs of a tort award, even if that award does not include any funding for physiotherapy treatment specifically.
Up until recently, the courts have been employing the "apples to apples" approach. This was beneficial for plaintiffs as deductions were only applied in cases where there was a strict match in terms of the type of service that was being funded for and the collateral benefits received. Unfortunately, however, recent case law (Cadieux v. Cloutier, 2018 ONCA 903 for the deduction of past benefits, and Carroll v. McEwen, 2018 ONCA 902 for the assignment of future benefits) has confirmed that the "apples to apples" principle is no longer the law in Ontario when it comes to the deduction of no-fault benefits.
From Bad to Worse
Although the difference between the two approaches may not sound very significant, it can be very costly for plaintiffs. Moreover, case law directs that trial lawyers representing plaintiffs will now be required to call evidence on past treatment paid by the SABS benefits insurer to ensure that the defence does not question the need for such treatments to further reduce tort awards.
For instance, in Cadieux, the plaintiff's counsel did not call evidence for the category of future care based on the understanding that SABS benefits fully covered this need. By ruling the silo approach applied to the case, the plaintiff's tort award was reduced by about $600,000 when an "apples to apples" approach would have seen only a $250,000 reduction.
In other words, if the life of an accident victim was not already hard enough, it just became even more difficult and costly for plaintiffs trying to prove their cases.
1 Bannon v. McNeely, 1998 CanLII 4486
2 Basandra v. Sforza, 2016 ONCA 251
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.