Disability benefits through a work insurance policy for short or long term disability may not be deductible from your client’s anticipated ICBC tort award under the insurance exception. Luis v. Marchiori,2015 BCSC 1 is good law on the matter and quotes Dionne v. Romanick, 2007 BCSC 436, at paras. 113-121 as follows:
“[113] The question of whether benefits received by an injured plaintiff should be deducted from the plaintiff’s claim for lost earnings has been the subject of significant judicial and academic comment. The policy reasons suggesting that they should be deducted consist largely of a desire to avoid double recovery, and to restore the plaintiff to his or her pre-tort position rather than to punish the wrong-doer. The policy reasons suggesting that they should not be deducted focus on the contribution made by the plaintiff to acquiring the benefits, suggesting that the tortfeasor should not benefit from the plaintiff’s sacrifices in obtaining the benefit. In some cases, this is referred to as the “insurance exception” to the general rule that benefits are deductible.
[114] The starting point for analysis is the decision of the Supreme Court of Canada in Ratych v. Bloomer, [1990] 1 S.C.R. 940, [1990] S.C.J. No. 37. In that case, the court considered whether a plaintiff who had lost work as a result of injuries caused by a tortfeasor could recover from the tortfeasor damages for loss of earnings where the plaintiff had been paid his full salary pursuant to his contract of employment. In that case, the plaintiff was a police officer. He continued to be paid pursuant to the terms of his collective agreement, and did not lose accumulated sick credits. He did not pay premiums for the salary continuation protection.
[115] Madam Justice McLachlin wrote for the five-member majority of the court, in paras. 94-101 as follows:
94. The general principles underlying our system of damages suggest that a plaintiff should receive full and fair compensation, calculated to place him or her in the same position as he or she would have been had the tort not been committed, in so far as this can be achieved by a monetary award. This principle suggests that in calculating damages under the pecuniary heads, the measure of the damages should be the plaintiff’s actual loss. It is implicit in this that the plaintiff should not recover unless he can demonstrate a loss, and then only to the extent of that loss. Double recovery violates this principle. It follows that where a plaintiff sustains no wage loss as a result of a tort because his employer has continued to pay his salary while he was unable to work, he should not be entitled to recover damages on that account.
…
96. The argument that wages paid by an employer pursuant to a contract of employment are akin to insurance and hence should not be deducted on the principle in Parry v. Cleaver cannot prevail, in my view. First, it is rejected in Parry itself, Lord Reid stating that in such a case, no loss ever arises. Second, the argument rests on the assumption that the employee has in fact suffered a loss or actually contributed to the fund from which the earnings are paid, an assumption which, in the absence of evidence, is far from self-evident.
97. Without placing them in a determinative role, it appears that considerations relating to loss distribution generally support the view that wage benefits paid to a plaintiff while he or she is off work should be deducted from damages awarded for loss of earnings…
99. These considerations suggest the following rule. As a general rule, wage benefits paid while a plaintiff is unable to work must be brought into account and deducted from the claim for lost earnings. An exception to this rule may lie where the court is satisfied that the employer or fund which paid the wage benefits is entitled to be reimbursed for them on the principle of subrogation. This is the case where statutes, such as the Workers’ Compensation Act, expressly provide for payment to the benefactor of any wage benefits recovered. It will also be the case where the person who paid the benefits establishes a valid claim to have them repaid out of any damages awarded. …
100. These comments should not be taken as extending to types of collateral benefits other than lost earnings, such as insurance paid for by the plaintiff and gratuitous payments made by third parties. Those issues are not before the Court and must be left for another day.
101. In this case the plaintiff was paid his full salary during the period he was off work as a result of his injuries. The principles to which I have alluded suggest that in these circumstances his claim against the tortfeasor for loss of earnings on the ground that the plaintiff has not established a loss, should be dismissed unless a valid claim is established on the part of the employer who paid the benefits.
[116] In summary, Ratych provides that as a general rule, wage benefits paid while a plaintiff is unable to work must be brought into account and deducted from the claim for lost earnings.
[117] In Cunningham v. Wheeler, [1994] 1 S.C.R. 359, [1944] S.C.J. No. 19, the Supreme Court of Canada considered a similar but distinct issue. Mr. Cunningham collected disability benefits under a disability plan established under the provisions of a collective bargaining agreement. He was not required to pay those benefits back pursuant to any subrogation agreement. Evidence established that the disability benefit provision resulted from a trade-off against wages negotiated by the union. Cory J., on behalf of the four-member majority of the seven-member panel of the court, wrote as follows at para. 94:
In my view Ratych v. Bloomer, supra, simply placed an evidentiary burden upon plaintiffs to establish that they had paid for the provision of disability benefits. I think the manner of payment may be found, for example, in evidence pertaining to provisions of a collective bargaining agreement just as clearly as in a direct payroll deduction.
[118] Cory J. also referred to a non-union employee. He wrote as follows at para. 99:
The application of the insurance exception to benefits received under a contract of employment should not be limited to cases where the plaintiff is a member of a union and bargains collectively. Benefits received under the employment contracts of non-unionized employees will also be non-deductible if proof is provided of payment in some manner by the employee for the benefits. Although there may not be evidence of negotiations for the wage/benefits package which makes up the employee’s remuneration, evidence that the employer takes the cost of benefits into account in determining wages would adequately establish that the employee contributed by way of a trade-off against higher wages. Clearly, if the non-union employee contributed to the plan by means of payroll deductions, that would prove the employee’s contribution. Again, these suggested methods of proof are not an exhaustive list.”
There will be few cases where the tortfeasor can escape paying compensation to an employee for lost time at work when the absence was covered by the employer or its insurer. Either the employer was obliged by contract to pay or to provide insurance coverage, in which case it can be easily shown that the benefit formed part of the overall compensation package, or the employer was under no obligation but continued the salary ex gratia, in which case the law says that the tortfeasor cannot take the benefit of another’s generosity.
Click here to learn about Subrogation in Personal Injury Cases