Category: Deductibility of Disability Benefits

Diebold v. Economical Mutual Insurance Company, 2022 ONSC 5592

In this personal injury action arising from a motor vehicle accident, the parties moved under Rule 21 for a determination before trial as to the deductibility of an LTD settlement from any damages awarded for loss of income. The plaintiff agreed that LTD benefits paid under the policy were deductible from income loss, but argued that the settlement was not deductible because it followed litigation and was not necessarily all for LTD benefits (i.e. the settlement could have included costs or punitive damages). Justice Gibson rejected the plaintiff’s position and held that Economical was entitled to deduct the LTD settlement from any damages awarded for loss of income. A key factor in the analysis was that the minutes of settlement in the LTD proceeding stated that the settlement was a taxable LTD benefit. This suggested to Justice Gibson that the settlement was for income replacement rather than other claims.

Sean Omar Henry v. Dr. Marshall Zaitlen, 2022 ONSC 2718

The defendant physician was found negligent by a jury. The plaintiff was awarded damages, which included damages for past loss of income. The defendant brought a motion to deduct the LTD and pension contribution benefits the plaintiff had received, from the award of damages for past loss of income. Justice Sanfilippo dismissed the motion, holding that the benefits could not be deducted because the provider had a right of subrogation right under the contract. He held that it was irrelevant that the provider was unlikely to pursue subrogation. In the circumstances where the contract provided for a subrogation right, the deduction was not permitted.

Finnemore v Hyde, 2021 ONSC 19

The plaintiff was injured in a motor vehicle accident. He took early retirement under his union pension plan, and began receiving benefits at age 58 (rather than 65). The plan entitled a person of age 55 or older to take early retirement if he or she became totally and permanent disabled. The defendant asserted that it was permitted to deduct the early pension benefits from the income loss claim. The plaintiff argued that the payments did not fall within the type of deductible benefit contemplated in s. 267 of the Insurance Act. The defendants brought a motion for a determination on deductibility. Justice Nicholson considered that the plaintiff had paid into the pension plan during his working years, and agreed with the plaintiff that the defendants were seeking to deduct payments made from the plaintiff’s own property – his vested pension plan. The court held that the benefits were not deductible, and dismissed the defendant’s motion.

Rolley v. MacDonell, 2019 ONSC 6244

This case involved the cost of future health care services from the plaintiff’s statutory accident benefits (AB) insurer. Justice Corthorn held that the defendant was entitled to an assignment as of the date of the jury verdict, and the plaintiff was entitled to reimbursement from the defendant for the reasonable costs he incurs between the date of the assignment and the date the jury verdict is paid in full to preserve his right to payment of AB. Finally, the plaintiff was required to co-operate with the defendant with any mediation, litigation, or arbitration to recover AB payments.