How government benefits can affect a loss of income claim

It is a trite principle of law that the purpose of an award of damages is to put you in the same position that you were prior to the motor vehicle accident, at least so far as a monetary award can do. The plaintiff is not entitled to turn an injury into a windfall, or in other words, to receive more than their actual loss. With respect to compensating for injuries, it is often an imprecise measurement. However, where it is a question of actual loss suffered, it is much easier to compensate a plaintiff accordingly. In this vein, a question that needs to be addressed in almost every tort award for a motor vehicle accident is what is the appropriate award for past loss of income? What can be deducted off an award for past loss of income?

This article is intended to address two interesting questions arising out of the above:

1. Can the benefits you receive from the government, your employment, or another form of wage replacement program be deducted from your loss of income claim?
2. Can you be compensated for having to use your sick time to attend medical appointments?

Summary

Summarily, social assistance benefits, including government-provided unemployment insurance, would be deductible from a loss of income claim. As a result of s. 570 of the Insurance Act, RSA 2000, c. l-3. (the “Insurance Act”), the law is unfortunately unclear when it comes to the deductibility of employer-paid benefits.

Earlier jurisprudence appears to indicate that employer-paid benefits are deductible unless the employee has made some form of contribution for them. Notably, evidence of a contribution seems a relatively low threshold to satisfy according to the Supreme Court decision of Cooper v. Miller, 1994 1 SCR 359.

Section 570 of the Insurance Act may reverse this jurisprudence, given that “a prescribed income continuation or replacement plan or scheme” is undefined. However, the lack of clarity appears to suggest that the current jurisprudence will be relied upon to deny the deductibility of employer-paid benefits in most cases where there is some evidence of a contribution made by the employee.

You can undoubtedly receive compensation for a loss of accumulated sick pay benefits incurred as a result of a motor vehicle accident.

Can the benefits you receive from the government, your employment, or another form of wage replacement program be deducted from your loss of income claim?

With respect to this question, the Supreme Court of Canada in B. (M.) v. British Columbia, 2003 SCC 53, has held that social assistance benefits are a form of wage replacement and are to be deducted from a past loss of earnings award. This would appear to include government-provided unemployment insurance.

In Ratych v. Bloomer, 1990 1 SCR 940, a case involving the deductibility of a wage replacement program provided by the employer pursuant to a collective agreement, and which did not result in a loss of future sick credits, the Supreme Court addressed the deductibility of employment insurance benefits. McLachlin, J. held that, generally, wage benefits paid while an individual is unable to work must be deducted from a claim for past loss of earnings. However, there may be an exception to this general rule if evidence can be provided that an individual contributed directly or indirectly to the receipt of the aforementioned employer-paid benefits. In these circumstances, the employment insurance benefits would not be deductible from a past wage loss claim.

In the Supreme Court of Canada decision in Cooper v. Miller, 1994 1 SCR 359, the issue again was whether wage loss payments under an insurance program offered as an employment benefit to unionized employees pursuant to a collective agreement could be deducted off a past wage loss award.

In that decision, Cory J. recognized the inequality of the exception noted herein above, stating that it is unfair that top management and professionals who could purchase their own insurance would have the benefit of the insurance exception, but those who had made financial sacrifices in their compensation to provide for disability benefits would be denied the benefit of the insurance exception. Cory, J. appears to have broadened and clarified the decision of Ratych in what would be considered evidence that the employee paid for the benefit. Cory J. listed the following examples of the type of evidence to meet the requirement that the employee contributed directly or indirectly for the benefit:

1. Evidence that there were trade-offs in the collective bargaining process, which demonstrate that the employee has forgone higher wages or other benefits in return for the disability benefits. In such a case, the employee has paid for the benefits through wages foregone.
2. Evidence of some money foregone by the employee in return for the benefits. For example if the employees gave up the return of a percentage of their Unemployment Insurance Plan premiums in return for the benefits.
3. Evidence of a direct contribution by the employee, in a form such as payroll deductions, in return for the benefits. Such a contribution need not be 100 percent of the premium.
4. Evidence of payments by the employer for the benefits made on behalf of the employee which shows that those payments were part of the employee’s wages, and thus the employee provided work for the employer in order to have the premium paid. For example, if the employer’s contribution is listed on the employee’s pay slip or statement of benefits, it can reasonably be inferred that the contribution is part of the employee’s wage package.

Cory J. further noted that when the employee is not unionized, 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.

Confusingly, Section 570 of the Insurance Act appears to make benefits under a prescribed income continuation or replacement plan or scheme” deductible from automobile accident claims. This provision has received little judicial consideration, other than to note that it is “vague and confusing” (see Hammond v. DeWolfe, 2014 ABCA 81 at para 25), as there is no statutory definition for income continuation or replacement plans. It is unclear how this provision will jive with extant jurisprudence and impact the deductibility of employer-paid benefits in the future.

On the basis of the principles of statutory interpretation and the lack of clarity, it would appear sensible that current jurisprudence will be relied upon to deny the deductibility of employer-paid benefits.

Can you be compensated for having to use your sick time to attend medical appointments?

In the Alberta Court of Queen’s Bench decision in Howes v. Rousta, 2002 ABQB 1052, the plaintiff was injured in a motor vehicle accident in February 1997. As a result of the accident, the plaintiff missed work and time off was deducted from their sick pay benefits. The plaintiff claimed special damages for recovery of accumulated sick pay benefits. The decision mentioned herein above in Ratych was used to compensate the plaintiff for their loss of accumulated sick benefits.