On December 4, 2018, a five judge panel of the Ontario Court of Appeal delivered a decision relating to innocent victims of motor vehicle accidents. The court ruled that the no-fault accident benefits should “be deducted from tort damages using a silo approach rather than a strict matching (“apples-to-apples”) approach”, which had been used previously under an earlier version of the Insurance Act. This meant that $700,000 that the jury awarded to cover the cost of an Acquired Brain Injury (ABI) support worker was reduced by a portion of an earlier accident benefit settlement meant to cover future attendant care expenses, even though the parties agreed that it was really a medical and rehabilitation expense.
Two different methods of deducting statutory accident benefits from tort awards have developed in Ontario. One approach requires matching accident benefits with like heads of tort damages; apples-to-apples. More recently, following a change in wording in the Insurance Act, a silo approach has been applied by some courts. The silo approach requires the tort award only to match generally with the broad corresponding accident benefit categories in order for there to be a deduction.
The silos include three wide-ranging categories:
- Income replacement benefits. If the injured person was not employed at the time of the accident, non-earner benefits or caregiver benefits apply.
- Health care benefits, including medical, rehabilitation and attendant care benefits.
- Other non-pecuniary losses, such as visitors’ expenses, educational benefits, and housekeeping and home maintenance expenses.
The appeal involved a case in which two pedestrians “were involved in an altercation at or near the shoulder of a road”. One pushed the other towards the road, causing him to stumble into the path of a truck. The injured party suffered severe brain damage.
The injured pedestrian received accident benefits from his own insurance company and started a lawsuit against the other pedestrian and the driver of the truck that struck him. He entered into a settlement of his accident benefits for $900,000, including $300,000 for past and future income replacement benefits, $250,000 for past and future medical benefits and $350,000 for past and future attendant care benefits.
After a trial, the jury awarded the injured pedestrian $2,300,000. This included money for past and future loss of income, and the cost of future care, including $700,000 for the ABI support worker. The jury made no award for the costs of future attendant care. The trial judge found that the jury award for the support worker was a medical/rehabilitation award and not an attendant care award.
Under the “apples-to-apples”, strict-matching approach, $700,000 for the ABI support worker would only be reduced by the portion of the accident benefits settlement identified for medical and rehabilitation benefits and not the portion for attendant care. Under the “silo” approach, both the health care benefits and attendant care benefits are in the silo of health care and deducted from the damages awarded for future care costs. The combined deduction would reduce the award for the ABI support worker to $100,000.
The trial judge adopted the “silo” approach and the injured pedestrian appealed. At the Court of Appeal he argued that any approach other than “apples-to-apples” would under-compensate plaintiffs and “unjustly enrich” defendants. The appeal court disagreed with this argument, citing changes in the Insurance Act wording: “We do not accept these submissions. … the evolution of the treatment of accident benefits in the case law has largely failed to take into account the difference between the statutory schemes that have been in place at various times. The policy rationale that supported the strict matching approach under a former statutory scheme is no longer applicable under the current legislative regime.”
In defending its decision, the court said that: “The silo approach is consistent with the statutory language of s. 267.8 [of the Insurance Act], is fair to plaintiffs, defendants and their insurers, and promotes efficiency in motor vehicle accident litigation”.
An award of $700,000 that the jury found he would need for an ABI support worker was reduced by $600,000 because he had entered into a settlement with his accident benefit insurance company that included an amount $250,000 for future med/rehab expenses and $350,000 for future attendant care expenses. Under the “apples-to-apples” approach, his jury award would only have been reduced by the $250,000 they awarded him for future med/rehab expenses.