At its most basic, subrogation is the right to reimbursement. In personal injury matters, subrogation is the mechanism by which you – the injured person – advance claims on behalf of third parties to recover compensation for benefits they have provided, or that they will be providing, to you as a result of your injuries. There are several circumstances in which this arises in personal injury matters.
The most common subrogated claim encountered in personal injury matters is that of OHIP. OHIP’s right to subrogation is conferred by statute. According to section 30 of the Health Insurance Act, R.S.O. 1990, c. H.6, as amended, OHIP is entitled to seek reimbursement for costs incurred or future costs to be incurred to treat your injuries caused by the negligence or wrongdoing of another. Given the broad scope of the provision, OHIP has subrogation claims in most personal injury matters, including slip and falls, dog attacks, sexual assaults, assaults and batteries, boating fatalities, medical malpractice, and product liability matters. Interestingly, you should be aware that, pursuant to section 30(5) of the Health Insurance Act, OHIP is not entitled to advance a subrogated claim for costs incurred or future costs related to injuries sustained in motor vehicle collisions.
In assault and battery matters, it is common practice for victims to simultaneously commence a civil action against the perpetrator and file an application for compensation with the Criminal Injury Compensation Board (CICB). As the CICB process is quicker, you will generally recover compensation first from the CICB before receiving any recovery through the civil action. However, the Compensation for Victims of Crime Act, R.S.O. 1990, c. C.24, as amended, provides that the CICB must be reimbursed from any subsequent recovery you receive as a result of the civil action. Through this mechanism, the CICB is able to provide timely compensation to you in your time of need, while also ensuring that the perpetrator remains fully responsible for all the damages caused.
Another instance where you may need to protect or advance a subrogated claim is in an action involving the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sch. A. as amended. There are certain situations where you may have concurrent rights to advance a civil action and also receive benefits under the WSIB scheme. In circumstances where benefits are received prior to an election to advance a civil action, WSIB will often not commence its own separate action for reimbursement of the benefits paid, but rather, will seek reimbursement by having you advance a subrogated claim on its behalf.
Group Insurance Polices
More complicated subrogated claims arise in group insurance policies, specifically relating to long-term disability benefits (“LTD benefits”). Often these policies contain clauses obliging you to reimburse your LTD provider from any damages subsequently recovered through a civil action. Oftentimes, these group insurance policies are drafted in such a manner that your LTD provider must be reimbursed regardless of how the settlement has been negotiated. For example, if you resolve a civil action and receive damages for pain and suffering only, with no compensation paid for past or future losses of income, your LTD provider will still argue that it is entitled to be reimbursed for all LTD benefits paid to date. Obviously though, the enforceability of such provisions turns on the wording of the provisions, as well as the contract itself.
In addition, it is of paramount importance that you and your lawyer remain mindful of any legislation which may supersede these provisions. For instance, within the context of a motor vehicle collision, any such contractual term establishing a subrogation claim would be contradicted and overruled by the specific provisions set out in the Statutory Accident Benefit Schedule and the Insurance Act, which purport that the accident benefits provider and at-fault driver receive a deduction for LTD benefits paid, not the other way around.
The takeaway is that whenever you, or your lawyer, are contemplating a civil action, the facts must be closely examined and any entities with pending or potential subrogated claims must be identified. If there is a subrogated claim at issue, instructions should be obtained from the subrogated entity at the outset to protect and advance its interests in the civil action, as failing to do so will only lead to detrimental consequences to you and all others involved.
If you have any questions, please do not hesitate to contact me.