The recent Superior Court decision of Nemchin v. Green by Corthorn J. is a significant win for auto insurers dealing with the deductibility of collateral benefits from large future loss of income awards. The plaintiff was injured in a motor vehicle accident in 2010. A trial took place in April, 2017. At the time of the trial, the plaintiff continued to receive long-term disability benefits from a third party insurer. At trial the plaintiff was awarded $600,000.00 for future loss of income. This was reduced to $540,000.00 for contributory negligence.
After the trial, two issues arose. First, the defendant sought an assignment of the plaintiff’s ongoing long term disability benefits pursuant to section 267.8(12(a)(ii), of the Insurance Act. Second, despite the finding in the recent El-Khodr and Cobb decisions, the plaintiff sought to have the judge use her discretion to alter the pre-judgment interest rate from 1.3% to 3.5%.
Regarding the assignment, the plaintiff opposed the defendant’s request because she argued it was not possible to match the $540,000.00 lump sum temporally to the ongoing disability benefits. She pointed out that the defendant opposed a jury question requiring the jury to break down any future payments by annual loss and duration. The defendant argued that the statutory provision or case law did not require “temporal matching”. Corthorn J. noted that the law in this area remained unsettled and the Court of Appeal was assembling a five member panel to hear Cadieux v. Saywall, 2016 ONC 7604, where they were expected to address the deduction of collateral benefits. However, the parties required finality in this matter and so she rendered her decision.
Corthorn J. granted the defendant an assignment until the plaintiff turned age 65 (when her LTD coverage ceased), or when the $540,000.00 had been fully paid by the LTD insurer. She also found that there was no basis to utilize her discretion to adjust the pre-judgment interest rate from 1.3% to 3.5%.
In her analysis, Corthorn J. confirmed that the burden of proving an assignment fell to the defendant. She addressed four main issues in determining whether the assignment should be granted. First, she found that it was undisputed that the plaintiff was in receipt of LTD benefits at the time of the jury verdict and would remain in receipt for as long as she met the disability test. Second, Corthorn J. agreed with the defendant that there was no requirement for “temporal matching”. Therefore, it fell to the trial judge to determine the duration of the assignment based on the record. Third, she found a global award for future loss of income did not preclude her from deciding the relevant issues. Finally, she found there was no risk the plaintiff would be undercompensated. The defendant is only entitled to an assignment once the plaintiff was paid the $540,000.00. At which point, the plaintiff would be fully compensated for her future loss of income. Relying on the decision of El-Khodr, Corthorn J. found the Court of Appeal’s commentary on the deductibility of Statutory Accident Benefits payments to be applicable.
This decision should be considered a significant success for defendants. It continues a growing trend in the case law where the deductibility of collateral benefits is addressed in a practical and holistic fashion. Overly technical jury questions requiring awards to be matched, year by year for a specific duration will not be required for a defendant to raise a claim for assignment.
See Nemchin v. Green, 2018 ONSC 2185
