ICBC is not allowed to deduct disability benefits in situations where you pay all or part of the premiums
On accidents that occurred before May 17, 2018, there is a significant advantage to having access to a disability plan. In most situations, ICBC cannot deduct the disability benefits paid to you when considering settlement on your injury claim. In other words, if your net wage loss is $10,000 and you were paid $5,000 in disability benefits, ICBC does not pay you $5,000. They pay you $10,000.
ICBC is not allowed to deduct disability benefits in situations where you pay all or part of the premiums of the disability insurance plan. Also, if there is a right of subrogation (i.e. request for repayment), on the part of the insurance company, then ICBC cannot deduct the amount of the disability benefit you received from the ICBC claim. Further, if the disability plan you are receiving through your employer is part of an employment package negotiated on behalf of a union or by you, ICBC cannot deduct the disability benefits paid to you.
As you can see, in almost every situation, ICBC will not be able to deduct the disability payments because it’s quite easy to find yourself in one of the three exceptions noted above.
One of the issues that usually arise when your employer or insurance company pays disability benefits is whether your employer or insurance company has a right to be repaid the disability benefits. This is called a “subrogation” claim. Often, the employer or insurance company wants you to sign a reimbursement agreement so that they can get paid back. Before you do so, it’s wise to get some legal advice.
The first question is whether the employer or insurance company has a right to ask for reimbursement. The answer lies in the insurance plan that gives rise to the payment of disability benefits.
The second question is how much should one pay the employer or insurance company back? Often, they want you to sign a reimbursement agreement, which basically says that you must pay back 100% of the disability benefits if you recover any money from ICBC. This type of agreement is unfair to you because, for example, if you must go the litigation route and spend money on legal fees, why should you have to pay back 100% of the disability benefits when you do not receive, in your pocket, 100% recovery in the settlement? In addition, if there is an issue in the ICBC claim that prevents you from recovering 100% of your damages (e.g. liability fight, intervening accident, pre-accident health issue, etc.), why should the employer or insurance company get 100% recovery? If they did get 100% of their payments back, you would end up paying money to them out of other parts of your settlement (e.g. non-pecuniary damages).
Hence, it is very important to understand what you are signing when your employer or insurance company presents a reimbursement agreement to you. You need to ensure that you do not sign an agreement, which effectively means you are paying more than you are recovering in the ICBC claim. In other words, if you received $10,000 in disability benefits but are only recovering $5,000 from ICBC, you should only have to pay $5,000 back to your employer or insurance company. Also, you need to ensure that the employer or insurance company has a right to share in the settlement from ICBC.
Several governments supported programs, such as Employment Insurance and Crime Victim Services, have a right of subrogation attached to them. Often these government agencies do not take an aggressive stance on collections, so the subrogation claim is seldom pursued.
Of note, TTD benefits paid by ICBC to you under Part VII are deductible from the end settlement of the tort/injury claim with ICBC.
The above has all changed for any accidents occurring after May 17, 2018. The new ICBC no-fault scheme requires you to fully pursue all income replacement sources such as private insurance plans, Employment Insurance, CPP and Government disability programs before ICBC pays. The reason being, ICBC can deduct income replacement benefits paid or payable from the tort/injury claim. That is, ICBC can deduct payments you received as well as payments that you should have received if you had taken all the necessary steps to receive the income replacement benefits.
ICBC has specifically legislated away the right of private insurance companies to receive their money back as part of a subrogation claim. In response, the private insurance companies are not taking this new change in legislation sitting down and are still requiring claimants to sign subrogation agreements.
This approach is placing the claimant into a very difficult position. Basically, ICBC does not have to pay any past wage loss that has been or should have been covered by wage replacement benefits, so the claimant will not receive any money in his/her pocket to pay back the private insurance company. However, the private insurance company still wants to get paid back so the claimant is caught in the middle and may end up having to pay money to the private insurance company that he/she never received from ICBC. Clearly, it is the claimant that is the victim of this legal battle between ICBC and the private insurance companies.
The other approach taken by private insurance companies is to deny payment of any benefits on the basis that the policy of insurance excludes payments resulting from the negligence of a liable third-party. In other words, the private insurance companies will pay disability benefits when it’s a non-ICBC claim but not when you have an ICBC claim. This approach seems patently unfair to a person that is paying insurance premiums regularly and now doesn’t have the benefit of the plan when he/she is involved in an ICBC injury claim.
In summary, under the ICBC no-fault scheme, the law is unsettled as it relates to income replacement benefits. Be very careful on signing any subrogation agreement with any private insurance company as the result of the agreement is you may have to pay back money that you never received from ICBC.