ICBC now can deduct potential benefits from any future care awards, while previously, deductions from future care due to coverage rarely occurred
Section 83 and 84 of the Insurance (Vehicle) Act were amended by Bill 20. These amendments apply to accidents on or after May 17, 2018 and allow a wide range of other potential coverages to be deductible from a tort claim by making ICBC a “secondary” payee. That is, all other available funding sources are considered first loss payees so that ICBC only pays if there is no other funding source.
The types of plans that ICBC becomes a secondary payee to include private insurance plans, Employment Insurance payments, government benefit plans and work-related benefit plans. For plans through your employment, the payments are factored into ICBC’s obligations to pay regardless of whether the administrator of the work plan frames the payment as a loan or advance on the plan.
Even more troubling is the fact that damages that ICBC would normally pay out are now deductible from the tort claim if the benefits were “paid or payable”. This means you cannot elect to go with ICBC and ignore your other benefit plans as ICBC can still deduct the payments you were entitled to receive from that plan even though you never received the actual payments. This means you need to take all steps possible to access all funding sources available to you.
If that isn’t enough, ICBC now can deduct potential Part VII benefits from any future care awards. In the past, deduction from future care due to the prospect of Part VII future coverage rarely occurred because we all know that ICBC may well cut a person off benefits for no reason at all. Now, however, the Court may not consider the likelihood that the benefits will be paid in the future by ICBC.
The one silver lining is that MSP payments and Workers Compensation Act payments are excluded so ICBC cannot deduct those payments from the tort claim.
The amendments also eliminate the subrogation rights of extended health benefits providers from claiming any repayment from the at-fault party following an accident. Subrogation is the right of a private insurer to recover payments made to the claimant under the policy of insurance in the situation where the payments are the result of an at-fault third party. This right, before the introduction of the No-fault scheme, existed because of years of case law and because the private insurance policies often contains contractual provisions that require the claimant to pursue a subrogation claim on behalf of the private insurer against ICBC.
Since the legislation was introduced, the private insurers have not “rolled over” but have been trying to find a “loophole” so they can continue receiving reimbursement either from ICBC or from the claimant. The original attempt to find a “loophole” was by having the claimants sign loan or advance payment agreements, but the Regulations passed in November 2018 closed that door and made loans and advance payments deductible from the tort claim. The next attempt is to write into the contract of insurance that no benefits will not be payable should the payments arise from injuries caused by an at-fault third party. The outcome of this change is that the claimant no longer is entitled to insurance benefits despite paying insurance premiums to maintain the plan.
There are some insurance companies that are going as far as to have claimants sign subrogation agreements, loan agreements or advance payment agreements so that if ICBC does not reimburse the claimant for the medical and/or wage loss benefits, the claimant still needs to pay back the full amount of the benefits. This means the claimant must dip into other heads of damages such as pain and suffering. If the claim has been capped at $5,500 for pain and suffering damages because it is a “minor injury”, and the insurance payments are significant, the claimant will receive very little in terms of compensation for his/her injuries and in some scenarios, will have to pay out-of-pocket.
To further illustrate the unfairness of the legislation to the injured victim, consider these scenarios. The first scenario is a claimant electing to use the insurance plan may have to repay the full amount of the benefits to the insurance company even though he/she did not recover the amount from ICBC. The second scenario is that the claimant decides not to use the insurance plan but ICBC takes the view the benefits that were “payable” are still deductible, so the claimant gets a reduced settlement despite never receiving money from the insurance company. Either way, it is the claimant that suffers economically and puts the claimant into a worse position than another claimant who has no private insurance plan to access.
ICBC may also look to deduct private insurance payment from a future care award as it is certainly open to ICBC to claim a deduction for private benefits payable in the future. One would expect the Court to give little weight to this ICBC argument as there are no guarantees the insurance coverages would continue uninterrupted.
In summary, the new legislation has given ICBC new powers to deduct other source payments from the tort claim, whether paid or not. The loser in the process is the injured victim because many insurance companies are still looking for reimbursement of their benefits paid regardless of whether the claimant can recover the payments from ICBC.