If I am paid wage indemnity benefits from my benefit provider, will I have to pay them back when I am compensated for pain and suffering due to a human rights violation or injury? What if my plan is set up as a trust, and the terms of repayment are clear – that I have to repay any monies received through a legally enforceable cause of action?
In a decision released earlier this year(Gordienko v. Palm, 2017 BCSC 938), the court commented on the interaction of benefit plans and whether they should be re-payable when the insured (the beneficiary of the benefit plan) receives compensation through a lawsuit. The parties here were trustees of the ILWU-Employer Association Health and Benefit Plan (the “Plan”), who sought to recover from the defendant insured (a member of the benefit plan) for disability benefits paid. Over the course of approximately a year, she was paid $36,078.57 in weekly wage indemnity benefits. She subsequently received $35,000.00 in settlement of a proceeding she commenced before the Canadian Human Rights Commission (presumably for wrongful dismissal or some related employment violation). The trustees sought to recover $35,000.00 from her, relying on the Plan’s provisions that “any benefits paid or payable under the Plan will be reduced by any amounts recovered from third parties”. The relevant provisions of the Plan are as follows:
[7] The particular provision relied on by the plaintiffs is also found in s. 4.3(c) under the heading “Benefits Offsets”:
Benefits paid or payable will be reduced by:
…
(c) any monies recovered through a legally enforceable cause of action against another person or corporation…
[8] The plaintiffs also rely on s. 4.9 of the Plan text, which states:
Where a Plan Member (subject to the requirements of Section 3) suffers a Disability as a result of a work related incident covered by Workers’ Compensation, or an injury or sickness for which a third party is, or may be, directly or indirectly, either in whole or in part legally liable, no Extended Health benefits, Weekly Indemnity benefits, Long Term Disability benefits (“Benefits”) are payable under the ILWU-Employer Association Health and Benefit Plan.
At issue was whether or not the $35,000.00 was truly recovered from a third party, since it was paid to the insured by her employers who were part of the Plan. Also at issue was whether or not her wage indemnity benefits should be re-payable from a settlement that was not intended to compensate for lost wages (the settlement was for pain and suffering compensation). Importantly, it was decided that the Plan was established under a trust agreement, and was not a standard policy of insurance. As such, the common law principles of subrogation did not apply. Common law subrogation principles are clear that benefit providers are not subrogated (subrogated is legal jargon meaning entitled to repayment from a settlement or other compensation) until the insured is fully indemnified for their loss.
Mr. Justice Skolrood concluded that employers were third parties despite being part of the Plan, as there was no language to suggest a caveat excluding repayment to the Plain for losses caused by the employer (or anyone part of the Plan). As for the second issue, the wording of the Plan carried the day:
[15] The defendant’s second argument is that the settlement monies she received were designated as compensation for her pain and suffering and that, as such, they should not be offset against the weekly indemnity benefits that were paid for lost wages.
[16] The answer to this argument is found in the broad language of the Benefits Offsets provision which provides that benefits will be reduced by “any monies recovered through a legally enforceable cause of action against another person or corporation” (emphasis added). This provision does not stipulate that the monies recovered from a third party must correlate to the type of benefits paid, which in this case again were for lost wages, in order for the benefit offset to apply.
[17] I am satisfied that any money recovered from a third party must relate to the same incident or event that caused or contributed to the disability for which benefits were paid. That is the case here in that the weekly indemnity benefits were paid in respect to wages lost while the defendant was away from work due to depression resulting from workplace issues. Those same issues were the subject of her complaints to the Canadian Human Rights Tribunal and of her resulting settlement.
[18] In the circumstances, I find that the settlement monies fall within the Benefits Offsets provision.
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