One of the fundamental principles underlying the workers’ compensation system is the historic trade-off: workers lose their ability to sue parties participating in the scheme but become entitled to compensation independent of fault or the ability of a party to compensate them. This trade-off is reflected in sections 26 through 31 of the Workplace Safety and Insurance Act, 1997 (WSIA).
Subsection 28(1) of the WSIA provides that a worker employed by a Schedule 1 employer may not commence an action against any Schedule 1 employer or a director, executive officer or worker employed by any Schedule 1 employer subject to certain exceptions. Accordingly, the WSIA extinguishes certain rights of action, but not all rights of action, that a worker may have when injured in the course of employment.
The Workplace Safety and Insurance Appeals Tribunal (WSIAT) has exclusive jurisdiction to determine whether, because of the WSIA, the right to commence an action is taken away, whether the amount that a person may be liable to pay in an action is limited by the WSIA or whether an individual is entitled to claim benefits under the WSIA. Parties to an action or an insurer from whom statutory accident benefits are claimed may file a Right to Sue Application with the WSIAT for a determination of these issues.
Under subsection 30(2) of the WSIA, a worker who is entitled to benefits under the insurance plan and is also entitled to commence an action against a third party in respect of the injury is required to choose to either elect to claim benefits or commence an action. In the case of motor vehicle accidents, when a worker elects to commence an action instead of claiming benefits under the WSIA, the individual may be entitled to claim benefits under the Statutory Accident Benefits Schedule (SABS). The interaction between the WSIA and the SABS is a discrete area of the Right to Sue Application jurisprudence.
The SABS provides that a Statutory Accident Benefits insurer is not required to pay benefits in respect of an insured person who is entitled to receive benefits under a workers’ compensation law or plan. Accordingly, insurers from whom Statutory Accident Benefits are claimed can bring a Right to Sue Application to the Tribunal for a determination that an individual is entitled to claim benefits under the WSIA, thereby relieving them of their obligation to pay Statutory Accident Benefits. The reasons why an insurer would bring a Right to Sue Application were succinctly summarized in WSIAT Decision No. 897/09:
The reason that the applicant [insurer] seeks this declaration is that under the Insurance Act and Regulations, an insurer is not required to pay statutory accident benefits to a person who “is entitled to receive benefits under any workers’ compensation law or plan.” Thus, the applicant seeks a declaration under section 31(1)(c) in order to be relieved of its obligation to pay statutory accident benefits to the respondent. Further, if the applicant is successful in its application, the respondent may be entitled to pursue his claim with the Board, and if the respondent obtains benefits from the Board, then the applicant would be entitled to be restitution pursuant to the assignment of benefits executed by the respondent. (para 7)
In accordance with section 61 of the SABS, when an insured person elects to bring an action, thereby opting out of WSIA benefits, they are entitled to Statutory Accident Benefits provided that their election “is not made primarily for the purpose of claiming benefits under SABS.” This is to avoid a situation in which an individual elects to commence an action for the sole purpose of circumventing the workers’ compensation scheme and accessing Statutory Accident Benefits.
The question of what constitutes “an action not made primarily for the purposes of claiming benefits under the SABS” was recently considered in a decision of the Ontario Divisional Court in S.H. v Northbridge Personal Insurance Corp., 2018 ONSC 1801 (S.H. v Northbridge).
S.H. v Northbridge arose as a result of a single motor vehicle accident which occurred on July 12, 2013 in Newfoundland. S.H. and H.S. were co-drivers of a transport truck. At the time of the accident, H.S. was driving and S.H. was asleep in the bunk of the truck. It was alleged that H.S. swerved to avoid hitting a moose on the highway and lost control of the vehicle. Both S.H. and H.S. were severely injured as a result of the accident.
Because S.H. and H.S. were Ontario workers, they had the option to claim benefits under the WSIA or elect to sue a third party outside the workers’ compensation scheme for their injures. They elected to join a certified class action underway in Newfoundland which alleged that the province failed to control the moose population resulting in motor vehicle accidents. Subsequent to their election, S.H. and H.S. applied to the insurer, Northbridge Personal Insurance Corp. (Northbridge), for Statutory Accident Benefits.
Northbridge paid Statutory Accident benefits to S.H. and H.S. The class action in Newfoundland was eventually dismissed at which time Northbridge took the position that S.H. and H.S. were no longer entitled to Statutory Accident Benefits.
S.H. and H.S. brought an application before the Ontario License Appeal Tribunal (LAT) for a determination that Northbridge was required to continue paying them Statutory Accident Benefits. The LAT granted the applications and found that S.H. and H.S. had not made their election for the primary purpose of claiming Statutory Accident Benefits. Therefore, they met the requirements prescribed in the SABS. Northbridge appealed the LAT’s decision to the Divisional Court.
Before the Divisional Court, Northbridge argued that the LAT erred in law by holding that the applicable test was whether the election was reasonable, rather than whether the election was bona fide and not for the primary purpose of obtaining Statutory Accident Benefits. Northbridge also asserted that the LAT erred by holding that the ultimate dismissal of the class action was not a factor to be considered in the determination.
In dismissing the appeal, the Divisional Court noted the legal test that had been articulated in Hayward v Royal & Sunalliance Insurance Co. of Canada: “the practical effect of the specific wording of the provision is to require the applicant to demonstrate that he brought the action in good faith for a primary purpose other than the purpose of claiming benefits under the SABS regulation, that is, that he had a bona fide claim…”. The LAT Adjudicator had decided that the focus of the scheme was the good faith of the election at the time it was made, not at some future date. The Divisional Court agreed.
The Divisional Court accepted that later events, such as the dismissal of the class action, may provide relevant evidence for the determination of the purpose of the election at the time the election is made but held that the facts in this case were different in that there was considerable evidence about the class action, already underway and certified, and the steps taken by S.H. and H.S. to join into that class action in a timely way. The Divisional Court found that a finding of bad faith does not ensue because the action was ultimately unsuccessful.
The decision of the Divisional Court in S.H. v Northbridge is interesting because it suggests that even if an individual elects to commence an action and is unsuccessful in the action, the election may not run contrary to the SABS if there is sufficient evidence to show that the election was made in good faith at the time it was made. Theoretically, this could stand even if the individual were to agree to a dismissal of the action on a without-costs basis. The decision also suggests that the timing and circumstances surrounding the election under the WSIA can factor into the analysis.
About the author
Kayla Seyler is a lawyer in the Tribunal Counsel Office (TCO) of the Workplace Safety and Insurance Appeals Tribunal.
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