If you are fortunate enough to have access to a short-term or long-term disability plan because of the injury suffered in your ICBC accident, generally speaking this is a significant advantage to you. The downside is that ICBC considers the amount of your disability benefits in minimizing the amount of Part VII disability benefits they pay to you because ICBC Part VII benefits are considered secondary insurance. Put another way, the Part VII disability benefits are only paid if you do not have enough other coverage.
The advantage is that the law of Canada has evolved so that it is very favorable to an injured person. In most situations, contrary to what ICBC may tell you, ICBC cannot deduct the disability benefits paid to you when considering settlement on your 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 (“substitution”) 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 from the ICBC claim.
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.
If ICBC is saying they will only pay you the net amount of your wage loss after considering disability benefits then that is a good reason to get a lawyer. The deduction ICBC is claiming would help cover your legal fees.
One of the issues that usually arise when your employer or insurance company pays disability benefits is whether or not your employer or insurance company has a right to get paid back 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 very 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 payment of the 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 have to pay back 100% of the disability benefits if you recover any money from ICBC or another third-party source. This type of agreement is unfair to you because, for example, if you have to 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), which is often the case, why should the employer or insurance company get 100% recovery? If they did receive 100% recovery, you would end up paying money to them out of your settlement which is not part of the money you received from ICBC to compensate you for wage loss during the period you are being paid disability benefits.
It is very important to see a lawyer whenever you are asked to sign a reimbursement agreement by your employer or insurance company. The lawyer will ensure that you do not sign an agreement, which effectively means you are paying more than you are recovering in the ICBC claim. Also, the lawyer will ensure that the employer or insurance company actually has a right to share in the settlement from ICBC.
If you do not want to see a lawyer then at the very least, you should insure that you are only paying back your employer or disability insurer the net amount you are recovering from ICBC for the subrogation claim advanced by the employer or insurance company. In other words, if you received $10,000 in disability benefits but are only recovering $5,000 from ICBC under the subrogation claim, you should only have to pay $5,000 back to your employer or insurance company. Any agreement you sign should specifically state this.
In recent time, Employment Insurance is now claiming a subrogation right as is Victim Services and other government backed programs. They have the statutory right to claim money back from you in many situations.
Of note, TTD benefits paid by ICBC to you under Part VII are deductible.
In summary, disability benefits paid to you are generally not considered in reducing the amount of your settlement with ICBC but they are considered in any payments by ICBC under Part VII benefits. If your insurance company or employer is looking to get paid back any disability benefits paid to you, be very cautious and only agree to paying them the net amount you are receiving from ICBC for the subrogation claim or you will be paying them out of other parts of your settlement.
