An election to proceed with a civil action can void entitlement to workers compensation benefits

Successful appeal by the Insured from a decision of the trial judge finding that he was not entitled to long-term disability (“LTD”) benefits from the Insurer because he had elected to proceed with a civil action.

Richer v. Manulife Financial, [2007] O.J. No. 110, Ontario Court of Appeal, S. Borins, J.C. MacPherson and R.G. Juriansz JJ.A., March 27, 2007

The Insured was an employee of the City of Toronto, which had a contract with the Insurer to provide health and disability benefits to City employees for injuries sustained in the course of their employment. The Insured, a truck driver and loader for the City, was injured in a motor vehicle accident that occurred during the course of his employment. He made a claim for long-term disability benefits from the Insurer, who denied the claim on the ground that the Insured had elected to proceed with a civil action against the other driver, rather than pursue his application for Workplace Safety and Insurance benefits (“WSIB”).

The Insured had brought an action against the Insurer for payment of benefits under the policy, but before trial the Insurer sought a preliminary determination of the Insured’s entitlement to such benefits and the appropriate deductions assuming that entitlement was established. The motions judge held that the Insured was not entitled to receive LTD benefits from the Insurer because of his election to proceed with a civil action.

The Court of Appeal considered the relevant portions of the Insurer’s LTD plan and specifically Article 4, which provided for monthly benefits payable to an employee who was insured under the policy. Article 4 stated that the amount of monthly benefits payable to an employee would be reduced by any payment to which the disabled employee was entitled to under any Workers’ Compensation Act or under the disability benefit provisions of the Canada or Quebec Pension Plan. Article 4 further provided that in order to receive benefits under the Plan, the employee must make an application for any disability benefits for which he or she might be eligible under any Workers’ Compensation Act or comparative legislation or insurance provision, or under the Canada or Quebec Pension Plan. The Insured had made an application for WSIB benefits, but had then elected to proceed with a civil action against the third party driver, leaving his application for benefits outstanding.

The Court of Appeal considered the effect of s. 30 of the Ontario Workers’ Compensation Act, which provided that, depending on the amount of damages obtained by the Insured in the civil action, his application for WSIB benefits might still result in payment of some benefits to him. Accordingly, the Court concluded that the Insured was entitled to receive LTD benefits under the policy having met the condition precedent of making the application for benefits that he might be entitled to.

The Court of Appeal further concluded that the Insurer was entitled to reduce the monthly benefit payable to the Insured under the policy by the amount of any WSIB benefits to which he would have been entitled had he not elected to proceed with the civil action.

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