Expenses incurred through the medical services plan (MSP) or from a hospital are likely not recoverable in British Columbia

Can a person claim for expenses incurred under the medical services plan (MSP) or expenses paid by a hospital in a claim in British Columbia?  The short answer is probably not.  Section 88 of the Insurance (Vehicle) Act precludes recovery of these expenses in claims involving a motor vehicle accident.  There does not appear to be a statutory right to recovery MSP benefits or hospital expenses.  The jurisprudence in British Columbia indicates that the courts will be unlikely to characterize these expenses as being paid pursuant to private insurance.

Every so often an issue arises in personal injury cases as to whether the services provided by a physician or hospital can be claimed by a plaintiff in a personal injury claim. It is important to identify whether a plaintiff has the legal right, or obligation, to claim for the expense of services they have received, whether in the context of a doctor’s office or a hospital. Such a right or obligation could significantly increase the value of the award provided to a plaintiff and therefore provide an incentive to lawyers working under a contingency fee arrangement to always include such a claim. In addition, if the Plaintiff is legally required to claim for these benefits, they may be deducted from any award of settlement regardless of whether they were recovered in the action.

In British Columbia, there are issues arising under the Medical Services Plan as well as the Hospital Insurance Act, R.S.B.C. 1996, c. 204. With respect to the Medical Services Plan, there does not appear to be a statutory right of subrogation for MSP expenses. The other way that the benefit could be claimed if it was characterized as private insurance. This issue was addressed, in a different context, in Wallace Estate v. Taylor, [1990] B.C.J. No. 2825 (S.C.) (QL), varied [1992] B.C.J. No. 2154 (C.A.) (QL). In Wallace, the plaintiff, an injured elderly citizen of the United States, had claimed special damages reflecting medical-related expenses that were paid for by, or reimbursed by, an American “MediCare” plan and a “Cigna” policy issued under her husband’s employment. The MediCare plan was an American statutory health insurance program under which the plaintiff became entitled to benefits at the age of 65 without having to pay a premium. The trial judge noted, at p. 9, that, “Medicare paid $19,352.28 to or on the Plaintiff’s behalf and it claims a right of subrogation in that amount which claim is advanced by the Plaintiff.” After referring to the then recent decision of the Supreme Court of Canada in Ratych v. Bloomer, the trial judge provided the following comments:

Neither of the Medicare or the Cigna claims involve wages or wage benefits.  Both are in the nature of insurance, that is, their purpose e [sic] harmless the Plaintiff from expenses incurred.  Falling as they do in that category, Ratych does not dictate deduction but it does recognize the principle that the measure of damages should be the Plaintiff’s actual loss.

A well-established exception to that principle is that proceeds of an insurance policy, the premiums for which were paid by a Plaintiff, are not deductible from damages.  Is that exception available to the Plaintiff here to support her claim?  Neither one of the schemes was put in place by the Plaintiff nor did she pay any premiums.  With respect to the significance of the nonpayment of premiums for a policy of insurance McLachlin J. said in Ratych at p. 16:

I also accept that if an employee can establish that he or she directly paid for a policy in the nature of insurance against unemployment, equivalent to a private insurance, he or she may be able to recover the benefits of that policy, although I would leave resolution of this question for another case.

Medicare is a statutory scheme which became available to the Plaintiff when she reached age 65.  As such it does not qualify, in my view, as an exception to the principle.  The amount of $19,352.28 paid by Medicare is deductible.

This part of the decision was not disturbed on appeal and indicates that our court will not allow a claim for expenses paid under MSP benefits to be collected in a tort action.

Finally, with respect to MSP expenses, the case of Semenoff (Committee) v. Kokan, [1991] B.C.J. No. 2674 (C.A.) (QL), is an example of a court “deducting” these expenses because they were not actually incurred to the detriment of the injured plaintiff. In this medical negligence action, the plaintiff tried to claim the amount of $29,135.15 that was paid by the Medical Services Commission for medical services rendered to the plaintiff. The Court noted that the plaintiff was not “under any obligation to the doctors to pay them for their services nor under any initial obligation to the Medical Services Plan to reimburse it for these costs” (at p. 4). The determination of the recoverability of this money was important because if recoverable by the plaintiff then there was a provision at the time in the Regulation to the Medical Service Act that gave the Medical Services Commission a subrogated right of recovery against the tortfeasor. The Court of Appeal relied on three cases dealing with hospital fees in the context of the Hospital Insurance Act, all discussed in the next paragraphs of this paper, and concluded that the plaintiff had not suffered a compensable loss because he was under no obligation to pay the amounts that were incurred for his care. Therefore, the Medical Services Commission would not have a subrogated right of recovery because they were only subrogated to people with a “right of action…”.

In British Columbia, the issue of hospital expenses is more complicated because of legislative intervention.  A right of action for the injured plaintiff, and a right of subrogation for the government, was created in 1950 with s. 34B, which eventually became s. 25 of the Hospital Insurance Act, R.S.B.C. 1996, c. 204. The present section, which has changed minimally since 1950, but which has not been enacted, provides:

25 (1)  If, as a result of the wrongful act or omission of another, a beneficiary suffers personal injuries for which the beneficiary receives hospital services paid for by the government, the beneficiary has the same right to recover the sum paid for the services against the person guilty of the wrongful act or omission as the beneficiary would have had, had the beneficiary been required to pay for the services personally.

(2)  On the beneficiary recovering the sum or part of it under subsection (1), the beneficiary must pay it at once to the minister.

(3)  The minister may order that a commission be paid for money recovered under subsection (1) and the amount of the commission and the conditions under which it may be paid must be in accordance with the rules prescribed by the Lieutenant Governor in Council.

(4)  The government is subrogated to the rights of the beneficiary to recover sums paid for hospital services by the government, and an action may be maintained by the government, either its name or the name of the beneficiary, for the recovery of the sum paid for hospital services as provided in subsection (1).

(5)  It is not a defence to an action brought by the government under subsection (4) that a claim for damages has been adjudicated on unless the claim included a claim for the sum paid for hospital services, and it is not a defence to an action brought by a beneficiary for damages for personal injuries that an action taken by the government under subsection (4) has been adjudicated on.

(6)  No release or settlement of a claim or judgment based on a cause of action for damages for personal injuries in a case where the injured person has received hospital services paid for by the government is binding on the government unless the minister or a person designated by the minister has approved the settlement in writing.

(7)  The Lieutenant Governor in Council may, by regulation, limit or define the circumstances that give rise to a cause of action under this section.

(8)  This section applies to claims for hospital services arising after a day to be set by the Lieutenant Governor in Council.

I will repeat again that this legislation is not in force. Over the last 57 years a date has still not yet been set by the Lieutenant Governor in Council. The legislation is not in force. Other Canadian provinces have provisions in place providing rights of subrogation for the government to recover hospital expenses from tortfeasors. For instance, the cases of Matt (Litigation Guardian of) v. Barber, [2002] O.J. No. 3171 (S.C.J.) (QL) and Scanes v. Dantillo, [2003] O.J. No. 2863 (S.C.J.) (QL) considered the Ontario provisions respecting subrogated actions for hospital expenses and in Foley-Cornish v. Nabors Drilling Ltd., 2007 ABQB 250, [2007] A.J. No. 433 (Q.B.) (QL), the Court considered the subrogation provision in the Hospitals Act, R.S.A. 2000, c. H-12.  The healthcare providers in these jurisdiction will expect to be compensated for the funds that they have paid on behalf of a plaintiff. This can raise issues of conflict, and issues of responsibility for payment of contingency fees.

One of the first cases to consider this unique position in British Columbia is Flaherty v. Hughes, [1952] 4 D.L.R. 43 (B.C.C.A.) where the injured plaintiff, in a medical negligence action, attempted to claim for $429 paid by the Vancouver General Hospital for services provided to him. At the time, everyone in British Columbia was required to pay a premium for hospital coverage. The Court of Appeal referred to the case of Schaeffer v. Mish, [1950] 4 D.L.R. 648 (Sask. C.A.) wherein their Court of Appeal refused to allow the plaintiff to claim for hospital expenses because he had not paid them. A majority of our Court of Appeal relied on the rationale in that case and concluded that the plaintiff was not entitled to claim for the amount incurred in hospital fees. Sloan, C.J.B.C. provided the following comments:

It seems somewhat unjust that the negligence of the defendant should result in an added burden being placed upon the Hospital Insurance Fund and that he should thus escape the full consequences of his fault. But that is a matter of legislative intervention as contemplated by s. 34B [enacted 1950, c. 29, s. 27] of the said Act, not yet in force.

A similar conclusion was reached in Wipfli v. Britten (1985), 56 B.C.L.R. 273 (C.A.) in the context of a future care award, and in Heltman v. Western Canadian Greyhound Lines Ltd. (1996), 57 W.W.R. 449 (B.C.C.A.).

It is the understanding of these writers that the delay in respect of s. 25 of our Hospital Insurance Act is due, in large part, to an understanding between certain insurers and the Ministry of Health. This written statement, often referred to as the “Gentlemen’s Agreement”, outlines the understanding between certain insurers and the government that in exchange for avoiding the situation envisioned in the other provinces and in s. 25 of the Hospital Insurance Act, the insurers will compensate the government for certain expenses. For instance, in situations where an award does not exhaust the policy limits, the insurer will compensate the government for hospital expenses up to the amount of their policy limits.

It is clear that s. 25(1) of our Hospital Insurance Act, if it comes into force as contemplated in s. 25(8), would make the hospital expenses recoverable as part of the injured person’s tort claim for the benefit of the government. Further, aside from the issue of whether the private insurance exception would apply, the fact that a right of subrogation is given to the government would seem to preclude a deduction of the amount of publicly-funded hospital expenses.

In British Columbia, in an action involving a motor vehicle accident, the benefits are not claimable. Section 88(6) of the Insurance (Vehicle) Act specifically states that these benefits are not claimable from the Insurance Corporation of British Columbia.