Long-term disability benefits decision ‘changes the landscape’

A recent decision against the double recovery of disability benefits from the public purse marks a shift away from a principle that allows exceptions for people with private insurance, says Ottawa personal injury lawyer Najma Rashid.

Rashid, a partner with Howard Yegendorf & Associates, says there has been a recent focus on the legal principle of double recovery, which is generally prohibited. The idea is to discourage someone who has been injured from getting payouts from both their insurer for the losses they suffered, as well as the party found to be responsible for that loss.

But there is an exception for those with private insurance.

“This is a novel case. It’s a departure from these principles,” Rashid.

In Mazzucco et. al. v Herer et. Al, Justice Antonio Skarica of the Ontario Superior Court of Justice instructed the jury to deduct long-term disability payments the plaintiff had been receiving through her job from any income loss award in her medical malpractice claim.

“The private insurance exception in regards to compensation for loss of income applies where you’re getting compensation for loss of income and you’re also receiving some kind of income indemnity payments from another insurance company but you’ve actually paid for the benefits,” explains Rashid.

“The private insurance exception says that that would be an exception to the principle against double recovery where you actually paid for that supplemental insurance.”

But in this case, the judge was concerned that the taxpayer would be on the hook for both payments, Rashid observes.

The judge declared that “the Supreme Court of Canada has signaled that a new era has begun regarding the private insurance exception.”

The plaintiff’s long-term disability was provided through her collective agreement with a school board, a public entity.

And her claim was against a hospital, also funded by taxpayers.

The plaintiff sued Women’s College Hospital and several doctors after she suffered a stroke not long after giving birth to her second child, according to the decision. She was unable to return to work after the stroke and collected long-term disability payments during the decade following the stroke.

“The result is that (the plaintiff) is in reality getting double recovery from agencies funded by the Ontario taxpayer. It is reasonable for Ms. Mazzucco to be compensated for her wage loss. For her to receive double recovery from the public purse, which in many respects is already overburdened, is not,” the judge declared.

“It’s definitely a novel decision and it might show that the courts are shifting in their approach toward these two principles,” she says. “It is surprising. The judge was very much influenced by policy considerations and the fact that both the defendant and the employer were funded by the public purse.

“It changes the landscape a little bit.”

The private insurance exception for long-term disability benefits has become an area of interest for the courts and needs to be examined by lawyers in these types of situations, says Rashid.

“It’s something we must examine carefully to see if this exception will apply,” she says.