In the recent decision D’Ettorre v. Coachman Insurance Co., 2012 ONSC 3613, the Ontario Superior Court of Justice on judicial review concluded that an assignment of a plaintiff’s Statutory Accident Benefits as part of a settlement of a tort claim was impermissible at law.
Mr. D’Ettorree was injured in a motor vehicle accident on November 7, 2001 when a tractor trailor collided with his pick-up truck. Coachman Insurance Company (“Coachman”) insured Mr. D’Ettorree, and The Nordic Insurance Company of Canada (“The Nordic”) insured the tractor-trailor. Mr. D’Ettorree applied for and received income replacement benefits from Coachman until it ceased payment of the benefits in 2005. After mediation attempts failed, Mr. D’Ettorre applied for an arbitration for the reinstatement of his benefits. Mr. D’Ettorre also started a third party tort claim against The Nordic’s insureds.
On August 22, 2008, Mr. D’Ettorre settled his tort action with The Nordic. The release and minutes of settlement included an assignment to The Nordic for the entirety of the plaintiff’s unclaimed accident benefits against Coachman. Due to the presence of a minor plaintiff, The Nordic received a consent judgment by the court that approved and repeated the terms of the settlement and the assignment.
As a result of the assignment, The Nordic took Mr. D’Ettorre’s place at the arbitration. Coachman objected to the arrangement stating that the Statutory Accident Benefits Schedule (“SABS”) only allowed an assignment of accident benefits following a trial. This argument was based on section 65(1) of the SABS which makes the assignment of a statutory accident benefit void except where the assignment is under section 267.8 of the Insurance Act.
Section 267.8(12) of the Insurance Act states,
The court that heard and determined the action for loss or damage from bodily injury…may order that…subject to any conditions the court considers just…
(a) the plaintiff who recovered damages in the action assign to the defendants or the defendants’ insurers all rights in respect of all payments to which the plaintiff who recovered damages is entitled in respect of the incident after the trial of the action…
The arbitrator determined that the assignment in the consent order was valid. Coachman appealed the arbitrator’s decision arguing that the assignment was not valid because there had not been a “hearing or determination” by way of a trial. The Delegate of the Financial Services Commission’s director overruled the arbitrator’s decision as there was no case law to support a finding that a consent motion is synonymous with a trial. Mr. D’Ettorre and The Nordic sought judicial review of the Delegate’s decision to the Superior Court of Justice.
A panel of three justices unanimously agreed with the Delegate’s decision. The Court concluded that the SABS required a judicial determination and that the approval of a consent judgment was not a judicial determination. In order for an assignment to be valid, if there has not been a trial, a defendant’s tort insurer must seek the court’s guidance through an assessment of damages which may alter the proposed settlement, possibly at the detriment of the defendant’s insurer.
Tort insurers now have to recognize that when settling a tort claim, the plaintiff’s right to future accident benefits cannot be assigned to the tort insurer. Only after an assessment of damages, or a trial can such an assignment be made. The better strategy may be to negotiate a deal whereby the plaintiff is allowed to “keep” her accident benefits, in exchange for concessions on future damages.