What are collateral benefits? If I have any, how will they affect my tort award?

Collateral benefits are explained and it is shown how they can affect your tort and accident benefits claims

Collateral benefits include private health benefits or disability insurance or benefits. Depending on the type of benefit, the defendant may be entitled to a setoff or deduction for the amount of the collateral benefit.

Collateral Source Benefits

Nature Function Deductibility
CPP Disability Benefits
  • Federal government program
  • Monthly payments to supplement income for people who are unable to work because of their injury
  • Whether the lawsuit is a tort claim or for accident benefits, the defendant is entitled to a setoff of these benefits
ODSP Disability Benefits
  • Provincial government program
  • Includes monthly payments and may include special meal allowances, prescription medication costs and transportation expenses
  • Whether the lawsuit is a tort claim or for accident benefits, the defendant will usually not be entitled to a setoff of these benefits*
Short (STD) and Long-Term (LTD) Disability Benefits**
  • Contract with insurer
  • Note: because these benefits are contractual, they need to be reviewed on a case-by-case basis
  • Includes an income continuation benefit if the individual becomes disabled and meets the eligibility criteria of the policy
  • Whether the lawsuit is a tort claim or for accident benefits, the defendant is entitled to a setoff of these benefits
Statutory Accident Benefits
  • Contract with insurer or, if there is a dispute, a court claim
  • Cover expenses required to treat or replace income of injured person
  • The tort insurer is entitled to a setoff of these benefits

* There are two reasons for this. First, section 52 of the ODSP Act, 1997, as amended, provides that the ministry responsible for implementing the ODSP program is ‘subrogated’ to the rights of the injured person to pursue recovery of benefits paid out; this means that the tortfeasor is responsible for paying the ODSP office back for benefits paid out to the injured person as a result of the injury. Second, ODSP is a means-based program and, because there is no guarantee that the injured person will continue to satisfy the means test, the defendant cannot claim the benefit of future ODSP payments.

** There are four unique issues for STD/LTD benefits. The first is: Who is the defendant? The defendant is either the insurer or employer: If the policy states that the insurer is responsible for paying benefits, the defendant is the insurer; if it states that the insurer is responsible for ‘administering’ the policy, but the employer is responsible for paying benefits, the employer is the defendant. The second is: What is the limitation period? The limitation period is set out in the individual’s specific policy. The third is: Are LTD benefits taxable? Some are, and so you should consult your accountant or tax lawyer for advice on the tax implications of a LTD benefit settlement before entering into one. The fourth is: Can a lawyer represent you? If you are a unionized employee, and there is a collective bargaining agreement that stipulates that this dispute falls within its scope, it is not uncommon for there also to be a provision that you irrevocably appoint the union as your sole representative.