Are Long Term Disability Settlements Deductible From Other Awards?
This post was written by Andrea Girones:
In my experience working here in Ottawa many of my clients have extensive medical benefits including long term disability benefit coverege. They may also have benefits from their accident benefits car insurance company (SABS) and they may also have a claim for lost income from a car accident law suit.
Typically these kinds of court award have a variety of offsetting rules so that there is no double compensation.
Recently we examined the law on whether or not money from a long term disability settlement was deductible from a settlement for income replacement benefits under the Statutory accident benefits system for car insurance in Ontario.
Section 267.8 of the Insurance Act and section 7 of the SABS, respectively, contemplate a reduction for:
- all payments in respect of the incident that the plaintiff has received or that were available for income loss or loss of earning capacity … under an income continuation benefit plan and
- net weekly payments for loss of income that are being received by the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan
Of importance is that many clients do not receive any payments through their LTD insurers as they were denied benefits after submitting their application. Therefore there are no payments in respect of income loss are available given that they were denied payment.
Further, the settlement/monies received are not made under an/any income continuation benefit plan assuming this is confirmed by the full and final release. Typically settlements of an LTD lawsuit are considered at law to be a “compromise” meant to settle address various litigated disputes and NOT pursuant to any contractual obligation.
As a result we were able to successfully argue that our client was able to collect both a settlement from hi accident benefits insurer as well as his long term disability insurer without any offset.
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