As the height of the COVID-19 pandemic comes to an end, the novel question of how COVID relief payments may be deducted in tort income loss claims and in accident benefit income replacement claims remains to be determined.
Federal COVID-19 Relief Programs
By way of overview, in response to the COVID-19 pandemic, the Federal Government introduced the Canada Emergency Response Benefit (“CERB”).[1] CERB officially ended on December 2, 2020 and individuals can no longer apply for this benefit.[2]
CERB was replaced with the following benefit programs:
- Canada Recovery Benefit (“CRB”);
- Canada Recovery Sickness Benefit (“CRSB”); and
- Canada Recovery Caregiving Benefit (“CRCB”).
The legislative authority for CERB and its successors comes from the Canada Emergency Response Benefit Act.[3]
Accident Benefits
Following a motor vehicle accident, a claimant may be eligible for Income Replacement Benefits (“IRBs”) under the Statutory Accident Benefits Schedule (“SABS”).[4]
Pursuant to the SABS, insurers are permitted to deduct 70% of any gross employment income received by a claimant during the period in which they are eligible to receive IRBs.[5] Gross employment income is defined in s. 4(1) of the SABS.[6]
Under s. 47 of the SABS, insurers are permitted to deduct any temporary disability benefits received by the claimant during the period in which they are eligible for IRBs. Temporary disability benefits is defined in s. 47 (3) and excludes EI benefits.[7]
Foster v. Aviva General Insurance Co. 2021 CarswellOnt 16958 was a reconsideration decision regarding whether CERB is deductible from IRB payment. In this case, Foster did not receive CERB as a result of being employed after the accident.
At first instance, Adjudicator Ferguson concluded that CERB was deductible from IRBs as it was akin to other renumeration from employment and since it was considered “gross employment income” as defined under s.4(1) of the SABS.
In his reconsideration decision, Vice-Chair Jesse Boyce held that CRB/CERB is not deductible from IRBs on the following basis:
- Adjudicator Ferguson incorrectly classified CERB as gross employment income and other renumeration from employment;
- CERB is not akin to EI as it is not paid under the Employment Insurance Act, but rather under the Canada Emergency Response Benefit Act;
- Being employed is not a prerequisite to receiving CERB and the applicant did not receive same as a result of being employed after the accident, meaning that CERB cannot be deducted from IRB under s.7(3)
Vice Chair Boyce held:
[10] The adjudicator incorrectly focused on the definition of “gross employment income” in s. 4(1) of the Schedule to conclude that CRB/CERB is deductible from IRBs pursuant to s. 7(3)(a) as “other remuneration from employment.” Whereas IRBs are directly connected to, and calculated with respect to, an insured’s pre-accident earnings, CERB is not calculated with reference to income from employment. Indeed, everyone who is eligible receives the same amount without reference to the amount of income they earned pre-pandemic. As CRB/CERB eligibility is not tied to employment status, it follows that it cannot be considered “gross employment income” under s. 4(1) because it is not analogous to “salary, wages and other remuneration from employment”, as the adjudicator determined. In turn, as CRB/CERB is not considered “gross employment income”, it cannot be deducted from an IRB under s. 7(3)(a).
Tort Claims
The overarching goal of the tort system is to restore the plaintiff back to the position they were in, had their accident not occurred.[8] The legislation therefore allows for deductions to prevent double recovery for plaintiffs. By contrast, COVID-19 relief payments are designed to support individuals who are experiencing job loss because of COVID-19. The risk of double recovery for a plaintiff would be small given the specific and time limited relief that is provided through these COVID-19 benefits.
Sections 267(1) and 267.8(1) of the Insurance Act contemplate deductions for damage awards in tort claims that arise out of the use and operation of a motor vehicle. [9] CERB and its successors (CRB, CRSB and CRCB) are received as a result of being unemployed for reasons directly related to COVID-19. A plain reading of sections 267(1) and 267.8(1) of the Insurance Act would suggest that the CERB payments may not be deductible in a tort action because they are not received by virtue of the use or operation of an automobile.
Income loss and loss of earning capacity in section 267.8(1) of the Insurance Act states that a plaintiff’s damage award is reduced by the following amounts:
- All statutory accident benefits payments received before trial;
- All payments that were available before the trial under the laws of any jurisdiction or under an income continuation benefit plan; and
- All payments made under the plaintiff’s employment sick leave plan.[10]
To date, there have not been any judicial decisions on the deductibility of CERB, CRB, from a tort claim. It would appear as though CERB, CRB would not be deductible from a tort loss of income claim, as it does not fall under the categories listed in s.267.8(1) of the Insurance Act.
Conclusion
The intention of COVID relief benefits was to support Canadians during incredibly tumultuous and trying times. To date, neither the Insurance Act nor the SABS have been amended to address COVID-19 relief payments. In the absence of legislative authority, and limited judicial authority, it will be interesting to see how these benefits are treated.
If you have questions about your tort loss of income claim, or accident benefits income replacement benefit claim, please do not hesitate to contact our personal injury lawyers today. Bogoroch & Associates LLP would be pleased to set up a free consultation.
[1] For a description of CERB and eligibility requirements see https://www.canada.ca/en/services/benefits/ei/cerb-application.html.
[2] https://www.canada.ca/en/services/benefits/covid19-emergency-benefits.html
[3] Canada Emergency Response Benefit Act, S.C. 2020, c. 5, s. 8.
[4] O. Reg. 34/10, s. 5 (1).
[5] Insurers are also permitted to deduct 70% of any income from self-employment received by a claimant during the period they are eligible to received IRBs per Insurance Act, R.S.O. 1990, c 1.8, s 7(3)(a)(b).
[6] O. Reg. 34/10, s. 4 (1).
[7] O. Reg. 34/10, s. 47 (3).
[8] Cooper v Miller [1994] 1 SCR 359, at para 76, [1994] SCJ No. 19.
[9]Insurance Act, R.S.O. 1990, c 1.8, ss 267(1) and 267.8(1).
[10] Ibid at s 267.8(1).
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