Ira Marcovitch, Summer Law Student
Almost a year ago, I wrote a blog on Henry v. Gore Mutual, a decision of the Ontario Court of Appeal which provided for a broad and generous interpretation of the Statutory Accident Benefits Schedule (“SABS”), in situations where family members stay home from work to provide attendant care to injured family members. But, as George Harrison once astutely noted, all things must pass.
This past February, the Ontario government passed Regulation 347/13, an inconspicuously named piece of legislation, which effectively negated the Court’s holding in Henry and significantly constrained the abilities of loved ones who forgo work to take care of injured relatives to be compensated. Pursuant to s.3 of the SABS, a provider of attendant care must show that they sustained an economic loss in providing the services before an insurer is obligated to pay such benefits. For family members, the economic loss usually manifested as salaries foregone to stay home to care for their family members. In Henry, the Court of Appeal held that once any economic loss was demonstrated, the insurer was obligated to pay all reasonable and necessary expenses according to the needs of the insured, notwithstanding that the costs may well exceed the salary the loved one forwent to stay home. For instance, if an injured person required $6,000 per month in attendant care, but their spouse who left work to care for them only made $3,000 per month, the insurer would nonetheless be required to pay the full $6,000.
However the passage of Regulation 347/13 overruled Henry and in doing so, seriously constrained the ability of family members to receive adequate compensation when they forgo routine employment to care for an injured loved one. Essentially, Regulation 347/13 refocuses the determination of benefits payable from the amount needed by the insured to maintain themselves, to the earning potential of the care provider. It limits the amount claimable to the amount of economic loss sustained, i.e. the foregone salary. So, in the above example, the insurer would only be obligated to pay the $3,000 that the spouse forwent at work, in spite of the injured person being assessed as needing $6,000 worth of care.
While the regulation may have a positive effect on stabilizing insurance premiums, Regulation 347/13 will severely impact the economic viability of having loved ones forgo employment to take care of injured family members. Firstly, the new regulation provides a strong disincentive for family members to take time off work to take care of loved ones. This is only compounded in situations where the caretaker would make more at work than would be recoverable under the SABS. As well, the regulation is discriminatory in its treatment of care takers of different economic means. For instance, if two persons take time off work to care for their spouses, and their spouses suffered the same injuries and required the same level of attendant care, the person who forewent their minimum-wage employment would be entitled to significantly less than the person who forwent a large executive salary. Further, though the Regulation now uses earning capacity as the litmus for determining benefit amounts, it fails to take account of the economic realities of employment. For instance, the regulation fails to take account of any overtime earning potential, professional advancement opportunities, or salary increases that may have accrued in the period that the caretaker took off from work.
While only time will tell what the effects of Regulation 347/13 will be, it is clear that family members faced with the prospect of caring for an injured loved one will now have more to take account of when making their decision.
For more information on this topic or any other topics related to SABS, Accident Benefits, etc., please contact our Personal Injury law group at Devry Smith Frank LLP.