Extra-provincial workers’ compensation boards that file subrogated claims in Alberta on behalf of non-residents should be prepared for reduced damage awards, as highlighted by a recent decision from the Alberta Court of Appeal (“ABCA”).
Vujicic v Estate of Leona Donna MacEachern involved a tragic head-on collision near Cochrane, Alta., between Mr. Vujicic and Mr. Rajlic (the “Workers”) and Ms. MacEachern. Ms. MacEachern was killed in the collision and the Workers were seriously injured.
The Workers, who were injured in the course of their employment, were residents of British Columbia. As a result, they chose recovery under the B.C. Workers Compensation Act (“BC WCB Act”) instead of Alberta’s Workers’ Compensation Act (“AB WCB Act”). The Workers’ claim was accepted and WorkSafeBC, B.C.’s compensation board, began providing compensation for a total of $379,500 as of March 2019.
Shortly after accepting the Workers’ claim, WorkSafeBC brought a subrogated action against the MacEachern Estate in Alberta. Vujicic and Rajlic then appealed the decision of the trial judge.
The ABCA confirmed that extra-provincial workers’ compensation boards can bring subrogated claims in Alberta. These claims are subject to the same rights and limitations the workers would have had if they had brought the claim themselves.
Section 570 of the Insurance Act
The appeal focused on the statutory interpretation of section 570 of Alberta’s Insurance Act.
Sections 570(3) and (4)(g) of the Insurance Act state that any award for a specific head of damages must be reduced by any related compensation already received by the claimant under another province’s equivalent to the AB WCB Act.
Section 570(6) states that anyone who assumes liability for a payment covered under section 570(3) does not have a subrogated right of recovery of the insured.
In Vujicic, the ABCA was asked to interpret these sections to determine two issues:
- Whether an extra-provincial workers’ compensation board has the right to step into the shoes of the insured and advance a claim on the insured’s behalf in Alberta; and
- Whether reducing automobile accident awards by the amount already paid to the Workers is appropriate and in accordance with the legislative intent of the section.
Appeal Court’s Decision
The right to step in the shoes of the insured is a statutory right available to WorkSafeBC, the ABCA confirmed.
The Court affirmed the trial judge’s decision, concluding that WorkSafeBC has a statutory right of subrogation pursuant to the BC WCB Act. The application of section 570(6) does not prevent WorkSafeBC from stepping into the shoes of the Workers to commence a claim. However, subrogation does not create rights. Subrogated claims are still subject to the same defences and statutory limitations as claims brought directly by the insured.
Based on this reasoning, the Court ruled that while WorkSafeBC was eligible to step into the shoes of the Workers, the Workers are still subject to the automobile accident award reductions set out in 570(3). The intent behind section 570 is to reduce Albertans’ “insurance premiums by reducing damage awards payable by automobile insurers.” Subjecting all forms of subrogated claims to this provision achieves this intent.
Workers Unlikely to Benefit from Damage Award
The effect of this interpretation drastically decreases the likelihood that the Workers would receive any portion of the award.
The BC WCB Act provides that from a settlement or damages award, WorkSafeBC gets paid first, with anything remaining being paid to the Workers. With the application of section 570, this would result in the Workers getting very little to nothing.
Even though this may be unfair to the Workers, the Court confirmed that unfairness does not give the courts the ability to depart from the law. This is a policy decision that is for the B.C. legislature to decide, not the courts.
This decision confirms that caution should be exercised by all parties when attempting to file a subrogated automobile accident claim in Alberta on behalf of a non-resident. Section 570 reduces awards relating to a wide range of benefits received from workers’ compensation boards and insurers outside of Alberta. Being aware of the latest interpretation of these provisions will ensure you are not caught pursuing a fruitless claim. To learn more about how this decision may impact you, contact a member of our Insurance practice group.