What Comes Out of Your Settlement

Why the gap exists

A settlement figure is a gross number. Several things come off it before the balance reaches you, and one of them, repayment to third parties, is the item clients almost never see coming.

None of it should be a surprise on the day. Ask for the net calculation before you accept any offer, and ask again if the offer changes.

OHIP's subrogated claim

Where someone else's negligence caused your injuries, Ontario's health plan is entitled to recover what it spent treating you. The Plan is subrogated to your right of recovery, meaning it stands in your shoes for the cost of the insured services you received.

Health Insurance Act, RSO 1990, c H.6, s. 30 and Regulation 552.

This applies across most kinds of injury claim: medical malpractice, slip and fall, municipal liability, product liability and assault claims among them. In a malpractice case it can be significant, because the negligence itself generated much of the additional treatment OHIP paid for.

Car accidents are the exception

If your injuries arose from the use or operation of a vehicle insured under an Ontario motor vehicle liability policy, OHIP has no subrogated claim against your settlement.

The reason is that Ontario auto insurers pay an annual levy to the health system instead, so the cost of treating collision injuries is recovered from the industry as a whole rather than from individual settlements. The exclusion is set out in the Insurance Act.

Insurance Act, RSO 1990, c I.8, s. 267.8(18); Health Insurance Act, s. 30(5).

Your claim has to include it

The obligation is not the Ministry's to chase. A person who sues for injuries caused by another's wrongdoing must include a claim on behalf of the Plan for the cost of insured services, unless the General Manager says otherwise in writing, and must pay over what is recovered on that account.

Health Insurance Act, s. 31.

Practically, your lawyer handles this. You will see it as a line on your final account rather than as something you deal with yourself. What matters to you is that it exists and that it comes off the top.

The amount is not always the full amount

A subrogated claim is not necessarily paid at face value. It can be reduced to reflect contributory negligence, litigation risk and other contingencies affecting the recovery, and in practice it is often resolved for less than the total billed. Your lawyer should be negotiating it rather than simply passing it through.

Other things that may have to be repaid

OHIP is rarely the only party with an interest in your settlement. Which of these apply depends entirely on your circumstances and, in most cases, on the wording of a policy.

• Long term disability insurers. Most group disability policies require you to reimburse benefits already paid where you recover damages for the same loss of income. This is contractual, so the policy wording governs.
• Workplace Safety and Insurance Board. Where WSIB has paid benefits in respect of the same injury, it can have a recovery interest.
• Extended health and other private insurers. Many policies contain subrogation clauses covering treatment costs they have funded.
• Employer plans and salary continuance. Some require repayment out of an award for lost earnings.

Tell your lawyer about every benefit you have received since the injury, including ones you assume are irrelevant. It is far easier to account for a repayment obligation early than to discover it after a number has been agreed.

Not a repayment, but it affects the number

In a motor vehicle claim, a statutory deductible applies to damages for pain and suffering below a threshold amount. That is not money going to anyone else; it is simply an amount the law removes from that head of damages. It still changes what you receive, and it should appear in any net calculation your lawyer prepares.

The order it comes off

When your matter resolves, the funds are paid into our trust account and you receive a final account statement setting out each deduction. In broad terms:

• The gross settlement or award
• Our fee, and HST on it
• The disbursements we advanced, and taxes on them
• Any subrogated or contractual repayment, including OHIP where it applies
• The balance payable to you

Every one of those lines should be identified and explained. If a figure on your account is not clear, ask, and if you think the account is unreasonable you can apply to the Superior Court to have it assessed.

Common questions

Will OHIP take part of my car accident settlement?

No. Where the injuries arise from the use or operation of a vehicle insured under an Ontario motor vehicle liability policy, OHIP has no subrogated claim. Ontario auto insurers fund the health system's collision costs through an annual levy instead.

Does OHIP claim for future treatment as well as past?

It can. The Plan's entitlement extends to the cost of insured services, and in appropriate cases that includes future insured services. Your lawyer will deal with how the claim is quantified.

Do I have to pay OHIP back if I lose?

No. The subrogated claim is satisfied out of a recovery. If there is no recovery, there is nothing to pay over.

Can these amounts be negotiated down?

Often, yes. Subrogated and contractual claims are frequently resolved for less than the amount originally asserted, particularly where liability was contested or the recovery was compromised.

Why did nobody mention this at the start?

It should have been mentioned. Raise it now rather than at the point of accepting an offer, and ask for a net figure that includes every deduction.

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