Social Safety Nets
There are three public sources of refuge, all of which offer modest entitlements. 1 Employed car accident victims, regardless of fault, may be allowed fixed sums for lost income. 2
E.I.
E.I. sick benefits may be available, presuming the employee qualifies. 3 and a medical certificate is provided, confirming the medical inability to work, Employment Insurance benefits due to sickness may be obtained to the maximum sum of $650 per week, this being a formula based on 55% of insurable earnings.
There is a two week waiting period, followed by a maximum 26 week benefit period. An application may by made if the insured has suffered a loss of 40% of greater of normal working hours.
CPP Disability Benefit
To qualify for a CPP disability pension under the Canada Pension Plan (“CPP” or the “Plan”), it must be shown that the disability, whether physical or mental, is severe and prolonged. There may also be dependent relative claims, all of which by the policy terms will offset LTD benefits.
The maximum CPP disability allowance is $1,538.67. The dependent child sum is $281.27.
The policy will generally mandate such an application be made at the request of the insurer. Some plans also require that an appeal be made of a denial of benefits. CPP will always reduce the liability of the insurer. When the disability insurance is non-taxable, the taxable CPP sum will reduce the sum to be paid by the insurer dollar for dollar, which is what the policy will typically dictate.
The applicant must be a CPP contributor who has not reached age 65 and who is not receiving a CPP retirement pension.
It is not a decision based solely on medical facts. The reasonably satisfied standard of proof requires a medical adjudicator to consider not only the medical condition(s), but also work capacity and personal characteristics and how they affect the individual.
Severe & Prolonged Test
The medical condition is the prime indicator of a disability. The analysis includes an evaluation of the “severe” and “prolonged” criteria related to the nature of the medical condition, the progressive nature of the medical condition, functional limitations, impact of treatment, medical statements, and multiple medical conditions as defined in this guideline.
CPP is regarded by most private insurance plans and provincial workers’ compensation programs as the “first payer”. In essence, this means that the receipt of other insurance benefits is not considered upon the application for CPP and further, that other insurance plans may offset CPP from their benefit obligations. 4
The Plan allows for an assignment of a retroactive lump sum benefit payment to government agencies or insurers.
This Act has been characterized as social benefits legislation and hence is to be interpreted in a “broad and generous manner”, as was decided by the Federal Court of Appeal. 5
The Court of Appeal also noted and adopted a contrary line of cases which developed a “real world” approach to the severity test, hence setting a new affirmative standard for the adjudication of “severe”. This added to the interpretation an aspect of employability.
Dependent Child Benefit
A “dependent child” of a contributor is defined as a child of the contributor who is less than eighteen years of age. It also includes a child of a contributor who is eighteen or more years of age but less than twenty-five years of age and who is in full-time attendance at a school or university. Further, it adds to its definition a child of a contributor who is eighteen or more years of age and is disabled, having been disabled without interruption since the time he or she reached eighteen years of age or the contributor died, whichever occurred later.
A “disabled contributor’s child” means a dependent child of a contributor who is disabled, but does not include a dependent child who is eighteen or more years of age and is disabled. 6
Set-off of Child's Benefit
The issue arises as to whether the insurer may assert a right by policy to offset not only the CPP benefit paid to the insurer, but also the child’s benefit.
The Ontario Court 7 concluded that the insurer, indeed, did have such a right under the policy term.
The Saskatchewan Court of Appeal 8 came to a different conclusion. The insurer, in this case, however, did not have similar policy wording and relied upon a clause which defined maximum income entitlement from all sources to be 85% of pre-disability income. This terms captured “disability or retirement income from other sources”, which also specifically included within its ambit “any government plan providing disability income that becomes payable only after the member becomes totally disabled”. 9
This Court distinguished the earlier Ontario decision 10 based on the policy wording and concluded that the child’s benefit was not to be deducted.
The Court of Appeal of Alberta in its 2003 decision, 11 also spoke to this issue. The group policy allowed for deductions from the benefit payable, which were defined to include “any government plan providing disability income including benefits for dependent children that becomes payable only after the member became disabled”.
The four children of the insured were entitled to a benefit of $492.51 monthly under the CPP. Clarica deducted the children’s benefit, leaving the plaintiff a monthly disability sum of $9.38. The court noted that her premium for this sum was $16.45 per month.
The chambers judge, on first instance, found the deduction was ambiguous, a word insurers have come to see as a harbinger of an adverse outcome. The decision was also influenced by the mathematical calculation noted immediately above.
The chambers judge concluded that the CPP children’s benefit could not be deducted. She decided that the contract of insurance was ambiguous, and accepted the interpretation that, in her view, better accorded with the intention of the parties. She concluded that low-income persons with dependent children would not likely enter into a contract that would pay them little or nothing after the CPP-related deductions. She also relied on the contra proferentem rule.
The Court of Appeal supported the decision for two reasons, one of which was the ambiguity conclusion.
The appellate court also found that, apart from the above argument, the interpretation of the clause maintained three requirements, which were (1) the insured receives the payment, (2) the payment is received by the insured as disability or retirement income and (3) the payment is from “other sources”. The word “income” had but one meaning and such must mean income of the insured, which this payment was not. 12
Mr. Justice Perell of the Ontario Superior Court concluded that the dependent child sum should reduce the benefit. 13 The finding was obiter as the court found that the claim had been issued out of time and dismissed the action for that reason.
An arbitral decision dealing with the issue of whether CPP disability benefits could be set off against LTD entitlement, of which a subordinate issue was whether the child’s benefit could also be offset. 14
The decision in this case was rendered in January of 1999. 15 The arbitrator found it was the intent of the parties to allow for the offset of the child’s benefit, based on the wording of the collective agreement. The remaining set-offs for the grievor and the infant dependent child were allowed, until the child reached the age of majority.
No Representation for the Child's Interests
The startling issue on this subject is that in none of the common law or arbitral cases has any motion been made to add the Children’s Lawyer as an advocate of the interests of the children who are adversely affected by these decisions. The statute protecting children’s rights in each jurisdiction clearly contemplates that a child’s interest in property or income is one to be protected. An advocate should be appointed to represent the interests of such minor dependent children.
It is difficult to imagine how a court could allow for the deduction of funds due to an infant, who is not a party to the contract, nor represented in the contract by any authorized representative and in fact may well have been unborn at the time of the contract, in these circumstances.
Tort Claims No Offset for CPP
The Supreme Court of Canada in its 1973 decision concluded that a CPP disability benefit should not be deducted from the claim in tort. 16 17
In an Ontario 2003 decision 18 of LaLonde J. considered a claim in a tort action for the loss of CPP credits due to the inability to work due to medical negligence. A factor in determining the quantum of CPP entitlement was the contributions made until the date of disability. The claim was allowed, apportioned to the liability finding, less pension contributions that would normally have fallen due.
The above case followed to the same effect, concluding that in a common law claim there would be no offset for CPP benefits.
Absent a specific statutory provision, CPP benefits will not offset a third party claim in tort.
Disability & Tax Credits
The Government of Canada allows for a non-refundable tax credit to those disabled or caring for a disabled dependant.
Canada also allows for a Registered Disability Savings Plan which is basically an income splitting device. The contributions made to the plan are not tax deductible by the donor, but the capital is not taxed by the beneficiary when the funds are withdrawn. There is also a grant provided by the Canadian Government. This grant and the investment income earned on the capital are both taxed on withdrawal. The amount of the grant is graded to an annual maximum of $3,500 based on family income. The maximum total grant is $70,000.
There is also a Canada Disability Savings Bond program, also graded to family income, for a maximum of $1,000 per year.
Legislation which provides social assistance to disabled persons exists in Ontario, Alberta, Yukon, Saskatchewan and British Columbia.
Ontario’s Workplace Safety and Insurance Act (“WSIA”), by way of example, provides income and employment supports to persons with disabilities. It does not require that eligible persons seek or maintain employment. To qualify, the applicant must meet financial eligibility requirements and meet the test of disability. The WSIA requires that the applicant have a substantial physical or mental impairment that is continuous or recurrent and that is expected to last for at least one year. The impairment must also result in a substantial restriction of one or more of (1) personal care (2) functioning in the community or (3) the ability to work.
On the face of the legislation, a person is not eligible for assistance if they is addicted to alcohol or drugs, where they are not otherwise suffering from a physical or mental impairment. This provision, in a different context, was determined to be contrary to the Charter of Rights and Freedoms by the Divisional Court, as confirmed by the Court of Appeal in the 2010 decision of Ontario (Disability Support Program) v. Tranchemontagne.
This is typical of the other jurisdictions.
The monthly sum presently paid varies according to the applicant’s circumstances.