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The Risk of Settling Your Accident Benefits Claim Before Your Tort Lawsuit

Can you receive less at Trial simply because you settled your Accident Benefits (“AB”) claim prior to your tort trial?

The Issue: often the AB file is ready to settle prior to the completion of the tort file. This is tempting for the injured claimant, because it can give the claimant a lump sum of money to pay for expenses while they wait for their tort claim to resolve

The Problem: what if you go to Trial and get less than expected? Could you receive even less because the tort defendant argues that part of your tort award should be deducted because it duplicates your AB settlement amounts.

The Case: An interesting challenge by a tort defendant in the recent case of Mikolic v. Tanguay and Albano, 2013 ONSC 7177 (CanLII), after Judgment at Trial was received.

It appears that after a healthy AB settlement, the plaintiff went to Trial on the tort claim and received less than anticipated.

This was further complicated when, after the Judgment, the tort defendant argued that the defendant was not obligated to pay the entire Judgment, as there was duplication of the tort awards by the Jury when compared with the earlier AB settlement.

In other words, the tort defendant was arguing that the tort award was modest and did not exceed the prior AB settlement for the same award headings.

In practice, this issue does not often arise, even though the AB very frequently settles prior to the AB.  The tort defendants generally settle before Trial, during which negotiations this deductibility argument is not seriously pursued.

The issue of deductibility is generally seen as settled, so that this decision is not surprising, as the Settlement Disclosure did not reveal a level of precision about the settlement which would have caused concern for the plaintiff.
Gregory Chang
Personal Injury and Insurance Lawyer