Your Settlement Proceeds are not subject to income tax. You may not be the only party with an interest in the proceeds of your lawsuit.
Some common subrogated or collateral claims may include:
Legal Fees: Your lawyer will be entitled to payment of her fee and disbursements as set out in a Retainer Agreement which is executed at the outset of the relationship.
OHIP: If you receive medical treatment as a result of your injury, all or part of that treatment will be paid for by OHIP. OHIP may, through your lawyer, then seek reimbursement from the Defendant for its expenditures, both past and future. OHIP subrogated claims apply to most types of accidents – but do not apply in motor vehicle accidents.
Group Health Insurance: Group health insurance, travel insurance and disability insurance policies typically include the right of subrogation. If you are hurt abroad and commence litigation in Ontario, the travel insurer will typically pay your medical expenses up front, with the understanding that you (your lawyer) will protect their subrogated claim.
WSIB: If you receive WSIB benefits and later elect to commence an injury lawsuit, WSIB may be entitled to reimbursement of any benefits it paid.
Litigation Financing: If you secure a loan from a litigation financing company, you and your lawyer will be required to sign a guarantee that the loan will be protected and paid from your settlement proceeds.
CPP Disability: In a motor vehicle accident case, the Defendant’s payment, insofar as it relates to income loss or loss of competitive advantage, is reduced by the amount of any CPP benefits you received during that period.
ODSP: If you are in receipt of ODSP benefits, you may be obligated to reimburse ODSP for payments made to you from your injury settlement. You will not be required to reimburse ODSP for any amounts under $100,000 providing that the monies were received for general damages for pain and suffering, general damages for the death of a family member, medical rehabilitation benefits, future loss of income, and interest. ODSP is entitled to be reimbursed for these damages received over $100,000. It is also entitled to be reimbursed for any portion of the damages settlement that relates to wages you would have earned while receiving ODSP, regardless of whether the settlement is more than or less than $100,000. The rules are complex. An injury lawyer can assist you further.
Ontario Works: If you are in receipt of Ontario Works benefits, awards in excess of $25,000 will be considered income and assets in making a determination about eligibility.
Employment Insurance: If you receive E.I. payments and later recover an income loss award from the Defendant, E.I. is entitled to reimbursement.
Charitable Gifts: If you receive charitable gifts or donations as a result of your injuries, these monies are not deducted from the amount the Defendant has to pay you.
Long-Term Disability Insurance: If you purchased private disability insurance before you were injured, the Defendant does not receive the benefit of your foresight – it has to pay the full amount owing to you without deduction for any of the disability payments you receive. In automobile cases, however, the Defendant deducts from your settlement any sums you already received from your Long Term Disability Carrier, and the Long Term Disability Carrier is not entitled to reimbursement.
Divorce: If you separate from your spouse, your former spouse will not be entitled to any portion of your injury settlement that relates to general damages for pain and suffering, medical rehabilitation costs, home modification and assistive devices costs, or any other costs that are personal to you and your injury. The receipt of damages relating to past and/or future income loss, however may impact the calculation of child and spousal support in a separation or divorce proceeding.
The law pertaining to subrogated and collateral claims is complex. Please consult with an injury lawyer for further information.