WORKERS' COMPENSATION APPEALS TRIBUNAL DECISION NO. 1015/94
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1 WORKERS' COMPENSATION APPEALS TRIBUNAL DECISION NO. 1015/94 This appeal was heard by conference call between Toronto and Thunder Bay on December 1, 1994, by a Tribunal Panel consisting of: J.P. Moore: Vice-Chair, G.K. Howes: Member representative of employers, S. Shartal: Member representative of workers. THE APPEAL PROCEEDINGS The worker appeals the decision of the Board's Legal Branch, set out in letters dated July 13 and September 9, 1993, denying the worker the right to have a claim considered for benefits under subsection 10(2) of the Workers' Compensation Act. The worker appeared and was represented by R. McKenzie, a lawyer. The employer was notified of the proceedings but did not participate. THE EVIDENCE Case Description materials prepared by the Tribunal Counsel Office were marked as Exhibit #1. The worker testified under oath. The Panel heard submissions from Mr. McKenzie. THE NATURE OF THE CASE The worker sustained injuries in a motor vehicle accident on July 10, He was in the course of his employment when he was injured. The Board was notified of the accident. The worker later accepted a settlement on the advice of his lawyer. The Board was not given an opportunity to review the settlement. The worker later claimed entitlement to compensation benefits, but was advised, in the letters noted above, that his failure to obtain the Board's approval of the settlement entered into by him deprived him of the right to claim compensation benefits. The worker appeals that decision to the Tribunal. The issue before the Panel is whether, having accepted a settlement from a third party, the worker was precluded from also claiming compensation benefits by virtue of subsections 10(2) and (3) of the Act. THE PANEL'S REASONS Subsection 10(1) of the Act stipulates that, where the circumstances of an accident permit a worker to bring legal action, the worker, if also entitled to compensation benefits, "may claim such benefits or may bring such action". Subsection 10(2) stipulates that the benefits to which the worker is entitled are benefits over and above what he/she receives by a judgment or a
2 2 settlement of the worker's legal action. Subsection (2) is subject to the provisions of subsection (3): 10(3) Subsection (2) applies to a settlement only if the approval of the Board to such settlement has been given before the settlement is made. In the present case, the Board's Legal Branch took the position that subsection 10(3) applied to deprive the worker of the benefits to which he might otherwise have been entitled under subsection 10(2). The facts of the present case are straightforward. The worker was injured in a motor vehicle accident on July 10, The worker testified that he was in the course of his employment at the time of the accident. A report of the accident was filed with the Board by both the worker's employer, and his family physician. The worker was sent an "Election" form. By completing that form, the worker would have elected to claim compensation benefits in lieu of taking legal action, and would have transferred any rights to take legal action to the Board. In the meantime, the worker had retained legal counsel. When he received the Election form from the Board, he took it to his lawyer. The worker testified that his lawyer stated that he had never encountered "this problem" and that he would "look into it". The Election form was never, in fact, filed with the Board. The worker's file was later transferred to another lawyer within the firm retained by the worker. Sometime in 1984, the second lawyer contacted the worker and informed him that he had received a settlement offer from the insurance company representing the other driver in the accident. The lawyer recommended that the worker accept the offer, which consisted of a payment to the worker of $8, The lawyer stated that, in his opinion, the settlement was a good one. According to the worker, the lawyer did not discuss the question of the worker's rights under the Workers' Compensation Act. The worker conceded that he had not raised the matter of his entitlement under the Act with his lawyer. The worker stated that he had developed the impression, after receiving the Election form, that the Board and the other driver's insurance company were in communication. He added that he did not ever receive any actual information from his lawyer which would have confirmed this. He and his lawyer never, in fact, discussed workers' compensation after the Election form was received. The worker accepted the settlement. The worker concedes that he did not obtain the approval of the Board for the settlement. In 1991, following a deterioration of the disability resulting from the motor vehicle accident, the worker contacted the Board about claiming compensation benefits. When it was discovered that the worker had entered into a settlement without the approval of the Board, the decision under appeal was made by the Board's Legal Branch.
3 3 The worker testified that he had a grade 7 education. Regarding the Election form, he stated that he believed that the form involved some sort of choice between compensation benefits and taking legal action. He also stated that he did not wish to lose his entitlement to compensation benefits. When he took the form to his lawyer, he assumed that his lawyer was handling things in such a way that he continued to have both a compensation claim and a lawsuit. At no point was he advised by anyone that accepting the settlement would terminate his entitlement to compensation benefits. The Panel notes that we did not have the actual Election form sent to the worker before us. However, the materials in front of us contained a sample Election form from the Board's Operational Policy Manual. That form informs the worker that he/she must choose either to claim compensation benefits or to bring legal action. The form does not inform the worker that, under subsection 10(2), he/she may be entitled to both. More particularly, the form does not inform the worker that accepting a settlement without obtaining the Board's approval terminates entitlement to compensation benefits under subsection 10(2). The form, therefore, seems to us to be both inaccurate and incomplete. However, in the present case, the form itself did not seem to contribute to the worker's failure to obtain the Board's approval of the settlement he entered into. The worker seems to have understood, roughly, the significance of the form and gave it to his lawyer. He was advised, at that time, that his lawyer would "take care of it". As it turns out, the worker's lawyers failed to appraise him fully of his legal situation and left the worker in a position where he entered into a settlement without knowing the full ramifications of that settlement. Specifically, the worker was not advised by his lawyers that entering into the settlement, without the approval of the Board, could result in the loss of his rights to further compensation benefits under the Act. We note that several previous Tribunal decisions have discussed the application of subsections 10(2) and (3) in similar circumstances. We note, in particular, Decisions No. 282/90 (1990), 17 W.C.A.T.R. 117, 271/91I (July 3, 1991), and 237/90 (April 6, 1992). In each of those decisions, the Panels accepted the principle that the settlement referred to in subsection 10(3) had to be "an informed settlement" before the worker would lose his or her rights to compensation benefits under subsection 10(2). We note in particular, the following excerpt from Decision No. 282/90, at p Subsection 8(3) [now 10(3)] protects the interests of the Board. The Board may presumably grant the approval described in subsection 8(3) applying any number of criteria. In our view, among the criteria that should be applied in determining whether approval is to be granted under subsection 8(3) is the question of whether the settlement entered into by the worker was an "informed" settlement. By "informed", we mean a settlement that reflects a reasonable degree of understanding of the worker's rights in the context of section 8.
4 4 We note that, in the present case, the worker was aware that he had an election right under the Act. He was made aware of this fact when he received the election notice from the Board. He was, however, not made aware, by that form, of the fact that he could claim both compensation benefits and bring legal action under subsection 10(2), or that he could lose that right, by entering into a settlement not approved by the Board. In our opinion, the Board's failure, at the time it issued the worker an election form, to advise the worker of the potential loss of entitlement to benefits in the absence of Board approval of a settlement left the worker significantly uninformed concerning his election rights under section 10. It could be argued that the worker's lawyers were responsible for providing the worker with this information, particularly given that the lawyers were made aware of the election aspect of section 10 when the worker brought the election form to them. However, that raises the question of whether the worker should be deprived of his entitlement to compensation benefits - a presumptive right for any injured worker - because of an oversight on the part of his lawyer. In our opinion, such a result is inconsistent with the overall purpose of the Act: the provision of comprehensive compensation to workers injured in the course of their employment. One of the decisions noted above, Decision No. 237/90, faced a similar situation. At page 7 of their decision, the Panel stated: The worker said he was not advised of his rights under the Act by his lawyer, his employer or the WCB. In these circumstances, the worker cannot be said to have made an informed settlement under section 8(3). In our view, the same statement can be made in the present case. The worker received a form from the Board which purported to advise him of his rights under what was then section 8 of the Act, but which, in fact, gave the worker only partial information. The worker then took that partial information to his lawyer, and relied on his lawyer to protect his interests. Through inadvertence, this did not happen. The lawyer advised the worker to accept a settlement which eventually led the Board to declare the worker ineligible for any further compensation benefits. In our opinion, in these circumstances, it cannot be said that the settlement entered into by the worker was an informed settlement and, in our opinion, to deprive the worker of benefits to which he might otherwise be entitled under subsection 10(2) would be unfair and unjust. We conclude, therefore, that the worker in this case, insofar as he had an accident that arose out of and in the course of her employment, did not lose his right to compensation benefits by accepting an unapproved settlement from a third party involved in that accident. The worker is entitled to benefits in accordance with the provisions of subsection 10(2) of the Act. THE DECISION
5 5 The decision of the Board's Legal Services Branch is set aside. The worker is not disentitled from claiming benefits pursuant to subsection 10(2) of the Act by virtue of subsection 10(3) of the Act. We leave to the Board the determination of the nature, extent and amount of benefits to which the worker is entitled without prejudice to the parties' usual rights of appeal. DATED at Toronto, this 25th day of January, SIGNED: J.P. Moore, G.K. Howes, S. Shartal.
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