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Can I Receive Accident Benefits if I Lose My Job After a Car Accident?

All automobile insurance policies in the province are required to include the coverage mandated by the Pntario Statutory Accident Benefits Schedule (SABS). If your injuries make it impossible for you to return to work, you may be eligible to collect income replacement benefits.

Case Study: Sabadash v. State Farm, et al.

What if you had medical issues that predated your accident, or it took several months for your accident-related injuries to affect your work? A recent case addressed by a three-judge panel of the Ontario Divisional Court, Sabadash v. State Farm, et al., addressed just such a situation. In this particular case, an accident victim challenged his insurer’s denial of income replacement benefits under the SABS, citing his inability to directly connect his losses to the underlying accident.

Here is a brief overview of what happened. The applicant was involved in a car accident that took place in Ontario on March 3, 2011. Prior to the accident, the applicant suffered from a number of physical and mental health impairments, including diabetes, anxiety, and depression. Following the accident, the applicant also reported “issues with his eyes tracking together, loud ringing in his ears, difficulty formulating thoughts, memory issues, dizziness and loss of balance” — all symptoms consistent with a traumatic brain injury.

At the time of the accident in March 2011, the applicant worked as the manager of a tool supply and repair shop. His employment ended seven months later, according to the applicant, because of his “inability to complete the tasks expected of him.” The applicant maintained this was the direct result of the injuries he sustained in the March car accident. On this basis, he applied for benefits under SABS from his insurance carrier, State Farm.

Automobile insurance companies should provide income replacement benefits to an injured policyholder who “sustains an impairment as the result of an accident” and, assuming they were employed at the time, is unable to “perform the essential tasks” of their job within 104 weeks (two years) of said accident. State Farm, however, took the position in this case that the applicant could not prove his inability to work was the result of his accident. The applicant did not accept this decision and decided to pursue the appeals process provided for by the Financial Services Regulatory Authority of Ontario (FSRA).

The Arbitrator’s Decision

The first stage in this process is a hearing before an FSRA arbitrator. After a hearing, the arbitrator assigned to this case sided with the applicant. State Farm maintained that the applicant could not prove that the accident was the “but for” cause of his subsequent loss of income. The but-for test is commonly applied by courts when assessing negligence in personal injury cases. Here, the arbitrator said that was not the appropriate standard for determining “causation in the statutory accident benefit context.”

Instead, the arbitrator said the applicant was entitled to income replacement benefits because a “preponderance of the evidence” supported the applicant’s position that the accident “was a material significant factor well beyond the de minimis range in the causation of [the applicant’s] inability to work.”

The Director’s Delegate’s Decision

Not satisfied with the arbitrator’s ruling, State Farm appealed to the next stage of the FSRA process, which is a review by a Director’s Delegate. The main thrust of State Farm’s appeal was that the arbitrator applied an incorrect legal standard. That is to say, the but-for test was the standard that should have applied to the plaintiff’s claim, rather than the “material significant” test.

This time, State Farm’s argument prevailed. The Director’s Delegate held that the applicant needed to show that “the injury arising from the accident must be enough to directly cause an impairment.” The Director’s Delegate therefore ordered a new hearing before a new arbitrator, who was instructed to apply this standard.

The Divisional Court’s Decision

The applicant then sought judicial review of the Director’s Delegate’s decision with the Divisional Court. In a judgment issued on February 15, 2019, the Court dismissed the appeal. However, the Court did not entirely affirm the Director’s Delegate’s decision either.

First, the Court said the original arbitrator was wrong to suggest the but-for test did not apply to assessments of statutory accident benefits. In fact, the Ontario Court of Appeal has previously held just the opposite. This supports the position taken by the Director’s Delegate.

The Director’s Delegate also held that when assessing claims under the SABS, the applicant must prove that “the injury arising from the accident must be enough to directly cause an impairment.” The Divisional Court said this language “appears to suggest that the accident in issue must be sufficient in itself to have caused the impairment — that it must be ‘the cause’ as opposed to ‘a necessary cause.’” This reading of the law is also incorrect, the Divisional Court said. That is to say, the applicant does not need to prove that the “accident alone” could have caused his inability to work.

Despite the Director’s Delegate’s error, the Divisional Court said it would not restore the arbitrator’s original ruling as requested by the applicant. Instead, the Court said it was necessary to conduct a new hearing before a “different arbitrator,” who must apply the correct legal standard from the outset.


Collecting the insurance coverage you are rightfully entitled to should not be a chore. If you believe you should receive income replacement benefits after sustaining injuries in a motor vehicle collision, contact our Ontario accident benefits lawyers today and receive a free initial consultation. To learn more, call 1-800-JUSTICE.

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