Legal Update: Solicitors' Liability Issues Raised By WCB Subrogated Claims

Solicitors representing clients who are entitled to benefits under the Workers' Compensation Act need to fully understand the relative rights and obligations of the worker and the Workers' Compensation Board, especially as they relate to WCB-subrogated claims. In this article, Wayne Morris of Dutton, Brock, MacIntyre & Collier explains the liability issues that should be considered by solicitors dealing with WCB-related claims.

Introduction
The Workers' Compensation Act permits a worker who is entitled to both benefits under the Act and to bring an action against some person other than his employer, to either claim the benefits or to bring such action.

If the worker recovers less in the action than he would be entitled to under the Act, he may be entitled to the difference from the WCB, if the Board approved the settlement of action.

Where a worker collects benefits from the Board and brings an action for damages against an unprotected defendant, the Board is entitled to be reimbursed by the worker to the extent of its payments.

Where the Board makes payments to a worker in circumstances where the worker has a cause of action against an unprotected defendant, the Board is subrogated to the rights of the worker and may bring action in the worker's name to recover damages (although not where the damages were caused in some motor vehicle accidents). To the extent such recovered damages exceed the benefits paid by the Board, the worker is entitled to the excess.

Advising the Client re: the rights of the WCB
In cases where the client has been paid the benefits by the WCB, and subsequently claims damages against a person not protected by the Act, the client must clearly understand that any proceeds of settlement or judgment will go first to the Board. If the Board learns of the client's recovery at some later date, the client is subject to being sued by the Board for return of its payments. The unhappy client who only belatedly realizes that he has initiated expensive and lengthy litigation only to benefit the Board, and not himself will look to his lawyer for recovery of expenses and other damages.

The solicitor in such circumstances appears to owe no duty directly to the Board. The Act contains no provision obliging the solicitor to protect the Board's subrogated interest (unlike such provisions found in the Health Insurance Act, in favor of OHIP). However, a solicitor who accepted the Board's retainer, or given an undertaking in favor of the Board, must secure the Board's consent to any settlement of the case.

Defendants not fully protected by Plaintiff's Release
Where a defendant is aware of a subrogated interest to which a plaintiff is obligated, and settles the action without regard for that subrogated interest, the release given by the plaintiff is not binding on the holder of the subrogated interest. Thus, in cases where the plaintiff has received payments from the Board to the knowledge of the defendant, the Plaintiff's Release will not bar the Board in subsequent litigation against that defendant. Counsel for the defendant who has knowledge of the Board's interest should therefore require the Board's consent to any settlement with the Plaintiff.

Conclusions
In circumstances where counsel is aware that the WCB may have a subrogated interest, counsel should ensure that the client fully understands the Board's right to return of benefits paid from the plaintiff, and to pursue the claim further against the defendant.