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Tort Damages Reduced to Offset Future Government Funding?

November 8, 2023

Health law

Author: Bryan Gallant

The Court of King’s Bench of Alberta has made it more difficult for people defending tort actions in Alberta to argue that potential future government funding for certain types of care should be deducted from damage awards to prevent the risk of double-recovery.

The Court’s Approach: Medical Negligence Case

In KY v Bahler, 2023 ABKB 280, a case in which twins suffered catastrophic permanent injuries at birth due to medical negligence, the Court held that the defendants bore the burden of showing a “real and substantial risk” of future double-recovery, and that the evidence must show that:

  1. the twins would likely receive the publicly funded services;
  2. the twins would not be disentitled from receiving program funding due to the receipt of a substantial damages award;
  3. if the provision of program funding or services is discretionary, it is likely that the discretion would be exercised to provide payment or services to the twins;
  4. if the twins receive program funding or services, they would not have to reimburse the government because of their entitlement to a damages award;
  5. if the twins receive program funding or services, the government will not have a subrogated claim against the defendants;
  6. the relevant program will continue to exist for as long as the twins need it;
  7. the program funding or services will continue at a predictable level; and
  8. the amount paid by the program would fully compensate for the type of care sought.

The Court applied these eight criteria to the government programs at issue:

  • (1) Assured Income for the Severely Handicapped (AISH);
  • (2) Alberta Aids to Daily Living (AADL);
  • (3) Coordinated Home Care Program (CHCP);
  • (4) Family Support for Children with Disabilities (FSCD); and
  • (5) Persons with Developmental Disabilities (PDD).

The Court’s Verdict: Funding and Services for Injured Individuals

In each case, though the Court found that the twins would likely meet the legislative criteria for requiring the funding or services in question, it declined to reduce damages to account for potential future receipt of funding from one or more of those programs. The Court found that the funding or services in question were discretionary in nature, and that there was no reasonable possibility of such discretion being exercised in the twins’ favour, given their substantial damages award and the large number of other deserving and less-well provided for candidates. It is difficult to ascertain the basis upon which the Court reached the conclusion that discretion would not be exercised in favour of the twins. The reality is that not all government programs are means-tested. For the programs that are not means-tested, decision-makers generally focus on the needs of the injured individuals, not the wealth of the family or whether there is a source of funds from a judgment or settlement.

The Court further noted that in the case of AISH, the Alberta courts have historically not reduced plaintiffs’ damages to account for the receipt of AISH benefits, and that in the case of AADL, the Crown would have a claim against the defendants for the cost of providing those benefits, under s. 67 of the Public Health Act.

Given the rigorous criteria set out in KY v Bahler for establishing a real and substantial risk of future double-recovery, and the Court’s reasoning in applying those criteria, defendants in Alberta will need to put forward convincing evidence that government program funding will remain in place even after settlement or judgment. It cannot be disputed that there is a real risk in these cases of double recovery. The question is whether it can be proven in each particular circumstance that this risk is substantial enough to justify a reduction (even partial) of the damages to account for this risk.

Clarifying Government Program Deductibility

In the end, what is needed is legislative action to clarify the deductibility of government programs. A great deal of time and money could be saved by the entire system with clear legislative direction on eligibility for government funding and deductibility in the face of settlements or judgment. This would benefit both plaintiffs and defendants in being able to more accurately quantify damages, particularly in catastrophic cases.

Contact Calgary Health Lawyers

If you have questions about this case, including its implications for damage awards in tort actions in Alberta, please contact the Health Law Lawyers at Carbert Waite.

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