Subrogation limits in the context of universal health care

The Yukon Government’s subrogation right for health, medical, and medical-related costs are limited to recovery against the tortfeasor.

Insurance law – Automobile insurance – Statutory Accident Benefits Schedule – Underinsured motorist; Subrogation.

Yukon (Department of Health and Social Services) v. Security National Insurance Co., [2024] Y.J. No. 32, Yukon Territory Supreme Court, May 17, 2024, E.M. Campbell J.

The Yukon Government, Department of Health and Social Services (“Yukon Government”) sought recovery of health, medical, and medical-related travel costs, incurred in providing health care and related services to a Yukon resident who was injured in a motor vehicle accident, from the Yukon resident’s first party motor vehicle insurer, Security National Insurance Co. (“Security National”). The damages to the Yukon resident insured exceeded the amount of coverage held by the other motorist, which had already been exhausted. The Yukon Government sought to either bring a subrogated claim or direct claim against the insured’s S.E.F. No. 44, Family Protection Endorsement (“SEF 44”) coverage which provides indemnification in circumstances where the wrongdoer motorist is inadequately insured. The Court held that the Yukon Government does not have such a right of recovery.

The government’s right of subrogation for health, medical, and medical-related costs arises from statutes. Those statutes also contain specific provisions regarding the right of the health care beneficiary to recover health, medical, and medical-related costs. This right of recovery is limited to recovery from the “person guilty of the wrongful act or omission”, in other words, the tortfeasor. The statutory provisions addressing the Yukon Government’s right of subrogation do not include specific language limiting the subrogation right to the third party tortfeasor and rather state that the Yukon Government shall be subrogated to “all rights” of the beneficiary. However, the Court held that that the Yukon Government’s subrogation right must be limited by the limits imposed on the beneficiary’s right of recovery, namely being limited to recovery from the tortfeasor. This does not include the beneficiary’s right to claim against his first party insurance coverage pursuant to the SEF 44 coverage with Security National.

The government was also not an “eligible claimant” under the SEF 44. “Eligible claimant’ is defined as follows in the SEF 44:

(c) The term “eligible claimant” means:

(i) the insured person sustaining bodily injury;

(ii) any other person who, in the jurisdiction in which the accident occurred, is entitled to maintain an action against the inadequately insured motorist for damages because of the death of an insured person or because of bodily injury to an insured person.

The Court held that “other person” within this definition only includes natural persons because SEF 44 coverage is intended to protect natural persons, their families, and to some extent dependant members of their extended families. The Court also noted that if the Yukon Government was successful, the insured risked receiving only a pro-rated portion of the amount otherwise wholly payable to him and would therefore amount to the victim having to pay for health, medical, and medical travel costs he was entitled to obtain free of charge pursuant to the universal health care scheme.

This case was digested by Dionne H. Liu and edited by Steven W. Abramson of Harper Grey LLP.  If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].