Not every amount that benefits an injured party can be deducted from compensation due under an insurance policy.
Dec 27, 2023
From: Attorney Shlomi Hadar - John Geva, Hadar & Co. - Lawyers and Mediators
After a request for further hearing, the Supreme Court upheld its ruling that since the state has no right of recourse against the insurer for the survivor's pension paid by it, the survivor's pension may not be deducted.
From: Attorney Shlomi Hadar - John Geva, Hadar & Co. - Lawyers and Mediators
After a request for further hearing, the Supreme Court upheld its ruling, according to which since the state has no right of recourse against the insurer for the survivor's pension paid by it, the survivor's pension may not be deducted. Compensation that the insurance company is required to pay for a car accident
background:
A family man who served in regular service in the IDF until the beginning of 2001 retired and began receiving a state pension. In early 2007, the deceased began working at "Egged," until a car accident occurred that led to his tragic death. After the deceased's death, his widow began receiving a survivor's pension from the state and payments from the National Insurance Institute.
Following the death of the deceased, his dependents and heirs filed a claim with the Magistrate's Court (Ta'a 2380-08-10), under the Compensation for Road Accident Victims Law, 5735-1975. It was ruled in this proceeding that the amount of the damage was less than the survivors' allowance and payments from the National Insurance Institute, which were determined to be deductible, and therefore the claim was dismissed.
The dependents and heirs filed an appeal with the District Court against the Magistrate's Court's ruling, centered on their claim that there was no reason to deduct the survivor's pension from the amount of damages awarded. The District Court (Case No. 048891-10-19) rejected the appeal, and ruled that the survivor's pension was legally deducted. An appeal was filed with the Supreme Court, which overturned the District Court's ruling and its decision remained in effect after a request for a further hearing was denied.
A family father who served in the IDF as a career officer until early 2001 retired and began receiving a government-funded pension. At the beginning of 2007, the deceased began working at "Egged" until a traffic accident occurred, leading to his tragic death. After the death of the deceased, his widow began receiving a survivors’ pension from the state and payments from the National Insurance Institute (Bituach Leumi).
Following the deceased’s passing, his dependents and heirs filed a claim in the Tel Aviv Magistrates’ Court (T.A. 2380-08-10) under the Compensation to Road Accident Victims Law, 1975. In this proceeding, it was ruled that the amount of damages was lower than the survivors’ pension and National Insurance payments, which were to be deducted; therefore, the claim was dismissed.
The dependents and heirs appealed the Magistrates’ Court ruling to the District Court, arguing primarily that the survivors’ pension should not have been deducted from the amount of damages awarded. The District Court (A.A. 048891-10-19) dismissed the appeal, ruling that the deduction of the survivors’ pension was legally correct. A further appeal to the Supreme Court overturned the District Court’s decision, and its ruling remained in effect after a request for further hearing was denied.
The heirs sought to make a distinction between an annuity paid to the deceased's family by the state without the state having the right to go back and sue the insurance company for the compensation due for the traffic accident, as opposed to payments for which the state has the right to demand that the insurance company reimburse it for amounts it paid to the deceased's family following his death.
According to the heirs' approach, a situation in which they receive "overcompensation" (meaning compensation higher than the compensation for death due to a car accident) should be preferred over a situation in which the tortfeasor/insurance company pays for only part of the compensation.
According to the insurance company, failure to deduct the survivor's pension will result in double compensation and, contrary to the principle of restoring the situation to its former state on Shabbat.
The parties' arguments in the appeal:
The court first noted that the deduction is therefore a product of case law, which originates from the right of the benefactor who pays the benefit to return to the harmed party in a claim for indemnity (hereinafter: the right of recourse ). Given a right of recourse, the absence of a deduction may result in the harmed party being liable for double compensation – which is contrary to fundamental principles of tort law.
However, when the benefactor does not have a right of recourse against the harmer, there is no concern about the harmer's overcharging as mentioned above, and then the basis falls below the justification for the deduction.
The Supreme Court ruled that in the matter examined by it, there is no dispute that the state has no right of recourse against the insurer for the payment of the survivor's pension to the applicant. Therefore, in the absence of an anchor in the Pensions Law for the deduction of the survivor's pension from the amount of compensation, the court concluded that there is no reason to deduct it. This conclusion was reinforced in light of the provisions of Section 64(d) of the Pensions Law, which states that the survivor's pension may not be deducted.
Therefore, it was determined that, in the absence of a specific legal provision directing the deduction of benefits received by the injured party from the compensation awarded to the tortfeasor, the basis for such deduction is the right of restitution of the benefactor against the tortfeasor, and the principle according to which the tortfeasor should not be required to pay compensation that exceeds the damage he caused. In any case, in circumstances where the benefactor does not have the right of restitution as stated, the main basis for deduction is omitted, namely "no indemnity - no deduction."
It was further noted that there is an additional purpose for deduction, which focuses on the damage, and is to prevent compensation that exceeds the damage caused to him and his "enrichment", so to speak, in a manner that is inconsistent with the principle of restoring the situation to its former state. In accordance with this principle, the compensation awarded to the injured party is supposed to place him, as close as possible in monetary terms, in the position he would have been in had the wrongful act not occurred, and no further. By virtue of this principle, it is ostensibly permissible to order the deduction of any benefit received by the injured party from the amount of compensation awarded in his favor – even without regard to the question of whether the beneficiary has a right of recourse against the tortfeasor.
However, the court ruled that the non-deduction of the survivors' pension from the amount of compensation does not contradict the principle of restoration of the situation to its former state. First, it was noted that the argument that the non-deduction of the survivors' pension entitles the survivors and the estate to double compensation, contrary to the principle of restoration of the situation to its former state, ignores the fundamental distinction between the separate legal entities: the dependents - who are entitled to the survivors' pension; versus the heirs who follow in the shoes of the injured party - who are entitled to compensation for damages for the "lost years". Second, the survivors' pension is paid to the appellant due to the mere death of the deceased and in accordance with his working conditions. In contrast, the compensation in the tort claim for the "lost years" is paid to the estate, which follows in the shoes of the deceased, due to his death as a result of the accident. Third, specifically, with respect to an insurance contract, as in our case, the court found it difficult to say that the non-deduction of the benefit results in the "enrichment" of the injured party, in a manner that is inconsistent with the principle of restoring the situation to its former state. From the perspective of the injured party, the insurance money is not a regular "benefit," but is paid to him in exchange for a premium he paid to the insurer (the benefactor).
Finally, it was also noted that when the normal balance in the "triangle of relationships" between the harmer, the injured party, and the benefactor is violated, there is justification in certain circumstances for the injured party to benefit from this situation, not the harmer.
Decision:
End of the matter
It was ruled that since the state has no right of recourse against the insurer for the survivors' pension paid by it to the appellant, the survivors' pension may not be deducted.
It was ruled that since the state has no right of recourse against the insurer for the survivors' pension paid by it to the appellant, the survivors' pension may not be deducted.
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