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A serious accident in the United States can leave a Canadian facing hundreds of thousands of dollars in American hospital, rehabilitation and medical bills.

Our firm handles U.S. personal injury and wrongful death claims for residents of Alberta, British Columbia, Saskatchewan and Manitoba who are injured in the United States.

We help Western Canadians determine who may be responsible for those medical bills, how travel insurance and provincial auto benefits interact, and whether an insurer can later claim reimbursement from a U.S. settlement.

How This Actually Worked in a Recent Cross-Border Case

Our firm represented a Western Canadian family after a horrific motor-vehicle accident in the United States.

One spouse was severely injured and the other was killed.

The injured spouse spent approximately 10 days in an intensive care unit followed by another 12 days in a U.S. rehabilitation facility before he could be flown back to Canada.

His U.S. medical bills exceeded US$400,000.

The client was a British Columbia resident, so he had private travel medical insurance as well as coverage through ICBC.

The at-fault driver had a US$1 million automobile liability insurance policy with a U.S. insurance company.

We pursued the U.S. liability claim and ultimately resolved the claim for the full US$1 million policy limit.

That resolved the liability claim against the American insurer.

It did not resolve the question of who was responsible for more than US$400,000 in outstanding American medical expenses.

Then the Fight Over the Medical Bills Began

Our client began receiving explanations of benefits, commonly called EOBs, from the travel insurance company.

The travel insurer took the position that ICBC was the primary insurer and therefore ICBC was responsible for paying the U.S. medical bills before the travel insurance coverage applied.

The travel insurer relied upon language in its policy stating, in substance, that its obligation to pay arose only after available automobile insurance had been exhausted.

At the same time, the travel insurer advised our client that if it did pay any of the American medical expenses, it claimed a lien or right of reimbursement against the money our client recovered from the responsible driver.

That created an obvious problem.

Our client had purchased travel insurance. He was also entitled to make an ICBC claim. The two insurers disagreed about which insurer should ultimately bear the medical expenses while American medical providers continued to have substantial outstanding accounts.

Our position was that our catastrophically injured client should not simply have to resolve a coverage dispute between two insurance companies by taking hundreds of thousands of dollars out of his U.S. injury settlement.

We therefore coordinated with ICBC and requested that ICBC and the travel insurer resolve between themselves which company ultimately had responsibility for the medical expenses.

B.C. Law Allows ICBC to Pay The Medical Bill First and Resolve the Insurance Dispute Later

Section 122 of B.C.’s Insurance (Vehicle) Act specifically addresses disputes over which source of insurance has priority.

If there is a dispute about whether another insurer (ie the travel insurance company) must pay, section 122(5) permits ICBC to pay or reimburse some or all of the disputed amount. Under section 122(6), ICBC can then pursue the other compensation provider for reimbursement.

In practical terms, this provides a mechanism for the insurers to fight over who ultimately owes the money without necessarily requiring the injured person to pay the disputed medical bills from the U.S. settlement.

What Happens to More Than US$400,000 in American Medical Bills?

The amount shown on an American hospital statement does not necessarily equal the amount that will ultimately be paid to satisfy the account.

In our case, ICBC will negotiate with the U.S. medical providers concerning the outstanding charges.

We anticipate that medical charges exceeding US$400,000 may ultimately be resolved for substantially less—potentially somewhere in the range of US$100,000 to US$175,000.

ICBC can then attempt to obtain reimbursement from the travel insurer for some or all of the amount ICBC ultimately pays.

Exactly how that dispute between ICBC and the travel insurer will ultimately be resolved remains unknown.

From our client’s perspective, however, the more important issue is much simpler:

We do not expect our client to have to take hundreds of thousands of dollars out of his US$1 million U.S. injury settlement to satisfy those hospital bills.

That is very different from assuming that because an injured Canadian received a substantial American settlement, the medical expenses automatically have to be paid out of that settlement.

Why Wouldn’t the B.C. Client Have to Repay ICBC?

This portion of the analysis is specifically applicable to British Columbia residents.

Section 123 of B.C.’s Insurance (Vehicle) Act provides for payment or reimbursement of reasonable expenses for necessary health care and specified related services, equipment and medication.

The particularly important provision is section 63 of the Enhanced Accident Benefits Regulation, which is titled:

“No recovery of specified benefits.”

Unless ICBC has paid more than the amount to which the person was entitled, section 63 restricts ICBC’s ability to recover specified benefits, including benefits paid under:

Section 168 of the Insurance (Vehicle) Act creates certain recovery powers for ICBC, but those powers are expressly made subject to the regulations.

Accordingly, properly paid section 123 medical benefits should not simply be treated as though ICBC automatically has a conventional lien against every dollar an innocent B.C. resident recovers in the United States.

The precise statutory basis for any repayment demand still needs to be examined, but in our case we do not expect our client to reimburse ICBC from his U.S. settlement for properly paid section 123 medical expenses.

What If a Travel Insurance Company Claims a Lien Against the U.S. Settlement?

This issue is potentially relevant to B.C., Alberta and other Western Canadian residents, because it involves private insurance and Canadian principles of subrogation rather than ICBC alone.

An insurer may say:

“We paid your U.S. medical bills, so you have to repay us from your settlement.”

That statement should not automatically end the analysis.

Two questions matter:

What does the insurance policy actually say?

And:

What reimbursement or subrogation rights exist under the applicable law?

The Made-Whole Rule: The Injured Person Gets Paid First

The basic rule is simple:

If the injured person has not been fully compensated for their loss, the insurance company’s right to take money from the settlement may not arise at all.

This is sometimes called the made-whole rule.

The purpose of subrogation is to prevent an injured person from being paid twice for the same loss. It is not meant to allow an insurance company to take part of a settlement when the injured person is still undercompensated.

In Somersall v. Friedman, 2002 SCC 59, the Supreme Court of Canada confirmed that, unless the insurance contract clearly provides otherwise, an insurer’s right of subrogation does not arise until the insured has been fully compensated.

The B.C. Court of Appeal applied the same principle in Confederation Life Insurance Co. v. Causton, 1989 CanLII 2769 (B.C.C.A.).

In Causton, the injured person recovered money from the person who caused her loss, but the recovery was not enough to fully compensate her. The Court held that the insurer’s right of subrogation never arose.

That distinction matters.

If someone suffers losses worth far more than the available insurance and settles only because the at-fault person has limited insurance and no meaningful assets, the fact that there was a settlement does not necessarily mean the person was “made whole.”

For example, if a catastrophic injury claim is reasonably worth several million dollars but the only available liability insurance is US$1 million, accepting the US$1 million policy limit does not mean the injured person has been fully compensated.

In that situation, the insurer may have no right to take any portion of the settlement under the ordinary made-whole rule.

The legal fees and expenses required to obtain the settlement also matter when deciding whether the injured person has actually been fully compensated.

One Important Exception: Check the Insurance Policy

The made-whole rule is not absolute.

The Supreme Court of Canada has said the rule applies unless the insurance contract provides otherwise.

That means a travel insurer may try to rely on specific policy language giving it a contractual right to reimbursement even where the injured person has not been fully compensated.

So when an insurer says it has a “lien” against a settlement, the proper response is not simply to pay it.

The first questions should be:

Was the injured person actually fully compensated?

and

What does the insurance policy actually say about reimbursement or subrogation?

If the person was not made whole and the policy does not clearly change the ordinary rule, the insurer’s claimed lien may never have arisen in the first place.

A US$1 Million Settlement Does Not Necessarily Mean the Person Was Fully Compensated

A US$1 million settlement sounds substantial.

In our case, it was not sufficient to compensate the client fully.

His spouse was killed.

He suffered catastrophic injuries requiring an extended ICU admission followed by inpatient rehabilitation.

His losses went far beyond the hospital charges themselves.

The case settled for US$1 million because that was the maximum liability insurance available, not because US$1 million represented the full value of the loss.

We also investigated whether the at-fault driver had personal assets from which an additional recovery could realistically be obtained. There were not sufficient assets available to fully compensate our client.

That distinction is important.

A policy-limit settlement is not necessarily a full-value settlement.

A Canadian injured in the United States may recover every available dollar of the responsible party’s insurance and still remain dramatically undercompensated.

What Is Different If the Injured Person Lives in Alberta?

An Alberta resident should not read the ICBC provisions above and assume those provisions govern their claim.

They do not.

But the broader cross-border analysis remains very similar.

For an Alberta resident seriously injured in the United States, we would want to identify at least:

  1. The state where the accident happened and the available U.S. liability insurance.
  2. The identity and assets of the person or business responsible for the accident.
  3. The client’s Alberta automobile insurance policy and available accident benefits.
  4. AHCIP benefits.
  5. Any travel or extended-health insurance.
  6. Which entity has already paid each medical expense.
  7. Any claimed lien, reimbursement or subrogation right.
  8. The precise policy language supporting that claimed reimbursement.
  9. Whether the U.S. settlement actually compensates the injured person fully.

AHCIP alone will generally leave an enormous gap in a catastrophic U.S. hospitalization because Alberta presently reimburses out-of-country inpatient hospital services at only C$100 per day.

That makes coordination with private insurance and the U.S. injury claim especially important.

Can an Alberta Resident Hire Our Firm for an Accident in the United States?

Yes.

Our cross-border injury practice is not limited to people who live in British Columbia.

Our firm handles U.S. personal-injury and wrongful-death claims for residents of Alberta, British Columbia, Saskatchewan and Manitoba who are injured in the United States.

The province where the client lives determines important Canadian insurance and benefits issues.

The state where the injury occurred generally determines important parts of the U.S. liability claim.

Those issues need to be coordinated rather than treated as though the Canadian insurance claim and the American injury claim exist in isolation.

A resident of Calgary, Edmonton, Red Deer or elsewhere in Alberta should therefore not assume that they need a British Columbia connection before contacting our firm about a serious accident in the United States.

The Practical Lesson From Our Case

Our client had:

  • more than US$400,000 in American medical charges;
  • travel insurance;
  • provincial automobile accident benefits;
  • a US$1 million liability policy available from the responsible driver; and
  • competing positions about which insurer was ultimately responsible for the medical expenses.

The U.S. liability insurer paid its full US$1 million policy limit.

The remaining medical-bill and insurer-priority issues are being dealt with separately rather than simply taking hundreds of thousands of dollars from the injured client’s settlement and paying the American hospital bills at face value.

For our client, understanding that distinction may preserve a substantial portion of the compensation he recovered.

The same lesson applies whether the injured Canadian lives in Vancouver, Calgary, Edmonton, Saskatoon, Regina, Winnipeg or elsewhere in Western Canada:

Do not assume that the U.S. hospital, travel insurer, provincial auto insurer and U.S. liability carrier all have the same rights—or that every claimed medical lien must be paid from the settlement.

Frequently Asked Questions

I live in Alberta and was injured in a car accident in the United States. Can your firm help me?

Yes. Our cross-border injury practice includes U.S. personal-injury and wrongful-death claims involving residents of Alberta and elsewhere in Western Canada. The Canadian insurance issues must be analyzed under the client’s home-province system rather than automatically applying B.C.’s ICBC rules.

Does AHCIP pay a large U.S. hospital bill?

Only a small portion in many serious cases. Alberta presently limits reimbursement for out-of-country inpatient hospital services to C$100 per day and outpatient hospital services to C$50 per day. Physician reimbursement is also limited to applicable Alberta rates.

Does ICBC cover a B.C. resident injured in the United States?

Subject to the Act and regulations, yes. Section 118 of the B.C. Insurance (Vehicle) Act expressly extends Enhanced Accident Benefits to B.C. residents injured by a vehicle in accidents occurring in Canada or the United States.

Does the ICBC rule apply if I live in Alberta?

No. Alberta residents have a different automobile insurance system. The B.C. case study on this page illustrates the cross-border problem, but an Alberta client’s automobile benefits must be determined under the applicable Alberta insurance policy and law.

Can my travel insurer take its payments from my U.S. settlement?

Possibly, but not merely because the insurer calls its claim a lien. The policy language and applicable subrogation law have to be reviewed. The Supreme Court of Canada has held that, absent contractual terms to the contrary, an insurer’s right of subrogation generally does not arise until its insured has been fully indemnified.

What if I recovered the entire U.S. driver’s policy limit but my losses were worth much more?

Recovering a policy limit does not necessarily mean you were fully compensated. The available insurance, the actual value of the losses, litigation expenses, other sources of recovery and the at-fault person’s assets can all matter.

Should I settle the American case before determining who pays my medical bills?

In a serious case, the reimbursement and medical-bill issues should be understood before the settlement proceeds are finally distributed. A release or payment can affect rights belonging to the injured person or an insurer.

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