Is it possible to overcompensate permanent disability? - International Law Office

Background
Compensation model for occupational injuries
Traffic Damage Act
Dispute
Decisions

Background

Walking along the pavement to work, HU noticed a tractor which she perceived to be driving straight towards her. In order to avoid being hit by the tractor, HU stepped into the road, where she slipped and fell, suffering a severe foot fracture. Her foot injury resulted in permanent disability to a degree of 25% and disfigurement.

HU claimed and received compensation for permanent disability and disfigurement from her employer's industrial injuries insurance based on the fact that she had suffered the injury on the way to her workplace – in other words, she was the victim of a work-related travel accident.

In addition, HU claimed compensation for the same injury from the traffic insurance taken out by the tractor owner based on the fact that she was the victim of a traffic accident. The insurer denied the claim on the grounds that HU was fully compensated by her employer's industrial injuries insurance.

Compensation model for occupational injuries

In principle, the purpose of the Swedish model for occupational injury compensation is to restore a person who is injured at work or through a work-related travel accident, or who suffers from a work-related disease, to the economic position in which he or she would have been had the injury not occurred. The model is a three-tier system:

• In principle, anyone living in Sweden who is injured at work or who suffers from a disease caused at work is entitled to basic compensation from the social insurance system.
• Anyone who works in operations in Sweden is insured under the Social Insurance Code.
• For most employees, the protection provided under the social insurance system and the Social Insurance Code is supplemented by industrial injuries insurance, a kind of strict liability insurance financed by employers. Industrial injuries insurance fills the gaps in the coverage provided under the other two insurance schemes (eg, compensation for pain and suffering and permanent disability).

In practice, this model excludes private employers' liability insurance in the Swedish market.

Traffic Damage Act

According to the Traffic Damage Act 1976, the owner of a motor vehicle registered in Sweden must maintain insurance for the vehicle. The right to indemnity is objective – that is, on a no-fault basis. The benefits to which traffic accident victims are entitled are regulated by the Tort Liability Act. Compensation is split into the following categories:

• costs;
• loss of income and non-pecuniary loss (ie, pain and suffering);
• permanent disability; and
• inconvenience.

The level of compensation is set by the Road Traffic Injuries Commission and is based on the table that applies when the compensation is fixed. The general principle is that loss shall be fully compensated, but not overcompensated.

Dispute

HU argued that the foot injury which she suffered resulted from the use of the tractor in traffic. Therefore, she was entitled to indemnity from the traffic insurance for permanent disability and disfigurement.

The insurer argued that HU had already been fully compensated for permanent disability and disfigurement by the compensation that she had received from the industrial injuries insurance.

Decisions

The Stockholm District Court found in favour of the insurer (Case 4149-08). In summary, the court stated that HU had already received compensation for the same injury through her employer's insurance. According to a general legal principle, an injured person is not entitled to double compensation.

The Svea Court of Appeal disagreed (Case T 4306-09), finding in favour of HU. The court referred to a government committee (Personskadekommittén, SOU 2002:1) which had held that compensation for non-pecuniary loss from another source should not be deducted from the compensation paid by the traffic insurance. The committee even expressed doubt as to whether loss of a purely non-pecuniary character could be overcompensated.

The Supreme Court has now granted leave of appeal (Case T 950-11), and its judgment is awaited with interest. The prevailing view among insurers seems to be that two lots of compensation for the same non-pecuniary loss amounts to double compensation, thus contravening the general legal principle and meaning that HU will be overcompensated.

For further information on this topic please contact Rose-Marie Lundström at Rose-Marie Lundström Advokat AB by telephone (+46 8 5460 1700), fax (+46 8 5460 1701) or email (rose-marie.lundstrom@rml-law.se).