Neutral Citation: 1993 ONICDRG 31

File No. A-001893

ONTARIO INSURANCE COMMISSION

BETWEEN:

FRANCIS NAND

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Francis Nand, was injured in a motor vehicle accident on February 13, 1992. He applied for and received accident benefits from the Insurer payable under Ontario Regulation 672 (the "No-Fault Benefits Schedule"), enacted under the Insurance Act, R.S.O. 1990, c. I.8.

The Applicant applied for weekly benefits under section 13 of the No-Fault Benefits Schedule.

The issues in this arbitration are:

1. Are the payments received by the Applicant deductible from his weekly benefits?

2. Should the Applicant's entitlement for weekly benefits be considered under section 12 or under section 13 of the No-Fault Benefits Schedule?

The Applicant also claims interest on any outstanding amounts owing, and his expenses incurred in the hearing.

Result:

1. The automobile insurance benefits, long-term disability benefits, and CPP benefits received by the Applicant are all payments for loss of income, which are deductible from any no-fault benefits paid to the Applicant.

2. I decline to rule on the question of whether the Applicant should properly have applied for benefits under section 12 or under section 13 of the No-Fault Benefits Schedule since, in any event, the question is moot.

Hearing:

A hearing was held in Hamilton, Ontario, on December 7, 1992 and May 6, 1993, before me, Frederika M. Rotter, Senior Arbitrator.

Present at the Hearing:

Applicant:

Francis Nand

Applicant's

David S. Wilson

Representative:

Barrister & Solicitor

Insurer's

Harry P. Brown

Representative:

Barrister & Solicitor

Exhibits:

Exhibit 1

Document brief prepared by Insurer

Exhibit 2

Letter from Confederation Life to Insurer's solicitors, dated May 5, 1993

Evidence and Argument:

The facts in this case, generally, were not disputed.

(1) Deductibility of Collateral Benefits:

The Applicant, Francis Nand, was involved in two motor vehicle accidents. The first accident was in February 1990. As a result of this accident, the Applicant was disabled from his employment, and remained disabled up to the time of the second motor vehicle accident. The second accident, which is the subject of the current dispute, occurred on February 13, 1992.

Prior to the first accident, the Applicant was employed. He had worked at Mold Engravers Ltd., at TNT Canada Inc., and had also operated his own private investigation firm. After the accident of February 1990, he was unable to return to any employment.

The Applicant applied for and received various disability benefits as a result of the first motor vehicle accident. These benefits continued to be paid after the second motor vehicle accident. The issue between the parties is the deductibility of these benefits from the Applicant's no-fault benefits. The benefits in question are the following:

(i) As a result of the first accident in February 1990, the Applicant began receiving no-fault benefits of $140 per week, under his contract of automobile insurance in force at the time.

(ii) The Applicant also started receiving disability payments from the TNT Canada Inc. disability plan, paid by Confederation Life. His long-term disability benefits commenced on July 1, 1990 and amounted to $1,564.47 monthly.

(iii) The Applicant applied for Canada Pension Plan ("CPP") disability benefits. CPP benefits of $626.39 per month were approved in November 1991, retroactive to June 1990. Under the Confederation Life plan, CPP benefits are deductible from the long-term disability benefits paid out. Therefore, the retroactive CPP award resulted in an overpayment by Confederation Life of $10,606.87.

Accordingly, Confederation Life suspended further long-term disability benefits to the Applicant for approximately one year (from December 1991 to November 1992) to collect repayment of the overpayment. In November 1992, the Applicant's long-term disability payments were reinstated at $938.08 per month. This adjusted amount reflected the appropriate deductions for the CPP benefits.

In February 1992 after the second motor vehicle accident, the Applicant applied for no-fault benefits under the current legislation. He was granted benefits of $185 weekly under section 13 of the No-Fault Benefits Schedule, and was paid at the rate of $45 a week. The Insurer took the position that the $140 per week he was receiving because of his previous accident was deductible as a payment for loss of income.

At the hearing, the Insurer argued that the CPP benefits and long-term disability benefits received by the Applicant were also payments for loss of income, which should have been deducted from the no-fault benefits payable under the legislation.

Section 13(3) of the No-Fault Benefits Schedule provides:

(3) The weekly benefit under subsection (1) will be $185 less any payments for loss of income, except Unemployment Insurance benefits,

(a) received by or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan; or

(b) received under any sick leave plan.

The Applicant's position was, essentially, that the other benefits received by the Applicant should not be deducted from his no-fault benefits. The Applicant's argument regarding each of the payments, and my findings, are set out below:

(i) The no-fault benefit payment: The Applicant argued that the no-fault benefit payment of $140 which he was receiving pursuant to his former contract of insurance was not deductible from his current payments under section 13(3), since it was not a payment for loss of income received by the Applicant under the laws of any jurisdiction, nor under any income benefit continuation plan; neither was it received under any sick leave plan.

The payment was made to the Applicant pursuant to a motor vehicle liability policy, the terms of which were governed by the predecessor legislation to the current Insurance Act. The Insurance Act, R.S.O. 1980, provided as follows:

Section 232

(1) Every contract evidenced by a motor vehicle liability policy shall provide the medical and rehabilitation benefits set forth in subsection (1) of Schedule C subject to the limits, terms and conditions set forth in Schedule C. 1971, c 84, s. 14(1).

Schedule C provides:

Subject to the provisions of this Part, a weekly payment for the loss of income from employment for the period during which the insured person suffers substantial inability to perform the essential duties of his occupation or employment, ...

Amount of Weekly Payment -- The amount of a weekly payment shall be the lesser of,

(a) $140 per week; or

(b) 80 per cent of the insured person's gross weekly income from employment, less any payments for loss of income from employment received by or available to such person under,

(i) the laws of any jurisdiction

(ii) wage or salary continuation plans available to the person by reason of his employment, and

(iii) Part III of this subsection (2), ...

I find that the $140 payments were made pursuant to the provisions of Schedule C under the Insurance Act, R.S.O. 1980. The payments were accordingly received by and available to the Applicant under "the laws of any jurisdiction". They are therefore deductible from his no-fault benefits under the current legislation.

(ii) The long-term disability benefits: The Applicant argued that the long-term disability benefits from Confederation Life were not deductible from his no-fault benefits during the period from February 1992 through to November 1992 since, during that period, the Applicant was not receiving these benefits, nor were the benefits available to him, due to the adjustment on account of his CPP overpayment. The Applicant conceded that the disability benefit would be deductible effective November 1992, when Confederation Life reinstated payments.

I cannot accept the Applicant's argument. Notwithstanding that the Applicant did not actually receive a cheque for benefits from Confederation Life during the period in question, those benefits were still available to him, and were applied to discharge his debt to the company. The Applicant should not be in a better position than he would be had he made other arrangements to repay his debt to Confederation Life, and then continued to collect disability benefits.

In this regard, I cite the reasons of my colleague, Senior Arbitrator Naylor in Sion Dray and Royal Insurance Company of Canada, O.I.C. File No. A-000025, dated January 31, 1992. In discussing whether funds withheld for income tax could be considered "available" to an applicant, Senior Arbitrator Naylor referred to two related meanings of the word "available": 1. capable of being used; at one's disposal 2. within one's reach.

Senior Arbitrator Naylor stated:

At first look, money withheld at source would not appear to fall within the scope of either of these definitions. The money is not capable of being used for the Applicant's day-to-day living expenses for the week for which the disability benefit is paid. Nor is it within the Applicant's reach for that period. The Applicant is deprived of use of the funds when he may need them the most regularly, while he is unable to work and make a living.

On the other hand, a person may be said to have money at his or her disposal, notwithstanding that the money has been earmarked for a specific purpose. Regardless of whether the uses to which the money is put are determined by choice, financial necessity or legal requirements, it is nonetheless "available" to the person for those uses. ...

I adopt the reasoning of Senior Arbitrator Naylor, and find that the long-term disability benefits paid by Confederation Life were available to the Applicant from February 1992 onwards, notwithstanding that he did not actually receive payments until November 1992. Those benefits therefore are payments for loss of income, which must be deducted from the Applicant's no-fault benefits.

(iii) The CPP benefits: The Applicant conceded at the hearing that the CPP benefits are payments for loss of income. I understand that the Applicant based his argument on deductibility in this matter on my decision in Michael Morin and The Personal Insurance Company of Canada, O.I.C. File No. A-000468, dated June 16, 1992. That decision has since been overturned by the Director on appeal, Michael Morin and The Personal Insurance Company of Canada, O.I.C. File No. P-000468, dated February 26, 1993. The Applicant made no submissions that the Morin appeal decision was either wrong or distinguishable in any respect.

I therefore find that the Applicant's CPP benefits are payments for loss of income deductible from his no-fault benefits.

To summarize, I conclude that all the three benefit payments received by the Applicant were deductible from his no-fault benefits. In the result, the Insurer has overpaid the Applicant $45 a week, which I find should be repaid to the Insurer as it was paid in error.

(2) Applicable section of the legislation:

I heard submissions from both parties as to whether the Applicant should have claimed benefits under section 12 or section 13 of the legislation.

The dispute focused on whether the Applicant could be considered to be "employed" under section 12(2) of the No-Fault Benefits Schedule. The Insurer argued that, so long as the employment relationship between the Applicant and his last employer had not been severed, the Applicant was "employed" for the purposes of the No-Fault Benefits Schedule, notwithstanding that he had not actively worked for the employer for more than three years. Therefore, the Insurer submitted, the Applicant ought properly to have applied for no-fault benefits under section 12, rather than under section 13 of the legislation.

It was not disputed that under section 12 of the legislation the Applicant would have been entitled to the minimum benefits of $185.60, since he had been earning no income at the time of the accident of February 1992, and had earned no income for the twelve months prior to the accident.

Neither party argued that the outcome in this case would be affected by whether the Applicant had applied for benefits under section 12 or section 13. It is clear that the wording in both sections, with regard to the deductibility of payments for loss of income, is identical. I held in the original Morin decision that the same words must be construed the same way in both sections, and this finding was upheld by the Director of Arbitrations in the Morin appeal.

Accordingly, the issue whether the Applicant should have applied for benefits under section 12 or under section 13 is moot. In either case, payments for loss of income are required to be deducted. Since the amounts to be deducted are greater than the no-fault benefits payable in either case (whether $185.60 or $185), the Applicant is not entitled to be paid benefits under either section. Accordingly, I decline to rule on the issue of whether the Applicant should be considered employed for the purposes of the legislation.

Expenses:

The Applicant seeks an award of the expenses he incurred in the arbitration hearing. Such expenses are routinely granted, following the criteria outlined by Senior Arbitrator Naylor in the decision of Ralph McCormick and Economical Mutual Insurance Company, O.I.C. File No. A-000139, dated October 2, 1991.

In this case, when the Insurer received the Applicant's application for the appointment of an arbitrator, it sought to add as an issue in dispute the question of the Applicant's ongoing disability.

The Applicant, in his Reply and at the pre-hearing, argued that the Insurer was estopped from raising this issue. The pre-hearing arbitrator held that the Insurer was not so estopped, and proceeded to order that the relevant medical information be exchanged.

The parties complied with the order of the pre-hearing arbitrator, and exchanged a great deal of medical information. Prior to the first hearing day, I was provided with much medical documentation from both sides. On the hearing day, a medical doctor was present to testify on behalf of the Applicant.

At the start of the hearing, counsel for the Applicant made a preliminary motion, submitting that I had no jurisdiction to deal with the issue of disability, since the Applicant did not agree that this issue should be dealt with.

My jurisdiction to hear and determine the issues in dispute between the parties is set out in the Insurance Act at section 282. That section provides:

(1) An insured person seeking arbitration shall file an application for the appointment of an arbitrator with the Commission.

(3) The arbitrator shall determine all issues in dispute and such other issues as the parties may agree.

In short, I have the jurisdiction to determine the issues as defined by the Applicant, and such other issues as the parties may agree. The Insurer is not precluded or estopped from raising issues to be dealt with at the arbitration hearing. However, the Applicant must agree to such issues being added. Similarly, the Insurer must agree if the Applicant wishes at any point after the application to add another issue for determination.

At no point after the pre-hearing did the Applicant take action to indicate that he did not agree to the determination of the issue of disability. In my view, the Applicant (who was represented by legal counsel) should have clearly indicated, at some preliminary stage, that he did not agree to this issue being raised. This would have eliminated the need for the parties to exchange volumes of medical information, and would have saved the Applicant's doctor an unnecessary attendance at the hearing.

In the event, I am prepared to grant the Applicant his expenses incurred in relation to the issue of the deductibility of payments for loss of income. However, I do not feel that the Applicant is entitled to his expenses for the disability issue, in view of his failure to take any steps that would have minimized the expenses incurred by both sides in relation to that issue.

Order:

1. The automobile insurance benefits, long-term disability benefits, and CPP benefits received by the Applicant are all payments for loss of income, which are deductible from any no-fault benefits paid to the Applicant.

2. I decline to rule on the question of whether the Applicant should properly have applied for benefits under section 12 or under section 13 of the No-Fault Benefits Schedule since, in any event, the question is moot.

3. The Applicant is entitled to his expenses incurred in the arbitration in respect to the issue of payments for loss of income.

May 28, 1993

Frederika M. Rotter Senior Arbitrator

Date