Wawanesa Mutual Insurance Company v. Carlo Caringi, 1996 ONICDRG 188

Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1996 ONICDRG 188

Application V-000860

OFFICE OF THE DIRECTOR OF ARBITRATIONS

WAWANESA MUTUAL INSURANCE COMPANY Appellant

and

CARLO CARINGI Respondent

Before: Elisabeth Sachs

Counsel: Brian C. Atherton (for Wawanesa Insurance Company) D. Kevin Davis (for Carlo Caringi)

ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The application for a variation of the arbitration order dated February 18, 1993 is granted, and paragraphs 3 and 4 of the order are revoked.

2. The following issues are remitted for adjudication before the Director:

(A) Whether Canada Pension Plan payments are to be deducted in determining the correct amount of weekly benefits paid to Mr. Caringi, and if so, in what amount;

(B) If the answer to (A) is 'yes', is Wawanesa entitled to any repayment of weekly benefits paid, and if so, in what amount;

(C) Expenses of the parties in the proceeding.

3. Mr. Caringi is entitled to his reasonable expenses of this variation application.

November 4, 1996

Elisabeth Sachs Director of Arbitrations

Date

REASONS FOR DECISION

I. NATURE OF THE PROCEEDING

This is an application by Wawanesa Mutual Insurance Company ("Wawanesa") to vary an arbitration order, dated February 18, 1993, pursuant to subsection 284(3) of the Insurance Act, R.S.O. 1990, c.I.8, as amended (the Act). The Director may vary or revoke an arbitral order and make a new order if satisfied that:

there has been a material change in the circumstances of the insured or that evidence not available on the arbitration or appeal has become available or that there is an error in the order....

Wawanesa contends there is "an error in the order" resulting from the arbitrator's refusal to deal with the deductibility of Carlo Caringi's Canada Pension Plan (CPP) disability benefits and its claim for a repayment of benefits if the amount is deductible.

II. BACKGROUND

At the time of his motor vehicle accident on October 26, 1990, Mr. Caringi was receiving disability benefits from two sources: the Workers' Compensation Board (WCB) and under the CPP. He was also receiving a WCB supplement.

From the date of the accident until September 28, 1991, Wawanesa paid Mr. Caringi weekly benefits pursuant to subsection 13(1) of O. Reg. 672, Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 (the Schedule). The benefit amount was calculated by Wawanesa without making any deduction of other benefits for loss of income as permitted by subsection 13(3) of the Schedule:

13(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.

Wawanesa stopped paying benefits after September 28, 1991, claiming Mr. Caringi no longer suffered from any inability to do his essential tasks. Mr. Caringi claimed continuing entitlement to benefits, and applied for arbitration. Wawanesa's original Response by Insurer, filed in the proceedings, stated:

The Insured no longer suffers the requisite disability to be entitled to continuation of no-fault benefits. No-fault benefits should not have been paid in the first instance, because the Insured receives over $1,600.00 per month from Worker's Compensation and Canada Pension Plan as income replacement benefits. This would reduce the potential weekly income benefits paid under this Policy to 0. The Insured has actually received an over-payment, but the Insurer is not requesting reimbursement at this time.

(Emphasis added)

Mr. Caringi represented himself at the pre-hearing conference. During the pre-hearing, Wawanesa offered not to seek any repayment of weekly benefits based on Mr. Caringi's receipt of pension benefits if he withdrew his arbitration application. He did not do so. The repayment issue was thus apparently left open.

The hearing was scheduled to start on June 15, 1992. Before the hearing, in a letter dated April 29, 1992 addressed to the Registrar and copied to Mr. Caringi, counsel for Wawanesa formally requested the issue of repayment be included in the hearing. Counsel specifically referred to the WCB pension Mr. Caringi was receiving. No reference was made to the CPP pension. In submissions before me, counsel for Wawanesa indicated that to the extent this letter limited Wawanesa's claim to repayment of benefits up to the amount of that pension only, it was inaccurate. Counsel argued the reference, by implication, was to any benefit payment "paid to the insured person through error or fraud," relying on section 27 of the Schedule, the one he cited in his letter. Counsel claims Wawanesa was reiterating the position it took at the pre-hearing - repayment of all weekly benefits paid.

The transcript of the hearing shows quite clearly that both parties addressed the WCB and CPP pension deductibility in their submissions, with no objection from the arbitrator. Mr. Caringi's counsel conceded pension deductibility was argued, but not on the repayment of benefits already paid. He submits the argument was only in respect of the proper amount of future weekly benefits.

After the arbitration hearing was over, but before a decision was rendered, the appeal decision in Morin and the Personal Insurance Company of Canada¹ was released. The arbitrator sent it to both parties, asking for their comments. Although she received the parties' written submissions with respect to the applicability of the Morin case and a further letter from Wawanesa's counsel commenting on the court decision Levata and Simcoe and Erie General Insurance Company² (on the nature of CPP payments as ones "for loss of income" and their deductibility), the arbitrator did not deal with the question of the deductibility of the CPP pension in her decision. She wrote at page 24:

No request was made for repayment of the Canada Pension Plan payments.

And at page 27:

It is not necessary for me to determine the issue of the deductibility of the CPP pension in this case. I have found that the Applicant is not entitled to ongoing benefits, and no repayment of these benefits is sought by the Insurer. Therefore, I make no findings as to whether the Applicant's pension is deductible as a payment for loss of income under section 13(3).

(Emphasis added)

The arbitrator dealt with nature and deductibility of the WCB pension, concluding it was not deductible from Mr. Caringi's weekly benefits.

The transcript shows concern over the amount of both the WCB and CPP pensions to be deducted was demonstrated at several stages during the hearing. After a ruling from the arbitrator on the admission of certain medical evidence, counsel for Mr. Caringi prefaces his argument on entitlement to weekly benefits with the following comment:

I understand my friend will be raising arguments with respect to the deductibility of W.C.B. benefits and C.P.P. benefits, and I prefer to reply to his arguments once they are raised.

(Transcript, p. 162)

During submissions by Wawanesa's counsel on some medical evidence, the arbitrator asked:

Arbitrator: Mr. Atherton, just to stop you there. With respect to benefits from September, 1991, I had understood that Wawanesa was taking the position that it might have a right of repayment of benefits, on the basis of disability, retrospectively from September, 1991, presumably back to the date of the accident.

Mr. Atherton: That is correct.

Arbitrator: So the period, I understand, is really from the date of the accident onwards.

Mr. Atherton: Well, I think what we are really talking about is that if Mr. Caringi is entitled to payment of benefits, next question is: Is there any deduction to be made from the benefits payable?

It is our position that both W.C.B. and C.P.P. payments should be deducted. Given the amount of benefits he is receiving, that would work out to a zero payment....So, I do not think there is any dispute with the fact that he qualified for at least the payment he was paid for, the deductibility question aside... I think what we are looking at is whether there is continued entitlement if they are not to be deducted.

(Transcript, p. 183 - 184 with emphasis added).

Shortly thereafter, the following exchange took place:

Arbitrator: I am sorry, with respect to my last comment, I was not clear from Wawanesa whether it was its position that benefits had been overpaid, vis a vis, disability, or whether it was simply with respect - an issue with respect to quantum.

Mr. Atherton: Just with respect to quantum.

(Transcript, p. 185 with emphasis added)

Mr. Atherton then concludes his submissions with respect to Mr. Caringi's activities and the arbitrator allows reply from Mr. Davis at that point, before Mr. Atherton turns to the issue of "the deductibility of the benefits."

Mr. Atherton states at page 232 of the transcript:

As indicated, there are two issues both dealing with the deductibility of the benefits Mr. Caringi is receiving. The first one is the W.C.B. benefit and the second is the C.P.P. benefit.

He begins his submissions with the WCB pension benefit, then turns to the CPP payments.

The Dispute Resolution Practice Code (July 20, 1990) in force at the time of this proceeding, stated at section 11.2 (d):

11. Response by Insurer

....(d) An insurer will not be permitted to raise an issue or other matter not set out in the Response or Report of Mediator except with leave of the arbitrator.

In my view, it is implicit in the words and actions of the arbitrator at the hearing, and in the weeks following when the Morin and Levata decisions were commented upon, that she understood and accepted that the issue of deductibility of the CPP disability benefit was to be dealt with in the proceeding. The question still remains whether repayment was a live issue.

Repayment to Wawanesa of benefits paid through error or fraud was not explicitly argued. It is not clear whether it was assumed by the parties that their arguments to the arbitrator related to past or only future benefits, or both. At the time of the pre-hearing, Wawanesa's position was plain, and thereafter somewhat muddied by the letter referring to only one of Mr. Caringi's pensions.

I find there is an error in the arbitrator's conclusion that "no repayment of these benefits is sought by the Insurer". It is manifest to me, in reviewing the transcript and the balance of the arbitral record, that Wawanesa's desire for a determination on the deductibility of WCB and CPP benefits was not only to quantify any future benefits it might be ordered to pay, but also to quantify the correct amount of Mr. Caringi's entitlement with a view to recouping past benefits paid. The argument Wawanesa advanced was that the correct weekly benefit amount from the date of the accident was zero. If the arbitrator believed the issue of deductibility of the WCB and CPP pensions only pertained to future benefits, then it was just as unnecessary for her to decide the issue with respect to WCB benefits as CPP benefits once she concluded that Mr. Caringi's benefits were not to continue beyond their original termination date.

The arbitrator relied on the wording of the April 29, 1992 letter to the Commission respecting repayment of WCB benefits. However, in that letter, counsel refers to the section of the Schedule pertaining to repayments to be made based on error or fraud. In my view, if the arbitrator had not requested additional submissions and had Wawanesa not taken the position at the pre-hearing it did, the wording of the letter might have ended the matter. The emphasis on WCB benefits is perhaps misplaced. Nevertheless, it is apparent to me no one could have been surprised or misled by Wawanesa's position on the deductibility of both pension payments to past payments.

The issue of whether CPP payments are to be deducted in calculating Mr. Caringi's correct weekly benefit should be resolved, along with the Wawanesa's request for repayment.

In the event the parties cannot settle the issues at this stage, I am prepared to deal with them by way of written submissions (covering ground not already canvassed in the transcript) and oral submissions, if desired.

Mr. Caringi is entitled to his reasonable expenses of this application.

November 4, 1996

Elisabeth Sachs Director of Arbitrations

Date

Footnotes

1. 1Morin and The Personal, (February 26, 1993, OIC P-000468). The case dealt with the deductibility of a CPP pension under subsection 13(3) of the Schedule. Notably, it did not determine whether CPP payments were for "loss of income" (as counsel had agreed they were) but dealt with their deductibility in circumstances where section 13 of the Schedule applied.
2. 2Levata v. Simcoe and Erie General Insurance Company, [1992] O.J.N.O. 1778.