Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1996 ONICDRG 38

Appeal P-002249

OFFICE OF THE DIRECTOR OF ARBITRATIONS

Concetta Bruno

Appellant

and

Liberty Mutual Insurance Company

Respondent

Before:

Elisabeth Sachs

Representatives:

Tina Bruno (Agent for the Appellant)

Khalid I. Baksh (Counsel for the Respondent)

APPEAL ORDER

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

1. The appeal is dismissed and the arbitration order dated May 6, 1993 is confirmed.

2. Mrs. Bruno is entitled to her expenses of the appeal fixed in the amount of $100.00.

March 8, 1996

Elisabeth Sachs

Director

Date

REASONS FOR DECISION

I. BACKGROUND

The appellant, Concetta Bruno, was injured in a motor vehicle accident on October 4, 1990. She received weekly benefits from the respondent insurer, Liberty Mutual Insurance Company (Liberty Mutual) under section 13 of O. Reg. 672, Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 (the Schedule) until they were terminated on June 5, 1992.

The termination of benefits came about just after Mrs. Bruno informed Liberty Mutual that she had started to receive Canada Pension Plan (CPP) disability payments. Liberty Mutual claimed it was entitled to deduct the total amount of the CPP benefits attributable to her from the weekly benefits otherwise payable, reducing her weekly benefits under section 13(1) of the Schedule to about $40. No issue was taken with respect to benefits payable under section 13(4) for Mrs. Bruno's eligible children.

The CPP benefit initially paid to Mrs. Bruno was by a lump sum retroactive to February, 1991. This meant she effectively received both weekly and CPP benefits for a period of about seventeen months. Liberty Mutual claimed a return of the weekly benefit it had paid to Mrs. Bruno during that time, or about $10,220.

Mrs. Bruno disputed Liberty Mutual's reduction of benefits and repayment claim, and in turn claimed the cost of airfare to Italy under section 6(1)(f) of the Schedule for a trip she took almost two years post accident.

The arbitrator concluded, following the appeal decision in Morin¹, that Mrs. Bruno's CPP benefits are deductible from weekly benefits under section 13(3) of the Schedule, and ordered repayment by way of an offset against future benefits payable. He also denied Mrs. Bruno's claim for the airfare, finding it was not a "reasonable medical expense" under the Plows² criteria.

With her appeal documentation, Mrs. Bruno submitted a new medical report written by her doctor after he reviewed the arbitrator's decision. After hearing oral submissions, I determined the report would not be admitted as fresh evidence on appeal.³ This decision disposes of the balance of the issues raised.

II. ISSUES AND ANALYSIS

A. Deductibility of CPP Benefits

The arbitrator applied the Morin⁴ decision in this case, determining that the amount Mrs. Bruno received on her own account from the Canada Pension Plan, must be deducted from her weekly benefits in accordance with section 13(3) of the Schedule. This case is no different in substance from Morin, and there is no reason to depart from my determination that CPP disability benefits fall into the class of payments "received by or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan."

In the Morin case, the parties agreed the payments were characterized as "payments for loss of income", and neither party appeared to argue otherwise here. However, Mrs. Bruno's Notice of Appeal and oral submissions showed some confusion about the nature of, and eligibility for, CPP payments. She expressed the view that she was awarded CPP benefits as a "disabled housewife" with no income, although she did recognize the payments were partially earnings related. It is clear that Mrs. Bruno and her children received these benefits because Mrs. Bruno qualified as a "disabled contributor" under the CPP scheme, having worked outside the home for a number of years prior to becoming a full time homemaker in 1985.

In its Response, Liberty Mutual refers to the court decisions of Paese and Levata⁵ and my discussion in Morin where I stated, at p. 10 - 11:

In construing the intent of the legislation in using the words "less any payment for loss of income" the court found the compensation was for an insured person's inability to continue as a wage earner, whether employed or not, at the time of the disability. Essentially the compensation was for the loss of opportunity to become employed as opposed to the loss of actual employment income, and it does not matter if the individual was unemployed at the time.

The context is no-fault insurance. There are no "damages" The legislation provides for a deduction from a benefit otherwise payable. The benefits themselves may not be earning related. There is a benefit conferred on persons involved in automobile accidents from which any earnings related payment is to be deducted....

I do not believe that the fact that the respondent in this case may never become employed or never intended to seek any form of remunerative employment makes any difference. The legislation was not intended to provide loss of income benefits over and above an actual loss where the income payments being received matched or were more than the benefits otherwise payable under s.13.

A similar conclusion on the deductibility of CPP disability payments from benefits payable under the former Schedule "C" to the Act⁶ was reached by Justice R.E. Holland on a motion before trial on a question of law in Parks v. Guarantee Company of North America:⁷

Disability pensions are only payable to contributors - that is persons who have made employees' contributions or who have contributed in respect of self-employed earnings. The pension is calculated in part on a flat rate, and in part upon the amount of pensionable earnings received during the course of employment.(... )

To qualify, a person must have been an income earner and the pension is calculated in part with reference to past income. I conclude that the payments are for loss of income from employment.

In my view, it is well established that CPP disability payments are "payments for loss of income" and thus deductible under section 13(3)(a) of the Schedule.

B. Cost of Living Adjustment and Child Benefits

Two points respecting the amount of the deduction to be made for CPP benefits in this case need to be clarified.

Mrs. Bruno argued the deduction should be fixed at the 1991 level first granted to her. From the plain wording of section 13(3), it is my view that the actual amount of the CPP benefit received is to be deducted, including any adjustment for cost of living made by the Plan from time to time. Unlike the section found under the former Schedule "C"⁸ which provided that "no deduction shall be made for any increase in such payment [ i.e. other payments for loss of income] due to a cost of living adjustment subsequent to the insured person's substantial inability to perform the essential duties of his occupation or employment...", no such language appears in the Schedule under consideration here.

Secondly, in calculating the deduction to be made, Liberty Mutual considered only that portion of Mrs. Bruno's CPP disability benefit attributable and payable to her in respect of the disability. In fact, Mrs. Bruno also received a further payment of CPP benefits under section 44(1)(e) of the Canada Pension Plan Act⁹ which provides "a disabled contributor's child's benefit shall be paid to each child of a disabled contributor...". Under section 75, if the child has not yet reached age eighteen, the payment is "made to the person or agency having custody and control of the child". Liberty Mutual's approach is the proper one. The words of section 44 (1)(e) clearly describe the benefit as income payable to the child, which does not fall within the scope of the deduction in section 13(3) of the Schedule. In this observation, I find the reasoning of the Saskatchewan Court of Appeal's recent decision in Mutual Life Assurance Company of Canada v. Peter Dubasoff¹⁰ compelling. The Ontario case, Ormonde v. London Life Insurance Company¹¹, holding to the contrary, must be distinguished on the basis of the significantly different language in the policy being interpreted in it.

C. Airfare Claim

In concluding that the claim for reimbursement of the cost of an airline ticket did not meet the required standards under section 6(1)(f) of the Schedule, the arbitrator considered two medical reports (Exhibit 3) from Mrs. Bruno's physician. Her doctor had diagnosed chronic pain as well as anxiety depressive symptoms. The arbitrator also relied on Mrs. Bruno's own testimony. He found the doctor's recommendation that Mrs. Bruno "go away for vacation to Italy" (noted as "beneficial") while her prognosis "remains poor" not sufficient, coupled with the availability of hydrotherapy locally, to meet the test that the expense was necessary for her treatment or rehabilitation. Nor was the expense qualified by the potential psychological benefits of being with supportive relatives who, paradoxically perhaps, might have had a claim to come to Canada to assist in Mrs. Bruno's recovery under section 6(2) of the Schedule. The value of the trip, undertaken almost two years after the accident, was diminished by Mrs. Bruno who testified that by the time of the hearing "things are no better than before".

The test on appeal is not what another adjudicator might find given this evidence .The duty of the Director, as opposed to that of an arbitrator at the initial hearing, has been canvassed in several decisions.¹² The arbitrator must hear the witnesses, review the documents presented and consider the submissions of the parties in relation to that evidence. The arbitrator must weigh the evidence, assess its credibility, and then accept or reject it. The arbitrator's findings are based on the evidence subjected to this scrutiny. It is not the Director's function to re-try the issues as if they were being presented for the first time, nor to interfere with the arbitrator's findings in relation to the evidence unless they have insufficient or no evidence to support them. The appellate function does not contemplate substitution of a different conclusion where the arbitrator's findings are supportable once the evidence is reviewed.

Added to this is the principle that interference in an arbitrator's determination as to what may be reasonable on the specific facts of a case, involving as it does the exercise of judgment by him or her, should only occur if the exercise was undertaken on improper grounds or in disregard of the evidence.

Applying these considerations to the findings in this case after reviewing the arbitration record and exhibits, I cannot say the arbitrator proceeded on the wrong principles, or came to a conclusion unsupported by the evidence.

III EXPENSES

Although Mrs. Bruno was not successful on the main issues, she did raise substantial questions about the nature of CPP disability payments, and their overall deductibility from weekly benefits under the Schedule. I found the submissions made on her behalf to have been concise and thoughtful. In the circumstances, Mrs. Bruno will be entitled to her appeal expenses, fixed at the filing fee paid of $100.00.

March 8, 1996

Elisabeth Sachs

Director

Date

Footnotes

1. 1Michael Morin and The Personal Insurance Company of Canada, (OIC File P-000468, February 26,1993).
2. 2Richard Mark Plows and Jevco Insurance Company, (OIC File P-000175, P-000588, May 22, 1992).
3. 3Concetta Bruno and Liberty Mutual Insurance Company, Preliminary Motion Appeal Decision (OIC File P-002249, August 31, 1993).
4. 4Supra, note 1.
5. 5Paese v. United States Fidelity and Guaranty Company (1985), 1985 CanLII 1984 (ON HCJ), 17 C.C.L.I. 1(Ont. Dist.Ct.) and Levata v. Simcoe and Erie General Insurance Company,[1992] I.L.R. 1-2868 (Ont. Gen. Div.).
6. 6R.S.O. 1980, c. 218.
7. 7[1989] O.J. 1511 (H. Ct.)
8. 8Part II - "Loss of Income" of subsection 2 "Death Benefits and Other Loss of Income Payments
9. 9R.S.C. 1985 c. C-8
10. 101995 CanLII 3933 (SK CA), [1995] S.J. No. 171, Reasons: March 23, 1995.
11. 11[1991] I.L.R. 1-2696 (Ont. Gen. Div.).
12. 12See Vito Luigi Calogero and The co-operators General Insurance Company,(OIC File P-000251, February 13, 1992) and the recent cases applying the principles first enunciated in that decision.