Neutral Citation: 1996 ONICDRG 43
ONTARIO INSURANCE COMMISSION
BETWEEN:
AURELIA BRASIL
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
DECISION
Issues:
Manuel Brasil died as a result of an automobile accident on June 11, 1993. He was in the course of his employment at the time of the accident. The Applicants are: Aurelia Brasil (spouse), and Nicole and Robert Brasil (children). The Applicants are entitled to receive workers' compensation benefits as a result of Mr. Brasil's death.
State Farm Automobile Insurance Company ("State Farm") insured Mr. Brasil at the time of the accident. Aurelia, Nicole and Robert claim they are entitled to death benefits under the Schedule1 as a result of Manuel's death. State Farm denied the family members' claims. The dispute was not resolved through mediation and the Applicants proceeded to arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issues in this hearing are:
- Are the Brasil family members entitled to death benefits under section 11 of the Schedule?
The Applicants also claim interest on any amounts owing, and expenses incurred in the hearing.
Result:
- The Brasil family members are not entitled to death benefits pursuant to section 11 of the Schedule.
Hearing:
The hearing was held in North York, Ontario, on September 5, 1995, before me, Fred Sampliner, arbitrator.
Present at the Hearing:
Applicants'
Jack Fitch and Bernie Kott
Representatives:
Barristers and Solicitors
Insurers'
Joseph Sullivan and Ron DiVincenzo
Representatives:
Barristers and Solicitors
Insurer's
Peter Robinson
Officer:
Claims Supervisor
The matter proceeded by way of an Agreed Statement of Fact, exhibits and oral submissions.
Exhibits:
Agreed Statement of Fact
Correspondence from the Workers' Compensation Board (August 24, 1995, August 24, 1995, February 2, 1994, November 1, 1993, October 18, 1993)
State Farm's calculation of benefits.
Evidence and Findings:
Manuel Brasil was struck and killed by a motor vehicle while in the course of his employment. As a consequence of Mr. Brasil's employment-related death, the Ontario Workers' Compensation Board paid the funeral expenses of Mr. Brasil. In accordance with section 35 of the Workers' Compensation Act, the Board also paid a lump sum to Mrs. Brasil, and provides an continuing indemnity benefit to Mrs. Brasil for her and the children's support.
The standard automobile insurance policy also provides for lump sum payments to Mrs. Brasil and the children as a result of Manuel Brasil's death. Section 11 of the Schedule entitles the surviving spouse to a $25,000 death benefit, and $10,000 to each of Manuel's surviving dependant children, Nicole and Robert.
State Farm argues that the Schedule does not allow Mrs. Brasil and the children to receive compensation under both systems. Section 20 of the Schedule provides:
- The insurer will not pay benefits under this Schedule in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers' compensation law or plan.
The Brasils maintain that this section was not intended to prevent a spouse and dependants from receiving death benefits under both systems. They argue that the words "insured person" in section 20 refer to Manuel Brasil, not his spouse or children. The Brasils say that section 20 was intended to bar an insured person from recovering weekly indemnity benefits, medical and rehabilitation benefits under the auto plan where similiar benefits are available to him or her under workers' compensation. In essence, this would mean that since Mr. Brasil himself did not receive the death benefits from workers' compensation, his surviving family members can claim the death benefits under both plans.
Secondly, the Brasils argue that the language in section 20 is ambiguous. They say it is not clear who is meant by "insured person". Accordingly, the term should not be restrictively interpreted to exclude a whole class of people, such as the families of deceased insureds. They cite well established principles; that the Schedule should be given a broad and liberal interpretation, and that restrictions in the policy should be strictly interpreted against the insurer, especially where ambiguity exists.2 The Brasils argue that the Legislature should have been more specific in drafting the Schedule if it clearly intended to exclude death benefits where workers' compensation has provided similarly.
I find that the intent of section 20 is clear. The language paints the policy with a broad brush-stroke. In my opinion, it sets out the general objective that if workers' compensation pays benefits as a result of a car accident, then similar benefits under the automobile policy are not available.This avoids the double payment or duplication of benefits from two different systems. The aim is generally reflected in other areas of the Schedule, where it is specifically provided that the auto insurer is not responsible to pay disability benefits, medical and rehabilitation benefits if the injured person can be paid by a private insurer. Thus, the legislative intent to make the auto insurer the payer of last resort is reiterated throughout the Schedule. I find that section 20 reflects the general legislative policy that payments emanate from only one system, and that the no-fault insurer is the payer of last resort.
Indeed, the broad language in section 20 is quite clear. The first phrase of section 20 says "The insurer will not pay benefits" if there is a workers' compensation entitlement. In my view, the word "benefits" refers to all benefits, and I am not persuaded by the Brasils' argument that the drafters were required to specify each particular category of benefits that are excluded from payment under both systems.
Further, I do not see any basis for finding ambiguity in the reference to the insured person. Section 20 says that the insurer shall not pay benefits "in respect of any insured person". Mr. Brasil is the insured person referred to, and the benefits would be payable "in respect of"his death. It is generally accepted that the legal term of art "in respect of" is the broadest possible reference. Logically, I find "in respect of any insured person" encompasses not only payments made directly to the insured person, but also workers' compensation payments made to other persons, arising from the insured person's accident.
A different conclusion was reached in a recent arbitration decision, Kyle Landon Lupien et. al. and General Accident Assurance Company of Canada, December 28, 1995, OIC File No. A-014182. In that case, three children applied for no-fault benefits as a result of their mother's death. They were also eligible for survivor benefits under the workers' compensation plan. However, it appears that the deceased insured's common law spouse had applied for and received these benefits for the children. Arbitrator Jones found that while the words "in respect of any insured person" cast a broad net, the Legislature did not intend section 20 to exclude no-fault benefits unless the claimants actually received the workers' compensation benefits. He interpreted the words "entitled to receive benefits" in section 20 as if the Legislature had written "entitled to and in receipt of." This interpretation reads in a second requirement, which is not contained in the plain language of the section. I find that the Legislature intended the exclusion to apply when workers' compensation benefits are payable in respect of a person, regardless of actual receipt.
In sum, section 20 broadly sweeps in all persons entitled to receive no-fault benefits through the insured person. The Legislature clearly enunciated a policy where claims are either wholly within the workers' compensation system or outside of it, and it is not consistent with the broad policy wording of section 20 and the legislative intent of the Schedule to allow selective choice for benefits under the two systems.
As a consequence of my interpretation of section 20, I find that Mr. Brasil's family is not entitled to death benefits under section 11 of the Schedule.
Repayment:
The parties agree that the Brasils applied for and received benefits from State Farm before the Workers' Compensation Board had advised them that the fund was covering the claim. State Farm paid Aurelia, Robert and Nicole Brasil death benefits totalling $45,000.
Section 27 of the Schedule provides that the insured person must repay any benefits received through error or fraud, together with interest at the established bank rate. These facts present a genuine error, as anticipated by section 27. I therefore find that Aurelia, Robert and Nicole Brasil must repay the $45,000 deaths benefits to State Farm.
However, of that sum, $20,000 represents death benefits to Nicole and Robert. The money was deposited into a bank account, which has probably been accumulating interest at a different rate than an insurer may charge pursuant to section 27(4) and (5) of the Schedule. Since Nicole and Robert Brasil have not maintained control over the funds, it would be unfair to force them to repay any interest above the amount actually earned. Therefore, I suggest that it is reasonable that they pay to State Farm all of the interest that the $20,000 earned in the bank. Effectively, Nicole and Robert, through their counsel, must release all of the funds in the account to State Farm.
On the other hand, the agreed facts state that Aurelia Brasil received the $25,000 spousal death benefit on August 27, 1993. She did not deposit the funds into Court, and has had full use of the funds. I find that State Farm is legitimately entitled to interest on that amount in accordance with section 27. However, because I was not advised when State Farm demanded repayment of the sum, I am unable to order when the interest begins to accrue.
Expenses:
This dispute concerned a genuine and legitimate question of legal interpretation. I have no hesitation in granting the Brasils their expenses of the arbitration process in accordance with the Dispute Resolution Practice Code.
Order:
Nicole and Robert Brasil shall each pay State Farm $10,000, together with all interest which has been earned on that sum in the Court account.
Aurelia Brasil shall pay State Farm $25,000.00 and interest according to section 27 of the Schedule.
State Farm shall pay the Brasils their expenses of the arbitration.
March 12, 1996
Fred Sampliner
Arbitrator
Date
Footnotes
- Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994. In this decision the term '"Schedule" will be used to refer to Regulation 672.
- Fathia Ahmed and Allstate Insurance Company of Canada, May 18, 1994, OIC File No. A-003995; Chevrier et. al. V. Zurich Insurance Company, [1985] ILR 1-1920 (Ont. C.A.)