Timothy E. Prouse v. Non-Marine Underwriters, Mbrs. of Lloyd's, 1999 ONFSCDRS 42

Neutral Citation: 1999 ONFSCDRS 42

FSCO A98-000701

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TIMOTHY E. PROUSE

Applicant

and

NON-MARINE UNDERWRITERS, MBRS. OF LLOYD'S

Insurer

REASONS FOR DECISION

Before:

Nancy Makepeace

Heard:

By agreed statement of facts and written submissions dated February 5, 1999, February 8, 1999 and February 12, 1999.

Representatives:

David M. Miller for Mr. Prouse

Rodney D. Dale for Non-Marine Underwriters, Mbrs. of Lloyd's

Issues:

The Applicant, Timothy E. Prouse, was injured in a motor vehicle accident on March 10, 1995. He applied for and received statutory accident benefits from Non-Marine Underwriters, Mbrs. of Lloyd's ("Lloyd's"), payable under the Schedule.[1] The parties disagreed about the amount of weekly income replacement benefits payable. The parties were unable to resolve their dispute through mediation, and Mr. Prouse applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Does the Applicant's "gross annual income from employment" include benefit premiums paid by his employer?

2. Is the Applicant entitled to interest on any amounts owing under section 68 of the Schedule?

3. Is either party entitled to its expenses incurred in this arbitration proceeding?

Result:

1. The Applicant's "gross annual income from employment" includes the benefit premiums.

2. The Applicant is entitled to interest on the benefits owing.

3. The issue of expenses may now be spoken to.

EVIDENCE AND ANALYSIS:

Agreed Facts:

The parties filed an Agreed Statement of Facts, the main points of which are as follows.

The Applicant was injured in a motor vehicle accident on March 10, 1995. At the time of the accident, he was employed as a machinist at Infatool, where he had worked since 1979. He has not been able to return to work since the accident.

The Applicant's bargaining unit was represented by the United Steel Workers of America, Local 3683. The collective agreement between the union and the employer required the employer to pay 100 percent of premiums for life insurance, dental benefits and medical benefits for all bargaining unit members. The total cost of the premiums at the time of the accident was $78.60 per month.

Lloyd's based the Applicant's benefit rate on his gross annual income from employment, without including the benefit premiums paid by Infatool.

Law:

Sections 9 and 10 of the Schedule set out the method for calculating the amount of an insured person's weekly income replacement benefit ("IRB"). Subsection 10(1) provides that the IRB shall be 90 percent of the insured person's "net weekly income from employment determined in accordance with section 81 or 82" of the Schedule. Sections 81 and 82 provide alternative methods for determining "net weekly income from employment" based on "gross annual income from employment." Pursuant to subsection 9(1), "gross annual income from employment" is based on an insured person's income for the 4, 52, or 156 weeks before the accident.

The terms "income" and "gross income" are not defined in the Schedule or the Act. I find that the Schedule is ambiguous as to whether benefit premiums paid by the employer are included in or excluded from "gross income."

There are two previous arbitration decisions directly on point.

Mouawad v. Alpina Insurance Company, Limited dealt with the predecessor provision, subsection 12 of the Statutory Accident Benefits Schedule —Accidents on or before December 31, 1993 ("the 1990 Schedule”). Under the 1990 Schedule, an insured person's weekly income benefit was based on his or her "gross weekly income" in the 4 or 52 weeks before the accident. The applicant in that case was a carpenter. Further to his collective agreement, the employer paid his wages — $28.67 per hour at the time of the accident — to his union. Of that amount, the union retained $3.58, which it used to pay for health and welfare plans, pension plans, and supplementary unemployment insurance benefits for members of the bargaining unit. The union then forwarded the remainder to the applicant. Arbitrator Mackintosh concluded that the benefit portion of the applicant's hourly rate was paid by the employer "in return for the [a]pplicant's labour" and was "of value" to him: "[i]n effect, the Applicant contributes $3.58 of each hour of pay earned by him, toward the cost of benefit plans provided through his union." Accordingly, she held that the benefit premium was part of the applicant's gross income."

In Crevier-Lamarche v. Missisquoi Insurance Company,iii Arbitrator Rotter held, following Mouawad, that the employer'