FSCO A99-000707

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

DIANE LEDREW

Applicant

and

PILOT INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

David J. Evans

Heard:

By written submissions received January 4, February 29, and March 31, 2000.

Appearances:

Tricia McAvoy for Ms. Ledrew

Martin E. Tiidus for Pilot Insurance Company

Issues:

The Applicant, Diane Ledrew, was injured in a motor vehicle accident on July 5, 1998. She applied for and received statutory accident benefits from Pilot Insurance Company ("Pilot"), payable under the Schedule.¹ She initially received income replacement benefits ("IRBs"), then elected caregiver benefits, and at the pre-hearing in this matter in October 1999 she re-elected IRBs. Ms. Ledrew disputes the amount of the IRBs. Pilot in turn seeks repayment of benefits allegedly overpaid and is deducting 20 percent of Ms. Ledrew's IRB in order to recover the overpayment. The parties were unable to resolve their disputes through mediation, and Ms. Ledrew 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. What is the amount of the weekly income replacement benefit to which Ms. Ledrew is entitled pursuant to section 6 of the Schedule?

2. Is Ms. Ledrew required to repay the caregiver benefits she received from Pilot, pursuant to section 47 of the Schedule?

3. Is Pilot liable to pay Ms. Ledrew's arbitration expenses under section 282(11) of the Insurance Act?

Ms. Ledrew also claims interest on any amounts found to be owing to her.

Result:

1. Ms. Ledrew is entitled to a weekly income replacement benefit of $59.69.

2. The hearing will be continued to hear evidence on the issue of repayment and any outstanding interest.

3. Expenses will be determined at the conclusion of the hearing.

EVIDENCE AND ANALYSIS:

This hearing proceeded by way of written submissions. Unfortunately, the parties did not prepare an agreed statement of facts. The parties appear to agree on enough facts relating to the IRB quantum to allow me to make a decision.

However, the parties disagreed on so many points regarding the repayment issue that I am not able to make a decision without hearing evidence. In fact, the situation changed even as the submissions were advanced, as is set out in further detail below.

Quantum of weekly income replacement benefit:

On Sunday, July 5, 1998, Ms. Diane Ledrew was involved in a serious single vehicle accident. She was eventually declared to be catastrophically impaired.²

At the time of the accident, Ms. Ledrew had just started employment after a long period of being at home with her children. Her new job was as a superintendent with Grover Realty Property Management. She and her family (two children and common-law spouse, Raynnie Toulouse) took possession of the apartment provided with her job on Monday, June 29, 1998. Her position required her to clean and maintain a 65-unit apartment building. Her essential duties included cleaning, performing minor repairs, overseeing garbage disposal, removing snow and ice, collecting rent and delivering arrears and eviction notices to tenants.

Mr. Toulouse prepared the initial Application for Accident Benefits. It indicates that Ms. Ledrew commenced employment on July 1, 1998 at an annual salary of $16,000 and that she also cared for her two children. The Employer's Confirmation of Income shows that Ms. Ledrew earned $308 in the one week before the accident. An additional undated document on Grover Realty's letterhead breaks down Ms. Ledrew's monthly wages into cash remuneration of $400, value of the three bedroom apartment of $781.03 per month, and estimated value of utilities of $154, for a monthly total of $1,335, or $308 a week.³ Thus, her income included both a cash element and value for the use of a free apartment and its utilities.

Ms. Ledrew initially received IRBs of $224.83 on the basis of an annual income of $16,016.⁴ Pilot subsequently took the position that the IRBs should only be based on the income over the four weeks preceding the accident - $308 - thereby greatly reducing the IRB. Pilot took the position that in these circumstances the Schedule only allows for a weekly IRB to Ms. Ledrew of $59.69. Pilot appears to have taken this position in September 1998, and Ms. Ledrew then elected to receive caregiver benefits. (Pursuant to section 36(1), caregiver and income replacement benefits are mutually exclusive.) Although Ms. Ledrew's election was originally an issue in the arbitration proceedings, the parties agreed to withdraw that issue at the pre-hearing and proceed on the issues set out above.

Ms. Ledrew submits that she is entitled to the higher IRB that she initially received.

Ms. Ledrew was working at the time of the accident. It is common ground that as a result of and within 104 weeks after the accident, she suffered a substantial inability to perform the essential tasks of that employment, entitling her to the IRB.⁵ She had to designate a period preceding the accident upon which to calculate the IRB; paragraph 1 of subsection 8(1) allows a designation of the four weeks before the accident.⁶ Subsection 8(3) then sets out the calculation of gross annual income from employment as follows:

(3) For the purpose of determining the amount of an insured person's income replacement benefit, the gross annual income from employment for a person who qualifies for a benefit under paragraph 1 of section 4 shall be deemed to be the following amount:

1. In the case of a person who designated the four weeks before the accident under paragraph 1 of subsection (1), the person's gross income from employment for the four weeks before the accident, multiplied by 13.

As Ms. Ledrew only earned the amount of $308 in the four weeks before the accident, multiplying that amount by 13 leads to a gross annual income of $4,004 and an IRB of $59.69.

Ms. Ledrew presents two arguments in favour of the higher IRB. First, she proposes that, even though she fits within paragraph 1 of section 4 ("employed at the time of the accident") I should deem her to be entitled under the "future contract" provisions of paragraph 3, namely "entitled at the time of the accident to start work within one year under a legitimate contract of employment." As her counsel puts the matter in her submissions:

Had the accident occurred on June 28, 1998, one week earlier, Ms. Ledrew's income replacement benefit would clearly be calculated on the basis of her employment contract, and would be extrapolated to reflect her true gross annual income of $16,020.36.

Ms. Ledrew relies on the Reith decisions.⁷ In that case, the applicant had a future contract with UPS but was in a training course with the same employer at a lower wage rate at the time of the accident. The insurer argued that the applicant was not entitled to an IRB based on the higher rate because the higher rate represented only a pay increase. The arbitrator held that the applicant was entitled to compensation based on paragraph 4.3. At issue was whether or not the applicant had already started his job. The arbitrator found that he had not started the job. Director's Delegate Makepeace upheld this decision, noting that she could "think of no policy reasons for putting Mr. Reith in a worse position than he would have been in if the accident had occurred the week before the course began."

However, in Reith, the Schedule was open to two interpretations, one of which could fit within its general policy considerations. I find that there is no possible interpretation of paragraph 4.3 that would allow Ms. Ledrew to fit within it, as she had already started the job, unlike in Reith. I find no power in the Schedule to allow me to fit Ms. Ledrew within paragraph 4.3, despite the fact that she is in a worse position than if the accident had occurred a week earlier.

As has been pointed out before, the Schedule provides "rough justice" in some cases.

Ms. Ledrew's second argument is that her income, or at least a large portion of it, was payable at the beginning of the month, as rent is traditionally prepaid or comes due on the first of the month. Therefore she should be considered to have received the full cash value of her month's wages before the accident.

However, I find that the relevant question is when the income is earned. I quote the following from the Gaudreault appeal decision⁸:

The critical time is when the income is earned, rather than the date of payment. A common situation is the wage earner who is paid at some point after the work period. For example, the worker may be paid one week in arrears. In my opinion, the income is for the period worked, even though it is received at a later date.

I find that reasoning equally applicable here. Even though there may have been an advance payment, the income is for the period worked. and Ms. Ledrew had worked only one week. Accordingly, I find that at the time of the accident Ms. Ledrew had earned only her one-week income of $308 in the four weeks preceding the accident.

I find that Ms. Ledrew is entitled to a weekly IRB of only $59.69.

Repayment:

Paragraph 47(1)(a) of the Schedule provides that a person shall repay to the insurer "any benefit under this Regulation that is paid to the person as a result of an error on the part of the insurer, the insured person or any other person, or as a result of wilful misrepresentation or fraud."

Pilot argues that the addition of the words "error on the part of the insurer" means that recovery of overpayments is available to an insurer even if there is no responsibility for the overpayment that is attributable in some material way to the actions of the applicant.

Interesting as this argument is, the parties did not provide an agreed statement of fact but only submissions. These submissions disagree on important points. Thus, I find that I cannot make a ruling without making findings of fact after hearing evidence.

The important points relate to both the question of whether there was an overpayment and, whether, even if there were an overpayment, the doctrine of estoppel could apply to excuse Ms. Ledrew from making repayments.

For instance, Ms. Ledrew pointed out in her original Submissions prepared at the end of December 1999 that Pilot had not provided her with any notice concerning the amount of any alleged overpayment. Pilot took steps to remedy the situation, as its Submissions contain a letter to Ms. Ledrew dated February 17, 2000, setting out the alleged overpayment of caregiver benefits and seeking repayment from February 17, 1999. Its submissions then state that Ms. Ledrew was paid $300 per week, although she did not "submit any evidence to establish that any expenses were incurred in caring for a person in need of care." In her Reply Submissions, Ms. Ledrew then stated that she was never paid a flat rate and only received benefits for expenses incurred:

The insurer accepted the receipts and at no time did the insurer question the expenses. Ms. Ledrew does not possess copies of these receipts. They are in the possession of the insurer. The Applicant's solicitors have requested that copies of these receipts be delivered.

These submissions also include a number of reports directed to Pilot setting out that Ms. Ledrew required caregiving help until August 1999. In particular, the report of Interactive Rehabilitation Services Ltd. dated December 10, 1998, which was in effect through April 1999, and thus was in effect during the period for which Pilot seeks repayment, finds that Ms. Ledrew had caregiving requirements of 7.5 hours each day during weekdays and 10 hours per day during weekends.

I find that I will have to make findings of fact after hearing evidence regarding the questions of overpayment and estoppel. Accordingly, I order that the hearing be continued by means of evidence presented before me. I also leave the question of any outstanding interest to the continued hearing. I leave it to the parties to arrange the hearing dates with the Commission.

EXPENSES:

I leave the question of expenses until the completion of the hearing.

August 21, 2000

David J. Evans Arbitrator

Date

Neutral Citation: 2000 ONFSCDRS 151

FSCO A99-000707

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

DIANE LEDREW

Applicant

and

PILOT INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Ms. Ledrew is entitled to a weekly income replacement benefit of $59.69.

2. The hearing will be continued to hear evidence on the issue of repayment and any outstanding interest.

3. Expenses will be determined at the conclusion of the hearing.

August 21, 2000

David J. Evans Arbitrator

Date

Footnotes

1. 1Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98
2. 2Catastrophic Impairment Determination Summary Report of August 10, 1999, Applicant's Submissions tab C.
3. 3$1,335 divided by 4.33. The parties disagree on the genesis and transmission of this document, but Pilot did not dispute its accuracy.
4. 4Explanation of Benefits Payable dated 1999/07/28, Pilot's Submissions, tab 3.
5. 5Paragraph 1 of section 4.
6. 6Paragraph 2 of subsection 8(1) allows an alternate designation of 52 weeks, which would not assist Ms. Ledrew.
7. 7Reith and Halifax Insurance Company (FSCO A98-000023, July 15, 1998) and appeal (FSCO P98-00037, July 16, 1999).
8. 8Gaudreault and Pilot Insurance Company, (OIC P-007144, November 2, 1995).