Singh v. State Farm Mutual Automobile Insurance Company, 2004 ONFSCDRS 1

Financial Services Commission of Ontario

Neutral Citation: 2004 ONFSCDRS 1

FSCO A03-000118 and A03-000119

BETWEEN:

MANJIT SINGH Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Fred Sampliner

Heard: By telephone conference call on October 1, 2003.

Appearances: Michael J. Gillen for Mrs. Singh Donna Ranger for State Farm Mutual Automobile Insurance Company

The Applicant, Manjit Singh, was injured in two automobile accidents on June 1, 2001 and April 9, 2002. She was insured by State Farm Mutual Automobile Insurance Company ("State Farm") on both occasions, claiming income replacement benefits under Part II of the Schedule¹ from the first accident and a weekly caregiver benefit under Part IV of the Schedule as a result of her injuries in the second accident. State Farm maintains that Mrs. Singh cannot receive both weekly benefits concurrently and that she must repay a portion of the income replacement benefits she has received. I heard the parties' submissions on the two preliminary issues under authority of the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Issues:

1. Can Mrs. Singh receive a weekly income replacement benefit at the same time as she receives a weekly caregiver benefit from a different accident?

Result: Mrs. Singh can receive both benefits at the same time

2. Can State Farm reduce Mrs. Singh's weekly caregiver benefits to recover an overpayment from a previous accident?

Result: State Farm cannot reduce Mrs. Singh's caregiver benefits to recover an overpayment from her previous accident.

Issue #1 Arguments:

The following relevant facts are agreed. Mrs. Singh worked at the time of the first accident, and she received a weekly disability benefit to replace her income stream from her job. Mrs. Singh stayed home and cared of her two children until the second accident. She received caregiver benefits based on her application to State Farm that she could not continue as the children's primary caregiver. State Farm does not dispute Mrs. Singh's entitlement to the income replacement or caregiver benefit for purposes of this preliminary issue.

State Farm's position is that the policy set out in section 36 of the Schedule does not permit her to receive both benefits simultaneously. This decision involves the interpretation of subsections 36(1) and 60(1) of the Schedule, shown below:

ELECTION OF INCOME REPLACEMENT, NON-EARNER OR CAREGIVER BENEFITS

36. (1) Only one of the following benefits may be paid to a person in respect of a period of time:

37. An income replacement benefit.

38. A non-earner benefit.

39. A caregiver benefit.

(2) If a person's application indicates that he or she may qualify for more than one of the benefits referred to in subsection (1), the insurer shall notify the person that he or she must elect within 30 days after receiving the notice which benefit he or she wishes to receive.

(3) The insurer shall deliver the notice under subsection (2) within 14 days after receiving the person's application.

OTHER COLLATERAL BENEFITS

60.(1) The insurer may deduct the following amounts from the amount payable to an insured person as an income replacement or non-earner benefit:

1. Any temporary disability benefits being received by the insured person in respect of a period following the accident and in respect of an impairment that occurred before the accident. (my emphasis)

State Farm submits that as a general policy receiving two weekly benefits constitutes "double recovery", which courts have not approved.² Subsection 36(1) incorporates this policy into the Schedule, with the specific intention to take precedence over any contradictory provisions.

Mrs. Singh maintains that the two benefits are not "double recovery" because one compensates her for income loss and the other for her inability to perform her caregiver duties. The drafters recognized this distinction through the operation of subsection 60(1), where insurers' deductions from benefits are limited to impairments arising before the accident³. Her caregiver benefits are excluded from deductibility because that entitlement arose after the first accident.

Mrs. Singh submits that the absence of language specifically allowing the insurer to deduct post-accident entitlements to temporary disability benefits indicates legislative recognition that an insured person could suffer an additional impairment of caregiver duties subsequent to an employment loss. She argues that State Farm's position twists the normal meaning of subsection 36(1)⁴ beyond the reasonable expectations of the insurance consumer⁵ because there is no language to indicate it is paramount to another portion of the scheme.

Analysis of Issue #1:

I have three primary reasons to reject State Farm's position. First, subsection 36(1) is contained within Part X "Procedures For Claiming Benefits." Both the title to this Part and the procedural nature of the section indicates to me it is intended to apply to the specific accident, and not as a broad policy affecting all accidents where the insured has applied for benefits.

Secondly, State Farm's argument extends the policy of section 36(1) beyond the plain meaning of the words⁶.The words are not ambiguous and there is no statement barring an insured person from receiving weekly benefits from multiple accidents. The Legislature could easily have made a clear statement of that objective. Thus, it is my view the drafters did not intend the policy to apply beyond the benefits for that particular accident.

Third, State Farm's interpretation of subsection 36(1) contradicts the operation of subsection 60(1). The drafters distinctly contemplated the scheme's interaction with co-existing benefit systems by allowing deductions for respective collateral benefits. In particular, they specifically restricted the deduction of temporary disability benefits to those impairments arising before the accident, demonstrating an intention to exclude the deduction for Mrs. Singh's caregiver benefits.

In my view, the section's absence of including post-accident impairments must mean that the Legislature did not intend Mrs. Singh's caregiver benefits to be deductible. Otherwise, the distinction between deductibility of pre-accident and post-accident impairments set out in subsection 60(1) is meaningless, an absurd result that should be avoided.⁷

For these reasons I do not accept State Farm's interpretation of subsection 36(1), and find that the Company is not entitled to deduct or offset Mrs. Singh's caregiver benefits and income replacement benefits against each other. In the result, she may collect both simultaneously providing that she establishes her disability for the individual benefit.

Issue #2 Arguments:

The second issue is moot if my conclusion is correct on the first because Mrs. Singh is entitled to receive both the caregiver and income replacement benefits at the same time without offset.⁸I have set out my reasons on this second issue in case I am wrong on appeal.

State Farm argues that subsection 47(1) of the Schedule is a broad mandate allowing insurers to collect overpayment claims from any accident benefits that the insured person receives:

47(1) A person shall repay to the insurer,

(a) 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; ...

Mrs. Singh maintains that the words should be interpreted in her favour, without a clear legislative mandate specifically covering multiple accidents.⁹ Permitting insurers to collect overpayment claims from any other accidents puts the insured person at a substantial disadvantage, interrupting the flow of benefits when he or she cannot easily oppose the insurer's decision, except through litigation.

Analysis of Issue #2:

Mrs. Singh's argument would essentially force an insurer to seek adjudicative approval before making deductions to collecting overpayment claims. The result would invalidate an insurer's duty to adjust benefits and its rights to repayments under the "Procedures For Claiming Benefits", Part X of the Schedule. I reject her argument.

The Subsection 47(1) statement "repay to the insurer any benefit paid under this Regulation....", does not specifically mention multiple accidents, and I am not persuaded that this phrase is unrestricted in time, because it avoids language specifically allowing insurers to collect overpayments from all accidents.

This language reflects the drafters' intention to allow insurers the right to collect overpayments from those benefits paid from the particular accident. The policy balances both parties' rights under the statutory contract by assuring the insured person that his or her flow of benefits from an accident will not be interrupted to reflect overpayment from past accidents and encourages the insurer to promptly determine and collect overpayments from current entitlements. I would not allow State Farm to deduct the past overpayment claim from Mrs. Singh's current entitlements under the Schedule.

EXPENSES:

The issue of the parties' arbitration expenses is deferred to the hearing arbitrator, who will determine their claims for their expenses of this preliminary issue at the conclusion of the arbitration process if they cannot agree.

January 2, 2004

Fred Sampliner Arbitrator

Date

Neutral Citation: 2004 ONFSCDRS 1

FSCO A03-000118 and A03-000119

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

MANJIT SINGH Applicant

and

STATE FARM MUTUAL AUTOMOBILE 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. Subject to the determination or agreement as to her entitlement and quantum of the benefits, State Farm shall pay Mrs. Singh an income replacement benefit under Part II of the Schedule and a caregiver benefit under Part IV of the Schedule, without any deduction for the other benefit.

January 2, 2004

Fred Sampliner Arbitrator

Date

Footnotes

1. 1The Statutory 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, 303/98, 114/00 and 482/01.
2. 2Ratych v. Bloomer, 1990 CanLII 97 (SCC), [1990] 1 S.C.R. 940, Cunningham v. Wheeler, 1994 CanLII 120 (SCC), [1994] 1 S.C.R. 359, Bannon v. McNeely, (1998) 1998 CanLII 4486 (ON CA), 38 O.R. (3d) 659 (C.A.)
3. 3Subsection 60(3)(a) of the Schedule
4. 4Bapoo and Co-operators General Insurance Co. (1997), 1997 CanLII 6320 (ON CA), 36 O.R.(3d) 616 (C.A.); July v. Neal (1986), 1986 CanLII 149 (ON CA), 57 O.R.(2d) 129 (C.A.)
5. 5Smith v. Co-operators General Insurance Co., [2002] SCC 30
6. 6Dreidger On Construction of Statutes, R. Sullivan (3rd ed., 1994), at p. 6
7. 7Dreidger, ibid, at p.176
8. 8The parties did not inform me of the amounts and time periods Mrs. Singh was paid income replacement and caregiver benefits.
9. 9July v. Neal (1986), 1986 CanLII 149 (ON CA), 57 O.R. (2d) 129 (C.A.) (Supra)