Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2006 ONFSCDRS 160

FSCO A04-000017

BETWEEN:

ROANA CODLING-MOKOENA

Applicant

and

CAA INSURANCE COMPANY (ONTARIO)

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

David Leitch

Heard:

August 30, 2006, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Jeffrey Raphael for Mrs. Codling-Mokoena

David A. Di Lella for CAA Insurance Company (Ontario)

The Applicant, Roana Codling-Mokoena, was injured in a motor vehicle accident on September 20, 2000. CAA Insurance Company (Ontario) ("CAA") paid her income replacement benefits (IRBs) in accordance with the Schedule¹ from September 27, 2000 to November 29, 2001. Her entitlement to IRBs after November 30, 2001 is a disputed issue to be determined in the main hearing. The question in this preliminary issue hearing was whether Ms. Codling-Mokoena's entitlement to IRBs was reduced by her receipt of benefits under a disability insurance policy she purchased prior to the accident from Crown Life Insurance Company ("Crown Life"). The answer is only affirmative if the Crown Life policy constituted an "income continuation benefit plan" within the meaning of section 7(1)1i of the Schedule. The issue in this preliminary issue hearing was, therefore:

Did the benefits Ms. Codling-Mokoena receive under her Crown Life disability insurance policy constitute "payments for loss of income... under an income continuation benefit plan" within the meaning of section 7(1)1i of the Schedule and hence reduce her entitlement to income replacement benefits?

The parties were unable to resolve this dispute through mediation, and Mrs. Codling-Mokoena applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The benefits Ms. Codling-Mokoena received under her Crown Life disability insurance policy did not constitute "payments for loss of income... under an income continuation benefit plan" within the meaning of section 7(1)1i of the Schedule and hence did not reduce her entitlement to income replacement benefits.

The relevant parts of section 7(1)1i of the Schedule, with emphasis added, read as follows:

... the weekly amount of an income replacement benefit payable to a person shall be ... reduced by ... net weekly payments for loss of income that are being received by the person as a result of the accident under ... any income continuation benefit plan ...²

The background facts

The circumstances leading to the creation of the policy and Ms. Codling-Mokoena's receipt of benefits thereunder were not disputed and can be summarized as follows:

Ms. Codling-Mokoena was a registered practical nurse who, prior to her accident on September 20, 2000, worked for three different employers, none of whom offered short-term or long-term income continuation benefit plans in the event of disability.³
In early 1996, Ms. Codling-Mokoena purchased an "Individual Disability Insurance Policy" issued by Crown Life Insurance Company. It was called a "Dignity Disability Income Policy" and its stated purpose was "to pay the Monthly Income Benefit upon due proof of the Total Disability of the Insured."⁴ The policy purchased by Ms. Codling-Mokoena also carried a "Two Year Regular Occupation Rider" making her eligible to receive the Monthly Income Benefit for a two-year period even if, during that period, her disability only prevented her from performing her pre-disability occupation as opposed to any other gainful occupation.⁵ This Rider is discussed in further detail below.
When she purchased the policy in January 1996, Ms. Codling-Mokoena completed an "Application for Disability Insurance" form prepared by Crown Life. It asked her to provide information about, among other things, her date of birth, her occupation, her employer's business name and address, the number of hours per week she worked, her current annual income, whether she was covered by any other disability insurance policies, her own health and the health of her family members. Ms. Codling-Mokoena provided the information requested and signed the form. It indicated that she was born in January 1959, that she earned $16,000 a year and that she worked between 25 and 40 hours per week.⁶ In March 1996, she provided an "Amendment of Application", stating that she worked "a minimum of 35 hours per week."⁷
Subject to the specific provisions of the policy, as set out below, the total Monthly Income Benefit payable was $1,000 per month, $300 per month under the "Base Policy" starting 60 days after the onset of disability, and an additional $700 per month under an "Additional Income Benefit Rider" starting 120 days after the onset of disability. The disability could be caused by either injury or sickness and the Monthly Income Benefit was payable for "120 months but not beyond the expiry date". The expiry date was identified as February 28, 2024, the last day of the month after Ms. Codling-Mokoena's 65^th birthday. The monthly premium for the policy was set at $54.75.⁸
In July 1997, Ms. Codling-Mokoena submitted an "Application for Policy Change" indicating that her annual income was now $18,000 and that she wanted to purchase another "Additional Income Benefit Rider" adding a further $100 per month to the Monthly Income Benefit which would also be payable starting 120 days after the onset of disability for a total of 120 months. At the same time, Ms. Codling-Mokoena purchased a Partial Disability Benefit Rider.⁹ As a result of these additions, the monthly premium was increased to $62.73.¹⁰
In March 1999, Ms. Codling-Mokoena purchased another "Additional Income Benefit Rider", this one adding a further $400 per month to the Monthly Income Benefit which would again be payable starting 120 days after the onset of disability for a total of 120 months. As she had done in July 1997, Ms. Codling-Mokoena may well have completed an "Application for Policy Change" indicating what her annual income was in March 1999 but no such document was entered into evidence. In any event, the application was approved and her monthly premium increased to $81.¹¹
On or about July 1, 1999, the Crown Life policy was assumed by The Canada Life Assurance Company ("Canada Life").¹²
In February 2000, Ms. Codling-Mokoena submitted another "Application for Policy Change", this time seeking to add a further $500 per month to the Monthly Income Benefit which would be payable starting 60 days after the onset of disability for a total of 120 months. While the Application was signed by Ms. Codling-Mokoena, it was completed by someone else, perhaps a broker, who observed: "Roana Codling's annual salary has increase dramatically over the last 5 years. She now earns $40,000+ and, thus, should qualify for this AIB ["Additional Income Benefit Rider"]. In any event, she should have her tax information available by middle of March, if in fact it is a requirement for this increase." This application was also approved by Canada Life but the documentary evidence did not establish the resulting increase in Ms. Codling-Mokoena's premium.¹³
As a result of her accident, Ms. Codling-Mokoena claimed benefits under her Crown Life policy and, on January 2, 2002, she commenced an action against Canada Life for its refusal to pay benefits under the policy. In accordance with a Release signed on December 3, 2003, Ms. Codling-Mokoena received a lump sum payment of $110,000 from Canada Life in return for her consent to the dismissal of the action without costs.¹⁴

The specific provisions of the policy were not disputed but their interpretation was. The relevant provisions are, therefore, set out below in the context of the parties' arguments.

CAA's Arguments

For the Insurer, Mr. Di Lella made the following assertions and arguments.

First, the evidence established a direct relationship between the level of Ms. Codling-Mokoena's pre-disability income and the level of income protection she sought and obtained under the Crown Life policy: as the former went up, so did the latter.

Second, the evidence established that before issuing the policy, Crown Life required and obtained information about Ms. Codling-Mokoena's current employment and current level of income. It continued to require and obtain confirmation of her employment and increases in her income before approving subsequent increases in her coverage.

Third, it was clear from the policy that Ms. Codling-Mokoena would no longer be entitled to receive the Monthly Income Benefit if she became able to return to her pre-disability occupation or, after two years, any other gainful occupation, and thus no longer continued to suffer any income losses.¹⁵

Fourth, the policy stated that if a policy-holder had not reached the age of 65 by the expiry date, he/she would be entitled to convert the policy into a "Revised Policy" providing coverage for an additional two years but only if the policy-holder had been "engaged in Full-time work during the six consecutive months immediately prior to the Expiry Date". The Revised Policy option also stipulated that: "In order for any benefits to be payable under the Revised Policy, You must have been engaged in Full-Time Work for the 90 day period prior to the onset of the Disability."¹⁶

Fifth, the amount of the Monthly Income Benefit payable to Ms. Codling-Mokoena for total disability would not automatically or necessarily be $2,000, that being the total of the amounts mentioned in the "Base Policy" and the "Additional Income Benefit Riders". It would, instead, be limited to a maximum of 85% of her average monthly earnings from employment in the six month period prior to the onset of her disability. Mr. Di Lella based this assertion on the following provisions of the policy:

Integration of Benefits

During any month for which benefits are payable, the total monthly benefit when added to Your Other Monthly Benefits cannot exceed 85% of Your Prior Income. Benefits will be reduced if necessary so that this formula is not exceeded. Prior Income means Your average monthly earnings from gainful employment in the six month period prior to the onset of the Disability, after the deduction of normal and customary business expenses and before the deduction of income tax. Other Monthly Benefits means the total monthly disability benefits, or monthly equivalent if payable other than monthly, that You are eligible to receive from the following sources:

the Canada Pension Plan or Quebec Pension Plan;
any Worker's Compensation Act or similar legislation;
government or private automobile accident plan;
employer salary continuation program; and/or
employer provided group insurance plan.¹⁷

In Mr. Di Leila's submission, these assertions support the conclusion that the policy was an "indemnity" policy, that is, it was intended to replace and continue Ms. Codling-Mokoena's demonstrated pre-disability "stream of income" after the onset of her disability, thereby compensating her for the pecuniary losses she sustained as a result of the disability. As he succinctly put it, Ms. Codling-Mokoena's becoming disabled was necessary but it was not sufficient to establish her entitlement to benefits under the policy. If she had zero earnings from gainful employment in the six month period prior to the onset of her disability, he maintained, her benefits under the policy could not exceed 85% of zero and would, therefore, be zero. Her entitlement to benefits would also fall to zero whenever she became able to return to her pre-disability occupation and thus no longer continued to suffer any income losses. In Mr. Di Lella's submission, the policy could not be properly characterized as a "non-indemnity", that is, the type of policy which would have obliged Crown Life to pay Ms. Codling-Mokoena a pre-determined amount merely upon the happening of a disabling event, regardless of whether or not that event caused her to sustain pecuniary losses.

Moreover, he continued, if Ms. Codling-Mokoena did have earnings during the six months prior to the onset of her disability, her benefits would be 85% thereof but only up to the amount of coverage she had previously purchased. Any benefit payable would thus reflect the level of her demonstrated pre-disability earnings, her own previous choices about how much coverage to apply for and Crown Life's previous decisions about whether she qualified for the increases in coverage she had applied for, decisions which were based on Ms. Codling-Mokoena's demonstrated earnings at the time she applied for the increases. It follows, he concluded, that the policy was intended to continue her pre-disability level of income and hence constituted an income continuation benefit plan.

Mr. Di Lella also argued that the present case can be distinguished from the decision in Economical Mutual Insurance Company and Wilcox¹⁸ where Director's Delegate Draper, as then was, held that the disability insurance policy at issue in that case was not an income continuation benefit plan. Mr. Di Lella noted that while the "Integration of Benefits" provision in the Crown Life policy "tied" Ms. Codling-Mokoena's level of post-disability benefits to her pre-disability level of income, the "integration clause" of the policy in the Wilcox case did not. Therefore, while Ms. Wilcox did have to be employed at the time her policy was issued, she did not have to establish any other pre-disability employment or income losses to qualify for benefits. As the Director's Delegate put it, Ms. Wilcox had paid a fixed premium for a fixed benefit rate, "regardless of fluctuations in her income and employment status". Mr. Di Lella urged me to conclude that this was not the kind disability insurance policy Ms. Codling-Mokoena purchased from Crown Life.

Ms. Codling-Mokoena's Arguments

For the Applicant, Mr. Raphael made the following assertions and arguments.

First, Ms. Codling-Mokoena obtained the Crown Life policy on her own initiative, without the involvement of her various employers, none of whom offered an income continuation benefit plan.

Second, there is no evidence to suggest that Ms. Codling-Mokoena paid reduced premiums for her CAA automobile policy to reflect the coverage she obtained through the Crown Life policy.

Third, entitlement to benefits under the policy was not always a function of loss of ability to work or resulting pecuniary losses. Due to the waiting or "elimination" periods of 60 or 120 days, Ms. Codling-Mokoena was not entitled to any benefits under the policy for the first 60 days after the onset of disability and was only entitled to receive the full monthly amount after waiting a further 60 days. She was then only entitled to receive benefits for 120 months meaning that if she started to receive benefits following the September 2000 accident when she was 41 years old, her entitlement to benefits would terminate long before the normal age of retirement age of 65, even if she remained unable to work until then. Furthermore, under the "Presumptive Total Disability" provision of the policy, Ms. Codling-Mokoena would be presumed to be totally disabled as a result of certain types of serious injuries (loss of sight, loss of use of a hand or foot) even if she was still able to engage in gainful employment.¹⁹

Fourth, an insured person who was not engaged in any gainful occupation immediately prior to the onset of disability could still qualify for benefits under the "Base Policy" and "Additional Income Benefit Riders". It was only the "Two Year Regular Occupation Rider" which required the insured person to be employed immediately prior to the onset of disability in order to qualify for benefits thereunder. Mr. Raphael based this assertion on the following provisions:

Monthly Income Benefit For Total Disability

If You become Totally Disabled, the Monthly Income Benefit will be payable after the applicable Elimination Period.

Additional Monthly Income Benefit for Total Disability

If You become Totally Disabled, the Additional Monthly Income Benefit will be payable after the applicable Elimination Period.

Total Disability or Totally Disabled means that, as a result of Injury or Sickness:

You are unable to engage in any Gainful Occupation; and
You are under the care and attendance of a Physician appropriate to the Injury or Sickness.

Gainful occupation means the occupation(s) in which You are engaged for the purpose of earning income, and for which You are reasonably suited by Your training, education, or experience.²⁰

Own occupation [as defined in the "Two Year Regular Occupation Rider"] means the material and substantial duties of the occupation(s) that You are performing at the onset of Disability. If you are not engaged in an occupation at the onset of Disability, then Own Occupation will mean any Gainful Occupation.

During the Occupation Period [defined under the "Two Year Regular Occupation Rider" as the period "from the date of Disability until the date that two years of benefits have been payable"] Total Disability or Totally Disabled, as defined in the Base Policy, is amended by this rider to mean that as a result of Injury or Sickness: You are unable to perform Your Own Occupation;
You are not engaged in any Gainful Occupation; and
You are under the care and attendance of a Physician appropriate to the Injury or Sickness.²¹

In responding to Mr. Di Lella's arguments based on the "Integration of Benefits" provision, Mr. Raphael disagreed that the Wilcox decision could be distinguished on the ground that the "integration clause" in that case was narrower. He submitted that the "Integration of Benefits" provision in the present case should also be read narrowly, that is, that it should be read as applying only when the insured person was in receipt of "Other Monthly Benefits". Moreover, he maintained that even if the insured person's "Prior Income" was relevant for that limited purpose, it was defined as the average monthly earnings from employment in the six month period prior to the onset of disability, a definition which did not require the insured person to be employed immediately prior to the onset of disability in order to qualify for benefits.

Mr. Raphael acknowledged that Crown Life obtained information about Ms. Codling-Mokoena's employment and income when it issued and amended the policy. However, he argued that this did not necessarily establish that she was required to have a certain level of income in order to qualify for coverage. Nor did it justify reading into the policy the requirement that she be employed at the onset of disability in order to qualify for benefits. On his submission, Crown Life may have only required information about Ms. Codling-Mokoena's income in order to determine the premium it would charge.

Mr. Raphael submitted that the option to convert the policy into a "Revised Policy" was irrelevant because Ms. Codling-Mokoena would have reached age 65 before the Expiry Date and because, even if she was able to exercise the option, that would create a "whole new policy".

Finally, Mr. Raphael noted that whereas the Crown Life policy contemplated monthly payments, section 7(1)1i only contemplates the deduction from IRBs of "weekly payments".

Analysis and Conclusion

In my opinion, the Crown Life policy did not constitute an income continuation benefit plan for the three reasons elaborated below.

No benefit payable during the elimination periods

In my opinion, the legislator's choice of the word "continuation" in the phrase "income continuation benefit plan" must be respected. The 1990 reprint of the Shorter Oxford English Dictionary defines the word "continue" as follows: "1. To carry on, keep up, persist in (an action, usage etc.) 2. To cause to last or endure; to prolong (something external to the agent), to keep on, retain (in a place, condition, etc.) 3. To attach to 4. To take up (a narrative, etc.); to carry on in space, succession, or development The definition of the word "continuation" incorporates these concepts by using the words "continue", "continuing", "continuous" and "continuity".

It follows, in my opinion, that the Crown Life policy could only qualify as an "income continuation benefit plan" if it called for the payment of benefits almost immediately after the onset of disability. It may be that very short waiting periods are compatible with the use of the word "continuation"; indeed, IRBs are not payable for the first week of disability.²² But a claimant who receives no benefits under the policy for 60 days after the onset of disability has plainly not had his/her income continued during that period and may suffer serious financial consequences as a result.

As pointed out by Arbitrator Alves in Lee and Certas Direct Insurance Company, a policy which pays nothing in the first four months after the onset of disability really only provides coverage "in the event of disability which lasted for longer than four months", not income continuation coverage.²³ While the waiting period in the Crown Life policy was shorter, I find that it was still too long to fall within the ordinary meaning of "income continuation benefit plan".

No requirement to be employed at time of disability

The Wilcox case involved a policy very similar, though not identical, to the policy at issue in the present case. Director's Delegate Draper listed some of its features as follows:

The policy is not a pension. It is referred to as a "Preferred Income Protector" policy.
Benefits are payable based on a work-related disability test.
Pecuniary loss is at least implied in the policy, as benefits are not payable if the insured person is working in any other gainful occupation.
The insured person must be employed to renew the policy.
Although the policy includes a "presumptive total disability" clause, entitling the insured person to benefits if he or she suffers a full and permanent loss of particular functions even if he or she continues to work, it does not apply to Ms. Wilcox.²⁴

The Director's Delegate agreed that these "income and employment" features bolstered the auto insurer's argument that benefits paid under the policy fit the definition of "payments for loss of income .. under any income continuation plan" and were, therefore, deductible from IRBs under section 75(1) of the Schedule applicable in that case. Nevertheless, he went on to observe that these features were "no longer sufficient. Cugliari has changed the analysis."²⁵

He was referring, of course, to the Court of Appeal's decision in Cugliari v. White²⁶ where the issue was whether Canada Pension Plan disability benefits constituted "payments ... for loss of income under the laws of any jurisdiction or under an income continuation benefit plan". If so, they were deductible under section 267(1) of the Insurance Act from damages awarded in tort as a result of a motor vehicle accident.

Despite the fact that the Cugliari case was decided in the tort context, the Director's Delegate noted that section 267(1) of the Insurance Act and section 75(1) of the Schedule governed deductibility using "the same key terms". He observed: "If a different meaning had been intended, other terms could have been chosen." Since section 7(1)1i of the Schedule applicable to the present case continues to use those same key terms, the question becomes: "what does Cugliari tell us about to interpret section 7(1)1i?". The answer to that question is found in paragraph 19 of the Cugliari decision which states:

When one considers the legislative purpose of eliminating double recovery, I fail to see how it would be advanced by deducting CPP disability benefits when the conditions for eligibility do not require that the recipient be employed at the time of the disability or that the recipient demonstrate a pecuniary loss. It is only by coincidence that double recovery would be eliminated in certain cases. For the same reasons, CPP disability benefits can arguably be seen to compensate for the loss of earning capacity but they cannot reasonably be construed as intending to indemnify a disabled person for loss of income.²⁷

I understand this passage as follows: if the plan or policy did not require the insured person to be employed at the time of the disability, then it did not require the insured person to demonstrate a pecuniary loss in order to qualify for benefits; the benefits were not therefore, intended to indemnify the insured person for loss of income, even though they might "coincidentally" do so if the insured person was employed at the time of the disability; since the benefits payable under such a plan or policy would not duplicate other benefits that were intended to indemnify the person for loss of income, the legislative objective of eliminating double recovery would not be served by deducting the former from the latter.

Applying this analysis to the Crown Life policy, I note that only the "Two Year Regular Occupation Rider"and the "Revised Policy" option required the insured person to be employed at the time of disability. I accept Mr. Raphael's submission that an insured person who was not engaged in any gainful occupation at the time of disability could still qualify for benefits under the "Base Policy" and "Additional Income Benefit Riders". I also agree with Mr. Raphael that the definition of "Prior Income" did not require the insured person to be employed at the time of disability in order to qualify for benefits.

As for the information Crown Life obtained about Ms. Codling-Mokoena's employment and income when it issued and amended the policy, I note that while the policy reserved Crown Life's right to "contest the validity of the Policy if any information provided in the application misrepresents any fact material to the risk being assumed"²⁸, it did not require the insured person to provide proof of current income when submitting a claim. It only required the insured person to provide information about "the occurrence, character and extent of the Disability" and a physician's certificate "describing the cause and nature of the Disability" and it only reserved Crown Life's right to "have You examined as often as We deem necessary during a claim."²⁹

I conclude that the Crown Life policy did not require the insured person to be employed at the time of disability in order to qualify for benefits and that, according to the analysis set out in Cugliari, the legislative objective of eliminating double recovery would not be served by deducting benefits payable under the policy from IRBs.

Benefits, at most, only coincidentally tied to pre-disability income

Despite the similarities in the policies, the "integration clause" of the policy in Wilcox was significantly different from the "Integration of Benefits" provision of the policy at issue in the present case. The "integration clause" in Wilcox read as follows:

The benefits provided by this policy will be reduced by the monthly amount or the monthly equivalent if payable other than monthly, to which the Insured is entitled under any Workers Compensation Act or similar legislation and any automobile accident insurance.³⁰

The critical difference was the absence of any reference to prior income. This difference provided a foundation for Mr. Di Lella's submission that whereas the "integration clause" in the Wilcox case did not tie benefits payable to prior income or any percentage thereof, the "Integration of Benefits" provision in the Crown Life policy did tie the level of benefits payable, if any, to 85% of the insured person's average monthly earnings in the six months prior to the onset of disability. However, in my opinion, this difference did not provide a solid foundation for Mr. Di Lella's submission.

As I see it, Mr. Di Lella's interpretation of the "Integration of Benefits" provision would effectively turn that provision into an "exception" to or a "reduction" of the amount of the Monthly Income Benefit payable for Total Disability contemplated by the "Base Policy" - $300 - and in the various "Additional Income Benefit Riders" - $700, $100, $400 and $500, respectively. In other words, rather than being entitled to $2,000 per month in the event of disability lasting longer than the applicable elimination periods, Ms. Codling-Mokoena would, according to Mr. Di Lella's submission, be entitled to no benefits whatsoever if she had not worked in the six months prior to the onset of her disability. In my view, the "Integration of Benefits" provision cannot be given this interpretation or effect because that would contravene section 299(1) of the Insurance Act, the relevant part of which reads as follows:

299.(1) ... the insurer shall set forth in the policy every exception or reduction affecting the amount payable under the contract, either in the provision affected by the exception or reduction, or under a heading such as "Exceptions" or "Reductions."³¹

As stated by the Supreme Court of Canada in Smith v. Co-operators General Insurance Co., one of the main objectives of insurance legislation is consumer protection. Speaking for all the participating members of the Court except Mr. Justice Bastarache, Mr. Justice Major observed that the consumer protection approach "obliges the courts to impose bright-line boundaries between the permissible and the impermissible without undue solicitude for particular circumstances that might operate against claimants in certain cases."³² Section 299 of the Insurance Act must be interpreted and applied in accordance with this approach.

The Crown Life policy did contain a brief "Exceptions" heading. It stated: "This Policy will not pay benefits for a Disability which is caused by, contributed to, or results from: 1. War, declared or undeclared, or any act of war; or, normal pregnancy or childbirth".³³

In my opinion, the reference to a percentage of "Prior Income" in the "Integration of Benefits" provision alerted the consumer, at most, to only one other kind of exception or reduction affecting the amount payable under the "Base Policy" and "Additional Income Benefit Riders" of the contract, namely, that triggered by the receipt of other benefits. The words "Prior Income" are, in fact, not used anywhere else in the policy. I, therefore, reject Mr. Di Lella's argument that the "Integration of Benefits" provision can be interpreted much more broadly, potentially reducing the insured person's entitlement to benefits to zero, thus creating another exception to Crown Life's obligation to pay, even when the insured person was not in receipt of any other benefits. In my view, that argument would be contrary to section 299(1) of the Insurance Act.³⁴

Accordingly, I find that the "Integration of Benefits" provision could, at most, only tie the amount payable under the contract to pre-disability income in those situations where the insured person was in receipt of other benefits. I do not need to decide whether the provision actually imposed such a limitation or whether, if it did, that would produce anomalies or unfairness as between those insured persons caught by it and those not. In the present context, it is sufficient for me to decide that it would be contrary to section 299(1) of the Insurance Act to apply the "Integration of Benefits" provision to insured persons not in receipt of other benefits. That meant that, at most, the policy could only, to use the Court of Appeal's term in Cugliari, "coincidentally" tie the level of benefits payable to 85% of the insured person's average monthly earnings in the six months prior to the onset of disability.

I conclude, therefore, that the "Integration of Benefits" provision did not provide a basis for distinguishing this case from Cugliari and Wilcox and that the result here must be the same as in those cases: the disability benefits were not deductible.

EXPENSES:

I was not made aware of any reason why expenses should not follow the result but if Mr. Di Lella takes the position that they should not, he will discuss the matter with Mr. Raphael and, in the event they cannot agree one expenses, they will comply with the procedure set out in the Dispute Resolution Practice Code.

October 17, 2006

David Leitch Arbitrator

Date