Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 19

FSCO A05-002881

BETWEEN:

AMANDA JANE ELDRIDGE

Applicant

and

AXA INSURANCE (CANADA)

Insurer

DECISION ON PRELIMINARY ISSUES

Before:

Jeffrey Rogers

Heard:

By written submissions completed on January 17, 2007.

Appearances:

Ms. Sandra Shaw, agent for Ms. Eldridge

Mr. Greg Abogado, solicitor for AXA Insurance (Canada)

Issues:

The Applicant, Amanda Jane Eldridge, was injured in a motor vehicle accident on July 12, 1996. She was twelve years old at the time and had just completed grade seven. She sustained a significant head injury and various orthopaedic injuries. She underwent surgery at the Hospital for Sick Children and was transferred to the Pediatric Brain Injury Program at Bloorview MacMillan Centre where she was involved in an extensive rehabilitation program.

She was discharged home on October 4, 1996 and returned to school for grade eight. She graduated grade eight on June 20, 1997. She continued in school, graduating grade twelve in 2001. She claims entitlement to a weekly education disability benefit (EDB) from November 19, 1999, her sixteenth birthday. By Notice dated August 23, 1999, AXA Insurance (Canada) ("AXA") denied her entitlement to EDBs. Ms. Eldridge also claims entitlement to a weekly loss of earning capacity benefit (LECB).

The preliminary issues are:

1. At the time Ms. Eldridge turned sixteen on November 19, 1999, was the test of disability for EDBs a partial inability to carry on a normal life, or complete inability to carry on a normal life, pursuant to section 15 of the Schedule?¹

2. If the test of disability for EDBs was a complete inability to carry on a normal life, was Ms. Eldridge entitled to an LECB offer at the time she turned sixteen, and if so, was the test for an LECB offer a partial or complete inability to carry on a normal life, pursuant to section 21(4) of the Schedule?

Result:

1. At the time Ms. Eldridge turned sixteen on November 19, 1999, the test of disability for EDBs was a complete inability to carry on a normal life, pursuant to section 15 of the Schedule.

2. Ms. Eldridge was not entitled to an LECB offer at the time she turned sixteen.

ANALYSIS:

What was the test?

Entitlement to EDBs is determined by section 15 of the Schedule which provides as follows:

15. (1) An insured person who sustains an impairment as a result of an accident is entitled to a weekly education disability benefit if the insured person meets the following qualifications:

16. The insured person,

i. was less than sixteen years of age at the time of the accident,

ii. was enrolled on a full-time basis in elementary, secondary or post-secondary education at time of the accident, or

iii. completed his or her education less than one year before the accident and was not employed, after completing his or her education and before the accident, in an employment that reflected his or her education and training.

2. The insured person, as a result of and within two years of the accident,

i. suffers a substantial inability to continue his or her education, in the case of an insured person who qualifies under subparagraph i or ii of paragraph 1,

ii. suffers a substantial inability to engage in employment that reflects his or her education and training, in the case of an insured person who qualifies under subparagraph iii of paragraph 1, or

iii. suffers a partial or complete inability to carry on a normal life, in the case of an insured person who qualifies under subparagraph i, ii or iii of paragraph 1.

(2) Subject to subsections (3) and (4), the weekly education disability benefit is payable during the period that the insured person suffers,

(a) a substantial inability to continue his or her education, in the case of an insured person who qualifies under subparagraph i of paragraph 2 of subsection (1);

(b) a substantial inability to engage in employment that reflects his or her education and training, in the case of an insured person who qualifies under subparagraph ii of paragraph 2 of subsection (1); or

(c) a partial or complete inability to carry on a normal life, in the case of an insured person who qualifies under subparagraph iii of paragraph 2 of subsection (1).

(3) No weekly education disability benefit is payable under this section,

(a) for any period before the insured person attains sixteen years of age; or

(b) for the first week of the disability.

(4) If an insured person qualifies for weekly education disability benefits under subparagraph iii of paragraph 2 of subsection (1) and does not qualify under subparagraph i or ii of paragraph 2 of subsection (1), no weekly education disability benefit is payable under this section more than 104 weeks after the insured person first qualified for weekly education disability benefits unless the insured person is suffering a complete inability to carry on a normal life as a result of the accident.

Section 15(1) establishes a two part test for who is entitled to EDBs. Paragraph 1 of section 15 sets out the personal characteristics of the insured. It is not disputed that Ms. Eldridge meets this part of the test. Paragraph 2 of section 15 sets out the required nature and level of disability. This paragraph also establishes that entitlement is determined by looking at the insured's circumstances at the time of and within two years of the accident. It is also not disputed that, immediately after the accident, Ms. Eldridge met this part of the test.

Sections 15(2), (3) and (4) combine to establish the period during which entitlement to EDBs will continue. Section 15(2) provides that subject to sections 15(3) and (4), entitlement continues for as long as the level of disability described in paragraph 2 of section 15(1) persists.

Because Ms. Eldridge was less than sixteen years old at the time of the accident, AXA was not required to pay an education disability benefit at that time, by operation of section 15(3)(a) which provides that no benefit is payable for any period before the insured person attains sixteen years of age.

Section 15(4) establishes a stricter disability test for entitlement to EDBs for more than 104-weeks after the insured first qualified for EDBs, in specified circumstances. The restriction applies only to insured persons who qualify for EDBs as a result of suffering a partial or complete inability to carry on a normal life and do not meet the other disability criteria of paragraph 2 of section 15. For those insured persons to continue to be entitled to EDBs beyond 104-weeks after they first qualified, they must suffer a complete inability to carry on a normal life as a result of the accident. Ms. Eldridge's claim for EDBs is based on her position that she falls within this class of insured persons.

The question of which test applies is resolved by determining whether Ms. Eldridge first qualified for EDBs at the time of the accident, or whether section 15(3)(a) means that she first qualified when she turned sixteen.

Director's Delegate Draper considered a similar issue in Gray and Zurich Insurance Company²He noted a consistent structure in the sections 7, 15 and 18 of the Schedule, which provide for entitlement to the weekly benefits of Income Replacement Benefits, Caregiver Benefits and EDBs.

He noted that the first subsections of each of these sections are to be viewed as triggering provisions, identifying those who are entitled to be considered for the relevant benefits. Entitlement to receive benefits, and to continue receiving them is determined by the subsequent subsections of each section:

The SABS-1994 establishes four types of weekly benefits: IRBs, EDBs, CGBs and ODBs. The sections dealing with the first three benefits have a similar structure, raising three separate questions:

(1) Who is entitled to claim this type of weekly benefit?

To be "entitled" to the weekly benefit, the insured person must meet the "qualifications" set out in the section. The qualifications require the insured person to meet certain personal characteristics at the time of the accident and the relevant disability test.

(2) For what period are benefits payable?

Generally, benefits are payable during the period that the insured person continues to meet the relevant disability test, subject to certain exceptions. The exceptions are different depending on the type of weekly benefit, but each includes a provision stating that benefits are not payable for the first week of the disability.

(3) What is the amount of the benefit?

The calculation of the benefit is different for each type of weekly benefit.³

Adopting that approach, I find that Ms. Eldridge first qualified for EDBs when she first met the disability test of section 15(1). She was identified at that time as a person entitled to claim the benefit, having met the "qualifications set out in the section". Had she been sixteen years old at the time of the accident, she would have been eligible to receive benefits from one week after the accident. Because she was less than sixteen, the exception in section 15(3)(a) delayed eligibility to receive payment until she turned sixteen.

This approach is consistent with the precise language of section 15(4), triggering the stricter test. Section 15(4) refers to qualifying for EDBs under section 15(1), with no reference to the date from which benefits must be paid under 15(3). Had the legislature intended to link the 104-week period to payment rather than to disability, it would have stated that. This approach is also consistent with the policy expressed in section 15(3)(a) that denies EDBs to insured's who are less than sixteen years old. Imposing a higher disability threshold in specified circumstances, upon attaining the age of sixteen, is consistent with that policy. On the other hand, putting the stricter test in abeyance until the insured turns sixteen would delay, rather than deny benefits, inconsistent with that policy. Had the legislature intended to delay, rather than deny benefits, it would have stated that. Had the legislature intended that the disability assessment of insured persons less than sixteen years old, should not be measured from the time of the accident, it would have stated that.

For the above reasons I find that, because at the time Ms. Eldridge turned sixteen on November 19, 1999, more than 104-weeks had passed since she first qualified for EDBs, the test of disability for EDBs was a complete inability to carry on a normal life, pursuant to section 15(4) of the Schedule.

LECB offer

Ms. Eldridge's entitlement to an LECB offer is prescribed by section 21(1) 4 which provides as follows:

21. (1) Subject to subsections (7) to (9), an insurer shall promptly deliver a written offer to an insured person with respect to the payment of weekly loss of earning capacity benefits if one or more of the following circumstances occurs:

22. The insured person qualified for weekly education disability benefits under section 15 and, 104 weeks after the onset of the disability in respect of which he or she first qualified for those benefits or on the date the person attains sixteen years of age, whichever occurs later, continues to qualify for weekly education disability benefits.

The issue of whether AXA was required to make Ms. Eldridge an LECB offer when she became sixteen, turns on whether she "qualified" for EDBs at that time, within the meaning of section 21(1)4. Director's Delegate Draper considered this issue as well in Gray and Zurich Insurance and also in Canadian General Insurance Group and Zehr.⁴ He concluded that when an insurer stops paying weekly benefits before its obligation to make an LECB offer is triggered, it is not required to make an LECB offer. "The insurer is not obliged to make an LECB offer in case it erred in terminating benefits."⁵

The Director's Delegate noted that, where the insured disputes the decision not to pay weekly benefits, the remedy is to challenge the decision through the dispute resolution process, as Ms. Eldridge has done. If it is determined in the arbitration that the insurer is required to pay weekly benefits at the 104-week mark, that determination would trigger the LECB process. The insurer would then have to make an LECB offer, based on the insured's current situation.

Applying the above decisions, I find that Ms. Eldridge was not entitled to an LECB offer at the time she turned sixteen. The issue concerning the validity of AXA's notice of stoppage, raised in Ms. Eldridge's submissions, and not addressed in AXA's submissions, is not properly within the scope of this preliminary issues hearing and is therefore left to be determined in the arbitration hearing.

EXPENSES:

The parties made no submissions on expenses. I reserve the assessment to the hearing Arbitrator. However, should the parties resolve the matter without a hearing but are unable to resolve the issue of expenses, either party may make an appointment for me to determine the matter in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003).

February 6, 2007

Jeffrey Rogers

Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 19

FSCO A05-002881

BETWEEN:

AMANDA JANE ELDRIDGE

Applicant

and

AXA INSURANCE (CANADA)

Insurer

ARBITRATION ORDER

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

1. At the time Ms. Eldridge turned sixteen on November 19, 1999, the test of disability for EDBs was a complete inability to carry on a normal life, pursuant to section 15 of the Schedule.

2. Ms. Eldridge was not entitled to an LECB offer at the time she turned sixteen.

February 6, 2007

Jeffrey Rogers

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
2. 2FSCO P98-00047, June 11, 1999 (appeal)
3. 3Gray, at page 9
4. 4FSCO P99-00010, June 11, 1999 (appeal)
5. 5Zehr, at page 8