Financial Services Commission des Commission services financiers of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 200
FSCO A08-000016
BETWEEN:
SYLVIA CROSSEY
Applicant
and
FARMERS’ MUTUAL INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: William J. Renahan
Heard: September 9, 2008, in Whitby, Ontario.
Appearances: David J. Gillespie for Mrs. Crossey
Darrell March for Farmers’ Mutual Insurance Company
Issues:
The Applicant, Sylvia Crossey, was injured in a motor vehicle accident on April 6, 1994. She applied for and received statutory accident benefits from Farmers’ Mutual Insurance Company, payable under the Schedule.1 Farmers’ paid income replacement benefits (“IRBs”) for about seven months until Mrs. Crossey returned to her full-time factory work at General Motors. After working full-time for about six years, Mrs. Crossey stopped working on November 20, 2000 and has not returned to work since then. In a decision dated September 28, 2005, Arbitrator Feldman found that she was entitled to income replacement benefits from November 21, 2000.
After Arbitrator Feldman released his decision, a further dispute arose concerning the application of the indexation provisions in section 79 of the Schedule to the calculation of Mrs. Crossey’s loss of earning capacity benefit (“LEC”) payable under Part VI of the Schedule. The parties were unable to resolve their dispute through mediation, and Mrs. Crossey applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The preliminary issue is:
- How are the indexation provisions in section 79 of the Schedule applied to the calculation of Mrs. Crossey’s LEC?
Result:
- Mrs. Crossey’s net weekly income used to determine her pre-accident earning capacity (“PEC”) under section 29(1) is indexed every year starting January 1, 1995 to calculate her LEC.
EVIDENCE AND ANALYSIS:
In his decision, Arbitrator Feldman considered indexation with respect to IRBs. He decided that section 79(2) precluded him from applying the indexing provisions to the calculation of
Mrs. Crossey’s IRBs until the first January after Mrs. Crossey had received IRBs for a total of at least one year, which would occur on January 1, 2003. Indexation would not take place for the intervening years 1995 through to 2002. The parties did not appeal that part of the decision dealing with indexation.
The provisions of section 79 which were material to Arbitrator Feldman’s decision and the decision I have to make are as follows:
79(1) Each of the following amounts shall be revised, effective the 1st day of January in every year after 1994, by adjusting the amount by the indexation percentage published under section 268.1 of the Insurance Act:
The net weekly income from employment used to determine the amount of a person’s weekly income replacement benefit under Part II.
The net weekly incomes used to determine the amount of a person’s weekly loss of earning capacity benefit under Part VI, if the benefit is payable to a person who is less than sixty-five years of age.
(2) Subsection (1) does not apply to the amount referred to in paragraph 1 of subsection (1) if the person has been receiving the weekly income replacement benefits for less than one year after the onset of the disability in respect of which the benefits are payable.
Among other things, Mr. March argued at the hearing before me that Arbitrator Feldman had determined the issue of indexation. Mr. Gillespie argued that Arbitrator Feldman did not deal with the application of section 79(1)4 in his decision.
The application of section 79(1)4 is not the same as the application of section 79(1)1 because the limiting provision of section 79(2) only applies to 79(1)1. Arbitrator Feldman relied on section 79(2) to limit the indexation provisions. Section 79(2) does not limit indexation with respect to LECs and therefore, the issue I have to decide is different from that decided by Arbitrator Feldman.
Section 79 does not refer to indexation of the IRB or LEC. Section 79 requires indexation of the “net weekly income from employment” used to calculate the IRB and LEC. The reason for this is that an IRB or LEC may change depending on collateral benefits and post-accident income. Indexing the net IRB or net LEC will not fully compensate the injured person for the erosion of the benefit due to inflation if the collateral benefits or post-accident income end. Therefore, the amount that is indexed, is the “net weekly income from employment” used to determine the IRB or LEC.
The intent of the indexation provisions is to protect the value of an injured person’s income replacement benefit and loss of earning capacity benefit against inflation. It is based on what the person’s income was at the time of the accident.
In keeping with my interpretation of the legislative meaning and intent to prevent the erosion of LECs due to inflation, and since I am not precluded from doing so by section 79(2), I find that Mrs. Crossey is entitled to have her net weekly income from employment used to determine her LEC indexed in every year starting January 1, 1995.
EXPENSES:
The parties agreed that expenses of this motion of $2,500 was reasonable. I agree and award Mrs. Crossey expenses fixed at $2,500.
December 22, 2008
William J. Renahan
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 200
FSCO A08-000016
BETWEEN: