Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2008 ONFSCDRS 48 FSCO A07-000592
BETWEEN:
MERLE SLATER Applicant
and
PERSONAL INSURANCE COMPANY OF CANADA Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Arbitrator Denise Ashby Heard: February 29, 2008 at the offices of the Financial Services Commission of Ontario in Toronto Written submissions were completed on: February 22, 2008 Appearances: Priti Khurana for Mrs. Slater Peter Yoo for Personal Insurance Company of Canada
Issues:
The Applicant, Merle Slater, was injured in a motor vehicle accident on May 14, 2004. She applied for and received statutory accident benefits from Personal Insurance Company of Canada (“Personal”), payable under the Schedule.1 Mrs. Slater disputes Personal’s entitlement to repayment of weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mrs. Slater 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:
Is Mrs. Slater required to repay Personal income replacement benefits pursuant to section 47 of the Schedule?
Is Personal liable to pay Mrs. Slater’s expenses in respect of the preliminary issue hearing, pursuant to subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Is Mrs. Slater liable to pay Personal’s expenses in respect of the preliminary issue hearing pursuant to subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Is Mrs. Slater entitled to interest for the overdue payment of benefits, pursuant to subsection 46(2) of the Schedule?
Result:
Mrs. Slater is not required to repay Personal overpaid income replacement benefits pursuant to section 47 of the Schedule.
The parties did not make submissions in respect of the issue of interest. In the event the parties are unable to agree, I remain seized of the issue.
In the event the parties are unable to agree on the issue of expenses, they may request an expense hearing before me in accordance with the Dispute Resolution Practice Code.
EVIDENCE AND ANALYSIS:
On May 14, 2004, Mrs. Slater was a passenger in a vehicle which was rear-ended. At the time of the accident, Mrs. Slater was on maternity leave from her place of employment. As a consequence of injuries sustained in the accident she could not return to her employment at the conclusion of her maternity leave. She was paid a weekly income replacement benefit calculated on her income during the 52-week period prior to the accident.
In March 2007, Personal gave Mrs. Slater notice that it had overpaid her income replacement benefit. She seeks an interpretation of subsection 47(3) of the Schedule.
The parties are agreed that:
On May 14, 2004 Mrs. Slater was involved in a motor vehicle accident the particulars of which were set out in Motor Vehicle Accident Report #776661.
On May 29, 2004, Mrs. Slater submitted her Application for Accident Benefits to Personal.
On June 8, 2004, Mrs. Slater provided Personal with her written statement in which she provided particulars of her employment in which she engaged prior to going on maternity leave.
Personal paid Mrs. Slater a weekly income replacement benefit which was incorrectly calculated at the rate of $284.12 per week.
The correct weekly amount was $240.37.
In or about November 2004, Personal paid Mrs. Slater a lump sum payment for income replacement benefits accruing between May 21, 2004 and November 12, 2004. These benefits were calculated at the weekly rate of $284.12.
On March 21, 2006, Personal gave notice of an overpayment.
On April 20, 2006 Personal advised Mrs. Slater that it had calculated the amount of the overpayment, for the 12 months preceding the notice, as $3363.18 and the overpayment would be deducted from the weekly income replacement benefit at the rate of 20% as provided by subsection 47(2)(b) of the Schedule.
For the purpose of this preliminary issue hearing, the sufficiency of the subsection 47(2) notice is not in dispute.
On or about August 28, 2007, Personal gave notice that the overpayment had been satisfied and it was “reinstating” Mrs. Slater’s benefits.
I accept the foregoing as the factual basis for the issue before me.
Subsection 47(1) of the Schedule provides:
A person shall repay to the insurer,
(a) any benefit under the 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;
(b) any income replacement or non-earner benefit that is paid to the person if he or she, or a person in respect of whom the payment was made, was disqualified from payment under Part IX;
(c) any income replacement, non-earner or caregiver benefit or any benefit under Part VI, to the extent of any payments received by the person that are deductible from those benefits under this Regulation.
(d) if, by reason of subsection 41.1(1), subsection 37(4), as it read on February 28, 2006, applies, any income replacement benefits, non-earner or caregiver benefits that is paid for the period after the insurer gave notice under subsection 37(1), as it read on that date, and before the date of the report of the designated assessment centre; or
(e) fees paid by the insurer that are referred to in paragraph 8 of subsection 24(1) if the insured person fails, without a reasonable explanation, to attend a designated assessment that has been arranged, or cancels a designated assessment without providing such notice as may be specified in the Pre-assessment Cancellation Fee Schedule established by the committee referred to in section 52, as it may be amended from time to time, that he or she will not be attending the designated assessment.
Subsection 47(2) provides:
(2) if a person is required to repay an amount to an insurer under this section,
(a) the insurer shall give the person notice of the amount that is required to be repaid;
and
(b) if the person is receiving an income replacement or caregiver benefit, the insurer may give the person notice that the insurer intends to collect the repayment by deducting up to 20 per cent of the amount of the benefit from each payment of the benefit.
Subsection 47(3) provides: “The obligation to repay a benefit does not apply unless the notice under subsection (2) is given within 12 months after the payment was made.”
Subsection 47(4) denies the insured person the relief provided in subsection (3) if the benefit was paid as a result of “wilful misrepresentation or fraud.”
Mrs. Slater submits that subsection 47(3) creates a limitation period which bars an insurer from collecting repayment of a benefit where the insurer fails to provide the notice required by subsection 47(2) within 12 months of the first payment. She contends that the term payment is undefined and is ambiguous. Therefore, because the legislation is remedial in nature any ambiguity must be interpreted to the benefit of the insured.
Mrs. Slater further submits that to find that the 12 month notice period commences with each payment of an income replacement benefit would result in the insurer having the benefit of a “rolling limitation period” which is not available to an insurer in respect of a claim against its insured.2
Personal submits that the notice provision of subsection 47(2) creates a 12-month period of retroactivity. Therefore, “the payment” provided for in subsection 47(3) refers to “any” payment made in error within the 12 month period prior to an insurer giving notice. Personal disputes that such an interpretation results in the creation of a “rolling limitation period.”
Personal further submitted that to interpret “the payment” as the first payment would result in a windfall for the insured to the prejudice of the insurer.
Personal referred me to various cases which deal with repayment. The cases in which the arbitrator found wilful misrepresentation do not assist because they are excluded from the protection afforded by subsection 47(3) by the operation of subsection 47(4).3
The cases in which the arbitrator determined notice was not given or was given after 12 months of any payment had elapsed are unhelpful because it was not necessary for the arbitrators to turn their minds to the meaning of subsection 47(3).4
In the case of Randall and ING Insurance Company of Canada5, the Arbitrator found that proper notice was given and the insured must repay the amount claimed by the insurer. However, all of the income replacement benefits, for which the insured sought repayment, were paid within 12 months of the notice and within 12 months of the first payment made in error. Therefore, the reasoning in that case does not deal with the circumstances in this matter.
The current principles of statutory interpretation are set out by Justice Laskin in Bapoo v. Co-operators as follows:
The modern approach to statutory interpretation calls on courts to interpret a legislative provision in its total context. The court's interpretation should comply with the legislative text, promote the legislative purpose and produce a reasonable and just meaning. Professor Sullivan described the modern approach in the following passage in Driedger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994) at 131, which was cited by Kiteley J.:
There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just.6
Section 47 provides for the repayment of any benefit which is paid to an insured in error. In circumstances where there is an honest mistake there is no obligation to repay unless the notice of overpayment is given within 12 months “after the payment is made.”
I found Personal’s submission that the notice provision triggers a 12 month period of retroactivity rather than a limitation period, a creative distinction. However, Personal provided no precedent for construing subsections 47(2) and (3) in a manner inconsistent with the presumption against retrospective operation of statutes. To import retroactivity to the Schedule would require clear statutory language. I conclude that subsection 47(3) creates a limitation period requiring the insurer to give notice within 12 months of “the payment.”
I find that the meaning of “the payment” is ambiguous in circumstances where an insured is receiving serial payments. For example, if an insured is entitled to a benefit which is paid out in one payment, then the error must be discovered and notice given within 12 months of “the payment” in order for the insurer to be repaid. However, an insured entitled to successive benefits would be subject to a renewed notice period with each payment of the benefit. This results in an inconsistent application of the notice period to different classes of benefits. As well, it creates a “rolling limitation period.” I accept the Arbitrator’s reasoning in Murugappa and find that in respect of an insured an insurer cannot rely on a “rolling limitation period.” To avoid the creation of a rolling limitation period “the payment” must be interpreted as meaning the first payment made in error.
To permit a “rolling limitation period” would place an unfair burden for repayment on those entitled to successive benefits. It denies an insured person certainty in respect of their benefit payments. The onus to repay benefits can create financial hardship for an insured person.
A 12-month period from the first payment made in error provides a short but reasonable period in which an insurer can investigate, verify the accuracy of its calculations and notify an insured of any error. The insurer has the protection of the general provisions of subsection 47(1) to seek repayment at any time if the error is the result of fraud or wilful misrepresentation.
I do not accept the windfall argument. At most, the insured avoids repayment of an overpayment of 12 months duration. Nothing in the provisions of section 47 undermines the provisions of section 45. It provides for the amount of the benefit to be changed assuming the requisite explanation has been given.
For the foregoing reasons I find that Mrs. Slater is not required to repay Personal the income replacement benefits. As a consequence, Personal is required to repay Mrs. Slater the amount it deducted from her weekly income replacement benefit.
INTEREST:
Mrs. Slater sought interest on the repayment Personal recouped in error. Usually, interest follows a finding that a payment to an applicant is outstanding. However, in the circumstances of this matter there may be a dispute with respect to its calculation. As the parties made no submissions with respect to this issue, I encourage them to resolve it between themselves. In the event they are unable to resolve the issue they may request that the hearing be reopened before me.
EXPENSES:
The parties made no submissions with respect to expenses. I encourage them to resolve the issue, failing which they may request an expense hearing before me in accordance with the Dispute Resolution Practice Code.
March 27, 2008
Denise Ashby Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2008 ONFSCDRS 48 FSCO A07-000592
BETWEEN:
MERLE SLATER Applicant
and
PERSONAL INSURANCE COMPANY OF CANADA Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Personal Insurance Company of Canada shall repay Merle Slater any overpayment it recouped, pursuant to section 47 of the Schedule.
March 27, 2008
Denise Ashby Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Murugappa and Aviva Canada Inc., (FSCO A05-000209, November 10, 2006)
- Singh and Gore Mutual Insurance Company (OIC A95-000257, July 3, 1998); Yusuf and Ahmed and TD Home & Automobile Insurance Company (FSCO A04-001797 and A04-001522, January 26, 2006); Soobrian and Belair Insurance Company Inc., (FSCO A04-000422, September 20, 2005)
- David C. Kilby and Dominion of Canada General Insurance Company, (FSCO A99-000608, September 29, 2000) and Erica Francis and TTC Insurance Company Limited, (FSCO A05-001598, March 7, 2007); D.F. and Wawanesa Mutual Insurance Company, (FSCO A05-000779, August 23, 2006)
- (FSCO A05-000847, May 24, 2007), pages 6 and 7
- 1997, Can LII 6320 (ON C.A.) paragraph 8