Aviva Insurance Company of Canada v. N.S., 2017 CanLII 146180

Date: 2017-12-14

Tribunal File No: 17-001880/AABS

Case Name: Aviva Insurance Company of Canada v 17-001880

In the matter of an Application for Dispute Resolution pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.

Between:

Aviva Insurance Company of Canada

Applicant

and

N.S.

Respondent

REASONS FOR DECISION AND ORDER

Adjudicator: S.F. Mather

Appearances: Mina Mikhail, counsel for the applicant

Dale Rosenberg, counsel for the respondent

Heard in Writing on: August 29, 2017

OVERVIEW

1N.S., the respondent, was involved in an automobile accident on October 16, 2014 and is currently being paid income replacement benefits (“IRBs”) pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010¹(the ''Schedule'').

2Aviva Insurance Company of Canada (“the applicant”) is claiming an overpayment of IRBs for the period April 7, 2015 to January 31, 2016 in the amount of $16,325.12 plus interest. The overpayment occurred because N.S. received Long Term Disability Benefits from Manulife Insurance (“Manulife benefits”) that should have reduced the amount of IRBs paid to the applicant during this time period.

3N.S. acknowledges that she is liable to repay to the applicant any IRBs to the extent that they are deductible under the Schedule².

4N.S. argues, however, that because she is still receiving IRBs the applicant’s remedy for collecting any amount she is required to repay is limited to the benefit reduction option in s. 52(2)(b) of the Schedule³. She argues that the applicant’s notice was invalid because it did not indicate that the insurer would obtain repayment by reducing each subsequent payment of the benefit. N.S. also argues that the interests of justice are best served by refusing to grant a repayment order at this time.⁴

5A Case Conference was held on May 29, 2107. The parties were unable to resolve the overpayment issue and a written hearing was scheduled.

ISSUES TO BE DECIDED

6I must decide the following issue:

1. Is N.S. liable to repay to the applicant IRBs in the amount of $16,325.12 plus interest due to the overpayment of this benefit?

7I find that N.S. is liable to repay to the applicant IRBs in the amount of $16,325.12 plus interest calculated in accordance with s. 52(5) of the Schedule.

ANALYSIS

8N.S. is liable to repay to the applicant IRBs in the amount of $16,325.12 plus interest calculated in accordance with s. 52(5) of the Schedule for the following reasons:

• S. 47 of the Schedule allows the applicant to deduct the Manulife benefits received by N.S. from her IRBs.

• S. 52(1)(c) of the Schedule allows the applicant to seek repayment of the IRBs N.S. received to the extent that the Manulife benefits are deductible under the Schedule.

• The applicant provided N.S. with notice of the amount of IRBs that are required to be repaid on March 22, 2016.⁵

• In accordance with s. 52(3), the notice was provided within 12 months after the payment of the amount that is to be repaid⁶ as the claim for repayment is for benefits paid to N.S between April 7, 2015 and January 31, 2016.

• The Schedule does not limit the applicant to recovering the repayment by collecting the amount by reducing each subsequent payment of IRBs.

• I have no authority to refuse to grant the order for repayment.

• I do not find that the applicant’s request for an order for repayment is an abuse of the Tribunal’s processes. The applicant is entitled under the Schedule⁷ to seek repayment of IRBs.

Deductibility of Income Replacement Benefits

9N.S. was eligible for IRBs following the accident, and the applicant paid IRBs to her from October 24, 2014 to date.⁸

10S. 47(1) of the Schedule allows the applicant to deduct any temporary disability periodic benefit being received by N.S. in respect of a period following the accident and in respect of an impairment that occurred before the accident from the IRBs she is entitled under the Schedule.

11As a result of the accident N.S is entitled to and receives Manulife benefits. She applied for Manulife benefits on July 10, 2015⁹, and her claim was approved by Manulife on November 18, 2015.¹⁰

12Manulife approved a monthly Long Term Disability benefit in the amount of $1,899.00 commencing retroactively from April 7, 2015.

13In November 2015, Manulife paid N.S. a lump sum payment of $12,913.20 representing her Manulife benefits from April 7, 2015 to October 31, 2015 and began monthly payments of the Manulife benefits.

14N.S. did not report to the applicant that she had been approved for and was receiving Manulife benefits until March 9, 2016 when her counsel advised the applicant of the approval and payment.

15Upon receiving confirmation of the approval and payment of benefits by Manulife, the applicant re-calculated the IRBs payable taking into account the Manulife benefits.

16As a result, N.S.’s IRBs were reduced from $400.00 weekly to $19.47 weekly as of February 1, 2016.¹¹N.S. still receives this IRB payment bi-weekly in the amount of $38.94.

17N.S. submits that the onus is on the applicant to establish whether or not the Manulife benefits received by her are deductible under the Schedule. She further submits that she did not receive any payments of Manulife benefits until November 2015. N.S. does not argue that the applicant has not established that the benefits are deductible under the Schedule.

18I am satisfied that the Manulife benefits received by N.S. are deductible under the Schedule.

19S. 47(1) of the Schedule clearly provides for the deduction of temporary disability benefits from IRBs. There is no evidence before me, and N.S. does not argue, that her Manulife benefits are not temporary disability benefits, nor does N.S. object to the calculation of the IRBs paid to her for the period of February 1, 2016 to date.

20The applicant submits the Superior Court of Ontario case of Intact Insurance Co. v. Marianayagam¹² (“Marianayagam”) as authority for Long Term Disability Benefits being deductible from IRBs.

21In Marianayagam the insurer was seeking an order for repayment of IRBs after the insured’s Long Term Disability Benefits were retroactively reinstated and the insurance company was not advised of the reinstatement until seven months later. The Court confirms that “certain collateral benefits, including LTDs are deducted from IRBs”.¹³

22Similar to the case before me, Marianayagam deals with the deductibility of retroactive long term disability payments from IRBs that were paid. The decision of the Superior Court in Marianayagam supports the position that the applicant is entitled to deduct both the retroactive Manulife benefits and the ongoing Manulife benefits from the IRBs paid to N.S.

Repayment

23The Schedule¹⁴ sets outs circumstances where a person is liable to repay benefits to an insurer.

24S. 52(1)(c) provides that a person is liable to repay to an insurer any IRB to the extent of any payments received by the person that are deductible under the Schedule.

25For the reasons given above, I find that N.S. is liable to repay IRBs to the applicant under s. 52(1)(c).The lump sum of retroactively paid Manulife benefits that she received in November 2015, and the ongoing benefits that she continued to receive, are deductible under the Schedule from her IRBs.

26N.S. agrees that pursuant to s. 52(1)(c) she is liable to repay to the applicant any IRB to the extent that the payments received by her are deductible under the Schedule. N.S. argues that s. 52(1)(c) is the only section under which she is liable to repay the benefit, and I agree.

27The applicant does not indicate it its submissions the subsection of s. 52(1) of the Schedule under which it is claiming a repayment of benefits. The applicant did, however, submit that N.S. is liable to repay the amount because she failed to disclose her entitlement to Manulife benefits to the applicant despite several requests for information about her entitlement to these benefits.¹⁵

28In its March 22, 2016 letter¹⁶ to N.S. asking for the repayment of benefits, the applicant makes the request “in accordance with s. 52(1)(a) of the Schedule”. This subsection provides for repayment of a benefit that is paid to a person as a result of an error or as a result of wilful misrepresentation or fraud.

29I find there is no evidence that the benefits were paid in error or that paid as a result of a wilful misrepresentation.

30While N.S. delayed in advising the applicant that she was receiving Manulife benefits, there is no evidence that she made any wilful misrepresentation about her entitlement to or her receipt of the benefits.

31N.S. provided the applicant with a copy of her Manulife benefits application on August 6, 2015.¹⁷ In my view, the applicant has not met its burden of establishing that N.S. wilfully misrepresented material facts in respect of her entitlement to IRBs.

Notice

32Pursuant to s. 52(2)(a) of the Schedule, the applicant is required to provide N.S. with notice of the amount she is required to repay.

33I am satisfied that this notice was given by the applicant in a letter to N.S. dated March 22, 2016.¹⁸The letter clearly sets out the amount to be repaid and requests repayment.

34S. 52(3) of the Schedule also provides that if the notice of the amount that a person is required to repay is not given within 12 months after the payment of the amount that is to be repaid, the person to whom the notice is given ceases to be liable to repay the amount unless the benefit was originally paid as a result of wilful representation or fraud.

35I am satisfied that the notice given on March 22, 2015 was within 12 months of the April 7, 2015 payment and that N.S. is liable to repay the amount claimed.

Method of Repayment

36N.S. was still receiving an IRB in March 2016 when the applicant gave its notice of the amount to be repaid. Pursuant to s. 52(2)(b) of the Schedule, the applicant had the option of giving N.S. notice that it intended to collect the repayment by reducing subsequent payments of her IRBs by 20% of the amount of the benefit.

37N.S. makes several arguments with respect to the method of repayment of the benefits. She argues that:

• The applicant’s ability to collect the amount to be repaid is limited to a claw back which is a reduction of each subsequent payment of the benefit provided for under s. 52(2)(b) of the Schedule.

• The Schedule is remedial legislation and the legislative intent is to limit and regulate overpayment scenarios to repayment in accordance with s. 52 which encourage insurers to pursue repayment by way of benefit claw back;

• In situations of IRB overpayments, the insurer does not have a right to an order for repayment and the full range of judgement debtor remedies;

• Section 1 of the Statutory Powers Procedures Act and the rules of a tribunal shall be liberally construed to secure a just, most expeditious and cost-effective determination of the proceeding;

• If I find that the applicant is entitled to an order I should exercise my discretion to impose terms that the order be stayed and not be subject to certification for filing with the Superior Courts while the claim is ongoing; and

• The interests of justice are best served by refusing to grant an order for repayment at this time.

38The applicant did not file any reply.

39I do not agree with N.S. that the applicant is obligated to use the claw back provisions in s. 52(2)(b) of the Schedule and collect the amount owing by N.S. through what would amount to $4.00 per week deductions from her IRB benefits.

40The wording of s. 52(2)(b) is clearly permissive and not mandatory. The provision states the insurer “may”, if the person is receiving an income replacement benefit, give notice that it intends to collect the amount to be repaid by reducing the person’s IRBs. The applicant is not obligated to collect the amount to be repaid by N.S. by reducing her IRBs.

41In my view, the purpose of s. 52(2)(b) is not to encourage an insurer to claw back IRBs but rather to limit the amount they may claw back so that the person receiving the benefit is not left without any weekly income benefit to live on.

42My authority as a member of the Tribunal is limited to the powers given to me by statutes, regulations and the Tribunal’s Rules. I have not been provided with and I am not aware of any authority that will allow me to impose terms on my order for repayment.

Interest

43The applicant seeks an order for interest on the amount to be repaid.

44S. 52(5) of the Schedule allows the applicant to charge interest on the outstanding amount starting on the 15th day after it gave notice to N.S. of the amount outstanding and ending on the day the repayment is received in full. Interest is calculated at the bank rate in effect on the 15th day after notice was given.

45If the parties are unable to agree on the interest calculation within 10 days of the release of this decision, I will convene an in-person continuation of the hearing to determine the interest calculation.

46For the reason provided above I Order:

1. N.S. shall pay to the applicant the sum of $16,325.12 plus interest calculated in accordance with s. 52(5) of the Schedule.

Footnotes

1. 1O. Reg. 34/10.
2. 2Paragraph 4, Respondent’s Submissions.
3. 3Paragraph 9, Respondent’s Submissions.
4. 4Paragraph 14, Respondent’s Submissions.
5. 5Application to the Tribunal by the Insurer, Tab 9.
6. 6Application to the Tribunal by the Insurer, Tab 9.
7. 7See s. 52(1)(c).
8. 8Exhibit D to the affidavit of Darryl Hurst, Tab 2, Applicant’s submissions.
9. 9Exhibit G to the affidavit of Darryl Hurst, Tab 2, Applicant’s submissions.
10. 10Exhibit H to the affidavit of Darryl Hurst, Tab 2, Applicant’s submissions.
11. 11Exhibit G to the affidavit of Darryl Hurst, Tab 2, Applicant’s submissions.
12. 12[2016] O.J. No. 1071.
13. 13[2016] O.J. No. 1071 at 27.
14. 14See s. 52(1).
15. 15Paragraph 19, Written Submissions of the Applicant.
16. 16Tab 9, Application to the Tribunal by Insurer.
17. 17Exhibit G, Affidavit of Darryl Hurst, Tab 2, Written Submissions of the Applicant.
18. 18Tab 9, Application of the Insurer to the Tribunal.