Tribunal File Number: 17-000053/AABS
In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, R.S.O 1990, c.I.8, in relation to statutory accident benefits
Between:
V.K.
Applicant
and
Travelers Insurance
Respondent
DECISION
Adjudicator: Robert Watt
Appearances:
Counsel for the Applicant: Adrian Lomaga
Counsel for the Respondent: Sarah Scott
HEARD both orally by teleconference and in writing on July 27, 2017
OVERVIEW
1The applicant was injured in an automobile accident on September 22, 2016, and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (the ''Schedule'').
2The applicant received income replacement benefits (IRB) from the respondent in the amount of $8233.99 for the period September 30, 2016 to April 28, 2017.
3The applicant claims that she should have received greater IRB, and is therefore owed in arrears, the sum of $2,758.01.
ISSUES
4Is the applicant entitled to an IRB at $301.54 per week from September 29, 2016, to May 31, 2017?
5Is the respondent liable to pay to the applicant a special award, due to their unreasonable delay in processing the applicant’s claim for income replacement benefits?
RESULT
6I find that the respondent’s calculations of the IRB weekly amounts in the amount of $272.21 from September 23, 2016, to December 31, 2016, and in the amount $215.91 from January 1, 2107, to April 30, 2017, to be the correct calculations.
7I find that the respondent is not liable to pay to the applicant a special award.
8I find that no costs are to be awarded to either party.
THE LAW, EVIDENCE AND ANALYSIS
Income Replacement Benefits
9Section 4 (2) (3) (4) of the SABS sets out the process of calculation for income and losses for income replacement benefits, including a reference to section 9(2) of the Income Tax Act (Canada).
10Section 7(3) (b) of the SABS allows an insurer to deduct from the amount of an IRB, 70 percent of any income from self- employment earned by the insured, post- accident.
11Section 9 (2) of the SABS refers to calculations as set out in the Income Tax Act (Canada), which would include Section 18 (12) (a). This section restricts certain expenses “ if the space is not used exclusively for the purpose of earning revenue and is not used on a regular and continuous basis”.
12Section 33(1) of the SABS requires the applicant to provide, within 10 days after receiving a request from the insurer, “to the insurer with any information reasonably required to assist the insurer in determining the applicant’s entitlement to a benefit”. Subsection (6) makes it clear that an insurer “is not liable to pay a benefit in respect to any period during which the insured fails to comply with subsection (1).”
Special Award
13Regulation 664, section 10, permits the Licence Appeal Tribunal to make a special award, when “the insurer has unreasonably withheld, or delayed payment, of any benefits owing”.
Costs
14Rule 19 of the Licence Appeal Tribunal, Rules of Practice allows the Tribunal to consider a party’s request for costs, if “a party in a proceeding has acted unreasonably, frivolously vexatiously or in bad faith”.
EVIDENCE
15The applicant was in an accident on September 22, 2016. At the time of the accident, the applicant was self- employed running a business cleaning residential houses. After the accident she did not actively pursue her business, but had her partner and sister carry on the business. The applicant, post- accident, did not apparently receive any earnings for the jobs that the partner and sister completed.
16The applicant maintained that she still kept in contact with clients and therefore post- accident incurred fixed business costs should be the same as pre-accident fixed business costs in the calculation of any (IRB). The applicant intended to go back to work. Those business costs claimed by the applicant as post- accident fixed business costs included home office, phone and utilities, management fee and administration fees etc.
17The applicant’s expert witness Mr. Grewal gave evidence on the calculations of the IRB based on his reports, which included financial documentation provided by the applicant. The applicant’s calculations indicated that the IRB should be$301.54 per week from September 29, 2016 to May 31, 2017. This amount was based on calculating 70 % of the applicant’s earnings in the amount of $215.31 per week, plus her ongoing business costs at $86.23 per week.
18The respondent’s expert witness Mr. Pellegrini gave evidence on the calculations of the IRB evidence based on his reports, which included financial documentation provided by the applicant. The respondent’s calculations indicated that the IRB should be $272.21 per week from September 23, 2016, to December 31, 2016. This amount was based on calculating 70% of the applicant’s earnings in the amount of $215.91 per week, plus her ongoing business costs of $56.30. The calculations from the period from January 1, 2017, to April 30, 2017 indicated that the IRB should be in the amount of $269.33 per week, based on calculating 70% of the applicant’s earnings $215.91 per week, plus her ongoing business costs of $53.42 per week.
19The major differences in the calculations between the applicant’s reports and the respondent’s reports, relate to quantifying the fixed business cost categories, post- accident.
20The respondent has not included in its calculations of the fixed business costs for post- accident costs, the business use of home expenses, the management and administrative fees, and has fixed the telephone and utilities at 50%. The total difference in dispute between the parties is $2,758.01, based on the difference of quantifying post- accident fixed business costs.
21The Respondent had paid to the applicant on June 22, 2017, the sum of $8233.99 representing IRB for the period from September 30, 2016 to April 30, 2017, based on the respondent’s calculations as set out in paragraph [18] above.
ANALYSIS
Is the applicant entitled to an IRB at $301.54 per week from September 29, 2016, to May 31, 2017?
22The only issue outstanding between the parties is what fixed business costs post- accident, are to be deducted and added to the base income amount, to arrive at an amount for the weekly IRB. There is no dispute as to the entitlement of the IRB.
23It seems only logical that if the applicant is not active in the business post- accident, that she will not incur certain fixed business costs that she incurred pre- accident. These fixed business costs not incurred, should therefore not be included in any calculations of fixed business costs post- accident.
24I prefer the respondent’s evidence in the quantification of the IRB over that of the applicant’s. I find that section 9(2) of the Income Tax Act (Canada) and Section 18 (12)(a) of the Income Tax Act (Canada) support the respondent’s method of quantifying fixed business losses by their accountants, excluding some previous fixed business costs that are no longer being incurred by the applicant.
25The intention of the applicant to go back to her business at some point of time is commendable; however until she goes back to work, there are fixed business costs not incurred by her.
26I find that the respondent has paid to the applicant the proper amount of IRB owed to April 28, 2017.
27The respondent position in not paying IRB to the applicant for the period from April 29, 2017, to the termination date of May 31, 2017, is that it is waiting for the bank statements covering that period of time as per its request for documentation under section 33 of the SABS. I find this a valid reason under Section 33 of the SABS for not paying any further benefits. Once the documentation has been provided and there are no issues with that documentation, then the final payment of the IRB should be paid by the respondent to the applicant.
Is the respondent liable to pay to the applicant a special award, due to the respondent’s unreasonable delay in processing the applicant’s claim for income replacement benefits?
28The applicant’s position is that the respondent had all of the necessary financial information necessary as of September 30, 2016 when the respondent’s accountant quantified the IRB for a certain period of time. The bank statements asked for by the respondent, to confirm post- accident non earnings, and not provided at this time by the applicant, were not necessary in the calculations of quantifying the fixed business costs.
29The applicant’s position is that the bank statements are not necessary as the SABS don’t specifically refer to the production of any bank statements. The applicant also feels that bank statements disclose a lot of personal information including the financial circumstances of the applicant, which might prejudice the applicant, if the respondent knew and took advantage of the applicant’s possible lack of financial means to continue court proceedings.
30The applicant’s position is that the respondent could have paid the applicant the IRB for the period from September 23, 2016 to May 31, 2017, until the requested further bank information was provided and then, if necessary, claim any overpayment back under section 52 of the SABS.
31The respondent’s position is that the request for the applicant’s bank statements was reasonable and necessary to substantiate the applicant’s oral evidence that she earned no post- accident income.
32The respondent asked on November 4, 2016, for further financial documentation including; financial statements of her business, monthly revenues statements, income tax documentation etc.
33The respondent on December 15, 2016, again indicated to the applicant that the respondent could not finalize an assessment until she provides the requested information. The respondent’s accountants requested further financial information from the applicant at this time, relating to her 2015 tax assessment and her bank statements from September 1, 2016, to date which had not yet been provided, although requested earlier.
34The respondent’s accountants were able on the information they received to date calculate the income replacement benefit for the period from September 23, to September 30, 2016, in the amount of $38.11. This benefit was paid to the applicant.
35The respondent again on January 9, 2017, under section 33 of the SABS wrote to the applicant asking for copies of bank statements from September 1, 2016, to date; a Statement of Revenue and Expenses from September 23, 2016, to date, and a detailed summary of wages paid to replacement workers.
36A completed Employer’s Confirmation Form (OCF-2) dated March 10, 2017, was provided by the applicant to the respondent on March 10, 2017.
37On April 25, 2017, an examination under oath of the applicant took place. The applicant confirmed at this examination, that she had a TD bank account used for her business. She also confirmed at this examination that when she was paid cash, not all of it was deposited into the TD bank account.
38The applicant’s counsel on May 4, 2017, provided copies of the applicant’s TD bank account statements associated with her business, from January 4, 2016, to April 28, 2017, and copies of invoices for the period of August 31, 2016, to September 30, 2016. The respondent’s accountant’s with this additional information provided an up dated report on June 22, 2017. The respondent then paid the IRB to the applicant in the amount of $8233.99, based on their accountant’s up dated report.
39The respondent’s position on the privacy issue, raised by the applicant relating to the bank statements is that the business documentation provided by the applicant provides far more private information about the applicant, than the applicant’s bank statements. The respondent’s evidence through their expert witness clearly indicated that they were only interested in the issue of income received, and not the total amounts in the bank statements. Any other information could have been redacted or worked out to be redacted with the applicant.
40The respondent’s position is that their accountants are not required to accept the oral word of the applicant as to what income she was, or was not, earning post- accident. The respondent’s position is that it was reasonable to request further documentation (source documents) to verify post- accident earnings, and business income and expenses.
41I find that the respondent under section 33 was acting reasonably in asking for further documentation to ratify the oral evidence of the applicant as to any income earned, post –accident. This is all the more necessary, especially when the applicant admitted, not putting all of her income earned, pre-accident, into the TD bank business account that she had. The respondent has to determine entitlement, quantum, and possible deduction of earned income for any IRB paid. Asking for copies of bank records is therefore essential disclosure for any proper determination, especially if there are credibility issues involved.
42Based on the above evidence relating to the dates of requested information and the dates that the requested information was produced by the applicant, I find that the respondent has not unreasonably withheld or delayed payment, and therefore the applicant is not entitled to a special award under Regulation 664.
43I find that the respondent under section 33(6) of the SABS had the right to refuse to pay income replacement benefits until it had all of the information required to complete the assessment, as to entitlement, to quantifying and to possible deduction of what IRB owed.
44I find that interest is not owed on benefits suspended under Section 33(6) of the SABS, leading up to the applicant providing the requested documentation.
45I find that section 33 of the SABS is very specific as to information required to be produced as a condition of payment of any IRB, and does not require any prepayment subject to adjustment later, under section 52 of the SABS.
46I find that there has been no evidence put before me by either party in this proceeding that either party has “acted unreasonably, frivolously vexatiously or in bad faith”. Therefore costs are not awarded to either party.
Released: January 3, 2018
_____________________
Robert Watt
Adjudicator