C.M. v. Aviva General Insurance Company, 2019 CanLII 94026

Tribunals Ontario Safety, Licensing Appeals and Standards Division 77 Wellesley Street West, Box 250 Toronto ON M7A 1N3 Tel: 1-844-242-0608 Fax: 416-327-6379 Website: www.slasto-tsapno.gov.on.ca

Tribunaux décisionnels Ontario Division de la sécurité des appels en matière de permis et des normes 77 rue Wellesley Ouest, Boîte no 250 Toronto ON M7A 1N3 Tél. : 1-844-242-0608 Téléc. : 416-327-6379 Site Web : www.slasto-tsapno.gov.on.ca

RECONSIDERATION DECISION AND ORDER

Before: Susan Mather, Vice-Chair

Date: July 8, 2019

File: 17-005910/AABS

Case Name: C.M. v. Aviva General Insurance Company

Written Submissions By:

For the Applicant: Alex Nikolaev, Counsel

For the Respondent: Kimberley Tye, Counsel; Michelle Friedman, Counsel

OVERVIEW

1On July 18, 2018, the Tribunal issued a decision in the case of C.M. v. Aviva General Insurance.¹ The decision denied the applicant’s request for an income replacement benefit after November 19, 2017 but allowed his request for a lump sum award under Ontario Regulation 664 (“O. Reg. 664”)² from the respondent (“Aviva”).

2If the Tribunal finds that an insurer has unreasonably withheld or delayed payments of benefits, O. Reg. 664 allows the Tribunal to award an insured a lump sum to compensate for the insurer’s unreasonable action. The Tribunal may award a lump sum of up to 50% of the amount to which the person was entitled at the time of the award, together with interest.

3Aviva is seeking a reconsideration of the Tribunal’s decision that the applicant was entitled to a lump sum award under O. Reg. 664.

4The grounds for the reconsideration request are that the Tribunal made a significant error of law or fact such that the Tribunal would likely have reached a different decision.

5This ground is an applicable criteria set out in Rule 18.2(b) of the Licence Appeal Tribunal (LAT) Rules of Practice and Procedure, Version 1 (April 2016) (the “LAT Rules”) which are the Rules applicable to this reconsideration.

6The applicant opposes this request for reconsideration arguing that the adjudicator did not make an error of law or fact so as to entitle Aviva to a reconsideration of the decision.

7LAT Rule 18.4 allows me to confirm, vary or cancel the decision or to order a rehearing on all or part of the matter. Aviva asks me to vary the decision and dismiss the claim of the applicant for a lump sum award.

8Pursuant to s. 17(2) of the Adjudicative Tribunals Accountability, Governance and Appointments Act, 2009,³ I have been delegated responsibility to decide this matter in accordance with the applicable rules of LAT.

RESULT

9For the reasons provided below, the Tribunal’s decision is varied to provide that the applicant is not entitled to a lump sum award.

THE FACTS

10C.M. (the “applicant”) was involved in a car accident on February 11, 2016. He applied for and received an income replacement benefit (“IRB”) from the respondent⁴ (“Aviva”) payable under the Statutory Accident benefits Schedule – Effective September 1, 2010, O. Reg. 34/10 (the “Schedule”).

11Aviva paid the applicant an IRB of $24.10 per week from February 18, 2016 to September 27, 2016.

12In calculating the rate for the IRB, Aviva erroneously, and contrary to s. 4(1)(a) of the Schedule, deducted employment insurance (“EI”) the applicant was receiving under the Employment Insurance Act.⁵

13The applicant promptly advised Aviva that the calculation of the IRB was incorrect, pointing out that EI was not deductible from his IRB. The applicant asked Aviva to recalculate the IRB.⁶

14Aviva responded by defending its position, explaining why in its view it was correct in deducting the applicant’s EI as part of the IRB calculation.⁷ Aviva referred the applicant to two cases to support its position.

15The applicant did not respond to Aviva’s letter defending its position.

16Four months later, the applicant confirmed that his EI was terminated,⁸ at which point Aviva adjusted the IRB rate to the maximum IRB of $400.00 per week. Aviva paid him $400.00 per week from June 11, 2016 to November 9, 2016, when it then terminated the benefit.⁹

17In his application to the Tribunal, the applicant disputed his entitlement to continued IRBs. He also asked the Tribunal to order a lump sum award on the IRB payments that were not paid given Aviva’s error in deducting EI from his IRB.¹⁰

18Aviva eventually agreed that the applicant was correct. At the February 14, 2018 case conference, Aviva agreed that it erred in calculating the IRB, specifically that it should not have deducted EI, and agreed to pay the outstanding balance for the period during which it based its calculation on the deduction for EI, namely February 18 to June 10, 2016. Aviva paid the outstanding balance on March 14, 2018.¹¹

Alleged Errors of Law and Fact

19Aviva alleges that the adjudicator made three significant errors of law or fact in determining that the applicant was entitled to a lump sum award under O. Reg. 664. such that the Tribunal would likely have reached a different decision.

a. The adjudicator mistakenly indicated that on September 09, 2016 Aviva conceded that there was an error in the calculation of the income replacement benefit.

20In paragraph 30 of his reasons for decision the adjudicator stated:

“I have decided C.M. is entitled to the award because Aviva should have paid C.M. at the $400 weekly amount from February 18, 2016 to June 10, 2016 when it conceded that they made an error in the September 2016 letter. Aviva did not do so, and waited until C.M. filed an application to the Tribunal. I find this resulted in an unreasonably withheld payment of the benefit.”

21I have reviewed the September 9, 2016 letter¹² and agree with Aviva that that Aviva did not concede in the letter that it made an error in the IRB calculation for the period of February 18 to June 10, 2016. Rather, the letter confirms that Aviva adjusted the IRB for the period June 10, 2016 to September 27, 2016 to recognize the fact that the applicant’s EI was terminated. There is no admission in the letter that payments made for the period of February 18 to June 10, 2016 were incorrectly calculated.

22I find this error of fact by the adjudicator to be significant because his decision to make a lump sum award relies on it. He clearly states that the reason he was making the award was because Aviva conceded the error in the September 9, 2016 letter.

23For the reasons provided below, I also find that it is likely that, without this error, the adjudicator would have reached a different decision.

24The applicant in his reconsideration submissions argues that, given all of the evidence provided at the hearing, the adjudicator did not make a significant error of fact and law. He does not recognize that the adjudicator’s decision to award a lump sum was based on his understanding that Aviva conceded the error in September 2016.

25The applicant argues that the adjudicator made other findings of fact that support his decision to make a lump sum payment:

• At the hearing, Aviva conceded that it had wrongly calculated the quantum of the IRB reducing the quantum based on the EI the received.¹³

• In a May 10, 2016 letter, Aviva calculated the IRB at $24.10 per week based on the applicant’s pre-and post-accident earnings. Aviva stated in the letter that s. 4(1)(a)(i) of the Schedule excludes a benefit under the Employment Insurance Act (Canada) and yet it proceeded to deducted the EI.¹⁴

• On May 13, 2016, Aviva sent another letter to the applicant stating it correctly calculated the IRB entitlement with the deduction of EI based on sections 7(1), (3) and 4(1) of the Schedule. Aviva ignored that fact that section 4(1)(a)(i) explicitly exclude EI benefits from the definition of other income replacement assistance.¹⁵

• The applicant testified at the hearing that Aviva agreed to pay the amount owing as calculated by the applicant after the Tribunal application was filed. Aviva did not dispute the applicant’s calculation or oral evidence that Aviva only corrected and paid the proper benefit amount after the dispute was filed.¹⁶

• The adjudicator found that there was no ambiguity regarding whether or not the applicant was receiving EI and what the Schedule states about EI payments and how to calculate and IRB in the applicant’s circumstances.¹⁷

• The Aviva adjuster conceded at the hearing that Aviva misinterpreted the regulation and made a mistake.¹⁸

• Aviva did not offer any explanation at the hearing as to the delay in correcting the mistake.¹⁹

26While the facts the applicant sets out are correct, I do not agree that based on these facts alone the adjudicator would have awarded a lump sum award.

27The adjudicator considered these facts in the context of Aviva having conceded the error in the September 9, 2016 letter. He relied primarily on this mistake of fact to reach his conclusion that the payment of the benefit was unreasonably delayed.

28The adjudicator stated that there was no ambiguity regarding whether or not the applicant was receiving EI and what the Schedule states about EI payments and how to calculate them in the applicant’s circumstances. I do not agree.

29Aviva was clearly confused in its interpretation of the Schedule. Aviva provided its perspective to the applicant in both its May 10 and May 13, 2016 letters.

30The decision does not recognize the applicant’s response to Aviva’s May 10, 2016 letter or his lack of response to Aviva’s May 13, 2016 letter. In my view, this confirms that the adjudicator relied on the incorrect fact that that Aviva conceded there was an error in the September 9, 2016 letter.

31I do not find it unreasonable that Aviva considered the issue to be resolved. By not responding to Aviva’s May 13, 2016 letter and not raising deductibility issue again in his August 29, 2016 letter informing Aviva that his EI had been terminated, I am satisfied that the applicant led Aviva to believe there were no further issues with the deductibility of the EI payments.

32The concessions made by Aviva at the hearing should not work against it. Aviva acknowledged its mistake prior to the hearing and paid the benefit.

33For the reasons provided above, I find that the error of fact made by adjudicator was a significant error such that the Tribunal would have likely reached a different decision.

b. The adjudicator mistakenly concluded that an O. Reg. 664 award is applicable where an insurer misinterprets a statue.

34Aviva argues that the delay in correcting the rate at which the IRB was paid was due to the insurer misinterpreting the Schedule and that a misinterpretation of a regulation is not grounds for ordering a lump sum award on an overdue benefit.

35While the adjuster conceded at the hearing that Aviva misinterpreted the Schedule and made a mistake I am unable to find anywhere in the decision that the adjudicator found that the misinterpretation of the regulation was a reason for the lump sum award.

36As I read the decision, the adjudicator did not consider the misinterpretation of the statue to be the reason for finding the payment of the benefit was unreasonably delayed. Rather, the adjudicator decided that Aviva should pay a lump sum award because of his mistaken belief that Aviva acknowledged its mistake and did not pay the benefit.

37Aviva argues that the Tribunal has established a principle that an O. Reg. 664 award will not be granted when the insurer incorrectly interprets or fails to comply with a provision of the Schedule.

38For the reasons provided below, I accept Aviva’s arguments and find that the applicant is not entitled to a lump sum award because Aviva misinterpreted the Schedule.

39In making this argument, Aviva relies on the Tribunal case of Applicant v. State Farm (“State Farm”) for the proposition that an O. Reg. 664 award will not be granted where the insurer incorrectly interpreted or failed to comply with a provision of the Schedule.²⁰

40In State Farm the adjudicator stated that “an insurer can come to the wrong conclusion without having acted unreasonably. To merit the granting of the special award there must be something more – unreasonable conduct on the part of the insurer.”

41I have reviewed the May 2016 correspondent between the parties that was included in the Joint Document Book for the hearing. I do not find any unreasonable conduct on the part of Aviva.

42When the applicant questioned Aviva’s position on the EI benefit,²¹ Aviva promptly responded²² and heard nothing further from the applicant about the issue until he filed his application with the Tribunal.

43I agree with the reconsideration submissions of the applicant that Aviva owed the applicant a duty of good faith to²³ conduct a reasonable investigation of information presented to it; approach the claim with an “open mind”; and be aware of the current state of the law.

44The requirement for a lump sum award, however, is that an insurer unreasonably withholds or delays a payment of a benefit and for the reasons provided above I do not find that this has occurred.

c. The adjudicator erred in concluding that the maximum award of 50% was appropriate in this case.

45Having determined that the lump sum award is not appropriate, I need not consider whether a maximum award of 50% is appropriate.

OUTCOME

46Rule 18.4 of the LAT Rules allows me several options in considering a request for reconsideration.

47For the reasons provided above, I find that the adjudicator made an error of fact such that the Tribunal would likely to have reached a different decision.

48I also find that the adjudicator did not find Aviva’s misinterpretation of the Schedule was a reason to find that Aviva acted unreasonably withheld or delayed the payment of the benefits.

49I find no reason to send this matter back for re-hearing. While the adjudicator did hear oral evidence I do not think my decision interferes with his discretion.

50The adjudicator clearly made an error of fact in reaching his conclusion and for the reasons provided I am not satisfied that Aviva’s misinterpretation of the Schedule resulted in Aviva unreasonably delaying or withholding payment of the benefit.

51For the reasons provided I Order:

1. Aviva’s request for reconsideration of the decision in C.M. v. Aviva General Insurance Company, File:17-00591/AABS is allowed.

2. The July 18, 2018 Order of the Tribunal is varied to provide that the applicant’s request for a lump sum award is dismissed.

Susan Mather

Vice-Chair

Tribunals Ontario – Safety, Licensing Appeals and Standards Division Released: July 8, 2019

Footnotes

1. 1LAT File 17-005910, July 18, 2018.
2. 2Section 10, R.R.O. 664 made under section 280 of the Insurance Act, R.SO.1990, Chapter I.8.
3. 3S.O. 2009, c. 33, Sched. 5. I.
4. 4RBC General Insurance was the named insurer at the time of the accident. Aviva became the named insurer. I refer to the insurer as Aviva throughout this decision.
5. 5Employment Insurance Act, S.C. 1996, c. 23.
6. 6Letter dated May 10, 2016 from applicant’s law firm to RBC General Insurance, Tab 6 Applicant’s Reconsideration Submissions; Tab 26 Joint Document Brief filed for Hearing
7. 7Letter dated May 13, 2017, Tab 5, Aviva’s Reconsideration Submissions
8. 8Letter dated August 29, 2106, Tab 8, Aviva’s Reconsideration Submissions
9. 9Tab 3, Aviva’s Request for Reconsideration, Letter dated September 09, 2016
10. 10The applicant claimed a lump sum award on the overdue benefits for the period February 18, 2016 to June 10, 2016.
11. 11Tab 4, Aviva’s Request for Reconsideration.
12. 12Tab 3, Aviva’s Reconsideration Submission.
13. 13Paragraph 21, C.M. v. Aviva
14. 14Paragraph 23, C.M. v. Aviva
15. 15Paragraph 26, C.M. v. Aviva
16. 16Paragraph 29, C.M. v. Aviva
17. 17Paragraph 32, C.M. v. Aviva
18. 18Paragraph 33, C.M. v. Aviva
19. 19Paragraph 33, C.M. v. Aviva
20. 2016-002858/AABS November 7, 2017
21. 21Letter dated May 10, 2016, Tab 6 applicant’s reconsideration submissions
22. 22Letter dated May 13, 2016, Tab 5 Aviva’s reconsideration submission
23. 23Irma Melchoirre and Wawanesa Mutual Insurance Company, FSCO A05-000491 and FSCO A05-000492, December 22, 2016