S.M. v. Aviva General Insurance Company, 2020 CanLII 12712

Tribunal File Number: 18-010116/AABS

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

Between:

S.M.

Applicant

and

Aviva General Insurance Company

Respondent

DECISION

Adjudicator: Jesse A. Boyce

APPEARANCES:

For the Applicant: Samia M. Alam For the Respondent: Leanne W. Zabudsky

Written Hearing: October 28, 2019

OVERVIEW

1S.M. was injured in an automobile accident on April 1, 2017. S.M. sought various benefits from the respondent, Aviva General Insurance Company, pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010¹ (the ''Schedule''). S.M. was paid various benefits by Aviva, including an income replacement benefit (“IRB”), which Aviva conceded S.M. was entitled to. The sole issue remaining in dispute between the parties concerns the payment of an accounting report completed for the purposes of calculating the IRB.

ISSUE

2The issue as outlined in the Case Conference Order dated March 6, 2019 is as follows:

i. Is the applicant entitled to the cost of an accounting report in the amount of $2,627.86 for the purpose of the IRB calculation prepared by Great Oaks Litigation Support, submitted on August 2, 2017 and denied by the respondent on August 2, 2017?

RESULT

3S.M. is not entitled to the cost of the accounting report in the amount of $2,627.86 for the IRB calculation as it was not reasonable and necessary.

ANALYSIS

Is the accounting report reasonable and necessary?

4Section 7(4) of the Schedule requires an insurer to fund an accountant’s report where three preconditions are satisfied: first, the insured person must be applying for an IRB that is based on the employment or self-employment considered in the report; second, the report must be prepared by a member of a designated body within the meaning of the Public Accounting Act, 2004; and, finally, the expense must be reasonable and necessary for the purpose of determining the insured person’s entitlement to an IRB. S.M. bears the onus of proving these conditions on a balance of probabilities.

5In submissions, the parties agree that the first two conditions of s. 7(4) are satisfied, as S.M. clearly applied for the IRB that the report concerns and the report was prepared by a member of a designated body, being Gurlal S. Gill, CPA, CGA, of Great Oak Litigation Support. The issue is whether the Great Oak report was both reasonable and necessary for the purposes of determining S.M.’s IRB.

6S.M. argues that the accounting report is reasonable and necessary because Aviva never paid for the Great Oak accounting report despite commissioning its own accounting report and despite its calculation of IRBs being lower than the Great Oak report, resulting in alleged underpayment to S.M. Specifically, S.M. argues that there was also a differential in quantum of IRBs during the period S.M. received short-term disability benefits. Further, she submits that she was entitled to obtain an expert report “particularly where no calculation was forthcoming from Aviva” and because s. 7(4) applies equally to both employed and self-employed individuals and is a “shall-pay” provision. S.M. argues that Aviva cannot state that the Great Oak report was not reasonable or necessary yet commission its own accounting report, that it cannot state IRBs could be calculated without an Employer’s Confirmation Form (“OCF-2”) yet fail to calculate IRBs until it received the OCF-2. In sum, S.M. argues that Aviva’s own actions indicate the report was reasonable and necessary and the difference in calculation indicates the calculation of IRBs was not as straightforward as Aviva’s denial asserted.

7In response, Aviva submits that the report is not reasonable and necessary because S.M. only had one job and one source of income. It argues that ss. 7(1) and (2) of the Schedule are clear with respect to calculation of IRB in these circumstances, where IRB is based on 70% of an insured’s gross weekly income and other income replacement assistance—like S.M.’s short-term disability—is deducted from that amount. Aviva argues S.M.’s calculation did not require the assistance of a forensic accountant to interpret the documents and applicable tax law because hers was a straightforward mathematical calculation. Finally, Aviva takes issues with the total cost, arguing it is not reasonable for “a benefit that took less than a half hour to calculate,” where Great Oak allegedly spent “more than seven and a half hours preparing a report at a rate of $275.00 per hour and invoiced Aviva $2,627.86,” which is in excess of the maximum under s. 7(5).

8I agree with Aviva. In their materials, the parties discuss some of the procedural delays and communication lapses that seemingly occurred. While those issues may have given rise to the dispute, the Tribunal’s determination focuses solely on the facts of S.M.’s employment at the time of the accident, the documentation available and whether it was reasonable and necessary to secure the assistance of Great Oak to calculate her IRB on this information. On the evidence and case law provided by the parties, I find S.M.’s IRB calculation was a straightforward one that did not require the assistance of a forensic accountant.

9It is undisputed that S.M. had only one employer and one source of income, being [a food and drink supplier]. S.M. does not argue that there were alternate forms of employment income that would complicate her IRB calculation. S.M. does not argue that she was self-employed which would necessitate the need for an accountant. With the exception of an OCF-2 from [a food and drink supplier], it appears that all of the relevant financial documentation was available. On review, there is nothing, in my view, out of the ordinary on the face of these documents or missing from the documents that would complicate the IRB calculation under the Schedule. Indeed, where there is only one source of income and all of the financial documentation is accurate, the math is not particularly difficult. While I am alive to S.M.’s claims about delay on Aviva’s end, I still find it difficult to reconcile why S.M. was the first party to secure an accounting report, or why it was necessary for her to do so.

10S.M. must demonstrate why the calculation was so difficult that it was reasonable and necessary to secure a professional accounting report. The only difficulty alleged by S.M. in calculating her IRB came in the form of her short-term disability payments, which she received through Sun Life following the accident. S.M. argues that her short-term disability payment was the reason she secured the services of Great Oak to calculate her IRB in the first place. Again, given the fact her financial picture was straightforward, and that the IRB calculation was uncomplicated as a result, I do not see why the professional accounting services of Great Oak were required simply to subtract the amount of S.M.’s short-term disability payment from the IRB amount. In submissions, S.M. continuously states that her calculation was complex, but does not offer evidence why it was. Instead, she points to the fact that Aviva secured an accounting report in response to hers.

11On this point, I find Aviva relied on an OCF-2, which, while not strictly required for IRB calculation by the Schedule, provides a more accurate and complete snapshot of an employee’s financial situation. I do not find that Aviva’s decision to get an accounting report in response to S.M.’s report to be default evidence that the Great Oak report is reasonable and necessary, as S.M. alleges. Rather, I find Aviva’s report was part of its ongoing duty to adjust the file, respond and, importantly here, provide an accurate calculation of the IRB. I disagree that the differential in quantum is an indication that S.M.’s IRB calculation was “not as straightforward as Aviva’s denial asserted” thus making the Great Oak report automatically reasonable and necessary. Indeed, I find that Aviva’s report was completed in order to address the missing OCF-2 from the Great Oak report.

12I follow the jurisprudence provided by the parties² for guidance. S.M.’s IRB calculation was straightforward because her employment documentation was available. S.M.’s IRB calculation did not require expertise to interpret documentation, to consider alternate forms of income or to navigate tax law since it was based on one source of income with a simple deduction of her short-term disability payments. The expense for the accounting report to complete this relatively straight-forward calculation was therefore not reasonable and necessary. I find S.M. has not demonstrated why an accounting report was reasonable and necessary.

13Finally, S.M. argues that Mawugbe v. Certas Direct Insurance (FSCO A13-009558), in conjunction with ss. 7(4) and (5) of the Schedule, support her argument that an applicant is not only free to obtain their own report, but in fact, has an obligation to support their claim for IRBs by providing a report prepared by a member of a designated body within the meaning of the Public Accounting Act. She argues that when this option is exercised, the shall-pay provision comes into effect and, accordingly, Aviva must pay. I disagree and find the case is distinguishable on its facts because the applicant in Mawugbe was self-employed, owned two businesses, did not provide proper financial documentation to support his IRB and had significant credibility issues. These facts do not apply here, and I find in any event that the case does not support S.M.’s argument concerning the shall-pay provision.

14Accordingly, I find S.M. is not entitled to the cost of the accounting report in the amount of $2,627.86 for the purpose of the IRB calculation as it was not reasonable and necessary.

CONCLUSION

15S.M. is not entitled to the cost of the accounting report in the amount of $2,627.86 for the IRB calculation as it was not reasonable and necessary.

Footnotes

1. 1O. Reg. 34/10.
2. 2See, for e.g., Applicant and The Co-operators, 2017 CanLII 77361 (ON LAT); B.H. and Certas Home and Auto Insurance Company, 2018 CanLII 95551 (ON LAT) and S.G. and Wawanesa Mutual Insurance Company, 2019 CanLII 76979 (ON LAT).