Citation: Unica Insurance Inc. vs. K.B., 2020 ONLAT 19-006165/AABS

Released Date: 05/21/2020

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:

Unica Insurance Inc.

Applicant

and

K.B.

Respondent

DECISION

ADJUDICATOR:

Jesse A. Boyce

APPEARANCES:

For the Applicant:

Modupe Egunjobi

For the Respondent:

Tricia J. McAvoy

Wendy H. Sokoloff

HEARD:

By way of written submissions

1K.B., the respondent in this case, was involved in an automobile accident on January 26, 2016 and sought benefits from his insurer, the applicant in this case, Unica, pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010¹ (the ''Schedule''). K.B. was paid various benefits by Unica, including attendant care benefits (“ACBs”) in the amount of $315 per week for the period January 26, 2016 to March 26, 2017.

2Given his accident related impairments, the parties agreed that K.B. was entitled to ACBs and would require attendant care. In late February 2016, K.B. began submitting OCF-6 expense claim forms to Unica in the amount of $3,000 per month. The invoices were for attendant care services provided to him by his mother, N.B., on the basis that N.B. was seeking employment when the accident occurred and was unable to secure employment because she had to provide care for K.B., resulting in her economic loss.

3Since N.B. did not provide services to K.B. in the course of her employment, occupation or profession, nor did she claim she incurred any other expenses, Unica requested proof of N.B.’s economic loss on multiple occasions in order to support payment for his ACB claims. Unica’s requests went unfulfilled.

4Instead, in August 2016, K.B. commenced an application for dispute resolution at the Licence Appeal Tribunal (the “Tribunal”), appealing the denial of his ACB claims by Unica.

5Shortly after filing, on September 26, 2016, K.B. sent Unica N.B.’s Employment Insurance (“EI”) claim details which indicated that she had received between $0 and $315 per week until March 2016, being two months post-accident. As this was the first financial document provided, Unica relied on N.B.’s EI statement to commence payment of ACBs to K.B. in the amount of $315 per week, pending answers to its income and employment-related questions. Between September 2016 and April 2017, K.B. received eight ACB cheques from Unica in varying amounts, including payment retroactive to the date of loss.

6K.B.’s appeal at the Tribunal proceeded to a hearing under file number 16-002023/AABS. In a decision dated April 25, 2017, the Tribunal determined that K.B. had failed to prove that N.B. suffered an economic loss in providing attendant care to K.B. during the period in dispute.²

7Relying on the Tribunal’s decision, Unica then notified K.B. on May 24, 2017 that it would cease paying ACBs. Unica also requested repayment in the amount of $19,170.90, plus interest, for ACB payments it made in error to K.B. for the period in dispute here. On May 26, 2017, Unica notified K.B. that ACBs were not payable because it had not received evidence to support N.B.’s economic loss.

8On May 23, 2019, after Unica’s request for repayment went unanswered, it commenced a new application at the Tribunal for resolution of the dispute.

ISSUES

9The issues in dispute are as follows:

a. Is Unica entitled to receive repayment of $19,170.90 for ACBs paid to K.B. at a weekly rate of $315.00 for services provided by N.B., his mother, for the period of January 26, 2016 to March 26, 2017?

b. Is Unica entitled to receive interest on any overdue benefit repayment?

RESULT

10I find K.B. is liable to repay Unica $19,170.90, plus interest, for ACBs paid in error for the period of January 26, 2016 to March 26, 2017 due to K.B.’s inability to prove that his service provider, his mother N.B., sustained an economic loss under s. 3(7)(e) of the Schedule.

ANALYSIS

Unica is entitled to recover ACBs

11Section 52 of the Schedule concerns the repayment of benefits. Under s. 52(1), a person is liable to repay to the insurer any benefit 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. Sections 52(2) and (3) provide timelines for repayment requests if a person is liable to repay an amount to an insurer. The insurer shall give the person notice of the amount that is required to be repaid. If the notice required is not given within 12 months after the payment of the amount that is to be repaid, the person to whom the notice would have been given ceases to be liable to repay the amount unless it was originally paid to the person as a result of wilful misrepresentation or fraud. The insurer has the burden of proving that the benefits were paid to the person as a result of an error on a balance of probabilities.

12Unica’s position is straightforward. It does not dispute that K.B. is entitled to attendant care for injuries he sustained in the accident. It submits that it paid ACBs to K.B. based on N.B.’s EI benefit statement because it was the first document provided by N.B., after numerous requests for same, that “shed some light on the quantum of her pre-accident income.” Unica argues it paid ACBs pending the receipt of further income information and proof that N.B. was searching for employment at the time of the accident, as alleged by K.B. Unica submits that it commenced paying ACBs because of its obligations under the Schedule to pay benefits promptly.

13Unica then relied on the Tribunal’s decision in 16-002023/AABS to support its position that K.B. failed to prove that N.B. was searching for employment at the time of the accident and was unable to continue to search for employment as a result of caring for K.B. and therefore unable to meet his burden under s. 3(7)(e) of the Schedule to prove that N.B. sustained an economic loss. Further, Unica submits that N.B. claimed and received income replacement benefits on the basis that she could not work due to psychological impairments sustained as a result of K.B.’s injuries, undermining her claim that she was prevented from seeking employment due to having to care for K.B. Finally, Unica submits that it issued proper notice to K.B. under s. 52(2), as its repayment request came eight months after payment of the ACBs was made.

14In response, K.B. offers three arguments to support his defence that Unica’s ACB repayment claim is being made in bad faith and should be dismissed. First, he submits that the Tribunal went beyond the scope of the issues in dispute in rendering its decision that N.B. failed to prove an economic loss as a result of providing attendant care to K.B. Second, K.B. submits that Unica has not established that the ACBs were “paid to the person”, being K.B., as required by s. 52, but rather that the ACBs were paid to N.B. as a third-party service provider, and therefore are exempt from repayment based on repayment case law. Third, K.B. submits that Unica has not established that the ACBs were paid as a result of “error on the part of the insurer” as required by s. 52, but rather as result of a strategic decision by Unica.

15On the evidence, I conclude that Unica is entitled to repayment for ACBs it paid to K.B. in error for the period in dispute, plus interest. Before delving into the evidence and submissions on repayment, it is helpful to revisit the Tribunal’s decision in 16-002023/AABS which underpins the repayment dispute here.

The Tribunal’s Decision in 16-002023/AABS

16In this first matter between the parties, the issue in dispute was whether K.B. was entitled to ACBs in the amount of $3,000.00 per month for the period from January 26, 2016 to date less any amounts paid. As noted, K.B.’s position on entitlement was that N.B. was searching for employment at the time of the accident and was unable to continue her search for employment as a result of caring for K.B. and therefore, ACBs were payable to K.B. because N.B. suffered an economic loss. At the hearing and in his submissions on this matter, K.B. attempted to argue that the dispute in 16-002023/AABS was limited to the quantum of ACBs payable only and that the Tribunal went beyond the scope of the dispute in rendering its decision.

17Unica disagreed with K.B.’s position in 16-002023/AABS and disagrees again here. It submits its position from the first hearing verbatim that “[…] the dispute is limited to Section 3(7)(e)(iii)(B) and s. 19(3)(4) of the Schedule, specifically, whether or not [N.B.] sustained an economic loss as a result of providing services to [K.B.]. The issue is not limited to the quantum of benefits payable as asserted by [K.B.]” [emphasis mine]. Unica argues that N.B.’s alleged economic loss formed the crux of the hearing and whether attendant care services are incurred by an insured or whether an economic loss was sustained by a service provider necessarily and inherently forms part of every ACB analysis.

18While I am alive to K.B.’s contention that the Tribunal went beyond the scope of the issue in dispute in 16-002023/AABS, I disagree that it was improper and reject K.B.’s argument that the economic loss issue was “created” by the Tribunal where no such dispute over past payments existed between the parties. I find Unica’s repeated requests for K.B./N.B. to produce financial documentation and proof of her job search following submission of the OCF-6s, its submissions on s. 3(7)(e) from 16-002023/AABS listed above and the Tribunal’s analysis in the Decision, copied below, all confirm that proof of N.B.’s economic loss was very much a live issue. Indeed, I find it is well-settled that when a service provider is not a third-party professional, whether ACBs were incurred by an insured and whether the service provider sustained an economic loss in providing services necessarily forms part of the ACB analysis regardless of how the issue is framed. While the Tribunal recognizes the important role that family members play in providing care to insureds, like N.B. did for K.B., s. 3(7)(e) is meant to prevent those same family members from securing a financial windfall in doing so.

19Indeed, the Tribunal agreed, finding that K.B. failed to prove at the hearing that N.B. was searching for employment at the time of the accident and was unable to continue to search for employment as a result of caring for K.B. Paragraphs 14-16 of the Tribunal’s decision are particularly revealing:

[14] In order to apply this principle, several questions:

Would [N.B.] have been able to find employment during the time in which she was providing an attendant care service to her son?

•Would [N.B.] have been able to work at the job given her psychological impairment, which currently renders her substantially unable to perform the essential tasks of her previous employment?

What would [N.B.]’s rate of pay have been?

[15] Looking at all of the evidence, there is no basis upon which I can conclude that any of the questions have a probable answer in the applicant’s favour. For example, I am unable to conclude that [N.B.] would probably have found employment during the time in which she was providing attendant care service to the applicant. The evidence on this issue is [N.B.]’s affidavit. Even if taken at its highest, the affidavit demonstrates only that [N.B.] is confident she would have found a job of the same skill and pay as her previous employment that if she continued her job search after the accident. With great respect, [N.B.]’s confidence in her ability is not proof of her ability. More is needed: for example, proof of [N.B.]’s search efforts before the accident and corresponding materials showing the search’s success or progress. Without this evidence, in the specific factual circumstances of this case, I cannot make the findings necessary to decide in the applicant’s favour. I am left to speculate on things that the applicant needs to prove.

[16] Similarly, I am unable to conclude that [N.B.] would have probably been able to work at a job if she found employment given her psychological impairment […].³

20Neither party sought reconsideration or judicial review of the Tribunal’s decision. K.B. did not seek to appeal the decision on the basis that it was outside the scope or even to clarify the Tribunal’s finding that N.B. had not demonstrated an economic loss in providing care for K.B. On the strength of the Tribunal’s determination that K.B. had not demonstrated that N.B. sustained an economic loss in providing care under s. 3(7)(e), Unica then notified K.B. on May 24, 2017 that it would cease paying ACBs and requested repayment of same.

Unica paid ACBs “to the person”

21Section 52(1) requires evidence that ACBs were “paid to the person” in order to trigger repayment, and not, for example, to a third-party service provider (such as a nurse or personal support worker, etc.) which, in some cases, would not trigger repayment. Despite residing together, K.B. argues that it is “unclear” whether payments were made to K.B. or N.B. and that there is no evidence that Unica paid the ACBs to K.B. in order to trigger repayment. Further, K.B. argues that even if there were evidence, that it is “clear that Unica was attributing those benefits to N.B. in her role as a third-party service provider.” In support of this argument, K.B. refers the Tribunal to Unica’s correspondence and log notes as well as case law that he submits indicates that N.B. was actually the recipient of the ACB payments.⁴

22In reply, Unica argues that this line of argument is disingenuous and provided compelling evidence to refute K.B.’s argument that it was “unclear” who was receiving the ACB cheques. This evidence came in the form of copies of all eight ACB cheques that were remitted to K.B. by Unica during the period in dispute. Each of the eight exhibits includes the following: the cheque envelope cover addressed to K.B., the subject line item “AC:” indicating attendant care with the applicable period of ACB claimed on the front, the date the cheque was issued by Unica, the amount of ACB paid to K.B., the transaction date on which the cheque was cashed along with the bank transit and account numbers, the receipt to match the cheque number and, crucially, the cheque deposit image from National Bank with K.B.’s name on the front of each cheque and his signature in the endorsement box on the back of each cheque. Every one of the cheques corresponds with the correct date and ACB payment made by Unica and every one of the cheques was endorsed by K.B.

23Suffice to say, I find Unica paid ACBs “to the person” and that this evidence clears up any confusion over who was receiving the ACB cheques. In a similar vein, I find these exhibits clearly demonstrate that Unica was not attributing ACB payments to N.B. as a third-party service provider, as alleged by K.B. On this basis, I find none of the cases relied on by K.B. are helpful to him, as those cases all concern payments to arm’s-length providers, which N.B. was not. I echo Unica’s submission that not one of the decisions cited by K.B. found that payments of specified benefits made to the insured directly for services rendered by others in the areas of housekeeping and caregiving were unrecoverable. In any event, I find that all of the payments for the ACBs were made directly to K.B. and he has not provided any evidence to refute this fact.

Unica’s payment of ACBs to K.B. was “error on the part of the Insurer”

24When seeking repayment, in addition to evidence that the benefit was “paid to the person”, s. 52(1) also requires that the payment was as a result of “an error on the part of the insurer.” Here, Unica submits that in light of K.B.’s failure in 16-002023/AABS to produce any evidence of N.B.’s job search and the conflicting reasons N.B. provided for her failure to return to work, the Tribunal’s decision can only mean that Unica should not have paid ACBs to K.B. at all. Further, Unica submits that K.B. should not have received any ACBs as he failed to establish that N.B. sustained an economic loss under s. 3(7)(e) as a result of caring for him. In particular, Unica argues that K.B. failed to prove that N.B. was looking for employment at the time of the loss and was unable to find employment as a result of caring for him after the accident. Unica further states that N.B. claimed and received income replacement benefits herself because she could not work due to psychological impairments sustained as a result of K.B.’s injuries and that the evidence advanced by K.B. in 16-002023/AABS only showed that N.B. was unable to work after the loss because of her own injuries.

25In response, K.B. argues that there is no indication in Unica’s correspondence or explanation of benefit letters that payments were being made subject to Unica making a determination on entitlement or quantum later. K.B. argues that there is no indication in the correspondence that Unica was awaiting further information to support K.B.’s ACB claim or that payments were conditional. K.B. submits that Unica stopped asking for financial documents after September 26, 2016 when it initiated payment. Finally, K.B. submits that Unica is a sophisticated party and its payment of ACBs to K.B. following receipt of N.B.’s EI information was a “strategic decision” and there has been no subsequent information provided to change that initial decision. K.B. relies on the Tribunal’s decision in Applicant v. Certas Home and Auto Insurance⁵ to support his argument that an insurer cannot commit error when it takes a deliberate action, which he argues Unica did in making the strategic decision to pay ACBs on the IE information it had before it.

26I disagree with K.B. for several reasons. First, I find Unica informed K.B. on multiple occasions that there was an issue regarding his ACB entitlement based on N.B.’s economic loss both before and after it started paying the benefit. Second, in addition to its requests for documentation in all of its pre-September 26, 2016 denials, I find Unica sought answers to 13 questions concerning N.B.’s alleged economic loss that went unanswered by K.B. and, as I understand, remain unanswered. Third, I find the September 26, 2016 letter remitted payment for the ACBs “based on the information we have to date.” This statement suggests, in my view, that Unica sought further information concerning N.B.’s economic loss and provides support for Unica’s position here that it was paying ACBs based on its good faith obligations under the Schedule to make payments promptly and because the EI information was the first financial document of any kind that K.B. provided. Further, I find the same letter then states, contrary to K.B.’s position, that “[W]e are still waiting for the answers to the outstanding questions outlined in our letter dated June 15, 2016” confirming that Unica was still taking issue with N.B.’s economic loss moving forward and in contemplation of his appeal at the Tribunal.

27Fourth, I find Unica’s submissions in 16-002023/AABS—set out in in paragraph 17 of this decision, above—confirm, contrary to K.B.’s position, that Unica was maintaining its position in February 2017 that proof of N.B.’s economic loss was required. I find no evidence in the record that Unica waived this requirement or resiled from this position at any point in lieu of a strategic decision.

28Fifth, as set out in paragraph 20 of its decision in 16-002023/AABS, the Tribunal found that “[…] a plain reading of the evidentiary record in general and the two letters in particular, makes it clear that Unica was providing the attendant care benefit to the applicant in good faith while it awaited further information about [N.B.]’s economic loss”, which I find clearly implies that the ACB payments made or the quantum of same could change on receipt of new information.

29Sixth, I find 17-001090/AABS is distinguishable because it concerned medical entitlement to income replacement benefits and not whether an economic loss was sustained for the purposes of ACB payments. Further, I agree with Unica that in that case the Insurer made the deliberate decision to pay notwithstanding its knowledge that the benefits were not payable. Here, in remitting payment for the ACBs, Unica was relying in good faith on K.B.’s assertion that N.B. was unable to seek employment as a result of having to care for K.B., a fact that was only within the knowledge of K.B. and N.B. and frustrated further by the lack of documentation provided by K.B. on Unica’s requests. I agree with Unica that K.B.’s subsequent inability to prove that N.B. was searching for employment at the hearing he initiated distinguishes this case from 17-001090/AABS. All of this is to say nothing of the fact that N.B. allegedly received income replacement benefits herself because she could not work due to psychological impairments sustained as a result of K.B.’s injuries, which in my view, puts further distance between the two cases.

30Against these facts, I struggle to reconcile K.B.’s allegations of bad faith on the part of Unica with K.B.’s apparent refusal to provide any proof of N.B.’s economic loss or answer the questions posed by Unica at any time in the now four years post-accident, despite being represented by counsel throughout. Further, I find no reason to interfere with the Tribunal’s determination in 16-002023/AABS that K.B. failed to produce any evidence that N.B. was searching for employment at the time of the accident and especially so where K.B. did not appeal the decision. On the evidence before the Tribunal in this matter, I find that K.B. still has not produced any related evidence to date to prove that N.B. was searching for employment or that she sustained an economic loss in providing care to K.B. to satisfy s. 3(7)(e). Where K.B. has failed to provide evidence of economic loss or a job search on two separate occasions before the Tribunal and despite repeated requests from Unica, I can only conclude that no such evidence exists. Where there is no evidence to support payment, it follows that any payment made by Unica was made in error.

31Finally, and in any event, I also agree with Unica’s submission that there is no ambiguity in the current version of s. 52 of the Schedule over which parties’ error triggers recovery. Simply put, any payment of benefits made to an insured that were made as a result of an error on the part of the Insurer, insured or other person—i.e., any payment that should not have been made, for whatever reason—are recoverable, which distinguishes this matter from the FSCO cases on which K.B. relies because those cases contemplated previous versions of the Schedule. Here, while the result is unfortunate for K.B., I find ACB payments were made to K.B. by Unica without K.B. providing proof of N.B.’s economic loss or job search and, evidently, without any proof of same existing. Accordingly, I find the ACB payments were made in error and are subject to the repayment provisions in s. 52, so long as the request for repayment was made by Unica within 12 months of the error, as required by s. 52(3).

Unica’s Notice to K.B. under s. 52(3) was proper

32As noted, under s. 52(3) of the Schedule, an Insurer seeking repayment of a benefit paid in error to an insured is required to provide notice of same within 12 months “after the payment of the amount that is to be repaid.” Here, Unica submits that it gave K.B. notice within eight months of the payment or receipt of the amount that is to be repaid, satisfying its obligations under s. 52(3). In addition, Unica submits that it gave valid notice in line with the Superior Court’s reasoning in Intact Insurance Company v. Marianayagam, 2016 ONSC 1479, which requires identifying the type of benefit to be paid, the payment period for which repayment is sought and the amount of repayment sought.

33I find Unica’s notice and request for repayment satisfies the requirements of s. 52(3) because Unica first issued payment for ACBs to K.B. on September 26, 2016 after receiving N.B.’s IE documentation. Unica’s letter confirms a first payment in the lump sum amount of $4,139.10 for ACB payments retroactive to K.B.’s date of loss. On review of the remaining explanation of benefit letters before the Tribunal, I find Unica issued subsequent payments to K.B. as follows: $6,885.90 on October 14, 2016; $1,351.35 on November 3, 2016; $1,351.35 on November 29, 2016; $1,260.00 on January 3, 2017; $1,439.55 on February 2, 2017; $1,483.65 on March 14, 2017; and $1,260.00 on April 19, 2017. It is not disputed that Unica notified K.B. on May 24, 2017 that it would cease paying ACBs and requested repayment at that time.

34While K.B. does not dispute whether the notice was proper, for completion, I agree that the repayment request was made within eight months of Unica’s first ACB payment to K.B. and all subsequent ACB payments, and well before the 12-month limitation period expired. Further, on review of the letter and explanation of benefits dated May 24, 2017, I find Unica’s notice of repayment properly identified ACBs as the type of benefit to be repaid, indicated that January 26, 2016 to March 26, 2017 comprised the payment period for which repayment was sought and clearly states the total of $19,170.90 as the amount of repayment sought. The letter cites the Tribunal’s decision in 16-002023/AABS as the basis for the request and satisfies the requirements of the Superior Court.

Interest under s. 52 is payable

35Section 52(5) and (6) provide guidance on when an Insurer may recover interest when seeking repayment. The insurer may charge interest on the outstanding balance of the amount to be repaid for the period starting on the 15th day after the notice is given and ending on the day repayment is received in full, calculated at the bank rate in effect on the 15th day after the notice is given. Section 52(6) indicates that “bank rate” means the bank rate established by the Bank of Canada as the minimum rate at which the Bank of Canada makes short term advances to the banks listed in Schedule I to the Bank Act (Canada). In submissions, Unica submits that the bank rate is 0.75% per annum and K.B. does not provide submissions to counter this rate. Accordingly, as Unica is entitled to repayment for ACBs paid to the person in error under s. 52, it follows that interest is payable on any overdue amounts.

ORDER

36K.B. is liable to repay Unica $19,170.90, plus interest, for ACBs paid in error for the period January 26, 2016 to March 26, 2017 due to K.B.’s inability to prove that his service provider, his mother N.B., sustained an economic loss under s. 3(7)(e) of the Schedule.

Released: May 21, 2020

__________________________