J.V.D.A. v. Aviva General Insurance, 2020 CanLII 40345

Citation: JVDA vs. Aviva General Insurance, 2020 ONLAT 19-002631/AABS

Released Date: June 3, 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:

J.V.D.A.

Applicant

and

Aviva General Insurance

Respondent

DECISION

ADJUDICATOR:

Derek Grant

APPEARANCES:

For the Applicant:

Rachel Levitsky, Counsel

For the Respondent:

Robert H. Rogers, Counsel

Heard:

By way of written submissions

OVERVIEW

1The applicant, J.V.D.A., seeks a determination that the HST paid, with respect to the attendant care services provided, should be paid outside of the attendant care benefit limit as set out in s. 19 of the Statutory Accident Benefits Schedule - Effective after September 1, 2010 (the “Schedule”). J.V.D.A. also seeks an award under O. Reg. 664 as she claims that the respondent, Aviva, unreasonably withheld payments of the attendant care benefit by paying HST out of the benefit limit.

2J.V.D.A. was involved in a motor vehicle accident on March 13, 2017 and subsequently requested funding for a determination of catastrophic impairment.

3The attendant care services were provided by [the Home Care Services company]. [the Home Care Services company] charges HST on the services it provides to J.V.D.A. To date, Aviva has paid both the cost of the attendant care services and the applicable HST out of the attendant care benefit limits afforded to J.V.D.A. up to the allowable maximum, for non-catastrophic impairments, of $3,000 per month. As of the date of the hearing, Aviva paid $1,829.62, as charged by [the Home Care Services company], for HST out of J.V.D.A.’s attendant care benefit policy limit.

ISSUES IN DISPUTE

4The issues in dispute are as follows:

a. With regard to the $1,829.62 in HST claimed with respect to the attendant care services provided to J.V.D.A., is the HST to be paid from the attendant care benefit policy limit or outside of the limit?

b. Is J.V.D.A. entitled to an award under O. Reg. 664 because Aviva unreasonably delayed or withheld the payment of $1,829.62 in HST?

DISCUSSION – Submissions regarding Tribunal Decision 18-002185/AABS

5On March 17, 2020, I asked the parties for additional submissions regarding the Tribunal’s decision in Applicant v. Dominion of Canada General Company (Dominion).¹ Dominion dealt with the issue of whether HST is to be paid from the medical benefit limit or outside of the benefit limit.

6Between the hearing of the Dominion case in April 2019 and the release of its decision in November 2019, a legislative amendment took place. Prior to the June 3, 2019 amendment, under s. 18(3) of the Schedule, there was no specific provision regarding HST and its inclusion or exclusion from the $65,000.00 benefit limit. Regarding accidents after June 3, 2019, s. 18(3)(a) was amended to include the following wording:

a. $65,000 plus the amount of any applicable harmonized sales tax payable under Part IX of the Excise Tax Act (Canada) for accidents that occur on or after June 3, 2019. (emphasis added)

7The amendment has essentially provided specificity regarding how HST is to be handled. Prior to the June 3, 2019 amendment, the handling of HST was largely left to interpretation of the Schedule, Financial Services Commission of Ontario (“FSCO”) Guidelines and related jurisprudence. The FSCO Guidelines have been largely interpreted to not include HST as part of a benefit limit, but as a tax that was to be paid separately by the insurer.

8The Guidelines should be considered regarding HST, and it’s equally important to consider other legislation that also guides an adjudicator in the interpretation and legal obligation when considering the issue of HST. According to s. 268.3(1) of the Insurance Act, the Guidelines are legally binding and are to be considered in any determination involving the Schedule. I agree with J.V.D.A. that the Guidelines help inform and interpret legal obligations that are not specifically enumerated in the Schedule. The Guidelines create funding obligations outside the wording of the Schedule itself.

9J.V.D.A. submits that Guideline No. 02/16 states that HST is part of the “reasonable” expense for medical and rehabilitation benefits, however, it does not dictate how specifically HST is to be treated with respect to the benefit limit, and it is therefore of limited assistance. J.V.D.A.’s position is that the wording of the Guideline means that insurers cannot avoid their responsibility to pay HST for those benefits - whether they are included within the benefit limits or not. The Guideline states the following:

“This is consistent with the treatment of HST for services subject to the Professional Services Guideline and the Cost of Assessments and Examinations Guideline.”

10Based on this, J.V.D.A. submits that this Guideline intended HST to be a “separate funding obligation”, and while there was no such wording in the Schedule, the Guideline created that obligation. Similarly, the Professional Services Guideline states:

“If the HST is considered by the CRA to be applicable to any of the services or fees listed in this Guideline, then the HST is payable by an insurer in addition to the fees as set out in this Guideline.”

11The Cost of Assessments and Examinations Guideline specifies that:

“If HST legislation provides that the HST is applicable to any of these goods or services, then the insurer must pay the HST in addition to the amounts that are payable under the Schedule. For example, the $2,000 cap that is provided for in s. 25(5)(a) of the Schedule to cover the costs and expenses of assessments, examinations and preparation of reports is exclusive of any HST that may be payable under HST legislation. Insurers are therefore expected to pay the HST, if it applies to such costs and expenses, without considering the $2,000 cap.”

12Aviva contends that under Guideline No. 02/16, if HST is part of the reasonable expense, it follows that HST is payable from the funding limits. Aviva questions the Adjudicator’s interpretation in Dominion, where the Adjudicator states “if the legislation intended to include HST under the attendant care benefit limit, it would have done so explicitly”. Aviva submits that the opposite is more in line with the principles of interpretation: that if the legislation intended to exclude HST under the tax limit, it would have done so explicitly.

13Aviva’s position is that the amendment confirms the legislative intent, as it specifically addresses how HST is to be handled after June 3, 2019; that the amendment would not have been necessary if the legislators were not changing the way HST was to be handled.

14I disagree. I find that, when taken into consideration with the Guidelines, the June 3, 2019 amendment was not a change to how HST was to be handled, but a clarification. Although Aviva submits that the interpretation of the Adjudicator in Dominion is flawed as it pertains to the Schedule and its ‘silence’ on the issue of HST, Aviva interprets the silence for its own benefit. I am not persuaded by Aviva’s argument that the legislative amendment was intended to change how HST is to be treated in relation to medical benefits.

15As consumer protection legislation, I find that the ‘silence’ of the Schedule should be interpreted in favour of an insured. Further, there is guidance from the FSCO Guidelines on how HST is to be treated. Combined with the legislation of the Insurance Act, I find that this allows the Schedule and Guidelines to be applied in favour of the insured. Thus, HST is to be paid separate and outside of the attendant care benefit limit.

RESULT

16Based on the totality of the evidence and having considered the submissions before me, I find that:

a. The $1,829.62 in HST claimed with respect to the attendant care services provided to J.V.D.A. shall be paid outside of the attendant care benefit limit; and

b. J.V.D.A. is not entitled to an award under O. Reg. 664.

ANALYSIS

J.V.D.A.’s position

17J.V.D.A. submits that the FSCO Guidelines and Bulletin are clear that HST is to be paid outside of the benefit limits. J.V.D.A. agreed that the Guidelines do not specifically address attendant care benefits. However, she submits that the same public policy on which they are based should also apply to the issue in this proceeding.

18In addition, J.V.D.A. submits that, pursuant to s. 19 of the Schedule, the term “reasonable and necessary” expense does not include a tax. J.V.D.A. contends that if the legislation intended to include the tax within the attendant care benefit limit, it would have stated so explicitly within s. 19 of the Schedule.

Aviva’s position

19Aviva takes the position that the $1,829.62 in HST in dispute is an “expense” paid from the attendant care benefit limit for the following reasons:

a. The Schedule and the Guidelines issued regarding attendant care do not differentiate between types of expenses such as fees or applicable taxes;

b. There is nothing in the Insurance Act or the language of the applicable Schedule as it read at the time of the subject accident, to support FSCO’s interpretation that “benefit” means the pre-tax cost in relation to either a good or service or that HST imposed on a certain good or service somehow does not form part of the expenses incurred by an insured who has to pay the tax in order to obtain those goods or services;

c. FSCO Bulletin A-04/15 regarding HST is not binding unless it is incorporated in to the Schedule; and

d. HST must be part of medical/rehabilitation/attendant care benefits given that it was a part of the overall cost associated with the delivery of some goods and services.

20For the reason to follow, I am persuaded by J.V.D.A.’s submissions and find that the $1,829.62 in HST should be paid outside of the attendant care benefit limits.

Does “reasonable and necessary expense” include HST?

21I find that pursuant to s. 19 of the Schedule, the term “reasonable and necessary” expense does not include a tax such as HST. Section 19 of the Schedule states that attendant care benefits shall pay for all reasonable and necessary expenses. Section 19(3)1 and 2 set out the financial limits on “reasonable and necessary” expenses. The Schedule does not differentiate between types of expenses; however, I do not find that this absence of clarity dictates that HST forms part of the “reasonable and necessary expense” as submitted by Aviva.

22My finding that the term “reasonable and necessary expense” does not include HST is based on the following:

a. If the legislation intended to include tax under the attendant care limit, I agree with Adjudicator Gosio in Dominion, that it would have done so explicitly. The term “tax” is not included in the legislation regarding the attendant care limit and therefore is not a “reasonable and necessary expense”. To take such a broad reading of “reasonable and necessary expense”, as one that includes HST, is opposite to the intention and meaning of the same phrase in s. 19, in addition to the related interpretation of “reasonable fees” in s. 25(5).

b. Interpreting HST as a tax and not a “reasonable and necessary expense” is consistent with a plain reading of the Schedule.

c. The provisions of the Schedule are a legislated, non-negotiable policy of insurance that ought to be interpreted broadly in favour of the insured in order to maintain the integrity of the Schedule’s consumer protection goal. I find that interpreting the HST as a tax, and not as a “reasonable and necessary expense,” serves the Schedule’s consumer protection goal.

23Aviva’s submits that HST should be interpreted as part of the legislative provision of a “reasonable and necessary expense” because it is consistent with a plain reading of the Schedule.

24The Schedule sets a maximum amount of $65,000.00 for non-catastrophic medical benefits that fall outside the limits of the Minor Injury Guideline. Aviva submits that interpreting HST as a “reasonable and necessary expense” payable within the medical benefit limits confirms the certainty of these limits.

25I disagree with Aviva’s submission, that not interpreting HST as a tax, does not interfere with the certainty of this limit which will remain at $65,000 unless legislated otherwise. HST is a tax and is not part of the attendant care benefit limits.

26Aviva submits that if HST was not part of medical/rehabilitation benefits, then J.V.D.A. should be able to point to some provision in the applicable Schedule that required an insurer to reimburse HST. Aviva submits that the HST charged by [the Home Care Services company] is not a tax Aviva is responsible for paying separate from the attendant care benefit limit; but a “reasonable and necessary expense” Aviva is legally obligated to pay from within the benefit limits. Aviva contends that “a legislative amendment was required to achieve the relief sought by J.V.D.A. and this has now been done, but only for accidents after June 3, 2019”. For the reasons stated above, I disagree.

Is HST to be paid from the Attendant Care Benefit limit?

27Although I am not bound by the FSCO Bulletin A-04/15 regarding HST, I find that it is helpful as a guide in its applicability to the subject proceeding. Although the bulletin does not specifically address attendant care benefits, the interpretation of the bulletin is consistent with other FSCO Guidelines and Tribunal decisions which have confirmed that HST is to be paid outside of the benefit limit with respect to other benefits under the Schedule. On this basis, I agree with J.V.D.A.’s submission that HST should also be paid outside of the attendant care benefit limit.

28I am also not persuaded by Aviva’s submission that the Schedule and the Guidelines regarding attendant care require insurers to pay HST from the policy limit in accordance with direction from the CRA. FSCO, as per its Bulletin 04/15, expects insurers to apply “the HST legislation correctly in accordance with any direction from CRA”.

29As already discussed, s. 19 of the Schedule does not address whether the HST applicable to attendant care services is to be paid from the benefit limit or outside of that limit. The Schedule does not contain legislative wording with respect to this issue.

30J.V.D.A. submits that the $1,829.62 in HST in dispute should be paid outside of the benefit limit and relies on a number of FSCO Guidelines and Bulletins in support of its position. FSCO initially issued Guidelines and Bulletins on various issues affecting the insurance sector in order to set out direction for parties dealing with accident benefits claims. For the purposes of this proceeding, J.V.D.A. relies on the Professional Service Guideline and a Bulletin entitled Use of Credit Information for Fleets/Commercial Use/Public Use Vehicles and Harmonized Sales Tax (HST).

31The Professional Services Guideline, Superintendent's Guideline No. 03/14, deals with expenses related to medical benefits, rehabilitation benefits, case manager services, and the reasonable fees associated with reviewing a treatment plan that has been approved. Pertaining to the subject proceeding, the relevant part of the Professional Services Guideline provides:

The applicability of the HST to the services of any health care professionals or health care providers listed in this Guideline falls under the jurisdiction of the Canada Revenue Agency Superintendent's Guideline No. 03/14 Financial Services Commission of Ontario Page 4 (CRA). If the HST is considered by the CRA to be applicable to any of the services or fees listed in this Guideline, then the HST is payable by an insurer in addition to the fees as set out in this Guideline.

32FSCO issued Bulletin No. A-04/15, Use of Credit Information for Fleets/Commercial Use/Public Use Vehicles and Harmonized Sales Tax (HST), also provides the following clarification:

HST is addressed in three Guidelines issued by the Superintendent Financial Services - the cost of assessments and examinations guideline, the professional services guideline and the cost of goods guideline. The professional services guideline states that "if the HST is considered by the CRA to be applicable to any of the services or fees listed in this guideline, then the HST is payable by the insurer in addition to the fees as set out in this guideline". The costs of assessments and examinations and costs of goods guideline includes similar statements.

33Bulletin 04/15 states that FSCO expects insurers will apply the HST legislation correctly in accordance with any direction from CRA, and that the HST is a tax and is not part of the benefit limits set out in the Schedule.

34For the reasons stated above, I find that HST is a tax and is not payable out of the attendant care benefit limit.

Is J.V.D.A. entitled to an Award because Aviva unreasonably delayed or withheld the payment?

35Section 10 of Regulation 664 permits the Tribunal to award a lump sum of up to 50% of the amount to which the insured person was entitled at the time of the award together with interest on all amounts then owing (including unpaid interest) if it finds that that an insurer has “unreasonably” withheld or delayed payments. J.V.D.A. bears the onus of establishing, on a balance of probabilities that Aviva acted unreasonably in withholding or delaying the payment of a disputed benefit.

36In this case, J.V.D.A. submits that Aviva has unreasonably withheld payment of attendant care benefits by directly contravening FSCO Guidelines, Bulletins and Directives and paying HST out of the attendant care benefit limit thereby reducing the available benefits afforded to J.V.D.A.

37I am not persuaded by J.V.D.A.’s submission and find that Aviva did not unreasonably withhold payment of the attendant care benefit. The Schedule is silent with respect to the handling of the HST within the attendant care benefit context. The mandatory FSCO Guidelines with respect to attendant care benefits are also silent on this issue.

38Given this, I find that Aviva’s position with respect to the handling of the HST charged by [the Home Care Services company] was based on its own interpretation of its obligations under the Schedule, the Guidelines and Federal HST legislation. I find that Aviva’s interpretation did not establish the threshold behavior required to justify an award claim under section 10. As such, I find that J.V.D.A. is not entitled to an award.

CONCLUSION

39For the reasons outlined above, I find that:

a. The $1,829.62 in HST claimed with respect to the attendant care services provided to J.V.D.A. shall be paid outside of the attendant care benefit limit; and

b. J.V.D.A. is not entitled to an Award under section 10 of O. Reg. 664.

Footnotes

1. 12020 CanLII 12760 (ON LAT) [“Dominion”]