Released Date: 09/21/2020
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:
C.Q.
Applicant
and
Pembridge Insurance Company
Respondent
REASONS FOR DECISION AND ORDER ON A PRELIMINARY ISSUE
ADJUDICATOR: Sandeep Johal
APPEARANCES:
Counsel for the Applicant: Sharon Mackay
Counsel for the Respondent: Jonathan B. Schrieder
Heard by way of written submissions.
OVERVIEW
1The applicant was injured in an automobile accident on September 21, 2012 and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 20101 (the ''Schedule'').
2The applicant applied for medical benefits that were denied by the respondent due to his policy limits being exhausted. The applicant disagreed with that decision and submitted an Application to the Licence Appeal Tribunal – Automobile Accident Benefits Service (the “Tribunal”).
3At the case conference, the respondent raised a preliminary issue that the Tribunal does not have jurisdiction to determine the applicant’s optional medical and rehabilitation policy limits.
ISSUES IN DISPUTE
Preliminary Issues
4The following preliminary issues will be addressed as part of this hearing:
(i) Whether the Tribunal has the jurisdiction to determine the optional medical and rehabilitation policy limits in this proceeding?
(ii) The preliminary issue shall be heard with the income replacement benefit issues.
Substantive Issues
5The following are the substantive issues in dispute:
(i) What is the amount of weekly income replacement benefit (“IRB”) that the applicant is entitled to receive April 1, 2014 to date?
(ii) Is the respondent required to repay the applicant for the amount of IRB deducted between the period from April 1, 2014 to February 14, 2017?
(iii) What optional benefits did the applicant purchase and what are the policy limits for the medical benefits available to the applicant as a result of the optional benefits purchased by the applicant from the respondent?
(iv) Is the applicant entitled to an award under s. 10 of Ontario Regulation 664 because the respondent unreasonably withheld or delayed payments to the applicant?
(v) Is the applicant entitled to interest on any overdue payment of benefits?
RESULT
6Pursuant to s. 280(1) of the Insurance Act, the Tribunal has the jurisdiction to determine the optional medical and rehabilitation policy limits in this proceeding.
7The applicant’s IRB quantum is as follows:
a. April 1, 2014 to December 31, 2014 is $786.43.
b. January 1, 2015 to December 31, 2015 is $781.29
c. January 1, 2016 to December 31, 2016 is $777.82
d. January 1, 2017 to December 31, 2017 is $773.70
e. January 1, 2018 to December 31, 2018 is $769.23; and
f. January 1, 2019 to December 31, 2019 is $761.13.
ANALYSIS
Preliminary Issues
Background
8On June 13, 2012 the applicant’s policy of insurance was changed to increase coverage as follows by way of a policy request change form:2
IRB at $1,000 per week
Medical-rehabilitation limits to $100,000
Attendant care benefits to $72,000
9Despite the terms of the policy limiting medical-rehabilitation policy limits to $100,000 the respondent inadvertently sent the applicant documentation listing his medical-rehabilitation policy limits as $1,100,000.
10The respondent did not realize its mistake until June 2019 and upon discovery of the mistake, the respondent informed the applicant and adjusted his policy limits.
11The applicant takes the position that the policy change request form is not a legal contract of insurance,3 and that a copy of the actual policy is legally binding and is the contract of insurance. According to the applicant, his policy shows the medical-rehabilitation benefits to be at $1,100,000.
Optional Benefits
12The respondent submits that Section 280(1) of the [Insurance Act]4 sets out the Tribunal’s jurisdiction to administer and resolve statutory accident benefit claims and that they are confined to disputes involving entitlement to benefits or in the amount of benefits to which an applicant is entitled.
13Accordingly, the respondent takes the position that a determination of optional medical and rehabilitation policy limits is not a determination of an applicant’s entitlement to benefits, nor is it in respect of the amount of benefits to which the applicant is entitled. It is a question of contract to which the jurisdiction is that of the Superior Court of Justice and not that of the Tribunal.
14In support of its position, the respondent relies upon the Ontario Court of Appeal decision of Stegenga v. Economical Mutual Insurance Company.5 In Stegenga the insured brought a claim against the insurance company for an insurer’s bad faith conduct and whether they fall outside of s. 280 of the Insurance Act. The Court found that interpreting the Insurance Act in light of the principles of statutory interpretation, s. 280 applies and that Ms. Stegenga’s claim cannot proceed in court, notwithstanding that the remedies the Tribunal can grant are different from those a court could.6
15The respondent relies upon Stegenga that jurisdiction for s. 280 of the Insurance Act is for disputes, in respect of and entitlement (emphasis in original) and the respondent submits that the words “in respect of” connote the broadest possible connection between two subject matters and that it was the phrase connecting “dispute” and “entitlement”.7
16The respondent relies upon the following passage from Stegenga:
Put in terms applicable here, an insured person could properly be said to have a dispute falling within s. 280(1) if a benefit the insured considers ought to have been paid or provided was not, or if it was paid or provided but only well after the insured considers it should have been because of what the insured considers to have been the insurer’s inappropriate handling of the claim. These are the matters the legislature has empowered the [Tribunal] to decide, and has taken away from the court. (emphasis in original).8
17It is the respondent’s position that the Stegenga decision did not articulate that the Tribunal has sole jurisdiction over all statutory accident benefits questions. “[I]t is the nature and subject matter of the dispute, assessed on the basis of the facts that give rise to it, that are determinative.”9 According to the respondent, the dispute is not over entitlement to benefits but a contractual interpretation of what the applicant’s policy limits are.
18The applicant takes the position that the Insurance Act and its regulations form a comprehensive scheme for the regulation of insurers and insurance, and this current dispute involves the entitlement to optional benefits as evidenced by the contract of insurance in place at the time of the accident.
19According to the applicant, the Schedule’s dispute resolution provisions capture a broad range of disputes and the purpose of the provisions, the expansive language used and the extent of the powers given to the Tribunal all support this interpretation.
20As a result, the applicant submits that this preliminary issue remains within the jurisdiction of the Tribunal and not with the Superior Court of Justice.
21In support of its position the applicant relies upon the Ontario Superior Court case of Riggs Estate v. Intact,10 to submit that the essential character of the dispute must be explored in order to potentially oust the courts inherent jurisdiction. In Riggs Estate, the Court applied the reasoning from Stegenga and found that the enforceability of an accident benefits settlement agreement constituted a dispute in respect of entitlement to accident benefits. The essential nature of the parties’ dispute in Riggs Estate was not a contractual dispute over the formation of the agreement but rather, the original dispute between the parties which was the entitlement to medical and rehabilitation benefits.
22It is the applicant’s position that as in the Riggs Estate case, the present case is not a matter of contractual interpretation, but rather the dispute is properly characterized as an entitlement to medical benefits on the basis that optional benefits were purchased and available to the applicant. (emphasis in original).
23Furthermore, according to the applicant, the language in s. 280 of the Insurance Act is broad enough to include a dispute over entitlement to optional benefits when the impact of that determination is that the applicant would be entitled to higher policy limits under the Schedule.
24I agree with the applicant. The essential nature of the dispute between the parties is what level of optional medical and rehabilitation benefits the applicant is entitled to. Part 6 of the Schedule is specifically titled “Optional Benefits” and states the different levels that are available for various benefits. In my view, the fact that there is an entire part of the Schedule that discusses optional benefits would make it within the purview of s. 280 of the Insurance Act.
25In Stegenga, Zarnett J.A. wrote at paragraph 22:
Neither the legal characterization of the cause of action asserted against the insurer nor the relief claimed determines whether a claim falls within the scope of the dispute resolution provisions. If the dispute related to the insurer’s compliance with obligations to the insured concerning [accident benefits], the timeliness of performance of those obligations and/or the manner in which they were administered, it falls within the broad reach of the dispute resolution provisions, and within the jurisdiction of the [Tribunal]. The prohibition on court proceedings will apply.
26In Riggs Estate, the Court stated as follows:
At paragraph 31 of Stegenga, the court held that the scope of s. 280 should be interpreted broadly and contextually. That scope was held to be beyond merely dealing with a claim for the payment of a benefit not paid or paid in an incorrect amount and was broad enough to include the issue in that case, namely the way in which the claim was handled. The court confirmed at paragraph 37 that the legislative intention was for the provisions of the Insurance Act constitute a complete code for the resolution of disputes in respect to an insured person’s entitlement to [accident benefits] or in respect of the amount of that entitlement.11
27In the present case, the dispute relates to the respondent’s compliance with obligations to the applicant concerning his accident benefits. The respondent denied the applicant’s request for benefits as a result of his policy limits being exhausted. The applicant disagreed and submitted a claim to the Tribunal.
28As stated in Stegenga, in interpreting s. 280 the phrase “in respect of” connotes the broadest possible connection between two subject matter. That phrase connects “dispute” to “entitlement to statutory benefits” or their amount. The word “entitlement” refers to a right to do or receive something. As such, the words of s. 280(1) “cover a wide array of disagreements connected in some way to the [Schedule] to which an insured person was or is entitled.”12
29As a result, I find that the respondent’s denial was with respect to his “entitlement” as he was denied the right to receive medical benefits and with respect to the amount of that entitlement. In my view, that is encompassed within s. 280 of the Insurance Act and furthermore, a dispute over optional benefits, which are contained within the Schedule, makes this a dispute over accident benefits which is within the exclusive purview of the Tribunal.
30The provisions of the Insurance Act constitute a complete code for the resolution of disputes in respect of an insured person’s entitlement to accident benefits or in respect of the amount of that entitlement.13
31As a result of the above, I find that the Tribunal has jurisdiction to determine the applicant’s policy limits of his optional benefits.
32I will now turn to discuss the IRB issue in dispute.
What is the amount of weekly income replacement benefit (“IRB”) that the applicant is entitled to receive April 1, 2014 to date?
33Based on the submissions, it would appear as though the dispute is for the time period of April 1, 2014 to December 31, 2016. As a result, my analysis will focus on that time period.
34The onus is on the applicant to prove his position on a balance of probabilities and I find that the applicant has not done so.
35I agree with the analysis of the respondent’s accounting report and find that the applicant’s IRB quantum is as follows:
a. April 1, 2014 to December 31, 2014 is $786.43.
b. January 1, 2015 to December 31, 2015 is $781.29
c. January 1, 2016 to December 31, 2016 is $777.82
d. January 1, 2017 to December 31, 2017 is $773.70
e. January 1, 2018 to December 31, 2018 is $769.23; and
f. January 1, 2019 to December 31, 2019 is $761.13.
36The applicant submits his IRB quantum from April 1, 2014 to December 31, 2015 is $1,000 per week however he does not provide any evidence in support of his position.
37The respondent submits the applicant did not provide any clear basis for how he reached his weekly figures and that it appears to be based on the fact that the applicant failed to account for his retroactive Canada Pension Plan (CPP) disability benefits paid to him from April 1, 2014 and ongoing.
38Without any evidence in support to refute the respondent’s figures based on an accounting report,14 I find that the applicant is entitled to an IRB as noted above in paragraph 34.
Is the respondent required to repay the applicant for the amount of IRB deducted between the period from April 1, 2014 to February 14, 2017?
39According to s. 52 of the Schedule the respondent is entitled to a repayment of an IRB if a notice is given within 12 months after the payment of the amount that is to be repaid. After which, the person to whom the notice would have been given ceases to be liable to repay the amount.
40I find that the respondent is not entitled to a repayment as its claim is not specific as to the time period which appears to be greater than 12 months.
41The respondent submits that according to its Summary of Benefits Payments,15 a repayment was never sought more than one year after the overpayment. It is the respondent’s position that it gave the applicant notice on January 20, 2016 of its overpayment and it was thereby entitled to reduce his benefits by 20%16 to capture one year of overpayment. As a result, it is the respondent’s position that it is not required to repay the applicant for any IRB deductions.
42The applicant takes the position that each notice sent by the respondent seeks a repayment that was paid in excess of 12 months prior to each notice. Furthermore, the applicant submits that the notices were deficient in failing to provide an accurate calculation within the correct timeframe.
43In support of his position, the applicant relies upon the following statement from the Financial Services Commission of Ontario (“FSCO”) case of Trottier v. Royal & SunAlliance Insurance Company of Canada:17
…However, another underlying principle is that insured persons should be able to rely on the benefits they received to meet their current needs. To this end, the legislation establishes rules and time lines for applications, the determination of entitlement, procedures for dealing with dispute, and the recovery of overpayments…Insurers are required to identify and provide notice of any overpayment with a relatively short period – 12 months- or lose the right to recover them.18
44The applicant also relies on the FSCO case of Knechtel v. Royal & SunAlliance Insurance Co. of Canada,19 where the Arbitrator held that the notice must contain basic information to explain in plain language the details of what the insurer seeks to have repaid.20 In Intact Insurance Co. v. Marianayagam,21 Perrel J. of the Ontario Superior Court of Justice found that a notice under s. 47 of the 1996 version of the Schedule (a similar provision to the current s.52) that the notice should contain:
a. Identification of the type of benefit that was overpaid;
b. The payment period for which repayment is sought;
c. The amount of repayment sought;
d. The amount claimed need not be perfectly correct, but it should be substantially correct;22 and
e. Unless the insured fraudulently misrepresented his or her entitlement to IRBs an insurer can only recover its overpayments for a 12-month period and the insured does not have to repay the balance of the overpayments.23
45Based on the above case law, the applicant submits the respondent’s notice dated January 20, 2016 sent to the applicant indicated the overpayment amount owing was $15,240.84 and there was no explanation provided as to why the respondent deemed there to be an overpayment, nor did the respondent indicate the period for which a repayment was sought.
46Upon review of the first Explanation of Benefits dated January 20, 2016,24 the respondent states: “We have made an error in our calculation. Therefore your weekly Income Replacement Benefit has been reduced to $543.57.”25 However no time period is provided as to when the overpayment occurred or what the error was.
47The notice goes on to state that in accordance with s. 52 of the Schedule the respondent is requesting a repayment of $15,240.84 as a result of CPP of $7,551.60 and an error in entitlement of $7,689.24 ($147.87 x 52). The notice then sets out that the future benefit will be reduced by 20% pending full repayment.
48Although I am not bound by FSCO case law, I do find the Knechtel case to be persuasive when the Arbitrator stated that the notice must contain basic information to explain in plain language the details of what the insurer seeks to have repaid. I would adopt that reasoning in this case and take it one step further. The plain language details must be directed in plain language to an unsophisticated reader. In the present case, I find that the respondent did not do so. There is no explanation as to the time period the respondent is seeking a repayment for and the calculations are not in plain language to an unsophisticated person as it is not clear on whether the calculations are substantially correct. The details on the overpayment are also not clear.
49The respondent sent a second notice by way of an Explanation of Benefits dated May 16, 2016. In that notice, the respondent makes reference to an accounting report from H&A Forensic Accounting dated May 4, 2016 for the applicant’s review and then goes on to request a repayment in the amount of $19,794.70 and that the applicant’s IRB will be reduced by 20% pending full repayment.
50In my view, this notice is also not in compliance with the Schedule or the Marianayagam case law. There is no time period for the repayment that is sought and any claim for more than 12 months prior to the notice is not repayable.
51As a result of the above, I find that the applicant is entitled to a repayment from the respondent for deducting 20% of his IRB which was not done in accordance with s. 52 of the Schedule.
52Based on the evidence provided, I do not have enough information to determine the precise amount that the respondent will have to repay to the applicant. As a result, the issue of interest should be addressed at the hearing on the substantive issues in dispute.
53As this was a preliminary issue hearing on certain issues in dispute, the parties should reach out to the Tribunal to request a case conference on the remaining issues in dispute. I would urge the parties to complete their calculations of the amount that should be repaid to the applicant before the next case conference in this matter.
54The applicant provided submissions on his request for an award, which was not listed as an issue in dispute for the purposes of this preliminary issue hearing but was to be addressed as part of the substantive issues.
55As a result, I will not address the applicant’s claim to an award at this preliminary stage, and submissions with respect to an award should be made for the hearing on the substantive issues in dispute.
ORDER
56Pursuant to s. 280(1) of the Insurance Act, the Tribunal has the jurisdiction to determine the optional medical and rehabilitation policy limits in this proceeding.
57The applicant’s IRB quantum is as follows:
a. April 1, 2014 to December 31, 2014 is $786.43.
b. January 1, 2015 to December 31, 2015 is $781.29
c. January 1, 2016 to April 30, 2016 is $777.82
d. January 1, 2017 to December 31, 2017 is $773.70
e. January 1, 2018 to December 31, 2018 is $769.23; and
f. January 1, 2019 to December 31, 2019 is $761.13.
58The applicant is entitled to a repayment of the improperly deducted IRB and the amount of the repayment should be addressed at a subsequent case conference between the parties.
59The issue of an award should be addressed as part of the hearing on the substantive issues in dispute.
Released: September 21, 2020
___________________________
Sandeep Johal
Adjudicator
Footnotes
- O. Reg. 34/10.
- Preliminary Written Submissions of the Respondent at Tabs 2,3. Policy Change Request dated June 11, 2012 and Tab 3: Policy Change Confirmation dated June 13, 2012.
- Ibid at Tab 2.
- R.S.O. 1990, c.l.8.
- 2019 ONCA 615. (“Stegenga”)
- Ibid at para. 6.
- Ibid at para. 41, 42.
- Ibid at para. 53.
- Ibid at para. 61.
- 2019 ONSC 6846. (“Riggs Estate”)
- Riggs Estate at para. 18.
- Stegenga at paras 43-45.
- Stegenga at para 37.
- Written Submissions of the Respondent at Tab 2 (H&A Forensic Account Report dated May 4, 2016) and Tab 5 (BDO Accounting Report dated January 18, 2018).
- Ibid at Tab 7.
- Section 52(2)(b) of the Schedule.
- [2003] O.F.S.C.D. No. 173.
- Ibid at para. 44.
- 2009 CarswellOnt 3646 (FSCO A07-000011). (“Knechtel”)
- Knechtel at para. 105.
- 2016 ONSC 1479 (“Marianayagam”)
- Marianayagam at para. 45.
- Ibid at para. 49.
- Ibid at Tab 3.
- Ibid at pg. 1.