Citation: Kunaseelan v. Aviva Insurance Company of Canada, 2022 ONLAT 20-000565/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:

Thushianthini Kunaseelan

Applicant

and

Aviva Insurance Company of Canada

Respondent

DECISION

ADJUDICATOR:

Brian Norris

APPEARANCES:

For the Applicant:

Jono Schneider, Counsel

For the Respondent:

Candace Mak, Counsel

Heard:

By way of written submissions

1Thushianthini Kunaseelan, (“the Applicant”), was involved in an automobile accident on June 20, 2019, and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (the ''Schedule'').

2Aviva Insurance Company of Canada, (the Respondent”), refused to pay certain income replacement benefits (“IRBs”) to the Applicant. The Applicant applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (“Tribunal”) for resolution of this dispute.

ISSUES

3The issues in dispute are as follows:

Is the Applicant entitled to IRBs in the amount of $400.00 per week for the period from June 27, 2019 to November 14, 2019?
Is the Applicant entitled to interest on any overdue payment of benefits?
Is the Respondent liable to pay an award under O. Reg. 664 because it unreasonably withheld or delayed payments to the Applicant?

RESULT

4I find that the Applicant is not entitled to the IRBs claimed, nor interest or an award.

BACKGROUND

5The Applicant was the driver of a compact sedan which was struck on the front end by an oncoming vehicle that crossed over the median in a suburban intersection. The impact upended the Applicant’s vehicle and it came to rest on the side of the road. According to her disability certificate dated August 29, 2019, the Applicant sustained sprain and strain injuries to the neck, back, and knee, as well as headaches and psychological injuries and was unable to work as a result of the injuries.

6Following the accident, the Applicant claimed entitlement to IRBs for the period from June 27, 2019 to August 27, 2020. However, the Respondent has paid IRBs only for the period starting November 15, 2019 because that is when it received a completed disability certificate, (“OCF-3”). It maintains that no IRBs are payable prior. Further, the Respondent never paid IRBs immediately to the Applicant upon receipt of the OCF-3. Instead, it requested additional information, mostly because the Applicant was employed by her husband and it questioned the validity of the information provided. The Respondent, despite not receiving the information requested, initiated payment on or around May 28, 2020, backdated to November 15, 2019, and payable every two weeks thereafter. However, the Respondent did not pay any interest on the withheld IRBs for the period spanning November 15, 2019 to May 28, 2020.

7The predominant issue here is whether the Applicant is entitled to IRBs for any period prior to submitting the disability certificate. For this issue, the parties identify several sections of the Schedule that are in play: Sections 36(2), 32(2), and 34. Also at issue is whether the Applicant is entitled to interest on any overdue payments and/or an award pursuant to Reg. 664.

PROCEDURAL ISSUE

8The Applicant was employed by her husband at the time of the accident. At the case conference prior to this hearing, she was ordered to produce the following documents:

Bank records for the period from March 8, 2019 to-date;
Income tax returns for 2018 to-date;
Her complete employment file from April 2019 to-date, including hours and dates worked and contact information for clients to confirm services provided; and
A Record of Employment from her employer.

9These records were not produced in the timeline imposed by the Tribunal. In fact, the Applicant has produced only a few documents from that list: her 2019 tax return, and her May and June 2019 bank statements. The documents were provided to the Respondent together with the Applicant’s Reply submissions. That is, they were produced after the Respondent made its submissions.

10Further compounding the confusion, the Applicant claims that she produced certain records via fax on August 27 and September 29, 2020. Yet, they were not included in the submissions and the Respondent disputes the Applicant’s claim. It submits that the Applicant refers to correspondence which, although sent to the Respondent at the same time and with the same page numbers, is attributed to a different claim and difference claimant. It maintains that the correct documents were never delivered.

11In response, the Respondent sought, and was granted, relief to make a sur-reply to address the new information. I considered the sur-reply submissions for this hearing. I will address the production issues during my analysis, as they arise.

12With respect to the outstanding productions, I agree with the Respondent and find that the Applicant failed to produce and disclose her 2018 tax returns, employment file, and record of employment and produced only two months of bank records. The consequences for the Applicant for her failure to produce the records are addressed as they apply to the difference issues.

Section 36 of the Schedule

13Section 36(2) of the Schedule provides that the Applicant must submit a completed disability certificate with her application for IRBs. Section 36(3) disentitles an Applicant to IRBs for any period before the completed disability certificate is submitted.

14Neither party disputes that the disability certificate was submitted on November 14, 2019. Instead, the Applicant submits that the Respondent failed to comply with its obligations in section 32(2) of the Schedule, which disentitles it from relying on section 36(3) to deny coverage.

Section 32 of the Schedule

15Section 32(2) of the Schedule holds that the Respondent, once it is aware that a claim may be made, shall promptly provide the Applicant with the appropriate application forms, a written explanation of benefits available, information to assist the person in applying for benefits, and information on the election relating to income replacement, non-earner and caregiver benefits.

16It is undisputed that the Respondent never gave the Applicant an OCF-3 in response to her application for accident benefits, even though she advised that she was unable to work. Further, I see no evidence showing that the Respondent ever gave her an OCF-3. To me, this is not compliant with the provisions in section 32(2) as the Respondent is required to provide the appropriate forms to the Applicant.

17The Schedule provides no consequence for a failure to comply with section 32(2). Instead, the Applicant submits that the Respondent’s failure to comply with section 32(2) of the Schedule precludes it from demanding a reasonable excuse for her delayed submission of the disability certificate, pursuant to section 34.

Section 34 of the Schedule

18Section 34 of the Schedule provides that the Applicant’s failure to comply with a time limit does not disentitle her to the benefit if she can give a reasonable explanation.

19The Respondent submits that section 34 of the Schedule is not applicable because 36(3) includes no timeline for the Applicant to comply with. It further submits that the Applicant has provided no reasonable excuse for her delayed submission of the disability certificate. It further submits that, as noted in K.A. vs. Intact Insurance Company (“K.A.”),¹ the Schedule does not require it to advise the Applicant that her claim may be barred if she does not submit an OCF-3 and that the Tribunal has previously denied IRBs prior to receipt of an OCF-3, without considering a reasonable explanation for the delay under section 34.²

20The Applicant submits that no reasonable excuse is required. She submits that the Respondent is estopped from demanding a reasonable excuse for the delay because it failed to comply with section 32(2). She relies on Anthonipillai and Security National (“Anthonipillai”).³ In that Financial Services Commission (“FSCO”) case, the insurer was estopped from denying payment of specified benefits prior to receipt of a disability certificate because it never advised the insured of the full scope of the consequences for a failure to submit it, which included a complete disentitlement from the benefit.

21I find that section 34 of the Schedule has no application when considering whether the Applicant is entitled to any IRBs prior to November 14, 2019, when she submitted her disability certificate. I agree with the reasoning in K.A. That case found that section 34 of the Schedule is a remedial provision for a missed time limit and that section 36(3) includes no time limit for it to be applied against.

THE INTERACTION BETWEEN THE RELEVANT SECTIONS

22I find that the Respondent’s failure to provide a disability certificate to the Applicant has no influence on section 36(3) of the Schedule.

23As noted above, the Schedule provides no consequence for a failure to comply with section 32(2). Similarly, there is no reference or connection between section 36(3) and section 32(2) of the Schedule.

24I am not bound by FSCO decisions and am not persuaded by the reasoning in Anthonipillai. To me, Anthonipillai erred when it found that the Respondent must first discharge its obligation in section 32(2) prior to relying on section 36(3) to deny the benefit. To me, K.A. provides the appropriate jurisprudence.

25Indeed, I recognize the injustice in that the Applicant falls between these sections of the Schedule. She never received an OCF-3 from the Respondent to complete and submit and, when she did submit a completed OCF-3, she was denied entitlement to IRBs for any time before. Yet, I have no remedy for this injustice, and it would be wrong for me to order payment of IRBs contrary to section 36(3) of the Schedule. In a similar vein, I cannot award IRBs by deeming them to be incurred pursuant to section 3(8) of the Schedule because IRBs are not an expense, nor are they “incurred”.

INTEREST

26Pursuant to section 51 of the Schedule, interest is payable on any overdue payments of benefits. A benefit is overdue if the Respondent failed to pay it within the time required under the Schedule.

27As noted above, the Applicant claims interest on the overdue payment of benefits. She submits that the May 28, 2020 payment for IRBs for the period from November 14, 2019 ought to include a payment for interest.

28Initially, the Respondent took the position that no interest is payable because the Applicant never established that she earned any taxable income for which an IRB can be calculated. This is because the Applicant never provided the requisite documents to confirm her pre-accident income and post-accident loss.

29As noted previously, the Applicant produced her 2019 tax return and her bank records for May and June 2019 via reply submissions, after the Respondent’s submissions. The Respondent was granted a sur-reply and, in those submissions, submits that no interest should be payable because the Applicant’s late and still incomplete productions have hindered its ability to adjust her claim.

30I agree with the Respondent and find that no interest is payable to the Applicant because the payment of IRBs never went overdue.

31Pursuant to section 36(4) of the Schedule, the Respondent has three options once it receives an application and completed disability certificate. It can: 1) pay the benefit; 2) refuse to pay the benefit but provide medical and other reasons why, including whether a section 44 assessment is required; or 3) it can send the Applicant a request for information under sections 33(1) or (2).

32The Respondent took the third option and requested additional information from the Applicant in the form of bank records. Therefore, it was not obligated to pay the benefit at that time. The Respondent requested bank records at first and, later, asked for tax records to confirm that the Applicant was employed at the time of the accident and reporting that income to the Canada Revenue Agency. This is because, pursuant to section 4(5) of the Schedule, IRB payments are calculated on the income reported to the applicable tax authority. The Respondent, given the Applicant’s relationship with her employer, is within its right to request the additional information.

33I recognise that the Respondent never referred to section 33 of the Schedule when the request was made. In addition, the initial request never gave a reason for it and never advised the Applicant that no benefits are payable until she complies with the request. Though, the Schedule makes no such notice requirement.

34The payment of IRBs prior to receipt of the section 33 request has no impact on the interest payable. The section 33 request made by the Respondent essentially paused the interest clock until the Applicant complied. She remained non-compliant at the time the payment was made. As a result, the interest clock never started.

35Ultimately, it was the Applicant’s refusal to produce the requested employment records which delayed payment of her IRBs for the period from November 21, 2018 until May 28, 2019. As noted above, the Applicant was employed by her husband and, as was determined by the Tribunal during a case conference prior to this hearing, a non-arms length employment relationship, like hers, invites additional scrutiny. The Respondent’s requests are reasonable, and it was the Applicant who never complied with the requests which would have started the interest clock. As a result, no interest is payable.

AWARD

36Pursuant to section 10 of Reg. 664, the applicant may be entitled to an award if the respondent unreasonably withheld or delayed payment of a benefit. Specifically, section 10 states:

If the Licence Appeal Tribunal finds that an insurer has unreasonably withheld or delayed payments, the Licence Appeal Tribunal, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, may award a lump sum of up to 50 per cent of the amount which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule

37The Applicant submits that the Respondent unreasonably withheld or delayed payment of her IRBs. She first submits that there was an unreasonable delay because the Respondent failed to provide the requisite forms to complete. To the Applicant, the Respondent was aware that she was injured in a serious accident but neglected to assist her through the claims process, as required.

38The Applicant further submits that the Respondent unreasonably withheld payment of her IRBs following the submission of her OCF-3. She submits that the Respondent ought to have paid the benefit because the Schedule permits it to request a repayment of any amounts paid in error. She also submits that the Respondent calculated the benefit but chose not to pay it and, instead, requested additional documents. To her, the denial of the payment of IRBs, is the most hostile option the Respondent could take.

39Lastly, the Applicant submits that the Respondent unreasonably and wrongly withheld interest on the overdue IRB payments for the period from November 28, 2019 to May 28, 2020. She submits that the Respondent ought to pay an award of 35-45% of the amounts withheld.

40The Respondent submits that the Applicant’s late and incomplete production of documents relating to her IRB claim have hindered its ability to adjust the Applicant’s accident benefits claim. For this reason, it submits that an award should not be payable.

41I have reviewed the submissions and evidence and find that the Applicant is not entitled to an award.

42The Applicant correctly highlights that Respondent failed to give her the proper forms to complete with her application. To-date, the Respondent provides no evidence that it gave the OCF-3 to the Applicant and it gives no explanation for failing to provide it. However, this delayed the Applicant’s application for IRBs and not the payment of them. As noted above, the Applicant is not entitled to any IRBs prior to submitting her disability certificate, pursuant to section 36(2). The provision of an award requires that the Applicant be entitled to payment of a benefit for the award to flow from it. In the Applicant’s case, she is not entitled to payment of IRBs prior to submitting a disability certificate.

43Indeed, once it received the OCF-3, the Respondent initially failed to give any reason why it required the employment documents it requested from the Applicant. Additionally, it failed to notify the Applicant that the request for bank and tax records was made pursuant to section 33, and that a failure to comply would disentitle her to the benefit. Pursuant to section 32(2), the Respondent has a duty to provide the Applicant with the relevant information to navigate the claims process and it failed to uphold that duty. The request made on November 21, 2019 asked for bank records before issuing payment. This request provides no insight into the rationale for delaying payment of the benefit. To me, the Respondent ought to have explained to the Applicant that her non-arms length relationship with her employer requires additional documents.

44I recognize that the Respondent clarified why it required additional information to calculate the Applicant’s IRB entitlement. This occurred on December 17, 2019 when the Respondent emailed Applicant’s counsel and advised that the additional information was required because of the relationship between the Applicant and her employer. Previously, the Respondent never explained the consequences for failing to comply with the request and, at a minimum, ought to have provided an explanation as to why it required the additional information.

45I appreciate that the Respondent made efforts to mitigate the issue by rendering payment in May 2020. It was not required to make the payment because the Applicant remained non-compliant with section 33 of the Schedule. To me, this payment mitigated the hardship caused by the notice issues documented above.

46Despite the Respondent’s unsatisfactory adjusting of the Applicant’s claim, I find that the language in section 10 requires that an award be tied to a benefit being owed. Thus, the Applicant is not entitled to an award.

47Section 10 of Regulation 664 states that “…in addition to awarding the benefits and interest…” The use of the words “in addition” in that section means that an award cannot be payable unless benefits and interest are also awarded. Here, I am not awarding benefits or interest to the Applicant because the Respondent mitigated the issue. Thus, I am unable to award a lump sum payment.

48Further, section 10 states that the Tribunal “…may award a lump sum of up to 50 per cent of the amount to which the person was entitled to at the time of the award…” To me, this provision further indicates that a lump sum payment cannot be awarded unless the Applicant is entitled to payment at the time the award is granted. Again, in the Applicant’s case, she is not entitled to any payments and, therefore, cannot be awarded a lump sum payment.

CONCLUSION AND ORDER

49I find that the Applicant is not entitled to IRBs for the period claimed because she failed to submit a disability certificate to initiate her claim. While the Respondent failed to comply with certain sections of the Schedule, such non-compliance has no impact on the Applicant’s entitlement to IRBs.

50No interest is payable because no benefits are payable or overdue.

51A lump sum payment pursuant to s. 10 of Reg. 664 cannot be awarded to the Applicant because she is not entitled to the benefits or interest that she claimed.

Released: February 17, 2022