Licence Appeal Tribunal
Licence Appeal Tribunal File Number: 21-001010/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:
Kuhanesa Balasubramaniam
Applicant
and
Aviva General Insurance Company
Respondent
DECISION
ADJUDICATOR: Derek Grant
APPEARANCES:
For the Applicant: David Wilson, Counsel
For the Respondent: Pamela Quesnel, Counsel
HEARD: By way of written submissions
OVERVIEW
1The applicant, Kuhanesa Balasubramaniam (“K.B.”), was involved in an automobile accident on August 24, 2005 and sought benefits, in particular, an income replacement benefit (“IRB”) from the respondent, Aviva, pursuant to the Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996.
2Aviva suspended payment of IRBs on the basis that it determined that K.B. was overpaid the benefit. K.B. disagreed and filed an application with the Tribunal for resolution of the dispute.
ISSUES IN DISPUTE
3Is K.B. entitled to repayment of IRBs in the amount of $13,500.43 for the period of April 4, 2012 to May 31, 2016 plus interest and an award?
4Is K.B. entitled to an award in relation to the $34,672.99 (for the period of June 25, 2018 to May 27, 2020) Aviva was ordered to pay related to IRBs that were suspended pursuant to the Tribunal Order dated May 6, 2020?
RESULT
5Based on a review of the evidence, I find as follows:
a. K.B. is not entitled to repayment of IRBs in the amount of $13,500.43 due to his non-compliance with s. 33 of the Schedule; and
b. K.B. is not entitled to an award in relation to the $13,500.43 or the $34,672.99. No interest is payable.
BACKGROUND
6This matter was initially heard before Arbitrator Kowalski at the Financial Services Commission of Ontario. In an Order dated April 13, 2010, Arbitrator Kowalski ordered that Aviva pay K.B. a weekly IRB in the amount of $311.21 ongoing.
7The following sets out a timeline of events leading to the subject dispute:
a. November 16, 2010 – Counsel advised Aviva that K.B. had been earning employment income that may effectively reduce the weekly IRB benefit to nil. Particulars were to follow;
b. January 18, 2011 – Aviva sent Explanation of Benefits (“EOB”) requesting an OCF-13/post-accident income information within 10 business days in accordance with s. 33 of the Schedule. February 22, 2011 – follow-up EOB sent requesting OCF-13 and post-accident information;
c. February 22, 2011 – Counsel wrote to Aviva noting that Aviva is not able to cease benefits due to non-compliance with the s. 33 request;
d. July 5, 2011 – Previous Counsel for Aviva advised Counsel that an application for variance of the IRB Order would be forthcoming. Counsel for Aviva requested employment and income particulars. July 29, 2011 – Counsel for Aviva sent a second request for particulars of K.B.’s post-accident employment and income;
e. September 14, 2011 – Counsel provided a copy of K.B.’s 2010 income tax return and advised that K.B. was earning income between April 24 and June 14, 2010 and from April 1 to June 30, 2011. After receiving the post-accident income documentation, Aviva filed an Application for Variation/Revocation on September 30, 2011;
f. November 15, 2011 – Counsel filed a Response, which indicated that the circumstances described in the Application for Variation do not warrant a variation or revocation of the April 13, 2010 Order. The Response went on to further note that “the insured is presently endeavoring to provide the insurer with complete information in this regard.”;
g. February 27, 2012 – Counsel for Aviva advised Counsel that there was an overpayment (as a result of accounting reports dated January 5 to February 10, 2012), and Aviva intended to deduct the requisite 20% from the weekly IRBs in accordance with the Schedule. Counsel for Aviva further noted that, unless she heard from K.B. otherwise, Aviva assumed there was no objection;
h. March 8, 2012 – Counsel advised that neither he or K.B. had been provided with particulars of the alleged overpayment and as such, there should be no deduction from the weekly IRB;
i. April 4, 2012 – Aviva advised K.B. that it overpaid IRBs from April 13, 2010 to June 30, 2011 in the amount of $13,500.43 and sought repayment. Aviva also advised that it intended to reduce IRBs by 20% until the overpayment was repaid. The exact date is not indicated, but, at some point, the issue of the repayment was dealt with by the parties and Aviva returned to paying K.B. $311.21 per week and there was no further correspondence for 5 years;
j. March 28, 2017 – Aviva requested an updated Disability Certificate (“OCF-3”) which was to be received by April 28, 2017. Aviva indicated that if same was not received by the specified date, it may not be liable for payment of IRBs during any period of non-compliance;
k. April 6, 2017 – Counsel wrote to Aviva advising of its obligation to pay IRBs referenced in the April 13, 2010 Order regardless of whether it received a completed OCF-3. On June 6, 2017, Aviva advised that IRBs would continue to be paid;
l. November 6, 2017 – Aviva obtained a surveillance report which indicated K.B. was working. December 8, 2017 – Counsel advised that K.B. did not apply for CPP disability benefits and would not be entitled as he was working and may be continuing to work on an intermittent basis. Aviva advised that it would be requesting a Declaration of Post-Accident Income to address IRB quantum to address any potential overpayment there may be as a result of post-accident income;
m. February 28, 2018 – Aviva sent correspondence further to its communication of December 8, 2017 and February 1, 2018 that it had not yet received a Declaration of Post-Accident income. Aviva’s notice further indicated that in accordance with s. 33, it required income tax returns and Notices of Assessment from 2013 to 2017. The letter further specified that if the documentation was not received by March 16, 2018, the IRB would be suspended. It was also noted that once the benefits were suspended, should the requested information be provided, withheld payments would be paid provided a reasonable explanation was provided for the delay in complying with the request;
n. July 3, 2018 – Aviva notified K.B. that IRBs had been suspended for failure to comply with the request for documents in accordance with s. 33. Aviva also reiterated its position from the February 28, 2018 letter regarding compliance with a reasonable explanation and reinstating the benefits. July 5, 2018 – K.B. wrote to Aviva disputing its right to suspend benefits. August 14, 2018 – Aviva advised its position remained unchanged;
o. November 13, 2018 – Aviva wrote K.B. to confirm its request for all post-accident income documentation from July 1, 2011 to date and ongoing, inclusive of any self-employment documentation. Aviva reiterated the request was being made under s. 33 and that K.B. failed to provide any of the requested records. Aviva further advised that IRBs had been suspended due to s. 33 non-compliance. In addition, Aviva advised that it will be requesting a repayment for any overpayment for the period of July 1, 2011 to June 24, 2018 pursuant to s. 52 of the Schedule;
p. July 17, 2019 – Aviva filed another Application to Vary/Revoke with an overpayment claim. Aviva restated its requests for all information regarding post-accident income from July 1, 2011 ongoing; and
q. March 6, 2020 – Tribunal Order ordered Aviva to bring IRBs up to date prior to being able to proceed with its Application to Vary/Revoke an order. March 19, 2020 – Aviva sent a cheque to K.B. for IRBs for the period of June 25, 2018 to March 18, 2020. Aviva also included correspondence regarding its s. 33 request for previously requested employment documentation. In addition, in accordance with s. 52, it requested repayment of any overpayment made for the period of July 1, 2011 ongoing.
ANALYSIS
K.B.’s position
8Under the Insurance Act, R.S.O. 1990 c. I.8, s. 287, an insurer shall not, after an order of the Director or of an arbitrator appointed by the Director, reduce benefits to an insured person on the basis of an alleged change of circumstances, alleged new evidence or an alleged error, unless the insured person agrees or unless the Director or an arbitrator so orders in a variation or appeal proceeding under section 283 or 284.
9Essentially, K.B. submits that Aviva has wrongly suspended the IRB payment, as there was no change of circumstances, new evidence or alleged error. He submits that there was no agreement to vary the Order of Arbitrator Kowalski, therefore Aviva wrongly suspended and withheld IRBs. His position is that because there was no objection to Aviva’s enquiry, this does not imply consent or an agreement to vary the Order.
Aviva’s position
10Aviva submits that K.B. had agreed to the reduction of IRBs. Aviva relies on the communication between the parties and the pleadings filed in relation to Aviva’s first Application to Vary/Revoke. Aviva posits that the response from Counsel was not that he was opposed to Aviva deduction of the requisite 20%, but that neither he nor K.B. had been provided with the particulars of the overpayment, therefore a deduction should not be made.
11K.B. further submits that Aviva’s request for repayment fails to meet the provisions set out in s. 52(1)(a). Under s. 52(1)(a), 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) set out the 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 required notice 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.
12I agree with K.B. that Aviva cannot rely on s. 287 to suspend the IRB payments. However, I find that Aviva can suspend IRB payments due to K.B.’s non-compliance under s. 33 of the Schedule. Lastly, Aviva erroneously claimed a repayment of benefits.
Section 287 of the [Insurance Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-i8/latest/rso-1990-c-i8.html)
13I agree with K.B. that Aviva cannot rely on the s. 287 provision to make any change to Arbitrator Kowalski’s Order. There was no clear agreement to vary the Order, nor did the Director or Director’s delegate order a variation of the order. Further, I find that there is no evidence of a change of circumstances or new evidence. While there is evidence of an alleged error in terms of the calculation of the amounts of IRBs owing, s. 287 prohibits the reduction of benefits on this basis.
14Although Aviva sought to vary/revoke the Order, no such Order was made, therefore, it cannot make a change to the Order. It has not pointed me to any evidence that the requirement for a change to the Order was met. Section 287 requires an agreement, and in the essence of consumer protection legislation, such an agreement to vary an order in accordance with s. 287 would necessarily require a clearly written agreement between the parties. Further, such an agreement should contain clear language such that an unsophisticated applicant understands the parameters of such an agreement.
15I find no evidence of such a written agreement. I agree with K.B. that not disputing Aviva’s position on varying the FSCO Order does not constitute agreeing with its request to vary the Order. In the scheme of contractual relationships between an insured and insurer, written communication is heavily relied on as a means of conveying one’s understanding of ongoing developments with an insured’s file. An agreement to reduce the amounts of benefits being paid to an insurer surely falls within the realm of being a significant change worthy of being relayed by way of written communication. It follows that such an agreement requires a level of clarity that allows the insured to understand what it is they are agreeing to.
16Accordingly, I find that Aviva has not satisfied the requirements under s. 287 to reduce or vary the FSCO Order on the basis of an alleged error as it pertains to IRB payments made, as no agreement was entered with K.B.
Section 33 non-compliance
17Section 33 of the Schedule states that an applicant shall, within 10 business days, provide the insurer with any information reasonably required to assist the insurer in determining entitlement to a benefit. Aviva’s position is that K.B. has failed to comply with its s. 33 requests, therefore, pursuant to s. 33(6), the insurer is not liable to pay a benefit in respect of any period which the insured fails to comply.
18K.B. did not make submissions on the issue.
19I agree with Aviva.
20On the evidence, Aviva made s. 33 requests on the following dates -– December 8, 2017, February 1, 2018, February 28, 2018, and November 13, 2018. While K.B. disputes that Aviva cannot withhold the IRB under s. 287 of the Insurance Act, there is no such restriction to Aviva as it relates to requests made under s. 33.
21K.B. has not directed me to any evidence that Aviva was provided with all of the requested documents from the December 2017 or February 2018 or November 2018 letters. There is no exception under s. 33(6), where the insurer is not liable to pay a benefit. Regardless of whether a previous Order has been made, s. 287 (as it was at the time of this accident), has no impact on the compliance requirements under s. 33.
22Section 33(8) is the only remedy available to K.B, whereby once he subsequently complies, Aviva shall resume payment of the benefit, if it was being paid; and shall pay all amounts that were withheld during the period of non-compliance, if K.B. provides a reasonable explanation for the delay in complying. K.B. has not provided such an explanation, despite having the opportunity to do so in his reply submissions.
23As the disputed benefit is IRBs, and Counsel advised Aviva that K.B. was working/self-employed, it follows that any income-related records are necessary for a calculation of his entitlement. This reasonably would include the Declaration of Post-Accident income and any self-employment records.
24K.B.’s failure to comply with Aviva’s s. 33 requests, preclude him from receiving IRBs until he complies with its request.
Section 52 and Aviva’s request for repayment of IRBs
25Section 52 of the Schedule regulates the repayment of benefits. Under s. 52(1)(a), 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) set out timelines for repayment requests if an insured is liable to repay any 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.
26K.B. submits that Aviva improperly relied on S. 52 as its correspondence failed to meet the requirements under s. 52(2) of not being given within 12 months. K.B.’s position is that if relying on its April 4, 2012 notice, Aviva would only be entitled to a repayment of any overpayment which had been accrued between April 4, 2011 and April 4, 2012. If it was relying on the earlier, March 21, 2012 notice, then it could only claim repayment for the period of March 21, 2011 and March 21, 2012.
27K.B. further argues that Aviva could claim, at most, a repayment of benefits paid during the period of April 4, 2011 to June 30, 2011, approximately 12 weeks. During the 12-week period, Aviva paid $311.21 per week, as opposed to the $219.91 per week that it alleges was the correct amount. The difference resulted in an overpayment of $91.30 per week for the 12-week period for a maximum of $1,095.60.
28Aviva did not directly address the issue, however, on the evidence, I agree with K.B.
29Starting April 4, 2012, Aviva paid a reduced bi-weekly amount of IRB at a rate of $497.94 until May 17, 2016. For the remaining two weeks of May 2016, Aviva paid $503.59. Commencing June 2, 2016, Aviva began paying the repayment amount as ordered by Arbitrator Kowalski. K.B. calculated the amount of payment withheld to be $13,500.43. Aviva does not dispute this calculation, only whether the amount is owed to K.B.
30I find that Aviva’s reliance on s. 52 amounts to an error. Aviva is not able to rely on s. 52 to circumvent the requirements of s. 287 of the Insurance Act. While it submits that an error was made, as set out by s. 287, there was no agreement or Order for a deduction, as discussed earlier, therefore no deduction can be made on this basis. Under s. 52, the amount of repayment that can be claimed depends on the circumstances surrounding the claim for repayment. Specifically, if the repayment is based on a fraudulent claim for benefits, the insurer is entitled to a full repayment of the benefit(s). However, if it is based on an error on the part of the insurer, then, the insurer can only claim repayment for the previous 12 months, provided proper notice was given in accordance with s. 52(2) and (3).
31Although K.B. did in fact return to work, Aviva is not entitled to a repayment. Section 52 is applicable as it pertains to Orders made under the Schedule. It is well established that regulations made in pursuant of an Act must be consistent with any provisions of said Act. The Schedule is such a regulation under the Insurance Act as Ontario Regulation 34/10. Therefore, s. 287 would prevail over s. 52 of the Schedule.
32As such, Aviva’s notices, made under s. 52, cannot supersede s. 287 of the Insurance Act. Thus, Aviva cannot claim a repayment of IRBs pursuant to s. 52 of the Schedule.
AWARD
IRBs for the period of April 4, 2012 to May 31, 2016 and June 25, 2018 to May 27, 2020
33Section 10 of Regulation 664 permits the Tribunal to award a lump sum of up to 50% of the amount to which the insured person (i.e., K.B.) 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 (i.e., Aviva) has “unreasonably” withheld or delayed payments.
34K.B. submits that Aviva’s actions in “erroneously ignoring the requirements mandated by s. 287 of the Insurance Act...in excess of two years,” is grounds for an award. He further submits that it ignored its own obligation to provide proper Notices yet relies on the proposition that since K.B. failed to file for dispute resolution within two years of the March 21, 2012 and April 4, 2012 Notices, he is statute barred from applying to the Tribunal.
35In response, Aviva argues that it was K.B.’s responsibility to advise if he was receiving post-accident income, a responsibility that is ongoing. Aviva submits that once it was notified of post-accident employment, it requested details, and, as recently as April 14, 2021, it still has incomplete information. It further submits that it did not terminate IRBs, but merely suspended due to non-compliance. Its position is that this handling of the file does not warrant a special award.
36I agree with Aviva.
37K.B. advised that he was earning post-accident income, and in response, Aviva requested additional post-accident income-based documentation. This is reasonable on the grounds of K.B. earning an income while receiving IRBs, otherwise known as “double recovery”. The Schedule is intended to prevent double recovery, and s. 33 is a means available to Aviva to ensure that double recovery is avoided.
38K.B. prevented Aviva from being able to properly determine whether a double recovery situation exists, and if it does exist, to what extent. Non-compliance under s. 33 allows for a suspension of benefits paid until the requested documentation can be assessed, and a determination made as to the amount of benefit owing, if any. Where an applicant fails to comply and prevents such a determination from being made, the consequences are “the insurer is not liable to pay a benefit”.
39Even though Aviva was ordered to pay the IRB benefit on two occasions (Arbitrator Kowalski’s Order and Vice Chair White’s Order), neither of these Orders represent an unreasonable withholding or delaying of benefits. I find that K.B.’s actions were the necessary factor that began the process of any determinations made regarding the deduction or suspension of IRB payments. To date, I am not aware that K.B. has complied with the s. 33 requests.
40I find that K.B.’s failure to comply with s. 33, does not warrant a “reward”. Accordingly, an award is not appropriate.
CONCLUSION
41K.B. is not entitled to a repayment of IRBs withheld during the period of April 4, 2012 to May 31, 2016, as a result of his failure to comply with Aviva’s s. 33 requests. No interest or an award is payable.
42K.B. is not entitled to an award or interest as it pertains to IRB payments withheld during the period of June 25, 2018 to May 27, 2020.
Released: January 26, 2023
Derek Grant Adjudicator