Licence Appeal Tribunal File Number: 21-002338/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:
Security National Insurance Company
Applicant
and
John D'Abbraccio
Respondent
DECISION
ADJUDICATOR:
Kate Grieves
APPEARANCES:
For the Applicant:
Michelle Hatzikonstadinou, Counsel
For the Respondent:
Kristy Kerwin, Counsel
Angel Leung, Counsel
Shane Henry, Counsel
HEARD:
By Way of Written Submissions
OVERVIEW
1John D’Abbracio (“JD”) was involved in an automobile accident on July 25, 2015, and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (the “Schedule”). Security National Insurance Company (“the insurer”) paid income replacement benefits (“IRBs”) to JD, then claimed a repayment of benefits paid. JD did not immediately repay the benefits and the insurer applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.
PRELIMINARY ISSUES
2The Case Conference Report and Order indicates that the amount of income replacement benefits in dispute is $5,187.00 for benefits paid during the period from January 1, 2018 to February 23, 2021.
3In its submissions, the insurer indicated that the actual amount of the outstanding overpayment it seeks is $10,786.97.
4JD disputes the insurer’s overpayment amount. I address the conflicting amounts in my analysis below.
ISSUES
5The issues in dispute are:
i. Is the insurer entitled to the repayment of income replacement benefits in the amount of $10,786.97 for the period from January 1, 2018 to February 23, 2021?
ii. Is the insurer entitled to interest on any overdue payment of benefits?
iii. Is either party entitled to costs?
RESULT
6JD is ordered to repay $4,788.00.
7The insurer may charge interest pursuant to section 52(5) of the Schedule, effective 15 days from October 21, 2020.
8JD is entitled to costs in the amount of $500.00
ANALYSIS
9The insurer submits that payment of IRBs was initially delayed because the details provided in JD’s OCF-2 could not be confirmed. After receiving an OCF-10 and OCF-2, the insurer wrote to JD by letter dated February 14, 2018 and requested additional information in order to confirm his entitlement to IRBs, pursuant to s. 33.
10By letter dated February 25, 2020, more than two years after requesting the additional information, the insurer determined that JD was entitled to IRBs and provided a lump sum for the period from August 2, 2015 to February 27, 2020 in the amount of $23,825.72. The same letter indicated that an ongoing benefit in the amount of $199.50 would be paid bi-weekly as long as JD remained entitled to receive the benefits. The letter also requested information pursuant to s. 33 of the Schedule including: notices of assessment for 2016-2019, T4s, records of employment, and confirmation of any post-accident income received, by March 25, 2020.
11On March 24, 2020 the insurer advised JD that it was not in receipt of the requested information and as such his IRBs would be suspended effective March 27, 2020. The insurer repeated its s. 33 requests for JD’s notices of assessment, T4s, any relevant records of employment, and to advise of any post-accident income received from March 27, 2017 to present. By letter dated June 25, 2020 the insurer again wrote to JD. This time it advised JD that his IRBs were suspended as of March 27, 2020 and reiterated its s. 33 request for information.
12On or about October 18, 2020 the insurer received JD’s 2018 income tax return showing that he received income in that year.
13The insurer sent a notice for repayment of IRBs dated October 21, 2020 pursuant to section 52 of the Schedule, requesting repayment in the amount of $5,187.00 that was paid for the year 2018.
14By letter dated December 14, 2021, the insurer advised JD that two stale-dated IRB cheques totalling $399.00 were applied to the overpayment amount, so the remaining overpayment amount to be repaid was $4,788.00. Pursuant to s. 33, it requested paystubs, T4, and notice of assessment for 2019, and copies of any paystubs received from January 1, 2020 to March 26, 2020.
15The insurer filed an application to the Tribunal on February 24, 2021 seeking repayment of income replacement benefits in the amount of $5,187.00 for the period from January 1, 2018 to February 23, 2020.
16Further requests for repayment of $4,788.00 were made by letters dated March 21, 2022 and June 17, 2022 and reiterated the s. 33 requests.
17By email dated October 25, 2022, JD (through his representative) provided the insurer the employment files from two employers. JD advised that, further to the Motion Order dated September 2, 2022 he would request and provide upon receipt: employment files from two other employers, personal and corporate income tax returns for 2017, 2019, 2020 and 2021, personal and corporate notices of assessment for 2017-2021, and all T4 slips from 2017-2021.
18JD has produced an employment file from one employer showing that he worked from July 30, 2018 to February 26, 2019. To date, and despite the Tribunal’s orders, JD has not produced his personal or corporate income tax returns, notices of assessment, T4 slips from 2017 to 2021, or his employment file and paystubs from the other employers. However, demonstrating his efforts to provide the financial documents and employment files, JD provided copies of multiple request letters sent to the Canada Revenue Agency, and his former employers for the documents.
Notice of Request for Repayment
19Despite the Case Conference Report and Order that indicates that the disputed amount was $5,187.00, its initial submissions, the insurer claimed that it was entitled to repayment of all the amounts paid from 2015 to 2020, totalling $23,711.72.
20In its reply, the insurer concedes that the amount overpaid was actually $4,788.00 in 2018, not $5,187.00 it had initially indicated. It also conceded that it was not entitled to repayment for the amounts paid for 2015-2017 but maintained its claims to entitlement to all amounts paid in income replacement benefits paid in the years 2018 ($4,788.99) 2019 ($5,187.00) and 2020 ($811.97), totalling $10,786.97, plus interest.
21In his submissions, JD agreed to repay the $4,788.00 for 2018, but objects to the request for repayment for the years 2019 and 2020. He submits that he was ambushed by the request because the insurer didn’t give notice of the amounts sought until its initial submissions at the hearing.
22The insurer submits that it was not able to identify the amounts for those years earlier because JD hadn’t produced the documents that would enable the insurer to calculate those amounts, (such as the tax returns, T4s, records of employment etc.). The insurer submits that it had always maintained its claims for the years 2019 and 2020, pointing out the period claimed in the LAT application, the Case Conference Report and Order, and the fact that it continued to request the financial documents for those years. It submits that it had always maintained that the quantum in dispute could change, and therefore JD was not ambushed, but was on notice that the potential for the insurer to request repayment for the years beyond 2018 upon receipt of the documents requested.
23I find that the insurer is entitled to a repayment of $4,788.00 because that is the amount it notified JD that he was required to pay.
24Section 52(1)(a) of the Schedule provides that a person is liable to repay a benefit to an insurer if the benefit is paid as a result of an error or wilful misrepresentation or fraud. However, section 52(2)(a) still requires that the insurer notify the insured person of the amount that they are required to pay.
25The request letters state that $5,187.00 was overpaid, and subsequently that amount was reduced to $4,788.00. The insurer provided no evidence that it gave notice that it was also reclaiming overpayments of $5,187.00 for 2019 and $811.97 for 2020, until its initial submissions at this hearing. That is not proper notice.
26The insurer states that it couldn’t calculate those overpayments because of missing financial documentation. This argument holds no weight because the Schedule provides remedies for this situation. First, the insurer could, as it did in its letters dated March 24 and June 25, 2020, request information pursuant to section 33 of the Schedule, and then withhold the payment of IRBs if JD failed to comply with the request. In the alternative, the insurer could have requested all the amounts paid, if that is indeed what it believed it was entitled to. Yet, the insurer did neither and, instead, limited its request for repayment to $4,788.00. The insurer also never sought to add to the issues in dispute, nor amend the amount sought. The only amount of IRB for which JD was given notice or formed the basis of this dispute was limited to the amount overpaid in 2018.
27The insurer even acknowledges in its submissions that notice for a repayment of $10,786.97 was not provided, but incorrectly states that notice was not required by virtue of s. 52(3). Section 52(3) removes the requirement that the notice of repayment be provided within 12 months of the payment being made in instances where the benefits were paid as a result of misrepresentation or fraud, but the insurer is still required to give notice of the amount to be repaid pursuant to s. 52(2).
28Allowing the insurer to put in dispute the overpayment of IRB for 2019 and 2020, without prior notice of the amount claimed would be procedurally unfair to JD.
29In his submissions, JD agreed to repay the $4,788.00 overpaid for the 2018 period, the amount for which he was properly given notice. The insurer is not entitled to the remaining amount sought.
Wilful Misrepresentation
30I find no evidence indicating that JD committed an act of wilful misrepresentation or fraud pertaining to his claim for IRBs.
31The insurer submits that it is entitled to repayment on the basis of wilful misrepresentation or fraud. Even though I have found that the insurer is not entitled to the other disputed amounts, I find it necessary to address the allegations made by the insurer against JD.
32JD does not dispute that he was engaged in employment during the disputed period but submits that this information was not intentionally withheld from the insurer. He submits that IRBs were not paid for five years, and he did not do anything or provide any information to induce the insurer to issue the payment for the benefits when it issued payment in 2020. The insurer did not request that he complete a Declaration of Post-Accident Income form (OCF-13) prior to issuing payment that would have outlined his post-accident employment and earnings, when it was within its right to do so. But rather, the insurer suddenly issued payment five years post-accident without further inquiry. Other than pointing to the February 2018 letter where the insurer acknowledged receipt of the OCF-10 and OCF-2 and requested additional information, the insurer points me to no evidence to explain why it suddenly determined that IRBs were payable in 2020.
33As noted above, the evidence shows that JD made best efforts to obtain the documentation requested by the insurer and provided what he could when it became available. JD provided the insurer with his 2015 and 2016 income tax returns on or about March 12, 2018, showing that he earned income in those years. Yet, despite having those records as early as 2018 indicating that he earned post-accident income in those years, and therefore his IRBs would be $0, the insurer argues that JD wilfully or fraudulently misrepresented his employment status.
34I find that the overpayment was not made on the basis of wilful misrepresentation or fraud on the part of JD. Almost two years prior to the payment being made, the insurer had in its possession JD’s tax returns showing employment income, and that his IRB eligibility in 2015 and 2016 was $0, yet for some reason unclear to me, the insurer suddenly issued payment for IRBs five years post-accident for a five-year period from 2015 to 2020. It appears that the insurer made an error in calculating the IRB and issuing payment and is now blaming JD for its error and alleging that he misled them into issuing IRBs.
Interest
35Pursuant to section 52(5), the insurer may charge interest with respect to the $4,788.00 owed by JD starting on the 15th day after the notice was given on October 21, 2020.
Costs
36Rule 19.1 of the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission Common Rules of Practice and Procedure, Version I (October 2, 2017) (“Rules”) (the “Rules”) provides that parties may request costs of the proceeding, if they believe that the other party has acted unreasonably, frivolously, vexatiously, or in bad faith. Rule 19.4 further sets out the requirements for that request, which must include the reasons for the request and the particulars of the alleged conduct.
37I find that JD is entitled to $500.00 in costs because the insurer acted unreasonably during this proceeding.
38Despite the Case Conference Report and Order that indicates that the disputed amount was $5,187.00, its initial submissions, the insurer suddenly claimed that it was entitled to repayment of all the amounts paid from 2015 to 2020, totalling $23,711.72. The insurer conceded in its reply that it inadvertently claimed that JD owed $5,187.00 in 2018, despite having already advised JD that it was reduced to $4,788.00. Also in reply, the insurer conceded that it wasn’t entitled to repayment of the amounts paid for 2015 to 2017 but maintained that it was entitled to the amounts for 2018 to 2020. At no time did the insurer seek to amend the disputed amount prior to this hearing or give JD proper notice of the amounts it sought for overpayment in 2019 and 2020. The insurer submits that the time period always included 2019 and 2020, that JD was aware that the amount in dispute could change, that it was not able to provide notice of the new amounts any earlier, and that JD could have requested an extension for his submissions if necessary.
39The insurer also made a request for costs in its initial submissions, but in its reply, appears to no longer be requesting costs in its order sought. It rather argues only that no costs should be awarded against it. In any event, I am unable to characterize JD’s behaviour during this process as unreasonable, frivolous, vexatious, or of bad faith. As a result, I conclude that the insurer is not entitled to costs pursuant to Rule 19.1.
40I find that the conduct of the insurer was unreasonable and warrants a cost award. The insurer essentially ambushed JD with substantial claims for repayment that it never identified prior to serving its hearing submissions, nor added to the issues in dispute for this proceeding. The insurer then changed its position and conceded that it wasn’t entitled to more than half of amounts requested in its reply. The insurer also alleges unfounded wilful misrepresentation or fraud by JD, when it suddenly paid a lump sum to JD five years post-accident, which it likely would not have paid had it reviewed its own records which contained the 2015 and 2016 income tax returns.
41I find that the insurer’s unreasonable behaviour interfered with the Tribunal’s ability to carry out a fair, efficient, and effective process, that it breached its duty of good faith to JD, and that such conduct should be deterred. Accordingly, find that costs in the amount of $500.00 in favour of JD is reasonable in the circumstances.
ORDER
42JD is ordered to repay $4,788.00 to the insurer.
43The insurer may charge interest pursuant to section 52(5) of the Schedule, effective 15 days from October 21, 2020.
44The insurer shall pay JD costs in the amount of $500.00.
Released: August 22, 2023
Kate Grieves
Adjudicator