Citation: Aviva Insurance Canada v. Harkness, 2024 ONLAT 21-009644/AABS

Licence Appeal Tribunal File Number: 21-009644/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:

Aviva Insurance Canada

Applicant

and

Stephanie Harkness

Respondent

DECISION

ADJUDICATOR:

Harry Adamidis

APPEARANCES:

For the Applicant:

Jeffrey Pasternak, Counsel

For the Respondent:

Maziar Mortezaei, Counsel

HEARD:

By written submissions

OVERVIEW

1Stephanie Harkness, the respondent, was involved in an automobile accident on February 28, 2019 and was paid an income replacement benefit (“IRB”) by Aviva Insurance Canada, the applicant, pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (including amendments effective June 1, 2016) (the “Schedule”).

2The applicant paid IRBs at $400 per week from April 6, 2019 to September 23, 2020. IRBs were suspended on September 24, 2020 on the ground that the applicant did not provide particulars on long-term disability (LTD) payments.

3The applicant applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of a repayment dispute.

ISSUES

4The issues in dispute are:

i. Is the applicant entitled to a repayment of $19,068.20 relating to its payment of an Income Replacement Benefit for the period of April 6, 2019 to September 23, 2020?

ii. Is the applicant entitled to interest on any repayment of benefits?

RESULT

5The applicant is entitled to a repayment of $19,068.20.

6The applicant is not entitled to interest.

ANALYSIS

7Under s. 52(1)(a) of the Schedule, an insured person is liable to repay any benefit that is paid 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.

8In Unifund Assurance Co. v M.D.C., 2020 CanLII 94799 (ON LAT), the Tribunal defined wilful misrepresentation as “any manifestation by words or other conduct by one person to another that, under the circumstances, amounts to an assertion not in accordance with the facts.” Further, the Tribunal has held that “silence or a failure to report” can constitute wilful misrepresentation.

9Sections 52(2) and (3) of the Schedule provide timelines and notice requirements for the insurer’s repayment requests if a person is liable to repay a benefit.

10The burden of establishing that an insured person is liable for a repayment rests with the insurer.

11The applicant began paying an IRB to the respondent at $400 per week from April 6, 2019.

12In a letter dated January 30, 2020 from Canada Life, the applicant was advised that she would begin receiving a gross monthly LTD payment of $3,621.00 retroactive to August 27, 2019.

13On or about May 11, 2021, counsel for the respondent advised the applicant that the respondent was in receipt of LTD payments.

14In a letter dated May 19, 2021, the applicant requested a repayment of $20,056.90 based on this amount having been “paid in error and/or by wilful misrepresentation.”

15According to the respondent, the applicant has failed to establish the misrepresentation of a material fact. She cites 18-001028 v Aviva Insurance Canada, 2019 CanLII 34612 (ON LAT) to show that there must be “clear and consistent evidence of an ‘intentional failure’ to notify” on behalf of the respondent. The applicant has no evidence showing that the respondent intended to conceal or misrepresent any information to the insurer. The respondent submits that she cannot be found to have engaged in wilful misrepresentation.

16The applicant submits that the case cited by the respondent involves a different scenario and a different legal test, and therefore, is not applicable.

17I agree with the applicant. The insured person in 18-001028 v Aviva was seeking accident benefits for an accident in a vehicle he did not own and for which he did not have an insurance contract. The insurer argued that it would have never permitted the person to have insurance coverage if he had disclosed certain facts about himself. As such, the insurer argued that he was excluded from receiving any coverage based on a material misrepresentation pursuant to paragraph 31(1)(b) of the Schedule. The Tribunal found there was no “clear and consistent evidence of an ‘intentional failure’ to notify” as the person did not obtain the insurance contract. Consequently, there was no material misrepresentation.

18The issue in 18-001028 v Aviva involved material misrepresentation under s. 31(1) of the Schedule. The person in that case was never required to disclose certain facts about himself. This case is different. The respondent was required to disclose the fact that that she was receiving LTD benefits to the applicant.

19On the face of it, the facts of this case establish wilful misrepresentation. The respondent received LTD payments for about a year and three months before advising the applicant. The respondent has made no effort to explain why it took so long to advise the applicant of her LTD benefits. In my view, this “silence or a failure to report” constitutes wilful misrepresentation.

Notice of repayment and quantum of repayment

20Under s. 52(2)(a) of the Schedule, the applicant must provide notice to the respondent of the amount of the IRB to be repaid to the applicant.

21Under s. 52(3) of the Schedule, if notice under subsection (2) is not given by the applicant within 12 months after the payment of the amount that is to be repaid, the respondent ceases to be liable to repay the amount unless the IRB was paid to the respondent as a result of wilful misrepresentation or fraud.

22The applicant’s letter dated May 19, 2021 requests a repayment of $20,056.90. I find that this correspondence meets the requirements of s. 52(2)(a) because this notice advises the applicant of the amount of the repayment.

23Having found that the respondent willfully misrepresented the receipt of LTD payments, I further find that the temporal restrictions in s. 52(3) do not apply to the repayment of the IRB.

24Section 7(1) of the Schedule states that all other income replacement assistance is subtracted from the particular week the IRB is payable. The amount of the monthly LTD payment is greater than the total amount of the weekly IRB payments received by the respondent during the same period of time. Accordingly, the respondent’s entitlement to an IRB is reduced to nil while she received LTD payments. Consequently, the entire IRB paid while she received LTD payments is subject to repayment.

25The applicant suspended IRB payments as of September 26, 2020. In the 56 week and 5 day period between the respondent receiving LTD benefits and the suspension of the IRB, the respondent received $22,685.70 in IRB payments. These are calculated as follows:

56 weeks x $400.00/week = $22,400.00

$400.00/week divided by 7 days = $57.14/day

$57.14/day x 5 days = $285.70

$22,400.00 (56 weeks IRB) + $285.70 (5 days IRB) = $22,685.70

26In a letter dated October 6, 2022, the applicant advises the respondent that it has been making a 20% deduction from her IRB and the remaining amount owed is $19,068.20. The applicant is seeking a repayment of this amount.

27The respondent argues that if the applicant proves wilful misrepresentation, then the amount owing should be the IRB payments that were received between February 6, 2020, the date she learned her LTD benefit was approved, and September 26, 2020. According to her, this is a 33 week period which would result in a repayment of $13,200.00, less amounts already paid.

28I disagree. Section 52 (1)(a) permits the repayment of “any benefit” paid as a result of an error or wilful misrepresentation. Thus, the IRB paid between August 2019 and February 2020 is also subject to repayment as it was paid in error.

29For all these reasons, I find that the applicant is entitled to a repayment of $19,068.20.

Interest

30Under s. 52(5) of the Schedule, the insurer may charge interest on the outstanding balance of the repayment from the 15th day after a notice under s. 52(2) is given until the day repayment is received in full. Interest is calculated at the bank rate in effect on the 15th day after the notice is given.

31Neither the applicant nor the respondent make submissions on interest.

32The applicant has put into evidence numerous letters requesting the repayment of the IRB. None of those letters ask the respondent to pay interest.

33The applicant’s IRB repayment notices do not indicate that it is charging interest on the outstanding balance and the applicant made no submissions on this point. As such, there is no basis to justify its entitlement to interest. For these reasons, I find that the applicant is not entitled to interest on the repayment.

ORDER

34The applicant is entitled to a repayment of $19,068.20.

35The applicant is not entitled to interest.