Citation: Paicente v. Allstate Insurance Company of Canada, 2024 ONLAT 22-007952/AABS

Licence Appeal Tribunal File Number: 22-007952/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:

Vincenzo Paicente

Applicant

and

Allstate Insurance Company of Canada

Respondent

DECISION

ADJUDICATOR:

Harry Adamidis

APPEARANCES:

For the Applicant:

Vincenzo Paicente, Applicant Jonathan Burton, Counsel

For the Respondent:

Jonathan Schrieder, Counsel

Court Reporter:

Micha Salazar

HEARD: by Videoconference:

January 15, 2024 and followed by written submissions

OVERVIEW

1Vincenzo Paicente, the applicant, was involved in an automobile accident on June 26, 2016, and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (including amendments effective June 1, 2016) (the “Schedule”). The applicant was denied benefits by the respondent, Allstate Insurance, and applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.

2A videoconference hearing took place on January 15, 2024. The parties advised the Tribunal that the issues in dispute were resolved, except for the repayment of the Income Replacement Benefit (IRB) and interest. On consent, the parties agreed to make written submissions on the remaining issues and also agreed to the following schedule for submissions:

Submissions	Due Date	Page Limit
Respondent’s submissions	January 26, 2024	15 pages
Applicant’s submissions	February 2, 2024	15 pages
Respondent’s reply submissions	February 6, 2024	5 pages

3I note the respondent’s reply was filed two days late on February 8, 2024.

Procedural Issues

4On January 22, 2024, the applicant filed a Notice of Motion to limit the grounds of the repayment issue.

5The Tribunal issued a Notice of Motion to be heard at a scheduled event on January 26, 2024. This notice instructed the respondent to file responding submissions by February 2, 2024, and for the applicant to file his reply by February 6, 2024. Both deadlines were met by the parties.

6On February 8, 2024, the respondent filed a sur-reply to this motion which was included in it’s late reply submissions on the substantive issues in this case.

7On February 9, 2024 the applicant filed a second Notice of Motion. The applicant asks for the respondent’s late reply submissions on the substantive issues and sur-reply to the applicant’s first motion to be struck. The applicant argues that the respondent’s reply is late and that the sur-reply on the motion is prejudicial to the applicant, and violates the principle of procedural fairness.

8On February 11, 2024, the Tribunal issued a Notice of Motion to be heard at a scheduled event for the second motion. The response from the respondent was due on February 20, 2024 and the applicants reply was due on February 23, 2024.

9The respondent submitted its response on February 12, 2024. It stated that the reply for the substantive issues was inadvertently late because counsel diarized an incorrect due date. It also asked the Tribunal to strike paragraphs 38-42 of the applicant’s response to the substantive issues as they relate to the applicant’s first motion and not the substantive issues in this case. In the respondent’s view, this constitutes an inappropriate incursion of the motion argument into the argument for the substantive issues of this case. The applicant also asks for the last four pages of the applicant’s response to be struck because he was allowed 15 pages by the Tribunal and the response is 19 pages in length.

10There was no reply from the applicant for his second motion.

11In regard to the applicant’s second motion, I am not striking the respondent’s late reply. The applicant has not identified any prejudice in allowing the reply to be accepted two days late. Moreover, the respondent has the burden of proof and would be prejudiced by excluding its reply.

12I am striking the respondent’s sur-reply submissions to the applicant’s first motion. Pursuant to Rule 15.3 of the Licence Appeal Tribunal Rules (Rules), the Tribunal provided the parties an opportunity to make response and reply submissions. If the respondent wanted to make a sur-reply then, at the very least, it must explain why it is necessary to do so. This was not done. Consequently, I am striking the respondent’s sur-reply because, pursuant to the Rules, the Tribunal did not provide an opportunity for a sur-reply and the respondent did not explain why a sur-reply should be allowed.

13I am not striking paragraphs 38-42 of the applicant’s response to the substantive issues, as requested by the respondent. In these paragraphs the applicant argues that the respondent should not be able to raise the issue of willful misrepresentation without proper notice. This argument, whether in the motion or the submissions on the substantive matter, is relevant. In my view, it is appropriate for the applicant to address relevant matters in his submissions on the substantive issues. I also note that the respondent had a meaningful opportunity to address to this argument in its response to the applicant’s first motion and in its reply on the substantive issues. As such, it is not unfair to allow these paragraphs to remain in the applicant’s response. For these reasons, I am not striking these paragraphs.

14I am not striking the last four pages of the applicant’s response, as requested by the respondent. I note that the submissions begin at page five and conclude at page 19. These submissions are 15 pages in length, as ordered by the Tribunal.

Applicant’s First Motion

15On January 22, 2024, the applicant filed a Notice of Motion requesting the following relief:

• Leave to bring this Motion in advance of the Written Hearing in this matter.
• An Order that the parties are not to file their respective written hearing submissions until the Adjudicator rules on this Motion;
• An Order that the Written Hearing proceed only on the remaining issue at the Tribunal, as stated in paragraph 13 of Schedule A (Applicant's submissions);
• An Order that the parties' written submissions and supporting documents in the written hearing are limited to the sole issue before the Tribunal, and therefore exclude the documentation listed in paragraph 27 of Schedule A;
• An Order excluding all documents exchanged by the parties outside of the deadline of September 5, 2023, imposed by the CCRO of Adjudicator Tyler Moore released June 12, 2023, from consideration or use in the parties' submissions at the Written Hearing;
• Any other relief that the Tribunal deems reasonable.

16On January 26, 2024, the Tribunal issued a “Notice of Motion to be heard at a scheduled event” advising that the applicant’s motion would be heard by way of written submissions at this hearing pursuant to Rule 15.2 of the Licence Appeal Tribunal Rules, 2023 (Rules). This notice addresses the first two items of relief in the applicant’s motion.

17The applicant asks for an order limiting the remaining issue pursuant to the wording in paragraph 13 of Schedule A of his submissions. Paragraph 13 states:

The issue is: whether the Applicant (sic) is entitled to a repayment of $101,571.44 plus interest, relating to its payment of an IRBs Section 52 of the SABS which represents the alleged overpaid amount of IRBs paid during the time period of July 4, 2016 to June 15, 2018 due to the Respondent’s (sic) receipt of Short Term Disability/Long Term Disability Benefit or due to receipt of income received post-accident either through Toronto Life Financial or through any other employment ventures.

18According to the applicant, previous correspondence from the respondent does not indicate that it is seeking repayment on any ground other than what is stated above from paragraph 13 of Schedule A of his submissions. In particular, the issue of the applicant misrepresenting his injuries and functionality was not raised before the hearing.

19The applicant submits that allowing the respondent to seek repayment on the ground of willful misrepresentation of his injuries and functionality is procedurally unfair and amounts to “trial by ambush.” Moreover, the applicant asserts that he has not had an opportunity to call witnesses to address this issue.

20The applicant further submits that allowing the respondent to argue that the applicant engaged in the willful misrepresentation of his injuries and functionality is contrary to Section 8 of the Statutory Powers Procedure Act (“SPPA”).

21The respondent submits that its Case Conference Summary, dated November 20, 2019, states that it is seeking repayment on the ground of willful misrepresentation. In a later Case Conference Summary, dated October 19, 2020, it again raised the issue of willful misrepresentation.

22The respondent also submits that the law always applies regardless of whether a specific allegation was previously made.

23Additionally, the respondent argues that its evidence of the applicant’s functional abilities was provided to the applicant in a timely fashion. As such, the applicant cannot reasonably claim to be surprised by the allegation that he willfully misrepresented his functional abilities.

24I find that it is procedurally fair for the issue of willful misrepresentation to be argued by the respondent.

25The applicant’s main point is that the respondent limited the willful misrepresentation issue to the applicant’s undeclared long term disability benefits. Then, on the day of the hearing, the respondent surprised the applicant by indicating it was also seeking repayment on the ground that the applicant had misrepresented his functional abilities. This position is not supported by the respondent’s Explanation of Benefits form dated March 31, 2020. This form requested a repayment of benefits and describes the willful misrepresentation issue as follows:

Specifically, but not limited to, Part 9 of your signed Application for Accident Benefits (OCF-1) in which you state that you do not have any other benefit plan that covers you, including private disability benefits. At Part 12 of that document, you certified, among other things, that the information contained in the application was true and correct and that you understood that it was an offence under the Insurance Act to knowingly make a false or misleading statement or representation to an insurer under a contract of insurance. (emphasis added)

26I agree that the phrase “but not limited to” shows that the respondent advised the applicant in writing that the willful misrepresentation issue was not limited to the ground of undeclared private disability benefits.

27At the Case Conference, the applicant requested surveillance evidence and the Tribunal ordered the respondent to provide this evidence to the applicant. This shows that the applicant turned his mind to the possibility that there may be evidence related to his functional abilities.

28There is no indication that he did not receive the surveillance evidence in a timely fashion in accordance with the Case Conference Order. I also note that many of the insurers Insurer’s Examination reports conclude that the applicant did not meet the IRB test while he was receiving the IRB. As such, the applicant was aware of evidence that spoke to his functional abilities and had an opportunity, before the hearing, to obtain and disclose responding evidence.

29At the hearing, the respondent stated that willful misrepresentation included the ground that the applicant misrepresented his functional abilities. The applicant had the opportunity to testify to address this allegation. Instead, he chose to not testify and agreed to make his submissions in writing.

30As such, the respondent never restricted the willful misrepresentation issue to one ground of undeclared long term disability benefits. Moreover, the applicant had a reasonable opportunity to consider and respond to the respondent’s evidence on his functional abilities before and during the hearing. In light of these factors, I find it is procedurally fair for the ground of the applicant willfully misrepresenting his functional abilities to be argued at this hearing.

31The applicant relies on s. 8 of the SPPA which states:

8. Where the good character, propriety of conduct or competence of a party is an issue in a proceeding, the party is entitled to be furnished prior to the hearing with reasonable information of any allegations with respect thereto.

32The statute does not state that a party must receive written notice of allegations. Instead, the statute requires a party be furnished with “reasonable information” of allegations. The term “reasonable information” is broad and includes, in my view, any information that gives rise to an allegation of improper conduct. Based on the factors listed in paragraph 18 above, I find that the applicant was furnished with reasonable information that the issue of willful misrepresentation included the ground of the applicant misrepresenting his functional abilities and that proceeding on this basis does not violate s. 8 of the SPPA.

33The remaining relief of this motion is based on excluding the ground of the applicant misrepresenting his functional abilities. As I have found that it is procedurally fair to allow this ground to be argued, the remainder of the motion is dismissed.

ISSUES

34The issue in dispute is:

i. Is the respondent entitled to a repayment of $101,571.44, plus interest, relating to its payment of an Income Replacement benefits (IRB) for the period of July 4, 2016 to June 15, 2018?

RESULT

35The respondent is entitled to a repayment of $27,000.00 plus interest.

ANALYSIS

36Under 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.

37In 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.

38Sections 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.

39The burden of establishing that an insured person is liable for a repayment rests with the insurer.

Did the applicant willfully misrepresent his functional abilities?

40I find, on a balance of probabilities, that the IRB was not paid to the applicant as a result of the willful misrepresentation of his functional abilities.

41The respondent submits that the applicant continued to work while receiving an IRB. It submits that this position is supported by the Insurer’s Examinations (IEs) which show the applicant was able to work, the fact that his businesses continued to operate after the accident, and surveillance evidence which shows the applicant attending his workplace. According to the respondent, this evidence establishes that the applicant wilfully misrepresented his functional abilities and that he was never entitled to an IRB.

42The applicant submits at least one IE, the IE of Dr. Moshiri, psychologist, concluded that the applicant met the IRB test, the applicant’s tax returns do not show that he was earning income while he received an IRB, and the surveillance evidence does not show him working.

43The respondent put into evidence various medical reports which opine that the applicant does not have any physical or neurological impediments that prevent him from working and that he is not entitled to an IRB.

44However, the respondent also provided the IE of Dr. Shahriar Moshiri, psychologist, dated August 9, 2017, who diagnosed the applicant with an insomnia disorder, persistent with other sleep disorders, and with an adjustment disorder with mixed anxiety and depressed mood. Dr. Moshiri concluded, from a psychological standpoint, that the applicant suffers a substantial inability to perform the essential tasks of his employment as a result of the accident.

45The respondent cites a report dated December 21, 2017 by Dr. Jean A. Saint-Cyr, psychologist. According to the respondent, Dr. Saint-Cyr examined the applicant and concluded that the applicant acted in a “very histrionic fashion and failed all tests of effort and malingering.” A poorly rendered version of this report is in evidence. The entire document is difficult to read and parts of it are illegible. As such, I give no weight to this report because it cannot be properly read or understood.

46The respondent also references the report dated December 22, 2017 of Dr. R.B. Hines, psychiatrist, who concluded that the applicant is not disabled from work. Dr. Hines also reviewed the surveillance report by Northwood and Associates which showed the applicant at the gym, driving, attending at his office and other social events. Dr. Hines concluded that the applicant was not honest about his functioning and exaggerated his presentation.

47The IE of Dr. Moshiri determined that the applicant’s psychological limitations met the IRB test. The respondent is silent on the weight to be given to this medical report. As such, I find that this IE undermines the respondent’s assertion that the applicant was able to perform the essential tasks of his work while he received an IRB.

48The IE of Dr. Hines diagnosed the applicant with major depressive disorder. The report states that this condition is mild and should resolve by increasing the applicant’s dosage of the anti-depressant Cymbalta. Dr. Hines did not change this diagnosis after reviewing the surveillance evidence and opined that the applicant exaggerated his presentation.

49In a letter dated May 29, 2018, the respondent advised the applicant that it reviewed recent IEs, including the assessment of Dr. Chadda, psychiatrist, dated April 27, 2018, and determined that he was no longer entitled to an IRB.

50In my view, the evidence shows that the applicant’s psychological impairment was an ongoing disorder that initially disabled him from working but improved over time. The evidence of the applicant’s psychological impairment does not show, as alleged by the respondent, that the applicant was continuously able to work while he received an IRB.

51The applicant owned two businesses at the time of the accident. One was a restaurant named Ciao Pizza. The other is Toronto Life Financial Group which is an insurance brokerage company. According to the respondent, the applicant was the sole shareholder of both companies from the time of the accident until the IRB was cancelled in 2018. According to the respondent, both businesses continued to operate after the accident and the applicant signed tax forms as the director of both companies while he received an IRB.

52During an examination under oath (EUO) that took place on September 18, 2018, the applicant explained that the insurance brokerage continues to operate because his son and two daughters perform the administrative work. He also testified that the restaurant is only open in the summer and that this business was operated by his children, even before the accident. I find that this testimony provides a reasonable explanation for how these businesses were able to continue operating after the accident without the applicant.

53The applicant signed tax forms for both businesses between 2016 and 2018. The respondent submits that this is further evidence that the applicant was working while receiving an IRB.

54The main duties of the applicant’s insurance work, as described at the EUO, was calling clients, setting up appointments, and going to appointments with clients. There is no evidence of the applicant engaging in these activities after the accident. Consequently, I find that the mere act of signing tax forms for two businesses is not persuasive evidence that the applicant continued working after the accident because this is a straightforward, administrative task, and because there is no evidence that he engaged in the core duties of an insurance broker.

55The respondent provided a surveillance report by Northwood & Associates dated October 18, 2017. This is the only surveillance evidence from the period when the applicant received an IRB. The applicant was observed for four days between October 4 and 7, 2017. According to the respondent, the report documents the applicant driving to the building where his business office is located. He is seen using the treadmill in the building’s gym and going into his office. The applicant was also seen going to two different residential addresses, Columbus Roofing Aluminum, and Fontana Primavera Event Centre. He went to lunches with his son and others. He also ran errands at BMW Sales, Best Buy, Chrysler Dealership, and Shoppers Drug Mart. The respondent also notes that the applicant was driving himself. The respondent submits this behaviour shows that the applicant continued working after the accident.

56I disagree. Contrary to the respondent’s submissions, the report does not say that the applicant was seen entering or leaving his office. The report does not state that the applicant was seen working. Instead, the surveillance report documents that the applicant attended the building where the office of his business is located and being observed using the gym. There are also times when he may have been in the office building, but investigators did not know where he was or what he was doing.

57It is possible that the applicant was working when he was in his office building, but out of view of investigators. However, this is speculation. Therefore, I give the surveillance evidence little weight because it is not helpful in establishing that the applicant was working in his office while receiving an IRB.

58As pointed out by the applicant, his tax returns show that he received no employment income in 2017 and 2018 when he was receiving an IRB. His total income from line 150 of his 2015 T1 Income Tax and Benefit Return is $179,560.00. His income from line 150 of his 2016 T1, which is from the year of the accident, is $99,887.98. This decrease in earnings is consistent with the applicant’s submission that he stopped working after the accident.

59I have reviewed the IEs, the fact that the applicant’s businesses continued to operate after the accident, and the surveillance evidence. For the reasons noted above, this evidence does not persuade me that the applicant continued to work while he received an IRB. I give more weight to the applicant’s income tax records which are consistent with his account of not being able to work after accident. For these reasons, I find that the IRB was not paid to the applicant as a result of the willful misrepresentation of his functional abilities.

Did the applicant willfully misrepresent his entitlement to Canada Pension Plan (CPP) disability and collateral disability benefits?

60In a letter dated December 20, 2017, Service Canada advised the applicant that he had been approved for the CPP Disability Benefit. The letter indicates that the approval was retroactive to the last three months in 2016.

61A log note dated April 10, 2018 indicates the respondent received the applicant’s CPP Disability approval letter. This was four months after the applicant learned of the approval.

62The applicant advised the respondent of the CPP Disability Benefit approval on his own initiative. I also note that the respondent makes no submissions on the applicant misrepresenting the fact that he had been approved for CPP Disability. For these reasons, I find that the applicant did not receive any IRB as a result of willfully misrepresenting receipt of the CPP Disability Benefit.

63On Part 9 of his Application for Accident Benefits form (OCF-1), dated August 11, 2016, the applicant indicated that he does not have any other benefit plan. Two years later at the EUO, the applicant revealed for the first time that he had received a disability benefit.

64The applicant submits that no willful misrepresentation occurred. In particular, the wrong box was checked on the OCF-1 and the applicant should not be penalized for making an unintentional mistake.

65I do not accept the applicant’s explanation. He not only checked the incorrect box but also failed to inform the respondent of the $43,400.00 in disability income that he received from RBC insurance while also receiving an IRB. In my view, this falls within the parameters of “silence or a failure to report” and constitutes wilful misrepresentation.

Notice Requirement and Quantum of Repayment

66Under s. 52(2)(a) of the Schedule, the respondent must provide notice to the applicant of the amount of the IRB to be repaid to the respondent.

67Under s. 52(3) of the Schedule, if notice under subsection (2) is not given by the respondent within 12 months after the payment of the amount that is to be repaid, the applicant ceases to be liable to repay the amount unless the IRB was paid to the applicant as a result of wilful misrepresentation or fraud.

68The respondent submits that its letter to the applicant dated September 27, 2018 is a notice of repayment. I disagree. The letter requests repayment of “overpaid amounts” but does not state the actual amount that is to be repaid. As such, this letter does not comply with s. 52(2)(a) of the Schedule because the letter does not state the repayment amount.

69On March 31, 2020, the respondent faxed an Explanation of Benefits Statement to the applicant. This correspondence provided notice to the applicant that the respondent was seeking a repayment of the entire IRB paid in the amount of $101,571.44. I find that this notice meets the requirements of s. 52(2)(a) because the notice advises the applicant of the amount of the repayment.

70The applicant received an IRB from July 4, 2016 to June 15, 2018. The notice of repayment was issued more than 12 months after the applicant stopped receiving an IRB. Consequently, the respondent is only entitled to a repayment where the applicant received an IRB as a result of willful misrepresentation.

71Having found that the applicant did not willfully misrepresent receipt of the CPP disability benefit, I further find that the respondent is not entitled to a repayment based on the applicant’s receipt of CPP disability.

72The applicant received $43,400.00 in disability income from RBC Insurance between July 26, 2016 and January 31, 2017. During this 27 week period, the applicant received an IRB of $1,000 per week. This works out to $27,000.00 in total.

73Section 7(1) of the Schedule states that all other income replacement assistance is subtracted from the particular week the IRB is payable. As such, the respondent would not have paid $27,000.00 of the IRB between July 26, 2016 and January 31, 2017 if not for the applicant’s willful misrepresentation of receipt of disability income from RBC Insurance. As such, I find that the respondent is entitled to a $27,000 repayment of the IRB based on the applicant’s willful misrepresentation.

74The respondent submits that it is entitled to a repayment of the entire IRB. It bases this position on the CPP Disability and RBC Insurance payments received by the applicant while he also received the IRB. In its view, the income continuation benefits received by the applicant would reduce the applicant’s IRB entitlement to nil. The respondent provides no calculations to show how it would be possible to reach such a conclusion. Consequently, there is no substantive basis for me to agree with its position.

75The applicant submits that the RBC Insurance policy was not an income replacement policy and therefore is not deductible from the IRB. He bases this on the titles “Individual Business Protection” and “Preferred Business Overhead Expense Policy” on policy documents. The applicant has not provided the policy documents, and as such, there is no evidence to support his position. Instead, I rely on a letter from RBC Insurance dated March 6, 2023 which states that the applicant was paid a $43,400.00 as a “Disability Income Benefit.” In my view, this evidence establishes, on a balance of probabilities, that the applicant received an income benefit from RBC Insurance while also receiving an IRB from the respondent.

Interest

76Under s. 52(5) of the Schedule, the insurer may charge interest on the outstanding balance 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.

77The respondent submits that it is entitled to bank rate interest from October 12, 2018, which is 15 days after the notice was given on September 27, 2018, which was 3.7%.

78The applicant submits that the bank rate on October 12, 2018 was not 3.7%, but instead was 1.75%. The applicant also submits that the respondent’s first notice of its intention to claim interest on the requested repayment was in a letter dated May 29, 2018. The bank rate on the 15th day after, June 13, 2018, was 1.5%.

79As noted in paragraph 58 above, the respondent’s letter dated September 27, 2018 does not meet the notice requirements of s. 52(2).

80The respondent’s letter dated May 29, 2018 also does not meet the requirements of s. 52(2). This letter makes a claim for recovery of “any overpayment” but does not ask for a repayment for a specific amount as required by s. 52(2) of the Schedule.

81I have found that the respondent is entitled to a repayment of $27,000.00. I have also found that the respondent’s correspondence dated March 31, 2020 is a proper notice of repayment under s. 52(2). Consequently, I further find that the respondent is also entitled to bank rate interest from April 15, 2020, which is 15 days after the notice.

ORDER

82The respondent is entitled to a repayment of $27,000.00.

83The respondent is entitled to bank rate interest from April 15, 2020 until the day the day repayment is received in full.

Released: May 15, 2024

__________________________

Harry Adamidis

Adjudicator