Citation: Geico Insurance Company v. Park, 2025 ONLAT 23-014522/AABS

Licence Appeal Tribunal File Number: 23-014522/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:

Geico Insurance Company

Applicant

and

Chung Jin Park

Respondent

DECISION

ADJUDICATOR: Harry Adamidis

APPEARANCES:

For the Applicant: Michael Blinick, Counsel

For the Respondent: Chung Jin Park

Interpreter: Samuel Park (Korean)

HEARD: by Videoconference: February 24, 2025

OVERVIEW

1Chung Jin Park, the respondent, was involved in an automobile accident on September 5, 2020 and was paid an income replacement benefit (“IRB”) by Geico Insurance Company, the applicant, pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (including amendments effective June 1, 2016) (the “Schedule”).

2The applicant applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of a repayment dispute.

ISSUES

3The issues in dispute are:

i. Is the applicant entitled to a repayment of $43,906.38 relating to its payment of the IRB from September 5, 2020 to November 16, 2022?

ii. Is the applicant entitled to interest in the event that repayment of all or an amount is ordered?

RESULT

4The applicant is entitled to repayment and interest.

ANALYSIS

5I find that the applicant is entitled to the repayment of the IRB that was paid as a result of the respondent’s wilful misrepresentation.

6Under 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.

7The respondent submitted a Disability Certificate (OCF-3), dated September 9, 2020, to the applicant which indicated that he is unable to perform the essential tasks of his employment. The OCF-3 also stated that he is able to return to work with modified duties and/or hours.

8In a letter dated September 14, 2021, Sedgwick Canada Inc. (Sedgewick), the independent insurance adjusters for Geico, asked the respondent to confirm if he had returned to work and if he has had any source of income since the accident.

9An Offer of Employment letter dated September 28,2021 from Howie, Sacks and Henry (HSH), a law firm, shows that the respondent was hired as a Client and Marketing Relations Specialist on October 1, 2021. He was paid bi-weekly and his annual salary was $102,000.00. The respondent did not disclose this information to the applicant until July 21, 2023.

10On December 6, 2021, BDO Canada Inc (BDO), an accounting firm, issued a report that concluded the respondent was entitled to a $400.00 per week income replacement benefit (IRB) based on his pre-accident income and on being unable to work since the accident.

11In a letter dated December 9, 2021, Sedgwick advised the respondent that based on the financial documentation he provided to BDO, he would be issued a payment of $25,312.00 for an IRB covering the period from September 13, 2020 to November 29, 2021 at a rate of $400.00 per week. The letter also stated that going forward, the applicant would continue to receive a bi-weekly IRB payment of $800.00, until he is no longer considered substantially disabled from his pre-accident employment or after two years have passed from the date of loss. These amounts were converted to United States dollars (USD) and then paid to the respondent as he was living in the United States at that time.

12The respondent submitted a second Disability Certificate, dated October 4, 2022, to the applicant which states that he is unable to perform the essential tasks of his employment and had not returned to work.

13Ms. Lee-Anne Klawsuc, adjuster, testified that the respondent’s IRB was terminated on November 16, 2022 and that the respondent was advised of this in the Explanation of Benefits Statement dated November 14, 2022.

14Ms. Klawsuc further testified that the respondent was examined under oath (EUO) on July 21, 2023, and he revealed for the first time that he had been employed by HSH. The respondent subsequently provided his employment contract and three Statements of Renumeration (T4). The amounts on the T4s are as follows:

2021 $25,892.33

2022 $103,961.62

2023 $105,923.16

15In a letter dated October 24, 2023, Sedgwick advised the applicant that it was seeking repayment of the entire IRB paid to the respondent, calculated at $32,362.24 in USD. The letter also asks for repayment within 10 business days, and if this was not done, then a new payment figure would be provided that included interest.

16According to the applicant, the respondent worked for HSH and earned a large enough salary that would have reduced the IRB quantum to zero. It submits that the respondent did not disclose this information while receiving an IRB, and as such, received these payments through fraud or willful misrepresentation.

17The respondent testified that he was employed by HSH but never performed any work for them because of his accident related injuries. He further testified that pre-accident, from 2009 to 2019, he directed clients to HSH but could not be paid for this work because he was not a licenced paralegal. He believes that they hired him years later as a means of paying him for this previous work that generated significant revenue for HSH. He also testified that he has been unable to work since the accident due to his accident-related injuries that this was the reason HSH terminated his employment.

18The Offer of Employment letter from HSH states that the respondent is being hired and paid a salary. The letter also discusses conditions of employment such as annual salary reviews, bonus incentives, and vacation pay. These conditions of employment are consistent with someone who is employed and working. There is no indication that he is to receive money for previously completed work. As such, the details in the Offer of Employment do not support the respondent’s explanation that he never actually worked for HSH. For this reason, I do not accept the respondent’s testimony and find that he worked for HSH during this period of employment and that he was not receiving income for previous work that was completed before he was employed.

19The respondent agrees that he was employed by HSH from October 1, 2021 until the end of 2023 and that he received the income on his 2021, 2022, and 2023 T4s from this employer. Consequently, I find that HSH paid employment income to the respondent from 2021 to 2023.

20As noted above, a letter from Sedgewick dated September 14, 2021 asking the respondent to confirm if he returned to work and if he has had any source of income since the accident. This was two weeks before his employment started at HSH. As such, the respondent received written notice that he had to report his employment income.

21On December 9, 2021, Sedgwick wrote a letter advising the respondent that the financial documentation he provided established his entitlement to the IRB.

22The respondent was asked to provide income information just prior to receiving an IRB. Despite this, he began his employment at HSH and started to receive employment income without providing this information to the applicant. As a result, he received employment income and an IRB at the same time.

23The respondent argues that he cannot be found to have engaged in willful misrepresentation because he voluntarily disclosed his employment to the applicant in 2023 at the EUO. I disagree. He did not disclose his employment with HSH during the entire time he was receiving an IRB. In my view, the only reason to not disclose his employment income would be to ensure that he would receive the IRB. Therefore, I find that not disclosing his employment income until the EUO constitutes willful misrepresentation within the meaning of 52(1)(a) of the Schedule.

24According to his offer of employment, he was paid bi-weekly during this period from an annual gross salary of $102,000.00. As such, his gross weekly income is calculated as follows:

$102,000 divided by 26 bi-weekly payments = $3,923.08

$3,923.08 divided by 2 = $1961.54 weekly gross employment income

25Section 7(3)(a) of the Schedule states that an insurer may deduct 70 percent of any gross employment income received by an insured person from IRB payments as a result of being employed after the accident. 70 percent of $1961.54 is $1,373.08. When 70 percent of his gross weekly income is subtracted from his IRB quantum of $400.00 per week, his IRB entitlement becomes zero.

26Under 52(2)(a) of the Schedule, the applicant must give the respondent notice of the amount to be repaid. I find that this requirement was satisfied by the applicant’s letter dated October 24, 2023 which advises the applicant that he is responsible to repay an IRB overpayment of $32,362.24 USD.

27Subsections 52(2) and (3) establish timelines for repayment requests if a person is liable for repayment. The insurer is required to give the person notice of the amount that is to be repaid. If notice is not given within 12 months after the payment of the amount to be repaid, the person ceases to be liable to repay that amount unless it was originally paid to the person as a result of wilful misrepresentation or fraud. Having found that the applicant engaged in wilful misrepresentation, I further find that the 12 month limitation period for seeking repayment does not apply.

28The next matter to be addressed is the quantum of repayment. The applicant submits that it is entitled to repayment of the entire IRB paid from September 13, 2020 to November 16, 2022. The applicant notes that there is no evidence of the applicant receiving income from the time of the accident until the commencement of his employment on October 1, 2021. Despite this, the applicant asks for an adverse inference be drawn because the respondent failed to comply with the Case Conference Report and Order, dated May 27, 2024, which required him to provide the accident benefits file from a July 5, 2020 accident and complete income tax returns from 2019 to the date of the case conference. The respondent also produced incomplete records for the various corporations where he worked before the September 2020 accident, which also contravenes the case conference order. According to the applicant, it is reasonable to assume that if the respondent had complied with the order, then the information would have been unfavourable and the respondent would be required to repay the entire IRB. The applicant relies on Aviva Insurance Canada v Subramaniyam, 2024 CanLII 23456 (ON LAT) (“Aviva v Subramaniyam”), where the Tribunal found that it was appropriate to make an adverse inference and order the repayment of the entire IRB based on a failure to produce records.

29In the alternative, the applicant argues that the respondent was working for HSH while receiving an IRB and that it is entitled to a repayment of the IRB from this period.

30The respondent submits that he did the best he could to provide the requested documents. In his view, he complied with the case conference order. He argues that he should not be required to make any repayment because he never worked after the accident.

31In Aviva v Subramaniyam, the insured did not produce documents related to employment or income despite being ordered to do so by the Tribunal. As well, the insured did not participate in the hearing and gave no reasons to explain the non-compliance. The Tribunal drew an adverse inference because of the complete failure to provide records detailing pre- and post-accident income and ordered a repayment of the entire IRB.

32This current case is distinguishable as the respondent produced post- accident tax documents and an employment contract. These documents are not as complete as what is required by the case conference order. However, the Tribunal cannot infer that the respondent is hiding income in the same manner as was done in Aviva v Subramaniyam because there is evidence that can be used to calculate post-accident income.

33As noted above in paragraph 25, the respondent’s income from HSH results in a zero dollar entitlement to the IRB. As such, he is required to repay the IRB he received from October 1, 2021 to November 16, 2022. This is calculated as follows:

Oct. 1, 2021 to Nov. 16, 2022 = 58 weeks and 5 days

$400.00 per week IRB divided by 7 days = $57.14 per day IRB

$400.00 per week x 58 weeks = $23,000.00

$57.17 per day x 5 days = $285.70

Total IRB Repayment $23,285.70

34I find that the respondent is liable to repay $23,285.70.

Interest

35Subsections 52(5) and (6) of the Schedule allow the applicant to charge interest on the outstanding balance of the amount to be repaid from the 15th day after the notice of repayment is given until the day repayment is received in full. The interest rate is the minimum rate at which the Bank of Canada makes short term advances to the banks listed in Schedule I of the Bank Act.

36The applicant’s notice to repay the IRB, dated October 24, 2023, indicates that it is charging interest.

37In light of the fact that the applicant advised the respondent that it was seeking interest in the notice to repay the IRB, I find that the respondent must pay the “bank rate” interest from 15 days after the repayment request was made on October 24, 2023, pursuant to the Schedule.

ORDER

38The respondent is liable to repay the IRB in the amount of $23,285.70.

39The respondent must also pay “bank rate” interest from 15 days after the repayment request was made on October 24, 2023.