The interpretation of the provisions of the various statutory accident benefit schemes continues to evolve. In this issue of the accident benefit reporter, we examine two recent decisions, one from the Ontario Court of Appeal and the other from the Office of the Director of Arbitrations – FSCO.
HENRY V. GORE MUTUAL INSURANCE CO.
On July 16, 2013, the Ontario Court of Appeal released its reasons for judgment inHenry v. Gore Mutual Insurance Company  O.J. #3792, upholding a lower court ruling that “economic loss was a threshold for entitlement to, but not a measure of, reasonable and necessary attendant care benefits“.
Justice Hoy, writing for the majority, stated the issue as follows”
“The issue is whether an expense was incurred by the respondent, with respect to the attendant care services provided by his mother outside of her normal hours of work.” (para 5)
Gore’s argument here and in the court below was that an insurer was only required to pay attendant care equivalent to the economic loss sustained by the person providing that care. In this case the injured plaintiff’s mother provided the attendant care, and Gore argued that the attendant care benefit was limited to the economic loss sustained by the mother (i.e. her loss of wages), who left a full-time employed position to provide full-time attendant care for her son.
The court ruled that the issue turned on the interpretation of the word “incurred” as defined in section 3(7)(e) of SABS – 2010. The court relied on the well-known rules of insurance contract interpretation which provide that “insurance coverage provisions are to be interpreted broadly, while coverage exclusions or restrictions are to be construed narrowly in favour of the insured” (para 21).
The court agreed with the conclusion of the judge below that since economic loss is not defined in SABS – 2010 and if the amount of the economic loss sustained by the caregiver was to be a relevant consideration then the regulation should have provided a mechanism to measure that amount. Since the legislation does not, no such calculation is relevant beyond a finding that the person has sustained an economic loss.
The amount of the attendant care is determined in accordance with a Form 1 completed by an occupational therapist or nurse under SABS – 2010. It is still open for the insurer to question the reasonableness and necessity of such care and to require verification that a family member has sustained an economic loss.
In arguing its position Gore identified some concerns of the IBC, that attendant care benefits were being provided where they were not needed, that benefits are sometimes paid when no care has been provided by a family member and that the Form 1 was sometimes prepared by those without the expertise to do so.
Justice Hoy observed at paragraph 35:
“In my view, the requirement adopted (that the family caregiver has sustained economic loss) provides a rough check on attendant care costs.”
Although the phrase economic loss remains undefined in the schedule, the law is now clear that family members are entitled to an attendant care benefit if they are indeed providing care in accordance with a Form 1 and have suffered an economic loss as a result of doing so.
As a footnote, a FSCO decision of Arbitrator Lee, that predated the court of appeal’s decision in Henry, in Simser and Canada Inc., held that economic loss was a financial or monetary loss but that a single out of pocket expense such as a gasoline expense, or a restaurant meal would not satisfy the requirement of “economic loss”. This suggests that the financial or monetary loss of the family member must be more meaningful than a single out of pocket cost.
ECONOMICAL MUTUAL AND LEROY PRIES
In the matter of Economical Mutual Insurance Company and Leroy Pries, Appeal P.12-00036, the meaning of the word “payment” in section 47(3) of the SABS – 1996 was reconsidered by Director’s Delegate Evans, whose reasons for decision were released on or about July 8, 2013.
Pries was involved in a motor vehicle accident on September 3, 2007. He applied for and received an IRB from Economical and when this benefit was suspended, he applied for CPP disability benefits.
This case concerned a retroactive lump sum payment of past CPP disability pension benefits for the period between November 2, 2008 and May 2, 2010. The application of Mr. Pries for CPP disability benefits was accepted in March of 2010. Economical gave notice of its repayment request to Mr. Pries on April 27, 2010.
In this decision Delegate Evans held that Economical was entitled to a re-payment of the IRB benefit to the extent of CPP benefits received for the 12 month period preceding April 27, 2010, the date of its notice to the insured requesting repayment. In the decision appealed from Arbitrator Wilson held that Mr. Pries didnot have to repay the IRB benefit received to the extent that those payments should have been reduced to reflect CPP disability benefits.
Section 47(3) provides that the obligation to repay a benefit does not apply unless the notice required by sub-section 2 is given within 12 months after “the payment” was made.
The issue on appeal was whether “the payment” in section 47(3) referred to the CPP lump sum payment (the collateral benefit) or the statutory accident benefit, in this case the IRB.
In an earlier decision, Trottier and Royal Sun Alliance Insurance Company of Canada (FSCO) PO3-00019, December 15, 2003, it was held that “the payment” was a reference to the statutory accident benefit, i.e. the IRB and not the payment of the collateral benefit. Delegate Evans’ followed Trottier.
Economical argued that “the payment” referred to the collateral benefit and not the statutory accident benefit. Delegate Evans was not prepared to accept that interpretation and pointed out that the repayment is not repayment of the collateral benefit, but repayment of the IRBs to the extent that the collateral payment is deductible from the IRB.
In the result, Economical was entitled to repayment of the income replacement benefits for the 12 month period ending May 2, 2010, to the extent that those payments would have been reduced by the CPP disability payments.
Economical was able to recover approximately 12 months of overpaid benefits, rather than a full 16 months from November 2, 2008.
Arbitrator Wilson in deciding the issue below came to the conclusion that the 12 month notice had to be given within 12 months of the first payment made in error, (i.e. November 2008 when the IRB was calculated before CPP benefits were found payable). Economical’s notice was given on or about April 27, 2010, long after the 12 month notice period in 47(3) had expired.
Director delegate Evans’ reversal of arbitrator Wilson’s ruling is consistent withTrottier and provides an interpretation of the repayment provisions that is fair for the insurer and the insured.
Those persons entitled to accident benefits under SABS – 1996, should be aware of the repayment provisions contained in section 47 and should be prepared, if subsequently in receipt of collateral benefits, to have their income replacement benefit clawed back in accordance with section 47(2)(b), i.e. 20% per month. The duration and extent of the overpayment will be determined after consideration of the date when the collateral payment was made and the delivery of the notice of repayment set out in section 47(3).
The comparable section under SABS -2010 is s.52. The wording of the notice provision in s.52(3) is somewhat clearer since “the payment” is clearly linked to the amount that is to be repaid, i.e. the IRB and not the collateral payment.
View PDF version: Accident Benefit Reporter | Volume 14, Issue 2 | November 2013