Co-Operators General Insurance Company v. Branden, 2022 ONSC 2473

Facts of the Case 

Patricia Branden (“Patricia”) was in a car accident in 2017. As a result of her injuries, she began receiving income replacement benefits from her insurer, Co-Operators General Insurance Company (“Co-Operators”). She also sought long-term disability (LTD) benefits from a workplace insurance plan covered by Empire Life Insurance Company (“Empire”). 

Empire initially rejected her application for LTD benefits, causing Patricia to file an action against them claiming both benefits and damages. This action was settled in 2018. Patricia signed a release that granted her a lump sum payment of $120,000 for suspending her claim.  

Co-Operators reviewed Empire’s settlement release document and perceived their lump sum payment to be a duplication of the Co-Operator’s income replacement benefit. Therefore, they recalculated the income replacement benefit amount they had been paying to Patricia from $400.00 per week to $224.49 per week. This was later recalculated again to $209.00 per week.  

In July of 2019, Patricia filed a claim with the Licence Appeal Tribunal (the “Tribunal”) contesting the Co-Operator’s recalculation. The Tribunal found for Patricia, agreeing that she was entitled to the full $400 per week for the period in question because the settlement with Empire did not count as compensation for lost income and was, instead, a compromise for all past and present claims under their policy (not limited to LTD claims alone). Therefore, it was not an instance of income replacement duplication.  

Co-Operators asked for this finding to be reconsidered at a new hearing, claiming an error in law had been made that they believed was material to the outcome of the proceeding. A reconsideration hearing was held, and the presiding adjudicator upheld the original determination, finding no error in law had occurred.  

Still not satisfied with the determination, Co-Operators launched an appeal to the reconsideration decision claiming an error in law. They challenged the interpretation of a section of the Statutory Accident Benefits Schedule (SABS) that addresses how income replacement benefits are to be calculated.  

Co-Operators argued that the settlement provided to Patricia by Empire fell under the definition of “other income replacement benefits.” Therefore, they argued, it should be considered a “double recovery,” and deductible from the benefits they had paid.  

Issues in the Case 

At issue in this case is whether there was an error in law when the adjudicator at a previous hearing determined that the $120,000 lump-sum settlement provided to Patricia by Empire was not to be considered “other income replacement benefits,” as per the SABS. If the settlement was not considered to be “other income replacement benefits,”  it would be ineligible for deductions from the Co-Operators benefit payment calculation. However, in Co-Operator’s estimation, this designation allowed for a double recovery of benefits, or what some would refer to as “double-dipping.”  

Decision 

The adjudicator found no error of law had occurred in the reconsideration hearing and dismissed the appeal.  

Co-Operators were also found responsible for costs of $15,000 payable to Patricia, as the successful party.  

Reasons 

Section 7(1) of the Statutory Accident Benefits Schedule (SABS) addresses how the income replacement benefit is to be calculated. It states that an insured party is entitled to the lesser of “A” and “B” where “A” is the weekly base amount less the total of all other income replacement assistance, and “B” is $400 (unless an additional optional income replacement benefit has been purchased).   

At the heart of the initial debate was the term “other income replacement assistance,” which is defined in the SABS as “the amount of any gross weekly payment for loss of income that is received by or available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan,” [9]. 

Co-Operators regarded Empire’s settlement payment as “other income replacement assistance.” As evidence, they referred to a calculation sheet provided by Empire that allowed for a maximum of $5,000 per month to cover earnings for up to two years, which totaled $120,000 – the same amount granted to Patricia. They felt this calculation sheet was evidence that the full settlement amount was attributable to income replacement.  

However, the letter Empire had enclosed along with the calculation sheet did not include any details that could confirm that the settlement amount was limited to income replacement benefits. Therefore, the adjudicator did not rely upon it when making their determination. Instead, they relied upon the original Statement of Claim which stated that, in their settlement, Empire was providing damages beyond the LTD benefits plus legal costs. As such, the settlement was not singularly attributable to income replacement.  

In making their argument, Co-Operators referred to a series of previous cases where benefit deductions as a result of additional outside benefit payments were allowed. They argued that these previous cases demonstrated why payments to insurers that were not strictly defined as income replacement should still be allowed for benefit recalculations to avoid what they consider “double recovery.”   

However, the adjudicator found that the cases cited were not relevant to this case since they dealt with different circumstances. Furthermore, the adjudicator found that, in these cases, “the court could identify a specific sum to be paid on account of lost income. In each case that sum was deductible from the tort damages because it falls within a ‘silo’ of either lost income or health care costs,” [28].  

In other words, it was clear in those cases to which category each payment was attributable. This was not the case in this appeal. Since the lump sum payment in this case could not be broken down into categories to “satisfy the requirements of the schedule,” [36] it should not be treated as income replacement.  

The focus of this appeal case was whether the adjudicator at the reconsideration hearing had made an error in law. Ultimately, the adjudicator found there was no error or law in the initial decision, nor in the reconsideration decision. The appeal was dismissed. Co-Operators was also found liable for costs of $15,000, payable to Patricia as the successful party.  

Source consulted: Co-Operators General Insurance Company v. Branden, 2022 ONSC 2473