May 14, 2018, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
Vandeborne and Middlesex
Decision Date: March 19,
Heard Before: Adjudicator Lynda Tanaka
HOUSEKEEPING: applicant makes case for entitlement to housekeeping expenses; Adjudicator found the standard to which the insurer held the applicant unreasonable in the situation; applicant awarded interest on overdue amounts.
Harriet Vandeborne was injured in a motor vehicle accident on August 20, 2009 and sought SABs from Middlesex payable under the Schedule, however, when the parties were unable to resolve their disputes through mediation Ms. Vandeborne applied to FSCO for arbitration.
- Is Ms. Vindeburne entitled to housekeeping benefits in the amount of $100.00 per week between October 14, 2009 and August 20, 2011, less amounts paid by Middlesex?
- Is Middlesex entitled to deduct any sum from its obligation to pay an IRB to Ms. Vandeborne as a result of the receipt by Ms. Vandeborne of a LTD lump sum payment of $177,933.91 net of tax on March 3, 2016 for the periods below:
- September 7, 2010 to October 21, 2010;
- October 22, 2010 to May 25, 2011; and
- May 26, 2011 to March 3, 2016?
- If Middlesex is entitled to a deduction, is it entitled to credit for the full amount of the LTD and CPP disability received from September 7, 2010 to March 3, 2016, without regard to the timing of the payments for each of the above periods, or for only 12 months of LTD and CPP entitlement to March 3, 2016?
- Is Middlesex entitled to a deduction to reflect the union dues that were deducted from Ms. Vandeborne ’s gross income, also for the same periods as is claimed for the collateral benefits, the LTD and CPP?
- Is Ms. Vandeborne entitled to interest on overdue payment of benefits?
- Ms. Vandeborne is entitled to housekeeping benefits in the amount of $100.00 per week between October 14, 2009 and August 20, 2011, less amounts paid by Middlesex.
- Middlesex is not entitled to deduct any sum from its obligation to pay an IRB to Ms. Vandeborne as a result of the receipt by Ms. Vandeborne of LTD benefit lump sum payment of $177,933.91, net of tax, on March 3, 2016.
- As Middlesex is not entitled to a deduction as held under Issue 2, this issue is moot.
- Middlesex is not entitled to a deduction to reflect the union dues that were deducted from Ms. Vandeborne ’s gross income, for the same period periods as is claimed for the collateral benefits, the LTD and CPP.
- Ms. Vandeborne is entitled to interest on overdue payment of benefits at 2% per month compounded monthly on all overdue amounts to date of payments and in particular, for IRBs, to June 22, 2016 (that is, $400 per week for the period May 25, 2010 to March 3, 2016) less the sum of $12,807.00 which was paid June 22, 2016 together with interest on the sum due as of June 22, 2016 at 2% per month compounded monthly from June 22, 2016 to date of payment.
EVIDENCE AND ANALYSIS:
At its core, the dispute centres on the deduction of a lump sum payment made by Ms. Vandeborne ’s long term disability provider, Desjardins Insurance, on March 3, 2016, some 5 and a half years after the application for long term disability benefits was made. There is no dispute with respect to payments after that date.
Issue 1 - Is Ms. Vandeborne entitled to housekeeping benefits in the amount of $100.00 per week between October 14, 2009 and August 20, 2011, less amounts paid by Middlesex?
Ms. Vandeborne testified that she was employed at the time of the accident as a dietician at the local hospital. According to the employer’s statement on her disability claim, she worked 37.5 hours a week at an hourly rate of $37.30. She lived alone and looked after her home, both the interior and the exterior, as well as her mother’s home two doors away.
After the accident, she struggled to keep up with her job as well as the housekeeping and caregiving, through the significant pain issues due to her injuries. She stopped looking after her mother’s house at some point which she could not remember and got help with her own house within 6 months of the accident. A friend, as well as one of her two sisters, assisted her. Her needs were assessed by an Occupational Therapist in the fall of 2009, two months after the accident and Middlesex approved up to $100 per week for housekeeping and home maintenance.
The Schedule requires that Ms. Vandeborne pay for the services received and then seek reimbursement from Middlesex. Ms. Vandeborne testified that she was unable to pay the $100.00 per week for services because of other bills and her struggle to keep on working. She was unsure how long she would be able to keep working with her difficulties in concentration, memory and pain. She struggled to complete tasks and left work early from time to time as a result. She stopped working in early February 2010 and did not return until an unsuccessful attempt in 2013 to go back part-time. Her employer provided her with sick pay from February to May 2010. Because she only received short term disability benefits, she was uncertain of her future benefit entitlements and therefore cautious about her spending on anything but her mortgage and other necessary bills.
In her testimony Ms. Vandeborne described her housekeeping and home maintenance needs. Ms. Vandeborne submitted OCF-6 applications for expenses on November 10, 2009, January 18, 2010, March 3, 2011, and March 11, 2013. She clearly understood that to be reimbursed for what she paid others for home maintenance and housekeeping, she needed to submit the forms but, in her evidence in December 2017, she was not able to consistently identify the signatures on the forms as her own, the names of the providers or the work done. Also, while the benefit was approved at $100 per week based on the Occupational Therapist’s assessment, she submitted OCF-6s in amounts less than that number. According to the agreed Statement of Facts Middlesex paid $5,620.00 for housekeeping services between August 20, 2009 and August 20, 2011. The claim in this Arbitration is for housekeeping services at a rate of $100 per week for the period October 14, 2009 to August 20, 2011.
Ms. Vandeborne ’s position is that she is entitled to the $100 per week benefits even though she cannot prove that she in fact spent that amount on a weekly basis throughout the period. Middlesex submits that Ms. Vandeborne has not incurred the housekeeping expense within the meaning of the Schedule if she cannot prove that she spent the $100 per week on appropriate expenses, and therefore she is not entitled to be paid the benefit.
Middlesex argues that the chronology of the submission of claims is noteworthy. The first claim was for $100.00 and was submitted November 25, 2009. The next submission was in January 2010, and again for only $100.00. Both submissions were for housekeeping services only and were submitted while she was still employed on a full-time basis. The next submission was not until March 3, 2011 and covers the period from the second submission to September 2010 at $100 per month and for the period October 2010 to February 2011 at $60 per month. Ms. Vandeborne claimed both housekeeping expenses and landscaping and yard work services. Middlesex relies on the 10-month gap during which she stopped working and began receiving short term disability payments and applied for LTD. Middlesex also submits that the fact that the next submission is two years later and covers a period from September 8, 2009 to October 2011 is significant. Middlesex submits that if Ms. Vandeborne were concerned that it would not pay the expenses or if she was concerned about her finances, she would not have incurred the expenses at all or, if incurred, she would have been more prompt in submitting them. Middlesex correctly notes that for the entire period from May 2010 on, Ms. Vandeborne had no income.
The case law under the Schedule is clear that the word “incurred” is to be given a broad meaning. The Court of Appeal in Monks v. ING rejected a narrow construction of the word “incurred” in the Schedule. The Court held that a purposeful and remedial interpretation must be given to the legislation. It should not be read so as to require that an insured person must actually receive the services or spend the money or become legally obliged to do so, nor to require that an insured person finance or pledge her credit in order to secure her benefits. The Court goes on to point out that the policy objective of the Schedule is that accident victims promptly receive the benefits to which they are entitled. Further its goal is to prevent an insurer from benefiting from an insured’s lack of financial resources. According to the Court of Appeal, the legislation was designed for the protection of the insured and should be construed in the way most favourable to her.
The Adjudicator did not accept Middlesex’s arguments as to what Ms. Vandeborne would have or should have done in the circumstances here and that in the absence of that conduct she should not be believed. Ms. Vandeborne was an hourly paid employee whose impairments caused her to leave work early in the early months after the accident and who therefore was likely facing pressure at work and on her income. Her impairments resulting from the accident are both physical and cognitive. During a period of over five years, her income had been reduced to nil and she was denied benefits to which she thought she was entitled (rightfully as finally admitted by the insurers in question). She was forced to pursue litigation and arbitration against both her insurers. She also had responsibility for care of her elderly mother that had somehow to be managed. With all these stressors and distractions, The Adjudicator did not accept that an expectation of perfect compliance with the Schedule is an appropriate test of Ms. Vandeborne ’s credibility.
Ms. Vandeborne has established her entitlement to the benefit for housekeeping as claimed in the amount of $100.00 per week for the period October 14, 2009 to August 10, 2011, less moneys already paid. Despite the fact that Middlesex deals with post-104 housekeeping benefits in its submissions, there is no claim for housekeeping benefits after the expiry of the 104 week period after the accident and therefore there is no issue of such a claim after that date.
Issues 2 and 3 Collateral benefit
As set out in the Agreed Statement of Facts, Ms. Vandeborne received short term disability benefits to which she was entitled as an employee of the hospital from February to May 2010 from Desjardins Insurance and, when that ended, Middlesex paid her IRBs for a brief period from May 25, 2010 to September 7, 2010. She applied for long term disability benefits from Desjardins Insurance to which she was also entitled on appropriate proof of disability as an employee of the hospital. If her application had been successful, such benefits would have commenced on September 7, 2010.
Desjardins Insurance refused her application for LTD on November 25, 2010 without paying any LTB and she commenced legal action against it on March 31, 2011. The litigation proceeded for five years and she finally obtained a lump sum payment of $177,933.91, net of tax, as settlement of the litigation on March 3, 2016. From the settlement funds, her lawyers deducted their fees of $50,285.00 inclusive of HST and disbursements totalling $46,991.67 inclusive of HST. Middlesex now agrees that Ms. Vandeborne was entitled to IRBs from May 25, 2010 to the present at a maximum rate of $400.00 per week.
The settlement information in the Agreed Statement of Facts does not include the calculation but it is specified that none of the payment was for interest. If averaged over a five year period, in essence, they paid her about $22,000 per year net of her legal fees.
In the course of the written argument, one issue was resolved, that being that Middlesex is not claiming an entitlement to repayment of benefits under Section 47 of the Schedule as the basis of the deduction of the collateral benefits. Ms. Vandeborne ’s argument was that, if Middlesex was entitled to set off the deduction under s. 47 as a repayment, then not only would Middlesex have to prove the appropriate demand for repayment had been made (which it had not) but also, the repayment (and therefore the deduction of collateral benefits) was limited to only 12 months. Middlesex has agreed that it is not seeking repayment or basing its entitlement to deduct the collateral benefits under s. 47. Therefore, Middlesex was bringing its claim for deduction squarely under the provisions of s. 7(1) of the Schedule.
Ms. Vandeborne relies on the wording of s. 7(1) which describes deductions for net weekly payments for loss of income (collateral benefits) “being received by” an insured or net weekly payments for loss of income that are not being received but are available unless Ms. Vandeborne has applied to receive the payments for loss of income.
Ms. Vandeborne ’s position is that to enable Middlesex to reduce the IRB payable, she must have been actively receiving periodic payments for loss of income (the LTD benefit) and Middlesex must have been paying the IRB. No periodic payments were received by Ms. Vandeborne in the period May 25, 2010 and March 3, 2016 and therefore the first part of section 7 does not apply. Ms. Vandeborne does however come within the provision of the second part of section 7, dealing with available payment for loss of income that is not being received but is available unless Ms. Vandeborne has applied to receive such payments. Ms. Vandeborne did apply for such payments but was denied, leading to the litigation that finally resolved March 3, 2016 with a lump sum payment by the collateral benefits insurer.
Ms. Vandeborne relies on the Superior Court decision in Vanderkop v. Personal Insurance. Ms. Vandeborne submits that this case is determinative as it was an identical situation and under the same version of the Schedule. In that case, the Court stated:
IRBs are to be reduced by LTD being received as a result of the accident. The legislation does not entitle Personal to set off hypothetical benefits applied for but refused. The Applicant was not in receipt of LTD. As Manulife had denied her claim, she cannot be described as entitled to the payment of LTD. That is, LTD was not available to her.
Ms. Vandeborne also analysed the wording under the Schedule in the context of other versions of the legislation which used the phrases “received by” or “have been received by” an insured. Ms. Vandeborne points out that other versions enacted since the Schedule would in fact catch her situation and permit the deduction that Middlesex seeks. Given those legislative changes, the conclusion Ms. Vandeborne asks me to draw is that the legislation cannot be interpreted to give effect to Middlesex’s argument. If the legislation were to be interpreted that way then the wording changes would not have been necessary.
Middlesex submits that the wording changes in s. 7 of the Schedule do not imply an intended change to the laws by virtue of s. 56 of the Legislation Act, 2006.
The Adjudicator agreed with Ms. Vandeborne that the amendments to the Schedule were intended to make change and that the foremost purpose of the amendment to the wording of s. 7(1) in the previous version of the regulation that was made under O. Reg. 403/96 was to limit the deduction to collateral benefits actively being received by the insured. No other logical explanation of the regulation amendment has been brought forward and the change from “benefits received” to “benefits being received” drives that interpretation. Ms. Vandeborne ’s interpretation is also consistent with the principles set out by the Court of Appeal in Monks v. ING case referred to above, that is, that coverage exclusions and restrictions are to be construed narrowly in favour of the insured.
The case law and the interpretation given to the legislation on the issues of the deductibility of collateral benefits is based on the policy that the collateral benefits are the first source of income support and the accident benefits are excess to those collateral benefits. Here, neither provided income support until they were forced, one after five years of litigation and without interest and the other only after that litigation had been resolved.
While the issue as stated refers to CPP disability payments there is no reference in the Agreed Statement of Facts to her receiving the disability payments; nor are there any submissions referencing the legislation or cases dealing with these. The order requested by the Respondent deals only with the deductibility of the LTD payment made March 3, 2016 and no other payments for CPP. Therefore the Adjudicator declined to make any order concerning the CPP disability payments.
On review of the law the Adjudicator found that Middlesex is not entitled to deduct the union dues payable by Ms. Vandeborne in arriving at the net weekly income from employment.
Ms. Vandeborne claims interest at 2% per month compounded monthly on all overdue amounts of IRB to June 22, 2016 (that is, $400 per week for the period May 25, 2010 to March 3, 2016 less the sum of $12,807.00 which was paid June 22, 2016). She also claims interest on the sum due as of June 22, 2016 at 2% per month compounded monthly from June 22, 2016 to date of payment. She is also entitled to interest on overdue housekeeping benefits. Ms. Vandeborne has been found entitled to benefits that have not been paid and are overdue and therefore should receive the interest to which she is entitled under the section.
Middlesex objects to the claim for interest on the payment due as of June 22, 2016 on the basis that it is punitive. The Adjudicator noted that it was Middlesex who argued that interest would be a factor discouraging an insurer from delaying payment of IRBs pending the LTD lawsuit, and thus was not persuaded by its argument now that it should not pay interest on the benefit that is found to be overdue, given that it made a specific decision not to pay interest at the time on the lump sum payment made June 22, 2016. It could have protected itself in making that payment by giving notice then that it would claim repayment under s. 47 and it did not. Therefore, the Adjudicator ordered an award to Ms. Vandeborne of interest as claimed.