Interim Income Replacement Benefits

December 21, 2009, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer



Before: Arbitrator Suesan Alves
Decision Date: July 15, 2009

Ms. M brought a motion for interim benefits pending the determination of her entitlement and that of her husband's estate to statutory accident benefits. The issue of the motion was to determine if Ms. M was entitled to interim benefits pursuant to section 279(4.1) of the Insurance Act.


Background and positions of the parties

D.M. and his wife P.M. applied for arbitration of their entitlement to statutory accident benefits in August 2006 as a result of the injuries D.M. sustained on November 20, 2004.

The cardinal dispute between the Applicants and Dominion was whether Mr. M sustained impairments as a result of a motor vehicle accident on November 20, 2004, as the Applicants alleged, or whether his injuries were the result of a spontaneous stroke, as Dominion alleged. Arbitrator Ashby determined that Mr. M's impairments were "directly caused by the use or operation" of his truck.

Dominion appealed. The appeal hearing was scheduled to take place in September 2009. The substantive issues arbitration hearing, which was to address both Applicants entitlement to benefits was scheduled to take place between August 24, 2009 and September 3, 2009. However, it was likely that the parties would have sought an adjournment pending the outcome of the appeal.

On this motion, Ms. M sought payment of $50,000 as interim benefits. Dominion submitted that an award of interim benfits would be prejudicial if it succeeded on appeal and Ms. M was required to repay those benefits.

Test for interim benefits

Arbitrators have disagreed as to the test which should be used to guide the exercise of that discretion. Few interim benefits awards have been made.

Arbitrator Alves’ opinion was that the appropriate test in these circumstances is that the Applicant should demonstrate a prima facie case, need and urgency.

Prima facie case

A prima facie case is one in which a party adduces evidence, which if unanswered and believed, is sufficient to render reasonable a conclusion in favour of entitlement. For the following reasons, Arbitrator Alves found that
Ms. M had demonstrated a prima facie case.

Arbitrator Ashby determined that Mr. M's impairments were "directly caused by the use or operation" of his truck. Despite the appeal, Arbitrator Ashby's decision remained in full force and effect: “An appeal does not stay the order of the arbitrator unless the Director decides otherwise.” Dominion did not seek a stay of Arbitrator Ashby's order. Accordingly her order remained in full force and effect.

The Applicants obtained evidence from health practitioners which supported D.M.'s entitlement to attendant care benefits and income replacement benefits. There was little doubt as to the profound nature of D.M.'s impairments.
He was admitted to hospital on November 20, 2004, remained there until February 8, 2005 when he was transferred to a rehabilitation hospital, then discharged home to Ms. M's care on May 2, 2005. Mr. M was unable to return to work. When D.M. was called as a witness at the hearing before Arbitrator Ashby, she found that he lacked capacity and appointed P.M. as his representative.

The Insurer had not obtained any section 42 assessments and accordingly there was no evidence to contradict the Applicants claim of entitlement to benefits up to the date of D.M.'s death in June 2008. On this basis, Arbitrator Alves found that the Applicants’ evidence on entitlement to benefits was unanswered. If that evidence was accepted and believed by the hearing arbitrator, it would have been likely that the Applicants would have been successful. For these reasons, Arbitrator Alves found that the Applicants had established a prima facie case of entitlement to benefits.

Counsel for the Applicant estimated the amount of the attendant care benefits payable to the Estate of D.M. based on the only Form 1 in the case at $252,000, and the amount of the income replacement benefits payable at $75,000. D.M. died intestate. As his spouse, P.M. was entitled to the first $200,000 of his estate under section 45 of the Succession Law Reform Act. She therefore was entitled to payment of a significant amount of the benefits payable to D.M.'s estate.

Arbitrator Alves was satisfied that Ms. M had demonstrated need and urgency in the Affidavit material which was filed.

Dominion's position was that Mr. M's impairments did not result from a motor vehicle accident and it did not pay statutory accident benefits to either Applicant. Ms. M quit her job on or about November 28, 2004 to care for her husband and attended to his needs as a result of the accident, so the family lost both breadwinners for approximately three and a half years.

Following his accident, Mr. M received a CPP disability benefit of $1,000 per month. The Applicants used their savings, line of credit and Visa to pay their living expenses and to pay for D.M.'s rehabilitation and treatment. Following D.M.'s death in June 2008, the family no longer had access to the CPP disability payment. Ms. M was bereaved and consequently unable to work for a period of time following her husband's death. She obtained a temporary job which ended on April 30, 2009.

The Applicant had 3 children. The youngest, a 14 year old son was experiencing emotional difficulty. He has been referred to a therapist by his family physician and was presently awaiting an appointment. Ms. M deposed that she was also incurring a further $100 per month in extraordinary expenses for her 14 year old son. The Applicant deposed that she was unable to seek full time work because of her son's emotional status. Ms. M and her family relied on social assistance.

Ms. M deposed that she had a mortgage of over $100,000, shorter term debt of approximately $50,000 consisting of a line of credit used to meet their living expenses and D.M.'s rehabilitation expenses. The Visa account was in collections and her personal account was in overdraft. In May 2009, one mortgage payment was N.S.F. The June property tax installment payment had also been missed. Thus, shelter was about to become a critical problem for the Applicant and her family.

In January 2009, Ms. M consulted with a trustee in bankruptcy, and was advised to hold off declaring bankruptcy for as long as possible.
Counsel for the Insurer relied on the case of Meehan and Wawanesa Mutual Insurance Company. In that case, the applicants alleged urgency and sought interim benefits, they had repeatedly adjourned hearing dates at the Financial Services Commission, retained three different counsel, and had not produced relevant financial documents. Four years had elapsed since the date of the accident and the Insurer had paid some income replacement benefits to one Applicant.

One proposition in Meehan was that an award of interim benefits is inherently prejudicial to an insurer. In the view of Abritrator Alves, by requiring the Applicant to demonstrate a case which was meritorious on its face, the prima facie case test gave sufficient consideration to the potential prejudice of making an award of interim benefits before the adjudication of entitlement to benefits.

The second proposition on which Dominion relied was that Applicants can expect to experience financial hardship following a motor vehicle accident and that interest and a special award compensate insured persons for such "usual" hardship. At times, it can be difficult to draw the line between "usual" hardship and "extraordinary" hardship. As stated earlier the test chosen was one of need. Arbitrator Alves was persuaded that the Applicants financial situation was urgent and precarious.

A consideration of need was not limited to financial circumstances. The stress of the Applicants’ financial situation, the possible loss of the family home, and the loss of a sense of security could not possibly be helpful to her son's recovery.
Arbitrator Alves was not persuaded that the emotional health of a teenager could be repaired at some later stage by an award of interest or a special award. So long as his emotional health was in crisis, Ms. M would have been unable to return to full time employment. Arbitrator Alves did not accept that this was a case in which a future payment of interest or a special award would adequately compensate the Applicant or her son.

The third proposition was that Applicants should exercise their ordinary remedies and seek an early hearing date, before seeking an extraordinary remedy of interim benefits. Arbitrator Alves took Dominion's point that the Applicant did not request preliminary issues hearing dates based on the urgency of her situation.

Arbitrator Alves did not believe that the Applicant should have been faulted for failing to anticipate that Dominion would appeal the preliminary issues decision; that her bereavement would prevent her from working; that her son's emotional condition would prevent her from seeking full time work; or for waiting until her financial situation became urgent and precarious in the spring of 2009 to serve a motion for interim benefits. It appeared unlikely that the parties would have an arbitration decision on entitlement to benefits until sometime in 2010.

With respect to the arbitration process, Arbitrator Alves found her situation distinguishable from that of the Meehan's who alleged urgency in the context of their failure to produce relevant documents; retained three different counsel; and requested and obtained repeated adjournments of arbitration hearing dates.

Arbitrator Alves found that the circumstances of this case favoured an exercise of her discretion to grant the interim remedy requested. With respect to the risk of repayment, the Applicant was not physically injured in the accident. She was sufficiently recovered from her bereavement that she was able to work. But for her son's emotional difficulties she had to seek full time work. Ms. M anticipated that she would have been able to find full time employment once her son made some gains in his emotional recovery.

As to the amount, Arbitrator Alves found it appropriate to order Dominion of Canada General Insurance Company to pay the sum of $30,000 to Ms. M as interim benefits to the date of the appeal hearing in September 2009.
Posted under Accident Benefit News, Automobile Accident Benefits, Catastrophic Injury, Disability Insurance, Treatment, Truck Accidents

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