May 10, 2019, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
When does clock begin to run on limitation period for repayment of overpaid NEBs - Aviva General Insurance Company v HH 17-007805, 2019 CanLII 18335 (ON LAT)
Date of Decision: January 21, 2019
Heard Before: Adjudicator Billeh Hamud
REPAYMENT OF BENEFITS – waiting period for NEBs; recouping overpayment of NEB benefit from the insured; when does clock begin to run on limitation period; limitation period isn’t ‘rolling’ but starts at the time of the first payment
HH was involved in a motor vehicle accident on July 2, 2016 and sought benefits from Aviva pursuant to the SABs. Aviva paid NEBs to HH.
Aviva believed that it made an error calculating the benefit when it applied an incorrect waiting period to HH’s eligibility for NEBs. According to Aviva, HH should have been entitled to NEB only after the first 26 weeks after the onset of the complete inability to carry on a normal life. Instead, Aviva paid HH NEBs after the first 4 weeks after the onset of the complete inability to carry on a normal life. Aviva filed this application with the Tribunal seeking a repayment for the difference.
- Is HH liable to repay Aviva the $2,193.57 in NEB she received from HH?
- Is HH entitled to costs against Aviva?
- Based on the written submissions and evidence before me, I find that Aviva is not entitled to a repayment of the non-earner benefits paid.
- HH is not entitled to costs against Aviva.
The Schedule states that a person is liable to repay the insurer any benefit that is paid to the person as a result of an error on the part of the insurer, the insured person or any other person, or as a result of willful misrepresentation or fraud. The insurer must give notice of the amount that is required to be repaid within 12 months after the overpayment; otherwise, the person ceases to be liable. The 12 month requirement does not apply if the benefit was paid as a result of willful misrepresentation or fraud. In this case, the parties agree that there is no issue regarding willful misrepresentation or fraud. Instead, Aviva submits that it applied an incorrect waiting period to HH in error.
In order to decide this issue and whether HH is liable to repay the NEBs she received; Aviva must show on a balance of probabilities of the following:
- Was adequate notice of the amount that was required to be repaid provided to HH?
- Was adequate notice of repayment provided to HH?
The Adjudicator noted that prior to June 1, 2016, NEBs were not payable under section 12 of the Schedule for the first 26 weeks after the onset of the complete inability to carry on a normal life. However, after June 1, 2016, section 12 was amended and reduced the waiting period to receive NEB payments from 26 weeks to 4 weeks.
On July 2, 2016, HH was involved in a car accident. However, Aviva notes that HH’s insurance renewed on May 27, 2016 and according to Ontario Regulation 251/15, the 26-week waiting period applied since HH’s insurance was renewed before June 1, 2016. On July 30, 2016, HH started receiving NEB payments from Aviva. She received these NEBs payments from July 30, 2016 until January 13, 2017.
On October 23, 2017, Aviva, for the first time, sent notice to HH that there was an error in the application of the NEB waiting period. According to Aviva, it incorrectly applied the 4-week waiting period instead of the 26-week waiting period under the Schedule. As a result, Aviva requested repayment of NEB from October 23, 2016 to January 13, 2017.
Aviva maintains that HH received the NEB payments in error because her policy effective date was May 27, 2016 and as such, HH was subject to s. 12 of the Schedule before it was amended on June 1, 2016.
The Adjudicator disagreed. There is no doubt that Aviva first provided notice to HH about an error on October 23, 2017 and well over the 12-month limitation period under s. 52(3) of the Schedule. However, Aviva still maintains that it was within the limitation period under s.52(3) of the Schedule since HH was still receiving NEB payments until January 13, 2017.
By contrast, it is HH’s position that the 12-month limitation period under s. 52(3) of the Schedule commenced after the first payment of NEBs were received on July 30, 2016. Therefore, HH maintains that she ceased to be liable for repayment after July 30, 2017. HH also relies on the FSCO decision, Slater v. The Personal Insurance Company, FSCO A07-000592 (“Slater”).
Although Aviva is correct that the Tribunal is not bound to follow any FSCO decisions, The Adjudicator found the decision in Slater to be persuasive and similar to the facts in this case and adopted it. At p.7 of Slater, Arbitrator Ashby reviewed s. 47(3) of the Schedule (as it was then) to interpret the meaning of “payment”:
“I find that the meaning of “the payment” is ambiguous in circumstances where an insured is receiving serial payments. For example, if an insured is entitled to a benefit which is paid out in one payment, then the error must be discovered, and notice given within 12 months of “the payment” in order for the insurer to be repaid. However, an insured entitled to successive benefits would be subject to a renewed notice period with each payment of the benefit. This results in an inconsistent application of the notice period to different classes of benefits. As well, it creates a “rolling limitation period.” I accept the Arbitrator’s reasoning in Murugappa and find that in respect of an insured an insurer cannot rely on a “rolling limitation period.” To avoid the creation of a rolling limitation period “the payment” must be interpreted as meaning the first payment made in error.”
The Schedule is remedial consumer protection legislation and the term “payment” contained in s. 52(3) of the Schedule is ambiguous and should be interpreted in favour of the insured. Interpreting the term “payment” in the manner argued by Aviva would lead to a “rolling limitation period” and create unfairness and unpredictability. The Adjudicator found that s. 52 of the Schedule creates a balance since repayments are not subject to any limitation period when payments made as a result of willful misrepresentation or fraud.