Volume. 5 Issue. 39- September 1, 2021
Does the insurer have to pay disability benefits when it fails to comply with notice provisions? It depends… You will need to have your SABS handy to follow the maze of application and notice requirements imposed on both the Applicant and Insurer in order to follow the Tribunal’s conclusion in this week’s cases.
We report on two cases where a failure to frame requests under s.33 in response to a claim for specified benefits impacts the insurer’s s.36(4) obligations, which sets out the following:
In response to an application for specified benefits, the insurer shall either, within 10 business days:
a) pay the specified benefits
b) provide a notice explaining the denial, and request an IE, if required; or
c) provide a s.33 request.
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No Ultimate Cost for Respondent’s Non Compliance in Two Matters
Non Compliance Trumped by Non Compliance – Injured in a September 2015 accident, the Applicant in A.H. v Aviva (19-0046390), sought IRB from October 2016 to date and ongoing, contending that his disability began coincidently when his employment ended. The Tribunal ultimately found that the work stoppage was unrelated to any alleged accident related impairments, further noting that there was evidence of his working throughout much of 2017. In addition, A.H. had not tendered his initial OCF-3 until May 24, 2017, which the Tribunal fixed as the effective start date of any purported entitlement. Following receipt of the OCF-3, the Respondent notified A.H. of his obligation to complete an OCF-10 Election, as there was potential entitlement to both IRB and NEB.
Offering an alternative argument, A.H. indicated there to have been a failure on the Respondent’s part to comply with s.36(4) of the Schedule, until there was an IE requested October 30, 2017. Therefore, as per s.36(6), the Respondent was obliged to pay IRB from May 24 through to October 30. The Respondent countered that the issue of its noncompliance was rendered moot by the fact of A.H. having worked throughout the period in question. (While not explicitly set out, it appears that the noncompliance would be based upon the fact of the OCF10 request not having been framed under s.33, as per s.36(4)(c)). However, the Tribunal did not accept this argument as “Section 36(6) is a clear shall-pay provision.”
Despite this, the Tribunal found that any payment obligations under s.36 were never triggered, as A.H.’s failure to comply with the s.33 request for an Election results in his application for specified benefits being rendered incomplete. Therefore, there was no quantum payable, as A.H. himself was in non-compliance with the Schedule.
Ultimately No Price for Non-Compliance – Injured in a July 2018 accident, the Applicant in Parameswaralingam v Echelon (19-005907), was found not to have been entitled to IRB until April 25, 2019. This was the date the Tribunal found that Parameswaralingam had properly submitted a December 2018 OCF-3 and a February 2019 OCF-1.
Upon confirming receipt of this completed application, the Respondent sent an April 26, 2019 correspondence indicating in part: “Based on the information provided you qualify / don’t qualify for the following benefits: INCOME REPLACEMENT BENEFITS….” In addition, a number of documents were requested in order to establish the quantum of IRB payable.
The Tribunal found that the Respondent had breached its s.36(4) requirements, having failed to either pay IRB, or indicate reasons why they believed there not to be entitlement, provide notice under s.44 for an IE, or request further information under s.33 of the Schedule.
There were subsequent requests for information on September 9, 2019, and again on February 5, 2020, however again they were found not to comply with s.36(4), including the fact that there was no reference to s.33. It was not until February 24, 2020 that the Respondent for the first time specifically requested documentation under s.33. Therefore, this was the date upon which the Respondent complied with s.36(4), and as a result IRB was payable from April 25, 2019 through to February 24, 2020. Beyond this date, the Tribunal found that Parameswaralingam had failed to establish ongoing entitlement.
Despite this finding, ultimately the Tribunal found that Parameswaralingam had failed to provide sufficient particulars regarding his pre- and post-accident income to establish the quantum. Whereas he had provided an OCF-2 confirming his last four weeks earnings, the CRA confirmed that Parameswaralingam failed to file a 2018 tax return. Therefore, Parameswaralingam was precluded from relying upon same, as “an OCF-2 does not trump the requirement of s. 4(5).”
While Parameswaralingam had filed with the CRA for taxation year 2017, there was no way to determine how much, if any, of the reported income was within the required 52 weeks pre-accident. Further, T4s for taxation year 2019 again failed to allow for an understanding as to how much if any was earned during the non-compliance period in 2019, therefore post-accident income could not be determined. As a result, the Tribunal was unable to calculate IRB payable during the period of noncompliance.
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