Volume. 8 Issue. 5 – February 7, 2024
This week we examine a case involving repayment of IRB’s that were negotiated as part of a settlement agreement at the case conference wherein thereafter the insured reneged on his obligation to repay which brought the matter back before the Tribunal.
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Financial Hardship Not A Defense for Repayment Responsibility
Ignorance Is Not Bliss – Security National (Applicant) sought partial repayment of Income Replacement Benefits (IRB) paid to Aklilu Thomas (Respondent) following a June 1, 2018 automobile accident. In Security National Insurance Company v. Thomas (22-000176), Security National claimed $10,847.17 for IRBs paid from June 14, 2018, to April 27, 2021, alleging that Thomas misrepresented his employment status.
At the time of the accident, Thomas was employed as a product verifier/order picker at Bite Beauty, he applied and received IRB in the amount of $356.22 per week from June 7, 2018 to April 27, 2021, for a total of $52,798.14 over a period of approximately 35 months.
Thomas submitted 4 Disability Certificates (OCF 3) from July 2018 until May 2020, all indicating that he was not working and that the last date worked was June 14, 2018. However, on April 27, 2021, Thomas told the IE assessor that he had been working as a food delivery driver with Uber and SkipTheDishes, working approximately 8 hours per week on an occasional basis. As a result, his IRBs were stopped on April 27, 2021.
Security National’s accountants calculated that Thomas had net earning during the period in question in the amount of 11,247.17 which ought to be deducted as post accident income from the IRB paid during that time in accordance with section 7(3) of the Schedule.
At the case conference on October 31, 2022, the parties (Thomas was represented at the time) negotiated a settlement agreement to pay Security National a total of $6,000.00, to be paid in installments of $500.00 per month over 12 months, to settle the file on a full and final basis. Having defaulted on the terms of the settlement agreement the matter was brought back before the Tribunal for a 1 day hearing in October 2023 via Motion Order.
During the hearing, Security National argued that Thomas knowingly failed to report income earned as a food delivery driver while receiving IRBs. That this misrepresentation of his failure to disclose was wilful and deliberate. Further failing to rectify the error for over two and a half years (from September 2018 until April 2021) despite having legal representation throughout that period. Thomas argued that he was not trying to mislead the insurer or the Tribunal stating that when he indicated on the OCF-3s that he had not returned to work, he interpreted that to mean that he had not returned to his previous full-time job at Bite Beauty as an order picker.
Thomas asserted that his deliveries were to test his ability to drive, as recommended by his physiotherapist, and that any income covered expenses, not resulting in any significant earnings. He claimed he was not aware of the reporting obligations and was not told of same by his lawyer.
On the issue of reneging on the settlement agreement Thomas claimed that financial hardship made it impossible for him to satisfy the terms of the agreement. He still owed $8900 to his physiotherapy clinic which was denied as part of the settlement. He had only agreed to settle the file for a repayment of $6000 on the advice of his lawyer at the time.
Thomas argued there should be no order from the Tribunal against him because of financial hardship and impecuniosity. Further arguing that his inability to repay arose from “unforeseen circumstances” including (1) mechanical issues related to his vehicle, (2) the COVID-19 pandemic and (3) his family’s immigration to Canada in 2022. He argues further that his ongoing Type II diabetes imposes an uninsured burden of $150 per month, and that his shoulder dislocation suffered in the accident makes it difficult for him to make extra income from delivery.
The Tribunal held that Thomas’ argument for impecuniosity was not a valid reason to dismiss the application. Further stating… “We agree with the applicant’s argument that the comments in Myers v. Metropolitan Toronto Chief of Police (1995 CanLII 11086 ON SCDC) are instructive, in that the courts and the Tribunal should avoid “a situation in which litigants without means can ignore the rules of the court with impunity, and the distastefulness of creating a rule incapable of consistent application.”
Despite Thomas’ hardship claims, the Tribunal ruled that he must repay $10,847.17, the full amount owed to Security National plus interest on overdue amounts but denied their request for costs.
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