In the face of these binding determinations, Arbitrator Tanaka embarked on her own analysis of the criteria of “good days and bad days” within the legislative scheme and whether a person who reported such functioning had demonstrated a “substantial or complete inability.” She also considered the broad discretion of an arbitrator to determine what is reasonable and necessary.
Despite Arbitrator Huberman’s criticisms of the Mores and Challis reports, Arbitrator Tanaka concluded that she was “… not prepared to find the Insurer was unreasonable in not identifying the significance of the citing of the conclusions of the Morse Report in the Challis Report.”
Nevertheless, there was no evidence from State Farm that it had ever applied Arbitrator Tanaka’s analysis or reasoning about “good days and bad days” when it assessed the Challis and Morse reports. There was no evidence this thinking had factored into State Farm’s decision to deny the treatment plans in question. Nor was there any need for the Arbitrator to examine the meaning of “substantial or complete inability.”
Once again, it appears the Arbitrator simply substituted her own concerns and attributed her own thoughts processes and conclusions to State Farm in the absence of evidence. Given these errors of law, I am rescinding the entirety of the Arbitrator’s decision, and returning the issue of the special award and its amount, if any, to a different arbitrator.
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State Farm Mutual Automobile Insurance Company and Kumuthakumary Kulaveerasingam 2018-05-30, Appeal, Final Decision, FSCO 5569 https://www5.fsco.gov.on. ca/AD/5569
a) Is State Farm entitled to a variation of the Arbitrator’s order?
At all times, the Respondent contended that it did not dispute that in principle, State Farm was entitled to a deduction from her IRBs, because the Respondent had been approved for CPP benefits after the Arbitrator’s order was issued.
Both parties also agree that sections 3(7)(d)(i), 4(1)(a), 7(1) of the SABs allow for the deduction of CPP disability payments from the calculation of the amount of an insured’s IRBs. They also agree that the formula to use to calculate the reduction is found at section 7(1) and (2). The calculation is made by taking 70 percent of the Insured’s “gross weekly employment income” to determine the “weekly base amount.” The IRB is then calculated by deducting the amount of the weekly payment for CPP from the weekly base amount. The remainder is the correct IRB to be paid to the Insured.
The parties now agree that the amount of the Respondent’s weekly base amount is $403.50. They also agree that in 2015, the weekly CPP payment made to the Respondent was $128.55. The difference between these two numbers, ($403.50-$128.55 = $274.95) would have been the correct IRB during that calendar year.
For the calendar year 2018, they now agree that the weekly CPP payment is $133.76. For 2018, the correct amount to be paid as an IRB is now $269.74/week.
I therefore find there was a material change in the circumstances of the insured in that she became entitled to CPP benefits after the issuance of the Arbitrator’s order, and State Farm is entitled to a variation of that order.
Nevertheless, the parties do not agree as to whether the variation order should be made retroactively. They disagree as to whether State Farm is entitled to the amounts it has overpaid the Respondent. They also disagree as to whether the Respondent is entitled to a repayment of the amounts State Farm has already collected through the weekly reduction of the Respondent’s IRB payments since 2015 and continuing to date.
I turn now to these remaining issues.
(b) Is State Farm entitled to the repayment of the moneys it has overpaid to the Respondent?
There is no doubt that State Farm may deduct any income replacement assistance (including CPP) received by the Respondent from the Insured’s “weekly base amount”. The weekly base amount is determined by taking 70 percent of the Insured’s “gross weekly employment income.”
Nevertheless, the repayment of any such amounts overpaid by the Insured is governed by section 52 of the SABs. Section 52(2)(a) requires the Insurer to give a notice to the Insured of the amount required to be repaid. Section 52(3) provides that the notice under section 52(2) must be given within 12 months after the payment of the amount that is to be repaid, failing which, the Insured ceases to be liable to repay the amount unless the amount was originally paid to the Insured as a result of willful misrepresentation or fraud.
In the present case, there is no suggestion of fraud or misrepresentation. The Respondent argues that each of the three notices given to her by State Farm is flawed and unenforceable against her.
