Special thanks to Articling Student Miranda Neal for contributing.
Mary Manuel (the Applicant) was injured in a motor vehicle accident on March 4, 2019. She applied to Certas Direct Insurance Company (the Insurer) for income replacement benefits (IRB) and other medical benefits under the Statutory Accident Benefits Schedule (the “Schedule”). Shortly after the accident, Manuel went on maternity leave, on which she was receiving Employment Insurance (EI) and maternity leave benefits. The focus of the dispute between the Applicant and the Insurer is the Insurer’s right to deduct these EI benefits and employer top up from her IRB payments.
The Insurer submits that the Applicant had a top-up benefit available through her employer, but failed to apply for it. The Insurer states that the Applicant was obligated to apply for the benefit, and the Insurer would have been entitled to deduct the majority of the amount she would have received, had she applied.
Is the Insurer entitled to deduct EI Maternity benefits and employer top-up benefits from IRB?
Is the Applicant entitled to interest on overdue payments of benefits?
Is the Applicant entitled to an award under Regulation 66.4 because the Insurer unreasonably withheld or delayed benefit payments?
Entitlement to IRB
The Insurer was claiming that the IRB cannot be calculated since the Applicant did not produce her employment file, complete with the EI benefits file. The Insurer inquired as to whether the Applicant suffered a wage loss as a result of the accident, because while she was indeed not working, she was still receiving EI maternity benefits and employer top-up benefits. The Applicant was responsible for providing the necessary documentation to prove the fact she was entitled for the IRB benefits. Without these documents, the Insurer was unable to determine the weekly amount currently being received by the Applicant, and therefore unable to determine her entitlement to IRB benefits.
At no time did the Insurer state that it was denying IRB benefits to the Applicant, and it agreed with the Licence Appeal Tribunal (the LAT) that IRB had not been denied in this case. However, no IRB payment has been made, leaving the application in a state of limbo. In this case, the Insurer was aware of the amount of the EI maternity benefits received by the Applicant weekly, and there was no dispute that the Applicant was entitled to IRB.
Deductibility of Maternity Leave Benefits
The main issue in this dispute revolves around whether maternity benefits are part of the definition of “gross employment income”. If so, the Insurer may deduct them. The Applicant asserts that maternity benefits instead fall within the definition of a “temporary disability benefit” or “other income replacement assistance”, meaning the Insurer cannot deduct the EI maternity benefit.
Section 7(3) of the Schedule requires the Insurer to pay the Insured an IRB in the amount of 70% of the gross weekly employment income up to a maximum of $400/week, if the insured has a substantial inability to perform the essential tasks of their employment as a result of an accident. The Applicant meets the substantial inability test in this case.
Gross employment income is defined in s.4 (1) of the Schedule as “salary, wages and other remuneration” which includes maternity benefits and employer top-up received under the Employment Insurance Act. Due to this inclusion, maternity leave benefits are considered payments under the employment act, and therefore a part of gross employment income.
The argument that maternity benefits fall under “temporary disability benefits” did not hold water. Section 47(3) of the Schedule allows an insurer to deduct any “temporary disability benefit” in respect of “an impairment” sustained before the accident. An “impairment” as defined in s.3 of the Schedule, is “a loss or abnormality of a psychological, physiological, or anatomical structure or function”. For this argument to be successful, recent childbirth would have to be considered an impairment. This was found not to be the intention contemplated in the Schedule.
Maternity benefits being classified as gross employment income is also supported by S.W. v Aviva Insurance Company of Canada (2018 CanLII 83535) (Aviva). Aviva expressly addresses the issue of maternity benefits in gross income head on, stating expressly that since the benefits are received under the Employment Insurance Act, and are not carved out in the same way that EI benefits covering disability and sickness are, maternity leave should be treated as gross income.
In accordance with s.4 (1)(b), the Applicant was obligated to apply for any available collateral benefits before relying on benefits available through her insurer. Where there are benefits available but an insured fails to apply for them, the insurer is still entitled to deduct those benefits from any payable IRBs.
Section 10 of Regulation 664 allows the award of a lump sup of up to 50% of the amount to which the insured person was entitled to at the time of the award, with interest on all amounts then owing if it finds that the insurer unreasonably withheld or delayed payments. Although it is not disputed that the Applicant was entitled to an IRB, the Insurer requested necessary documentation, which the Applicant did not provide. This lack of documentation is the Insurer’s reasoning for the non-payment. The Applicant’s non-compliance was what created this delay or withholding of payments.
It was ultimately found that the Insurer was entitled to deduct EI maternity benefits and the employer top-up amount from IRBs for any period that IRB was payable. Further, the Applicant was entitled to interest of any IRBs owed and the award claim was dismissed.
While interesting arguments were raised revolving around whether maternity benefits should be part of gross employment income, or should instead be classified as a temporary disability benefit, it is ultimately a function of precedent and the wording of legislation that solidifies it as gross employment income. Despite the temporary nature of maternity benefits in course of ones employment, its classification under the Employment Insurance Act makes the conclusion in this case inevitable. It is important to note when bringing a case against the insurance company, that the insured has in fact held up their end of the obligation, and that all of their ducks are in a row before moving forward with the matter.