Depending on the wording of the policy, the Ontario Court of Appeal has affirmed that Long Term Disability Benefit carriers can receive a deduction for any Non-Earner Benefits received by an Insured.
In the decision of Hamblin v. Standard Life Assurance Co. of Canada, released on November 14, 2016, the Court of Appeal dismissed an Insured’s appeal seeking to overturn a determination that her Non-Earner Benefits could be deducted from her weekly LTD payments.
The Appellant, Ms. Hamblin, was involved in two motor vehicle accidents. After the first, she began to receive Long Term Disability payments through her insurer, Standard Life. The Appellant was then involved in a second accident. As she was not working at the time, she elected to receive Non-Earner Benefits through her automobile policy. She also continued to receive her LTD payments from Standard Life.
For reasons that were never explained, the Accident Benefits Insurer never deducted any of the LTD payments from the weekly $185.00 Non-Earner Benefit, despite s. 12(2) of the Statutory Accident Benefits Schedule 2010 which allowed for a deduction in the weekly benefit, “[in] the total of all other income replacement assistance, if any, for the same week.”
Standard Life, upon being notified the Insured was receiving a Non-Earner Benefit, began to reduce their monthly benefit by a corresponding amount. Standard Life relied on a term of the Insured’s policy that allowed the carrier to reduce the monthly LTD payments “by any disability or retirement benefit…payable…under…a provincial auto insurance law.”
Standard Life took the position that they could do this, as long as the automobile Insurer did not deduct the LTD payments from the Non-Earner Benefit first.
The Insured’s counsel claimed that the Court’s decision in Bannon prohibited this sort of deduction. Bannon has stood for the principle that when assessing the deductibility of benefits paid by other compensation schemes, Courts must only deduct like benefits from like, or “apples to apples”. The Insured’s counsel maintained this was not a case of “apples to apples.” Case law had established that Non-Earner benefits were not “income replacement” benefits similar to LTD benefits and therefore could not be deducted from the LTD benefits.
The Court disagreed. They found that unlike the statutorily mandated deductions discussed in Bannon, the wording in the Insured’s policy was clear and unambiguous. The policy allowed for a deduction of any disability payments under an automobile insurance law and was not restricted to income replacement payments. As Non-Earner Benefits were granted where an Insured suffered a complete inability to carry on a normal life resulting from an accident related impairment, they were correctly a disability benefit payable under a provincial auto insurance law.
The Court found the Application judge’s decision was correct, and dismissed the Appellant’s appeal.
Although a bit of an oddity, this case is an important lesson for both AB and LTD insurers. For Accident Benefit carriers it’s a good reminder that temporary disability benefits being received by the insured person in respect an impairment that occurred before the accident are deductible from IRBs and NEBs. For LTD insurer’s, there is now Court of Appeal support that disability payments under ad automobile insurance law includes non-earner benefits. In both cases, a fulsome investigation into an Insured’s other sources of income will avoid double dipping.
See Hamblin v. Standard Life Assurance Co. of Canada, 2016 ONCA 854