In the long awaited July 14, 2022 LAT award rendered in #20-007407/AABS by Vice-chair, Sandeep Johal, the question arose whether an LTD benefit that was not being received could be deducted from an IRB benefit. The upshot was that the deadline for the SABS claimant to apply for the collateral disability benefit had expired. While he was aware of that deadline, he applied late to SunLife and was denied on that technical basis. The conundrum with the ongoing payment of the unreduced weekly IRB in this case was that if the LTD payment was ultimately found to be deductible there would be a substantial repayment claim available to Allstate.
The dispute proceeded by way of written submissions. At issue, per the September 2010 version of the SABS, was whether “other income replacement assistance” was available to the claimant, and had he made an application for same? The claimant argued the auto insurer had a greater part to play in informing him of the requirement to apply for the LTD benefit, offered various reasons for his delay in applying for it and claimed the related SunLife denial was sufficient to deny Allstate the right to deduct.
Allstate relied upon the FSCO case of Li Pan (#A16-003705), which gave that auto insurer the right to deduct a CPP disability benefit where no application had been made for those benefits (and also did not require the level of information from the auto insurer argued by that claimant). To deny the offset, the Schedule would effectively be made the first payor, which is not what was intended by the Ontario Legislature. The Vice-chair found the FSCO precedent persuasive, and the Court of Appeal judgment discussed therein (Wilken) binding, that a claimant must be diligent and exhaust collateral benefits before resorting to the SABS insurer. Failing to apply in time was akin to failing to apply at all, especially when represented. To be sure, the LAT has extended Li Pan in looking at the nature of the LTD denial and not just that a denial was made. Accordingly, it now behooves auto insurers to dig deeper; to know the terms of the LTD contract and assess whether a limitation period has been missed and the true nature of the denial.
In the end, Allstate is entitled to deduct from the IRB the amount of the LTD benefit the claimant could have received had he applied for it in a timely manner (and if it was approved). If claimants apply in a timely way for collateral disability benefits they might receive them and they might not. The auto insurer will be able to deduct in the former scenario but not in the latter. But if they don’t apply in time, the deduction will happen irrespective of the collateral carrier’s decision. Claimants are on notice that they need to have their collateral benefits entitlement decided on the merits to give real effect to the SABS provisions; the way it was meant to be.
Reference is had to a line from a song by the band, Incubus: “Dig me up from under what is covering the better part of me”. Just dig.
