Should HST count against an Insured Person’s benefit limits?
Jul 23, 2020
Despite the introduction of the HST in July 2010, the SABS were, until a June 3, 2019 amendment, silent on how HST was to be treated against benefit limits. A class action suit has come to a grinding halt as a result of one recent court decision, one LAT reconsideration decision, and a third first level LAT decision, which have all recently been released and shed some light on this issue.
Dorman v Economical Mutual Insurance Company, 2020 ONSC 4004
Justice Edward Belobaba ruled on 15 proposed class actions against 15 insurers alleged to have improperly deducted HST from the accident benefits limits payable to the class members. Following the Court of Appeal decision in Stegenga v Economical Mutual Insurance Company, Justice Belobaba found that the License Appeal Tribunal (LAT) has exclusive jurisdiction to address disputes in respect of an insured’s entitlement to accident benefits. Although the court lacks jurisdiction to determine the issue in dispute, Justice Belobaba was sympathetic to some of the class members since the amount at issue for each of them was less than the $100 filing fee for a LAT Application on an individual basis.
Despite his sympathies, the class action suits were all dismissed, with the Court’s direction to litigants that Issues of HST and how it is to be treated must be heard before the LAT.
The following two decisions indicate that the LAT would likely find that HST should be paid outside the benefit limits.
F.R and Dominion of Canada General Insurance Company, 2020 ONLAT 18-002185/AABS and JVDA vs. Aviva General Insurance, 2020 ONLAT 19-002631/AABS
In F.R and Dominion of Canada General Insurance, the Tribunal reconsidered a first level decision in which HST payable in respect of attendant care services was found to be payable in addition to the policy limits.inOn reconsideration, Adjudicator Boyce found that there was no error of law in the Tribunal’s ruling. The error of law alleged by Dominion in the initial decision was that Section 19 and the SABS on the whole are silent on whether HST is to be paid from the benefit limit. Dominion argued that HST is an incurred expense under section 3(7)(e) and therefore falls within the policy limits. Adjudicator Boyce ruled that there was no error in law regarding the finding that HST is not a reasonable and necessary expense within the SABS and thus part of the benefit scheme and limits thereof. Adjudicator Boyce found that the SABS was silent on this issue but the Tribunal made a reasoned analysis that if tax was intended to be included in the limit for attendant care service, the legislature would have said so.
Dominion also argued that the Tribunal erred by relying on non-binding FSCO Bulletins directing that HST be paid as additional to the limits, and not on the binding FSCO Attendant Care Hourly Rate Guideline which set specific dollar limits per hour. Adjudicator Boyce did not agree with Dominion’s submission. The Tribunal only addressed the non-binding bulletin because it was contained within the submissions of the Applicant. The Tribunal did adopt FSCO Bulletin A-04/15 in its decision, but Adjudicator Boyce found that there was no error in law using this non-binding Bulletin as it was analogous reasoning for the HST issue.
JVDA and. Aviva also dealt with HST and the limits for attendant care benefits. The hearing happened before the Dominion decision was released. Therefore, Adjudicator Grant allowed the parties to make submissions on that case and on the June 3, 2019 amendment of s. 18(3)(a) of the SABS which stipulated that the limit for benefits would be $65,000 plus any applicable HST for an accident on or after that day. Adjudicator Grant found that HST is not a “reasonable and necessary expense” and that HST should be paid outside the benefits limit. Regarding the June 3, 2019 amendment, Adjudicator Grant found it was not a change of legislative intent but rather a clarification. Further, although the operative version of the SABS was silent on this issue, the silence should be interpreted in favour of an insured in the context of consumer protection legislation.
There is the prospect of an appeal from these decisions to Divisional Court, and where there is no longer deference owed to the LAT by judges by reason of the Supreme Court of Canada decision in Vavilov, anything can happen on a further appeal. Moreover, LAT decisions are not binding or precedent setting, so other adjudicators can come up with their own views. All that having been said, the early returns on decisions from the LAT suggest that at least certain adjudicators will find HST is not payable out of benefits limits even prior to the June 3, 2019 amendment of the SABS. The interpretation is a bit perplexing to those that are familiar with insurance outside of the SABS context. When someone has a fire loss and suffers losses of $1,000,000 plus HST and has a policy limit of $1M, they do not get the HST on top of the policy limits, and frankly, no one would suggest otherwise. Yet, for whatever reason, the SABS is treated differently. Where the vast majority of the claims considered part of the class action suit pertained to HST on the $3500 Minor injury cap (to the extent the services were subject to HST, which not all of them were), the amounts are likely too modest to justify a LAT application. Other claims, like the two in dispute at the LAT, which involve ongoing attendant care at or above the monthly policy limit, do add up to significantly more money and more easily justify the LAT’s involvement.
Eric Grossman and Brendan Sheehan are members of the LAT practice group at the firm and authors of this blog. If you have a question about HST or any of these decisions, please contact Eric at 416-777-5222 or Brendan at 416-777-5242.