Non-Earner Benefits Revisited – Impact Of Recent Changes -

There has been a major reduction in the availability of non-earner benefits with the legislative changes to the Statutory Accident Benefits Schedule that went into effect on June 1, 2016.

There has been a major reduction in the availability of non-earner benefits with the legislative changes to the Statutory Accident Benefits Schedule that went into effect on June 1, 2016.

Historically, non-earner benefits have always been available to accident victims such as students, stay at home parents, the unemployed and retired as a modest weekly benefit entitlement. Prior to the changes to the Statutory Accident Benefits Schedule on June 1, 2016, non-earner benefits were not payable for the first 6 months post-accident, but thereafter were payable at a rate of $185 per week for seriously injured accident victims that have suffered "a complete inability to carry on a normal life". For students, the weekly amount increased to $320 per week at the 2 year anniversary of the accident. Benefits were payable for life, as long as the claimant continued to qualify for them, but the weekly amounts were reduced after age 65.

The new legislation, applicable to claims arising from accidents on or after June 1, 2016, reduces the duration of eligibility for non-earner benefits from "life" to a maximum duration of 2 years, but reduces the waiting period from 6 months to 4 weeks.

There is no doubt that this change will have a devastating impact on accident victims, such as students or stay at home parents, who were about to enter or re-enter the workforce and earn an income, but as a result of the injuries sustained in the accident are unable to do so. These accident victims will now only be eligible for weekly benefits up to $18,500, versus the lifetime of benefits previously available. In the case of a seriously injured student who will never work again because of accident related injuries, this represents the loss of a cumulative weekly benefit in excess of $500,000, with no entitlement to income replacement benefits after the 2 year mark.

Click to Download the 2016 Statutory Accident Benefits Schedule.

Test for Non-Earner Benefits as of June 1, 2016

The Statutory Accident Benefits Schedule, Section 12 (1) specifies the following conditions that a claimant must satisfy in order to be eligible to receive non-earner benefits:

The insured person suffers a complete inability to carry on a normal life as a result of and within 104 weeks after the accident and does not qualify for an income replacement benefit.
The insured person suffers a complete inability to carry on a normal life as a result of and within 104 weeks after the accident and,
- i. was enrolled on a full-time basis in elementary, secondary or post-secondary education at the time of the accident, or
- ii. completed his or her education less than one year before the accident and was neither employed nor a self-employed person after completing his or her education and before the accident, in a capacity that reflected his or her education and training.

Section 12 (2) of the Schedule specifies that the amount of the non-earner benefit is $185 for each week during the period that the insured person suffers a complete inability to carry on a normal life, less the total of all other income replacement assistance, if any, for the same week.

Section 12 (3) of the Schedule specifies circumstances under which an insurer is not required to pay the non-earner benefit.

For the first four weeks after the onset of the complete inability to carry on a normal life;
Before the insured person is 18 years of age;
For more than 104 weeks after the accident; or
If the insured person is eligible to receive and has elected under section 35 to receive either an income replacement benefit or a caregiver benefit under this part of the Schedule.

Section 3 (7) of the Schedule states that, "a person suffers a complete inability to carry on a normal life as a result of an accident if, as a result of the accident, the person sustains an impairment that continuously prevents the person from engaging in substantially all of the activities in which the person ordinarily engaged before the accident".

Qualifying Test for Non-Earner Benefits

The qualifying test for non-earner benefits can be an onerous one. However, in 2009 the Ontario Court of Appeal in Heath v. Economical Mutual Insurance Company provided a number of general principles as being the "proper approach" in interpreting and applying the relevant sections of the Statutory Accident Benefits Schedule when determining a claimant's entitlement to non-earner benefits.

The Court indicated that there must be an analysis and comparison of a claimant's pre-accident and post-accident activities and life circumstances. This analysis cannot be a mere "snap shot" of an individual's life immediately prior to an accident, but rather requires a careful review of all the circumstances over a reasonable period of time prior to the accident, which would be fact specific for every claimant.

The Court clarified that all of the claimant's pre-accident activities must be taken into account when determining whether or not the claimant had the ability to partake in "substantially all" of his or her pre-accident activities. The Court further noted that some activities which played a more significant part of a claimant's life may be given more weight than others. The Court considered this to be a more "claimant-focused inquiry" when analyzing a claimant's entitlement to non-earner benefits.

The Court believed that it was not enough for a claimant to show a change in circumstances after the accident, and reiterated that the onus was on the claimant to establish that as a result of the accident, he or she was continuously prevented from engaging in substantially all of his or her pre-accident activities.

The Court further interpreted "continuously prevents" and "engaged". The Court was of the opinion that being "continuously prevented" from activities would require a claimant to prove "disability or incapacity of the requisite nature, extent or degree which is and remains uninterrupted". With respect to being "engaged" in an activity, the Court was quick to point out that merely going through the motions of an activity was not enough and that the manner and quality of performance of activities by the claimant must be considered as a whole.

Finally, the Court indicated that the degree of pain a claimant suffered while engaged in performing his or her pre-accident activities should be taken into account as well. The Court believed that the degree of pain experienced by a claimant, either while the activity was being performed or thereafter, was an indication of whether or not the claimant could be considered "prevented from engaging in those activities."

Can a Claimant Qualify for Non-earner Benefits while Receiving Other Income?

In 2012, the Court of Appeal visited the issue of whether or not a claimant was entitled to non-earner benefits when he or she was earning income.

The non-earner benefit is often considered a last resort benefit that individuals may apply for if they are not entitled to receive income replacement benefits or caregiver benefits (for catastrophically injured parties).

In the case of Galdamez v. Allstate, the Court of Appeal stated that a plain reading of the Statutory Accident Benefits Schedule indicates that non-earner benefits are for claimants who are not eligible to receive income replacement benefits.

However, the Court noted that the Statutory Accident Benefits Schedule do not specifically state that a claimant cannot be working when he or she applies for non-earner benefits. As such, the Court touched on the possibility that there may be circumstances under which a claimant may be working at the time of the accident and still qualify for non-earner benefits.

The Court was of the opinion that if an individual worked full-time at a job that was not the significant activity they would be engaged in, and if this individual returned to the same job post-accident, they may qualify for non-earner benefits as stated in the language of the Schedule.

Based on this analysis, technically, if an artist was working as a parking attendant prior to the accident, and following the accident, is unable to sculpt statues or paint on a canvass, but is able to return to his or her parking attendant position, then there may be an argument made for entitlement to non-earner benefits. The Court suggested that if the artist's main focus in life was being an artist and he or she is not able to return to this activity as a result of injuries sustained in the accident, then this individual may qualify for non-earner benefits.

It seems that the Court has opened the door for potential situations in which a claimant may be earning income, but still qualify for non-earner benefits. It will be interesting to see how the Court, FSCO and LAT deal with this issue in the future.

Recent Case Law Considerations

Sietzema v. Economical Insurance, 2014 ONCA 111 (Ontario Court of Appeal)

Galdamez was also cited in Sietzema. In Sietzema the plaintiff was employed at the time of the accident, and the disability certificate filed by her physician indicated that she was "substantially unable to perform the essential tasks of his/her employment at the time of the accident" and that she met the "disability test" for income replacement benefits. That same form answered negatively the question as to whether the applicant suffered a complete inability to carry on a normal life and that accordingly she did not meet the "disability test" for NEB. The insurer advised the insured that she was eligible for income replacement benefits, but that she was not eligible for non-earner benefits because she was employed at the time of the accident.

The plaintiff was involved in a motor vehicle accident on November 11, 2005. She filed an application for benefits on November 29, 2005. The insurer, by OCF-9 dated December 19, 2005, advised that the plaintiff was entitled to income replacement benefits of up to $400 a week, but was not eligible for non-earner benefits because she was employed at the time of the accident.

Although the plaintiff was not eligible for non-earner benefits, the reason given by the insurer was wrong. The plaintiff was not eligible for non-earner benefits because she qualified for income replacement benefits and the Statutory Accident Benefits Schedule would not permit her to receive both benefits for the same period of time. The OCF-9 advised the plaintiff that she had a right to dispute the decision within a two (2) year time limit.

The plaintiff returned to work on February 13, 2006 and income replacement benefits were terminated on March 2, 2006. She retained a lawyer in January 2006 shortly after receiving the OCF-9, however, she did not re-assert a claim for non-earner benefits until February 3, 2010. The plaintiff's lawyer wrote to the insurer taking the position that the insurer had not refused non-earner benefits and that the limitation period had not yet started to run.

The defendant brought a summary judgment motion to dismiss the plaintiff's claim for non-earner benefits as being statute barred. In this case the Court determined that the plaintiff retained counsel in 2006, and that was the date that she, or her legal representative, knew or ought to have known, of her right to dispute the denial of non-earner benefits.

Although upholding the summary judgment ruling based on the lapse of the limitation period, the Court of Appeal, following Galdamez, did not take issue with, and indeed seemed to infer, that it would be permissible to bring a non-earner benefits claim after the termination of income replacement benefits payments, as long as it is brought in a timely way, and doesn't seek double payment in respect of the same time period.

Section 36 (1) makes it clear that only one of such benefits (income replacement benefits, non-earner benefits or caregiver benefits) may be paid in respect of the same period of time. In Sietzema the plaintiff's claim for non-earner benefits was for the period in which the plaintiff had already received income replacement benefits. The Court determined that as a matter of statutory interpretation, this claim for non-earner benefits for the same time period in which the plaintiff had received income replacement benefits must fail.

Toresho v. Primmum Insurance Company, 2015, ONSC 516 (Ontario Superior Court of Justice)

The Galdamez case was followed in Toresho. In Toresho, the plaintiff received income replacement benefits payments for a period of time. Her income replacement benefits payments ended and she applied for non-earner benefits thereafter.

The Court reiterated the eligibility requirements for an non-earner benefits as follows: that the insured does not qualify for an income replacement benefits, and that only one of three benefits available, income replacement benefits, non-earner benefits or caregiver benefits "may be paid to a person in respect of a period of time."

In this case, the defendant brought a summary judgment motion to dismiss the plaintiff's claim for non-earner benefits.

The plaintiff was working at the time of the accident. The Disability Certificate she submitted indicated that she was entitled to income replacement benefits as a result of being unable to perform the essential tasks of her pre-accident employment, and further indicated that she did not suffer a complete inability to carry on a normal life.

The insurer paid the plaintiff income replacement benefits until an insurer's exam determined that she was no longer eligible. The plaintiff commenced an action against the defendant for income replacement benefits.

Subsequently, plaintiff's counsel wrote to the defendant advising that the plaintiff may be eligible for non-earner benefits. The defendant denied the benefit by stating that the plaintiff had qualified for, elected and received income replacement benefits. The parties mediated the issue and the plaintiff commenced an action against the Defendant for non-earner benefits.

The plaintiff's claim for non-earner benefits was for the period for which she had been qualified for, elected and received income replacement benefits as well as for the period after which income replacement benefits were terminated, to date and ongoing.

The Court dismissed the plaintiff's action for non-earner benefits for the period she had received income replacement benefits stating that as a matter of statutory interpretation, it would not be permissible for her to receive non-earner benefits for a period of time that she had already received income replacement benefits. As for the period following the termination of income replacement benefits to date and ongoing, the matter was to proceed to trial for a determination of the extent of the plaintiff's disability. It appears that the issue was ultimately settled between the parties.

Hernandez v. TTC Insurance Co., 2015 Carswell Ont 11180 Financial Services Commission of Ontario (Appeal Decision)

The applicant applied for non-earner benefits after a motor vehicle accident. The issue in this case came down to causation and whether or not the applicant suffered a "complete inability to carry on a normal life."

Based on oral and written evidence provided by both the applicant and his health care team, the Arbitrator found that the applicant continued to see his daughter, continued to go to prayers (although possibly with somewhat less frequency and satisfaction), continued to go to the gym (with some reduction in the breadth of activity) and was able to continue to engage in housekeeping, cooking, personal care, attending appointments, shopping (with some limitation), going for walks, contact with relatives and doing exercises at home.

The Arbitrator found the applicant's participation in these identified pre-accident activities was sufficient to constitute engagement within the meaning of subsection 3(7) of the 2010 Schedule, although the frequency, quality and emotional satisfaction may had been marginally reduced.

The Arbitrator concluded that the applicant had failed to prove, on a balance of probabilities, that the accident caused any significant injury or impairment, or exacerbated his pre-accident physical or psychological condition. The Arbitrator was of the opinion that the applicant was never continuously prevented from engaging in substantially all of the activities in which he normally engaged before the accident. The Arbitrator found that the applicant had not satisfied the burden of proof that s. 3. (7) of the Schedule requires. As such, it was determined that the applicant was not entitled to non-earner benefits.

An Appeal was brought by the applicant/appellant submitting that the Arbitrator erred in law in changing the non-earner benefits test by requiring the impairment to be "significant."

The Director's Delegate Blackman stated that the Arbitrator had noted the general principles to a proper approach to the non-earner benefits test in the 1996 Schedule set out in Heath and that the applicant/appellant had not disputed the applicability of these principles to the 2010 Schedule.

These principles include:

It is not sufficient for a claimant to demonstrate that there were changes in his or her post-accident life. Rather, it is incumbent on a claimant to establish that those changes amounted to him or her being continuously prevented from engaging in substantially all of his pre-accident activities. The phrase "continuously prevents" means that a claimant must prove "disability or incapacity of the requisite nature, extent or degree which is and remains uninterrupted"...
The phrase "engaging in" should be interpreted from a qualitative perspective and as meaning more than isolated post-accident attempts to perform activities that a claimant was able to perform before the accident. The activity must be viewed as a whole, and a claimant who merely goes through the motions cannot be said to be "engaging in" an activity. Moreover, the manner in which an activity is performed and the quality of performance post-accident must also be considered. If the degree to which a claimant can perform an activity is sufficiently restricted, it cannot be said that he or she is truly "engaging in" the activity.
In cases where pain is a primary factor that allegedly prevents the insured from engaging in his or her former activities, the question is not whether the insured can physically do these activities, but whether the degree of pain experienced, either at the time or subsequent to the activity, is such that the individual is practically prevented from engaging in those activities.

Following the above analysis, the Court was not persuaded that the Arbitrator had "changed" the non-earner benefits entitlement test. Rather, it was found that the Arbitrator was "endeavouring to summarize the test, that the statutory wording required a degree of disability that was significant".

Director's Delegate Blackman concluded that the Arbitrator had not erred in law, and the Appeal was dismissed.

Gupta v. State Farm Mutual Automobile Insurance Co., 2016 CarswellOnt 14393 Financial Services Commission of Ontario (Arbitration Decision)

In this case the applicant had stated that she was in charge of cooking, cleaning, laundry and grocery shopping in her home prior to the accident.

The Arbitrator looked at the question of entitlement to a non-earner benefit and broke it down into two sub-issues:

Did the applicant suffer any accident related impairments 26 weeks after the accident (as required by section 13(4)(a)); and
If so, did the impairments result in a complete inability to carry on a normal life.

The Arbitrator, in considering whether an insured qualifies for non-earner benefits, stated that this analysis necessitated a comparison between what an insured was doing for a reasonable period before the accident and what an insured is capable of doing after the accident. "A complete inability" suggests that there needs to be a substantial change in an insured's ability to function, as a result of the accident.

In this case, the Arbitrator decided that the applicant was not entitled to non-earner benefits because evidence of pre-existing medical history showed that she had received disability tax credits for a number of years prior to the accident. The Arbitrator determined that this applicant did not suffer a complete inability to carry on a normal life as a result of the accident.

Galloway v. Echelon General Insurance Co., 2016 Carswell Ont 8253 Financial Services Commission of Ontario (Arbitration Decision)

In this case the applicant applied for non-earner benefits, which were subsequently terminated. Then the applicant subsequently underwent spinal surgery after which non-earner benefits were reinstated and then terminated once more.

In reviewing the evidence presented at the Arbitration, the Arbitrator stated that part of the difficulty in this case arose because the experts who assessed the applicant had in mind the concept of "a normal life," whereas the Court of Appeal uses the yardstick of active participation in pre-accident activities.

The Arbitrator stated that a "normal life" is a subjective concept, while the Court of Appeal has established a somewhat more objective, observable standard.

The Arbitrator went through the evidence stating that before the accident, Mrs. Galloway was an active, independent, outgoing and social person with a passion for motorcycles. Objectively speaking, what pre-accident activities have been continuously impaired or prevented, and how important were each of these activities to Mrs. Galloway? And what is a reasonable time period for which to consider these activities?

The Arbitrator was of the opinion that the Court of Appeal in deciding whether the necessary threshold had been satisfied, stated that all of the pre-accident activities in which the claimant ordinarily engaged should be considered, but greater weight may be assigned to those activities which the claimant identifies as being important to his/her pre-accident life. The Court spoke of inability to participate in "substantially all" pre-accident activities. The Arbitrator interpreted this to include most, but less than 100%, of her pre-accident activities.

Based on this reasoning, the Arbitrator awarded non-earner benefits to the applicant.

Kostopoulos v. Wawanesa Mutual Insurance Co., 2016 CarswellOnt 5282 Financial Services Commission of Ontario (Arbitration Decision)

In this case, the applicant had applied for non-earner benefits following an accident. The Insurer had scheduled a section 44 examination, but the applicant had failed to attend.
The Arbitrator quoted the decision in Al-Shimasawi v. Wawanesa Mutual Insurance Co., and set out the following considerations for assessing the reasonableness of a proposed Insurer Examination:

The timing of the Insurer's request;
The possible prejudice to both sides;
The number and nature of previous Insurer's Examinations;
Whether there are any new issues being raised in the applicant's claim that require evaluation;
Whether there is a reasonable nexus between the examination requested by the Insurer and the applicant's injuries.

The Arbitrator concluded that as a result of the above, the applicant was not entitled to non-earner benefits until the Insurer Examination had been completed in order to properly determine whether or not the applicant was entitled to non-earner benefits.

Conclusion

It is not easy for a claimant to prove that, as a result of an accident, they have sustained an impairment that continuously prevents them from engaging in substantially all of the activities in which they ordinarily engaged in before the accident. However, having a full appreciation of the claimant's pre-accident and post-accident activities as well as the significance of these activities on their life and the degree to which they are able to engage in them post-accident is an essential part of the analysis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Canada: Non-Earner Benefits Revisited – Impact Of Recent Changes