December 2, 2013

Court of Appeal – Pre-condition to Post-104 IRB is Eligibility to Pre-104 IRB

For the week of December 2 to December 6, 2013 

Wadhwani v. State Farm Mutual Automobile Insurance Company, 2013 ONCA 662 (CanLII), November 1, 2013

MVC: September 26, 1997. Due to the limited facts provided by the Court of Appeal, the facts of this case were obtained from the decision on summary judgment motion by Justice Grace dated May 10, 2010: 2010 ONSC 2479 (CanLII). The Insured, an aesthetician who recently opened her own business, continued to work after the collision at a reduced capacity and received Income Replacement Benefits (“IRBs”). Although she continued to work, she consistently complained of neck and back pain, severe nausea inducing headaches, and persistent knee pain. In February, 1998, the Insurer received an opinion from its assessor that the Insured was not substantially disabled from performing essential tasks of her job.   The Insurer ceased paying IRBs after March 9, 1998.  It was not until August, 2005 that the Insured stopped working.  The Insured subsequently pursued IRBs and the issue was mediated on December 20, 2007. The report of mediator was released June 16, 2008.

On December 20, 2007, the Insured issued a statement of claim against the Insurer for, among other issues in dispute, IRBs from August, 2005 to as long as she remains disabled. At trial, the jury was not satisfied that the Insured had suffered a substantial inability to perform the essential tasks of her employment as an aesthetician as a result of the accident and within 2 years of the accident. The Insured failed to provide sufficient medical evidence to demonstrate that she was substantially unable to perform the essential tasks of her employment during the first 104 weeks, while the Insurer had a report dated February 16, 1998 concluding that she was not. As a result, the action was dismissed. The Insured appealed as a self-represented party and challenged the correctness of the trial judge’s interpretation of the interplay between subsection 4(1) and 5 of the Statutory Accident Benefits Schedule – Accidents On or After November 1, 1996 (“SABS”).



Section 4(1) and 5(2)(b) of the SABS provides as follows:

4.  (1)  The insurer shall pay an insured person who sustains an impairment as a result of an accident an income replacement benefit if the insured person meets any of the following qualifications:

1. The insured person was employed at the time of the accident and, as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of that employment.

5.  2)(b)  The insurer is not required to pay an income replacement benefit,…for any period longer than 104 weeks of disability, unless, as a result of the accident, the insured person is suffering a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience;

The trial judge decided that to qualify for IRBs under section 5 of the SABS beyond a period of 104 weeks, an insured must establish eligibility for the benefits within the first 104 weeks after the accident under section 4(1) of the SABS. The Court of Appeal confirmed that the trial judge was correct in her interpretation of the relationship between the two provisions. The Insured also argued that an insured can return to work during the initial 104-week period, as the Insured did here, and, if at some time thereafter she or he is entirely unable to work because of accident-related injuries, she or he can reassert a clam for IRBs at any time, with the limitation period beginning to run only when the insurer refuses to pay the further benefits claimed. The Court of Appeal rejected this argument. The Court of Appeal dismissed the appeal in its entirety.



The Insured faced significant evidentiary issues in this trial: although there were significant medical records evidencing her medical complaints after the collision, there were no reports to answer the specific question of whether she was substantially unable to perform the essential tasks of employment. Her family physician, who may have been able to answer that question on the stand, was deceased.

What is clear from the Court of Appeal’s decision is that if an insured does not apply for IRBs and obtain a determination of entitlement at any time during the first 104 weeks after the collision, the insured will be precluded from seeking IRBs after 104 weeks despite a deteriorating condition. This situation can arise where a benevolent employer provides significant accommodation for an insured, but such accommodation may not last or help long term. To preserve the insured’s right to IRBs in the future, it may be necessary to obtain employment information and medical evidence that specifically supports the substantial inability to perform the essential tasks of that employment. The fact that the insured returns to work is not affirmative evidence that the insured does not meet that test. However, medical evidence showing pain and a disabling condition where the insured returns to work is not sufficient to prove to a jury that the insured suffers a substantial inability to perform essential tasks of his or her job.

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