May 26, 2014

SABS Update – “Real World Jobs” are not Broken Down into Component Parts – Applicant Entitled to IRB’s.

For the week of May 26 to May 30, 2014

Kozumplik v Aviva, FSCO A12-006180, Arbitrator Knox M. Henry

MVC, August 29, 2004. The Applicant was a Czechoslovakian immigrant who came to Canada at the age of 17 with a grade 9 education. He worked 20 years at the Ford Motor Company assembly plant in Talbotville. While at Ford, he attended college to improve his English skills and obtain his real estate license. He began a business where he renovated then either resold or rented properties. He undertook the majority of the renovation work to bring the properties into a reasonably habitable condition. This part-time activity became his full time, self-employed occupation after the closure of the Ford plant. His wife assisted with the administrative duties. They split their income on a 50/50 basis for the purpose of tax returns even though his wife did 95% of the work following the crash.

As a consequence of the collision, the Applicant underwent extensive medical treatment but was unable to resume his self-employment activities. Extreme lower back pain restricted the Applicant from doing any repair, renovation and maintenance activities. As a consequence of his injuries, he was forced to sell the properties at a significant loss.

At issue on Arbitration was entitlement to post-104 week Income Replacement Benefits.

Although the applicant was able to complete some aspects of his job including responding to tenant complaints, hiring a contractor or obtaining maintenance supplies, the Arbitrator found that the Applicant’s level of ability to perform any work as defined in section 5.2 of the Schedule was severely limited and the Applicant met the test of a complete inability to engage in any employment for which he is reasonably suited by education, training or experience. The Arbitrator relied on the fact that a “complete inability” does not require a degree of impairment as high as “catastrophic impairment” which would preclude legitimate claims for ongoing disability.

The test in paragraph 5(2)(b) ought not be interpreted that the applicant has to suffer an ability to do more than 50% of the job to qualify for post-104 week IRB’s. Real world jobs should not be broken down into their component parts such that if an applicant is able to do a little more than half of any suitable job, that he or she should be found to be disentitled from receiving IRBS.

IMPLICATIONS

The decision reiterates the importance of taking a real world and “real job” approach to the disability test. A literal reading of a total disability clause would mean an insured would have to be unable to perform any function of any job to qualify. For this reason, the ability to engage in a reasonably suitable employment must be considered as a whole, including reasonable hours and productivity.

Aviva was entitled to the deduction of 80% of the net income received by the insured subsequent to the collision. Not surprisingly, the arbitrator was not prepared to go behind the tax returns to determine entitlement in accordance with the division of labour rather than the division of income.

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