Canadian Underwriter

Auto insurers had it right in accident benefits HST case, Appeal Court rules

August 3, 2022   by David Gambrill

Nurse Speaking to a Mother and Child

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Auto insurers that paid catastrophically impaired accident victims attendant care benefits prior to a regulatory clarification in 2019 do not have to pay provincial sales tax above and beyond the benefit limits outlined in law, the Court of Appeal for Ontario has decided.

The province’s accident benefits law sets out the maximum amount insurers must pay for attendant care in catastrophic injury cases — a limit of $6,000 per month, up to a maximum of $1 million.

Ontario’s harmonized sales tax (HST) is included within these limits, the appeal court decided, finding the industry was correct in how it was paying out the HST before the regulations changed in 2019.

In Dominion of Canada General Insurance Company v. Ridi, Filippo Ridi was catastrophically impaired as a result of a car accident on Mar. 21, 2014 and became eligible for attendant care benefits.

At the time, Ontario’s Statutory Accident Benefits Schedule (SABS) stated: “Attendant care benefits shall pay for all reasonable and necessary expenses…that are incurred by or on behalf of the insured person as a result of the accident for services provided by an aide or attendant.” Those benefits were capped at a maximum of $6,000 per month, up to $1 million.

Section 19 of the SABS then did not mention the HST provincial tax at all.

Ridi’s insurer, Dominion, interpreted s. 19 to mean the HST paid to attendants was included in the monthly $6,000 monthly maximum and the $1 million maximum policy limit. Dominion claimed HST is an attendant care benefit because it is a “reasonable and necessary” expense incurred by the insured.

Ridi disagreed and took the dispute to the Ontario Licence Appeals Tribunal (LAT), which found the HST did not come under the limits for attendant care benefits. In other words, Dominion had to pay for HST above and beyond the $6,000 and $1 million maximums.

Dominion had the LAT result overturned in Divisional Court, and the Court of Appeal for Ontario also found in favour of the insurer. (Insurance Bureau of Canada and the Ontario Trial Lawyers Association appeared as intervenors in the Appeal Court case.)

Ridi pointed to several SABS regulations that dealt with other benefit amounts, where HST was not subject to limits defined in regulation (none of his examples were attendant care benefits, the Appeal Court noted).

Also, Ridi said, the 2019 “clarification” of the attendant care benefit regulations, which called for insurers to pay for HST above and beyond the limits, showed what the legislature actually intended.

But the Appeal Court noted changes in the law say nothing about how previous versions of the laws are to be interpreted. What’s more, the court said if insurers are obligated to pay for attendant care benefits, then the limits should apply to those payments.

“The phrase ‘attendant care benefits’ must be given the same meaning when used in s. 14 [of the SABS], imposing an obligation on the insured to pay them, and in s. 19, specifying that they consist only of ‘reasonable and necessary expenses,’ and are subject to maximum amounts,” the Appeal Court wrote in a decision released on July 29.

“In our view, the same words in ss. 14 and 19 [of the SABS] cannot be interpreted to require the insurer to pay HST for attendant care services but at the same time, exclude HST for the purpose of establishing the maximum amount payable by the insurer for those same attendant care benefits based on the identical wording.

“Treating amounts required to be paid for attendant care benefits as inclusive of HST but excluding HST from the maximum amount payable for attendant care benefits would be contrary to the principle of statutory interpretation to give, ‘the same words the same meaning throughout a statute.’”


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