January 11, 2011 by Canadian Underwriter
A change in the occupation test for determining Income Replacement Benefits (IRB) before and after a 104-week period of disability is not necessarily enough of a “change” of circumstances to warrant overturning an arbitrator’s order to pay IRB benefits.
Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO), made the ruling in Wawanesa Mutual Insurance Company and Sophia Sun.
Under Ontario legislation, an insurer cannot deny IRB benefits after an arbitrator has ordered that a claimant is entitled to ongoing benefits, unless the insurer receives a variance order from an arbitrator based on an “alleged change of circumstances.”
Among other things, Wawanesa noted the change of the occupational test in Ontario’s legislation between the pre- and post-104-week disability period was in itself a change of circumstances to warrant termination of benefits.
Prior to the 104-week point of a disability, a claimant must meet the “own occupation” test to be entitled for IRB benefits. In other words, the claimant’s injury must prevent him or her from performing the tasks of his or her own occupation.
After the 104-week point of a disability, however, the test changes to the “any occupation” test. That is, to be entitled to receive IRB benefits after the 104-week period, a claimant’s injuries must prevent them from performing the tasks of any reasonable occupation.
An Ontario arbitrator ruled Sophia Sun was entitled to IRB benefits because she could not perform the tasks of her own occupation, which was on an assembly line.
Subsequent to that decision, Wawanesa ordered a number of further assessments, and sought for the IRB benefits to be terminated based on the findings of these new assessments.
Wawanesa argued the subsequent assessments proved that Sun’s injuries did not meet the post-104-week occupation test – that she could not meet the tasks required of “any” reasonable occupation.
The arbitrator re-iterated this was an appeal case under s. 287 of the Insurance Act, which “affords a mandatory protection of benefits” following an arbitrator’s order. To overturn this, there must be a change of circumstances.
“Neither of these decisions [supplied by Wawanesa in support of its case] supports the proposition that the change in the [occupational] test alone suffices to constitute a material change in circumstances where benefits have been finally ordered after a full hearing on the merits,” a FSCO arbitrator concluded.