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No such thing as a ‘zero’ income replacement benefit, Ontario arbitrator rules


June 11, 2008   by Canadian Underwriter


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Security National Insurance scored a pyrrhic victory in an Ontario arbitration, in which the arbitrator dismantled the notion that there can be such a thing as an “income replacement benefit of zero.”
In Zewde Berhe and Security National/Monnex Insurance Management, an applicant, Zewde Berhe, was injured in a 2004 motor vehicle accident.
During the arbitration, Berhe’s true employment status was a subject of live debate.
“It seems likely that if Mr. Berhe was actively engaged in the workplace prior to the accident, his engagement was largely restricted to the underground economy,” Financial Services Commission of Ontario (FSCO) Arbitrator John Wilson noted in his reasons for decision. “This pattern had significant implications for Mr. Berhe’s accident benefits claim.”
Based on his employment status, Berhe opted to pursue a claim for a non-earner benefit.
Under the Statutory Accident Benefits Schedule (SABS), the non-earner benefit goes to an injured person who “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.”
Security National rejected Berhe’s claim for a non-earner benefit, arguing he did indeed qualify for an income replacement benefit.
Under the SABS, the income replacement benefit goes to anyone who was “employed at the time of the accident” and can no longer perform the tasks of the employment.
Security National noted some evidence that Berhe claimed he did maintenance for Auto Works and was employed as a casual worker for Amber Kitchen Cabinets. But there was little documentary evidence to back up the claim, as the income did not appear on any tax returns.
The insurer argued Berhe was entitled to income replacement benefits because he worked, but the benefits would be reduced to the amount of zero because Berhe’s earnings were not recorded on any income tax returns, as required by the SABS.
The arbitrator made short work of this argument: “When someone speaks loosely of a ‘zero benefit,’ they are really speaking of a lack of entitlement to a benefit” Wilson wrote. “A zero benefit in itself would neither indemnify nor compensate and would be both an oxymoron and an absurdity.”
Still, the arbitrator ruled Berhe was not entitled to the non-earner benefit, not because of his income status, but because he did not meet the threshold of “a complete inability to carry on normal life” as a result of an accident.


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