Ontario Court Of Appeal Summaries (April 27 – May 1, 2015)

Hello everyone. Below are summaries of this week's Ontario Court of Appeal civil decisions (non-criminal). Topics covered include family law, construction liens, constructive dismissal, insurance law in relation to the calculation of the amount of a subrogated claim by OHIP in a personal injury action and in the reduction of benefits under an LTD policy upon receipt of CPP payments, and a motion to strike for no cause of action and the right to amend pleadings in that context.

Erickson & Partners v. Ontario (Health and Long-Term Care), 2015 ONCA 285

[Feldman, Benotto and Brown JJ.A.]

Counsel: B. A. Babcock, for the appellant R. V. Bambers and S. Gandhi, for the respondent

Keywords: Insurance Law, Ontario Health Insurance Act, Personal Injury, OHIP, Calculation of Subrogated Claim

Facts: Under the Ontario Health Insurance Act, any person who commences an action to recover damages arising out of the negligence or other wrongful act of a third party must include a claim on behalf of the Ontario Health Insurance Plan (the "Plan") for the cost of any insured medical services provided to the insured person in respect of the injury or disability suffered. Section 39(6) of the General Regulation made under the Act (the "Regulation") prescribes the portion of the costs of the insured person's action which the Plan must bear. At issue on this appeal is the proper interpretation of that section.

The appellant, Erickson & Partners, is a Thunder Bay law firm (the "Law Firm"). A dispute arose between the Law Firm and the Plan about how to calculate the Plan's share of costs payable by the insured person under ss. 39(6) of the Regulation.

The Law Firm commenced an application which sought a declaration regarding how the Plan's share of costs should be calculated, specifically the meaning of the phrase "the total recovery of the insured person" found in ss. 39(6) of the Regulation.

The application judge interpreted ss. 39(6) of the Regulation in a manner which accepted only part of the Law Firm's submissions.

The Law Firm appealed from the Judgment in respect of the interpretation of ss. 39(6) of the Regulation. The respondent Plan submitted that although the Judgment in large part was correct, the application judge unduly complicated the calculation required by ss. 39(6) of the Regulation and the Court of Appeal should simplify it.

Issues: (1) Did the application judge err in his interpretation of "the total recovery of the insured person in the action" under ss. 39(6) of the Regulation? (2) Did the application judge unnecessarily complicate the treatment of costs recovered by judgement or settlement under ss. 39(6) of the Regulation?

Decision: Appeal Dismissed

Reasoning: (1) No. The Law Firm submitted that the phrase "the total recovery of the insured person in the action" is limited to the amount of the personal damages recovered by the insured person, such as general damages and loss of income, and should not include the amount recovered under the Plan's subrogated claim. The court disagreed. Since the cause of action for the recovery of the costs of medical services incurred as a result of the injury remains that of the injured person, it follows that "the total recovery of the insured person in the action" would include the amounts recovered in respect of the subrogated claim advanced on behalf of the Plan for the cost of insured medical services.

(2) Yes. The application judge created a four-step approach to calculating the portion of the costs the Plan should bear. The approach proposed by the application judge was inconsistent with ss. 39(6) of the Regulation. Where an insured person recovers costs as part of a judgment or settlement, those costs should be deducted from the total costs in order to determine "the taxable costs otherwise payable by the insured person" to their lawyer. Once the net costs due to the lawyer are ascertained, one then can proceed to calculate the Plan's proportionate share of those net costs by using the formula found in ss. 39(6) of the Regulation.

Prystupa v. Desjardins Financial Security Life Assurance Company, 2015 ONCA 298

[Hoy A.C.J.O., Watt and Brown JJ.A.]

Counsel: A. Rouben, for the appellant G. Patenall and E. Caputo, for the respondent

Keywords: Insurance Law, Long Term Disability, Calculation of Benefits, Canada Pension Plan

Facts: The plaintiff, Ms. Prystupa, had sought declarations interpreting section 3 of Minutes of Settlement entered into on April 13, 2011, with Desjardins and the Canadian Bar Insurance Association (the "Minutes"). The settlement resolved a 2008 action commenced by Ms. Prystupa in which she had sought payment by Desjardins of disability benefits under a group insurance policy (the "Policy").

In 2013, Ms. Prystupa applied for disability benefits under the Canada Pension Plan ("CPP"). In January, 2014, Ms. Prystupa was informed that she was eligible for the CPP Disability Benefit, retroactive to January, 2013, in an initial monthly amount of $1,101.08.

Desjardins subsequently told Ms. Prystupa that the CPP Disability Benefits were a direct offset from LTD benefits under the Policy and requested that she refund $14,314.04 as overpayments made to her from the commencement of her receipt of the CPP Disability Benefit. Desjardins also advised that upon receipt of the overpayment, Ms. Prystupa's benefits would resume at a revised monthly LTD benefit amount of $898.92.

In June 2014, Ms. Prystupa commenced an application in which she sought a declaration that section 3 of the Minutes be interpreted so that the direct offset provisions of the Policy concerning CPP Disability Benefits did not apply to her.

The application judge found that when Ms. Prystupa agreed as part of the settlement that the policy provisions would still be in effect, subject to the amendments in the Minutes of Settlement, the clear implication was that any deductions for Canada Pension Plan...