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Accident Benefits and LTD Benefits

In accordance with Section 7 of the Statutory Accident Benefits Schedule (“SABS”), the accident benefits insurer (“AB Insurer”) is entitled to offset the amount of income replacement benefit (“IRB”) it pays to an insured by the amount of long-term disability (“LTD”) that is received. However, what if the insured is denied the LTD? Is the insured obligated to pursue an appeal of the LTD insurer’s decision? The answer is “no”.

Let’s take a look at the case of Ng v. Cole et al., 2013 ONSC 6588. The insured suffered injuries from a slip and fall accident in March 2008 and then injuries from a motor vehicle accident in July 2008. He applied for LTD benefits but was denied and received some, but not all, of the IRB from the AB Insurer. An action was brought against the AB Insurer and the LTD Insurer. The AB Insurer crossclaimed against the LTD Insurer alleging the LTD Insurer was unjustly enriched by the IRB payments that would not have been paid if the LTD Insurer paid the LTD. The AB Insurer asserted that its decision to pay the IRB made an obligation for the LTD Insurer to pay the LTD.

Murray, J. disagreed. The crossclaim was struck out because Murray, J. found that the AB Insurer was not entitled to deduct from the IRB the value of unpaid LTD payments applied for and denied. The LTD Insurer is a separate insurer with a separate contract and separate obligations. The SABS places no obligation on the insured to pursue the LTD benefits for the benefit of the AB Insurer. The decision of an AB Insurer to pay the IRB does not bind an LTD Insurer to pay, nor vice versa.