Divisional Court says adjudicator did not ignore psychiatry report finding marked impairment
The Ontario Divisional Court has upheld an adjudicator’s decision in favour of an insurance company that sought to stop paying income replacement benefits (IRBs) to an injured party who had returned to his pre-accident employment as a lawyer.
On November 5, 2019, the appellant in Zabarain v. Coseco Insurance Company, 2026 ONSC 3712, was riding his bicycle when an automobile struck him. He fractured his hip and right finger.
At the time of the accident, the appellant was an international student from Colombia who was studying music at Mohawk College in Hamilton. At that time, he had no Ontario Health Insurance Plan coverage but had secondary coverage under a travel insurance policy.
According to the appellant, before moving to Canada, he worked as a lawyer at his mother’s Colombian construction company during the week and as a freelance musician on the weekends.
The respondent insurance company was the automobile insurer for the owner of the vehicle that hit the appellant. On Nov. 28, 2019, the appellant applied to the insurer for accident benefits.
On Oct. 12, 2021, the insurer informed the appellant that his IRB entitlement would end on Nov. 1, 2021, or 104 weeks from the accident date, as he did not meet the test for IRBs after 104 weeks of disability because he had resumed working as a lawyer on modified hours on Apr. 6, 2020.
On Sept. 30, 2022, before the respondent Licence Appeal Tribunal, the appellant applied for dispute resolution regarding the insurer’s cessation of IRBs and its refusal to pay for medical and rehabilitation services beyond the $65,000 limit for medical and rehabilitation benefits.
In its response on Oct. 17, 2022, the insurer alleged a $10,513.56 overpayment of IRBs for the period from Apr. 6, 2020, to Nov. 1, 2021. The insurer asserted material misrepresentation regarding the appellant’s employment status.
The tribunal’s adjudicator decided that the appellant was not entitled to:
The adjudicator found the insurer entitled to repayment of IRBs amounting to $10,513.56 under s. 52 of the Statutory Accident Benefits Schedule (SABS).
The appellant appealed the adjudicator’s decision dated Sept. 12, 2024, and his reconsideration decision dated Mar. 3, 2025.
The Divisional Court of the Ontario Superior Court of Justice dismissed the appeal and ordered the appellant to pay the respondent insurer’s costs of $7,500 and the respondent tribunal’s costs of $250.
First, the court saw no legal error in the adjudicator’s determination that the insurer did not violate ss. 38 and 39 of the SABS by paying the hospital expense as a medical benefit without a treatment and assessment plan and by failing to notify the appellant.
The court ruled that ss. 38 and 39 did not apply because the insurer had paid an already incurred hospital expense.
The court added that Ontario’s Insurance Act, 1990, and the SABS did not prohibit an insurer from paying, under ss. 14 and 15 of the SABS, an already incurred medical and rehabilitation expense that it considered a reasonable and necessary expense incurred due to an accident.
Second, the court found no basis for the appellant’s argument that the adjudicator ignored a doctor’s psychiatry report, which opined that the appellant had a marked impairment in adaptation.
The court saw no authority or evidence that a marked impairment finding would mean the appellant met the disability test for IRBs. The court discerned no legal error in the adjudicator’s finding that the appellant failed to provide sufficient evidence to support his impairment claim.
Third, the court rejected the appellant’s assertion that the adjudicator committed a legal error by addressing the quantum of IRBs, an issue allegedly not raised before the hearing. The court pointed out that the insurer disputed the quantum of the appellant’s requested IRBs in its response to the application.
Fourth, the court acknowledged that the adjudicator misstated the appropriate test for wilful misrepresentation in s. 52 of the SABS.
However, the court held that the adjudicator applied the correct test because he analyzed the evidence and circumstances to conclude that the appellant had withheld employment information that would jeopardize his IRB claim.
