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Divisional Court Dismisses Appeal on Deducting LTD Settlement from Income Replacement Benefits

The decision in Co-operators General Insurance Company v. Branden, 2022 ONSC 2473, involves a statutory accident benefits claim in which the insurer sought to deduct from income replacement benefits amounts received in a settlement of an LTD claim.

The Licence Appeal Tribunal held that there were insufficient details of the LTD settlement to permit the deductions sought by the insurer.  This was upheld by the Divisional Court.

The LTD claim settled for $120,000.  This was the maximum amount of coverage available under the LTD policy.  The insurer argued that the LTD settlement must have been solely for LTD benefits. However, there was no direct evidence of how the settlement was calculated.

As against her LTD insurer, the claimant sought not only LTD benefits, but also aggravated, exemplary and punitive damages.  The Licence Appeal Tribunal accepted that the settlement was a compromise of all of the claimant’s claims against the LTD insurer, including legal costs.

The Licence Appeal Tribunal had made a factual finding that the settlement was not an income replacement benefit and, therefore, could not be deducted in the accident benefits claim.  This was a factual finding and not subject to appeal.

The Divisional Court held that the Licence Appeal Tribunal did not make an error of law.  The insurer’s appeal was dismissed.