New rule may curb practice of paying HST out of benefits
By AdvocateDaily.com Staff
Lawyers for injured plaintiffs are hopeful that a recent change to clarify the requirement for insurers to pay HST over and above accident benefit limits will increase compliance with the law and allow individuals to preserve room in their benefit entitlement, says London personal injury lawyer Maia Bent.
Ontario regulation 123/19, which took effect in June, changes the Statutory Accident Benefits Schedule (SABS) under the Insurance Act to clarify that insurers are obliged to pay HST in addition to the maximum accident benefit amount limits specified in the SABS.
Specifically, insurers should pay HST for assessments or examinations, and for preparing reports in connection with these, in addition to the maximum limits provided in the SABS.
Although individuals are awarded a fixed, maximum amount of benefits — whether $3,500 if they are in the minor injury guideline, $65,000 for non-catastrophic injuries or $1 million in benefits if they are catastrophically injured — some insurers were also erroneously paying the tax for services such as physiotherapy out of an individual’s benefit entitlement.
Bent, partner with Lerners LLP, tells AdvocateDaily.com that the issue of HST had previously been brought to the attention of the Financial Services Commission of Ontario and now the Licensing Appeals Tribunal (LAT) via arbitration — which reinforced that HST was not to be taken out of accident victims’ benefits — but some insurance companies continued to do so, as there was often no penalty in place.
Although plaintiffs were previously able to bring claims for bad faith damages in court, Bent notes that changes to the Insurance Act in 2016 removed the right of individuals to hold insurers accountable in this regard.
“As a result, some insurers persisted in taking HST out of people’s benefits,” she says.
In addition, Bent says, most accident victims do not have the ability to start an arbitration at the LAT to recover HST room in their benefit entitlement.
“The size of the dispute is not sufficient to warrant starting an arbitration,” she explains.
However, with the regulation now in place, Bent says she is optimistic that there will be more compliance with what has always been the law.
“Hopefully, we will start to see those insurance companies taking this more seriously and stopping this practice, which depletes the amount of money available to accident victims,” says Bent.