Will Davidson LLP Partner, Chris Morrison, successfully upheld the non-deductibility of a lump sum LTD settlement from Income Replacement Benefit on behalf of the Insured Patricia Branden represented at the adjudication by Roger Foisy, Founder and Principle Lawyer of Roger R Foisy Professional Corporation.  The Divisional Court confirmed the adjudicators decision that there was no evidence of double recovery from Patricia’s Long-Term Disability settlement of $120,000 with her employer’s insurance carrier Empire Life.

Read the full decision here.


Following a motor vehicle accident in 2017, Patricia Branden applied for and received an Income Replacement Benefit (IRB) from the appellant, Cooperators General Insurance Company. She also sought a long-term disability benefit (LTD) held by her employer from Empire Life Insurance Company. At this time, Patricia received income replacement benefits from Cooperators, but Empire Life denied her claim for LTD.

In October 2018, Patricia settled with Empire Life Insurance Company for $120,000, in which she signed a release for a two-year suspension of her long-term disability claim. Included in this settlement amount was “aggravated, exemplary, and punitive damages in the amount of $100,000.”

The Cooperators received a copy of this release and responded by cutting her income replacement benefits. They noted that they had overpaid her $3,369.72 on previous IRB’s, and would cut her future IRB payments from $400 per week to $209.80 per week.

In July 2019, Patricia filed an application with the Licensed Appeal Tribunal (LAT), and in September 2020, the LAT found that Patricia was entitled to an income replacement benefit under SABS in the amount of $400 per week. There was no evidence found that “the LTD settlement between P.B. and Empire does not provide appropriate details to allow The Co-Operators to deduct the settlement from P.B.’s past IRB calculation because the settlement was not confined to payment for her LTD claims alone.”


The Cooperators asked the LAT to reconsider the decision, and when it refused, the Defendants appealed the decision to the Ontario Divisional Court. The adjudicator noted that there was no evidence that the 120,000 lump sum payment represented weekly income replacement and refused the deduction and maintained the position on reconsideration.  Before the Divisional Court, Cooperators argued that the “silos” approach for deduction of collateral benefits for tort claims under the legislation applied and therefore they were entitled to the deduction.  Chris Morrison argued:

a) that the finding that the 120,000 payment was not income replacement was a factual determination and unappealable, and that

b) the “silos” approach was under differently worded sections and the attribution of LTD settlements to IRB calculations still required strict matching of categories. 


In the Divisional Court agreed that the question under appeal was primarily factual based on the findings made by the adjudicator based on the evidence of what the settlement was based on with Empire Life.  In particular the Court noted that the adjudicator based his decision that the settlement was not for weekly income replacement which as a factual finding was not subject to appeal.  In terms of the “silos approach” advocated by Cooperators the Divisional Court noted:

The calculation of income replacement benefits pursuant to s. 7(1) of SABS specifically sets out that the amount deducted is only “the amount of any gross weekly payment for loss of income that is received by or available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan” and is only to be applied to the “particular week” the benefit is payable. The adjudicator found that the LTD settlement between Patricia Branden and Empire did not provide appropriate details to allow Co-Operators to deduct the settlement from her past IRB calculation because the settlement was not confined to payment for her LTD claims alone.

This case demonstrates the necessity for proper documentation of any settlement as the case turned on the fact that the releases and claim specifically were not limited to a claim for denied benefits but included punitive and aggravated damages as well as interest and costs.  It will also be useful to have evidence that shows the settlement was for more than simply insurance payments as ultimately it will be determined by the adjudicator on a factual basis.

Chris Morrison, Partner at Will Davidson LLP handles the majority of our firm’s appeals and as well as a significant number of appeals for litigators across Ontario. If you need co-counsel support on an appeal, contact us by filling out a form on our website, or email Chris Morrison directly at

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