Active/Passive Income not an IRB Consideration

January 16, 2018 | Nawaz Tahir

In the recent LAT decision of A.S. and Economical Insurance (16-003197/AABS), Adjudicator Robert Watt held that an insurer is entitled to deduct post-accident income from a claimant’s business in determining an Income Replacement Benefit amount under the Statutory Accident Benefits Schedule (“SABs”).

The claimant, a chiropractor, had to hire another chiropractor after the accident to treat patients. While not active in the day to day operations of the business, the claimant continued to be responsible for the control of the business and made all of the major business decisions.

The Adjudicator held that the SABs does not differentiate between passive and active income.  Accordingly, the test was not whether or not the claimant was active in the business, but simply whether or not he had income from the business.  Since he had income from the business, and even though he was less involved in the business, and making less money, he was still making income from the business.

The significance of that fact, as applied to the case, was that the deductible post-accident income was greater than the $400 a week maximum IRB, such that there was a complete set off and thus, there was no IRB payable.

The adjudicator noted that this was consistent with previous decisions from FSCO, including the Surani appeal case, which was comprehensively reviewed by my partner, Helen Friedman, accessible here.

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