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Overpayment Recovery: Is the Notice Valid?

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Overpayment situations can be stressful and complex. Especially where Income Replacement Benefits (IRB) had at one time been terminated and then reinstated, or one or more sources of other income replacement assistance may have been retroactively paid, and possibly at different times.  And of course, the overpayment could just be due to calculation error.

We focus only on the recovery period in this post, which for overpayments is limited to the 12-months prior to a valid notice of overpayment being issued by the insurer.

But what makes the notice valid?  For the answer to this we need to look at s.52 of the SABS and recent decisions.


In the Kulaveerasingam and State Farm Variation Order (FSCO Appeal P17-00011) it was determined that three notices of overpayment issued by the insurer were flawed or otherwise defective, and as such, unenforceable against the insured.

The main issue with all three notices was the repayment amount requested was for periods which were in excess of the prior 12-months. The Director’s Delegate referenced Knechtel and Royal Sun Alliance (FSCO A07-000011) which outlines requirements for a notice of overpayment:

  • The name of the specific benefit(s) the insurer claims it has overpaid;
  • A statement of the appropriate weekly/monthly or lump sum amount sought;
  • The payment date or applicable time span of the specific benefit(s) it has paid and seeks to be repaid; and
  • A calculation of the total repayment claimed.

While the above decision does relate to SABS-1996, the variation order acknowledges there have been no material changes which would make it not applicable for the current legislation.

Intact and Marianayagam (ONSC 1479) was also referenced, which indicates the amount claimed on a notice of overpayment needs to be substantially correct as the quantum of the deduction sought is sometimes debatable.

The Director’s Delegate concluded that although the quantum can be debatable, the duration of the time period claimed is not debatable as it is clearly stated in s.52 of the SABS.

What about retroactive payments?

In the Pries and Economical Appeal (FSCO Appeal P12-00036) the insured received a retroactive payment of Canada Pension Plan disability benefits (“CPPd”). The Director’s Delegate concluded the recovery period continues to be limited to 12-months prior to the date notice of overpayment is provided. For further discussion regarding this issue refer to our blog on CPPd.

What you should watch for:

The common causes of overpayments are:

  1. Receipt of a retroactive benefit (i.e. CPPd, LTD, etc.)
  2. An error in the initial IRB calculation
  3. A change in the IRB calculation due to updated information becoming available (such as a tax return which was not previously due to be filed)
  4. A change in the situation (i.e. return to work, receipt of other income replacement assistance, etc.)

When the above issues come up, know that an overpayment is possible, and where any question lingers about the accuracy of a payment, ensure the overpayment calculations address only the 12-months prior to the notice date.

We frequently come across notices of overpayment which are requesting repayment far in excess of the prior 12-months. For this reason, understanding the recovery period is crucial to ensuring the requested overpayment is recoverable.

In accordance with s.52(3) of the SABS, the 12-month limitation does not exist on matters where the overpayment was obtained through fraudulent means.

When in doubt, ask an expert for their opinion.

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