Thursday, July 9, 2015

ODSP Overpayments: Update

About 15 months ago, I made an entry about an Ontario Court of Appeal decision, Surdivall, reinstating a decision by the Social Benefits Tribunal to 'forgive' half of an ODSP overpayment.

The Supreme Court subsequently denied leave to appeal, and therefore the Ontario Court of Appeal's decision was final on the point.

I made the following observation in my previous entry:
It may well be that, in cases where the recipient can show good faith, partial forgiveness will become the norm, not the exception.
It appears that I was wrong.  Sort of.  The Social Benefits Tribunal has considered the impact of the Surdivall case on dozens of occasions since then, and in most of those cases has completely forgiven the overpayment, including requiring the Director to refund recovered portions of the overpayment.  It isn't universal, of course.  In some cases, we see partial forgiveness.  In others, no forgiveness, but a significant reduction in the rate of recovery of the debt.  On one occasion, the Tribunal didn't have the evidence to be able to make a ruling on the point, but 'encouraged' the Director to exercise such discretion.

And there are a few cases where recovery was ordered.

There are a few trends here.  In many of the cases considered, the overpayment resulted from administrative errors - not failures to report by the recipient.  In those cases, combined with adequate evidence of hardship, the trend tends to be toward full forgiveness of the overpayment.

Where the overpayment resulted from an innocent mistake by the recipient, with adequate evidence of hardship, the trend is toward partial forgiveness of the overpayment, or alternatively to limiting the rate at which the Director can recover the overpayment.

However, where the evidence of hardship was inadequate, or where the overpayment was created by deliberately misleading conduct by the recipient, the full overpayment is recoverable.

In this entry, I'll survey a few cases of note, to draw out some contrasts.

Honesty Versus Dishonesty

There are a couple of big dollar-value cases.  In 1306-05671 (let's call it "671"), an overpayment of $102,024.01, over the course of 11 years, was found to result from a recipient's failure to declare child support payments and other factors relating to her dependants.

In 1405-06001, an overpayment of $87,001.75 resulted, over the course of several years, from a failure to report increases in the amount of other (Federal) income support payments.

In both cases, the overpayment is large.  In both cases, it's the result of the recipient's failure to provide necessary information to the Ministry.  In both cases, recovery of the overpayment would lead to hardship.

But there's one critical distinguishing factor:  In 671, the Tribunal concluded that the recipient was intentionally dishonest:
[137] Further, the Appellant has proven that she is willing to provide false information in order to increase her access to funds. She stated that she provided false information about her living situation with V.S. to the courts in order to increase the amount that he would have to pay her. She also testified that she avoided advising OW of the fact that she had pursued support, and received it, because she was concerned that this would impact her eligibility for income assistance.
[138] The Tribunal found that the Appellant was well aware of what was required of her and that she purposely avoided providing same in order to benefit her financial situation.
In 001, by contrast, the recipient's non-disclosure was inadvertent, premised on an assumption that the Ministry would be aware of the changes to their other income supports.
I accept the Respondent’s argument that the Appellant was under a duty to advise the Director of any changes in his income. He signed an agreement to this effect. I further accept that the Appellant did not satisfy his obligations in this regard. His failure to do so was not as a result of any type of dishonesty or an attempt to deceive the Director. The failure of the Appellant to advise the Director of the increases in his federal benefits was as a result of a mistaken belief on the part of his spouse that the Director would be aware of any changes in the benefits which had already been disclosed. In fact, it was the Director who insisted that the Appellant apply for these benefits so it is somewhat understandable that the Appellant would assume that the Director remained aware of any increases. In other words, the overpayment is the result of the Appellant’s mistaken belief that the Director was aware of this income.
The result?  The recipient in 671 has to repay the whole amount; the recipient in 001 had most of the overpayment forgiven, with only $5000 still recoverable.

The "Insufficient Evidence" Cases

In a few cases, the Tribunal concluded that the evidence did not establish significant hardship that would result from recovery of the overpayment.

Of course, people who are on ODSP are, by definition, of limited means, so financial hardship will very often be present.

To some extent, this appears to be a 'luck of the draw' analysis in terms of which Member hears the case.  Only a small number of cases go that way, and two of them were decided by the same Member, Margaret Reynolds, who expressly rejected the notion that being on ODSP is, in and of itself, evidence of hardship that would result from recovery of an overpayment:
No evidence of any substance was given as to hardship at the hearing. This Member is not prepared, in the absence of such evidence, to assume that to be in receipt of Ontario Disability Support amounts is to be in financial hardship.
In one such case, the overpayment resulted from an administrative error failing to flag that her child turned 18, which changed her entitlements, and the overpayment was assessed at $5,600.  The other case involved a Danish immigrant - he came to Canada in 1989, and started receiving ODSP benefits in February 2011, and ODSP provided him with hearing aids and a CPAP machine.  At the time, he was up front that he was applying for a Danish pension fund, and was told, basically, "Let us know when you start getting those funds."

In October 2011, he started receiving the Danish pension (of about $1100 Canadian per month), which rendered him ineligible for ODSP benefits, and he also received a retroactive payment to July 2010, which made all the benefits he'd received up to that time an overpayment.  Including the receipt of the hearing aid and CPAP machine.  (He says that he never would have gotten them if he'd known he'd have to pay for them, and that his caseworker believed that he would remain eligible for these benefits.)  The overall ODSP overpayment was $6,587.81.

Ms. Reynolds focuses on the fact that these recipients received the benefit of the overpayment, and therefore in the absence of evidence of hardship should have to pay for the windfall, even where the overpayment resulted from circumstances totally outside of their control.

It's not a bad analysis, but one might wonder about the hearing aids and CPAP machine:  There's a bit of an integral unfairness in the regime, that disabled people need to meet some pretty narrow financial eligibility criteria before they become eligible for ODSP assistance which includes medical treatments.  (I once dealt with a fellow with a debilitating medical condition that could be totally controlled with expensive medication - he'd never make enough money working to be able to pay for it, but with ODSP paying for the medication, he actually could have worked and not needed income support.  Except that then he'd be ineligible for ODSP support, and they'd stop paying for his meds, so he'd no longer be able to work.)  In this instance, the Danish pension was fairly comparable to his ODSP benefits, in financial terms.  Repaying the actual financial support out of the overpayment, under the circumstances, makes sense, but saying "By the way, you also need to pay us for the non-financial help we gave you" strikes me as a tad heavy-handed.

What is Required?

In the cases where the overpayment is partially or totally forgiven, there's a broad range of evidence in terms of financial hardship.  In some of the cases, the decision doesn't reference financial hardship at all, or finds "financial duress" without explaining why.  (These decisions might be susceptible to review by the Divisional Court.)  In some of them, it appears that significant income and expense information was provided to the Tribunal (though in at least one case the Tribunal expressed some scepticism about the budget, because it generates a shortfall, and the absence of any assets or credit on which to draw imply that they aren't actually paying that much).  In one case, the fact that the applicant was on social assistance in the first place, combined with his use of a food bank, satisfied the Tribunal as to hardship.

In another case, the recipient explained where her money goes, and the Tribunal was satisfied that there were no "frivolous" expenditures, and that any reduction would come primarily out of her family's food budget, since most other expenses were fixed expenses.

In another case, the evidence of hardship was limited to the statement that the recipient had "no assets and no money."

There's little doubt in my mind that some evidence of hardship is (or should be) necessary, but precisely what constitutes proof of hardship may be a bit of a moving target.  Ms. Reynolds might look for more significant evidence of hardship than certain other members.

Still, it strikes me as a technical requirement which will likely be possible to satisfy in most cases.  I suspect that, if I were still working in this area of law, my default approach would probably be to lead evidence as to the limited assets and financial resources of the recipient, to lead evidence as to the fixed expenses, and then end up demonstrating how much is left in the family's budget for food and other non-fixed costs, to illustrate its inadequacy.  (If the person's going to a food bank, or there's evidence of bills going unpaid or services being cut off, that's probably going to factor strongly into my argument.)

But with technical evidentiary requirements, it's really easy for self-reps to miss these sorts of things.  For any readers who have been assessed an ODSP overpayment, for no fault of their own or through an innocent mistake, I would suggest promptly contacting your local community legal aid clinic to seek their assistance.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

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