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3. Overpayments
(a) Overview
Overpayments arise where a cancellation, suspension or reduction of assistance applies to a period already past, resulting in the assessment of a 'debt' owing to the administrator [Act s.19(1)].
More specifically, overpayments can result from:- new information or evidence coming to the attention of the administrator, resulting in a re-assessment of past eligibility (see s.2: "Cancellation, Suspension and Reduction Decisions", above);
- an "Agreement to Reimburse and Assignment" not being honoured [Act s.19(2)] (see Ch.7 "Asset Rules: Assignments and Agreements to Reimburse");
- interim assistance (temporary assistance provided while a Tribunal appeal is pending) being initially ordered where the appellant later loses their case at their appeal hearing [Act s.32] (see "Ch.10: "Appeals and Other Remedies: Interim Assistance").
Overpayments incurred under welfare, ODSP or the previous General Welfare Assistance Act and Family Benefits Act programs, are all universally recoverable within the current welfare (or ODSP) program [Act s.19(3)]. This is called "portability".
Almost invariably an overpayment assessment will be made by way of Notice of Decision (aka Notice of Overpayment) setting out the overpayment amount. When this is done, overpayments may be recovered by deduction from present assistance or through normal court collection processes [Act s.19(4)].Case Note:
In the case of Surdivall v. Ontario (Disability Support Program) (Ont CA, 2014) the Court of Appeal, applying a detailed statutory interpretation (which included an important consideration of the Financial Administration Act), held that both the ODSP Director and the Social Benefits Tribunal (SBT) [consequently, since it's appellate authority tracks that of the Director [ODSP Act 29(3)] have discretion with respect to both whether to recover an overpayment (ie. it may waive recovery completely), and - if it does not waive recovery fully - in what amount the province may pursue it.
The court expressly endorsed the potential use of this discretion where the ineligibility that resulted in the overpayment was innocent on the part of the recipient, and would result in financial hardship to them if fully pressed.
Be clear though that the existence of an overpayment as a juristic fact is automatic under the legislation [ODSP Act s.14(1)], without any administrative act by the Director (ie. any amount paid in excess of entitlement is by definition an overpayment).
Based on the similarity of the statutory language between the ODSP Act and the Ontario Works Act (OWA) [OWA s.67(1)], the reasoning of the case is transferrable to welfare (OW) administrators addressing overpayment recovery, and overpayment welfare appeals before the SBT. (b) Notice of Overpayment
Where the administrator assesses an overpayment, they may issue and serve a written Notice of Decision to the recipient setting out (minimally) the amount of the overpayment [Act s.21(1)].
The service of an overpayment Notice of Decision has legal significance beyond simply conveying information to a recipient. The act of serving the Notice triggers formal rights of the administrator respecting "Overpayment Recovery through the Courts", "Joint Liability Amongst Recipient and Spouse" and "Overpayment Recovery by Province" (see these topics below).
While the law is clear that an overpayment Notice of Decision must state the "amount of the overpayment", otherwise complexities can arise as to the required components of such a notice. Where an overpayment is "appealable" (most are, see below), then the Notice is required to contain all the details set out generally for Notices under "Contents of Notice" [s.2(d), above] [Act s.24; Reg s.67]. However, as will be seen immediately below under "Appealability of Overpayment Decision" [s.3(c) below], there are some limitations on when an overpayment may be challenged through the normal Tribunal appeal process. In such cases it is arguable that the standard Notice content requirements do not apply to an overpayment Notice of Decision.
That's what the law is: somewhat confused. However as a practical matter the administrator has serious problems with consistent 'content of notice' compliance even in non-overpayment situations where their content duties are clear (see COMMENT under "Notice of Decisions" above). As such, parties should expect inconsistent and incomplete overpayment Notices of Decision in any event. The basis of the alleged overpayment may not be known until the administrator serves its written submissions on an appeal, or until the welfare file is reviewed by the recipient after being received pursuant to an MFIPPA request (see Appendix 1: "Getting a Copy of Your Welfare File"). Reliance on verbal information in this regard from the welfare worker or supervisor is risky as reasons may 'change' over time as staff attention to the situation varies, and in any event verbal advice provides no firm documented basis upon which one can rely.
(c) Appealability of Overpayment Decisions
With one possible exception discussed below, an overpayment decision is appealable like any other decision of the administrator. Anyone receiving such a Notice (and their spouse) and who wishes to challenge it should quickly file a request for internal review and commence the appeal process to the Social Benefits Tribunal (see Ch.10: "Appeals and Other Remedies").
There is an aberrant case: Richstein v Director (Income Maintenance) (unreported) (Div Ct, 1982), that held that overpayments may only be appealed by 'recipients' - such that anyone no longer receiving social assistance (because they are no longer a 'recipient') cannot appeal an overpayment decision to the Tribunal. In my view this is an excessively formalistic decision on old legislation with little bearing on the present OW and ODSP schemes. Barring it being re-affirmed in more recent caselaw I suggest that it be ignored, or dealt with only if and when it is raised by the administrator. Acceptance of the logic of Richstein means that overpayment assessments against former recipients could only be challenged by way of judicial review - an odd and cumbersome result.
Richstein was distinguished in the case of Ontario v Conway [1990] OJ #2278 (QL); 75 DLR (4th) 564 (Div Ct) where, in addition to the overpayment decision there was an ancillary decision to cancel income support.
(d) Amount of Overpayment For Excess Assets
Normally the assessment of the amount of an overpayment is a relatively simple process of re-applying the "new" facts to the old eligibility period and then calculating the reduction of assistance that results.
However, where a recipient becomes ineligible for past assistance because of excess assets that apply to that period (commonly when some sort of non-welfare retroactive eligibility comes into pay), then the maximum amount of the resultant overpayment is [Reg s.62(3)]: - The values of the assets held "when the person was ineligible", minus
- the maximum asset cap.
Similar rules apply to overpayments assessed under an Agreement to Reimburse due to the temporary application of ODSP asset caps during the period while an ODSP application is pending: see Ch.7, s.3(b): "Assets: Overpayments".
The purpose of this special rule is to prevent large overpayment accumulations where the amount of the excess assets may have been small, for example $1,000 - just above the single person welfare asset cap. In that example, were the excess assets assessed in a timely manner then that recipient would have 'spent-down' and re-established eligibility quickly. Applying the 'normal' rule in that case could conceivably result in an overpayment equal to months or even years of assistance, a quite disproportionate result.
(e) Overpayment Recovery by Deduction
When the overpayment 'debtor' is still receiving assistance (or ODSP) the normal overpayment recovery process is for the administrator to deduct it from on-going 'basic assistance' [Act s.20]. In that case, the overpayment is the last deduction in the determination of the actual amount of assistance, coming after budgetary requirements have already been reduced by chargeable income to reach the 'basic assistance' figure [see Ch.3: Basic Assistance].
The maximum that may be deducted by the administrator is 10% of basic assistance. More may be deducted if the recipient so consents [Act s.20(2), 23(3)], but in fact it is normal policy to only deduct at a 5% rate.
However, if a social assistance arrears payments (ie. a back-payment of either welfare or ODSP) comes into pay to a recipient (or their spouse) who has an outstanding overpayment, it may be deducted in full [Act s.23(3); Reg s.62(1)(b)]. Typically these situations arise when an ODSP applicant is granted ODSP after a prolonged period of assessment or Tribunal appeal, and has a pre-existing overpayment. Note:
There are similar and related assistance deduction provisions for certain limited other 'debts' such as spousal and child support payments. See Ch.8: "Applications and Procedures: Limits to Attachment or Assignment of Assistance". (f) Overpayment Recovery Through the Courts
. Overview
There are two related processes involved in enforcement of overpayments through the courts. One involves the right of the administrator to sue the recipient for a court order regarding the debt - like any other defendant, and the second involves the legal conversion the overpayment Notice of Decision into something equivalent to such a court order, so that the court's collection processes might be used directly.
That said, use of the courts by administrators in enforcing overpayments is infrequent when compared with overpayment deductions (above). The process - even when an enforceable 'court order' or its equivalent is obtained - is slow and cumbersome. For that matter, most welfare recipients are "judgment-proof" (ie. they have no appreciable assets to pursue in satisfaction of the alleged debt).
. Use of Court Collection Procedures
If an overpayment Notice of Decision has been properly served, and available appeal routes have been exhausted (or are no longer available through expiration of limitation periods) then the Decision takes on the force of a court order and may be enforced as such through court collection procedures [Act s.21(2)(3)]. For examples of these procedures, see the chapter on "Collection" in the Isthatlegal.ca Small Claims Court (Ontario) Legal Guide. If the amount is above the $25,000 Small Claims Court limit then recourse must be had to the Rules of Civil Procedure for collection procedures in the higher court:
Small Claims Court (Ontario): Ch.16: Collections
Rules of Civil Procedure, Rule 60: Enforcement of Orders
Again - this does not mean that the administrator must (or even will) pursue this route, as usually the overpayment deduction route is easier (if the 'defendant' is still receiving assistance). The court collection procedures are likely only to be used when the recipient is no longer receiving assistance and the administrator has information that they have assets worth pursuing.
Note again that the 'conversion' of a Notice of Decision into a court order equivalent is conditioned on the exhaustion of appeal rights, either through loss or non-use. The standard timeline for a Tribunal appeal is 30 days, subject to a discretionary extension by the Tribunal to a maximum of one year.
It is not certain what the effect of an appeal timeline "extension" is on the conversion of the Notice into a court-enforceable instrument. As a matter of practice, appeal timeline extensions are scheduled for argument as a preliminary matter at the date allocated for the full appeal hearing - typically months after the appeal is filed. While in such circumstances the appellant will have sought and obtained an order of "interim assistance" (see below) to effectively stay (block) enforcement by overpayment deduction, an interim assistance order cannot operate to stay (suspend) the enforceability of the Decision through the court collection process. In the rare cases when this problem might arise the party might have to seek a court "stay" of the enforceability by way of motion. Procedures for this may be reviewed in the Isthatlegal.ca Small Claims (Ontario) Legal Guide at Ch.12: ["Motions and Procedural Changes"], otherwise (in the higher Superior Court) recourse must be had to the Rules of Civil Procedure:
Rules of Civil Procedure, R.63: Stays
. Right to Sue
If no overpayment Notice of Decision has been served then the administrator may still sue for the overpayment debt in court, but will have to advance its case 'from scratch' under normal court rules [Act s.22]. Practically, full civil action is rarely used to recover overpayments, however two such attempts are noted below.
In Toronto v Providence [1996] OJ #5024 (OCJGD) the court dismissed such an action when it was brought outside of the (then) six year limitation period from the date that the facts upon which the action was grounded came to the attention of the administrator. Note that the Limitations Act has now been amended: Limitations Act.
Halton (Regional Municipality) v. Rezaizadeh (Ont Sup Ct, 2004) is an example of an ill-advanced lawsuit by a municipality to recover overpayments allegedly resulting from deceit by the recipients. Inadequate pleadings undermined the plaintiff's claim against four out of five of the defendants.
(g) Overpayment Recovery by Province
By amendments to the Ontario Works Act in 2006, the province ("Crown") has been given the right to recover overpayments due to an administrator as though they were "debts due to the Crown". Ths right arises after overpayment Notice of Decision has been given and either the time for appeal has expired without an appeal being taken, or an appeal has been taken and lost [Act s.19(2.1), 22.1].
The law of debts due to the Crown is complex and beyond the range of this program, however it can involve direct seizure of monies by way of "set-off" (deduction from monies the Crown owes the recipient), without the need to obtain a court order.
(h) Joint Overpayment Liability Amongst Recipient and Spouse
. Overview
"Joint liability" means that two or more parties share legal liability for a single debt. In a situation of joint liability the creditor can collect against any or all of the joint debtors up to the total of the outstanding debt, without any duties to be 'fair' or balanced between them.
The problem of joint liability arises in welfare law when an overpayment is assessed for a period when both a recipient and a spouse were in the benefit unit. The situation can be complicated by the fact that the couple may later split up, and/or may no longer be on social assistance - or even they may split up and only one of them is on social assistance.
As noted above, there are four methods of recovering overpayments: overpayment deduction from ongoing assistance, use of court collection procedures, the province moving to collect the overpayment as a debt due to the Crown - and normal civil lawsuits. The first three of these rely on the administrator serving the debtor with a Notice of Overpayment.
. Notice of Overpayment Procedures
Section 21 of the Act renders the spouse jointly liable for an overpayment debt if the administrator also choses to serve the Notice of Overpayment on the spouse. Further, when the spouse is served with the Notice of Overpayment, they may appeal that assessment to the Tribunal or become a party to any appeal proceedings already commenced [Act s.28(6)].
So when the spouse is so served, the three collection methods that are triggered by Notices of Overpayment can be used against them as a "joint debtor". This would hold regardless of whether the couple is later separated. Spouses since separated but still on some form of social assistance can expect the overpayment deduction to "follow" them.
. Lawsuit
Welfare law is however silent on joint liability when the collection method sought to be used is a regular lawsuit (remember this can be used when the Notice-triggered procedures of collection are not used). The only conclusion that can be reached from this is that the issue of joint liability must be decided by the court on common law principles of joint liability, and the facts of the relationship and behaviour of the defendants. That issue can be quite complicated and fact-dependent and I will not address it further here.
. Overpayment Created by Default in Agreement to Reimburse
Recall that these documents are sometimes required by administrators when a member of the benefit unit expects some future income, such as a motor vehicle accident settlement or award or where they have been receiving assistance by virtue of the higher asset caps that apply when a member has a pending ODSP application (see Ch.7: "Asset Rules: Welfare Security Requirements: Agreements to Reimburse and Assignments").
While Agreements to Reimburse are not necessarily "jointly" signed by the recipient and the spouse, when they are then any resultant overpayment liability is joint between them as a matter of contract law [Act s.19(2)].
4. Appealable and Non-Appealable Decisions
(a) Overview
As noted above in the discussion of "Notices of Decision", the administrator is obliged to provide any applicant or recipient against whom an "appealable" decision has been made with a written "Notice of Decision" [Act s.24; Reg s.67]. Subject to some exceptions (discussed here), any decision "affecting eligibility for or the amount of basic financial assistance" is appealable [Act s.26].
The structure of this notice provision is a bit odd in that it allows the administrator to decide which of it's decisions are appealable and which aren't (and thus when to issue of Notice of Decision) - a clear conflict of interest and a plain potential for injustice. A similar problem arises where the administrator informally imposes a 'cheque-hold' [see "NOTE Re Cheque Holds", s.2(c) above]. Tactics for disputing the administrator's view of what is appealable are discussed below.
(b) Appealable Decisions
As noted, any Decision of the administrator "affecting eligibility for or the amount of basic financial assistance" is appealable [Act s.26].
As discussed above in s.2 ["Cancellation, Suspension and Reduction Decisions"] (above), such decisions can take a variety of forms. As well, they generally include "overpayment" decisions, although readers should review s.3(c) (above) on this issue.
"Basic financial assistance" includes [Act s.5; s.26(2)]:- income assistance for shelter and basic needs (see Ch.3 "Assistance"); and
- benefits (see Ch.4 "Benefits").
(c) 'Non'-Appealable Decisions
The following decisions are not appealable [Act s.26(2)]:- Employment Assistance:
A decision with respect to employment assistance that does not affect eligibility for or the amount of income assistance or a mandatory benefit (see Ch.9 "Workfare").
- Discretionary Benefits:
A decision respecting discretionary benefits. These are specific benefits provided at the discretion of the welfare administator (see Ch.4, s.4 "Benefits: Discretionary Benefits".)
Be careful to distinguish these specific non-appealable "discretionary benefits" from other forms of assistance and benefit which may have an element of discretion in their being granted (these latter are appealable) (see Ch.4, s.1: "Benefits: Important Explanatory Note").
- Lieutenant-Governor Assistance:
A decision of the Lieutenant Governor in Council respecting assistance in exceptional circumstances (see Ch.2: "Claimants").
- Third Party Payments:
A decision to provide a portion of basic financial assistance directly to a third party. (see Ch.8 "Applications and Procedures: How Welfare is Paid: Third Party Payments")
- Welfare Trustees:
A decision made to appoint a person to act on behalf of a recipient. (see Ch.8 "Applications and Procedures: How Welfare is Paid: Welfare Trustees")
- Legislative Changes:
A variation, refusal or cancellation of assistance caused by an amendment to this Act or the regulations. Basically, if the legislation changes, that itself is not appealable.
- Emergency Assistance:
A decision respecting emergency assistance (see Ch.8 "Applications and Procedures: Emergency Assistance").
The Regulation states that additional non-appealable issues are [Reg s.68].- Internal Review Timeline Extensions
A refusal of the administrator to extend the time for an internal review (where the 30 day limitation is missed) (see "Ch.10: "Appeals and Other Remedies: Internal Reviews")
- Decisions on Death of Member
A decision to refuse, suspend or cancel basic financial assistance or to reduce basic financial assistance on the death of a member of the benefit unit.
Such "non-appealable" decisions, while not subject to statutory appeal through the Social Benefits Tribunal and it's later court appeal stream, may in fact be reviewable by the courts for such things as lack of jurisdiction, failure to address the exercise of statutory discretion, constitutional violation or other reasons: see the discussion in Ch.10 "Appeals and Other Remedies" - especially regarding judicial review, lawsuits, Charter and Human Rights Code remedies.
(d) Disputing "Non-Appealability"
As noted above, the law as structured leaves the identification of "appealability" to the administrator, as they are only under a duty to serve Notices of Decision of decisions which are "appealable". The conflict of interest created here is obvious and disputes may arise as to which decisions are and are not appealable.
In the event of such a dispute, parties should not let lack of proper written Notice of Decision deter them from commencing the internal review and appeal processes. They should simply adopt a 'common sense' approach to identifying when they have learned of a negative decision, what that decision is - and then act as though proper Notice of Decision had been given. In my experience, both administrators and the Tribunal will respond appropriately in processing internal review and appeal documentation. It will be for the Tribunal to decide "appealability" as a preliminary jurisdiction issue.
This is only reasonable, as otherwise the appeal jurisdiction of the Tribunal could be dictated by the administrator - an intolerable result in terms of natural justice. |
