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Simon Shields,
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(Retired)
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Return to First Part of Chapter

3. Overpayments

(a) Overview

Overpayments arise where a cancellation or reduction of income support applies to a period already past, resulting in the assessment of a 'debt' owing to the Director [Act s.14(1)].

More specifically, overpayments can result:
  • from new information or evidence coming to the attention of the Director, resulting in a re-assessment of past eligibility (see s.2 "Cancellation, Suspension and Reduction Decisions", above);

  • from an "Agreement to Reimburse and Assignment and Direction" not being honoured [Act s.14(2)] [see Ch.8, s.4(c): "Asset Rules: ODSP Security Requirements: "Agreements to Reimburse" and "Assignments and Directions"];

  • from the receipt of some form of "retroactive" income such as EI back-pay, or a motor vehicle lawsuit settlement or judgment (such monies are allocated or "spread" back over the periods to which they relate);

  • when interim assistance (temporary income support provided while a Tribunal appeal is pending) has been ordered and the appellant later loses their case at the appeal hearing [Act s.27] (see "Ch.12: "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.14(3)]. This is called "portability".

Almost invariably any recovery action will be preceded by a Notice of Decision setting out the overpayment amount. Then overpayments may be recovered by deduction from present income support or through court collection processes [Act s.14(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 Director assesses an overpayment, they may issue a written Notice of Decision to the recipient setting out (at least) the amount of the overpayment Act s.16(1)].

The service of an overpayment Notice of Decision has legal significance beyond imply conveying information to a recipient. The act of serving the Notice triggers formal rights of the Director respecting "Overpayment Recovery through the Courts" and "Joint Liability Amongst Recipient and Spouse" (see below), as well of course the triggering of the normal internal review and appeal processes see Ch.12: "Appeals and Other Remedies").

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 components of such a notice. Where an overpayment is "appealable" (almost always), then the Notice is required to contain all the details set out generally for Notices under "Contents of Notice" (above) [Act s.19; Reg s.56]. 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. However as a practical matter the Director has serious problems with consistent 'content of notice' compliance - even when their 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 firm basis of the alleged overpayment may not be known until the Director serves its written submissions on an appeal, or until the ODSP file is reviewed by the recipient after being received pursuant to a FIPPA request (see Appendix 2: "Getting a Copy of Your ODSP File"). Reliance on verbal information in this regard from the ODSP worker or supervisor is risky as reasons may 'change' over time as staff attention to the situation varies.

(c) Appealability of Overpayment Decision

With one possible exception discussed below, an overpayment decision is appealable like any other decision of the Director. Anyone receiving such a Notice (recipient or spouse) who wishes to challenge it should quickly file a request for internal review and commence the appeal process to the Social Benefits Tribunal (Ch.12: "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 income support(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 court decisions I suggest that it be ignored or dealt with only if and when it arises. Acceptance of the logic of Reichstein means that overpayment assessments against former recipients could only be challenged by way of judicial review - an odd and cumbersome result for persons of already limited financial means.

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 income support that results.

However, where a recipient becomes ineligible for past income support because of excess assets that apply to that period [see the different circumstances in which this situation can arise in sub-section (a) above], then the maximum amount of the resultant overpayment is [Reg s.51(3)]:
  • The values of the assets held "when the person was ineligible", MINUS

  • the maximum asset cap.
Example
If a single person recipient comes into a $8,000 retroactive payment, and does not spend it down below $5,000 (their asset maximum: see Ch.8 "Asset Rules") for six months. The maximum recoverable is $8,000 minus the applicable asset cap of $5,000 (see Ch.8 "Asset Rules"): or $3,000. This is the case even though the income support the recipient had been getting over the six month period of (what would have been disentitlement) totalled $5994 (6 X $999)(at the maximum rate).
IMPORTANT NOTE

A significant problem with this otherwise generous policy is that it makes it tempting for the recipient to "hide" excess assets to avoid present ineligibility (which can be quite significant over a number of months, even if the assets excess is small), on the reasoning that 'even if they are caught' the loss of income support will be much less under this special retroactive rule.

The problem of course is that such a scheme constitutes fraud and is prosecutable under the Criminal Code as such (see Ch.14: Fraud and Prosecutions").

(e) Overpayment Recovery by Deduction

When the overpayment 'debtor' is still receiving income support (or ODSP) the normal overpayment recovery process is for the Director to deduct it from on-going income support [Act s.15].

The maximum that may be deducted by the Director is 10% of current monthly income support [Reg 51(1)], though more may be deducted if the recipient so consents [Act s.15(2), 18(3)]. In my experience they often only take this deduction at a 5% rate.

However, if a social assistance (OW or ODSP) 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, that arrears payment may be taken in full [Reg s.51(1)(b)]. Typically this situation arises when an ODSP applicant is granted ODSP medical eligibility after a prolonged period of assessment or a successful Tribunal appeal.
Note:
There are similar income support deduction provisions for spousal and child support payments. See Ch.10: "Applications and Procedures: Limits to Attachment or Assignment of Assistance".

Note:
Complexities can arise over overpayment deductibility when portions of income support are for "benefits", especially health or extended health benefits. These issues are discussed in Ch.4, s.1: "Benefits: Important Explanatory Note". Generally, extended health benefits are immune from overpayment deduction.
(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 Director to sue the recipient for a court order regarding the debt - like any other defendant, and the second involves the legal conversion the overpayment Decision into something equivalent to such a court order - so that the court's collection processes might be used more immediately.

That said, use of the courts by Directors 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 ODSP 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 by expiration of limitation period) then the Decision takes on the force of a court order and may be enforced as such through court collection procedures [Act s.16(2)(3)]. For examples of these collection procedures, see "Collection" in the Small Claims Court program. If the amount is above the $10,000 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: Collections.

Again - this does not mean that the Director must (or even will) pursue this route, as usually the overpayment deduction route is easier (if the 'defendant' is still receiving income support). The court collection procedures are likely only to be used when the recipient is no longer receiving income support AND the Director has information that they have assets worth pursuing.

Note 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 (see Ch.12: " Appeals and Other Remedies") .

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 Tribunal practice, appeal timeline extensions are scheduled for argument as a preliminary matter at the date allocated for the full 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 impact on the enforceability of the Decision through the court collection process [Act s.25(1)]. 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 in the Small Claims Court may be reviewed in that program, otherwise recourse must be had to the Rules of Civil Procedure, R.63: Stay Pending Appeal

. Right to Sue

If no overpayment Notice of Decision has been served then the Director may still sue for the overpayment debt in court, but will have to advance its case within normal court rules [Act s.17]. 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 Director. Note that the Limitations Act has now been amended.

Practically, civil action is and will be resorted to even more rarely than the court collection processes discussed immediately above. However - as the use of any overpayment technique is discretionary to the Director - it is arguable that this process SHOULD be opted for in preference to other techniques as a consideration to vulnerable defendants when the overpayment 'defence' involves legal issues or remedies beyond the jurisdiction of the Tribunal - such as constitutional or equitable issues. The Crown is a fiduciary to its citizens, especially its disabled ones. However this consideration is not likely forthcoming as such issues are still conceived of in a conventional adversarial litigation framework.

. Overpayment Recovery as "Debt Due to the Crown"

By amendments to the ODSP Act in 2006 [Act s.14(2.1)(5)], the province ("Crown") has been given the right to recover overpayments due to the Director as though they were "debts due to the Crown".

The law of "debts due to the Crown" is complex and beyond the scope of this program, however it can involve both a lawsuit [Act s.17] and/or direct seizure of monies by way of "set-off" (deduction from monies the Crown owes the recipient such as tax refunds), without the need to obtain a court order.

(g) 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' between them.

The problem of joint liability arises in ODSP 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 still on social assistance.

As noted above, there are four method of recovering overpayments: overpayment deduction from ongoing income support, use of court collection procedures, normal civil lawsuits and recovery of "debts due to the Crown". The first two of these rely on the Director serving the debtor with a Notice of Overpayment [Act s.16,17].

. Notice of Overpayment Procedures

The ODSP Act at ss.16(4) and (5) renders the spouse jointly-liable for an overpayment debt IF the Director 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.23(5)].

So when the spouse is so served, the two collection methods that are triggered by Notices of Overpayment can be used against the spouse as a "joint debtor". This would hold regardless of whether the couple is later separated, and regardless as to who is or is not on income support at the time of collection efforts. Spouses since separated but still on some form of social income support can therefore expect the overpayment deduction to "follow" them.

. Lawsuit and "Debt Due to the Crown"

Welfare law is however silent on joint liability when the collection method sought to be used is a regular lawsuit or "debt due to the Crown" (remember these 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 a court on common law principles, 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 "Agreement to Reimburse" security documents are sometimes required by Directors when a member of the benefit unit expects some future income, such as a motor vehicle accident settlement or award (see Ch.8: "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 [Act s.14(2)].


4. Appealable and Non-Appealable Decisions

(a) Overview

As noted in the discussion of "Notices of Decision" (above), the Director is obliged to provide any applicant or recipient against whom an "appealable" decision has been made with a written "Notice of Decision" [Act s.19; Reg s.56]. Subject to some exceptions (discussed here), any decision "affecting eligibility for or the amount of income support" and related forms of benefit are appealable [Act s.21].

The structure of this notice provision is unusual in that it allows the Director to decide which of its decisions are "appealable" and which aren't - a clear conflict of interest and a plain potential for injustice. A similar problem arises where the Director informally imposes a 'cheque-hold (see "Holding Cheques", above). Tactics for disputing the Director's view of what is appealable in both situations are discussed in sub-section (e): "Disputing Non-Appealability", below.

(b) Appealable Decisions

Any Director decision "affecting eligibility for or the amount of" the following, is appealable [Act s.21]:
  • income support [this is the primary form of ODSP financial aid (see Ch.3) and it includes (most) "benefits" (see Ch.4, s.2)];

  • "extended health benefits" [technically, these are not included in the legal definition of "income support" or "benefits" (see Ch.4, s.3)];

  • assistance for children with severe disabilities (See Ch.5).
As discussed above in s.2 "Cancellation, Suspension and Reduction Decisions" (above), such decisions can come in a variety of forms. As well, they generally include "overpayment" decisions, although readers should review s.3(c) "Appealability of Overpayment Decisions", above) on this issue.

Note that any negative income support decisions can be subject to a discretionary three-month delay in implementation "if the recipient has dependents included in the benefit unit at that time" (see s.2(c) above) [Reg s.53(3)]. It would appear that this decision IS appealable (see Ch.12: "Appeals and Other Remedies".

Note that where adult non-disabled dependents of ODSP recipients (ie. spouses and dependent adults) are required (as a condition of eligibility) to participate in welfare (Ontario Works) (see Ch.13: "Workfare and Employment Supports"), any decisions regarding workfare that effect the above are appealable AS ODSP DECISIONS (not as OW decisions).

There are also some appealability issues relating to Date of Grant issues. As they are complex I have given them their own sub-section [(e)] below.

(c) "Non"-Appealable Decisions

The following decisions are NOT appealable [Act s.21(2)]:
  • Lieutenant-Governor Assistance:

    A decision of the Lieutenant Governor in Council respecting income support in exceptional circumstances (see Ch.2 "Claimants").

  • Third Party Payments:

    A decision to provide a portion of basic financial income support directly to a third party. (see Ch.10, s.3(g): "Applications and Procedures: How Welfare is Paid: Third Party Payments").

  • Legislative Changes:

    A variation, refusal or cancellation of income support caused by an amendment to this Act or the regulations. Basically, if the law changes, that itself is not appealable.

  • Employment Supports:

    In Ch.13 ("Workfare and Employment Supports"), voluntary "employment supports" (on the one hand) are distinguished from workfare duties (on the other hand) that some dependents may have to participate in. Decisions regarding "employment supports" are NOT appealable. Decisions regarding workfare duties that effect eligibility for or the amount of income support or benefits ARE appealable as ODSP decisions (NOT as welfare or Ontario Works decisions - EVEN THOUGH the workfare program is run by welfare).

  • Discretionary "Income Support":

    Discretionary "benefits" provided through the welfare program (see Ch.4, s.4 "Benefits: Discretionary Benefits"), are NOT appealable.

    Similarly, any forms of "income support" the granting of which is entirely within the discretion of the Director, is unappealable. Examples of this would include the Director's decision to reduce budgetary requirements of a recipient after three months residence in a women's shelter or a hospital.

    It is important to distinguish these specific "non-appealable" "discretionary items from or mandatory income support and benefits which may have an ELEMENT of discretion in HOW they are granted - not IF they are granted. These latter are appealable.
The Regulation states that additional non-appealable issues are [Reg s.57]:
  • Internal Review Timeline Extension

    A refusal of the Director to extend the time for an internal review (where the 10 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 income support or to reduce income support on the death of a member of the benefit unit.

  • Extension for Completion of ODSP Application

    In Chapter 10, s.2: "Applications and Procedures: Application Procedures" it is explained that when the ODSP medical forms are not filed within 90 days of issuance then the application is "deemed" to be withdrawn, subject to the Director extending time (which they typically do). However, technically a decision by the Director NOT to extend this time is not appealable. If this ever happens the solution may simply be to request a new application right away.

  • Review Date Schedulings

    In Chapter 9 ("Persons with a Disability") the requirement of a medical "review date" is explained. The scheduling of a review date is not appealable.
Such "non-appealable" decisions, while not subject to statutory appeal through the Social Benefits Tribunal, 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 judicial review, lawsuits, Charter and Human Rights Code remedies.

There are also some non-appealability issues relating to Date of Grant issues. As they are a bit complex I have given them their own sub-section [(d)] below.

(d) Date of Grant Appealability and Non-Appealability

. Overview

In Chapter 10. s.4: "Applications and Procedures: Date of Grant", the decision as to WHEN ODSP starts in-pay after a successful application or appeal is explained. As that section explains, these rules recently changed with the abolition of the "four-month rule". There are also associated transition rules which require Director decisions.

. Date of Grant Set ON OR BEFORE Date Application is Complete

A decision to set the Date of Grant ON or BEFORE the date the application is completed (typically, when all the paperwork is filed: see Ch.10, s.2) is NOT appealable.

. Date of Grant Set AFTER Date Application is Complete

It is a necessary implication of the above rule that a Director's decision to set a Date of Grant AFTER the date that the application is completed IS appealable.

Note however that when the "new" ODSP recipient was on welfare (Ontario Works) when ODSP was granted then their new Date of Grant has traditionally been the first day of the month in which the eligibility decision was made in [thus allowing 'double-dipping' of both for one month, as welfare is paid in advance and ODSP is paid in arrears - and as the welfare assistance was not chargeable (see Ch.7: "Income Rules")]. HOWEVER, if in such a case (under the new rules) the Director sets the Date of Grant at the first day of month FOLLOWING the ODSP decision to grant, this decision is NOT appealable. (It looks like this will be the new ODSP practice in OW-to-ODSP transfers.)

. Transition Decisions

As is explained in Ch.10, s.4: "Applications and Procedures: Date of Grant", the(old) "four-month rule" provided that the Date of Grant was the LATER of either the date the application was completed, or four months before the date of the Director's decision (to either grant or refuse - in the latter case later being reversed on appeal). This rule is now abolished.

However the changes have retroactively abolished to four-month rule all the way back to the commencement of the ODSP regime in June of 1998 - in most cases resulting in a retroactive payment entitlement to the recipient. This requires the re-determination of a "new" Date of Grant, and as well the re-determination of budgetary requirements and income support which will apply to any such "new" months of eligibility.

The transition rule provides that - normally - the income support for these new "retroactive" months will be the same as it was for the first month of eligibility under the old four-month rule (ie. the first month's income support under the old rule). If however the recipient requests - and the Director is of the view that the recipient's circumstances have 'substantially changed' between that "old" first month and the "new" first month, then the Director may calculate income support under normal rules (ie. actual determination of budgetary requirements, deductions, etc as they would have been generated during those 'back'-months).

The following decisions regarding these transition rules are NOT appealable:
  • determination of the new Date of Grant date for retroactivity purposes;

  • the amount of income support granted in any "new" months (ie. the retroactive payment amount);

  • the application of any retroactive payment amount to the reduction of any outstanding overpayments [note that retroactive payments are not generally subject to the normal 5 or 10% deduction rates explained in Ch.10, s.3(h): "Applications and Procedures: How Income Support is Paid: Limits on Alienation and Execution of Income Support"].
(e) Disputing "Non-Appealability"

As noted above, the law as structured leaves the identification of "appealability" to the Director, as they are only under a duty to serve Notices of Decision for decisions which are "appealable". The conflict of interest created here is obvious as disputes will inevitably arise as to which decisions are and are not appealable.

In the event of such a dispute, applicants and recipients should not let lack of a 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 was - and then act as though proper Notice of Decision had been given. The 'Request for Internal Review' letter should then - for clarity's sake - contain the recipient's understanding and position on the issue in dispute.

In my experience, both Directors and the Tribunal will respond appropriately in processing internal review and appeal documentation. This is only reasonable as otherwise the appeal jurisdiction of the Tribunal could be dictated by the Director - an intolerable result in terms of natural justice. It will then be for the Tribunal to decide "appealability" as a preliminary jurisdiction issue, should it arise.
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