Neutral Citation: 1993 ONICDRG 18

File No. A-001531

ONTARIO INSURANCE COMMISSION

BETWEEN:

RANDY A. SAUNDERS

Applicant

and

CANADIAN GENERAL INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUE

Preliminary Issue:

The Applicant, Randy Saunders, was injured in a motor vehicle accident on November 1, 1991. He applied for and received accident benefits from the Insurer under the No-Fault Benefits Schedule (Ontario Regulation 672, enacted under the Insurance Act, R.S.O. 1990, c. I.8).

Because he was unemployed at the time of his accident, Mr. Saunders received weekly income benefits of $185 a week under section 13 of the No-Fault Benefits Schedule. Canadian General continued to pay weekly income benefits until January 31, 1992, when it cancelled them on the basis that he was no longer eligible. Mr. Saunders applied for mediation, but the mediation did not resolve the issue.

On July 14, 1992, Mr. Saunders applied for arbitration. Canadian General issued a cheque for $2,500 to Mr. Saunders on July 31, 1992. Canadian General contends that this payment was made in full settlement of Mr. Saunders' claim for weekly income benefits and, therefore, the arbitration should not proceed. Mr. Saunders maintains that this payment was not a final settlement.

The preliminary issue is:

Did the payment of $2,500 made to Mr. Saunders on July 31, 1992 settle the issue of his entitlement to weekly income benefits?

Result:

1. The issue of Mr. Saunders's entitlement to weekly income benefits was settled and, therefore, the arbitration will not proceed.

2. The $1,000 assessment that Canadian General paid in respect of this arbitration shall be refunded.

3. Mr. Saunders shall receive his expenses which relate to this arbitration.

Hearing:

The hearing was held in Toronto, Ontario, on April 6, 1993, before me, David R. Draper, arbitrator.

Present at the Hearing:

Applicant:

Randy A. Saunders

Insurer's

Brian Atherton

Representative:

Barrister and Solicitor

Witnesses:

1. Johann Nishikawa - claims specialist, Canadian General

2. Randy A. Saunders - Applicant

Exhibits and Authorities:

The parties filed seven exhibits. In addition, Canadian General's legal representative provided a Brief of Authorities. These documents are listed in more detail in Appendix A.

Reasons for Decision:

1. Findings:

Mr. Saunders was involved in a motor vehicle accident on November 1, 1991. He was insured by Canadian General. Based on the evidence of Ms. Johann Nishikawa, a claims specialist with Canadian General, I find that the Insurer was first notified of the accident on November 4, 1991. Ms. Linda Watson initially handled the file for Canadian General. Ms. Watson sent forms to Mr. Saunders which he completed and returned.

Under the No-Fault Benefits Schedule, weekly income benefits are paid under either section 12 or section 13. Section 12 benefits are payable to those who, at the time of the accident, were:

1. employed or self-employed;

2. on a temporary lay-off;

3. not working, but had been employed or self-employed for 180 days in the year prior to the accident; or

4. waiting to start work within one year based on a legitimate offer of employment.

Section 13 provides for benefits of $185 a week for those who do not fit within section 12. Canadian General concluded that Mr. Saunders did not fit within section 12 and, therefore, considered his application under section 13. No evidence was presented to suggest that this conclusion was incorrect. I find, therefore, that his eligibility was properly considered under section 13 of the No-Fault Benefits Schedule.

In order to be eligible for benefits under section 13, Mr. Saunders had to establish that he suffered injuries which resulted in a "substantial inability to perform the essential tasks in which he ... would normally engage". Canadian General initially accepted that Mr. Saunders was eligible. The No-Fault Benefits Schedule states that the Insurer is not required to pay benefits for the first week of disability. Canadian General paid weekly benefits of $185 starting one week after the accident.

Section 23(2) of the No-Fault Benefits Schedule gives insurance companies the right to obtain "independent medical examinations". In December 1991, Canadian General arranged for Mr. Saunders to be examined by Dr. Michael C. Hall. Dr. Hall concluded (Exhibit 1):

The patient was involved in a motor vehicle accident 1 November 1991. The physical examination suggests somebody who is purporting to have an injury, but in fact does not have one.

He was unemployed at the time and had not worked for over a year. He is unable to think of any activity he has in looking after himself, his sister appears to do this entirely for him. The only thing he can think of that he did before the accident was taking his clothes to the washing machine that is situated in the house in which he lives. He continues with his ordinary activities of washing and dressing himself. There is no evidence that he has suffered any substantial inability to perform his pre-accident activities.

He is getting treatment with ultrasound in a clinic which serves no useful purpose in terms of therapy to this patient. This should be discontinued. He is not in need of treatment now and he is not likely to be in need of treatment in the future.

The soft tissue injuries sustained can be expected to subside spontaneously and completely with time leaving no permanent ill-effect.

Based on Dr. Hall's report, Canadian General decided that Mr. Saunders was not eligible for benefits under section 13 of the No-Fault Benefits Schedule. His benefits were terminated effective February 1, 1992.

Shortly after he was notified that his benefits were being terminated, Mr. Saunders applied for mediation. The mediation commenced on March 5, 1992 and continued until April 21, 1992. Mr. Saunders participated in the mediation. Canadian General was represented during the mediation by Mr. Doug Hurlbut, Senior Claims Manager.

Based on the Report of Mediator, I find that the mediation did not settle the issue of weekly income benefits. It was agreed, however, that Canadian General would reassess Mr. Saunders' eligibility in light of updated reports from Mr. Saunders' family doctor, Dr. Mok, and from his treating specialist, Dr. Geisler. Canadian General agreed to send Dr. Hall's report to Dr. Mok and Dr. Geisler and to ask each of them for an opinion about Mr. Saunders' ability to perform the essential tasks in which he would normally engage.

Dr. Geisler prepared a report, dated May 22, 1992, which states (Exhibit 2):

He was seen on the 23rd of March for a review after some physical therapy and he was essentially unchanged. I felt that a soft disc should be excluded and recommended a Cat Scan or Cat Scan Myelogram. The patient is reluctant to proceed in that direction because of his fear of the machine. Accordingly, electromyographic studies were done by a colleague and they also proved to be normal.

I have written to his family doctor, suggesting that the patient should reconsider the CAT Scan Myelogram strategy, and failing that he might prefer to have his patient seen by another doctor for an independent point of view but in the meantime, I felt that he should try to return to work.

Perhaps his previous locale of employment would have him back on a part-time basis to see how he worked out and go on from there.

On May 26, 1992, Dr. Mok completed an Ontario Automobile Insurance Medical or Psychological Report form (Exhibit 3). In response to the question, "What, after discussion, is the estimate of when the claimant will be able to return to work or normal activities", Dr. Mok wrote, "unknown".

Based on her oral evidence, I find that Ms. Nishikawa assumed responsibility for Mr. Saunders' file shortly after the mediation finished. She testified that when she reviewed Dr. Mok's report, she was concerned about what tasks he was considering to be Mr. Saunders' essential tasks. In order to deal with this concern, Ms. Nishikawa completed an "Essential Tasks Worksheet" with Mr. Saunders on June 4, 1992 (Exhibit 4). This is a form that has been developed by Canadian General to clarify an applicant's pre-accident tasks.

I accept the evidence of Ms. Nishikawa that she phoned Dr. Mok on June 4, 1992, the same day that the form was completed. I find that, as a result of this conversation, Ms. Nishikawa understood that Dr. Mok's opinion was that although Mr. Saunders had some limitations in his ability to do heavy work, he could generally care for himself. She concluded that he was not eligible for any further benefits under section 13 of the No-Fault Benefits Schedule.

Ms. Nishikawa advised Mr. Saunders that the new medical evidence had been reviewed and that they did not feel that he was eligible for any additional weekly income benefits. Based on the oral evidence of both Ms. Nishikawa and Mr. Saunders, I find that Mr. Saunders' primary objection to the decision was that he did not believe that he was physically able to return to work.

On July 14, 1992, Mr. Saunders applied for arbitration. I find that when she learned of his application for arbitration, Ms. Nishikawa contacted Mr. Saunders in an attempt to settle his claim. Although Mr. Saunders could not recall the details of his discussions with Ms. Nishikawa, he did not contradict her evidence in any significant way. In any event, I found her evidence to be clear and credible and have no hesitation in relying on it.

Ms. Nishikawa initially offered Mr. Saunders $1,000. This represented the amount that Canadian General would have to pay under the Dispute Resolution Practice Code in response to Mr. Saunders' application for arbitration. Mr. Saunders suggested twenty weeks of benefits (20 x $185 = $3,700). Ms. Nishikawa increased her offer to $1,850. Mr. Saunders said that he would think about it.

Ms. Nishikawa phoned Mr. Saunders the next day, July 31, 1992. Mr. Saunders initially stated that he wanted three years of additional benefits. During the discussion, he reduced his demand to twenty-six weeks (26 x $185 = $4,810). Ms. Nishikawa increased her offer to $2,400. Mr. Saunders suggested $2,500 and Ms. Nishikawa agreed.

In her oral evidence, Ms. Nishikawa stated clearly that her understanding was that $2,500 was a compromise. Although Canadian General did not feel that Mr. Saunders was entitled to any additional weekly income benefits, it was willing to pay $2,500 to settle the matter. In her view, the payment was meant to resolve finally the issue of his entitlement to weekly income benefits.

Mr. Saunders testified that he thought that he could get additional weekly income benefits if his family doctor's reports supported his eligibility. He conceded that Ms. Nishikawa did not say anything about additional benefits and provided no explanation for how he reached this conclusion.

On the same day, July 31, 1992, a cheque was issued to Mr. Saunders in the amount of $2,500. The cheque stub, which Mr. Saunders received, includes the following notation: "Settlement of Disability Claim" (Exhibit 6). Mr. Saunders received and cashed the cheque. He did not object to the notation on the cheque stub and did not make any claim for continuing weekly income benefits.

Ms. Nishikawa contacted the Ontario Insurance Commission on July 31, 1992 to find out how to finalize the matter. Her understanding was that, in order to close its file, the Commission needed a letter from Mr. Saunders. I accept her evidence that she contacted Mr. Saunders and told him that he needed to send a letter to the Commission advising that the matter had been settled. Ms. Nishikawa sent a fax to the Commission, dated July 31, 1992, which states:

Please be advised our offer of settlement extended to Randy Saunders has been agreed upon.

Income disability claim has been settled for an additional payment of $2500.00. He will confirm this to you in writing. Please call if a letter hasn't been received next week from Randy Saunders.

Ms. Nishikawa testified, and I accept, that she made "infrequent calls" to the Commission to see if Mr. Saunders had written, but was advised that he had not. She assumed that the Commission would finalize the matter. Although it might have been advisable to obtain a release in this case, it is my view that Ms. Nishikawa's actions were reasonable.

I find that between July and December 1992, Mr. Saunders did not contact Canadian General or the Commission. In December 1992, the Commission contacted Mr. Saunders about his application for arbitration. He indicated that he wanted to proceed with an arbitration hearing. Canadian General was notified and on January 4, 1993 it filed a Response and the $1,000 assessment.

2. Conclusions:

As stated above, the preliminary issue is whether there was a final settlement of Mr. Saunders' entitlement to weekly income benefits. In my opinion, the findings overwhelmingly support a conclusion that $2,500 was paid in final settlement of Mr. Saunders' claim for weekly income benefits.

It is my view that Mr. Saunders' failure to act during the period from July to December 1992 is the strongest evidence that he understood that the matter had been finally settled. At all other points of the process, he acted quickly when he did not like the position taken by Canadian General. When his benefits were cancelled, he applied for mediation. When he was advised by Ms. Nishikawa that the new medical evidence had not changed their position, he applied for arbitration. He entered into negotiations with Ms. Nishikawa which involved a number of offers and counter-offers. After he received the $2,500, he did nothing further for over four months. He then acted only when the Commission contacted him.

The only evidence that the $2,500 payment was anything but a final settlement is Mr. Saunders' bare statement that he thought that he could get further benefits if his family doctor provided supportive reports. He offered no basis for this belief and, in my view, it is contrary to all of the other evidence. In cross-examination, Mr. Saunders acknowledged that he proceeded with the arbitration because he "hoped" that he might be able to get some additional benefits. Although this might be understandable, I conclude that there was a final settlement which should be respected.

I agree with the statement of Arbitrator Palmer in Mehmet Tuzin and Allstate Insurance Company of Canada (OIC File No. A-000596, dated May 28, 1992) that as a general rule:

It is not the role of an arbitrator to go behind a settlement which has been achieved between competent parties, in cases where there has been no fraud, mistake, misrepresentation, undue influence, or other vitiating factor.

The procedures under the Insurance Act and the Dispute Resolution Practice Code encourage the settlement of claims for no-fault benefits. Mediation is mandatory. The Act also specifically recognizes the role of settlement:

279(2) Any restriction on a party's right to mediate, litigate, arbitrate, appeal or apply to vary an order as provided in section 280 to 284 is void except where the restriction forms part of a settlement.

In this case, I conclude that there was a final settlement. Based on the medical evidence submitted and my findings about the negotiation process, I do not find any basis for interfering with the settlement.

2. Return of the Assessment:

The Director of Arbitrations has adopted a "Filing Fees and Assessments Policy" which states that "[a]rbitration assessments shall only be refunded to an insurer before the Response due date. It appears that this policy is intended to operate as a further incentive to insurers to settle cases at an early stage.

In this case, Mr. Saunders applied for arbitration on July 14, 1992. According to the Dispute Resolution Practice Code, insurers must file a Response within fourteen days of receiving an Application for Appointment of an Arbitrator. I have concluded that this matter was settled on July 31, 1992. I am unable to determine precisely when Canadian General received the application, but allowing some time for the mailing of the form, I find that the matter was settled within the time period for filing the Response.

Canadian General did not file a Response or pay the $1,000 assessment because it understood that the matter was settled. When it was notified in December 1992 that Mr. Saunders wanted to proceed with the arbitration, Canadian General filed a Response and paid its $1,000.

In my opinion, Canadian General acted responsibly and quickly to settle this case in a manner which should be encouraged. I conclude that this case falls within the Director's policy and that the $1,000 assessment should be refunded.

3. Expenses:

Under section 282(11) of the Insurance Act, an insured person may be awarded expenses incurred in respect of an arbitration proceeding. Mr. Saunders asked that expenses be awarded. Because he was not represented at the hearing and called no witnesses other than himself, it appears that his only expenses are the $50 filing fee and his travel costs and parking for the hearing.

The representative for Canadian General submitted that the arbitration hearing was unnecessary and, therefore, it would be inappropriate to award expenses to Mr. Saunders. Although this submission is understandable, I conclude that expenses should be awarded.

Arbitrators have consistently held that expenses should be awarded to the insured person unless the claim was manifestly frivolous and vexatious, or the person's conduct unreasonably prolonged the proceedings. I am persuaded that Mr. Saunders did not proceed with the arbitration for any improper purpose. It was clear at the hearing that he is genuinely upset that the No-Fault Benefits Schedule does not appear to him to recognize the fact that he has not fully recovered from his injuries.

Order:

1. Mr. Saunders is not entitled to an arbitration hearing on the issue of his entitlement to weekly income benefits because a final settlement of that issue was reached on July 31, 1992.

2. The assessment of $1,000 paid by Canadian General in respect of this arbitration shall be refunded.

3. Canadian General shall pay the Applicant the expenses that he incurred in respect to the arbitration, as set out in Ontario Regulation 664, Dispute Resolution Expenses.

April 8, 1993

David R. Draper Arbitrator

Date

APPENDIX A

Exhibit 1

A photocopy of a report from Dr. Michael C. Hall to Canadian General, dated December 20, 1991.

Exhibit 2

A report from Dr. William O. Geisler to Canadian General, dated May 22, 1992.

Exhibit 3

An Ontario Automobile Insurance Medical or Psychological Report form, completed by Dr. Mok on June 2, 1992.

Exhibit 4

An "Essential Tasks Worksheet", completed by Johann Nishikawa, claims specialist, on June 4, 1992.

Exhibit 5

A photocopy of a fax, dated July 31, 1992, from Johann Nishikawa of Canadian General to the Ontario Insurance Commission.

Exhibit 6

The file copy of a cheque, dated July 31, 1992, from Canadian General to Mr. Saunders, for $2,500, together with a copy of the cheque stub.

Exhibit 7

An Ontario Automobile Insurance Medical or Psychological Report form, completed by Dr. Mok on March 16, 1993.

Brief of authorities provided by Canadian General's legal representative:

Cambrian Ford Sales (1975) Ltd. v. Horner (1989), 1989 CanLII 4259 (ON HCJ), 69 O.R. (2d) 431 (H.C.)

Sylman v. Sylman (1986), 10 C.P.C. (2d) 231 (Ont. H.C.).

Tuzin v. Allstate Insurance Company of Canada, OIC File No. A-000596, dated May 28, 1992.

Bartlett v. Barker (1984), 1984 CanLII 6013 (ON HCJ), 4 C.C.L.I. 308 (Ont. Co. Ct.).