Neutral Citation: 1993 ONICDRG 45

File No. A-002691

ONTARIO INSURANCE COMMISSION

BETWEEN:

ADOZINDA OLIVEIRA

Applicant

and

ZURICH INSURANCE COMPANY

and

THE PERSONAL INSURANCE COMPANY OF CANADA

Insurers

DECISION ON PRELIMINARY ISSUES

Issues:

The Applicant, Adozinda Oliveira, was injured in a motor vehicle accident on December 28, 1990. She applied for accident benefits from The Personal Insurance Company of Canada (The Personal) and Zurich Insurance (Zurich). Both Insurers claim that the other is responsible for Mrs. Oliveira's accident benefits.

The Personal maintains that Mrs. Oliveira must apply for benefits to Zurich. Zurich contends that Mrs. Oliveira did not promptly notify it of the accident and Zurich is not obligated to pay her accident benefits.

Mediation was unsuccessful in resolving Mrs. Oliveira's disputes with Zurich. The Personal agreed to join the arbitration on consent of the parties.

The preliminary issues to be decided at this hearing are:

1. Whether Mrs. Oliveira has a reasonable excuse for failing to notify Zurich of her accident benefits claim within the time limits prescribed by section 22(1) of the No-Fault Benefits Schedule.

2. Whether Zurich or The Personal is liable to pay Mrs. Oliveira's accident benefits.

The Applicant also claims her expenses incurred in the hearing.

Result:

1. Mrs. Oliveira has a reasonable excuse for failing to notify Zurich of her claim within the prescribed time limits.

2. Zurich is liable to pay Mrs. Oliveira's accident benefits arising from the December 28, 1990 motor vehicle accident.

The issue of the Applicant's expenses of this arbitration proceeding are deferred to the hearing on the substantive issues.

Hearing:

The hearing was held in Chatham, Ontario, on April 21, 1993 and July 7, 1993, before me, Fred B. Sampliner, arbitrator.

Present at the Hearing:

Applicant:

Adozinda Oliveira

Applicant's

James E. S. Allin

Representative:

Barrister and Solicitor

Zurich's

Ian Boundy (for July 7, 1993)

Representatives:

Barrister and Solicitor

William B. Woodward(for April 21, 1993)

Barrister and Solicitor

Personal's

James R. Townsend (for July 7, 1993)

Representative:

Barrister and Solicitor

Witnesses:

Adozinda Oliveira, Virginio Oliveira

The proceedings of both days were recorded by Marilyn J. Rowe, certified court reporter.

Exhibits:

The parties filed nine exhibits, listed in Appendix 1

Cases cited:

Cases cited are listed in Appendix 2

Evidence and Findings:

1. Background:

Mrs. Adozinda Oliveira and her husband, Virginio, travelled from their home in Thamesville, Ontario to British Columbia shortly before Christmas 1990 to visit relatives. On December 28, 1990, Mrs. Oliveira was injured in an automobile accident in Vancouver.

Mrs. Oliveira was a passenger in her son Paulo's car at the time of the accident. Paulo Oliveira, the vehicle owner, was insured by an Ontario motor vehicle insurance policy with The Personal. Mrs. Oliveira was insured by an Ontario motor vehicle insurance policy with Zurich.

On March 19, 1991, Mrs. Oliveira made a claim for accident benefits to The Personal, her son's insurer. Her lawyer wrote a claim letter to The Personal's office in Ontario. However, the claim was transferred to The Personal's office in Calgary, Alberta.

The transfer of the claim to the Calgary office apparently confused The Personal. They sent Mrs. Oliveira a claim form, but it was not the Ontario no-fault benefits application. Mrs. Oliveira completed and sent this form to The Personal in Calgary. During the following year, Mrs. Oliveira's medical, physiotherapy and prescription expenses were paid by The Personal.

In March 1992, Mrs. Oliveira retained a new lawyer. Her new counsel continued to submit expenses to The Personal. He also notified Zurich about the accident and claimed no-fault benefits on behalf of Mrs. Oliveira. It was agreed by the parties that her lawyer's April 7, 1992 letter provided Zurich with its first notice of Mrs. Oliveira's claim.

Initially, neither insurer knew of the claim against the other insurer, but by July 15, 1992 The Personal and Zurich had discussed the matter. At that point, the correspondence indicates both insurers questioned their responsibility for Mrs. Oliveira's accident benefits.

The Personal wrote to Mrs. Oliveira's counsel stating that she should look to Zurich for her accident benefits. On July 29, 1992, Zurich wrote Mrs. Oliveira and declined to pay her any benefits, citing her delay in notice as the cause for its denial.

Mrs. Oliveira contends that her delay in notifying Zurich of the accident was reasonable in the circumstances. She also maintains that the Insurance Act entitles her to choose benefits from either The Personal or Zurich.

2. Insurer Priority

Section 268 of the Insurance Act, R.S.O. 1990, c. I.8, governs the order in which insurers are responsible to pay no-fault accident benefits. The relevant part of that subsection states:

1. In respect of an occupant of an automobile,

i. the occupant has recourse against the insurer of an automobile in respect of which the occupant is an insured,

ii. if recovery is unavailable under subparagraph i, the occupant has recourse against the insurer of the automobile in which he or she was an occupant,

Mrs. Oliveira was an occupant, and her insurer (Zurich) is the company she must apply to for benefits, under section 268(1)i. The Personal is the insurer of the car she was riding in, and section 268(1)ii states that Mrs. Oliveira has recourse against The Personal only if benefits from Zurich are unavailable.

Mrs. Oliveira argues that section 268(4) of the Insurance Act allows her to choose either company for benefits, regardless of the section 268(1) priorities. I do not agree. Section 268(4) states:

4. If, under subparagraph i or iii of paragraph 1..., a person has recourse against more than one insurer for the payment of no-fault benefits, the person, in his or her absolute discretion, may decide the insurer from which he or she will claim the benefits.

I find that The Personal is an insurer under 268(1)ii, and subsection 4 does not apply to these facts.

Regardless of section 268(4), Mrs. Oliveira does not have a choice. Section 268(5) states:

5. Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle policy or the person is the spouse or a dependant, as defined in the No-Fault Benefits Schedule, of a named insured, the person shall claim no-fault benefits against the insurer under that policy....

Mrs. Oliveira was a named insured under her own policy with Zurich. Section 268(1) and (5) both say the injured party must seek benefits from their own insurer first. It is quite clear to me, under these facts, that Mrs. Oliveira must apply to Zurich for accident benefits.

2. Reasonable excuse

Mrs. Oliveira did not make a claim against Zurich until one year and three months after the accident.

Zurich feels that Mrs. Oliveira's delay is inexcusable and violates the notice provisions of section 22 of the No-Fault Benefits Schedule.

Section 22 of the No-Fault Benefits Schedule provides the rules for timely presentation of accident benefits claims.

(1) The insured person or the person otherwise entitled to make a claim shall,

(a) give initial notice of a claim to the insurer, in writing, within thirty days from the date of the accident or as soon as practicable thereafter; and

(b) furnish to the insurer within ninety days of the giving of the notice under clause (a) a completed application for no-fault benefits respecting the accident and the resulting loss.

(2) A failure to comply with a time limit set out in subsection (1) does not invalidate a claim if the claimant has a reasonable excuse and so long as there is compliance within two years of the accident.

Mrs. Oliveira submits that her injuries, treatment, and resultant personal, work and family problems after the accident, as well as her former counsel's neglect, caused the delay. She testified at length on these matters. Mr. Oliveira corroborated his wife's testimony. Her counsel contends that Mrs. Oliveira's medical and personal problems qualify as a reasonable excuse. I am not persuaded by the testimony or counsel's arguments that these matters caused Mrs. Oliveira's delay in applying to Zurich for benefits.

Instead, I find that The Personal's payment of Mrs. Oliveira's claimed medical expenses until early 1992 was the primary cause of the delay. The correspondence between Mrs. Oliveira's lawyer and The Personal, contained in the Document Brief (Exhibit 6), shows that, since inception of the claim in March 1991 until March 1992, The Personal admitted liability and paid Mrs. Oliveira's expenses. The Personal's March 27, 1992 correspondence (Exhibit 6, Tab 18) to Mrs. Oliveira's lawyer is the first indication of a problem paying for any expense throughout the year. This letter states:

In regards to the vocational rehabilitation training program, The Personal Insurance Company of Canada will gladly pay for this service, once proper documentation has been received....

In regards to the mileage for the necessary medical and rehabilitative treatments, the no-fault accident benefits portion of her policy, does not cover her for this expense.

Promptly thereafter, on April 7, 1992, Mrs. Oliveira's counsel notified Zurich.

This case bears factual similarity to Lily Steele and Zurich Insurance Company, (O.I.C. File No. A-001024, dated December 3, 1992). In Steele, Arbitrator Palmer found that a one-year delay in application for benefits was partially caused by the applicant's personal upheaval after the accident, and qualified as a reasonable excuse. More significantly though, the Arbitrator found that the insurer had contributed to the delay by failing to promptly send Mrs. Steele the accident benefits application. Section 135 of the Insurance Act provides:

(1) An insurer, immediately upon receipt of a request, and in any event not later than sixty days after receipt of notice of loss, shall furnish to the insured or person to whom the insurance money is payable forms upon which to make the proof of loss required under the contract.

This insurer obligation should be read along with Section 227 of the Insurance Act:

(1) No insurer shall use a form of policy, endorsement or renewal, a claims form or a continuation certificate in respect of automobile insurance other than a form approved by the Commissioner. 1990, c. 2, s.41 (1), part.

I find that it is the insurer's duty, when notified of a claim, to provide an applicant with the proper Ontario benefits application form within sixty days of its notice of the loss. These obligations are placed in the no-fault context in Steele and Zurich, where Arbitrator Palmer said:

...the whole scheme of statutory accident benefits calls for fast, efficient service and prompt payment. In my view, it is implicit in the operation of the scheme that an insurer, once notified of injury by an applicant, must forward promptly the prescribed claim forms.

The Ontario accident benefits claim form 1, prescribed by Regulation 672, under paragraph 4, asks the applicant to provide the insurer with the applicant's own insurance and other available policies. Insurers who obtain the information requested on this prescribed Ontario form are able to properly determine their responsibility under the Ontario no-fault benefits scheme.

The Personal did not send Mrs. Oliveira this prescribed Ontario form. The Personal sent her a form that did not ask about her insurer. Through their error, The Personal did not obtain the information which would have enabled it to know of Mrs. Oliveira's policy and determine the proper insurer.

Zurich contends that the delay has prejudiced treatment and recovery of Mrs. Oliveira's chronic pain condition. Zurich and Mrs. Oliveira submitted medical reports and articles on early treatment of chronic pain syndrome. Essentially, Zurich believes it would have intervened earlier and engaged more active rehabilitation, thereby reducing her recovery time. However, the effect any treatment program would have on her is too speculative for me to draw any conclusion.

The Personal's conduct concerns me. However, it does not change the statutory priorities fixed on Zurich by section 268 of the Insurance Act. Consequently, The Personal's payment of accident benefits gives Mrs. Oliveira a reasonable excuse for her delay in notifying Zurich until March 27, 1992.

3. Expenses

The Applicant seeks an award of her expenses of the arbitration. Section 282(11) of the Insurance Act provides:

The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.

These prescribed expenses are more fully set forth in Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 664, R.R.O. 1990, "Dispute Resolution Expenses".

The decision to award expenses is discretionary and judged case by case. The comments of Senior Arbitrator Naylor in Ralph McCormick and Economical Mutual Insurance Company (O.I.C. File No. A-000139), p. 27, are appropriate:

The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.

Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.

The hearing on the preliminary issues took two days. On the first day, Mr. and Mrs. Oliveira testified. A great deal of their testimony was irrelevant to the issues before me.

Mrs. Oliveira also submitted a medical brief and a medical chronology at the arbitration hearing. The preparation and introduction of both exhibits was unnecessary for the preliminary issues.

The submissions of Mrs. Oliveira's counsel took most of the second day. I did not find these submissions helpful to my determinations.

Some of the testimony and documents may prove useful in the hearing of the substantive issues in dispute among the parties. Accordingly, I will not make an expense order until that hearing is concluded.

Order:

1. Zurich Insurance of Canada shall pay Mrs. Oliveira's no-fault benefits arising out of her December 28, 1990 automobile accident.

August 10, 1993

Fred B. Sampliner Arbitrator

Date

APPENDIX 1

Exhibits

Exhibit 1

Copy of the insurance card and vehicle permit of Paul(o) Oliveira

Exhibit 2

Copy of December 9, 1992 letter from The Personal to Paul(o) Oliveira

Exhibit 3

Zurich Insurance policy declarations for Adozinda and Virginio Oliveira

Exhibit 4

Medical chronology of Adozinda Oliveira, from December 28, 1990 to April 28, 1993

Exhibit 5

Medical brief of Adozinda Oliveira

Exhibit 6

Document brief of Adozinda Oliveira

Exhibit 7

Copy of Notice of Loss form

Exhibit 8

Opinion letter of Dr. John C. Clifford, containing an article: Clifford, "Successful Management of Chronic Pain Syndrome", Canadian Family Physician (Vol. 39, p. 549, March 1993)

Exhibit 9

Opinion letter and curriculum vitae of Dr. Manfred Harth

APPENDIX 2

Cases referred to by the parties

1. Lily Steele and Zurich Insurance Company (O.I.C. File No. A-001024, dated December 3, 1992)

2. Thai Tru Luong and Toronto Transit Commission (O.I.C. File No. A-000027, dated September 19, 1991)

3. Daniel Cattrysse and The Westminster Mutual Fire Insurance Company and Anglo Canada General Insurance Company (O.I.C. File Nos. A-001618 and A-001789), dated June 21, 1993

4. Woolford v. Lockhart et. al, (1985) 2 C.P. (2d) 16