Neutral Citation: 1994 ONICDRG 103

File No. A-003987

ONTARIO INSURANCE COMMISSION

BETWEEN:

WALTER FRANCIS

Applicant

and

HALIFAX INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUE

Issues:

The Applicant, Walter Francis, was injured in a motor vehicle accident on May 16, 1991. He received weekly income benefits in the amount of $600.00 from his Insurer, Halifax Insurance Company (Halifax), payable under section 12(1) of Ontario Regulation 672¹. Weekly income benefits were terminated by Halifax on August 27, 1992, on the basis of medical documentation indicating that Mr. Francis no longer suffered a substantial inability to perform the essential tasks of his occupation (Exhibit 1, Tab 1).

Mr. Francis applied for mediation with respect to the termination of his weekly income benefits. At mediation, Halifax claimed that Mr. Francis no longer suffered a substantial inability to perform his essential tasks after August 27, 1992. In addition, Halifax raised questions concerning the quantum of weekly income benefit previously paid and sought a repayment of any overpayment made during that period. The parties were unable to resolve their disputes through mediation and the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Mr. Francis seeks to limit the issues at arbitration to a determination of his substantial inability to perform his essential tasks after August 27, 1992 under section 12(1) of the Schedule, and his entitlement beyond 156 weeks under section 12(5)(b). He also seeks an order compelling Halifax to reinstate weekly income benefits in the original amount of $600.00 per week from August 27, 1992. He takes the position that Halifax's claim for repayment of any overpayment of weekly income benefits made during the period May 23, 1991 to August 27, 1992, should not be heard at the same time as his claim for weekly income benefits.

Halifax submits that since the Applicant has commenced proceedings under the benefit category of weekly income benefits, it is entitled to raise all the issues within that category which are consequentially related, such as the proper amount of the weekly income benefit and repayment.

At the pre-hearing discussion held July 4, 1994, the parties were unable to agree on what issues should be included in the arbitration hearing.

The preliminary issue is:

What issues should be included in the arbitration hearing?

Result:

The issues to be included in this arbitration hearing are:

1. Did Mr. Francis suffer a substantial inability to perform the essential tasks of his occupation after August 27, 1992, under section 12(1) of the Schedule?

2. Did Mr. Francis' injuries continuously prevent him from engaging in any occupation or employment for which he is reasonably suited by education, training or experience for any period in excess of 156 weeks under section 12(5)(b) of the Schedule?

3. What is the quantum of weekly income benefit payable to Mr. Francis under section 12 of the Schedule?

4. Is Mr. Francis entitled to interest on any amounts found to be owing, according to section 24 of the Schedule?

5. Should Mr. Francis be awarded his expenses related to the arbitration hearing, according to section 282(11) of the Insurance Act?

6. Is Halifax entitled to repayment of any portion of approximately $39,600.00 in weekly income benefits paid to Mr. Francis during the period May 23, 1991 to August 27, 1992, pursuant to the provisions of section 27 of the Schedule?

7. Is Halifax entitled to interest on any amounts found to be owing by Mr. Francis, according to section 27(4) of the Schedule?

Hearing:

The hearing on preliminary issue was held in Toronto, Ontario, on August 25, 1994, before me, Janice Mackintosh, arbitrator.

Present at the Hearing:

Applicant's Representative:

Daniel V. McCarthy Barrister and Solicitor

Insurer's Representatives:

Theodore P. Charney and Alex Voudouris Barristers and Solicitors

Counsel for the parties each filed a factum, and a brief of authorities. Exhibits are listed in Appendix A. Authorities referred to by the parties are listed in Appendix B, and other documents before the arbitrator are listed in Appendix C.

Evidence and Findings:

Mr. Francis submits that Halifax cannot raise a "matter" (overpayment) that was not included in his Application for Appointment of an Arbitrator. This issue was first examined by Senior Arbitrator Naylor in her decision Rosa DeCicco and State Farm Mutual Automobile Insurance Company, December 18, 1991, OIC File No. A-000277. In that case, Mrs. DeCicco challenged the right of State Farm to raise any issues beyond those specifically referred to arbitration in her application. Mrs. DeCicco's application was confined to her continuing entitlement to weekly income benefits under section 12 of the Schedule, and care benefits under section 7. Mrs. DeCicco regarded State Farm's claims for repayment of section 7 care benefits and section 6 supplementary medical and rehabilitation benefits as "matters" different from her claims.

Senior Arbitrator Naylor rejected the restrictive approach to the issues. She concluded at pages 9 and 10 of the decision:

...defining the jurisdiction of an arbitrator by the strict terms of the application [for arbitration] would encourage formality and technicality in the process. This would be inconsistent with the purpose of arbitration, which is intended to be informal and accessible.

... the scope of the issues before the arbitrator should not be defined in a narrow and technical way. The authority of the arbitrator extends to anything that reasonably and consequentially flows from the issues that are before her. In my view, this includes an applicant's liability to repay any benefits found to have been overpaid in light of the arbitrator's findings.

Senior Arbitrator Naylor was prepared to consider State Farm's claim for a repayment of care benefits because it reasonably and consequentially flowed from a determination of Mrs. DeCicco's entitlement to further care benefits, which was the "matter" raised in her application. However, Senior Arbitrator Naylor did not determine State Farm's claim for repayment of supplementary medical and rehabilitation benefits because this was not a matter which had been referred to arbitration by Mrs. DeCicco and it did not reasonably or consequentially flow from a determination of the matters raised by her.

State Farm appealed the decision of Senior Arbitrator Naylor. The Director of Arbitrations did not specifically comment on the above-quoted statement from the decision in DeCicco. However, the Director concluded at page 10 of Rosa DeCicco and State Farm Mutual Automobile Insurance Company, February 21, 1992, OIC File No. P-000277 (appeal decision):

The words "all issues in dispute" in s. 282(3) must be referenced to "the matter" and there must be a natural, or consequential, flow from the general to the specific.

Where an arbitrator is called upon to determine "the matter" referred to him or her, the arbitrator must define that matter and, in each case, determine the scope of the arbitration.

The Director dismissed State Farm's appeal in DeCicco.

Counsel for Mr. Francis submits that his client's situation is analogous to that of Mr. Kotsiakos in the decision Peter Kotsiakos and State Farm Mutual Automobile Insurance Company, July 26, 1994, OIC File No. A-002354 (under appeal), which follows the reasoning of the Director of Arbitrations in DeCicco. In that case, Mr. Kotsiakos sought to limit the arbitration to a calculation of his gross weekly income under the provisions of section 12(7) of the Schedule, in conjunction with the calculation of his weekly income benefit under section 12(4) of the Schedule. The insurer, State Farm, claimed repayment of weekly income benefits paid between August 20, 1992 and December 19, 1993, on the basis that Mr. Kotsiakos was able to perform the essential tasks of his employment during this period.

Arbitrator Manji concluded that the issues raised by State Farm expanded the nature and scope of the arbitrator's inquiry to include medical evidence concerning Mr. Kotsiakos' ability to perform the essential tasks of his employment. Arbitrator Manji did not consider State Farm's issues to be directly related to the calculation "matters" referred to arbitration by Mr. Kotsiakos or to naturally or consequentially flow from a determination of the calculation matters. Arbitrator Manji declined to determine State Farm's claim for repayment and concluded at page 10:

I do not believe that it is open to an arbitrator, where the matter or thing in dispute that an applicant has referred to arbitration is restricted, to expand the scope of the arbitration to include an unrelated question or concern raised by an insurer. If the question or concern is directly related to the matter or naturally or consequentially flows from the matter, then it is properly an "issue in dispute".

Counsel for Mr. Francis maintained that the adjudication of Halifax's claim for overpayment of weekly income benefits during the period May 23, 1991 to August 27, 1992, will add substantial time and expense to the determination of Mr. Francis' claim for further weekly income benefits, in the amount of $600.00, after August 27, 1992.

Counsel for Halifax noted numerous decisions of the Commission which establish that the burden of proving the amount of weekly income benefit claimed rests upon the applicant. Halifax submitted that the review of Mr. Francis' pre-accident financial affairs necessary to establish the quantum of weekly income benefit claimed after August 1992 is identical to the inquiry required to determine whether an overpayment of weekly income benefits has been made prior to August 1992. Counsel for the Insurer submitted that, in this case, the determination of the Insurer's claim for repayment does not significantly enlarge the nature or scope of the arbitrator's inquiry.

I agree with the submissions of counsel for the Insurer. This is not a case where the applicant has limited his claim to a determination of his entitlement to weekly income benefits on the basis of his medical condition only, with no reference to the quantum of benefit payable in the event that entitlement is established. Mr. Francis is seeking an order from the arbitrator compelling Halifax to reinstate benefits at a particular level. In order to determine this issue, the arbitrator must inquire into the quantum of benefit claimed and determine whether the amount claimed is supported by the evidence. Once the quantum of benefit is determined for the period after August 1992, it is a simple matter to determine whether an overpayment of weekly income benefits occurred in the period prior to August 1992.

I accept the principle enunciated in DeCicco (appeal decision), and I find that a determination of Halifax's claim for repayment of weekly income benefits paid prior to August 1992 consequentially flows from a determination of the matters submitted to arbitration by Mr. Francis. Furthermore, Halifax can raise the issue of repayment on the basis of quantum because Mr. Francis seeks an order as to quantum. I find that Halifax's claim for repayment does not significantly expand the scope of the arbitrator's inquiry.

Counsel for Mr. Francis submitted that Halifax should be estopped from disputing the quantum of weekly income benefits, at least to the date of their termination on August 27, 1992. Mr. Francis suggested that Halifax made its initial decision to pay weekly income benefits at the level of $600.00 in May 1991 and continued to pay benefits in that amount for a further 14 months. Mr. Francis maintained that Halifax is bound by its initial decision for the period up to August 1992 and any recalculation of benefits should apply to the period after August 27, 1992 only.

Counsel for Halifax responded that under section 24(2) of the Schedule, an insurer is required to deliver weekly income benefits within ten days after it has received a completed application for statutory accident benefits. In this case, Halifax calculated weekly income benefits on the basis of information contained in the Application for Accident Benefits and Employer's Confirmation of Income forms, prepared by Mr. Francis. Some time later, Halifax received further income information which appeared to contradict the information contained in these forms.

In my view, it is premature for me to decide the issue of the potential operation of estoppel against Halifax, at this preliminary stage. I find that the issue of estoppel is relevant only to repayment. Halifax's claim for repayment of any overpayment will only arise if Mr. Francis fails to establish the $600.00 amount of weekly income benefit claimed by him.

I find that the issue of estoppel is most appropriately dealt with along with the other questions which arise in the event that the arbitrator is required to consider the operation of section 27(1) of the Schedule, which states:

27(1) A person must repay to the insurer any benefit received under this Schedule that is paid to the person through error or fraud.

In order to succeed with its claim for repayment under section 27 of the Schedule, Halifax must establish that any overpayment of weekly income benefits received by Mr. Francis from May 23, 1991 to August 27, 1992, was paid through error or fraud, as these words have been interpreted by various cases before the Commission. If Halifax fails to meet this burden, or the Applicant establishes the basis for an estoppel, Halifax may not obtain a repayment of weekly income benefits from Mr. Francis.

Order:

The issues to be included in this arbitration hearing are:

1. Did Mr. Francis suffer a substantial inability to perform the essential tasks of his occupation after August 27, 1992 under section 12(1) of the Schedule?

2. Did Mr. Francis' injuries continuously prevent him from engaging in any occupation or employment for which he is reasonably suited by education, training or experience for any period in excess of 156 weeks under section 12(5)(b) of the Schedule?

3. What is the quantum of weekly income benefit payable to Mr. Francis under section 12 of the Schedule?

4. Is Mr. Francis entitled to interest on any amounts found to be owing, according to section 24 of the Schedule?

5. Should Mr. Francis be awarded his expenses related to the arbitration hearing, according to section 282(11) of the Insurance Act?

6. Is Halifax entitled to repayment of any portion of approximately $39,600.00 in weekly income benefits paid to Mr. Francis during the period May 23, 1991 to August 27, 1992, pursuant to the provisions of section 27 of the Schedule?

7. Is Halifax entitled to interest on any amounts found to be owing by Mr. Francis, according to section 27(4) of the Schedule?

I make no order with respect to expenses of the arbitration in connection with this hearing on a preliminary issue. The Applicant's claim for expenses related to arbitration will be dealt with in its entirety by the hearing arbitrator as part of the main hearing.

October 28, 1994

Janice Mackintosh Arbitrator

Date

APPENDIX A

Exhibits:

1. Applicant's brief of documents (Tabs 1-5):

Tab 1

Assessment of Claim by Insurer, dated May 30, 1991

Tab 2

Medical report of Dr. Fred Langer, dated June 11, 1992

Tab 3

Report of Mediator, dated April 15, 1993

Tab 4

Application for Appointment of an Arbitrator, dated March 9, 1994

Tab 5

Response by Insurer, dated April 18, 1991(4)

2. Insurer's brief of documents (Tabs A-N and 1-9):

Tab A

Application for Accident Benefits, dated May 30, 1991

Tab B

Employer's Confirmation of Income

Tab C

1990 Income Tax Return for Walter Francis

Tab D

Report of Mediator, dated April 15, 1993

Tab E

Letter from Halifax to Daniel McCarthy, dated June 10, 1993

Tab F

Letter from Daniel M. Edwards to Halifax, dated May 19, 1993

Tab G

Letter from Daniel McCarthy to Halifax, dated June 30, 1993

Tab H

Letter from Halifax to Daniel McCarthy, dated July 9, 1993

Tab I

Letter from Daniel McCarthy to Halifax, dated August 19, 1993

Tab J

Letter from R. Laird Elliott to Daniel McCarthy, dated August 4, 1993

Tab K

Facsimile from Halifax to Daniel McCarthy, dated August 23, 1993

APPENDIX A cont'd

Tab L

Letter from Halifax to Daniel McCarthy, dated January 19, 1994

Tab M

Pre-hearing letter from OIC to Daniel McCarthy and Alex Voudouris, dated May 20, 1994

Tab N

Pre-hearing letter from OIC to Daniel McCarthy and Alex Voudouris, dated July 15, 1994;

Factum of the Applicant, dated July 14, 1994

Tab 1

Report of Dr. Fred Langer, dated September 3, 1991

Tab 2

Report of Canadian Back Institute, dated January 22, 1992

Tab 3

Report of Dr. Fred Langer, dated June 11, 1992

Tab 4

Report of Dr. Joseph Lipcsei, dated January 25, 1992

Tab 5

Report of Dr. Michael B. Bushuk, dated February 17, 1993

Tab 6

Report of R. Laird Elliott, dated August 4, 1993, with Agreement, dated June 4, 1990, attached

Tab 7

Report of Dr. Michael Ford, dated September 8, 1993

Tab 8

Report of Dr. Robert Sasse, dated February 4, 1994

Tab 9

Report of Dr. Robert Sasse, dated February 28, 1994

3. List of Walter Francis' essential tasks prior to May 16, 1991

APPENDIX B

Authorities referred to:

1. and Toronto Transit Commission (Markel Insurance Company of Canada, April 15, 1994, OIC File No. A-004077

2. Rosa DeCicco and State Farm Mutual Automobile Insurance Company, December 18, 1991, OIC File No. A-000277

3. Rosa DeCicco and State Farm Mutual Automobile Insurance Company, February 21, 1992, OIC File No. P-000277 (appeal decision)

4. Peter Kotsiakos and State Farm Mutual Automobile Insurance Company, July 26, 1994, OIC File No. A-002354 (under appeal)

5. Insurance Act, R.S.O. 1990, c.I.8., sections 281 and 282, as amended by the Insurance Statute Law Amendment Act, 1993, S.O. 1993, c.10., including the provisions in Ontario Regulation 672

APPENDIX C

Other documents before the arbitrator:

1. Report of Mediator, dated April 15, 1993

2. Application for Appointment of an Arbitrator, dated March 9, 1994

3. Response by Insurer and Schedule A, dated April 18, 1991 (correct date is 1994)

4. Pre-hearing letter, dated May 20, 1994

5. Factum of the Applicant, Walter Francis

6. Statement of the Insurer, Halifax Insurance Company

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.