Neutral Citation: 1994 ONICDRG 104
File No. A-003577
ONTARIO INSURANCE COMMISSION
BETWEEN:
DOMITILA PEREZ
Applicant
and
ROYAL INSURANCE COMPANY OF CANADA
Insurer
DECISION ON PRELIMINARY ISSUE
Issues:
The Applicant, Domitila Perez, was injured in a motor vehicle accident on June 12, 1991. She applied for and received certain statutory accident benefits from the Insurer, the Royal Insurance Company of Canada ("Royal"), payable under Ontario Regulation 6721. Mrs. Perez claims that she is entitled to weekly income benefits at the rate of $281.60 based on a job offer from the Island Yacht Club. Royal takes the position that at the time of the accident, she did not have a "legitimate offer of employment made before the accident and evidenced in writing", within the meaning of section 12(2)1.iii of the Schedule.
As a preliminary issue, Mrs. Perez submits that the parties settled that she had a legitimate job offer from the Island Yacht Club and, therefore, Royal cannot now take the position that she did not. Royal claims that there was no such settlement.
The preliminary issue is:
Is Royal precluded from taking the position that Mrs. Perez did not have a "legitimate offer of employment made before the accident and evidenced in writing", within the meaning of section 12(2) 1 .iii of the Schedule, because this issue was previously settled?
Result:
Royal is not precluded from taking the position that Mrs. Perez did not have a "legitimate offer of employment made before the accident and evidenced in writing", within the meaning of section 12(2) 1 .iii of the Schedule.
Hearing:
The hearing was held in North York, Ontario, on October 24, 1994, before me, David R. Draper, arbitrator.
Present at the Hearing:
Applicant:
Domitila Perez
Applicant's
Peter B. Cozzi
Representative:
Barrister and Solicitor
Insurer's
Stanley Tessis
Representative:
Barrister and Solicitor
Insurer's
Rick Bowers
Officer:
Assistant Claims Manager
Observing:
Juan Perez
Witnesses:
Ralph Sasso - Law Clerk employed by Peter B. Cozzi, Barrister and Solicitor
Maria Mascherin - Secretary employed by Peter B. Cozzi, Barrister and Solicitor
Rick Bowers - Assistant Claims Manager, Royal Insurance
Exhibits:
The Applicant provided a document brief which is detailed in Appendix A to this decision.
Reasons for Decision:
Mrs. Perez was injured in a motor vehicle accident on June 12, 1991. She applied to Royal for accident benefits, including weekly income benefits. She was initially paid weekly income benefits at the rate of $330.89 based on her reported pre-accident income. Royal subsequently concluded that Mrs. Perez was not able to verify her pre-accident income and, effective February 21, 1992, stopped paying her weekly income benefits.
In January 1993, Mrs. Perez applied for mediation. A face-to-face mediation was held on March 30, 1993. Mrs. Perez was represented by Mr. James Cozzi, a paralegal employed by Mr. Peter B. Cozzi, Mrs. Perez's lawyer in this proceeding. Mr. Bowers, an assistant claims manager, attended on behalf of Royal.
During the mediation, Mrs. Perez mentioned for the first time that she had a job offer from the Island Yacht Club, to start work shortly after the accident. She provided an undated letter signed by "Chef Poudrette" (Exhibit 1, Tab 4).
The Report of Mediator, dated April 9, 1993, indicates that weekly income benefits and supplementary medical benefits were settled, as set out in the Memorandum of Agreement, dated March 30, 1993. The Report also states, however, that the proper amount of Mrs. Perez's weekly income benefits was not settled.
The Memorandum of Agreement states (Exhibit 1, Tab 2):
As a result of our mediation meeting, the parties have agreed to the following resolution:
WEEKLY INCOME BENEFITS:
QUANTUM:
The insurer has paid to the insured weekly income benefits from June 21, 1991 to February 21, 1992, the amount of $330.89 per week. The insurer agrees pending further confirmation of the insured's income the amount of $185.60 per week from June 21, 1991 to date and ongoing at $185.60 per week less the amount of weekly benefits already paid. (The parties agree that as of March 28, 1993 the amount owed would equal approxamitely [sic] $5223.82.)
The amount of benefits to be determined upon confirmation of the insured's income from either the 52 weeks prior to the accident, 4 week [sic] prior to the accident or from the amount of income anticipated at the Island Yacht Club as a kitchen helper.
The insured's counsel to remit any income tax or other income documentation to support above and to provide to the insurer a description of the duties involved in each position. The insurer to investigate the income and hours involved in the kitchen helper position.
DURATION;
The insured shall remit to the insurer a copy of Dr. Kesmarky's recent report upon reassessment of Mrs. Perez. Cost of which is to be borne by the insurer.
SUPPLEMENTARY, MEDICAL ETC:
Royal shall pay for all outstanding expenses for the medical reports outlined on the Application for mediation.
VOCATIONAL ASSESSMENT:
Once the report is received from Dr. Kesmarky the insurer and insured's counsel shall discuss the above treatment and assessments required for the insured.
FAILED ISSUES:
QUANTUM/INTEREST
Should the insurer and insured not agree upon the amount of weekly income benefits owed from June 21, 1991, the insured may proceed to court or arbitration on these issues.
I find that Royal agreed to bring Mrs. Perez's weekly income benefits up to date and to continue paying them, but at the minimum rate of $185.60 per week. Taking into account the higher amount that Royal initially paid, the parties agreed that as of March 28, 1993, the amount owing would be approximately $5,223.82. My rough calculations confirm this:
Royal paid $330.89 from June 21, 1991 to February 21, 1992, or approximately 35 weeks. 35 x $330.89 = $11,581.15.
June 21, 1991 to March 28, 1993 is approximately 92 weeks. 92 x $185.60 = $17,075.20.
$17,075.20 - $11,581.15 = $5,494.05.
I assume that this payment was made. The result was that Mrs. Perez received weekly income benefits equivalent to the minimum amount of $185.60 per week for the period up to and including March 28, 1993. The agreement was that the proper amount of Mrs. Perez's weekly income benefits would be investigated further. If she could demonstrate to Royal's satisfaction that she was entitled to a higher amount, presumably the higher amount would have been paid, together with back payments. The Memorandum of Agreement left open the issue of whether Mrs. Perez would base her claim for additional benefits on her pre-accident income in the four or 52 weeks preceding the accident, or on the offer of employment from the Island Yacht Club. If the parties were unable to agree on the proper amount, Mrs. Perez was specifically allowed to apply to court or arbitration.
In my opinion, the Report of Mediator and the Memorandum of Agreement make it clear that an agreement was not reached at mediation about the proper amount of Mrs. Perez's weekly income benefits. Rather, there was an agreement about an approach that, hopefully, would resolve the issue. This type of outcome is sometimes referred to as a "procedural agreement".
Following the mediation, Mr. Sasso assisted Mr. James Cozzi with this case. I accept Mr. Sasso's testimony that he contacted the general manager at the Island Yacht Club, who prepared a letter, dated May 4, 1993 (Exhibit 1, Tab 8). The letter states that Mrs. Perez was to start a full-time position as a kitchen helper at the Island Yacht Club on June 13, 1991, earning $8.00 per hour and working 44 hours per week.
The letter from the Island Yacht Club's general manager and an updated medical report were forwarded to Royal on June 2, 1993 (Exhibit 1, Tab 3). Mr. Sasso testified that he prepared the covering letter for Mr. James Cozzi's signature. The letter asks Royal to bring Mrs. Perez's weekly income benefits up to date at $281.60 per week based on her anticipated earnings from the Island Yacht Club ($8.00/hr. x 44 hr./wk. = $352.00 x 80% = $281.60).
Mr. Bowers arranged for some investigation of Mrs. Perez's claim. By June 14, 1993, the investigator had advised him that Chef Poudrette had not worked at the Island Yacht Club since October 1989. Mr. Bowers' file notes indicate that he was concerned about this information. He testified that he was also concerned that Mrs. Perez had not mentioned the job offer, or the letter from Mr. Poudrette, for nearly two years after the accident.
Mr. Bowers then asked the investigator to speak to the general manager of the Island Yacht Club. In the interim, he authorized additional weekly income benefits for the period from March 29, 1993 to July 5, 1993, at $185.60 per week.
Mr. Bowers was subsequently advised that according to the general manager of the Island Yacht Club, Mrs. Perez was hired by the club's chef, who did not need approval for that type of hiring. She was to work from June 13, 1991 to September 2, 1991, a period of just less than 12 weeks.
On July 12, 1993, Mr. Bowers spoke to someone from Mr. Cozzi's office. He thinks that it was Mr. Sasso, although Mr. Sasso was uncertain whether he spoke with Mr. Bowers that day. Mr. Bowers testified that in order to resolve the offer of employment issue, he agreed to pay the higher amount of $281.60 for 12 weeks ($281.60 - $185.60 = $96.00 x 12 = $1,152.00). Based on the recent medical report, he also agreed to pay an additional four weeks of weekly income benefits at $185.60 per week.
Royal issued a cheque to Mrs. Perez, dated July 12, 1993, for $1,894.40. The cheque stub states:
Further income bfts of $185.60 frm July/5 to August 2/93 plus $1152 temporary employment for 12 wks at Island Yacht Club.
Mr. Bowers maintained that the additional $1,152.00 was paid to settle what he considered a relatively small dispute, and was not a concession that Mrs. Perez had a legitimate offer of employment. He denied that he did anything to suggest that Royal had given up its right to contest whether Mrs. Perez had a legitimate offer of employment, within the meaning of section 12(2) 1 .iii of the Schedule.
Mr. Sasso's recollection was that he called Mr. Bowers after the July 12th cheque was received because he felt that Mrs. Perez was entitled to $281.60 for the entire period of her eligibility. He claimed that during their conversation, Mr. Bowers specifically agreed that Mrs. Perez had a legitimate job offer from the Island Yacht Club, and agreed to pay her benefits based on this job offer at $281.60 per week. Mr. Sasso stated that his understanding was that she would be paid $281.60 per week on an ongoing basis, not just for 12 weeks.
Mr. Sasso testified that he confirmed this conversation in a letter for Mr. James Cozzi's signature. The letter, dated July 19, 1993, states (Exhibit 1, Tab 6):
We confirm your conversation with Ralph Sasso of our office as follows:
Royal acknowledges and excepts [sic] that Mrs. Perez weekly income is $281.60, being 80% of her gross income.
Royal agrees to pay this amount adjusted by previous payment up to and including Labour Day, September 1991. Thereafter at $185.60 to present.
This is in contradiction of the OMPP legislation who's statutes requires [sic] and entitles her to the $281.60 to date
We will proceed to Arbitration in this matter.
We serve notice that we consider your position unreasonably withholds payment.
Mr. Bowers testified that he has no record of this discussion and did not receive the confirmation letter. In any event, I do not believe that the letter contradicts his evidence. It indicates disagreement, not agreement. In my opinion, the letter simply confirms Royal's position that Mrs. Perez's entitlement was limited to $185.60 per week, but that it agreed to pay benefits at the higher rate of $281.60 for 12 weeks during the summer of 1991.
Mrs. Perez applied again for mediation of her entitlement to weekly income benefits. The Report of Mediator is dated April 12, 1994. It appears that at the time of the mediation, Royal was still paying weekly income benefits, but at the minimum rate of $185.60.
The Report of Mediator sets out the following under both "Issues Settled" and "Issues Remaining in Dispute":
The insured had claimed at a previous mediation that she would have commenced employment as a kitchen helper on June 19, 1991 under a "legitimate offer of employment" made prior to the MVA. She claimed she would have made $8.00 per hour.
Royal agreed at that time (as per Memorandum of Agreement dated March 30, 1993) to investigate and confirm whether or not Mrs. Perez had been offered this position at the Yacht Club as a kitchen helper.
Following their investigation, Royal commenced paying $281.60 per week for the period July 5, 1993 to September 27, 1993 based on the claimed anticipated salary.
The second mediation was initiated on the basis of the insured's claim that the weekly benefits paid following Royal's investigation should have been paid up to July 5, 1993 and following September 27, 1993.
Royal claimed that they terminated benefits on September 27, 1993 on the grounds that the Mrs. Perez's employment with the Island Yacht Club was seasonal in nature and would have ended in September of each year.
As a result of mediation, the insurer agreed that disability was not an issue presently and agreed to re-instate the minimum benefit from September 27, 1993 in the amount of $185.60 and confirm within the week as to what amount they would pay on an ongoing basis.
Royal indicated that they have reviewed the matter and now take the position that "a legitimate offer of employment" in accordance with the Statutory Accident Benefits schedule was not made. Royal agrees not to request repayment of the monies paid over and above the $185.60.
I find that the third paragraph, above, is incorrect. After Royal's investigation, it agreed to pay weekly income benefits of $281.60, but only for the 12 week period from June 13, 1991 to September 2, 1991. There was no agreement about the proper amount of Mrs. Perez's weekly income benefits for any other period. Royal continued to claim that she was only entitled to receive $185.60 per week.
The dispute resolution process is designed to encourage parties to settle their disputes. Settlements should be respected, but only if an agreement is truly reached. Section 279(2) of the Insurance Act reflects this principle:
279.-(2) Any restriction on a party's right to mediate, litigate, arbitrate, appeal or apply to vary an order as provided in sections 280 to 284 is void except where the restriction forms part of a settlement.
A number of provisions in the Schedule require or encourage insurers to pay benefits promptly, even if there is some question about the applicant's eligibility. In my opinion, therefore, an arbitrator must be careful in interpreting the payment of a benefit as a concession by the insurer. In this case, I am not persuaded that Royal made any concession or took any action that should preclude it from contesting whether Mrs. Perez had a "legitimate offer of employment made before the accident and evidenced in writing", within the meaning of section 12(2) 1 .iii of the Schedule.
I heard no submissions with respect to expenses and, therefore, any issue concerning the expenses of this preliminary hearing will be reserved to the arbitration hearing.
Order:
Royal is not precluded from taking the position that Mrs. Perez did not have a "legitimate offer of employment made before the accident and evidenced in writing", within the meaning of section 12(2) 1 .iii of the Schedule.
November 4, 1994
David R. Draper
Arbitrator
Date
APPENDIX A
Exhibit 1
The Applicant's document brief, containing photocopies of the following documents:
Tab 1
Report of Mediator, dated April 9, 1993.
Tab 2
Memorandum of Agreement, dated March 30, 1993.
Tab 3
Letter, dated June 2, 1993, from Mr. James Cozzi to Royal Insurance.
Tab 4
Undated letter from the Island Yacht Club to whom it may concern.
Tab 5
Royal Insurance cheque to Mrs. Perez, dated July 12, 1993.
Tab 6
Letter, dated July 19, 1993, from Mr. James Cozzi to Royal Insurance, together with a fax transmission report, dated July 20, 1993.
Tab 7
Report of Mediator, dated April 12, 1994.
Tab 8
Letter, dated May 4, 1993, from the Island Yacht Club to Mr. Peter Cozzi.
Tab 9
Letter, dated May 12, 1994, from Royal Insurance to Dr. Rajka Soric.
In addition to the exhibits, the following documents were before the arbitrator:
Application for Appointment of an Arbitrator, dated May 17, 1994.
Response by Insurer, dated June 16, 1994.
A letter from the pre-hearing arbitrator, dated October 3, 1994, confirming the pre-hearing discussion held on September 29, 1994.