ONTARIO INSURANCE COMMISSION

Neutral Citation: 1994 ONICDRG 135

File No. A-004387

BETWEEN:

MONICA SARJEANT

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUE

Issues:

The Applicant, Monica Sarjeant, was injured in a motor vehicle accident on August 8, 1992. She applied for and received statutory accident benefits from the Insurer, Economical Mutual Insurance Company ("Economical"), payable under Ontario Regulation 672.¹ Weekly income benefits were terminated by Economical on February 27, 1993. Mrs. Sarjeant claims ongoing weekly income benefits. She applied for mediation of the dispute. Economical contends that the dispute was resolved at mediation in April 1993. Mrs. Sarjeant contends that the settlement reached at mediation dealt only with weekly income benefits to the date of mediation, and did not deal with benefits after April 1993. She applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8.

The only issue in this hearing is:

1. Was the issue of Mrs. Sarjeant's entitlement to ongoing weekly income benefits after April 1993 settled at mediation?

The Applicant also seeks her expenses in the proceeding.

Result:

1. The issue was not settled at mediation. The arbitration may proceed.

The Applicant is entitled to her expenses in the proceeding.

Hearing:

The hearing was held in Hamilton, Ontario, on June 1, 1994, before me, Nancy Makepeace, Arbitrator.

Present at the hearing:

Applicant: Monica Sarjeant

Applicant's Representative: Charles Macaluso Barrister and Solicitor

Insurer's Representative: Gordon L. Robson Barrister and Solicitor

Insurer's Officer: Mark Stewardson

Witnesses: Monica Sarjeant Maureen Morao

Exhibits, other documents before the Arbitrator, and cases referred to by the parties, are set out in an Appendix to this decision.

Background facts:

The following facts appeared not to be in dispute between the parties:

1. Following her motor vehicle accident of August 8, 1992, Mrs. Sarjeant received weekly income benefits of $185.60 per week, under section 12 of the Schedule, between August 15, 1992 and February 27, 1993, when benefits were terminated.

2. Mrs. Sarjeant applied for mediation of the dispute. On Friday, April 16, 1993, Mrs. Sarjeant met with Fred Heerema, a Mediator with the Commission, and Maureen Morao, Senior Accident Benefits Supervisor with Economical. The parties reached a tentative agreement, but nothing was signed at this meeting. Mr. Heerema advised Mrs. Sarjeant to think about it over the next several days.

3. The following week, Mrs. Sarjeant telephoned Mr. Heerema, and advised that she would accept the tentative agreement. A Report of Mediator was issued on April 26, 1993 (Exhibit 1, Tab 3). The Report sets out no "Issues Remaining in Dispute". Under the heading, "Issues Settled", is found the following:

6. ISSUES SETTLED

The following issues have been settled:

Issue: Interest

Amount: Not Applicable

Details: Ms. Monica Sarjeant agrees that the amount of $750.00 paid to her by Economical Mutual Insurance in settlement of the claim for weekly income benefits, includes an amount for interest under Section 24 of the No Fault Benefits Schedule.

Issue: Suplt. Medical

Amount: Not Applicable

Details: Ms. Monica Sarjeant and Economical Mutual Insurance agree that as of April 16, 1993, there are no outstanding claims for supplementary medical and rehabilitation benefits under the No Fault Benefit Schedule.

Ms. Monica Sarjeant agrees that she will attend an eight week proactive physical therapy/rehabilitation program acceptable to Dr. A. Greenspoon and Economical Mutual Insurance at the earliest opportunity subsequent to April 16, 1993.

Issue: Weekly Income

Amount: $750.00

Details: Economical Mutual Insurance has paid $185.60 per week to Ms. Monica Sarjeant for the period August 15, 1992 to February 27, 1993 as a weekly income benefit under Section 12 of the No Fault Benefits Schedule. Ms. Monica Sarjeant claims ongoing weekly income benefits beyond February 27, 1993.

In settlement of their dispute concerning weekly income benefits, Ms. Monica Sarjeant and Economical Mutual Insurance agree that Economical Mutual Insurance will pay to Ms. Sarjeant the sum of $750.00 inclusive of interest. Ms. Sarjeant agrees that as of April 16, 1993, there are no outstanding issues between Economical Mutual Insurance and herself with respect to weekly income benefits. Ms. Monica Sarjeant also agrees that as of April 16, 1993, there is no basis for re-activating any claim for weekly income benefits under the No Fault Benefits Schedule.

4. The covering letter, dated April 26, 1993, sent with the Report of Mediator (Exhibit 1, Tab 2), says that the Report "indicates that all of the issues have been resolved". A Confirmation of Settlement form was enclosed, and the Applicant was asked to sign and return it to verify her acceptance of the settlement as outlined in the Report of Mediator. Mrs. Sarjeant signed the Confirmation of Settlement form in May 1993, and returned it to the Commission (Exhibit 1, Tab 4).

5. In accordance with the settlement reached at mediation, Economical gave Mrs. Sarjeant a cheque for $750. Mrs. Sarjeant cashed the cheque shortly thereafter.

6. In early August 1993, Mrs. Sarjeant saw Dr. McKnight, her family doctor, who told her that she could return to work in several weeks, but not before. Mrs. Sarjeant telephoned Mrs. O'Reilly, her claims adjuster at Economical, and re-activated her claim for weekly benefits. Mrs. O'Reilly advised that because of the agreement reached at mediation, Mrs. Sarjeant would have to proceed through mediation again, in order to re-activate her claim.

7. Mrs. Sarjeant applied for mediation at the Commission. Mediation was conducted between August 16 and September 8, 1993. She met with Mr. Heerema and Ms. Morao once again. A Report of Mediator, dated September 8, 1993, indicates that mediation failed. Mrs. Sarjeant received no further payments following this meeting.

8. At no time did Economical ask Mrs. Sarjeant to sign a full and final release, or any other document, in connection with the settlement.

The parties agree that Mrs. Sarjeant's entitlement to weekly benefits to April 16, 1993, was resolved at the first mediation. The only dispute is whether Mrs. Sarjeant agreed that she could make no further claim for weekly income benefits after that date. At issue is the last sentence of the April 26, 1993 Report of Mediator:

Ms. Monica Sarjeant also agrees that as of April 16, 1993, there is no basis for re-activating any claim for weekly income benefits under the No Fault Benefits Schedule.

The Insurer contends that this sentence reflects Mrs. Sarjeant's agreement that she could not re-activate her weekly income benefit claim after that date.

Mrs. Sarjeant and Ms. Morao testified at the hearing. There was little dispute between them about what happened at mediation. However, they disagreed about the nature of the $750 payment made by Economical. Mrs. Sarjeant understood that this amount represented about four weeks of benefits. At the time of the mediation meeting on April 16, she had not received benefits for seven weeks. She understood the four-week payment as a compromise offer dealing only with the period between February 27 and April 16. She testified that no one told her the settlement was final and that she could not come back for further benefits.

Ms. Morao initially testified that the $750 figure was an arbitrary figure which did not, in her mind, represent four weeks of benefits. In cross-examination, she testified that she had come up with the $750 figure in a "caucus" meeting with Mr. Heerema, and she based it on four weeks of benefits "because you have to base an offer on something". She understood that the money was paid in full and final settlement of any weekly income benefit claims. When she received the Report of Mediator, she was satisfied that the wording reflected the Insurer's understanding of the scope of the settlement. She testified that Economical did not generally obtain a release in such cases at that time. Ms. Morao is no longer with Economical and could not testify about the Insurer's current practice.

Reasons:

In the decision, Aggarwal and Allstate Insurance Company, June 17, 1993, OIC File No. A-002621, Arbitrator Fred Sampliner dealt with a Report of Mediator which indicated that the Applicant agreed to accept a lump sum payment of $6,000 for weekly income benefits, including interest. No release was signed. Arbitrator Sampliner made the following comments about the language contained in the Report of Mediator:

I find that this mediator's report is not clear. No terms in the report alerted the Applicant that she was extinguishing her right to future weekly benefits. Words like "full and final release", or "you give up your rights to further weekly benefits" would, in my view, clearly indicate termination of a right to any reasonable person. Instead, the mediator's report simply states that the Applicant will accept a lump sum of money. Since the report does not designate whether this is a full or partial settlement, the intentions of the parties must be gleaned through the other evidence presented at the hearing.

Arbitrator Sampliner found it significant that "most of the negotiations took place indirectly, through the mediator, who shuttled back and forth between the parties". He also considered that the Applicant was not represented by a lawyer, and found that she did not understand that the settlement was final. He concluded that the settlement reached was a partial settlement, and the Applicant could proceed to arbitration on the issue of ongoing weekly benefits. He concluded,

Where an insurer is seeking to permanently exclude the insured's right to further benefits, it should take steps to obtain a release or other agreement which clearly and specifically sets forth the bargain struck.

I agree with these comments.

The final sentence of the Report of Mediator in this case is ambiguous. The Insurer may reasonably have understood that it disposed of any further rights the Applicant may have to claim weekly income benefits. In my view, the Applicant's interpretation was equally reasonable, in the circumstances. The sentence does not contain a clear agreement that the Applicant could not make a claim for weekly benefits in the future. As in the Aggarwal case, the Applicant was not represented at mediation, and at least some of the discussion was conducted by way of shuttle negotiations. The Insurer agreed to fund a physiotherapy program which was arranged for Mrs. Sarjeant after the mediation. In this context, I accept Mrs. Sarjeant's explanation that she believed "their door was still open to me".

I am not satisfied that Mrs. Sarjeant and Ms. Morao came to an understanding about the nature of the $750 payment or the scope of the agreement. I find that there was never "a meeting of the minds" with regard to the scope of the settlement reached at mediation. I conclude that the agreement did not extend to the period after April 16, 1993. Accordingly, the Applicant is entitled to proceed to arbitration with regard to the issue of her entitlement to weekly income benefits after April 16, 1993. The hearing is scheduled to reconvene on July 18 and 19, 1994.

Order:

1. The issue of Mrs. Sarjeant's entitlement to weekly income benefits after April 1993 was not settled at mediation. The arbitration may proceed.

The Applicant is entitled to her expenses in the proceeding.

Nancy Makepeace Arbitrator

Date

APPENDIX

Exhibits:

Tab 1 Copy of mediator's letter, dated March 24, 1993, to the Applicant

Tab 2 Copy of mediator's letter, dated April 26, 1993, to the Applicant

Tab 3 Copy of Report of Mediator, dated April 26, 1993

Tab 4 Copy of Confirmation of Settlement, signed by the Applicant

Tab 5 Copy of mediator's letter, dated August 17, 1993, to the Applicant

Tab 6 Copy of mediator's letter, dated September 8, 1993, to the Applicant

Tab 7 Copy of Report of Mediator, dated September 8, 1993

Tab 8 Copy of pre-hearing letter, dated February 21, 1994, from the arbitrator to the Applicant's lawyer and the Insurer's lawyer

Tab 9 Notice of Preliminary Hearing, dated April 22, 1994

Tab 10 Copy of Notice of Hearing, dated April 22, 1994

Other documents before the Arbitrator:

Application for Appointment of an Arbitrator, November 4, 1993 Response by Insurer, December 21, 1993 Reply by Insured Person, December 30, 1993

Cases referred to by the parties:

1. Abedi and Pilot Insurance Company, May 3, 1993, OIC File No. A-002705
2. Aggarwal and Allstate Insurance Company, June 17, 1993, OIC File No. A-002621
3. Bailey and CAA Insurance company (Ontario), October 29, 1992, OIC File No. A-001139
4. Love and State Farm Mutual Automobile Insurance Company, October 13, 1993, OIC File No. A-0038065
5. Mouriopoulos and the Citadel General Assurance Company, March 23, 1993, OIC File No. A-002166
6. Saunders and Canadian General Insurance Company, April 8, 1993, OIC File No. A-001531
7. Tuzin and Allstate Insurance Company of Canada, May 28, 1992, OIC File No. A-000596

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.