Neutral citation: 1994 ONICDRG 35
File No. A-006666
ONTARIO INSURANCE COMMISSION
BETWEEN:
DOMENICA PAULOZZA
Applicant
and
LIBERTY MUTUAL FIRE INSURANCE COMPANY
Insurer
DECISION ON THE PRELIMINARY ISSUE
Issues:
The Applicant, Domenica Paulozza, was injured in a motor vehicle accident on November 2, 1990. She applied for and received statutory accident benefits from the Liberty Mutual Fire Insurance Company ("Liberty Mutual"), payable under Ontario Regulation 6721. Mrs. Paulozza was paid weekly benefits from November 12, 1990 until Liberty Mutual terminated this benefit on July 26, 1991. Mrs. Paulozza continued to claim weekly benefits. Liberty Mutual did not pay any weekly benefits after July 26, 1991. The dispute was not resolved in mediation, and Mrs. Paulozza applied for arbitration under the Insurance Act, R.S.O. 1990, c. I.8.
Liberty Mutual claims that Mrs. Paulozza filed for arbitration more than two years after its refusal to pay weekly benefits, and that consequently she is barred from proceeding to hearing on the merits of her claim.
The preliminary issue in this hearing is:
- Is Mrs. Paulozza barred from an arbitration hearing on the merits of her claim for weekly benefits?
Mrs. Paulozza also claims her expenses of the hearing.
Result:
- Mrs. Paulozza is not barred from an arbitration hearing on her claim.
Hearing:
The Hearing was held in North York, Ontario, on March 21, 1994, before me, Fred Sampliner, Arbitrator.
Present at the Hearing:
Applicant's
Altor Shields
Representative:
Barrister and Solicitor
Insurer's
George O. Frank
Representative:
Barrister and Solicitor
Insurer's Officer:
John McLean
The parties submitted an Agreed Statement of Facts.
Evidence and Findings:
Section 281(5) of the Insurance Act states that an Applicant must commence his or her arbitration proceeding concerning a dispute about no-fault benefits within two years of an insurer's refusal to pay the benefit claimed. The two year time limitation period begins to run when the insured person is notified of the insurer's refusal to pay the benefit. Section 24 of the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 provides:
If the insurer refuses to pay an amount claimed in an application for no-fault benefits, the insurer shall forthwith give written notice to the insured person giving reasons for the refusal.
It is Liberty Mutual's burden to prove that it provided Mrs. Paulozza with a notice of its refusal to pay weekly benefits, stating the reason for the cutoff.
Liberty Mutual argues that its August 12, 1991 letter to Mrs. Paulozza is satisfactory notice of its refusal to pay her weekly benefits. The letter states in its entirety:
Please be advised that under the Accident Benefits section of your auto policy, a person who is capable of performing essential duties as a housewife is not entitled to Accident Benefits under the section of benefits if no income. Please be advised that we will continue to pay for your physical therapy as stated in the auto policy.
In my opinion, the language of this letter is not clear, and could be subject to different interpretations. The first sentence is simply a statement of what the adjuster thought the policy said. It is not a denial directed to Mrs. Paulozza. The second sentence states that Liberty Mutual will pay another category of benefits. Reading both sentences together, the entire letter's meaning is unclear, and I believe that Mrs. Paulozza could have reasonably misinterpreted this letter.
As Arbitrator Naylor held in Emilia Zeppieri and Royal Insurance Company of Canada, February 17, 1994, OIC File No. A-005237, the language of an insurer's letter must clearly and unequivocally set forth a refusal to pay the claimed benefit in order to begin the running of the time limit. In this case, the August 12, 1991 letter merely implies that weekly benefits are cutoff. I am of the opinion that an insured person should not have to read an implied meaning into a letter which terminates a benefit. Thus, I find that Liberty Mutual's August 12, 1991 letter to Mrs. Paulozza does not satisfy the notice requirement of Section 24.
The August 21, 1992 letter to Mrs. Paulozza is much clearer:
In response to our telephone conversation and the fax you sent to me on August 20, 1992. Liberty Mutual maintains our position that you are capable of performing the essential duties as stated on the form you signed from Crawford and Company Rehabilitation. As stated in my letter of August 12, 1991, your benefits if no income have ceased but we will continue to pay any medical expenses related to this accident for four years from the date of loss.
The adjuster's use of language in this letter is not the best. Yet, I find the adjuster's words do convey the idea that Liberty Mutual ceased payment of weekly benefits because the rehabilitation report indicated that Mrs. Paulozza could perform her household tasks. Liberty Mutual told Mrs. Paulozza why it ceased paying her weekly benefits. I find that the August 21, 1992 letter satisfies the notice obligation of Section 24, and begins to run the two year time limit.
Based upon the August 21, 1992 letter, Mrs. Paulozza's application for arbitration filed on December 13, 1993 was filed within the two year time limitation period. Therefore, I find that she is not barred by Section 281(5) of the Insurance Act from proceeding to hearing on the merits of her claim for weekly benefits.
I exercise my discretion to award Mrs. Paulozza her arbitration expenses.
Order:
Mrs. Paulozza may proceed to arbitration on the merits of her claim for weekly benefits.
Mrs. Paulozza is entitled to her arbitration expenses.
April 22, 1994
Fred Sampliner
Arbitrator
Date