Neutral Citation: 1994 ONICDRG 36
File No. A-001827
ONTARIO INSURANCE COMMISSION
BETWEEN:
TIBLETZ ZERE
Applicant
and
ROYAL INSURANCE COMPANY OF CANADA
Insurer
DECISION ON THE PRELIMINARY ISSUE
Issues:
The Applicant, Tibletz Zere, was injured in a motor vehicle accident on August 16, 1990. She applied for statutory accident benefits from Royal Insurance Company of Canada ("Royal"), payable under Ontario Regulation 6721. Royal refused to pay weekly income benefits. Mediation of Ms. Zere's claim for weekly benefits with Royal did not resolve the dispute, and on or about September 13, 1993, she applied for arbitration under the Insurance Act.
The preliminary issue in this hearing is:
- Has Mrs. Zere filed for arbitration in a timely manner?
Mrs. Zere also claims her expenses incurred in the hearing.
Result:
- Mrs. Zere's application for arbitration was filed out of time.
Hearing:
The hearing was held in North York, Ontario, on February 17, 1994, before me, Fred Sampliner, arbitrator.
Present at the Hearing:
Applicant's Representative:
Joseph J. Faust Barrister and Solicitor
Insurer's Representative:
Stanley C. Tessis Barrister and Solicitor
Evidence and Findings:
The parties filed two Agreed Statements of Fact.
Section 281(5) of the Insurance Act. R.S.O. 1990, c. I.8, as am., states:
A proceeding in a court or an arbitration proceeding in respect of no-fault benefits must be commenced within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the No-Fault Benefits Schedule. 1990, c.2, s.65, part.
I do not believe that I have the discretion to extend the time limit for the filing of an application for arbitration.
The method of analysis for the time limitation was set out by Arbitrator Naylor in Emilia Zeppieri and Royal Insurance Company of Canada, February 11, 1994, OIC File No. A-005237:
In my view, a two-step process must determine whether the limitation period applies in the circumstances of this case. First, it is necessary to ask whether, and when, there was a refusal to pay benefits; and second, whether the insurer may rely on a limitation period that runs from the date of the refusal.
Royal's adjuster sent a letter to Mrs. Zere's lawyer on March 14, 1991, which contains the following language:
Relative to Ms. Zere's claim for weekly benefits, we have been instructed by the insurer to formally inform you that they are not prepared to pay weekly benefits as claimed by your client....
The language clearly and unequivocally conveys the message that Royal denied Mrs. Zere's claim for weekly benefits. I find that the March 14, 1991 letter from Royal to Mrs. Zere's lawyer is a clear refusal to pay weekly benefits.
Mrs. Zere's lawyer knew that Royal refused to pay weekly benefits. About the time that Royal sent the March 14, 1991 refusal letter, she retained a different lawyer to handle her claim. On March 12, 1991, Mrs. Zere's second lawyer wrote the claim's adjuster stating that Mrs. Zere would file for mediation if the company did not pay her weekly benefits. The March 12, 1991 letter confirms that her lawyer knew that Royal refused to pay weekly benefits. I find that on or about March 14, 1991, Mrs. Zere knew that Royal denied her claim for weekly benefits.
Mrs. Zere argues that the limitation period was never initiated because she continued to assert her claim after Royal's refusal. Mrs. Zere contends that the limitation period applies only where a claimant does nothing to assert his or her claim for over two years after an insurer's refusal.
Mrs. Zere's interpretation would render the limitation period meaningless. If Mrs. Zere's interpretation is correct, claims could be extended indefinitely, as long as a claimant continued to communicate his or her right to further weekly benefits to the insurer during the two year period. I do not believe Section 281(5) of the Insurance Act was intended to be ineffective, and I do not accept Mrs. Zere's interpretation of the section.
Moreover, Royal is obligated to maintain communications with Mrs. Zere relating to other benefits under the Schedule. Under section 6 of the Schedule, Royal must reimburse Mrs. Zere for the reasonable cost of medical and rehabilitation expenses related to the accident. Communication between the parties to discuss a claimant's medical condition and rehabilitation expenses is implicit to the process. In a practical sense, many of these communications would involve discussion of a claimant's potential disability, which could extend the limitation period, if I accept Mrs. Zere's interpretation. However, I am not persuaded that the limitation period set out in Section 281(5) should be extended by a claimant's discussion of benefits.
Mrs. Zere also argues that Royal contributed to her delay in filing for arbitration. After Royal denied weekly benefits, the company agreed to re-evaluate her eligibility, offered to pay her some benefits and a lump sum settlement. According to Mrs. Zere, Royal's dealings misled her.
Mrs. Zere's argument brings me to the second half of the time limit analysis: Is there anything in Royal's behaviour to estop it from relying on the limitation period.
On March 26, 1991, Mrs. Zere's lawyer wrote to Royal's adjuster, stating her intention to change her claim from a that of a student, under section 12 of the Schedule, to that of an employed person, under section 13 of the Schedule. The adjuster sent the lawyer new claim forms, but completed forms were not returned to Royal.
Approximately one year later, on April 23, 1992, Mrs. Zere filed for mediation, using the services of a third lawyer.
The mediation did not successfully conclude the dispute. At mediation, Royal made a final offer to pay Mrs. Zere nine weeks of benefits, totalling $1,116.44. Royal said it would reconsider its position to pay additional weekly benefits after it received medical reports from two physicians. The parties also discussed a further lump sum settlement of all benefits, pending receipt of the two medical reports.
When Royal received the first of the two medical reports, stating that Mrs. Zere told the doctor that she had resumed work three weeks after the accident, Royal wrote Mrs. Zere's lawyer and retracted the lump sum offer. Royal had already forwarded the nine weeks benefits to Mrs. Zere, and felt it had overpaid her.
Royal's settlement offers at mediation and subsequent retraction were not misleading. The purpose of mediation is to assist the parties to openly discuss the issues with an eye towards resolution. Towards that end, Section 281(3) of the Insurance Act provides a statutory obligation that the insurer must pay its last offer in mediation. If I accept Mrs. Zere's contention that Royal's offer misled her, then I am actually finding that the settlement offer changed Royal's position. The effect of such a holding would chill future negotiations in this forum, for no insurer would ever make settlement offers lightly. In my view, this is contrary to the legislative scheme and the common law notion that settlement offers do not generally change the parties positions or constitute an admission of liability. Therefore, I find that the negotiations, settlement offers, and retraction were not misleading and did not result in a change of Royal's position in refusing to pay weekly benefits.
Counsel for Mrs. Zere sent Royal two letters after the lump sum settlement offer was retracted. Her lawyer's December 31, 1992, and February 19, 1993, letters to Royal explain Mrs. Zere's version of her post-accident work. Both letters state that Mrs. Zere would file for arbitration. The threat of arbitration, if Royal did not pay, demonstrates that Mrs. Zere's lawyer knew that Royal had not changed its position.
I also recognize that at the time Mrs. Zere's lawyer sent the February 19, 1993 letter threatening arbitration, her application for arbitration would have been timely. However, Mrs. Zere filed for arbitration more than six months later.
Conclusion:
Quite simply, Royal did not mislead or deceive Mrs. Zere. Nothing in the evidence suggests that Royal changed its position at any time. From March 1991 onwards, it is apparent to me that Mrs. Zere's representatives knew that Royal denied payment of weekly benefits. It was for Mrs. Zere and her representatives to decide how and when she should assert her claim. I find that Mrs. Zere's failure to file her application for arbitration within two years of Royal's refusal bars her claim from proceeding to an arbitration hearing.
I exercise my discretion to award Mrs. Zere her expenses of the arbitration.
Order:
Mrs. Zere may not proceed to arbitration hearing on her claim for weekly benefits.
Mrs. Zere is entitled to her expenses of the arbitration.
April 22, 1994
Fred Sampliner Arbitrator
Date