Neutral Citation: 1994 ONICDRG 61
File No. A-006399
ONTARIO INSURANCE COMMISSION
BETWEEN:
SAMUEL DAVID
Applicant
and
SIMCOE & ERIE GENERAL INSURANCE COMPANY
Insurer
DECISION ON PRELIMINARY ISSUE
Preliminary Issue:
The Applicant, Samuel David, was injured in a motor vehicle accident on November 7, 1991. He applied for and received statutory accident benefits from the Insurer, Simcoe & Erie General Insurance Company ("Simcoe & Erie"), payable under Ontario Regulation 6721. Weekly income benefits were terminated by Simcoe & Erie on September 10, 1992.
Mr. David applied for mediation. He claims that prior to meeting with the mediator, Simcoe & Erie agreed to reinstate his weekly income benefits at $600.00 per week from September 10, 1992, pending further medical assessments. He relies on the Report of Mediator, dated June 3, 1993, which states that the "parties agreed that Simcoe & Erie Insurance would reinstate weekly income benefits at the rate of $600.00 per week, retroactive to the termination date, and ongoing into the future."
Simcoe & Erie claims that the Report of Mediator does not accurately reflect the agreement that was reached. Its position is that the agreement was to reinstate Mr. David's weekly income benefits, but that the rate was dependent upon receiving confirmation of his pre-accident income.
The preliminary issue is:
Was this matter settled by the parties, as reflected in the Report of Mediator, dated June 3, 1993?
Result:
The parties did not reach a binding settlement with respect to the proper amount of Mr. David's weekly income benefits.
Mr. David is entitled to his expenses related to this preliminary issue, calculated according to Schedule 1 of the Dispute Resolution Practice Code and Ontario Regulation 664, R.R.O. 1990.
Hearing:
The hearing of the preliminary issue was held in North York, Ontario, on July 6, 1994, before me, David R. Draper, arbitrator.
Present at the Hearing:
Applicant's Representative:
Brian Horowitz Barrister and Solicitor
Insurer's Representative:
Ralph D'Angelo Barrister and Solicitor
The Applicant, Samuel David, was not present.
Witnesses:
Edward M. Futerman, Q.C. - Barrister and Solicitor
Tricia Doyle - Claims Supervisor, O.M.P.P. Unit
Exhibits:
The exhibits are set out in Appendix A to this decision.
Cases considered:
Leon Albert Bailey and CAA Insurance Company (Ontario), [Preliminary Issue], October 29, 1992, OIC File No. A-001139 (Mackintosh).
Leon Albert Bailey and CAA Insurance Company (Ontario), [Preliminary Issue No. 2], June 11, 1993, OIC File No. A-001139 (Mackintosh).
Margaret Love and State Farm Mutual Automobile Insurance Company, [Preliminary Issue], October 13, 1993, OIC File No. A-003806 (Makepeace).
Nikolaos Mouriopoulos and The Citadel General Assurance Company, [Preliminary Issue], March 23, 1993, OIC File No. A-002166 (Naylor).
Mehmet Tuzin and Allstate Insurance Company of Canada, [Preliminary Issue], May 28, 1992, OIC File No. A-000596 (Palmer).
Raj Aggarwal and Allstate Insurance Company, [Appeal Decision], June 30, 1994, OIC File No. P-002621 (Sachs).
Reasons for Decision:
1. The Facts
Mr. David was injured in a motor vehicle accident on November 7, 1991. He applied to Simcoe & Erie for accident benefits, including weekly income benefits. In support of his application, he submitted a form completed by his employer, Idea Custom Woodworking, a company owned by his mother. Based on the information provided by Mr. David, Simcoe & Erie paid him weekly income benefits at the maximum rate of $600.00 per week.
Mr. David's weekly income benefits continued at $600 per week until September 10, 1992, when they were terminated on the basis that he was no longer substantially unable to perform the essential tasks of his pre-accident employment. According to the Assessment of Claim by Insurer, dated August 27, 1992 (Exhibit 3), Simcoe & Erie based its decision on Dr. Bateman's opinion that Mr. David was able to return to work. There is no indication that it had any concerns about the financial information provided by Mr. David.
Mr. David applied for mediation on April 7, 1993, represented by Edward M. Futerman, Q.C. The only matter raised by Mr. David was the cancellation of his weekly income benefits.
Simcoe & Erie's file was transferred to Ms. Tricia Doyle, Claims Supervisor, to handle the mediation. I accept Ms. Doyle's evidence that as a result of a company policy that was instituted in 1992 or 1993, she reviews the income verification that has been submitted in every post-1990 file that she receives. I also accept that upon her initial review of Mr. David's file, she felt that additional income verification was required.
Ms. Doyle wrote to the Ontario Insurance Commission on April 13, 1993, with a copy to Mr. Futerman (Exhibit 2). In that letter, she provided the medical reports upon which she was relying, and asked Mr. Futerman to provide any contrary reports. In addition, she stated: "I also note that we have neither Mr. David's records of employment nor T4 for 1991 and would appreciate a copy of both." I find that she was simply asking for confirmation of Mr. David's pre-accident income beyond the Employer's Confirmation of Income form. Given the fact that the form had been completed by his mother, I do not find this request unreasonable.
A mediation was scheduled for June 3, 1993, at the Ontario Insurance Commission in North York. On June 1, 1993, Mr. Futerman sent the following documents by fax to Ms. Doyle (Exhibit 4):
Report of Dr. T. Axelrod, dated May 21, 1993.
Reports of Dr. E. English, dated February 17, 1993 and April 22, 1993.
Letter, dated October 3, 1992, from Mr. David's employer [his mother].
T-4 slip for the year 1991.
It appears that on the same day, June 1, 1993, the same documents were sent by courier to Mr. Golfetto, mediator, Ontario Insurance Commission (Exhibit 5).
On June 2, 1993, Ms. Doyle wrote to Mr. Futerman (Exhibit 6), and also had a telephone conversation with him. Ms. Doyle's recollection was that the telephone conversation preceded the letter. Mr. Futerman testified that he called Ms. Doyle as a result of receiving her "very encouraging letter".
I prefer Mr. Futerman's recollection. Ms. Doyle acknowledged that her memory was rather vague and, in my view, the contents of the letter support Mr. Futerman's version. It appears that Ms. Doyle's letter was sent in response to Mr. Futerman's correspondence, and not as confirmation of a telephone conversation.
I find, therefore, that Ms. Doyle reviewed the documents provided by Mr. Futerman on June 1, 1993, and concluded that they supported Mr. David's eligibility for weekly income benefits. However, the version of the T4 slip that she received was not legible. In her letter, dated June 2, 1993, she wrote:
The T4 slip was not faxed properly. Would you please forward another copy.
At this time I am prepared to reinstate benefits to June 3, 1993 (38 weeks) upon receipt of the T4.
I would like to arrange an IME with Dr. Bateman to clarify the discrepancies in the prognosis, through Crawford Rehab. I would also like to arrange a CBI assessment to ensure proper strengthening of the knee, through Crawford Rehab.
I would also like Crawford to do a job function assessment to address the issue of returning to work.
Please fax your reply, since it may negate mediation.
I accept Ms. Doyle's testimony that she was not anticipating problems with the financial information, but felt that confirmation was needed for her file. In other words, she expected that he would be reinstated at $600.00 per week, but that was contingent on the verification of his pre-accident income.
In response to Ms. Doyle's letter of June 2, 1993, Mr. Futerman called her that same day. Neither Ms. Doyle nor Mr. Futerman have notes of the conversation, nor can they claim perfect memory of the conversation. It is clear that an agreement was reached that Mr. David would receive weekly income benefits from September 10, 1992 and continuing, pending further medical assessments to be arranged by Simcoe & Erie. The dispute is with respect to the amount of those benefits.
Mr. Futerman testified emphatically that he and Ms. Doyle agreed that Mr. David's weekly income benefits would be paid at the previous rate of $600.00 per week, with the exact amount owing to be calculated later. He insisted that Ms. Doyle gave no indication that the amount of benefits was contingent on additional financial information. According to Mr. Futerman, the conversation was cordial, both of them were pleased that the matter had been resolved, and they agreed to advise the mediator that the mediation was no longer necessary. He stated that he would not have agreed to cancel the mediation if the quantum issue remained unresolved.
It is clear, however, from Mr. Futerman's testimony and from his follow-up letter, dated June 3, 1993 (Exhibit 7), that Ms. Doyle asked him to send her a copy of Mr. David's 1991 T4 slip and further information from his employer. I find that at the end of the conversation on June 2, 1993, Ms. Doyle still wanted confirmation of Mr. David's pre-accident income in order to ensure that he was entitled to receive $600.00 per week.
On June 3, 1993, Mr. Futerman faxed a letter to Ms. Doyle stating (Exhibit 7):
Thank you for your correspondence of June 2, 1993.
We enclose a copy of the T-4 for 1991 together with letter from our client's employer.
Would you kindly forward your cheque, payable to Futerman & Futerman in Trust, which covers the outstanding disability payments to June 3, 1993 which is for a period of 38 weeks in the sum of $22,800.00.
On June 3, 1993, Ms. Doyle sent a fax to Mr. Futerman and Mr. Golfetto, the mediator, stating (Exhibit 8):
Thank you for your prompt reply. On receipt of the T4/record of employment, we will issue payment up to June 3/93 & continue benefits until Mr. David has been assessed by Dr. Bateman & the CBI, to determine his present limitations & any possible program that may strengthen the knee. I am advising Mr. Golfetto of the OIC via this fax, of our resolution.
Ms. Doyle testified that according to the time notations in her file, she received Mr. Futerman's fax in the morning of June 3, 1993, and sent her fax that afternoon. Because she was still asking for the T-4 slip, however, I find that it is more likely that she had not read the letter when she sent her fax.
Based on Mr. David's Application for Appointment of a Mediator and Ms. Doyle's fax, Mr. Golfetto issued a Report of Mediator, dated June 3, 1993, stating (Exhibit 9):
The parties were able to resolve their dispute before the mediation meeting. The parties agreed that Simcoe & Erie Insurance would reinstate weekly income benefits at the rate of $600.00 per week, retroactive to the termination date, and ongoing into the future. These benefits would continue pursuant to the Regulations and Mr. David would attend Dr. Bateman and the Canadian Back Institute for a re-assessment.
Mr. Golfetto also sent Mr. Futerman and Ms. Doyle Confirmation of Settlement forms, according to section 6.1 of the Dispute Resolution Practice Code:
6.1 If all or any of the issues in dispute are resolved,
(a) the mediator shall record in the Report of Mediator the issues that have been settled, and the amounts that have been agreed upon, including any applicable interest; and
(b) the parties shall confirm all settlements and agreements set out in the Report.
Mr. Futerman signed the Confirmation of Settlement form on June 9, 1993 (Exhibit 10). Ms. Doyle did not sign the Confirmation of Settlement form. Instead, she wrote to Mr. Golfetto on June 8, 1993 (Exhibit 17), with a copy to Mr. Futerman, stating that she "did not agree to reinstate benefits at $600 per week, since the amount of income earned was not verified". Simcoe & Erie did not reinstate Mr. David's weekly income benefits.
Over the next three months, Ms. Doyle continued to request financial information. Mr. Futerman complied with these requests, but consistently demanded payment at $600.00 per week, in accordance with the settlement. He acknowledged that Simcoe & Erie was entitled to reasonable information about Mr. David's income, and to demand the repayment of benefits obtained through "error or fraud". In his view, however, this was separate from Simcoe & Erie's obligation to honour the settlement.
In a letter, dated August 19, 1993 (Exhibit 24), Ms. Doyle reiterated her position that she did not "make a commitment to the $600.00 per week". She indicated, however, that in the interim, Simcoe & Erie was prepared to pay weekly income benefits up to date at the minimum rate of $185.60 per week, pending a further medical assessment. A cheque for $9,280.00 was then sent to Mr. Futerman. Mr. Futerman advised that the $9,280.00 would be released to Mr. David, without prejudice to his right to claim the balance that he claimed was owing (Exhibit 15).
Mr. David filed another Application for Appointment of a Mediator on September 1, 1993, stating that Simcoe & Erie had not complied with the settlement (Exhibit 26). Mr. Golfetto issued a second Report of Mediator, dated January 10, 1994, stating:
The issue of weekly income benefits was previously mediated by me on an Application for Appointment of a Mediator registered 04/07/1993. The parties discussed the issues without my presence and advised me of their agreement. The agreement as I understood it can be found in the Report of Mediator dated 06/03/1993.
My understanding of the agreement reached was incorrect and as such, I agreed to remediate the issue of weekly income benefits in an attempt to resolve the difficulty.
A new Application for Appointment of Mediator was received 09/01/1993.
Mr. David was involved in a motor vehicle accident on 11/07/1991. He received weekly income benefits at the rate of $600.00 per week from 11/14/1991 - 09/10/1992. He then received weekly income benefits at the rate of $185.60 per week from 09/11/1992 - 09/23/1993 when they were terminated by his insurer altogether.
Mr. David filed for mediation for the retroactive reinstatement of his benefits at the rate of $600.00 per week, ongoing into the future. He disagreed with the rate of duration [sic] of his benefit payable.
His insurer was of the opinion that they had overpaid his benefit and sought recovery.
Mediation was unsuccessful in resolving these disputes.
Mr. David then applied for arbitration.
2. The Position of the Parties
At the commencement of the hearing, I was advised that Mr. David is claiming weekly income benefits at $600.00 per week, but only until September 23, 1993. His position is that Simcoe & Erie is obliged to pay these benefits in full, pursuant to the settlement reached on June 2, 1993, and recorded in the Report of Mediator, dated June 3, 1993. It was submitted that if Simcoe & Erie believes that Mr. David's entitlement was less than $600.00 per week, its recourse is to apply for mediation of that issue.
Simcoe & Erie takes the position that although it agreed to pay weekly income benefits from September 10, 1992, pending further medical assessments, it did not agree that the proper amount was $600.00. Rather, the amount was contingent upon receiving verification of the pre-accident income that Mr. David had claimed.
3. Analysis and Conclusions
The Director of Arbitrations recently expressed the view that the Report of Mediator is not conclusive (Raj Aggarwal and Allstate Insurance Company, June 30, 1994, OIC File No. P-002621 (Sachs)). Rather, it is the opinion of a neutral third party as to what is resolved and not resolved during the mediation. She also suggested that a signed Confirmation of Settlement is an indication that the matter has been settled.
In my view, it is very significant in this case that Ms. Doyle did not sign the Confirmation of Settlement, but immediately notified the mediator and Mr. Futerman that she did not agree with the Report of Mediator. In this respect, the situation is similar to that in Nikolaos Mouriopoulos and The Citadel General Assurance Company, [Preliminary Issue], March 23, 1993, OIC File No. A-002166.
In Mouriopoulos, the Report of Mediator stated that the dispute was settled. As soon as Mr. Mouriopoulos learned about the purported settlement, he contacted the mediator to express his disagreement. In finding that there was no binding settlement, Senior Arbitrator Naylor stated, at page 8:
In my view, the absence of agreement in this case appears to be the result of nothing more than a misunderstanding. Inevitably, in the course of the process - as in any process - misunderstandings may occur as to the intent of the parties. In this case, the Applicant took immediate steps to clarify the misunderstanding.
Similarly, I conclude that in this case, there was an honest misunderstanding. I find that both Mr. Futerman and Ms. Doyle ended their conversation on June 2, 1993 sincerely believing that they had resolved the matter. Unfortunately, they had different views of the agreement.
Mr. Futerman's understanding was that Simcoe & Erie would reinstate Mr. David's weekly income benefits at $600.00 per week, pending further medical assessments. He knew that Ms. Doyle wanted additional financial information, but believed that was a separate matter. Based on Ms. Doyle's stated willingness to "reinstate" Mr. David's weekly income benefits, Mr. Futerman's view is understandable.
However, Ms. Doyle did not regard the amount of Mr. David's weekly income benefits as a separate matter. Her understanding was that Mr. David's weekly income benefits would be brought up-to-date, and would continue, pending further medical assessments. She assumed that the amount would be $600.00 per week, but that depended on verification of his pre-accident income.
It was submitted that by not responding to Mr. Futerman's letter, dated June 3, 1993, which set out his demand for $22,800.00, Ms. Doyle demonstrated her acceptance that Mr. David was to be paid at $600.00 per week ($600.00 x 38 weeks = $22,800.00). However, she responded on June 8, 1993, immediately after receiving the Report of Mediator. In my view, this short delay is not significant.
I conclude, therefore, that the parties did not reach a binding settlement with respect to the proper amount of Mr. David's weekly income benefits. An arbitration hearing has been scheduled for November 2, 1994 to deal with this issue.
4. Expenses
An award for expenses may be made under section 282(11) of the Insurance Act, R.S.O. 1990, c.I.8, as amended by the Insurance Statute Law Amendment Act, 1993, S.O. 1993, c.10, which provides as follows:
282 (11) The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.
In spite of Mr. David's lack of success on this preliminary issue, I believe that it is appropriate for him to recover his expenses. He raised a legitimate issue and proceeded without delay.
Expenses are calculated according to Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 664, R.R.O. 1990. The parties are encouraged to reach an agreement as to the expenses. However, if an agreement cannot be reached, I remain seized of this matter and either party may apply for an assessment of the expenses.
Order:
The parties did not reach a binding settlement with respect to the proper amount of Mr. David's weekly income benefits.
Mr. David is entitled to his expenses related to this preliminary issue, calculated according to Schedule 1 of the Dispute Resolution Practice Code and Ontario Regulation 664, R.R.O. 1990.
July 15, 1994
David R. Draper Arbitrator
Date
APPENDIX A
Exhibit 1
A photocopy of a letter, dated April 6, 1993, from Mr. Futerman to the Ontario Insurance Commission.
Exhibit 2
A photocopy of a letter, dated April 13, 1993, from Ms. Doyle to the Ontario Insurance Commission, with enclosures (9 pages).
Exhibit 3
Assessment of Claim by Insurer, dated August 27, 1992.
Exhibit 4
A photocopy of a letter, dated June 1, 1993, sent by fax, from Mr. Futerman to Ms. Doyle.
Exhibit 5
A photocopy of a letter, dated June 1, 1993, sent by courier, from Mr. Futerman to Mr. Golfetto, a mediator at the Ontario Insurance Commission.
Exhibit 6
A photocopy of a letter, dated June 2, 1993, from Ms. Doyle to Mr. Futerman.
Exhibit 7
A photocopy of a letter, dated June 3, 1993, sent by fax, from Mr. Futerman to Ms. Doyle.
Exhibit 8
A photocopy of a fax cover sheet, dated June 3, 1993, from Ms. Doyle to Mr. Futerman.
Exhibit 9
A photocopy of the Report of Mediator, dated June 3, 1993.
Exhibit 10
A photocopy of the Confirmation of Settlement, signed by Mr. Futerman on June 9, 1993.
Exhibit 11
A photocopy of a letter, dated June 15, 1993, sent by fax, from Mr. Futerman to Ms. Doyle.
Exhibit 12
A photocopy of a letter, dated June 30, 1993, sent by fax, from Mr. Futerman to Ms. Doyle.
Exhibit 13
A photocopy of a letter, dated July 15, 1993, from Mr. Futerman to Ms. Doyle.
Exhibit 14
A photocopy of a letter, dated August 19, 1993, sent by fax, from Mr. Futerman to Ms. Doyle.
Exhibit 15
A photocopy of a letter, dated August 27, 1993, from Mr. Futerman to Ms. Doyle.
Exhibit 16
A photocopy of a letter, dated September 3, 1993, from Mr. Futerman to the Superintendent of Insurance.
Exhibit 17
A photocopy of a letter, dated June 8, 1993, from Ms. Doyle to Mr. Golfetto, a mediator at the Ontario Insurance Commission.
Exhibit 18
A photocopy of a letter, dated June 16, 1993, from Ms. Doyle to Mr. Futerman.
Exhibit 19
A photocopy of a letter, dated June 17, 1993, sent by fax, from Mr. Futerman to Ms. Doyle, enclosing a letter from Mr. David's employer (2 pages).
Exhibit 20
A letter, dated June 18, 1993, from Mr. Futerman to Ms. Doyle, enclosing payroll records (1 page).
Exhibit 21
A letter, dated July 5, 1993, from Ms. Doyle to Mr. Futerman.
Exhibit 22
A fax covering sheet, dated July 30, 1993, from Ms. Doyle to Mr. Futerman.
Exhibit 23
A photocopy of a letter, dated August 9, 1993, sent by fax, from Mr. Futerman to Ms. Doyle.
Exhibit 24
A photocopy of a letter, dated August 19, 1993, sent by fax, from Ms. Doyle to Mr. Futerman.
Exhibit 25
A photocopy of Mr. David's Application for Appointment of a Mediator, received by the Ontario Insurance Commission on April 7, 1993.
Exhibit 26
A photocopy of Mr. David's Application for Appointment of a Mediator, received by the Ontario Insurance Commission on September 1, 1993.