Neutral Citation: 1995 ONICDRG 114

File No. A-013093

ONTARIO INSURANCE COMMISSION

BETWEEN:

MARIA MERCEDES ELIAS

Applicant

AND

ROYAL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON PRELIMINARY ISSUE

The Applicant, Maria Elias, was injured in a motor vehicle accident on April 3, 1991. She applied for and received statutory accident benefits from Royal Insurance Company of Canada ("Royal"), payable under Ontario Regulation 672¹. The parties were unable to resolve their dispute. Ms. Elias applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Act").

Mrs. Elias received benefits under section 13 of the Schedule, which were terminated on June 25, 1991. She did not apply for arbitration until December 27, 1994. At a pre-hearing discussion in this matter held on May 8, 1995, counsel for Royal submitted that Mrs. Elias cannot proceed to arbitration on the merits of her claim because she did not apply for arbitration within the time limit set out in the Act and Schedule.

ISSUES AND RESULT

Preliminary Hearing

A hearing on this preliminary issue was held in Toronto, Ontario on July 17, 1995 before me, Beth Allen, arbitrator. The proceedings were recorded by Ms. Angie Granzotto, a court reporter ordered by the Insurer.

Present at the Hearing

Applicant's Altor Shields Representative: Barrister and Solicitor

Insurer's A. Wayne Edwards Representative: Barrister and Solicitor

Witnesses: For the Insurer Lawrence Lander

EVIDENCE

The following exhibits were filed at the hearing:

Exhibit 1 Letter from Mr. Lander of Lander-Spiers Insurance Adjusters Ltd., to Mr. Laraia of Lofranco, Longley & Vickar, dated September 9, 1991.

Exhibit 2 Letter from Mr. Lander of Lander-Spiers Insurance Adjusters Ltd., to Mr. Laraia of Lofranco, Longley & Vickar, dated October 4, 1991.

Exhibit 3 Facsimile cover sheet, dated November 18, 1991, with attached Form 4 medical form, dated April 4, 1991, from Mr. Laraia to Mr. Lander.

Exhibit 4 Hand-written memorandum from Mr. Lander to Mr. Laraia, dated November 29, 1991.

Exhibit 5 Assessment of Claim by Insurer, dated September 27, 1991.

Exhibit 6 Facsimile cover sheet with hand-written message (no attachments), dated June 29, 1994.

EVIDENCE AND FINDINGS

Mrs. Elias did not attend the hearing and no evidence was submitted on her behalf. Her case, as presented by her counsel, Mr. Shields, was based entirely on the evidence advanced for Royal by Mr. Edwards.

Mr. Lander, an independent insurance adjuster with Lander-Spiers Insurance Adjusters Ltd., testified as a witness for Royal. He stated that he provides claims adjusting services on behalf of his company for Royal. Mr. Lander testified that, in the course of his business relationship with Royal, he does not make independent decisions. He takes instructions from Royal when decisions must be made about a file.

Mr. Edwards argues that Mrs. Elias is prevented from having her case arbitrated because she exceeded the two-year limitation period set out in section 281(5) of the Act. This section states:

A proceeding in a court or an arbitration proceeding in respect of statutory accident 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 Statutory Accident Benefits Schedule. R.S.O. 1990, c.I.8; 1993, c. 10, s. 1.

However, Mr. Shields argues that Royal failed to meet its responsibility under the Schedule to give Mrs. Elias adequate notice of the refusal of benefits. He pointed to section 24(8) of the Schedule which states:

If the insurer refuses to pay an amount claimed in an application for statutory accident benefits, the insurer shall forthwith give written notice to the insured person giving the reasons for the refusal.

Royal disputes Mr. Shields' claim. Mr. Lander testified about a course of written communications between himself and Mr. Laraia, a law clerk with Mr. Shields' office.

A letter dated September 9, 1991 (Exhibit 1), from Mr. Lander to Mr. Laraia, advises Mr. Laraia of Mrs. Elias' rate and period of entitlement. It also advises Mrs. Elias of an independent medical examination appointment set for September 16, 1991 with Dr. Hall, a doctor appointed by Royal. Mr. Lander sent a subsequent letter, dated October 4, 1991, to Mr. Laraia (Exhibit 2).

The October 4 letter, according to Royal, provides adequate notice to Mrs. Elias of benefit termination. In Royal's view, it advises Mrs. Elias of the refusal of benefits and the reason for the refusal, as required by the legislation. The October 4 letter concerns Mrs. Elias and another client of Mr. Shields' law firm, both apparently involved in the same automobile accident. The relevant portions of this letter state:

You will recall that both clients recently underwent independent medical examinations by the specialist Dr. Hall.

Based on Dr. Hall's reports, he found that there was nothing at all wrong with Mrs. Elias and as far as he was concerned she was not disabled in any sense and not restricted in any way from conducting her normal routines including household duties, etc.

Indeed if you will review your own medical evidence that you already have on file, it was the opinion of her doctors that in June Mrs. Elias even admitted that she was functioning quite well and was able to look after all of her household duties including attending to her young grandson on a day-to-day "babysitting" basis.

Mrs. Elias has already been paid No Fault benefits up to and including June 25th and it is my understanding that the Royal Insurance Co. are (sic) not prepared to pay any further W.I. benefits to this lady and that an Assessment Notice has been sent to your office on her behalf or that said Assessment is being sent now.

Mr. Lander testified that his file contains an Assessment of Claim by Insurer, dated September 27, 1991 (Exhibit 5). It is unsigned, but he testified that it was prepared by Mr. Neuhold, an assistant claims manager for Royal. Mr. Lander admitted that he has no knowledge of whether the Assessment of Claim was sent to, or received by, Mrs. Elias. He stated that there is no evidence on file indicating this. It is Royal's position that an Assessment of Claim is not the only means by which adequate notice of benefit termination can be communicated.

Mr. Shields argues that the details of the Assessment of Claim form should be examined to determine whether Mrs. Elias received proper notice of refusal of benefits. He pointed out that in the October 4 letter, Mr. Lander was relying on the Assessment of Claim form to give final notice to Mrs. Elias of benefit termination. According to Mr. Shields, there was no intention on the part of Royal that the October 4 letter be in compliance with section 24(8), since Mr. Lander was looking to Royal to give notice. Mr. Shields contends that there is no proof that the Assessment of Claim form was sent to Mrs. Elias. Therefore, Royal has not complied with the requirements of the Schedule, and Mrs. Elias should be permitted to have her case arbitrated.

REASONS FOR DECISION

I have reviewed Mr. Shields' submissions on behalf of Mrs. Elias, as well as Royal's evidence and Mr. Edwards' submissions on behalf of Royal. I am concerned that Mrs. Elias was not present to testify on her own behalf. Mrs. Elias might have provided evidence as to whether she actually received notice of benefit termination and the reason for termination. She might have explained why she failed to apply for arbitration until over three years after she ceased receiving benefits. An applicant is an important source of evidence in a case where the receipt or non-receipt of notice is at issue.

Despite this, however, I am not satisfied that Royal has met the requirements of section 24(8) of the Schedule. Royal admitted, through its independent adjuster, that it had no evidence as to whether Mrs. Elias received the Assessment of Claim. It claims that the October 4, 1991 letter provides adequate notice to Mrs. Elias of refusal of benefits. The October 4 letter, however, was written by Mr. Lander on behalf of Royal. I am not satisfied that Mr. Lander is making a final decision about the refusal of benefits in this letter. He states that it is his "understanding" that Royal is not prepared to continue paying further benefits to Mrs. Elias. He looks to the Assessment of Claim by Insurer to be sent, or to have been sent by Royal to Mrs. Elias, to confirm his understanding of her status. This is consistent with Mr. Lander's evidence that he does not make independent decisions about files, but takes instructions from Royal when decisions have to be made.

Previous arbitration cases have found that a notice of refusal of benefits must be communicated to the applicant in a clear and unequivocal manner². I do not find that the October 4 letter is a "clear and unequivocal" notice to Mrs. Elias of benefit refusal. This letter only notified Mrs. Elias of the independent adjuster's understanding of her circumstances. It is the insurer's burden to show that it has provided adequate notice of termination of benefits. I do not find that Royal has met its burden through the October 4 letter.

It is not clear from Mr. Shields' submissions whether his emphasis on the adequacy of the Assessment of Claim is limited to the circumstances of this case, or whether he is advocating this form as the required method of refusing benefits. However, I adopt the observation in the Zeppieri case (cited below) that, while this is a form approved by the Ontario Insurance Commission for this purpose, it is not prescribed by regulation. There is no requirement that this method of refusing benefits be used. However, if an insurer is relying on this method, then it must establish that the form clearly communicates notice of termination. In this case, the October 4 letter raised the expectation that the Assessment of Claim was being used by Royal to provide notice of benefit termination to Mrs. Elias.

I, therefore, conclude that Mrs. Elias is not prevented by section 281(5) of the Act from proceeding to a hearing on the merits of her claim for weekly benefits.

EXPENSES

An award of expenses may be made under section 282(11) of the Act. No submissions were made on expenses incurred in the preliminary hearing. However, I will remain seized of this matter and either party may apply for assessment of the expenses. In the event that an application for assessment is made, I will determine this matter through correspondence with the parties.

Order:

Mrs. Elias may proceed to arbitration on the merits of her claim for weekly benefits.

August 19, 1995

Beth Allen Arbitrator

Date

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.
2. 2Emilia Zeppieri and Royal Insurance Company of Canada, February 17, 1994, OIC File No. A-005237; Domenica Paulozza and Liberty Mutual Fire Insurance Company, April 22, 1994, OIC File No. A-006666; Jack Talany and Royal Insurance Company of Canada, May 3, 1995, OIC File No. A-009300.