Neutral Citation: 1996 ONICDRG 216

OIC A96-001403

BETWEEN:

HARINDER SINGH

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON INTERIM BENEFITS

The Applicant, Harinder Singh, was injured in a motor vehicle accident on December 2, 1995. She applied for and received income replacement benefits (I.R.B.'s) from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.¹ Allstate terminated I.R.B.'s on May 1, 1996, on the basis of a medical report it obtained from Dr. W. M. Erwin. The parties were unable to resolve their dispute through mediation, and Mrs. Singh applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended. A hearing in respect of this dispute has been scheduled for May 6, 7, and 8, 1997.

I conducted a pre-hearing in this matter on November 26, 1996. In advance of the pre-hearing, the Applicant served notice on the Insurer and the Ontario Insurance Commission that she would be seeking an interim order for reinstatement of I.R.B.'s, on the basis that Allstate failed to comply with the benefit stoppage procedure under section 64 of the Schedule.

The issue in this pre-hearing is:

Is Ms. Singh entitled to an interim order reinstating her I.R.B.'s, on the basis that Allstate failed to comply with the benefit stoppage procedure under section 64 of the Schedule?

Ms. Singh is not entitled to an interim order reinstating her I.R.B.'s.

Present at the Pre-hearing:

Applicant:

Harinder Singh

Ms. Singh's

Michael J. Gillen

Representative:

Barrister and Solicitor

Allstate's

Ian D. Kirby

Representative:

Barrister and Solicitor

Allstate's Officer:

Cathy Cameron-Smith

Facts:

Ms. Singh was injured in a car accident on December 2, 1995. As a result of injuries sustained in the accident, she was not able to return to her pre-accident employment as a general labourer with Premier's Choice Gourmet Enterprises. Allstate paid her I.R.B.'s of $326.57 per week until May 1, 1996.

Allstate terminated I.R.B.'s on the basis of an opinion it requested from Dr. Erwin, who assessed Ms. Singh on February 22, 1996. In his report of March 12, 1996, Dr. Erwin concluded that Ms. Singh required a more vigorous form of therapy for a period of six weeks, with a gradual return to work over the following four weeks.

Allstate gave notice of termination by letter from Craig Stroyan, Senior Claims Representative, dated April 3, 1996, to Ms. Singh's counsel. It states as follows:

Please find enclosed a copy of Dr. Erwin's Independant Examination of February 22, 1996.

Dr. Erwin states Harinder would be able to return to full duties of her employment 10 weeks post assessment or May 1, 1996. Mrs. Singh's benefits will be terminated at this time.

If your client objects to this decision, you may notify me in writing within 14 days of receiving this couriered correspondence or April 21, 1996, if your client wishes to be examined by a Designated Assessment Centre closest to her residential address as per Section 64 (5) (6) of the SABS.

If you have any questions with regards to this please contact the writer at (905) 897-5285.

Mr. Gillen, counsel for Ms. Singh, received the letter on April 4, 1996. Ms. Singh did not give notice that she wished to be assessed by a DAC, nor did she contact Mr. Stroyan about any questions arising from his letter.

Submissions and Findings:

Section 64 outlines the procedure² by which an insurer may stop paying weekly benefits. It permits the insurer to stop the payments on at least 14 days notice to the insured person, unless the insured person provides a written notice that she wishes to be assessed at a DAC. In that case, the insurer must continue to pay benefits unless it receives a report from a DAC stating that the insured person is no longer disabled as a result of the accident.

Ms. Singh submits that Allstate failed to comply with section 64, on two bases. First, she argues that Allstate violated the technical requirements of section 64. Second, she maintains that Allstate failed to give adequate reasons for the termination of benefits. I will deal with each submission in turn.

1. Technical Violations

a) Termination Date

Ms. Singh argues that the notice letter from Allstate is unclear because it requires her to request a DAC assessment before the termination date. She points out that the letter, which was delivered to Mr. Gillen's office on April 4, 1996, advises that benefits will be terminated on May 1, 1996 but goes on to state that if Ms. Singh wishes a DAC, she must notify Allstate "within 14 days" of receipt of the letter, i.e., by April 18, 1996, "or April 21, 1996." Ms. Singh argues that by requiring a request for a DAC assessment earlier than the termination date of May 1st, Allstate was unclear about the time period within which she could exercise her options, and therefore it should not be permitted to rely upon the letter as constituting proper notice.

Section 64(3) allows the insurer to stop payments "on or after the date specified in the notice...," being, in this case, May 1, 1996. Section 64(4) states that the insurer "shall not specify a [termination] date... earlier than 14 days after the insured person receives the notice," i.e., by April 18, 1996.

Section 64 is designed to protect the insured from a premature termination of benefits. As such, it is important that the insurer communicate the termination date in a clear and unequivocal manner. In this case, however, there is no evidence that the Applicant or her counsel were confused or misled by the fact that the letter required a DAC request before the termination date. Moreover, the termination date of May 1st, as set out in the notice, is 12 days more than the 14 day period required by the section. Therefore, Ms. Singh received more than adequate notice of her rights. If anything, Allstate's provision of a termination date later than the 14 day period required by the legislation benefited Ms. Singh, as it resulted in a further 12 days of benefits. Given these circumstances, I reject Ms. Singh's argument that the notice letter is unclear and cannot be relied upon by Allstate.

b) Content of Notice

Subsection (2) states that the notice "shall provide the information contained in subsections (3) to (7) and the reasons for the stoppage in payment." Ms. Singh argues that Allstate's letter fails to set out the information contained in subsections (3) to (7) in adequate detail.

I have already found that Allstate provided the information required by subsections (3) and (4); it advised Ms. Singh of the termination date and gave her (more than) 14 days notice within which to object to the termination by requesting a DAC assessment.

I further find that Allstate provided the information required by subsections (5), (6) and (7), which set out the applicant's right to request a DAC assessment and the method by which the assessment centre is to be chosen. Allstate advised Ms. Singh that if she objected to its decision, she could be "examined by a Designated Assessment Centre closest to her residential address as per Section 64 (5) (6) of the SABS." Although Allstate's letter does not set out the rules for choosing a DAC in the precise words used in subsections (5) and (6), it indicates that if Ms. Singh requests a DAC assessment, it will be arranged at the "closest" centre, presumably to avoid any dispute. I note that the letter says nothing about the conflict of interest provisions in subsection (7). However, this omission is of no consequence where, as here, Ms. Singh did not give notice that she wished to be assessed by a DAC; nor did she allege a conflict at the pre-hearing.

Finally, I also find that Allstate adequately advised Ms. Singh of the "reasons for the stoppage in payment." It explained that it was terminating benefits because of Dr. Erwin's finding that she "would be able to return to full duties of her employment [by] May 1," and enclosed a copy of his report.

Ms. Singh argues that Allstate was obliged to set out each section in full in order to avoid any potential confusion. She submits that section 64 is a mandatory provision, to which the doctrine of substantial compliance does not apply. Ms. Singh points out that section 64(1) states "[a]n insurer shall not stop payment of ... benefits...except in accordance with this section," and section 64(2) provides that an insurer's notice of termination "shall provide" the information required [emphasis added].

I accept that the language of section 64 is mandatory, and that non-compliance with the notice requirements set out in the section may invalidate an insurer's termination of benefits. However, subsection 64 (2) simply requires the insurer to "provide the information contained..." in the designated subsections; it does not require it to reproduce the wording in full. I agree with Arbitrator Makepeace's comment in Abarca and Allstate³ that "substantial compliance with the notice provisions of section 64 is sufficient to discharge an insurer's obligations." Although Allstate did not, in this case, use the precise wording set out in the Schedule, it included all the critical information mandated by the section in its notice letter. Consequently, I find that Allstate substantially complied with the notice requirements of section 64.

2. Inadequate Reasons

Ms. Singh submits that Allstate had no reasonable basis upon which to terminate benefits, and therefore failed to provide "reasons" as required by subsection 64 (2), which states in part:

... the notice shall provide ... the reasons for the stoppage in payment ...

In its notice letter, Allstate relied upon Dr. Erwin's report, the key paragraphs of which state:

This lady's therapy must immediately assume a much more vigorous nature...

[She] will require therapy for an additional six weeks from the date of this assessment followed by discharge into an activity based home exercise programme...Mrs. Singh may reasonably be expected to return to work six weeks post-assessment and should have a graduated return to work programme of two weeks, half shift and at full-time by four weeks.

Dr. Erwin assessed Ms. Singh on February 22, 1996. He predicted that she could return to work within six weeks "post-assessment" and graduate to full-time employment within a further four weeks (for a total of ten weeks). On the basis of that advice, Mr. Stroyan advised Ms. Singh's counsel by his letter of April 3 that

Dr. Erwin states [Ms. Singh] would be able to return to full duties of her employment 10 weeks post assessment or May 1, 1996. Mrs. Singh's benefits will be terminated at this time.

Ms. Singh maintains that Dr. Erwin's prediction that she could return to work full time by May 1st was made on two assumptions: a) she would immediately receive six weeks of vigorous therapy, and b) she would be permitted a gradual return to work. Ms. Singh contends that as neither of those assumptions was borne out, Allstate was not entitled to terminate benefits.

In support of her position, Ms. Singh points out that upon receiving Dr. Erwin's report, Allstate made no effort to provide her with the "vigorous" therapy he recommended. Moreover, it did not provide the report to Ms. Singh's counsel until April 4, whereupon only three and a half weeks remained before the termination date of May 1st. In addition, before sending out the notice letter, Mr. Stroyan had in his possession a job site analysis prepared for the Insurer⁴ which stated that Ms. Singh's employer was agreeable to her returning "on a part time basis, perhaps 2 to 3 days weekly" but "half days or the like would not be available... because it would be disruptive to employee scheduling." Consequently, Ms. Singh argues, Mr. Stroyan must have known before sending the notice letter that Dr. Erwin's requirement for a graduated return to work could not be met.

Ms. Singh argues that "reasons" under subsection 64(2) need not be correct but must have some reasonable basis. She submits that Allstate's reasons are capricious and totally lacking in reason because they ignore the uncontroverted evidence that the conditions set out in Dr. Erwin's report could not be satisfied.

On the limited material before me, I find it difficult to assess Allstate's compliance with Dr. Erwin's recommendations. On the one hand, Allstate did not offer the vigorous therapy he recommended, and there is some evidence that Ms. Singh may have found it difficult to obtain a gradual return to work. On the other hand, neither Ms. Singh nor her counsel requested a course of vigorous therapy after receiving Allstate's letter. Moreover, Dr. Erwin's recommendation for a graduated return to work programme of "two weeks, half shift and at full-time by four weeks" is sufficiently ambiguous to permit a return "on a part time basis, perhaps 2 to 3 days weekly," which the employer indicated was available. Finally, I note that Allstate waited the full ten week period contemplated by Dr. Erwin before terminating benefits.

More importantly, I am disinclined at this preliminary stage to judge the adequacy of Allstate's reasons. In my view, it is for the hearing arbitrator to determine whether Allstate's "reasons" for stopping benefits were adequate and timely. Although the provision for a DAC assessment does not permit an insurer to discontinue benefits unreasonably, section 64 guarantees the applicant an independent assessment if she disagrees with the termination. If Ms. Singh objected to Allstate's reasons at first instance, her remedy was to request a DAC assessment, an option she chose not to exercise. Moreover, by requesting a DAC assessment, Ms. Singh would have insured that her benefits continued unless and until the DAC report stated that she was no longer disabled.

I note that even if an applicant does not request a DAC assessment, under subsection 64(13) she may nonetheless dispute the stoppage of benefits and, if successful, recover any benefits that should have been paid. That is the option this Applicant chose to pursue. In addition, if the hearing arbitrator finds that the Insurer discontinued benefits unreasonably, Ms. Singh may seek a special award under section 282(10) of the Insurance Act, on the basis that her benefits were "unreasonably withheld."⁵

For these reasons, I decline to find that Allstate has failed to provide reasons as required by subsection 64(2).

Conclusion:

I am not persuaded that Allstate failed to comply with the benefit stoppage procedures under section 64 of the Schedule. Consequently, Ms. Singh's request for an interim order reinstating benefits is dismissed.

In their submissions, counsel made no comment regarding whether Ms. Singh should meet certain threshold criteria for interim benefits,⁶ being a) a prima facie case, and b) an urgent need of benefits. However, in view of my finding that the Insurer is not in violation of section 64, it is not necessary for me to consider those issues.

Order:

Ms. Singh's request for an interim order reinstating benefits is dismissed.

December 31, 1996

Deena Baltman

Arbitrator

Date

SCHEDULE "A"

Stoppage in Weekly Benefits

(1) An insurer shall not stop payment of weekly benefits under Part II, section 15, Part IV, or Part V on the ground that the insured person no longer suffers from a disability as a result of the accident in respect of which weekly benefits are paid, except in accordance with this section.

(2) The insurer may give notice to the insured person that the insurer will stop paying benefits on a date specified in the notice and the notice shall provide the information contained in subsections (3) to (7) and the reasons for the stoppage in payment.

(3) The insurer may stop payment of the weekly benefits on or after the date specified in the notice unless the insured person gives the insurer written notice that he or she wishes to be assessed in accordance with subsections (5) and (6).

(4) The insurer shall not specify a date for stopping payment under subsection (3) earlier than 14 days after the insured person receives the notice mentioned in subsection (2).

(5) If the insured person gives a notice under subsection (3) and if, within 100 kilometres of the residence of the insured person, there is no designated assessment centre that is authorized to assess impairments of the type sustained by the insured person, the insurer and the insured person shall endeavour to agree on one or more people, at least one of whom shall be a health practitioner, to conduct the assessment.

(6) If there is a designated assessment centre within 100 kilometres of the residence of the insured person or if, within 14 days after the insurer received notice under subsection (3), the insurer and the insured person cannot agree under subsection (5) on who shall conduct the assessment, the designated assessment centre nearest to the residence of the insured person shall conduct the assessment.

(7) If, before the assessment has commenced, the designated assessment centre nearest to the residence of the insured person has disclosed to the insurer and the insured person that it has a conflict of interest with either of the parties within the meaning of that term in the guidelines established by the accident benefits advisory committee under subsection 38 (2),

(a) the designated assessment centre or another centre shall conduct the assessment, if the parties agree; or

(b) the designated assessment centre that is next nearest to the residence of the insured person shall conduct the assessment, if the parties do not agree under clause (a).

(8) If a designated assessment centre is required to conduct the assessment,

(a) the insurer shall, within 15 days, notify the designated assessment centre; and

(b) the centre shall promptly notify the insured person and arrange for the assessment.

(9) For the purpose of the assessment,

(a) the insured person and the insurer shall provide the person or persons who conduct the assessment with such information as is reasonably necessary; and

(b) the insured person shall submit to such reasonable, physical, psychological and mental examinations as are requested by the person or persons who conduct the assessment.

(10) After conducting the assessment, the person or persons who conducted the assessment shall prepare a report and provide a copy of the report to the insurer, the insured person and the insured person's health practitioner.

(11) If the report states that the insured person is no longer suffering from a disability resulting from the accident in respect of which the weekly benefits are paid, the insurer may stop paying the benefits.

(12) If the report states that the insured person continues to suffer from a disability resulting from the accident in respect of which the weekly benefits are paid, the insurer may dispute the obligation to pay benefits in accordance with sections 279 to 283 of the Insurance Act, and, pending the resolution of the dispute, the insurer shall pay the benefits.

(13) Nothing in this section prevents an insured person from disputing a stoppage in the payment of weekly benefits in accordance with sections 279 to 283 of the Insurance Act and, if it is finally determined that payment of the benefits should not have been stopped, the insurer shall,

(a) resume payment of the benefits; and

(b) pay the benefits that were not paid.

(14) If the insured person does not submit to an assessment that he or she requests under subsection (3) or does not comply with the requirements of subsection (9), the insurer may withhold payment of the weekly benefits until the person submits to the assessment or complies with subsection (9) respectively, after which time the insurer shall,