Neutral Citation: 1996 ONICDRG 6
ONTARIO INSURANCE COMMISSION
BETWEEN:
HEIN VO
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
DECISION ON PRELIMINARY ISSUES
Issues:
The Applicant, Ms. Hein Vo, was injured in a motor vehicle accident on January 23, 1991. She applied for and received statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under section 12 of Ontario Regulation 672.1 Weekly income benefits were originally paid by Allstate from January 30, 1991 until April 9, 1991. As a result of mediation on November 9, 1992, an agreement was reached and further weekly income benefits were paid from April 9, 1991 until September 3, 1991. Ms. Vo claims she is entitled to weekly income benefits from September 3, 1991 on an ongoing basis. Allstate claims that Ms. Vo settled her claim for weekly income benefits at the mediation and signed a release extinguishing her rights to further payments with the exception of "future claims which may arise through any retroactive change in legislation." Allstate further claims that Ms. Vo is precluded from proceeding to arbitration because her application was brought beyond the two year limitation under section 281(5) of the Insurance Act, R.S.O. 1990, c.I.8, as amended, and section 26(1) of the Schedule. The parties were unable to resolve their disputes through mediation and the Applicant applied for arbitration under the Insurance Act.
The preliminary issues in this hearing are:
Is Ms. Vo barred from advancing her claim for weekly income benefits pursuant to section 12 of the Schedule as a result of her signing a release dated November 18, 1992?
Has Ms. Vo complied with the time limitations under section 281(5) of the Insurance Act and section 26(1) of the Schedule?
The Applicant also claims interest on any amounts owing, and her expenses incurred in the hearing.
Result:
Ms. Vo is not barred from advancing her claim for weekly income benefits as a result of the Release dated November 18, 1992.
Ms Vo has complied with the time limitations under section 281(5) of the Insurance Act and section 26(1) of the Schedule, and can proceed to arbitration.
Ms. Vo is entitled to her expenses of the hearing.
Hearing:
The hearing was held in North York, Ontario, on November 20 and 21, 1995, before me, Bruce Robinson, arbitrator.
Present at the Hearing:
Applicant:
Ms. Hein Vo
Applicant's Representative:
Mr. Michael P. Canning Barrister and Solicitor
Insurer's Representative:
Mr. Tom Wright Barrister and Solicitor
Insurer's Officers:
Mr. Mike Tolan
Witnesses:
Ms. Hein T. Vo
Mr. Michael Ellis
Ms. Teresa Kayahara
Exhibits:
Exhibit 1
Affidavit of Michael Ellis sworn November 15, 1995
Exhibit 2
Letter dated August 21, 1991 from Ms. Anh Mai
Exhibit 3
Affidavit of Ms. Kayahara sworn November 6, 1995
Exhibit 4
Application for Mediation dated February 16, 1995
Exhibit 5
Report of Mediator dated May 26, 1995
Exhibit 6
Application for Arbitration dated June 6, 1995
Mr. Josgh Nguyen, a Vietnanese interpreter, was present on November 21, 1995, when Ms. Vo attended the hearing.
Background:
Ms. Hein Vo was injured in a motor vehicle accident on January 23, 1991. She applied for and received statutory accident benefits from Allstate, payable under section 12 of the Schedule from January 30, 1991 until April 9, 1991. On August 21, 1991, Allstate wrote to Ms. Vo's solicitors, Levinter, Levinter, Reznick, as follows:
I am in receipt of the medical report from Dr. Fred Langer following his examination of your client on July 17th, 1991.
Please be advised that we are maintaining our denial position. Dr. Langer agrees in his report with your client’s former family doctor, Dr. Vo, that your client could return to work. Your client even admits to Dr. Langer in his office that she was looking for a job but could not find anything. In addition, Dr. Langer does not agree with Dr. Becker that your client needs a multidisciplinary physical program including supervised exercise nor vocational assessment. As a result we will not be honouring any costs arising from these type of treatmentSj and there will be no further disability payment after April 9th, 1991.
We have enclosed a copy of Dr. Langer’s medical report for your perusal. If you have any questions, please do not hesitate to contact the undersigned.
[Emphasis added]
Ms. Vo applied for mediation on September 3, 1992 and the mediation was conducted on November 9, 1992. Ms. Vo attended at the mediation with Mr. Michael Ellis, a law clerk in the offices of Levinter, Levinter, Reznick. Allstate was represented by Ms. Teresa Kayahara, its unit claims manager. The Report of Mediator dated November 10, 1992 refers to settlement of the "Weekly Income" claim as follows:
The Insurer agrees to reinstate the Insured's Weekly Income Benefits as of the date benefits were first terminated, April 9, 1991, until September 3, 1991.
[Emphasis added]
Mr. Ellis wrote to Ms. Kayahara on November 9, 1992 and set forward the terms of the settlement as follows:
The terms of settlement are as follows:
Payment of income indemnity benefits in the sum of $5,376.00; said sum representing payments of $256.00 per week for the period of April 9, 1991, until September 3, 1991;
Interest on the above sum at a rate of 9.00 per cent, totalling $564.48;
Payment of the medical reports you have on file,.....equalling $1,872.50.
Thus, I look forward to receiving your firm's cheque in the total sum of $7,812.98, made payable to Levinter, Levinter, Reznick, in trust. I am presently making efforts to have Ms. Vo visit our offices in order to sign the release pertaining to the income indemnity payments for the period of April 9, 1991 to September 3, 1991, which we will hold in escrow pending our receipt of said funds. [Emphasis added]
Ms. Kayahara replied in a letter of November 12, 1992 stating, in part:
Further to our recent conversation, please find attached a draft payable to your client c/o your company in the amount of $5,940.48. This covers the disability period September 3rd, 1992 [sic].
This letter makes no mention of a release, nor does it take issue with the terms of settlement contained in Mr. Ellis letter of November 9, 1992.
Ms. Vo signed a Release on November 18, 1992 which was sent to Allstate in a letter dated November 20, 1992 from Mr. Ellis. The Release was in the following form:
FULL AND FINAL RELEASE
IN CONSIDERATION of the payment to me of five thousand nine-hundred forty dollars and forty-eight cents, inclusive of interest;
I HEREBY RELEASE AND FOREVER DISCHARGE ALLSTATE from any and all actions, causes of action, claims and demands, for income indemnity payments for the period of April 9, 1991, until September 3, 1991.
AND I HEREBY AUTHORIZE AND DIRECT the releasee to the said consideration as follows:
MESSERS. LEVINTER, LEVINTER, REZNICK IN TRUST
IN WITNESS WHEREOF, we have hereunto set our hands the 18th day of November, 1992.
Ms. Kayahara took issue with this Release for the first time in her letter to Mr. Ellis of November 26, 1992 . She returned the Release and requested the wording be changed to include:
...release and forever discharge Allstate from any and all actions, causes of action, claims and damages for payment of weekly benefits which hereto may have been or may hereafter be sustained by me in consequence of a motor vehicle accident which occurred on or about January 23 rd, 1991.
Mr. Ellis replied in a letter of December 7, 1992 stating in part as follows:
I have made changes in the release which you requested, with one exception. I do not feel it would be proper to include a discharge from income indemnity payments unilaterally. At this time it is our position that our client has received all of the income indemnity benefits to which she is entitled, but I will not predjudice [sic] my client for any future claim which may arise through any retroactive change in the legislation.
Our settlement was based on your paying our client income indemnity payments for the period of April 9, 1991 to September 3, 1991. This was our initial claim, and that was the period relating to the settlement we arrived at.
Release
Mr. Ellis is a law student at the present time. He gave his evidence in a very clear and straight-forward manner. He indicated that the settlement discussions at the mediation were only directed to resolving the specific issue of weekly income benefits for the period April 9, 1991 to September 3, 1991, as set forward in the Release and confirmed by his letter of November 9, 1992. He stated, unequivocally, that there was no request by the Insurer to deal with any future claims to weekly income benefits of Ms. Vo at the mediation, and no request for a release of future benefits at that time.
Ms. Kayahara was a unit claims manager with Allstate during the relevant period. She confirmed attending the mediation and entering into a settlement. Unfortunately, she did not make any notes of the terms of the settlement, nor did she confirm the terms of the settlement in any written form to Ms. Vo or to Mr. Ellis. I find that her recollection of the discussions leading up to the settlement was extremely vague. She agreed that the settlement dealt with the claim for weekly income benefits during the specific period of April 9, 1991 to September 3, 1991, but she also "thought it was for future claims." This statement is in contrast to her evidence in cross-examination where she stated: "I would say there was an agreement to supply a release for the disability claim, I can’t comment on the future claim."
It was her evidence that on receipt of the Release, she was dissatisfied and therefore sent it back . This was the first time she specifically recalled raising this issue of future weekly income benefits. She had already sent out the settlement funds in her letter of November 12, 1992.
Where there is a difference in the evidence between Mr. Ellis and Ms. Kayahara, I choose to accept that of Mr. Ellis. He was clear and consistent in his evidence and the documentary evidence accords with his testimony.
The Release, itself, is clear and unequivocal. It is directed at the only issue in dispute between the parties at the time of the mediation and it is in accord with the Report of Mediator which speaks of the period April 9, 1991 until September 3, 1991. The Release stands on its own and is consistent with the evidence of Mr. Ellis and the correspondence of November 9, 1992.
Furthermore, the Insurer released the funds in its letter of November 12, 1992 without taking issue with Mr. Ellis' letter of November 9, 1992 and without making any reference to any future claims of Ms. Vo for weekly income benefits. I find that the Release is confined to the specific period referred to and it does not bar Ms. Vo from advancing her claim to weekly income benefits beyond September 3, 1991.
Limitation
The limitation period for commencement of an arbitration proceeding is set out in section 281(5) of the Insurance Act as follows:
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.
The time-limit for arbitration or litigation set out in section 281(5) has not been extended under the Schedule. However, section 26 of the Schedule establishes a time limit for commencing mediation. It states:
26.-(1) A mediation proceeding under section 280 of the Insurance Act or an arbitration or court proceeding under section 281 of the Act in respect of benefits under this Regulation must be commenced within two years from the insurer's refusal to pay the amount claimed in the application for statutory accident benefits or, if the person has attended school or accepted, or returned to, an occupation or employment, as permitted by section 16, within two years of the insurer's refusal to pay benefits.
Accordingly, Ms. Vo has two years from Allstate’s refusal to commence an arbitration. Section 24(8) of the Schedule prescribes the manner in which Allstate must communicate its refusal to pay benefits. It states:
(8) 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.
It is agreed that Ms. Vo’s Application for Mediation in the present proceeding was dated February 16, 1995, the Report of Mediator was dated May 26, 1995, and the Application for Arbitration was dated June 6, 1995.
The Insurer claims that its letter of August 21, 1991 starts the two year limitation running and that Ms. Vo has not complied with the two year limitation in section 281 (5) of the Insurance Act
Ms. Vo claims the limitation has not started to run as she was never given written notice of Allstate’s refusal to continue paying benefits after September 3, 1991.
Law
I adopt the test set forward in Emilia Zeppieri and Royal Insurance Company, February 17, 1994, OIC File No. A-005237, where Senior Arbitrator Naylor stated:
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.
In dealing with Section 281(5) of the Insurance Act she stated:
The refusal relied on must be clear and unequivocal, and must be communicated to the applicant. Section 24(8) of the regulations indicates that the notice must be in writing, and provide reasons for the refusal. The onus is on the insurer to establish that an applicant has received the proper notice. [Emphasis added]
I find that the Insurer's letter of August 21, 1991 was clear and unequivocal notice of a refusal to pay disability benefits at the time it was written. However, I find that the settlement which Allstate entered into at the mediation on November 9, 1992, and its subsequent actions terminated the effect of this notice. The Report of Mediator refers to reinstatement of weekly income benefits and Allstate complied by sending further funds to Ms. Vo with regard to weekly income benefits.
I find that Allstate did not take the necessary steps after November 9, 1992 to comply with the notice provisions that are prescribed by section 24(8) of the Schedule and discussed in Zeppieri. Therefore I find that the limitation has not begun to run in this matter.
Expenses:
I exercise my discretion to award Ms. Vo her expenses . If the parties are unable to agree on the issue of expenses, either of them may apply for an assessment of the expenses.
Order:
Ms. Vo is not barred from advancing her claim for weekly income benefits as a result of the Release dated November 18, 1992.
Ms Vo has complied with the time limitations under section 281(5) of the Insurance Act and section 26(1) of the Schedule, and she is not barred from proceeding to arbitration.
Ms. Vo is entitled to her expenses of the hearing.
January 10, 1996
Bruce Robinson Arbitrator
Date