Neutral Citation: 1997 ONICDRG 104

OIC A95-000267

ONTARIO INSURANCE COMMISSION

BETWEEN:

LINDA HARRIS

Applicant

and

ROYAL INSURANCE COMPANY OF CANADA

Insurer

DECISION (No. 3)

This is the third decision with respect to the Applicant, Linda Harris. Ms. Harris was injured in a motor vehicle accident on March 26, 1991 and claimed that she was involved in a second motor vehicle accident on December 25, 1991. She applied for and received statutory accident benefits from Royal Insurance Company of Canada ("Royal"), payable under Ontario Regulation 672.¹ Royal terminated weekly benefits on September 1, 1994. The parties were unable to resolve their disputes through mediation and Ms. Harris applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The first hearing in this matter concerned a number of preliminary issues. The Applicant was represented by Mr. Wayne T. Jackson. The Insurer was represented by Mr. John Aikins, Barrister and Solicitor, with regard to the first accident, and Mr. Vance H. Cooper, Barrister and Solicitor, with regard to the second accident. In my decision,² I dismissed the Insurer's preliminary objections to proceeding with the arbitration hearing with respect to the first accident. I found that the Applicant was not involved in the second accident. Accordingly, I dismissed her Application for Arbitration with respect to that accident and ordered her to pay half the Insurer's assessment on the ground that her Application for Arbitration with respect to that accident was an abuse of process. The Insurer requested repayment of all benefits paid after the second accident. However, I reserved on this question in order to give the parties a further opportunity to present evidence on whether benefits paid after the second accident were attributable to that accident or to the Applicant's claim of ongoing impairment and disability resulting from the first accident. The hearing on the remaining issues was scheduled to resume on February 24, 25, 26 and 27, 1997. I ordered that the hearing could not proceed unless the Applicant paid the Insurer the $1,000 assessment as ordered.

The Applicant did not pay the $1,000 assessment, and neither she nor her representative appeared for the hearing on February 24, 1997. In his decision, Arbitrator William Renahan reserved on the repayment issue because he was concerned that my order might have left the Applicant with the impression that "no hearing, including a hearing on the issue of repayment, will proceed so long as she does not pay the $1,000." His order clearly stated that the hearing with respect to the Insurer's claim for repayment of benefits paid after December 25, 1991 would proceed whether or not the Applicant paid the $1,000. Arbitrator Renahan dismissed the Applicant's Application for Arbitration with respect to the first accident because she had failed to comply with my order that she pay the assessment before February 24, 1997. The remaining issue to be determined was the Insurer's request for the remaining $1,000 assessment on the basis that the Application for Arbitration with respect to the first accident was frivolous, vexatious or an abuse of process.

This matter was heard on May 22, 1997, at the offices of the Ontario Insurance Commission in North York, Ontario. The Applicant was represented by Mr. Jackson. Mr. Cooper represented the Insurer with respect to its request for repayment. Mr. Aikins did not appear.

The Application for Arbitration with respect to the first accident:

At the outset of the hearing, the Applicant stated that she had not realized that the February 1997 hearing could result in dismissal of her Application for Arbitration with respect to the first accident, despite her failure to participate in the hearing or pay the $1,000 assessment. I considered whether to invite the parties to make submissions as to whether the Applicant’s entitlement to benefits relating to the first accident should be reopened upon payment of the assessment. However, Mr. Jackson stated that the Applicant would not pay the assessment. Accordingly, I ruled that the application with regard to the first accident had been dismissed, pursuant to Arbitrator Renahan’s order, and would not be an issue in this hearing.

The Insurer’s assessment relating to the first accident:

My previous order that the Applicant pay the Insurer a $1,000 assessment followed upon my finding that the Applicant was not involved in the second accident. In this proceeding, the Insurer seeks an order for payment of a further $1,000, being the other half of the assessment, based on Arbitrator Renahan's dismissal of the Application for Arbitration relating to the first accident.

Section 282(11. 2) of the Act provides that an arbitrator may order the insured person to pay the Insurer an amount up to the amount of the Insurer's arbitration assessment - $2,000 in this case - if the Arbitrator concludes that the insured person commenced an arbitration that was frivolous, vexatious or an abuse of process.

Arbitrator Renahan dismissed the Applicant’s Application for Arbitration relating to the first accident because she did not pay the $1,000 assessment I ordered as a precondition to that matter proceeding to arbitration. He did not consider any evidence or submissions as to the Applicant’s entitlement to benefits arising out of the first accident. In these circumstances, I am not persuaded that the application commenced with respect to the first accident was frivolous, vexatious or an abuse of process.

Repayment of benefits relating to the second accident:

In my first decision in this matter, I found that "the Applicant misrepresented to the Insurer that she and her daughter were occupants of the Glickman car at the time of the [second] accident." I described this as "a serious misrepresentation."

Section 27(1) of the Schedule states that "a person must repay to the insurer any benefit received under this Schedule that is paid to the person through error or fraud." In applying this test, arbitration decisions have consistently adopted the analysis set out by Senior Arbitrator Susan Naylor in Levenson.³ After stating that the term "fraud" is "readily understood," she drew the following conclusions about the term "error":

It is not sufficient therefore to establish merely that an applicant has received benefits to which he or she is subsequently adjudged not to be entitled. To give meaning to the terminology of the section, the stipulation that benefits be paid "through error" in order to be recoverable must require that responsibility for the payment be attributable in some material way to the actions of the applicant.

In a recent appeal decision, Director's Delegate David Draper reaffirmed "the view underlying Levenson that an 'innocent' insured person should be able to rely on the benefits he or she receives without being left vulnerable to a later claim for repayment based on new calculations or a different interpretation of the Schedule." He also reaffirmed the principle that "[i]f the insured person materially contributed to the overpayment, it must be repaid."⁴

I have no hesitation in finding that the Applicant "materially contributed" to the overpayment of benefits relating to the second accident and therefore they must be repaid.

I reserved on the repayment issue in my first decision because I received little evidence as to which benefits were paid in connection with the second accident. I was concerned that some benefits paid after the second accident may have been attributable to the first accident. At the hearing today, Mr. Cooper filed a number of documents pertaining to this issue, and Ms. Barbara Koszalka, Senior Claims Representative in the Insurer's Facility Association branch, testified about the benefit payment history.

The documentary evidence presented at this hearing confirmed the chronology presented at the first hearing and reviewed in my first decision. The Insurer terminated the Applicant’s benefits on September 9, 1991, based on Dr. Barmania's report of August 9, 1991. The Applicant received no further benefits between September 9, 1991 and December 25, 1991, the date of the second accident. She applied for mediation in January 1992; her application referred only to the first accident, and stated that she was "cut off in September 1991." Only in May 1992, as a result of mediation, did the Insurer agree to reinstate benefits to December 25, 1991. Another mediation in 1993 resulted in the Insurer’s agreement to pay medical and rehabilitation benefits relating to the first accident until December 25, 1991.

Ms. Koszalka testified on the basis of her review of the file relating to the December 25, 1991 accident. She noted that the Application for Accident Benefits, ⁵though apparently not signed or dated, referred only to the December 25, 1991 accident and the number of the policy under which the second accident claim was made. This was a Facility Association policy, whereas the policy under which claims were made relating to the first accident was a regular market policy. Ms. Koszalka testified that the claims were dealt with by different claims representatives and under separate files. She testified that the first entry in the file relating to the second accident was January 7, 1992, when the Applicant's application for accident benefits was received and a medical claim file was opened. According to Ms. Koszalka, though the claims staff handling the file would have known about the Applicant's previous accident, this would not have affected their adjustment of the file. The Applicant presented no evidence and made no submissions to dispute the Insurer's claim that the two accident claims were handled independently of each other. Accordingly, I find that all the benefits paid after December 25, 1991 related only to the second accident.

The Insurer's Claim Transaction History records indicate that the Insurer paid benefits totalling $122,151.21 relating to the accident of December 25, 1991, as follows:

Housekeeping Expenses

February 28, 1992 to September 20, 1993

$19,185.00

Supplementary Medical Expenses

January 25, 1992 to March 27, 1995

$48,019.61

Rehabilitation and Vocational Counselling

November 5, 1992 to November 23, 1995

$23,621.35

Weekly Benefits

January 9, 1992 to August 17, 1994

$24,955.25

Dependant Care Benefits

February 28, 1992 to August 17, 1994

$ 6,370.00

The Applicant presented no evidence and made no submissions challenging the Insurer’s claim that these benefits were paid and received. Although the Applicant did not raise this point, I considered whether I should order repayment of benefits paid directly to treatment-providers as well as benefits paid to the Applicant. I agree with the Insurer’s submission that while an insurer may, for purposes of convenience, pay the invoices of treatment-providers directly, it is the insured person who receives the benefit - the medical treatment or rehabilitation program, for example - and it is only the insured person who is entitled to receive medical and rehabilitation benefits under section 6 of the Schedule. I find that these benefits were also paid through "error or fraud" and must be repaid pursuant to section 27(1) of the Schedule.

Representation:

I find it necessary to comment on Mr. Jackson's representation of the Applicant in this matter.⁶

Following my first decision, dated January 23, 1997, Mr. Jackson purported to appeal my ruling that the Applicant was not involved in a motor vehicle accident on December 25, 1991 (the second accident). However, Director's Delegate Draper found that as the notice of appeal was not in proper form and did not include the appeal filing fee, the decision was not properly appealed. Although Mr. Jackson has stated his intention to perfect the appeal, most recently during the hearing of May 22, 1997, he has not yet done so.

The Applicant failed to comply with my order that she pay the Insurer $1,000 as a precondition for proceeding to arbitration with regard to the accident of March 26, 1991 (the first accident), and neither she nor Mr. Jackson appeared at the second hearing on February 24, 1997.

Mr. Jackson appeared an hour late for the May 22, 1997 hearing without explanation. He made three spurious adjournment requests, all of which I rejected.⁷ His comments during the hearing were exclusively directed to my finding that the Applicant had not been involved in an accident on December 25, 1991, despite my ruling that that matter was no longer in issue. He was completely unprepared to cross-examine Ms. Koszalka, and I ruled his few questions improper.⁸ Mr. Jackson then left the hearing with the Applicant, despite my caution that the hearing would continue in his absence.

The Applicant was not well served by Mr. Jackson's representation.

Order:

The Applicant shall pay the Insurer $122,151.21 plus interest under section 27 of the Schedule.

June 18, 1997

Nancy Makepeace Arbitrator

Date

Appendix A - Exhibits

Exhibit 1

Report of Dr. Y.E. Barmania dated August 9, 1991

Exhibit 2

Report of Dr. J.G. Evans dated November 1, 1991

Exhibit 3

Assessment of Claim by Insurer, January 16, 1991 [sic - should be 1992]

Exhibit 4

Application for Appointment of a Mediator, January 2, 1992

Exhibit 5

Report of Mediator, May 27, 1992

Exhibit 6

Application for Appointment of a Mediator, April 1993

Exhibit 7

Report of Mediator, June 2, 1993

Exhibit 8

Confirmation of Settlement signed by Insurer, April 8, 1993

Exhibit 9

Application for Accident Benefits, undated and unsigned

Exhibit 10

Claim Transaction History with respect to December 25, 1991 accident

Exhibit 11

Adding Machine Tape for Dependant Care Benefits prepared by Insurer's counsel

Appendix B - Other Documents Before The Arbitrator

Letter from Director's Delegate Draper to representatives (copied to parties), March 13, 1997

Letter from Mr. John J. Aikins to Director's Delegate Draper (copied to the Applicant, Mr. Jackson and Mr. Cooper), March 21, 1997

Letter from Mr. John J. Aikins to Acting Appeals Administrator (copied to the Applicant and Mr. Cooper), March 26, 1997

Letter from Director's Delegate Draper to representatives (copied to the parties), April 22, 1997

Letter from Mr. John J. Aikins to Director's Delegate Draper (copied to the Applicant, Mr. Jackson and Mr. Cooper), May 5, 1997

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 On or Between June 22, 1990 and December 31, 1993. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2OIC A95-000267, January 23, 1997
3. 3Levenson and The General Accident Assurance Company of Canada (February 18, 1992), OIC A-000260
4. 4Shawn P. Lunn and State Farm Mutual Automobile Insurance Company (April 30, 1997), OIC Appeal P-013860
5. 5Exhibit 9
6. 6Subsection 23(3) of the Statutory Powers Procedure Act provides that a tribunal "may exclude from a hearing" any representative, other than a lawyer, who "is not competent properly to represent or to advise the party ... or does not understand and comply at the hearing with the duties and responsibilities of an advocate or adviser."
7. 7The grounds for requesting the adjournment were that (i) the Applicant intended to appeal my decision with regard to the December 25, 1991 accident, (ii) the Applicant intended to commence a Charter challenge, and (iii) the Applicant wished to reopen the issue of the second accident. As the Applicant had had four months in which to appeal my decision of January 23, 1997, which would be the appropriate recourse if she wished to reopen the issue of the second accident, and had not provided the required Notices of Constitutional Question, I denied these requests.
8. 8Mr. Jackson asked Ms. Koszalka whether the Insurer had charged the Applicant with fraud relating to the second accident and whether it was the Insurer's practice to pay claims without investigation. I ruled that these questions were improper because I had already found, in my first decision, that the Applicant had been overpaid benefits relating to the second accident because of "serious misrepresentation" and a person cannot be heard to argue that their own misrepresentation should have been detected earlier.