Vincent Davis v. Pafco Insurance Company Limited, 1997 ONICDRG 133

OFFICE OF THE DIRECTOR OF ARBITRATIONS

Neutral citation: 1997 ONICDRG 133

Appeal P97-00010

VINCENT DAVIS Appellant

and

PAFCO INSURANCE COMPANY LIMITED Respondent

Before: David R. Draper, Director's Delegate

Counsel: Urmas Suits (for Vincent Davis) Douglas A. McPherson (for Royal Insurance)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal is dismissed and the arbitration order, dated February 3, 1997, is confirmed.

2. Vincent Davis is entitled to his reasonable appeal expenses, payable by Pafco Insurance Company Limited.

July 22, 1997

David R. Draper Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal involves the interaction between accident benefits and workers' compensation under the Bill 164¹ legislation. Mr. Davis was injured in a work-related automobile accident. After receiving workers' compensation benefits for seven months and then having them cancelled, he applied to his automobile insurer for accident benefits. He claimed he was eligible because he had re-elected to sue the person responsible for his accident.

The arbitrator held that Mr. Davis was precluded from receiving accident benefits. In reaching this conclusion, she interpreted section 76 of the Statutory Accident Benefits Schedule - Accidents After December 31, 1993 and Before November 1, 1996 ("the SABS - 1994")² as requiring him to choose, at the outset, to claim workers' compensation benefits or elect to sue and claim accident benefits. She found nothing in the legislation allowing him to re-elect after exhausting his claim for workers' compensation benefits.

Mr. Davis appeals the arbitrator's order, submitting that she erred in her interpretation of the SABS - 1994, particularly section 76. More specifically, the issues on appeal are:

(1) Can Mr. Davis re-elect to sue and claim accident benefits after receiving workers' compensation benefits?

(2) If re-elections are allowed, can Mr. Davis re-elect more than three months after the accident?

(3) Is Pafco Insurance Company of Canada ("Pafco") estopped from denying responsibility for paying accident benefits under subsection 76(5) of the SABS - 1994?

(4) Was Mr. Davis's re-election invalid because it was made primarily for the purpose of receiving accident benefits?

II. ANALYSIS

Mr. Davis claims that the arbitrator erred by relying too heavily on arbitration decisions interpreting the earlier legislation, without taking into account the major changes brought in by Bill 164 and the SABS - 1994. Unfortunately, the arbitrator did not get the kind of detailed submissions I heard on appeal, undoubtedly because Mr. Davis was not represented at the arbitration hearing.

For the following reasons, I conclude that while re-elections are allowed under the SABS - 1994, Mr. Davis is not entitled to accident benefits because his re-election was made primarily for the purpose of claiming accident benefits.

A. Background

The arbitrator made factual findings based on the documents filed at the arbitration hearing. No oral evidence was called. On appeal, I allowed Mr. Davis to submit additional documents to fill some factual gaps.

Mr. Davis was a long-time employee at a gas station. On July 20, 1994, he was struck by a van while on the job. He advised the Workers' Compensation Board ("the W.C.B.") that he "suffered multiple injuries to back legs hand & feet including knees & ankles." However, his family doctor, Dr. Krishna K. Persaud, reported only that he suffered strains to his feet and ankles.

The provisions dealing with work-related automobile accidents are found primarily in section 76 of the SABS - 1994 and section 10 of the Workers' Compensation Act, R.S.O. 1990, c.W.11. The general scheme is clear. Automobile insurers are not required to pay accident benefits if the insured person is entitled to receive workers' compensation benefits. However, there are two exceptions. First, an insured person who elects under subsection 10(1) of the Workers' Compensation Act to sue rather than receive workers' compensation benefits can claim accident benefits as if the accident were unrelated to work [s.76(2)]. Second, if there is a dispute about workers' compensation coverage, the insured person can claim accident benefits until the dispute is resolved, provided the automobile insurer is given an assignment of any workers' compensation benefits to which he or she becomes entitled [s.76(5)].

For reasons discussed in more detail below, I find that this scheme is significantly different from the pre-Bill 164 approach in the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, R.R.O. 1990, O. Reg. 672 ("the Schedule"). Bill 164 not only amended the Insurance Act, it included amendments to the Workers' Compensation Act, changing the relative responsibilities of the W.C.B. and automobile insurers in work-related automobile accidents.

Mr. Davis initially pursued compensation through the W.C.B. As part of the claims process, he received an election form advising him that he could claim workers' compensation benefits or bring a legal action against those responsible for the accident. The election form includes the following paragraphs:

3. Under the Workers' Compensation Act, I may be able to claim workers' compensation benefits OR I may be able to bring a legal action against a person or persons who may have been responsible for the accident.

4. If I bring a legal action, I may be able to collect no-fault auto insurance benefits.

5. I have not started a legal action or received any money from a settlement, and I have not received any no-fault auto insurance benefits.

6. I choose to receive workers' compensation benefits.

7. I understand that this means that the Workers' Compensation Board now has the right to bring a legal action on my behalf, and I understand that I cannot bring a legal action against anybody on my own.

8. I understand that I cannot receive workers' compensation benefits for non-economic loss or future economic loss under sections 42 and 43 of the Workers' Compensation Act until I confirm this choice, at which time my decision is final.

Mr. Davis elected to receive workers' compensation benefits by signing the form. The W.C.B. found that he was entitled to temporary total disability benefits and paid him for about three months. He then returned to his job on a part-time basis for about six weeks, receiving partial benefits during that period. On December 1, 1994, he stopped working and was reinstated to full benefits.

In January 1995, the W.C.B. arranged to have Mr. Davis assessed at a Regional Evaluation Centre. The assessment was done by Dr. Michael H. Ford and Marci Gaudet, a physiotherapist. According to their report, Mr. Davis complained of pain in both ankles, worse in the right, and pain in his right foot. Dr. Ford and Ms. Gaudet accepted that he suffered bilateral ankle sprains in the accident, but found that he had recovered from these injuries. They attributed his ongoing pain to pre-existing arthritis, possibly affected by non-insulin dependent diabetes.

Relying on this assessment, the W.C.B. told Mr. Davis that his benefits would be "finalized" on February 16, 1995. He returned to work on March 27, 1995, but challenged the decision to cancel his benefits. He claimed that he returned to work as soon as he could and, therefore, should have received benefits until March 27, 1995.

B. Is re-election allowed?

In early April 1995, after his workers' compensation benefits were cancelled and just after he returned to work, Mr. Davis received a letter from an "Elections Clerk" at the W.C.B. It told him that, as explained in his initial election form, he had to confirm his election to claim workers' compensation benefits if he wanted to receive benefits for non-economic loss ("NEL benefits") or future economic loss ("FEL benefits"). Given the W.C.B.'s position that Mr. Davis had recovered from his accident-related injuries, it is not obvious why this letter was sent. The most likely explanation is that his file was still active because his appeal was pending.

The requirement that workers confirm their election before receiving NEL or FEL benefits comes from subsection 10(15) of the Workers' Compensation Act. This provision was part of the Bill 164 amendments, and makes sense in that context. Under Bill 164, tort actions were restricted to non-economic losses (pain and suffering). Because NEL benefits overlap with what could still be claimed in tort, the worker was given a chance to reconsider which course to take before receiving them. If he or she confirmed the election to claim workers' compensation benefits and received NEL or FEL benefits, the election became irrevocable [s.10(16)].

In my view, the clear implication of subsection 10(15) is that re-elections are allowed. It must mean that the person can decide not to confirm his or her election, and re-elect to sue instead. Other parts of the Bill 164 amendments support this interpretation. For example, subsection 10(14) of the Workers' Compensation Act deals with someone "who receives benefits under this Part and who subsequently receives statutory accident benefits under section 268 of the Insurance Act in respect of the accident." This would make little sense if injured workers were not allowed to re-elect after receiving workers' compensation benefits.

The legislation also clarifies who pays when. According to subsection 76(3) of the SABS 1994, the automobile insurer is not responsible for paying certain benefits, including income replacement benefits, for any period before the election is made under subsection 10(1) of the Workers' Compensation Act. The companion provision is subsection 10(14) of the Workers' Compensation Act. It states that someone who receives workers compensation benefits and then receives accident benefits loses his or her entitlement to further workers compensation benefits, but is not required to repay any benefits already received. These sections, in my view, are designed to facilitate movement between the two systems.

This is a change from the pre-Bill 164 scheme recently considered by Director's Delegate Naylor in Rocchetti and Royal Insurance Company of Canada, (June 3, 1997, OIC P96-00044). Under the Schedule, automobile insurers played only an interim role. They paid accident benefits pending the outcome of the court action. The W.C.B. remained in the picture by protecting the person to the extent of his or her workers' compensation entitlement. If the person recovered less in the law suit than would have been paid under the Workers' Compensation Act, the W.C.B. provided a "top-up." The automobile insurer was then entitled to repayment according to the formula set out in subsection 21(2) of the Schedule. In Rocchetti, Director's Delegate Naylor found that the interim nature of the insurer's role and its right to repayment limited the person's right to move between the two systems.

Under the SABS - 1994, however, the automobile insurer does not play an interim role in election cases. Once the person elects to sue and claim accident benefits, the W.C.B. has no further responsibility. Bill 164 added subsection 10(2.1) to the Workers' Compensation Act. It states that by receiving accident benefits under the SABS - 1994, the worker gives up his or her right to a "top-up" from the W.C.B. The automobile insurer is responsible for paying accident benefits from the date of the election forward, as if the accident were not work related. I note that the " top-up" is lost only if the person receives accident benefits. It appears, therefore, that an injured worker who wants the protection of the "top-up" can elect to sue, but not claim accident benefits.

The injured worker's right to re-elect is complicated to some extent by the W.C.B.'s right of subrogation. When Bill 164 was enacted, the W.C.B.'s subrogation rights had already been eliminated. This meant that an injured worker could re-elect without any need to involve the W.C.B. He or she simply left the workers' compensation system, sued for non-economic loss and claimed accident benefits from the time of the election onwards. However, the section that took away the W.C.B's right of subrogation was later repealed.

The election form that Mr. Davis originally signed dealt with the W.C.B.'s subrogation rights.

Paragraph 7, set out above, says that the W.C.B. has a right to bring a legal action on his behalf and that he has no right to sue. In my opinion, this does not eliminate the person's right to re-elect, but only makes his court action subject to the W.C.B.'s subrogation rights.

The two systems are meant to fit together, without overlapping. With respect to elections, neither the W.C.B. nor the automobile insurer has an interim role. They are obliged to cover different periods, depending on the choices made by the injured person. There is no repayment between them because the legislation now makes it clear that the W.C.B. pays until the election, and the automobile insurer pays after. The automobile insurer and the court do not overlap because the court can only deal with non-economic losses, which are not compensated in the SABS 1994. Finally, the Workers' Compensation Act includes benefits that could overlap with the court case, but those benefits are not payable until the person confirms his or her election to claim workers' compensation benefits instead of suing.

For these reasons, I conclude that an insured person can re-elect to sue and claim accident benefits after receiving workers' compensation benefits, with at least two limitations. First, he or she cannot re-elect after receiving NEL or FEL benefits under the Workers' Compensation Act [s.10(16)]. Second, the re-election cannot be made primarily for the purpose of claiming accident benefits [s.76(2)].

C. Is re-election allowed after three months?

Pafco raised a new argument on appeal. It submits that even if Mr. Davis can re-elect, subsection 10(6) of the Workers' Compensation Act says that he must do so within the three-month time limit established in subsection 9(2). The relevant part of subsection 9(2) states:

9. • (2) Notice of the election, . . . shall be given . . . within three months after the happening of the accident or, in the case it results in death, within three months after the death or within such longer period as either before or after the expiration of such three months the Board may allow.

Pafco claims that the W.C.B. can only extend the time limit for claims involving death. While the grammatical structure of the section supports Pafco's interpretation, it would present a serious obstacle. The question of entitlement to FEL benefits does not arise for 12 months, making it difficult for the injured worker to reconsider at that point and still meet a three-month limitation period.

The Workers' Compensation Appeals Tribunal (W.C.A.T.) has considered this issue and rejected a technical reading. In Sylvester v. Cullen, Decision No. 764/91, 1991 CanLII 4741 (ON WSIAT), 21 W.C.A.T.R. 348, a W.C.A.T. panel acknowledged that without a comma following the phrase "after the death," the discretion to extend the time limits appears to apply only to claims involving death. It concluded, however, that such an interpretation would be contrary to the purpose of the legislation:

. . . . the legislation is enacted primarily for the benefit of workers. As such, it should be given a liberal interpretation. If grammatical rules are strictly applied, subs. 7(2) could be read as suggesting that a worker could not elect to receive compensation benefits unless the election were made within three months of the accident. To deprive an injured worker of benefits under the Act on such specious grounds is inappropriate. When faced with a choice between the technical interpretation and the overall intent of the legislation, the latter should generally prevail. (p.362)

This interpretation has been accepted in later W.C.A.T. decisions. For example, in Lozo v. Parish, Decision No. 145/95, 35 W.C.A.T.R. 195, the panel held that the W.C.B. could extend the limitation period in non-death cases and allowed the worker to re-elect to sue rather than continue receiving workers compensation benefits.

I find no reason to disagree with W.C.A.T.'s interpretation of subsection 9(2). Here, Mr. Davis was invited to re-elect. The W.C.B. could not have made it much easier for him. The letter from the Elections Clerk states that if he did not sign and return the confirmation form, "the Workers' Compensation Board will assume you want to claim Statutory Accident Benefits."³

D. Is Pafco estopped from denying responsibility?

Mr. Davis submits that due to the actions of its adjuster, Pafco is estopped from denying its obligation to pay interim benefits under subsection 76(5) of the SABS - 1994. This section deals with situations where there is a dispute about whether subsection 76(1) applies, making the W.C.B., not the automobile insurer, responsible for paying benefits:

76. • (1) The insurer is not required to pay benefits under this Regulation in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers' compensation law or plan.

(5) Despite subsection (1), if there is a dispute about whether subsection (1) applies to a person, the insurer shall pay full benefits to the person under this Regulation pending resolution of the dispute if,

(a) the person makes an assignment to the insurer of any benefits under any workers' compensation law or plan to which he or she is or may become entitled as a result of the accident; and

(b) the administrator or board responsible for the administration of the workers' compensation law or plan approves the assignment.

There was some discussion at the appeal hearing about the application of this section. For the reasons set out above, it does not create an interim role for insurers to pay accident benefits pending the outcome of a law suit. If the person makes a bona fide election under section 10 of the Workers' Compensation Act, the automobile insurer must pay full benefits, not interim benefits, according to the SABS - 1994 from the time of the election forward.

In my view, subsection 76(5) also has no application once workers compensation coverage is established, subject perhaps to a later coverage dispute. Its purpose is to provide interim benefits until workers compensation coverage is determined. It does require automobile insurers to pay particular benefits not available under the Workers Compensation Act, or that have been refused by the W.C.B.

Mr. Davis clearly was entitled to receive workers compensation benefits. He received them for seven months and did not contact Pafco until after they were cancelled. The reason for the cancellation was not related to any coverage dispute, but because the W.C.B. found that his accident-related injuries had resolved. Therefore, subsection 76(5) does not apply pending his claim for additional workers compensation benefits.

However, subsection 76(5) also has a limited role in election cases. It covers any "dispute about whether subsection (1) applies." Subsection 76(2) says that subsection (1) does not apply to an insured person who makes an election under section 10 of the Workers' Compensation Act, unless the election is made primarily for the purpose of claiming accident benefits. This means that if the insurer challenges the bona fides of the election, as Pafco does here, there is a dispute about whether subsection (1) applies, making subsection (5) applicable.

The question, therefore, is whether Pafco is estopped from denying its responsibility to pay accident benefits pending a determination of whether Mr. Davis's election was made primarily for the purpose of claiming accident benefits.

In April 1995, when Mr. Davis received the Confirmation of Election form, his workers compensation benefits had already been cancelled and he was back at his job, working full-time. He did not sign the form, but he also did not start a law suit or contact Pafco. Instead, he pursued his W.C.B. claim by asking Dr. Persaud to prepare another report in support of his claim. The report, dated April 12, 1995, addresses the causation question. It states that although x-rays show degenerative changes and signs of osteoarthritis, Mr. Davis did not have any foot problems before the accident. The report does not mention any knee or thigh injuries.

On May 5, 1995, the Senior Benefits Adjudicator at the W.C.B. denied Mr. Davis's claim for further benefits. The new medical evidence did not change the W.C.B. medical advisor's opinion that by February 16, 1995, Mr. Davis "had fully recovered from the accident in this claim file and would be capable of returning to work with no physical restrictions." Mr. Davis objected to this decision, asking that it be reviewed by the next level of the W.C.B.

Mr. Davis continued to work at the gas station and in late May 1995, ten months after the accident, he contacted Pafco. As part of the claims process, he signed a written statement that included the following:

It was my plan to sue the driver that caused my injuries. I just recently found out from W.C.B. that if I claim their benefits, then I cannot sue the driver. Therefore, I decided to claim benefits with Pafco Insurance Company as [sic] then hire a lawyer and start a law suit. I have not spoken with any lawyers so far.

The insurance adjuster sent Mr. Davis an Assignment of Workers Compensation Benefits form. He signed and returned it, presumably understanding that it would allow him to sue and claim accident benefits. However, Pafco refused his claim for accident benefits. The precise reason for the refusal is not clear from the appeal record. However, the Report of Mediator suggests that Pafco claimed Mr. Davis’s re-election was not a proper election under subsection 76(2), but even if it were, he did not qualify for benefits under the SABS - 1994.

Mr. Davis submits that by giving him the assignment form, Pafco accepted its responsibility for paying interim benefits under subsection 76(5) of the SABS - 1994. I do not agree. I accept Pafco’s submission that estoppel does not arise because there is no evidence that Mr. Davis relied on the adjuster's actions to his detriment. The W.C.B. had already cancelled his benefits and, therefore, he did not give up ongoing workers' compensation benefits to sue.

Further, the insurer's obligation to pay is not absolute. It is only required to pay the benefits to which the person is entitled under the SABS - 1994. The only exception is set out in subsection 76(1), creating a "pay now dispute later" obligation for vocational rehabilitation services that were underway at the time of the election. Even if subsection 76(5) applies, therefore, Pafco was entitled to question Mr. Davis's eligibility for benefits.

E. Was the re-election primarily for the purpose of claiming accident benefits?

Pafco submits that Mr. Davis is not entitled to accident benefits under subsection 76(2) of the SABS 1994 because his re-election was made primarily for the purpose of claiming accident benefits. This issue was before the arbitrator, but she did not deal with it because she concluded he could not re-elect after receiving workers' compensation benefits.

Mr. Davis submits that the bona fides of his re-election should be decided on oral evidence and, therefore, asks that the matter be referred back for an arbitration hearing. Pafco points out that the parties agreed at the pre-hearing that this issue would be decided at the preliminary hearing based on documents and submissions. It submits that there is no reason to reconsider that decision on appeal, particularly because Mr. Davis was allowed to file additional material.

Someone who conducts an arbitration on his or her own cannot expect to start over with a lawyer simply because the outcome is unfavourable. Whatever the agreement reached at the pre-hearing, however, I must be satisfied that the appeal record provides a sufficient basis for a decision. In this case, I am satisfied that Mr. Henry has had a reasonable opportunity to present his position and that I have enough information to make a decision.

Section 10 of the Workers' Compensation Act offers a choice. An injured worker who is entitled to benefits, but also has a right to sue the person responsible for his or her injuries, is allowed to choose between these two options. The right to re-elect, discussed above, allows the person to re-evaluate his or her choice before it becomes irrevocable. Section 76(2) of the SABS - 1994 recognizes the injured worker's right to choose and puts those who have a bona fide action in the same position as other automobile accident victims. They can sue for their non-economic losses and claim income replacement benefits and expenses under the SABS - 1994.

The legislation is designed to allow this choice between compensation options, but only where the person is making a real choice. In my view, the intent is not to allow "forum shopping" on the question of disability. Someone who re-elects to sue after being unable to convince the W.C.B. that he or she was seriously injured in the accident is asking for a second opinion, not making a choice between viable compensation options.

While there may be circumstances where a bona fide re-election can be made after a final refusal by the W.C.B., I am not convinced this is such a case. In my opinion, Mr. Davis crossed the line into forum shopping by making overlapping claims to the W.C.B. and Pafco. This is not to suggest that he tried to "double-dip," but only that he wanted Pafco to recognize his disability for any period that the W.C.B. would not.

As set out above, Mr. Davis returned to work on March 27, 1995, but challenged the W.C.B.'s decision to cancel his benefits five weeks earlier. In mid-June, after the W.C.B. confirmed its decision and Mr. Davis appealed further, he received four weeks notice of termination from his employer. On July 13, 1995, his last day of work, he applied to Pafco for accident benefits.

Generally, I would not regard an application for accident benefits as sufficient evidence of a re-election under section 10 of the Workers' Compensation Act. However, Mr. Davis did what he was asked. The W.C.B. was prepared to assume a re-election if he did not return to the Confirmation of Election form. Mr. Davis did not return it. Pafco asked him to sign the Assignment of Workers Compensation Benefits form and fill out an application form, which he did. Therefore, it is only fair that his application for accident benefits be treated as his re-election.

The legislation gives the W.C.B. and automobile insurers separate responsibilities. The W.C.B. pays benefits until the person makes an election under section 10 of the Workers Compensation Act, at which point the obligation shifts to the insurer. Mr. Davis’s position would be much stronger, therefore, if he had clearly distinguished his claims, limiting his workers' compensation claim to the period before July 13, 1995, and only asking Pafco to pay benefits after that date. However, that is not what he did.

According to the Report of Mediator and the pre-hearing letter, Mr. Davis claimed income replacement benefits under the SABS - 1994 from February 16, 1995, the date his workers compensation benefits were cancelled. He made this claim even though he was actively pursuing his appeal of the workers' compensation decision for the same period. This suggests to me that he applied for accident benefits because the W.C.B. was refusing to pay, not because he had decided to leave the workers compensation system.

There is no suggestion that Mr. Davis made his re-election at any point before he applied for accident benefits. Therefore, he clearly is not entitled to income replacement benefits before July 13, 1995. Given the complexity of the analysis in this decision, it would be surprising if Mr. Davis fully understood his options. However, his simultaneous claims to the W.C.B. and Pafco illustrates the problem with his position.

Mr. Davis also made overlapping claims for the period following his re-election. Not only did he continue his workers compensation appeal, he expanded it. The first two W.C.B. decisions dealt only with his entitlement from February 16, 1995, when his benefits were cancelled, until March 27, 1995, when he went back to work. They considered only his feet and ankle injuries because the medical reports did not mention any others. At the same time he was applying for accident benefits, however, Mr. Davis sent reports to the W.C.B from Dr. Persaud stating that he also suffered knee and thigh injuries and was unable to do his job from mid-June onwards.

According to Dr. Persaud, Mr. Davis complained of knee pain and weakness in his thigh muscles in mid-June 1995. His reports states as follows:

On examination of the knees there was full range of movement. There was also moderate wasting of the quadriceps muscles associated with moderate weakness. These are most likely the result of his previous injuries. X-ray show mild osteo-arthritis of the knees, ankles and feet.

It should be noted that previous to his injuries, this patient had no complaints regarding his knees and thighs.

Dr. Persaud provided essentially the same information to Pafco. His diagnosis was strained knees, feet and ankles, and weakness and mild wasting of his right and left quadriceps (thigh muscles). He rated Mr. Davis's thigh problem as the most serious, followed by his knees and then his ankles. Dr. Persaud also reported that testing showed osteoarthritic changes in Mr. Davis's feet and right ankle, and minimal degenerative arthritic changes in his knees. Finally, he stated that Mr. Davis was unable to return to work, but did not say how long he expected that to continue.

Pafco refused Mr. Davis's claim, but he did not pursue it by applying for mediation. Instead, he continued with his W.C.B. appeal and, at some point, retained Mr. Suits to represent him. The appeal decision is dated February 20, 1996, and rejects his claim for further workers' compensation benefits. While it is formally limited to a confirmation of the earlier decisions, the reasons suggest that the new evidence was considered. The Appeals Officer refers to Mr. Suits submission that Mr. Davis's injuries prevented him from continuing to work. This seems to relate to his claim that by mid-June 1995, he could not do his job properly. In my view, it is important that the Appeals Officer confirms the conclusion that by February 16, 1995, Mr. Davis’s accident-related injuries had resolved.

According to the Report of Mediator, the mediation started on February 20, 1996, the same day that Mr. Davis’s workers compensation appeal was rejected. At this point, seven months after his re-election, he still had not started a court action. He suggests that he could not sue until the W.C.B. decided whether it was going to pursue its subrogated rights by bringing an action on his behalf. This might explain why he had not started an action at the time of his application for accident benefits, but the W.C.B. notified him in late July 1995 that it had decided not to sue. Despite this, his Statement of Claim was not issued until July 1996, almost a full year later, and four months after he applied for arbitration, four days before the arbitration pre-hearing and just one day before the expiration of the limitation period.

The sequence of events convinces me that Mr. Davis's re-election was not a proper election under section 10 of the Workers' Compensation Act. It was made for the purpose of claiming accident benefits that he felt the W.C.B. should be paying, but was not. I am not suggesting that this was a deliberate scheme to manipulate the system. Understandably, both sides appear to have been uncertain about his options. I conclude, however, that section 76(1) applies to Mr. Davis and, therefore, Pafco is not required to pay accident benefits.

My view of the situation might have been different if Mr. Davis's tort claim were clearly meritorious. However, I am not persuaded that it is.

Bill 164 not only eliminated actions for economic damages, but an action for non-economic damages must involve death, serious disfigurement, or "serious impairment of an important physical, mental or psychological function." Even if the injury meets this test, the action is also subject to a $10,000 deductible (indexed). Therefore, unless the damages are assessed at more than the deductible, there will be no recovery.

Mr. Davis submits that I should not get involved in evaluating the strength of his court action, arguing that would usurp the role of the Ontario Court (General Division). In my opinion, however, this is a legitimate part of analyzing the bona fides of the election.

Pafco claims that Mr. Davis's court action has very little chance of success. It contends that even if his ongoing problems are all related to the accident, which it submits is doubtful, they are not sufficient to overcome the verbal threshold and the $10,000 deductible.

I agree that the medical evidence is not particularly strong. While I was not given sufficient case law to conclude that Mr. Davis's tort claim has no chance of success, I am convinced that its weakness further undermines the bona fides of his re-election.

This decision does not leave Mr. Davis without options. He is free to pursue his court action. Because he did not receive accident benefits, it appears that he would still be entitled to a " top-up" under subsection 10(2) of the Workers' Compensation Act if he recovers less in his court action than his workers' compensation entitlement. However, he would need to convince the W.C.B. that he is entitled to further benefits. I am also not aware of any reason that he could not abandon his court action and reassert his W.C.B. claim.

III. EXPENSES

Appeal expenses have often been granted to unsuccessful appellants who have raised novel and important issues. In my view, this is such a case. Therefore, I am exercising my discretion to grant Mr. Davis his reasonable appeal expenses. If the parties cannot agree on the amount of the expenses, an assessment can be arranged through the Registrar's office.

July 22, 1997

David R. Draper Director's Delegate

Date

Footnotes

1. 1Insurance Statute Law Amendment Act, 1993, S.O 1993, Chapter 10.
2. 2Ontario Regulation 776/93.
3. 3To be consistent with the legislation, the assumption should have been that he decided to re-elect under section 10 of the Workers' Compensation Act and claim accident benefits from the time of the re-election onwards.