Neutral Citation: 1997 ONICDRG 134

OIC A96-000538

BETWEEN:

LUCILLE MACAULAY

Applicant

and

ROYAL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Mrs. Lucille MacAulay, was injured in a motor vehicle accident on June 14, 1991. She applied for statutory accident benefits from Royal Insurance Company of Canada ("Royal"), payable under Ontario Regulation 672.¹ She received weekly income benefits from October 28, 1991 until January 29, 1993. Royal terminated these benefits because Mrs. MacAulay advised Royal that her physician had "released" her to return to work. On October 13, 1993, Mrs. MacAulay telephoned and asked Royal to reinstate her benefits. She advised Royal that she was still disabled and had not returned to work since the accident. Royal refused to pay further benefits.

Mrs. MacAulay referred the dispute to mediation. The parties were unable to resolve their dispute through mediation and Mrs. MacAulay applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

As a preliminary matter, Royal contends that Mrs. MacAulay's claim for weekly income benefits came to an end in January 1993, as she no longer continued to be disabled within the meaning of section 12 of the Schedule. Royal contends that the claim that she made thereafter for benefits in October 1993, was a new claim. It contends that Mrs. MacAulay did not give notice of this further claim within the two years of the date of accident, i.e., prior to June 14, 1993, as required under section 22 of the Schedule. Therefore, she is precluded from commencing an arbitration pursuant to section 25 of the Schedule.

Royal also contends that Mrs. MacAulay is precluded from making a further claim for weekly income benefits two years after the date of the accident under subsections 12(2)2. and 16(2) of the Schedule.

The preliminary issue in this hearing is:

Is Mrs. MacAulay precluded from commencing an arbitration proceeding or making a further claim for weekly income benefits two years after the date of the accident?

Mrs. MacAulay is not precluded from commencing an arbitration proceeding. Mrs. MacAulay is not precluded from making a further claim for weekly income benefits two years after the date of the accident.

Oral submissions were made to me, Shemin Manji, Arbitrator, by telephone conference call on July 22, 1996. I also received written submissions from Royal. I issued my decision on October 31, 1996, with reasons to follow.

Participating in the telephone conference call:

Applicant:

Lucille MacAulay

Mrs. MacAulay's

William Watson

Representative:

Barrister and Solicitor

Royal's

Karen M. Howe

Representative:

Barrister and Solicitor

Witnesses:

There were no witnesses.

Exhibits:

The exhibits filed are listed in Appendix A to these reasons.

Reasons for Decision:

Royal seeks an order dismissing Mrs. MacAulay's arbitration pursuant to section 25 of the Schedule because of her failure to comply with section 22 of the Schedule. As noted above, Royal also submits that Mrs. MacAulay is precluded from making a further claim for weekly income benefits two years after the date of the accident under subsections 12(2)2. or 16(2) of the Schedule.²

Sections 25 and 22 of the Schedule provide as follows:

No person may commence a mediation proceeding under section 280 of the Insurance Act in respect of benefits under this Schedule unless the requirements of section 22 have been satisfied ...

22.—(1) The insured person or the person otherwise entitled to make a claim shall,

(a) give initial notice of claim to the insurer, in writing, within thirty days from the date of the accident or as soon as practicable thereafter; and

(b) furnish to the insurer within ninety days of the giving of the notice under clause (a) a completed application for no-fault benefits respecting the accident and the resulting loss.

(2) A failure to comply with a time limit set out in subsection (1) does not invalidate a claim if the claimant has a reasonable excuse and so long as there is compliance within two years of the accident.

Royal contends that subsection 22(1) of the Schedule sets out the time limit within which an insured person must give notice of each of his or her claims.

Royal acknowledges that Mrs. MacAulay had a claim for weekly income benefits that arose within two years of the accident, as a result of her inability to perform her pre-accident activities.

However, Royal contends that this claim came to an end on January 29, 1993, when she was able to return to her pre-accident activities and no longer continued to be disabled within the meaning of section 12 of the Schedule. Royal contends that Mrs. MacAulay's subsequent claim for weekly income benefits in October 1993 is barred under section 22 of the Schedule because she did not give notice of this claim to Royal within two years of the accident, i.e., by June 14, 1993.

Mrs. MacAulay's response is that Royal, by its conduct, is either estopped from relying on the notice provision in section 22 of the Schedule or has elected to treat Mrs. MacAulay's claim as valid notwithstanding her failure to comply with section 22 of the Schedule. Mrs. MacAulay submits that after she contacted Royal in October 1993, Royal sought and obtained information about Mrs. MacAulay's condition from her various doctors.

I agree with Mrs. MacAulay that Royal cannot rely on the notice provision in section 22 of the Schedule but for a different reason. In my view, section 22 of the Schedule sets out the time limit within which an insured person must give the insurer initial notice of claim and furnish an initial completed application for accident benefits³ respecting the accident and the resulting loss. In my view, section 22 of the Schedule does not apply in respect of the further claim Mrs. MacAulay made for weekly income benefits in October 1993. There is no dispute that before making the claim for benefits in October 1993, Mrs. MacAulay had given Royal a written initial notice of claim and furnished it with an initial completed application for accident benefits respecting her accident and the resulting loss within the time limit set out in section 22 of the Schedule. As a result of this application, Royal paid Mrs. MacAulay weekly income benefits from October 28, 1991 to January 29, 1993.⁴

In my view, section 22 of the Schedule does not prevent an insured person who initially suffered a disability and received benefits as a result, recovered, but subsequently suffered a relapse, from applying for and receiving further benefits even if the relapse occurred two years after the accident, as long as he or she meets the requisite tests for disability and is able to establish that the disability resulted from the accident.

Royal also refers to subsection 12(2)2. of the Schedule in support of its contention that Mrs. MacAulay is prevented from claiming weekly income benefits after June 14, 1993 (two years after the accident). Subsection 12(2)2. provides as follows:

12.(2) The following qualifications apply to an insured person who claims a weekly benefit under subsection (1):

He or she as a result of and within two years of the accident must have suffered a substantial inability to perform the essential tasks of his or her occupation or employment.

I do not read this subsection as one that precludes Mrs. MacAulay from making a claim for weekly income benefits after June 14, 1993. Essentially this subsection states that where an insured person's disablement from work occurs for the first time more than two years after the accident, the person is not entitled to claim weekly income benefits. Mrs. MacAulay's disablement from work occurred for the first time within two years of the accident. Therefore, she is not precluded from claiming weekly income benefits because she meets the qualification in subsection 12(2)2. The rest of section 12 of the Schedule indicates that once an insured person meets this qualification, he or she is entitled to claim and receive weekly income benefits for as long as he or she can establish that he or she meets the requisite tests for disability in subsections 12(1) and 12(5)(b) of the Schedule.

In addition, Royal submits that section 16 of the Schedule restricts an insured person's ability to make a new claim for benefits after he or she returns to pre-accident activities two years after the date of the accident. Royal submits that subsection 16(2) of the Schedule extends eligibility after the two year anniversary of the accident, but only for periods of up to 90 days. Royal relies on the arbitration decision in Russell and Co-operators General Insurance Company (December 20, 1993), OIC A-005417, in support of this proposition.

Section 16 of the Schedule provides as follows:

(1) Subject to section 15 and subsection (3), a person receiving a benefit under this Part may attend school or accept, or return to, work at any time during the first two years following the accident for any period of time without affecting his or her benefits under this Part if, as a result of the accident, he or she is unable to continue at school or in the occupation or employment.

(2) Subject to section 15 and subsection (3), after the two-year period referred to in subsection (1), a person receiving a benefit under this Part may attend school or accept, or return to, an occupation or employment for periods of up to ninety days without affecting his or her benefits under this Part if he or she, as a result of the injury, is unable to continue at school or in the occupation or employment.

In Russell, Arbitrator David Draper concluded that when section 16(1) and (2) are read together within the context of the Schedule, the protection of section 16 is lost if the person is able to return to work for more than 90 days after the two-year anniversary of his or her accident. In such a case, the person becomes ineligible for further weekly income benefits.

The evidence in this case indicates that although Mrs. MacAulay may have been capable of returning to her pre-accident employment after January 29, 1993,⁵ she did not. When Mrs. MacAulay telephoned Royal on October 13, 1993 she advised Royal that she had not returned to work since the accident.⁶ It appears, therefore, that section 16 of the Schedule does not apply in the circumstances of this case.

In any event, I do not agree with Royal that subsection 16(2) of the Schedule precludes an insured person who has returned to pre-accident activities, from claiming further benefits two years after the date of the accident. I agree with Arbitrator Draper in Russell, that the purpose of section 16 of the Schedule, is to encourage insured persons receiving weekly benefits, to get back to work or school as soon as practicable. However, I do not agree that subsection 16(2) of the Schedule says that an insured person is not eligible for weekly benefits where he or she has worked or attended school for a period of more than ninety days after the two-year anniversary of his or her accident. The subsection indicates that the insured person's benefits are affected, not terminated. I agree with Senior Arbitrator Frederika Rotter in Lafleur and Zurich Insurance Company (May 11, 1995), OIC A-004141, that "...if the (Lieutenant-Governor-in Council) had intended that benefits in respect of an accident be permanently terminated in the situation described in section 16(2), it would have said so, in clear and precise language."

I also agree with Senior Arbitrator Rotter's comment in Lafleur that when subsection 16(2) of the Schedule indicates that benefits are affected this means the presumption of ongoing eligibility for benefits in section 16 of the Schedule is affected. As Senior Arbitrator Rotter states "(i)n effect a 'rebuttable presumption' that the person does not remain disabled has been created. Nevertheless,…the issue of ongoing disability and entitlement to benefits remains 'a question of fact to be determined'." Further, I agree with Senior Arbitrator Rotter that:

(the insured person) bears that burden of rebutting the presumption that he (or she) has become ineligible for benefits. He (or she) can do so by establishing a substantial disability to do his essential tasks as a result of the accident. In effect, the nexus or connection between the accident and the disability must be reestablished, and cannot be presumed to exist, in contrast to the situation under section 16(1)."

I note that Arbitrator Stewart McMahon also considered the effect of subsection 16(2) of the Schedule in Whyte and Metropolitan Insurance (April 30, 1996), OIC A-009277. Arbitrator McMahon agreed with Senior Arbitrator Rotter's interpretation of subsection 16(2) of the Schedule in Lafleur. He disagreed with Arbitrator Draper's conclusion in Russell that within the first three years a person could become disentitled to future benefits merely because he or she is able to return to work. He made the following comments, with which, I concur:

There is no requirement in section 12(1) that the disability need be continuous. Section 12(5)(b) requires the insured to demonstrate that the disability is continuous, but that requirement is not imposed until after a period of 156 weeks. Accordingly, in my view, section 16(2) which takes effect during the currency of the first 156 weeks must have some effect other than to bar an insured from further benefits, merely because he returns to work for more than 90 days.

Summary & Conclusion

I am unable to make an order dismissing Mrs. MacAulay's application for arbitration pursuant to section 25 of the Schedule. I find that section 22 of the Schedule does not apply in respect of the further claim Mrs. MacAulay made for weekly income benefits in October 1993. I also find that subsections 12(2)2. and 16(2) of the Schedule do not preclude Mrs. MacAulay from making a further claim for weekly income benefits in October 1993. Mrs. MacAulay is entitled to receive further benefits as long as she can establish that she meets the requisite tests for disability in subsection 12(1) and 12(5)(b) of the Schedule and her disability is a result of the accident.

Order:

The issue of expenses will be determined in the arbitration hearing.

July 22, 1997

Shemin Manji

Arbitrator

Date

APPENDIX A

Exhibit 1

The following correspondence attached to the Reply by the Applicant for Arbitration:

Letter dated April 4, 1994 from Royal to Mrs. MacAulay
Letter dated September 30, 1994 from Mr. Watson to Royal
Letter dated November 17, 1994 from Mr. Watson to Royal
Letter dated December 2, 1994 from Royal to Mrs. MacAulay (no enclosures)
Letter dated March 22, 1995 from Mr. Watson to Royal (no enclosures)
Letter dated April 10, 1995 from Royal to Mr. Watson (no enclosures)
Letter dated April 25, 1995 from Mr. Watson to Royal
Letter dated May 9, 1995 from Mr. Watson to Royal
Letter dated June 16, 1995 from Mr. Watson to Royal
Memorandum dated June 26, 1995 from Royal to Mr. Watson (no enclosures)

Exhibit 2

Affidavit Of Karen Taylor, Claims Representative, Royal sworn July 19, 1996 with the following exhibits:

Exhibit A

Application for Accident Benefits of Mrs. MacAulay dated October 10, 1991

Exhibit B

Royal computer file notes dated January 11, 1993

Exhibit C

Letter dated February 16, 1993 from Royal to Dr. Harry J. Bergen

Exhibit D

Letter dated February 23, 1993 from Dr. Bergen to Royal

Exhibit E

Royal computer file notes dated October 13, 1993

Exhibit F

Letter dated December 1, 1993 from Dr. Bergen to Royal

Exhibit G

Letter dated March 17, 1994 from Dr. Michael A. Munoz to Royal

Footnotes

Prior 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.
It is not clear from Royal's submissions whether it is relying on subsections 12(2)2. and 16(2) of the Schedule to support its interpretation of section 22 or whether these are independent grounds on which it is relying in support of its position that Mrs. MacAulay is precluded from making a claim for weekly income benefits two years after the date of the accident.
This becomes clear when section 22 is read in conjunction with section 29 of the Schedule which prescribes forms for an initial application for benefits and an application for additional benefits.
Affidavit of Karen Taylor - Exhibit 2
Affidavit of Karen Taylor sworn July 19, 1996 - Exhibit D - Report of Dr. Bergen dated February 23, 1993
Affidavit of Karen Taylor sworn July 19, 1996 - Exhibit E - Computer notes of Mrs. Del Fabbro (Exhibit 2)

Lucille MacAulay v. Royal Insurance Company of Canada, 1997 ONICDRG 134

Case Summary