Neutral Citation: 1997 ONICDRG 135

Appeal P96-00064

OFFICE OF THE DIRECTOR OF ARBITRATIONS

DEBRENA HENRY

Appellant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Ian A. Little (for Debrena Henry)

Ian D. Kirby (for Allstate)

APPEAL ORDER

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

The appeal is denied and the arbitration order, dated January 12, 1996, is confirmed.
No appeal expenses are payable.

July 23, 1997

David R. Draper

Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Debrena Henry from an arbitration decision dated January 12, 1996. She claims the arbitrator erred in failing to recognize that section 64 of the Statutory Accident Benefits Schedule - Accidents On or After January 1, 1994 ("the SABS - 1994")¹ means that her entitlement to caregiver benefits continued until the Designated Assessment Centre ("DAC") issued its report.

II. ANALYSIS

Ms. Henry was injured in an automobile accident on April 19, 1994. At the time of the accident, she was an 18 year old student in Grade 13, living with her mother and three younger sisters. Her mother had an automobile insurance policy issued by Allstate Insurance Company of Canada ("Allstate"). Ms. Henry applied to Allstate as her mother's dependant. Although she qualified for insurance coverage as a dependant, she claimed caregiver benefits of $350 per week under Part IV of the SABS - 1994 on the basis that she was the primary caregiver for her three sisters.

Allstate refused to pay caregiver benefits, taking the position that a dependant cannot qualify as a caregiver. However, Ms. Henry received "other disability benefits" of $185 per week under Part V of the SABS - 1994.

Ms. Henry applied for mediation, claiming she was entitled to $350 per week as a caregiver rather than the $185 that Allstate was paying. On August 15, 1994, the mediator reported that this issue was not resolved. Ms. Henry did not apply for arbitration immediately, but continued to receive $185 per week.

After paying benefits for about five months, Allstate decided to evaluate Ms. Henry's ongoing eligibility for benefits. Section 64 of the SABS - 1994 sets out a detailed procedure that insurers must follow before cancelling weekly income benefits, including both caregiver benefits and other disability benefits. The section is lengthy, but the most relevant parts provide as follows:

64.-(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 the disability in respect of which the benefits are paid, except in accordance with this section.

(5) If the insured person provides the insurer with a certificate under subsection (3) or (4), the insurer may, on notice to the insured person, require the insured person to be examined by,

(a) a health practitioner of the insurer's choice; or

(b) a person selected in accordance with subsections (11) and (12).

(8) If a report under subsection (7) states that the insured person is no longer suffering from the disability in respect of which the benefits are paid, the insurer may give the insured person notice that the insurer will stop paying the benefits on a date specified in the notice and the notice shall provide the information contained in subsections (9) to (12).

(9) 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 examined by a person selected in accordance with subsections (11) and (12).

(10) Despite subsection (9), the insurer shall not stop payment earlier than fourteen days after the insured person received the notice under subsection (8).

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

Effective January 1, 1995, section 64 was revoked and replaced by a new section dealing with stoppage of weekly benefits (O. Reg. 781/94). It is not clear that the changes would have affected the analysis. In any event, this matter proceeded under the pre-1995 legislation and, in my opinion, that is the law to be applied.

As allowed by subsection 64(5), Allstate arranged for Ms. Henry to be examined by Dr. Louis M. Weisleder, an orthopaedic specialist. Dr. Weisleder prepared a report, dated October 6, 1994, stating that she suffered a contusion of the left knee and a possible meniscal tear, but was fit to resume all her pre-accident activities except vacuuming. Using the language of subsection 64(8), this was a report under subsection (7) stating that Ms. Henry was no longer suffering from the disability in respect of which her benefits were being paid.

Allstate wrote to Ms. Henry and her lawyer, advising them it would pay an additional 14 days of weekly benefits to November 7, 1994, but no more. Ms. Henry informed Allstate that she wanted another assessment, as she was entitled to do by subsection 64(9). Because she asked for an assessment, Allstate was required to continue paying benefits, which it did.

The second assessment was done on January 26, 1995 by Dr. Robert Grossman, functioning as a Designated Assessment Centre (DAC) for disability. In his report, dated January 30, 1995, Dr. Grossman stated that Mr. Henry was not disabled based on either her tasks as a student or a caregiver. Not only did he conclude that she was no longer disabled, he "would have expected [the injury] to resolve in about six weeks."

Relying on Dr. Grossman's report, Allstate stopped paying benefits as of January 30, 1995. Allstate also advised Ms. Henry that because her disability ended earlier, it would seek repayment if she pursued her claim further.

In March 1995, the Ontario Insurance Commission received an Application for Appointment of an Arbitrator filed on behalf of Ms. Henry. She claimed she was entitled to caregiver benefits of $350 per week from the date of the accident and ongoing. Allstate responded, asserting that she had been overpaid. The arbitrator described the issues as follows:

Is the Applicant entitled to weekly education disability benefits under section 15, caregiver benefits under section 18 or "other disability benefits" under section 19 of the Schedule and, if so, for what period of time?
Is the Insurer entitled to a repayment pursuant to section 70 of the Schedule?

The arbitrator found nothing in the SABS - 1994 to prevent someone claiming accident benefits under an insurance policy as the dependant of the named insured from qualifying for caregiver benefits. Based on his assessment of the evidence, he was satisfied that at the time of the accident, Ms. Henry was the primary caregiver to her three sisters. Therefore, he went on to consider whether she met the disability test for benefits as a caregiver.

Paragraph 18(1)3 of the SABS - 1994 establishes two tests for caregiver benefits. The arbitrator found that Ms. Henry did not suffer a substantial inability to engage in her pre-accident caregiving activities and, therefore, did not meet the first test. However, he found that for some period after the accident, she suffered a "partial inability to carry on a normal life," as defined in section 2 of the SABS - 1994. Therefore, she qualified for caregiver benefits.

The arbitrator then had to determine the period that Ms. Henry continued to suffer a "partial inability to carry on a normal life." Relying on Dr. Weisleder's opinion, he concluded that by October 6, 1994, she was no longer eligible for caregiver benefits.

In effect, the arbitrator concluded that Ms. Henry was entitled to weekly benefits at a higher rate, but for a shorter period. He ordered Allstate to pay the difference between her entitlement and the amount she received, plus interest.

The arbitrator's factual findings are not challenged in this appeal. Ms. Henry claims, however, that even if she was not disabled beyond October 6, 1994, Allstate is obliged by section 64 to pay her until January 30, 1995, the date of the report by the Designated Assessment Centre.² To put it more simply, the arbitrator concluded that Allstate should have paid Ms. Henry caregiver benefits. If it had, it would have been required to continue paying until January 30, 1995. She argues that she should not be worse off because Allstate refused to pay her the type of benefits to which she was entitled.

I am unable to accept Ms. Henry's argument. In my view, section 64 deals with process, not entitlement. It protects the flow of benefits by controlling the insurer's right to cancel them. Benefits must be paid pending the DAC assessment even though the insurer claims the person is no longer entitled. This obligation to pay, however, does not create an entitlement that is immune from later challenge. I agree with Allstate's submission that the legislation was not intended to give insured persons an automatic right to extend their entitlement by requesting a DAC assessment, regardless of the merits of their claim.

Allstate complied with the requirements of section 64 by continuing to pay benefits pending the DAC assessment. It had no obligation to pay benefits in the higher category pending the outcome of that part of the dispute. Throughout the process, Allstate claimed that by October 6, 1994, Ms. Henry was no longer entitled to weekly benefits. The arbitrator agreed. In my opinion, his order that Allstate pay benefits at the higher rate, but only to October 6, 1994, is both within his authority and reasonable. Therefore, Ms. Henry's appeal is denied.

III. EXPENSES

While I am not persuaded that Ms. Henry's appeal was frivolous, vexatious or an abuse of process, as suggested by Allstate, I do not believe that Allstate should be required to fund it. Therefore, her request for appeal expenses is denied.