Neutral Citation: 1997 ONICDRG 154

OIC A96-001077

ONTARIO INSURANCE COMMISSION

BETWEEN:

EMBARK MOUSSALI

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Issues:

The Applicant, Embark Moussali, was injured in a motor vehicle accident on July 6, 1992. He applied for statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under Ontario Regulation 672.¹ Allstate denied Mr. Moussali's claim for weekly income benefits in an Assessment of Claim by Insurer form dated August 18, 1992. An Application for Appointment of a Mediator was received by the Commission on November 28, 1994. At mediation, Allstate claimed the application for mediation was filed beyond the two year limitation period set out in section 26 of the Schedule. Mr. Moussali applied for arbitration on June 6, 1996 under the Insurance Act, R.S.O. 1990, c.I.8, as amended. Allstate relies on section 11 of the Dispute Resolution Practice Code (August 1995) and section 281(5) of the Insurance Act to preclude Mr. Moussali from proceeding to arbitration with his claim.

The issues in this hearing are:

1. Is Mr. Moussali precluded by section 26 of the Schedule, section 281(5) of the Insurance Act or section 11 of the Dispute Resolution Practice Code, (August 1995) from proceeding with his claim for weekly benefits?²

Result:

1. Mr. Moussali can proceed to arbitration in respect of his claim for weekly benefits from April 6, 1994 onwards. The claim for weekly benefits up to and including April 5, 1994 is barred by the applicable provisions.

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on April 21, 1997, before me, John Friendly, Arbitrator.

The hearing proceeded on the basis of documents filed by the parties. No witnesses were called. At my request a second day, May 2, 1997, was scheduled to hear witnesses on the issue of whether or not Mr. Moussali received the Assessment of Claim form. That hearing date was cancelled when the Applicant agreed that he had personally received and reviewed the Assessment sometime shortly after it had been mailed to his lawyer.

The hearing on the main issue was scheduled to proceed before Arbitrator Jones on June 24, 1997. To avoid any unnecessary inconvenience to the parties, I rendered my decision by letter dated June 11, 1997 with fuller reasons to follow. These are those reasons.

Present at the Hearing:

Mr. Moussali's Representative:

Steven Sieger Barrister and Solicitor

Allstate's Representative:

Colin S. Jackson Barrister and Solicitor

Exhibits:

Exhibit 1

Applicant's Book of Documents

Exhibit 2

Respondent's Book of Documents

Evidence and Findings:

Mr. Mousali was involved in a motor vehicle accident on July 6, 1992. On August 11, 1992, Mr. Moussali's lawyer at that time, sent an Application for Accident Benefits to Allstate.³ The Assessment of Claim by Insurer is dated August 18, 1992. The form indicates the entire claim for weekly benefits is denied. The explanation is as follows:

Not applicable while on Workers' Compensation as per section 2.49, page 9, of the auto policy. (Please advise of any changes to entitlement of workers' compensation benefits).

Mr. Moussali retained his current lawyers on April 1, 1993. On his behalf, they submitted a second Application for Benefits on May 19, 1993. The Insurer did not send a new Assessment of Claim form in response.

Mr. Moussali argued that Allstate was obligated to respond to the second Application for Accident Benefits. I disagree. There was no suggestion that the second application put forward a new or different claim for benefits. I find that Mr. Mousali and his lawyers understood that the reasons given for the refusal to pay benefits in the initial Assessment were still operative and relevant.

This is borne out by subsequent events. In August and September of 1993, the Insurer and Mr. Moussali's lawyers discussed the status of the Workers' Compensation claim. A letter confirming that Workers' Compensation ("WCB") benefits had stopped on November 17, 1992 was sent by Mr. Moussali's lawyers to the Insurer.⁴ In response Allstate sought more particulars. There was a delay in verifying the information about the WCB claim because Mr. Moussali was out of the country. He did not return to Canada until March 1994.

Shortly after Mr. Moussali returned from Morocco, his lawyers informed Allstate that Mr. Moussali's WCB benefits had been reinstated retroactive to November 17, 1992, but that the benefits would terminate on April 5, 1994. They asserted a revised claim for weekly benefits from April 6, 1994 onwards.⁵ The response from Allstate dated March 16, 1994 indicates that the file would be reopened. Allstate asked for authorization to obtain the WCB file directly.⁶Allstate also requested and was provided with relevant medical documents.

On August 24, 1994, the adjuster handling the file called Mr. Moussali's lawyers. According to the memorandum to the lawyer's file of the same date,⁷ the adjuster was maintaining a denial of benefits to Mr. Moussali.

The adjuster sent his written reasons for the denial by letter dated August 30, 1994.⁸ It states:

Please be advised that I will be maintaining the denial decision (previously conveyed to Ellen of your office via telephone on May 19, 1994) with respect to your previous request for payment of accident benefits to Embark Moussali, effective April 6, 1994 onwards, in connection with the above-mentioned matter.

The adjuster sets out in detail the six reasons why the claim is being denied. Not one of those reasons concerns the receipt of workers' compensation benefits.

At the bottom of the same letter, in a postscript, the adjuster writes:

Given that it appears that you are now barred from exercising Mediation and Arbitration proceedings..! suggest that you follow-up with the litigation specialist to address any outstanding issues which you deem unresolved in connection with your request for accident benefits subsequent to (and including) April 6, 1994.

The law

For the purposes of this decision there is no important difference between section 11 of the Code, section 26 of the Schedule or section 281(5) of the Insurance Act.⁹ Each of these provisions provide for a two year limitation period which commences from "the insurer's refusal to pay." The parties relied on previous arbitral jurisprudence applicable to sections 26 and 281(5), and I have treated the parties' submissions as referable to each of the three applicable provisions interchangeably.

I agree with arbitrators who have held that the insurer must show it has communicated a clear and unequivocal refusal to pay together with reasons for the refusal in writing. I also agree that I must consider if the insurer is estopped from raising the limitation period because the applicant reasonably relied on the insurer's actions or promises to his or her detriment.¹⁰

The Insurer relies on the Assessment of Claim form. It says it is a clear and unequivocal refusal to pay benefits. Mr. Moussali, on the other hand, argues the Assessment of Claim form was ambiguous or vague. He maintains the first clear refusal was contained in the adjuster's letter dated August 30, 1994.

The Application for Mediation was received by the Commission November 28, 1994, and the Application for Arbitration was received June 7, 1996. On its face, Mr. Moussali's applications for mediation and arbitration are both out of time if the limitation period is calculated from the time he received the Assessment of Claim form. There would be no bar to proceeding, if time is calculated from the date of the adjuster's August 30, 1994 letter.

Clear and unequivocal refusal

I find the Assessment of Claim form contains a refusal to pay which is unmistakably "clear and unequivocal." The form contains a tick box section which is introduced by these words:

The insurer has reviewed your application for no-fault benefits and has assessed your claim below. Where the insurer has denied a benefit claim entirely or in part, this is notice to you of a denial of a claim.

Under the heading "Weekly Income Benefits" the box which has been chosen indicates: "Entire Claim Denied". The form then indicates: "The insurer will pay the amount of $ 0".

The explanation section (quoted again for convenience) states:

Not applicable while on Workers' Compensation as per section 2.49, page 9, of the auto policy. (Please advise of any changes to entitlement of workers' compensation benefits).

Section 2.49 of the policy is identical to section 20 of the Schedule:

The insurer will not 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 worker's compensation law or plan.

Although I find the refusal to be clear and unequivocal, the refusal itself is conditional on Mr. Moussali's continued entitlement to (or receipt of) WCB benefits. The final sentence of the explanation implies that entitlement to weekly income benefits will be considered afresh as soon as entitlement to workers' compensation benefits end.

Effect of the "conditional" refusal

In March 1994, Mr. Moussali informed the Insurer his WCB benefits would end on April 5, 1994. He asserted, at that time, a claim for benefits from April 6, 1994 onwards. In my view, the initial refusal was no longer applicable. The condition placed by the Insurer on its refusal had been met and it was incumbent on the Insurer to respond again in writing to this renewed claim. The Insurer did so on August 30, 1994.

I find that the Insurer considered and treated the claim for weekly benefits from April 6, 1994 onwards very differently from the claim for benefits up to and including April 5, 1994. It did so in a manner which was consistent with the initial conditional refusal.

This is not a situation, similar to that described in other arbitration decisions, where the applicant is asking the insurer to consider additional information, engage in discussions and negotiations or further investigate the claim for reconsideration of an initial decision to deny benefits. Unlike those decisions, in this case, the initial refusal was conditional. I find that the Insurer initially indicated, clearly and unequivocally, that it would entertain a claim for weekly benefits when Mr. Moussali's entitlement to workers' compensation benefits had ended. When Mr. Moussali's WCB benefits were about to end, he presented the Insurer with a revised claim (the April 6, 1994 claim) reflecting that fact. The Insurer was given access to the WCB file and apparently decided that the WCB claim no longer was a relevant reason for refusing to pay the benefits claimed. It accordingly treated the claim afresh. The letter of August 30, 1994 sets out a new decision with respect to a differently constituted claim.

Although the initial refusal of August 18, 1992 was superseded by a fresh denial on August 30, 1994 with respect to the April 6, 1994 claim, the initial denial still governs the dispute over entitlement to benefits prior to April 6, 1994. The pre-hearing letter notes that for the purposes of the scheduled Arbitration hearing Mr. Moussali is claiming weekly benefits under section 13 from July 13, 1992 and ongoing. Given the clear refusal by the Insurer, Mr. Moussali's claim for benefits for the period from July 13, 1992 until April 5, 1994 is barred by operation of the Insurance Act and the Schedule.

Mr. Moussali's claim for benefits from April 6, 1994 and onwards, however, is not precluded. This claim was refused by Allstate August 30, 1994. Both the mediation and the arbitration were commenced within two years of the August 30, 1994 refusal. The Insurer chose to consider his claim on a different footing when Mr. Moussali's WCB benefits ended. The Insurer indicated this to Mr. Moussali on its initial Assessment of Claim form, and I find that the Insurer expected Mr. Moussali to restate his claim when and if the condition set out in the refusal was met. Mr. Moussali availed himself of that opportunity.

My decision should not be read as indicating that an applicant can avoid statutory time limitations by simply changing the nature of his or her claim. Nor should the commencement of the running of the limitation period necessarily change every time there is a fresh reason to refuse the benefit claimed. In most cases the limitation period will run from the initial refusal without interruption. As Arbitrator Bayefsky stated in Veldhuizen and Coseco Insurance Company.¹¹

the section 26 limitation period runs continuously from the date of first refusal unless the applicant has been misled in subsequent dealings with the insurer, the applicant has been refused benefits following a section 16 return to work or school, or the applicant's benefits have in fact been reinstated.

While I agree with Arbitrator Bayefsky's general statement, I am mindful that compared to other arbitration decisions, Mr. Moussali's case is factually unique. The Insurer did not pay any benefits (and therefore I am not dealing with a termination of benefits or a claim for reinstatement of benefits). The Insurer provided what I have called a "conditional refusal" initially and, subsequently, issued a denial based on the merits of the claim. It should also be noted that while the conditional nature of the initial refusal is clear from the Insurer's choice of words, to some extent the conditional nature of the refusal is predicated on, and peculiar to, the nature of section 20 of the Schedule.

Estoppel

Even if I were wrong in this characterization of the initial refusal as conditional, on the evidence as I have found, the insurer would be estopped from relying on the limitation period to resist the claim for benefits beyond April 6, 1994. The Insurer represented that it would deal with Mr. Moussali's claim for weekly benefits once his entitlement to WCB benefits ended. Mr. Moussali acted on that representation, providing access to and information on the status of his WCB claim. The Applicant presented and the Insurer accepted, at the relevant time, that WCB benefits had terminated as of April 5, 1994. The Insurer then treated the claim on a different footing as of April 6, 1994. Mr. Moussali relied on this course of conduct and expected a determination on the merits of his claim from the Insurer. The Insurer first provided that evaluation on August 30, 1994 when it refused to pay the renewed claim. Mr. Moussali could reasonably expect that the time limits for his claim would run, not from the initial refusal, but from the fresh appraisal on the merits of his claim. While awaiting the Insurer's written response to the April 6, 1994 claim the initial time limitation period ended.

Conclusion

The Insurer in this case initially communicated a limited refusal. It was no less a refusal because it was conditional. In these circumstances, and to give full effect to the language of the applicable statutory provisions, the refusal must be dealt with on its own terms.

Expenses:

I heard no submissions from either party on this issue. In the circumstances, expenses will be determined by the Hearing Arbitrator.

Order:

1. Mr. Moussali can proceed to arbitration in respect of his claim for weekly benefits from April 6, 1994 onwards. The claim for weekly benefits up to and including April 5, 1994 is barred by section 26 of the Schedule, section 281(5) of the Insurance Act and section 11 of the Dispute Resolution Practice Code (August 1995).

August 15, 1997

John Friendly Arbitrator

Date

APPENDIX

Section 11 of the Dispute Resolution Practice Code:

11. Time Limits for Mediation or Arbitration

11.1 A mediation or arbitration must be started no later than:

(a) 2 years from the date the insurer refused to pay an amount claimed; or

(b) as provided in the Statutory Accident Benefits Schedule.

11.2 Despite Rule 11.1, an insured person may apply for arbitration within 90 days after the mediator reports to the parties in the Report of Mediator.

Section 26 of the Schedule:

Time Limits for Proceeding

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 further benefits.

(2) Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within 90 days after the mediator reports to the parties under subsection 280(8) of the Act. O. Reg.779/93, s.5.

Section 281(5) of the Insurance Act:

Limitation period

(5) A proceeding in a court or an arbitration proceeding in respect of statutory accident 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 Statutory Accident Benefits Schedule. R.S.O. 1990, c. I.8, s. 281 (5); 1993, c. 10, s. 1.

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. 2The application was originally for weekly income benefits under section 12 of the Schedule. At the pre-hearing, the parties agreed to treat the claim as one for weekly benefits under section 13 of the Schedule. For the purposes of this decision I have used the term weekly benefits.
3. 3Exhibit 1, Tab 1
4. 4Exhibit 1, Tab 6
5. 5Exhibit 1, Tab 8
6. 6Exhibit 1, Tab 9
7. 7Exhibit 1, Tab 10
8. 8Exhibit 1, Tab 11
9. 9The full text of these provisions can be found in the Appendix.
10. 10The leading case is Zeppieri and Royal Insurance Company of Canada (February 17, 1994), OIC A-005237, affirmed on appeal (December 22, 1994), P-005237
11. 11(October 12, 1995), OIC A-015549