Neutral Citation: 1997 ONICDRG 2

OIC A96-000114

ONTARIO INSURANCE COMMISSION

BETWEEN:

REZA SHIRANI

Applicant

and

WELLINGTON INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Reza Shirani, was injured in a motor vehicle accident on December 21, 1991. He applied for and received weekly income benefits from Wellington Insurance Company ("Wellington"), payable under section 12 of Ontario Regulation 672.¹ Weekly income benefits were terminated by Wellington on May 31, 1992, by letter dated June 3, 1992, when Mr. Shirani returned to work. In February 1995 Mr. Shirani applied for further benefits. Wellington alleged that Mr. Shirani had applied later than two years after the denial of the claim and that he was therefore barred from proceeding with his claim. The parties were unable to resolve their dispute through mediation and Mr. Shirani applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Act").

The issues in this hearing are:

1. Is Mr. Shirani precluded from proceeding to arbitration with regard to his claim for weekly income benefits by reason of the provisions of section 26 of the Schedule and section 281(5) of the Act?

Mr. Shirani also claims his expenses incurred in the hearing.

Result:

1. Mr. Shirani is precluded by section 281(5) of the Insurance Act and section 26 of the Schedule from proceeding to arbitration with regard to his claim for weekly income benefits.

2. Mr. Shirani is entitled to his expenses incurred in the hearing.

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on Thursday, July 25, 1996, before me, David Evans, Arbitrator.

Present at the Hearing:

Applicant:

Reza Shirani

Wellington's Representative:

Edmund W. Kent Barrister and Solicitor

Wellington's Officer:

Vicky Vlahakos

Ms. Feroza Bobert was also present at the hearing.

Witnesses:

Mr. Reza Shirani

Ms. Vicky Vlahakos

Exhibits:

Exhibit 1

Ontario Automobile Insurance Application for Accident Benefits, Employer's Confirmation of Income, and Medical or Psychological Report

Exhibit 2

Letter dated December 31, 1991, from Ms. Vicky Vlahakos to Mr. Shirani

Exhibit 3

Letter dated January 30, 1992, from Ms. Vlahakos to Mr. Shirani

Exhibit 4

Intermediate Attending Physician's Statement by Dr. E.L. Jacobson dated February 5, 1992

Exhibit 5

Note of Mr. Shirani date-stamped May 26, 1992, with attached note of Dr. Jacobson dated May 11, 1992

Exhibit 6

Letter dated June 3, 1992, from Ms. Vlahakos to Mr. Shirani

Exhibit 7

Ontario Automobile Insurance Medical or Psychological Report by Dr. Jacobson dated March 6, 1995, and attached fax cover sheet

Exhibit 8

Letter dated April 17, 1995, from Ms. Vlahakos to Mr. Shirani

Evidence and Findings:

Mr. Shirani was injured in a motor vehicle accident on December 22, 1991. He received weekly income benefits from Wellington through May 31, 1992: his final cheque for the benefits arrived with a letter from Wellington dated June 3, 1992. In February 1995 Mr. Shirani contacted Wellington, seeking reinstatement of his benefits. Wellington refused this request by letter dated April 17, 1995, on the basis that more than two years had passed since its refusal to pay further benefits.

Mr. Shirani testified, as did Ms. Vicky Vlahakos, accident benefits adjuster for Wellington. The parties did not disagree on any essential facts. Mr. Shirani did not dispute the documentation filed by Wellington.

Mr. Shirani testified that there had been some confusion about who should pay his weekly income benefits. By the end of January 1992 it was determined that the weekly income benefits should come from Wellington.

Ms. Vlahakos kept in touch with Mr. Shirani monthly in the first half of 1992. Mr. Shirani's health improved during that period. On May 11, 1992, his family physician, E.L. Jacobson, wrote that Mr. Shirani would be able to return to work by the end of May 1992. Mr. Shirani testified that he did return to work at the end of May or start of June. After Mr. Shirani sent Dr. Jacobson's note to Ms. Vlahakos, she replied by the letter of June 3, 1992, enclosing his "final cheque" and noting that Dr. Jacobson had indicated that he would be able to return to work at the beginning of June. Mr. Shirani confirmed that he received the letter and the cheque and knew that his benefits were terminated because his doctor had cleared him to return to work.

Mr. Shirani had no further contact with Wellington until February 1995. During that period he had worked for a number of months, with some periods off work. He was at work on December 8, 1994, at his occupation as a taxi driver, when he injured his back while lifting a suitcase. As a result, he stopped working and decided to contact Wellington again, with the results noted above.

Limitation Period

The relevant limitation period for commencing an arbitration is set out in subsection 281(5) of the Insurance Act:

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.

The Schedule provides no longer period (except in limited circumstances where a mediation is completed late in the two-year period). Ms. Vlahakos' letter of June 3, 1992, clearly met the notice requirements of subsection 24(8) of the Schedule, as Mr. Shirani acknowledged when he testified that he knew his benefits were terminated and the reason why. Accordingly, I find there was a refusal to pay benefits at the beginning of June 1992. The application for arbitration is date-stamped November 28, 1995. Since Mr. Shirani did not contact Wellington nor start his mediation or arbitration proceedings until well after the two-year period, it appears at first glance that the remaining issue is whether Wellington can rely on the limitation period.

Can Wellington Rely on the Limitation Period?

Mr. Shirani argued that Wellington should not be able to rely on the period, in that Ms. Vlahakos did not warn him of the two-year limitation period. I can find no obligation placing that burden on the Insurer in either the Insurance Act or the Schedule. I agree with the following statement by Arbitrator Bayefsky in Ingrid Veldhuizen and Coseco Insurance Company.²

Finally, I reject the suggestion that an insurer can only assert the limitation period if it has first advised the applicant of the time limit. The legislation is clear that the two year period begins to run when benefits have been refused, not when the insurer advises the applicant of his or her rights to mediation and of the existence of the time limit. An insurer would only be estopped from asserting the limitation period if it had actively led the applicant to believe that the time limit did not apply or had been waived. In light of a clear and unequivocal refusal of benefits, a direct misrepresentation by the insurer would be required to preclude it from invoking what is otherwise a clear statutory restriction on the right to mediation.

There was no suggestion of misrepresentation or estoppel in the evidence, and accordingly I find that Mr. Shirani was not entitled to a warning of the two-year limitation period.

That would seem to be the end of the matter, but shortly after this hearing concluded, Arbitrator Renahan issued the decision in Kirkham and State Farm Mutual Automobile Insurance Company³

Kirkham and State Farm

In Kirkham, Arbitrator Renahan held that an applicant would be entitled to benefits starting from two years prior to the date of filing for arbitration. He based his reasoning on case law decided before the Schedule came into effect — case law that held that the entitlement to weekly benefits "accrues" from week to week as benefits became payable — notwithstanding the changes in the Insurance Act that he discusses in his decision.

Arbitrator Jones has since written Abdi and Wawanesa Mutual Insurance Company,⁴ in which he rejects Arbitrator Renahan's decision on the grounds that a plain reading of section 281(5) suggests that an applicant has two years from the insurer's date of refusal to pay a benefit to commence a proceeding in the courts or by way of arbitration.

I accept Arbitrator Jones's conclusions. However, I feel I must deal with one particular aspect of Arbitrator Renahan's decision in light of the facts in this case. In particular, he seems to suggest that, where an applicant returns to work after a refusal of benefits — as happened in this case — the running of the limitation period is suspended until there is a further refusal. That would mean the limitation period did not start to run until April 1995, when Wellington wrote Mr. Shirani refusing his application for a resumption of benefits. Since Mr. Shirani filed for arbitration in November 1995, in this view he was well within time for filing.

Subsection 26(1) of the Schedule sets out the limitation period. Arbitrator Renahan noted that subsection 26(1) adds a phrase that is not in section 281(5) of the Act:

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.

[Emphasis added]

I emphasize that the return to an occupation or employment must be "as permitted by section 16." Section 16, titled "Temporary Return to School or Work," provides as follows:

16.-(1) Subject to section 15⁵ and subsection (3), a person receiving a benefit under this Part [Part IV — titled "Weekly Benefits"] 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 employment⁶ 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.

(3) The insurer is not required to pay weekly benefits under section 13 for any week in which the insured person attends school.

Arbitrator Renahan wrote that section 16 suspends the running of the limitation period where a person works during the first two years following the accident and where the insurer has delivered a refusal to pay further benefits. He concluded that the second part of section 26(1) is necessary to end the suspension of the running of the limitation period, in that — in his view — it specifies that the two-year limitation period starts to run again on the insurer's refusal to pay further benefits.

In his decision, Arbitrator Renahan only referred to a person returning to work during the first two years after the accident. However, several decisions have held that subsection 16(2) for the post-two year period creates only a rebuttable presumption against entitlement (Rene G. Lafleur and Zurich Insurance Company,⁷ William J. Whyte and Metropolitan Insurance,⁸ Phillip Ralston and Progressive Casualty Insurance Company⁹). The combined effect of these decisions and Kirkham, then, suggests to me that in effect there would be no limitation period: an applicant could return to work after receiving a termination notice and then years later — as in the present case — seek further benefits. The applicant might have to rebut the presumption against entitlement set out in Lafleur, but no limitation period in and of itself would prevent the application for arbitration after the insurer's likely refusal to pay.

It is not clear to me that section 16 suspends the limitation period set out in the earlier part of subsection 26. In fact, it may be that sections 16 and the latter part of 26(1) could work to impose a limitation period in certain circumstances in the absence of an outright refusal to pay benefits. Suppose the person had returned to work part-time and then stopped working, claiming the injuries from the accident prevent him or her from working at all. The insurer continues to pay benefits, but at a reduced level, claiming the person could work part-time. Benefits never cease, so the limitation set out in the first part of subsection 26(1) would never commence, but the second phrase of subsection 26(1) would impose upon the person a time limit of two years from that refusal to pay further benefits to seek a resumption of the full benefits.

In any event, as I read section 16, both subsections 16(1) and 16(2) only apply to "a person receiving a benefit under this Part." Surely, if a person has received an insurer's notice of termination of benefits, that person is no longer a person receiving a weekly benefit. Therefore, the requirements of subsections 16(1) and (2) are not met — or, in the phrasing of subsection 26(1), the return to work after the termination of benefits is not "as permitted by section 16." Consequently, the only relevant limitation period is that as set out in subsection 281(5) of the Act and in the first part of subsection 26(1) of the Schedule: the claim must be brought within two years of the insurer's refusal to pay further benefits.

As more than two years passed after Mr. Shirani received the notice of refusal before he applied for arbitration, he is precluded from proceeding with the arbitration hearing.

In passing, my reading does suggest that a person who did not initially claim a benefit under Part IV because he or she continued working for some period would also not be a "person receiving a benefit" under that Part. Accordingly, section 16 would not apply in that circumstance either. The situation may be different where a person has returned to work or school and has not received the insurer's subsection 24(8) written refusal to pay. In that case it appears the person continues to be deemed to be "receiving a benefit" even if the section 15 deduction reduces the benefit to zero or subsection 16(3) excuses the insurer from having to pay a section 13 benefit while the person attends school. The defining moment, then, would be the earliest moment that the insurer refuses to pay benefits: if it waits until the person stops going to work or school to refuse further benefits, the limitation period runs from that point; if it delivers a refusal and the person then starts to work or go to school, the limitation runs from that refusal and is not suspended while the person works or attends school. However, it is not necessary for me to deal with all these issues in this decision.

Expenses:

I exercise my discretion under section 282(11) to allow Mr. Shirani his expenses incurred in the arbitration.

Order:

1. Mr. Shirani is precluded from proceeding to arbitration with respect to income replacement benefits.

2. Mr. Shirani is entitled to his expenses incurred in respect of the arbitration.

January 7, 1997

David Evans Arbitrator

Date

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 Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2(October 12, 1995), OIC A-015549
3. 3(August 15, 1996), OIC A96-00141
4. 4(November 21, 1996), OIC A96-000681
5. 5Section 15, entitled "Deductions," provides as follows: The insurer may deduct from any benefit payable under this Part 80 per cent of any income received or available from any occupation or employment subsequent to the accident.
6. 6I do not know if any meaning is to be ascribed to the use of the word "work" in subsection (1) where in subsection (2) the words "an occupation or employment" appear.
7. 7(May 11, 1995), OIC A-004141
8. 8(April 30, 1996), OIC A-009277
9. 9(August 8, 1995), OIC A-004609