Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1997 ONICDRG 204

Appeal P97-00025A

Appellant

and

Respondent

Before:

Frederika M. Rotter, Director's Delegate

Counsel:

Kristopher H. Knutsen, Q.C. (for Shannon Kuchiak) Gregory R. Birston (for Wawanesa Mutual Insurance Company)

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

The appeal is allowed. Paragraph 1 of the arbitrator's order dated April 21, 1997, is rescinded. The following order is substituted:

Ms. Kuchiak is entitled to interest pursuant to section 68 of the Statutory Accident Benefits Schedule - Accidents After December 31, 1993 and Before November 1, 1996 on the $10,000 dependant's benefit received under paragraph 51(4)(a) from 30 days after April 27, 1994, until 30 days after March 14, 1995.

Shannon Kuchiak is entitled to her reasonable appeal expenses, payable by Wawanesa Mutual Insurance Company.

December 8, 1997

Frederika M. Rotter Director's Delegate

Date

This appeal involves a claim for interest on death benefits paid to the appellant, Shannon Kuchiak. Ms. Kuchiak applied for benefits following the death on March 10, 1994, of her common-law spouse, Michel Proulx. Wawanesa paid a $50,000 benefit to Ms. Kuchiak under paragraph 51(1)(b) of Ontario Regulation 776/93, the Statutory Accident Benefits Schedule - Accidents After December 31, 1993 and Before November 1, 1996 (the "Schedule"), as a surviving spouse. Ms. Kuchiak subsequently claimed she was financially dependent on Mr. Proulx and accordingly was also entitled to a death benefit as a dependant under paragraph 51(4)(a). Wawanesa eventually allowed this claim and paid the additional $10,000 benefit to Ms. Kuchiak. The remaining dispute concerns her claim for interest on this $10,000 benefit.

Michel Proulx was eighteen years old when he was killed in an automobile accident. Ms. Kuchiak was seventeen years old. She was living with Mr. Proulx and was nine months pregnant with their daughter Alexa, who was born shortly after her father's death.

At the time of the accident, Ms. Kuchiak was estranged from her mother and was a ward of the Children's Aid Society. Mr. Proulx was unemployed and receiving welfare for himself and Ms. Kuchiak.

After the fatal accident, Ms. Kuchiak suffered a mild nervous breakdown. She reconciled with her mother, who handled the insurance claims on her behalf. She also retained Mr. Knutsen as her lawyer.

On April 27, 1994, Mr. Knutsen submitted a "Death or Funeral Benefit Application" to Wawanesa on behalf of Ms. Kuchiak and her daughter Alexa. The form was accompanied by a covering letter enclosing correspondence confirming that Ms. Kuchiak and Mr. Proulx were receiving general welfare assistance as a common-law couple at the time of Mr. Proulx's death.

In July 1994, Wawanesa paid a $50,000 death benefit to Ms. Kuchiak as a surviving spouse. It determined that dependant's benefits were not payable to Alexa Proulx, who was unborn at the time of the accident.

On March 14, 1995, Mr. Knutsen sent Wawanesa a second application form requesting dependant's death benefits under paragraph 51(4)(a) for Ms. Kuchiak. After further investigation and correspondence between the parties, Wawanesa paid Ms. Kuchiak a dependant's death benefit of $10,000 on March 1, 1996. In November 1996, Wawanesa calculated and paid the interest owing on that benefit, for the period between March 14, 1995 and March 1, 1996.

At the arbitration, Ms. Kuchiak took the position that the interest in respect of the dependant's death benefit should have been calculated from the date she first applied for benefits, April 27, 1994.

The appeal proceeded by way of written and oral submissions. On appeal, Ms. Kuchiak asserts that the arbitrator made a number of errors and therefore her decision cannot stand. Most of the Appellant's arguments were generally directed towards the arbitrator's findings of fact, and I deal with them briefly. However, the question which she raised about the insurer's failure to provide information is a serious concern.

A. Arbitrator's findings of fact

The Appellant claims the arbitrator wrongly held that she (Ms. Kuchiak) had the legal burden to show that the interest on her dependant's death benefit under 51(4)(a) began to run 30 days after the date of her initial application for benefits.

It is trite law that, in general, and as a matter of common sense, an applicant or plaintiff in a civil case has the burden of proving all the facts essential to his or her claim.¹ Since Ms. Kuchiak claims that her initial application for benefits included or contained sufficient information to allow Wawanesa to act upon or respond to her claim for a dependant's death benefit, she must satisfy the arbitrator that this is so. The arbitrator was not satisfied and found that Ms. Kuchiak had not discharged her burden of proof. I find no error in this conclusion.

In this case the arbitrator concluded that two applications for death benefits were made. She considered the information contained both in the initial application and in the accompanying letter when determining whether the material provided was sufficient to support or demonstrate a claim for a dependant's death benefit by Ms. Kuchiak. She concluded that nothing in either document indicated that Ms. Kuchiak was claiming a dependant's death benefit in addition to a spousal benefit.

The Appellant submits that the application form and letter together provide enough information to establish a "prima facie" case that she is entitled to a dependant's benefit. Accordingly, she says, Wawanesa should have responded to her application by considering whether she would have been eligible for such a benefit.

I do not agree. The information provided in the original application documents the existence of a common-law relationship and supports the claim for a spousal benefit. It does not, on its face, support a claim for a dependant's benefit. The benefit is not explicitly claimed and no evidence or proof of Ms. Kuchiak's dependancy is offered. Nor can Ms. Kuchiak's financial dependancy on Mr. Proulx be inferred solely from the fact that the couple was receiving welfare.²

At the arbitration hearing the Appellant also argued that regardless of what was contained in the documents, Wawanesa "knew" that Ms. Kuchiak was financially dependent on Mr. Proulx. At the hearing, Ms. Kuchiak submitted that her mother had advised the adjuster that she (Ms. Kuchiak) had been dependent on Mr. Proulx.

The arbitrator wrote:

... I give little weight to Ms. Kuchiak's submission that her mother had informed the adjuster of Ms. Kuchiak's dependency on Michel Proulx and that this could be inferred from the adjuster's correspondence to Wawanesa.

I note that Ms. Kuchiak's mother did not testify. I was told that there was no particular reason why she was not called as a witness. I, therefore, draw an adverse inference from the fact that Ms. Kuchiak's mother did not testify.

In my view, after reviewing the adjuster's correspondence, the only thing that can be reasonably inferred is that he viewed the application of April 27, 1994 as one for death benefits for Ms. Kuchiak as the common-law spouse of Mr. Proulx, and dependent benefits for her daughter, Alexa Proulx. Nothing in the correspondence suggests that the adjuster was aware that Ms. Kuchiak was making an additional claim as a dependant of Mr. Proulx, pursuant to section 51(4)(a).

The Appellant submits that the arbitrator erred in drawing this adverse inference. I do not agree.

The arbitrator gave "little weight" to the submission that Wawanesa "knew" about the dependancy for two reasons:

(1) there was no reliable evidence that the information had been transmitted: no direct evidence as opposed to hearsay evidence or submissions;

(2) there were no grounds for drawing that inference from the correspondence, contrary to what was suggested by Ms. Kuchiak.

The adverse inference objected to did not materially affect either the outcome of the arbitration or the arbitrator's assessment of the evidence. Even without the adverse inference, the arbitrator was not obliged to attribute any weight or significance to Ms. Kuchiak's uncorroborated hearsay submissions. The arbitrator found no corroborative material in the correspondence, and drew the appropriate conclusions from the evidence before her.

I find no merit in the Appellant's further submission that the arbitrator should instead have drawn an adverse inference from the adjuster's failure to testify as to his knowledge of the dependancy. Wawanesa was under no obligation to bring evidence on this point, or to "disprove" an otherwise unsubstantiated assertion.

To summarize, the arbitrator found that in her first application Ms. Kuchiak failed to present sufficient information to support a claim for a dependant's death benefit. She found that such information was only presented in the second application. Having reviewed the record, I agree with that assessment.

B. Wawanesa's failure to provide information

The Appellant argues that she should not be penalized for any deficiency in the content of her initial application because Wawanesa did not provide her with any information to assist her in applying for benefits, as required under paragraphs 59(2)(b) and (c) of the Schedule. The section provides:

59.-(1) A person who wants to apply for benefits under this Regulation shall notify the insurer within thirty days after the circumstances arose that gave rise to the entitlement to benefits, or as soon as practicable thereafter.

(2) The insurer shall promptly provide the person with,

(a) the appropriate application forms;

(b) a written explanation of the benefits available under this Regulation; and

(c) written information to assist the person in applying for benefits, including information to assist the person in making any possible elections.

The record in this case shows that, in response to requests by Ms. Kuchiak's counsel, Wawanesa forwarded to counsel two accident benefits application packages and a Death Benefits Application form.³ However, it is common ground that, contrary to the requirements of the Schedule, no written information or explanation about the benefits available was ever sent to Ms. Kuchiak or her representatives.

At the time of this fatal accident, a new Statutory Accident Benefits Schedule had just been introduced, as of January 1, 1994.Wawanesa was aware of the new regulations governing its business and of its increased responsibilities under the regulations. The record shows that Wawanesa forwarded the appropriate application forms for use under the new regulation, but failed to forward any informational material to Ms. Kuchiak.

The arbitrator found that, in this case, Ms. Kuchiak's counsel, and not the insurer, had the primary responsibility to inform Ms. Kuchiak of her rights, and to advise and assist her in making the appropriate choices in applying for statutory accident benefits. Thus, she did not feel it was appropriate to impose any sanction for Wawanesa's breach of its duty to provide information.

In my opinion, this approach does not adequately address the issue of an insurer's responsibility to comply with its obligations under subsection 59(2). The Schedule mandates that information be forwarded to applicants for benefits. It does not create an exception for applicants who are represented by counsel. Accordingly, I conclude that Wawanesa breached its obligation to provide an explanation of the benefits available and information under subsection 59(2).

I also conclude that, here, Ms. Kuchiak may have been prejudiced by Wawanesa's failure to send the required information. Had she received an informational brochure⁴, she might well have been immediately alerted to the fact that it was open to her to apply for the dependant's benefit, as well as the spousal benefit.

In these circumstances, I conclude that Wawanesa, and not Ms. Kuchiak, should be responsible for the consequences of the delay in filing the application for benefits. While the Schedule does not specify the consequences of failing to provide explanatory material, the requirements of paragraphs 59(2)(b) and (c) must be given some meaning. Accordingly, I find that Wawanesa should pay interest on the $10,000 dependant's benefit from 30 days after April 27, 1994, until 30 days after March 14, 1995.

C. Special Award

The Appellant submits that if I found in her favour with respect to any outstanding amounts of interest owing, then I should also order a special award, in light of Wawanesa's delay in paying some of the interest owing until after the arbitration prehearing discussion.

Although I find that Wawanesa failed to meet its obligations under the regulation, its conduct was not unreasonable in other respects. After receiving notice of the dependant's claim, Wawanesa investigated it and ultimately paid the benefit and interest it felt was due. In the circumstances, it would not be appropriate to order a special award.

IV. EXPENSES

Ms. Kuchiak successfully raised novel and significant issues and is entitled to her reasonable appeal expenses. If the parties are unable to agree on the amount, an assessment may be arranged through the Registrar.