Neutral Citation: 1997 ONICDRG 227

OIC A96-001341

ONTARIO INSURANCE COMMISSION

BETWEEN:

LYNE FOURNIER

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Issues:

The Applicant, Lyne Fournier, was injured in a motor vehicle accident on June 25, 1991. She applied for and received statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under Ontario Regulation 672.¹ Zurich terminated weekly benefits on June 25, 1994. Ms. Fournier made an application for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended, which was received at the Ontario Insurance Commission on August 19, 1996. Zurich submits that the application for arbitration cannot proceed as it was made beyond the two-year limitation period prescribed in the Insurance Act and the Schedule.

The issue in this hearing is:

Was Ms. Fournier's application for arbitration made out of time?

Zurich also seeks an award under subsection 282(11.2) of the Insurance Act in the amount of its assessment.

Result:

Ms. Founder's application for arbitration was made out of time, and therefore cannot proceed to a hearing.

Hearing:

The hearing was held by telephone conference call on February 18, 1997, before me, Frederika Rotter, Senior Arbitrator.

Participating in the Hearing:

Ms. Fournier's Representative:

Denis Cadieux Barrister and Solicitor

Zurich's Representative:

Marla N. Cox Barrister and Solicitor

The written material filed and authorities relied on are listed in Appendix A .

Evidence and Findings:

The sole issue in this preliminary hearing is whether Ms. Founder's application for arbitration was made out of time. Ms. Fournier was involved in a motor vehicle accident in June 1991 and received weekly benefits under section 13 of the Schedule for 156 weeks. Her benefits were terminated effective June 25, 1994. Her application for arbitration was received by the Commission on August 19, 1996.

The applicable legislation, subsection 281(5) of the Insurance Act states:

281.--(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. 1990, c. 2, s. 65, part.

The two year time limit for arbitration or litigation set out in subsection 281(5) has not been extended under the Schedule. It is well-settled law that an arbitrator has no discretion to extend this prescribed time limit.²

A number of arbitration decisions have dealt with the question of the timeliness of an application. I summarize the case law as follows: to determine whether the time limit for an application has been exceeded in a particular instance, it must first be established whether and when there was a refusal by the insurer to pay benefits. The insurer's refusal must be clear and unequivocal, and must be communicated to the insured person in writing. The limitation period runs from the date of the refusal, and the insurer may generally rely on it unless it can be shown that in subsequent dealings between the parties, the insurer actively led the applicant to believe that the time limit did not apply or had been waived.³

In this case, the parties disagree about when the insurer's refusal to pay benefits was clearly communicated to Ms. Fournier, and accordingly when the two year period starts to run. The Insurer relies on a refusal letter dated June 9, 1994 and attached "Assessment of Claim by Insurer" of the same date. Ms. Fournier asserts that the refusal was only clearly and unequivocally communicated in a revised "Assessment of Claim by Insurer" dated December 21, 1994. There was no dispute concerning the receipt of the communication or calculation of the 156 week period, under the Schedule, nor was the issue of a rolling limitation period raised before me.

The evidence in this case was presented by way of affidavit and supporting documents.

The documents before me indicate that Zurich first advised Ms. Fournier in a letter dated October 22, 1993 that the test for entitlement to ongoing benefits changed at the 156-week mark. Zurich stated that Ms. Fournier would not qualify for benefits beyond June 25, 1994 (the 156-week mark).

Prior to the end of the 156 week period, Mr. Philip Cutfield, Zurich's Claims Supervisor in its accident benefits unit in Ottawa, wrote to Ms. Fournier's legal representatives on June 8, 1994 to confirm the arrangements for a medical examination of Ms. Fournier scheduled for June 10, 1994. He also indicated that Ms. Fournier's file would be transferred from Ottawa to a centralized unit in Toronto. In the final paragraph of his letter he wrote:

We would confirm that final determination as to Madame Fournier's entitlement to disability and dependent care income benefits beyond the 156 week mark of the life of this claim will not be made by the undersigned but rather the accident benefits claims unit in Toronto.

I find that this paragraph was written on the understanding that Ms. Fournier would attend the medical appointment scheduled for June 10, 1994. Accordingly, the "final determination" as to Ms. Fournier's benefits would normally be made some time after Zurich had received the medical report.

However, Ms. Fournier subsequently advised that she would not attend the appointment which had been scheduled. The material before me indicates that on June 9, 1994, Zurich's Claims Supervisor spoke twice with Ms. Corinne Cameron, a legal assistant in the law firm representing Ms. Fournier. Ms. Cameron made notes of these conversations. The first line of her notes dated June 9, 1994 states "if benefits suspended he will have to send notice."⁴ Ms. Cameron's notes then indicate that Mr. Cutfield was "trying to accommodate" Ms. Fournier by rescheduling the medical appointment to August 12, 1994. A further note on the following page, also dated June 9, 1994 indicates "Assessment of Claim Form will be sent (she'll be cut off June 25, 1994)."

Zurich sent Ms. Fournier's legal representatives a letter dated June 9, 1994, and an Assessment of Claim by Insurer of the same date, both signed by Mr. Cutfield in his capacity as Supervisor, Accident Benefits Unit. In the letter Mr. Cutfield refers to the "conversation with Corinne of your office of June 9, 1994." The letter states:

Our assessment is that Mme. Fournier does not meet the test of disability beyond June 25th, 1994. Further, we find that she has not complied with her obligations under section 2.55 of the policy. Accordingly, no further weekly income benefits are payable under section 2.29 of the policy. Additionally, no further dependant care benefits, under section 2.32 of the policy, are payable as they are tied to section 2.29 benefits.

The Assessment of Claim by Insurer states:

Please see our covering letter. Your motor vehicle accident related injuries do not continuously prevent you from engaging in substantially all of the activities in which you would normally engage. Also, you have not made yourself available for examination by a qualified medical practitioner, upon reasonable notice.

I find that the letter and the accompanying form constitute clear and unequivocal notice that Ms. Fournier's weekly benefits were being terminated on June 25, 1994. These documents, on their face, are unambiguous and not susceptible of misunderstanding. Moreover, Ms. Cameron's notes clearly show that she understood that Ms. Fournier would be "cut off June 25, 1994."

Accordingly, I do not accept Ms. Cameron's affidavit evidence, sworn February 13, 1997, stating that "It was our understanding that the benefits would be re-instated if Ms. Fournier attended for a defence medical before Dr. Racine on August 12, 1994."

That understanding is neither recorded nor alluded to, either in Ms. Cameron's contemporaneous notes or in the correspondence of the same day from Mr. Cutfield, referring to their conversation.

Ms. Fournier's representative subsequently wrote to Mr. Cutfield on June 13, 1994, "further to your letter of June 9, 1994." He confirmed that Ms. Fournier would attend the rescheduled medical appointment, requested a copy of the Ontario Automobile Policy O.P. F.1, applicable in this case, and also requested "the documents needed to appeal your decision of June 9, 1994 concerning Mrs. Fournier (sic) benefits."

In response to this letter, Zurich sent a handwritten memorandum dated July 25, 1994, signed by Brigitte Riggs, advising that "the undersigned has taken over handling of this file. As per your request I have enclosed the auto policy and highlighted the areas concerned."

In her affidavit, Ms. Cameron states that by the time Zurich's memo was received, on July 28, 1994, "Ms. Fournier had booked another appointment for a defence medical, and it was our understanding that the suspension of the benefits had been lifted."

I find that nothing in the documented correspondence between the parties supports such an understanding. On the contrary, I find from the correspondence that Ms. Fournier and her representatives understood the decision to terminate benefits made by Zurich, and sought to "appeal" it.

Ms. Cameron, in her affidavit, refers to the June 8, 1994 letter of Mr. Cutfield where he indicates that the final determination as to ongoing benefits would be made by the accident benefits claims unit in Toronto. She suggests that the June 9, 1994 documents signed by Mr. Cutfield were not understood to be a clear notice of termination of benefits, since they did not originate from Toronto. I do not accept this proposition.

The June 8, 1994 letter was written further to a telephone conversation of June 6, 1994 and refers to the medical appointment scheduled for June 10, 1994. It advises that the file is to be transferred to the Toronto unit. Assuming that the medical report was received by Zurich at some point after June 12, 1994 it is logical that the Toronto unit would then consider the report and base its assessment of the claim on that report.

The June 9, 1994 correspondence was created by Zurich after it learned that Ms. Fournier would not attend the medical appointment scheduled. Zurich, accordingly, chose to terminate Ms. Fournier's benefits based on the medical information it then had before it, and also based on Ms. Fournier's failure to attend the medical examination. I find that it gave clear notice of its decision. For the reasons stated earlier, I do not accept the suggestion, made by Ms. Cameron in her affidavit, that it was "understood" that the termination was actually a temporary suspension, or that the benefits were terminated only because Ms. Fournier had missed the appointment, and would be automatically reinstated once she attended.

Zurich might have reconsidered its decision based on updated medical information obtained in the subsequently arranged medical appointment. However, nothing in the documentation before me (other than Ms. Cameron's assertions, made two and one half years after the fact) suggests that Zurich's decision of June 9, 1994 was less than a clear and unequivocal refusal to pay ongoing benefits after June 25, 1994. There is no suggestion in any of the correspondence or associated documents that the refusal was temporary, conditional, or otherwise qualified by any understandings between the parties. I find that the refusal to pay further benefits was appropriately communicated to Ms. Fournier through her representatives and was clearly understood as such.

Moreover, nothing in Zurich's conduct or in the documented dealings between the parties suggests that Zurich should be barred from relying on the notice given on June 9, 1994. Contrary to Ms. Cameron's "understanding" as expressed in her affidavit, weekly benefits were not reinstated either before or after the rebooked medical appointment. I received no evidence that the Applicant or her solicitors requested such a reinstatement after the medical attendance, other than the request for the "appeal" documents.

Ms. Fournier seeks to rely on a revised "Assessment of Claim by Insurer" which Zurich issued on December 24, 1994. She asserts that it is only in this revised form that Zurich gives clear notice of its refusal to pay weekly benefits. I do not agree.

The form is revised because, as a result of the new medical information, Zurich reconsidered its position on housekeeping benefits. It did not reconsider its position on weekly benefits, and in fact reiterates its decision regarding weekly benefits in almost the identical language used in the June 9, 1994 form.

In this regard, I refer to the reasons of Senior Arbitrator Naylor in Zeppieri and Royal Insurance Company of Canada⁵ where she stated:

Insurance companies are responsible for investigating new information provided after benefits are terminated and must fairly re-evaluate an applicant's claim in light of the new information provided. The re-evaluation of claims on an ongoing basis is integral to a system of periodic benefits, and is a continuing obligation owed to an applicant.

The fact that an insurance company reconsiders a prior decision to terminate (as it must do) does not mean that a refusal of benefits only can take place at the completion of that process. To interpret the language of s. 281(5) in this manner would largely deprive it of meaning.

Accordingly, I conclude that Zurich gave Ms. Fournier clear and unequivocal notice of its refusal to pay further weekly benefits in its correspondence to her representatives dated June 9, 1994. Nothing in that correspondence or in Zurich's subsequent behaviour or dealings with Ms. Fournier and her representatives suggests that the time limit for arbitration was waived, or that Ms. Fournier was misled in any respect as to the effect of Zurich's decision. Nothing in the evidence suggests that Zurich ever changed its position in respect of Ms. Fournier's weekly benefits.

Ms. Fournier applied for mediation of her claims for ongoing accident benefits, including weekly benefits. The report of the mediator dated June 15, 1995 indicates that the issue of ongoing entitlement to weekly benefits after June 25, 1994 remained in dispute. However, it appears that no further steps were taken to pursue this matter until after the time limit for arbitration had expired.

I find that in this case the time limit for applying for arbitration started to run in June 1994, when Zurich gave Ms. Fournier clear notice of its refusal to pay ongoing weekly benefits. As this application for arbitration was received in August 1996, more than two years after the refusal, it is outside the time limits prescribed by the legislation. Therefore, Ms. Fournier cannot proceed to arbitration, and no arbitrator has jurisdiction to hear her claim.

Expenses

Ms. Fournier asked that the determination of expenses be left to the arbitrator who hears this claim on its merits. Since this claim will not proceed to a further hearing, I now deal with the issue of expenses.

I am not prepared to award Ms. Fournier her expenses of this proceeding. This application was brought out of time. I found very little merit in the submissions and affidavit material of counsel for the Applicant. None of the documentary evidence supported the applicant's view of when and why benefits were terminated. No reasonable explanation was given for the failure to apply for arbitration in a timely fashion.

Zurich has claimed an award in an amount equal to its assessment under subsection 282(11.2) of the Insurance Act on the grounds that this application was frivolous, vexatious or an abuse of process. Although it was brought out of time, it does not necessarily follow that this application was therefore frivolous, vexatious or abusive. I do not feel it is appropriate to make the award requested by Zurich in the present case.

Order:

1. Mrs. Fournier may not proceed to have this matter arbitrated as the application was brought out of time.

2. No expenses are payable by either party in this matter.

Frederika Rotter Senior Arbitrator

Date

Appendix A

1. Affidavit of Jennifer Wilde dated February 10, 1997

2. Affidavit of Corinne Cameron dated February 13, 1997

3. Veldhuizen and Coseco Insurance Company (October 12, 1995), OIC A-015549

4. Foster and Royal Insurance Company of Canada (April 19, 1995), OIC A-011628

5. Holguin and Allstate Insurance Company of Canada (July 26, 1995), OIC A-009270

6. Vouyioukas and Allstate Insurance Company of Canada (December 1, 1995), OIC A-002128

7. Zeppieri and Royal Insurance Company of Canada (February 17, 1994), OIC A-005237

8. Derman and State Farm Mutual Automobile Insurance Company (September 12, 1995), OIC A-009521

9. Do and Royal Insurance Company of Canada (September 6, 1996), OIC A95-000643

10. Abdi and Wawanesa Mutual Insurance Company (November 21, 1996), OIC A96-000681

11. Shirani and Wellington Insurance Company (January 7, 1997), OIC A96-000114

Footnotes

1. 1Prior to January 170, 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. 2Rahman and Co-operators General Insurance Company (December 21, 1993), OIC A-000854, followed in Zeppieri and Royal Insurance Company of Canada (February 17, 1994), OIC A-005237, and numerous cases thereafter.
3. 3These principles were summarized in Veldhuizen and Coseco Insurance Company (October 12, 1995), A-015549 at pages 8 and 9.
4. 4Reproduced as Exhibit "A" to her affidavit dated February 13, 1997.
5. 5Supra, footnote 2 at pages 13 and 14