Neutral Citation: 1997 ONICDRG 23

OIC A96-000486

ONTARIO INSURANCE COMMISSION

BETWEEN:

PHYLLIS WORTHMAN

Applicant

and

AXA INSURANCE (CANADA)

Insurer

DECISION ON A PRELIMINARY ISSUE

Issues:

The Applicant, Phyllis Worthman, was injured in a motor vehicle accident on January 18, 1995. She applied for and received statutory accident benefits from the Insurer, Axa Insurance (Canada) ("Axa"), payable under the Schedule.¹

Axa concluded that Ms. Worthman was no longer disabled as a result of the motor vehicle accident. Axa notified Ms. Worthman that it intended to stop her weekly benefits, unless she asked to be assessed by a designated assessment centre. Ms. Worthman asked to be assessed by a designated assessment centre. She then retained counsel. With the benefit of the advice of counsel, Ms. Worthman informed Axa that she no longer wished the assessment, but would instead apply for mediation. Ms. Worthman did not attend the scheduled assessment. Axa took the position that Ms. Worthman failed to attend the assessment, and was therefore precluded from applying for mediation and arbitration.

The parties were unable to resolve their disputes through mediation. Ms. Worthman applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended. At the pre-hearing Axa requested a ruling as to whether Ms. Worthman was prevented from proceeding to mediation and therefore to arbitration.

The issues in this hearing are:

1. Is Ms. Worthman prevented from proceeding to mediation and to arbitration because she failed to attend a disability assessment at a designated assessment centre on January 5, 8 and 9, 1996?

2. Is Ms. Worthman required to repay weekly benefits received from Axa after November 15, 1995?

3. Is the Insurer entitled to costs of the mediation, pre-hearing and of this motion?

Result:

1. In the circumstances of this case, Ms. Worthman is not prevented from proceeding to arbitration.

2. Provided Axa has met the notice provisions under section 70(2) of the Schedule, Ms. Worthman must repay all weekly benefits received from Axa between November 16, 1995 and January 4, 1996.

3. I have no jurisdiction to make an award of expenses in favour of Axa.

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on October 4, 1996, before me, Suesan Alves, Arbitrator.

Present at the Hearing:

Ms. Worthman's Representative:

David S. Wilson Barrister and Solicitor

Axa's Representative:

David Murray Barrister and Solicitor

Witnesses:

The motion proceeded on the basis of an agreed statement of facts and exhibits which were filed as Exhibit 1. No witnesses testified at the hearing.

Other documents before the Arbitrator:

Report of Mediator dated March 7, 1996

Application for Arbitration dated March 13, 1996

Response to Application for Arbitration dated May 10, 1996

Pre-hearing letter dated November 21, 1996

Evidence and Findings:

Phyllis Worthman was injured in a motor vehicle accident on January 18, 1995. Axa paid Ms. Worthman weekly benefits at the rate of $231.56 per week under the provisions of the Schedule. Axa concluded that Ms. Worthman no longer suffered from a disability which was caused by the motor vehicle accident, on the basis of a report of Dr. Grant, dated October 20, 1995. Having reached this conclusion, Axa wished to stop Ms. Worthman's weekly benefits.

By letter dated November 1, 1995, Axa notified Ms. Worthman that her weekly benefits would be stopped on November 15, 1995, unless she requested an assessment at a designated assessment centre, in writing, within 14 days of receiving the notice.

On November 7, 1995, Ms. Worthman wrote Axa that she disagreed with the stoppage of her income replacement benefits. She also stated "It is my intention to be assessed at a designated assessment centre of your choice." Axa arranged the assessment with the Health Recovery Clinic. The Clinic in turn notified Ms. Worthman of the assessment, scheduled for January 5, 8 and 9, 1996.

On November 28, 1995, Mr. David S. Wilson, barrister and solicitor, advised Axa that he represented Ms. Worthman. On December 13, 1995, Mr. Wilson advised Axa that Ms. Worthman had decided not to proceed with the assessment, and would instead apply for mediation. On the same date, the application for mediation relating to the stoppage of Ms. Worthman's weekly benefits was signed and mailed to the Ontario Insurance Commission.

Axa declined to cancel the appointment for the assessment, as requested by Mr. Wilson. Mr. Wilson advised the Health Recovery Clinic that the appointment should be cancelled as his client would not be attending. Ms. Worthman did not attend the assessment, and, on January 11, 1996, Axa advised that it would withhold payment of weekly benefits until she submitted to the assessment. Axa takes the position that Ms. Worthman is precluded from proceeding to mediation and therefore arbitration as she failed to attend the assessment.

Analysis:

An insurer may stop an insured person's weekly benefits, on the basis that he or she is no longer disabled as a result of an accident only in accordance with the provisions of section 64 of the Schedule.² An insurer is required to notify the insured person of its intention to terminate benefits, and to provide at least 14 days' notice.³

The insured person may accept the insurer's position, apply for mediation,⁴ or ask the insurer to arrange an assessment by a designated assessment centre.⁵ If an insured person requests such an assessment, then the insurer is obliged to continue paying weekly benefits. If the report of the designated assessment centre states that the insured person is no longer suffering from a disability resulting from the accident, the insurer may stop paying the benefits.⁶ If the insured person does not submit to the assessment, the insurer may withhold payment of the weekly benefits until the person submits to the assessment.

Section 71.1 (b) of the Schedule, provides that :

71.1 No insured person shall commence a mediation proceeding under section 280 of the Insurance Act unless he or she,

(a) ....

(b) when required, has submitted to and provided the information required for an assessment under section 23, 25, 39, 45, 50 or 64, as the case may be;

I find that if Ms. Worthman simply did not attend at the designated assessment centre, then by virtue of section 64(14) of the Schedule, the Insurer could withhold payment of her income replacement benefits until she submitted to the assessment. Under section 71.1(b) of the Schedule, she would not be entitled to proceed to mediation, and therefore to arbitration, until such time as she submitted to the assessment.

The critical difference in this case is that Ms. Worthman had a bona fide change of mind after receiving the benefit of legal advice. There was no indication in the material before me that Ms. Worthman was aware that she had the option of applying for mediation if she disagreed with the proposed stoppage of her weekly benefits, prior to receiving legal advice. Her lawyer notified Axa of her changed intentions, and, when it became clear that the Insurer would not cancel the appointment for the assessment, Mr. Wilson did so. Ms. Worthman applied for mediation on the same date. Counsel agreed that there was no suggestion that Ms. Worthman was acting improperly or attempting to extract an additional period of benefits from Axa.

Nothing in the Schedule prevents a bona fide change in this regard. Had the Legislature intended that an election be irrevocable, it could easily have stated so. For example, under section 61(7) of the Schedule, an insured person's right to change the category of weekly benefit, once elected, is specifically restricted. I am not persuaded that the absence of a procedure detailing the steps to be taken by an insured person who no longer wishes to undergo an assessment by a designated assessment centre which he or she originally requested, means that the Legislature intended to preclude a bona fide change of mind.

I find that Axa relied on Ms. Worthman's statement that she wished to be assessed by a designated assessment centre, and continued to pay her weekly benefits after November 15, 1995. Axa's letter of December 18, 1995 to counsel for Ms. Worthman states: "If your client does not show or cancel's [sic] the scheduled appointment we will have no alternative but to discontinue the Income Replacement Benefit effective January 5, 1996."Axa's letter dated January 11, 1996 to counsel for Ms. Worthman states: "Please be advised that we will be withholding payment of the weekly benefits until Mrs. Worthman submits to the assessment....". In addition, the Application for Arbitration, dated March 13, 1996, which was signed by counsel for the Applicant, contains an admission in this regard. The Application states that "Weekly benefits were paid in the sum of $231.56 from and after April 1, 1995 to January 4, 1996."

Repayment:

Although Axa wished to stop Ms. Worthman's weekly benefits as of November 15, 1995, Ms. Worthman's statement that she wished to be assessed by a designated assessment centre triggered Axa's obligations under the Schedule, to continue to pay her weekly benefits. I find it appropriate in these circumstances that the parties be restored to their previous positions, in so far as this is permitted under the provisions of the Schedule.

Section 70 of the Schedule provides for the repayment of benefits to an insurer on the grounds of error, wilful misrepresentation or fraud. There was no suggestion of wilful misrepresentation or fraud on the part of Ms. Worthman. The meaning of "error" in the context of the repayment provisions of section 27 of the Statutory Accident Benefits Schedule—Accidents Before January 1, 1994, was considered in the case of Dana B. Levenson and General Accident Assurance Company (February 18, 1992), OIC A-000260.

In Levenson, Senior Arbitrator Naylor, as she then was, found that while a number of meanings can be attributed to the word "error," the stipulation that benefits be paid "through error" in order to be recoverable must "require that responsibility for the payment be attributable in some material way to the actions of the applicant." I agree with and adopt this view. I also find that in using the same terminology in the repayment section of the subsequent Schedule, i.e. the Statutory Accident Benefits Schedule —Accidents after December 31, 1993, and before November 1, 1996, the Legislature intended the same meaning to be applied to "error."

In this case, Ms. Worthman's statement that she wished to be assessed by a designated assessment centre, triggered Axa's obligation to continue to pay her weekly benefits, beyond the initial notice period. I find that the payment of weekly benefits by Axa to Ms. Worthman after November 15, 1995 is materially attributable to her actions, and therefore the result of "error" within the meaning of the Schedule.

Section 70(2) requires an insurer to comply with certain notice requirements in the event that it wishes a repayment on the basis of "error." There was no evidence before me which indicated whether there had been compliance with this provision. Provided Axa has complied with the notice requirements, Ms. Worthman is required to repay the weekly benefits which she received from Axa between November 15, 1995 and January 4, 1996.

Expenses:

The Insurer claimed its expenses in respect of the mediation, pre-hearing and of the motion. The mediation was conducted between January 10, 1996 and March 5, 1996. The Application for Arbitration was filed on March 15, 1996. The pre-hearing was conducted on August 28, 1996, and the motion was heard on October 4, 1996.

Section 282(11.2) of the Insurance Act, R.S.O. 1990, c I.8 as amended by S.O. 1993, c. 10 provides that:

If an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration under section 14.

This section permits an arbitrator to make an award, in favour of the insurer, to be paid by the insured person, where an arbitrator is of the opinion that the insured person commenced an arbitration which is frivolous, vexatious or an abuse of process. This is an award of a punitive nature, to a maximum amount; it is not an award of expenses or costs, as such. On the basis of the material before me I am unable to conclude that Ms. Worthman commenced an arbitration that is frivolous, vexatious or an abuse of process. I am therefore unable to grant the Insurer an award under section 282(11.2) of the Insurance Act.

Section 282(11) of the Insurance Act was repealed by section 38(4) of the Automobile Insurance and Rate Stability Act, S.O. 1996, c.21, and a new subsection substituted therefor. This Act came into force on November 1, 1996. The new subsection provides:

(11) The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

Section 38(4) permits an arbitrator to grant an insurer expenses in respect of an arbitration proceeding according to criteria to be prescribed by regulation. These criteria are set out in section 12 of Ontario Regulation 464/96 which came into force on November 1, 1996.⁷ The effective date of these provisions is after the date on which the motion was heard and after the expenses claimed were incurred. Unless the statute is retroactive, I have no authority to grant Axa the expenses which it claims in respect of this arbitration.

Dreidger defines a retroactive statute as:

one that operates backwards, that is to say, it is operative as of a time prior to its enactment. It makes the law different from what it was during a period prior to its enactment. A statute is made retroactive in one of two ways: either it is stated that it shall be deemed to have come into force at a time prior to its enactment, or it is expressed to have come into force at a time prior to its enactment, or it is expressed to be operative with respect to past transactions as of a past time,⁸

I can find no express or implied words in the statute or in the regulation to indicate that the expenses provision, as set out in section 38(4) of the Automobile Insurance and Rate Stability Act, and in section 12 of the Ontario Regulation 464/96 is retroactive. I conclude therefore that I have no jurisdiction to order Ms. Worthman to pay the expenses which Axa has claimed.

Order:

1. In the circumstances of this case, Ms. Worthman is not precluded from proceeding to arbitration.

2. Provided Axa has complied with the notice provisions of section 70(2) of the Schedule, Ms. Worthman shall repay Axa Insurance all weekly benefits paid between November 15, 1995 and January 4, 1996.

3. I have no jurisdiction to make an award of expenses in favour of Axa.

January 30, 1997

Suesan Alves Arbitrator

Date

APPENDIX A

Stoppage in Weekly Benefits

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 a disability as a result of the accident in respect of which weekly benefits are paid, except in accordance with this section.

(2) The insurer may give notice to the insured person that the insurer will stop paying benefits on a date specified in the notice and the notice shall provide the information contained in subsections (3) to (7) and the reasons for the stoppage in payment.

(3) 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 assessed in accordance with subsections (5) and (6).

(4) The insurer shall not specify a date for stopping payment under subsection (3) earlier than 14 days after the insured person receives the notice mentioned in subsection (2).

(5) If the insured person gives a notice under subsection (3) and if, within 100 kilometres of the residence of the insured person, there is no designated assessment centre that is authorized to assess impairments of the type sustained by the insured person, the insurer and the insured person shall endeavour to agree on one or more people, at least one of whom shall be a health practitioner, to conduct the assessment.

(6) If there is a designated assessment centre within 100 kilometres of the residence of the insured person or if, within 14 days after the insurer received notice under subsection (3), the insurer and the insured person cannot agree under subsection (5) on who shall conduct the assessment, the designated assessment centre nearest to the residence of the insured person shall conduct the assessment.

(7) If, before the assessment has commenced, the designated assessment centre nearest to the residence of the insured person has disclosed to the insurer and the insured person that it has a conflict of interest with either of the parties within the meaning of that term in the guidelines established by the accident benefits advisory committee under subsection 38 (2),

(a) the designated assessment centre or another centre shall conduct the assessment, if the parties agree; or

(b) the designated assessment centre that is next nearest to the residence of the insured person shall conduct the assessment, if the parties do not agree under clause (a).

(8) If a designated assessment centre is required to conduct the assessment,

(a) the insurer shall, within 15 days, notify the designated assessment centre; and

(b) the centre shall promptly notify the insured person and arrange for the assessment.

(9) For the purpose of the assessment,

(a) the insured person and the insurer shall provide the person or persons who conduct the assessment with such information as is reasonably necessary; and

(b) the insured person shall submit to such reasonable, physical, psychological and mental examinations as are requested by the person or persons who conduct the assessment.

(10) After conducting the assessment, the person or persons who conducted the assessment shall prepare a report and provide a copy of the report to the insurer, the insured person and the insured person's health practitioner.

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

(12) If the report states that the insured person continues to suffer from a disability resulting from the accident in respect of which the weekly benefits are paid, the insurer may dispute the obligation to pay benefits in accordance with sections 279 to 283 of the Insurance Act, and, pending the resolution of the dispute, the insurer shall pay the benefits.

(13) Nothing in this section prevents an insured person from disputing a stoppage in the payment of weekly benefits in accordance with sections 279 to 283 of the Insurance Act and, if it is finally determined that payment of the benefits should not have been stopped, the insurer shall,

(a) resume payment of the benefits; and

(b) pay the benefits that were not paid.

(14) If the insured person does not submit to an assessment that he or she requests under subsection (3) or does not comply with the requirements of subsection (9), the insurer may withhold payment of the weekly benefits until the person submits to the assessment or complies with subsection (9) respectively, after which time the insurer shall,

(a) resume payment of the benefits; and

(b) pay the benefits that were not paid if the assessment report determines that benefits should continue to be paid.

APPENDIX B

Excerpts from Ontario Regulation 664, R.R.O. 199, as amended by Ontario Reg. 464/96 made under the Insurance Act.

12. (1) The expenses set out in the Schedule are prescribed for the purpose of subsection 282(11) of the Act.

(2) An arbitrator may award expenses to an insurer or insured person under subsection 282(11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:

1. Each party's degree of success in the outcome of the proceeding.

2. Conduct of the insurer or the insured person that tended to shorten or facilitate the proceeding or that tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders.

3. Whether the proceeding or any position taken by the insurer or the insured person during the proceeding was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process.

4. The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.

5. If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.

6. Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulations 635/94 and 781/94.
2. 2Section 64(1). Section 64 is set out in Appendix B
3. 3I was not asked to determine whether the parties complied with the requirements of section 64.
4. 4Section 64(13)
5. 5Section 64(3)
6. 6Section 64(11)
7. 7Section 12 is set out in Appendix B.
8. 8Dreidger, Construction of Statutes, Canadian Legal Manual Series: Butterworths, at 186