minicounsel

Neutral Citation: 1997 ONICDRG 56

OIC A96-000714

BETWEEN:

SONJA ANDREESKI

Applicant

and

PILOT INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUES

The Applicant, Sonja Andreeski, was injured in a motor vehicle accident on November 12, 1992. She applied for and received statutory accident benefits from Pilot Insurance Company ("Pilot"), payable under Ontario Regulation 672.¹ Pilot terminated weekly income benefits on April 27, 1994. On April 27, 1995, Mrs. Andreeski and her husband, Mr. Lupco (Louie) Andreeski, commenced an action in the Ontario Court (General Division) against Pilot for non-payment of weekly income benefits pursuant to the Schedule. On November 8, 1995, Mrs. Andreeski applied to the Ontario Insurance Commission for mediation of this, and other issues. Mediation failed, and on May 6, 1996, Mrs. Andreeski applied to the Ontario Insurance Commission for arbitration. Pilot takes the position that Mrs. Andreeski cannot pursue arbitration and proceed by way of a court action at the same time, and that she must elect one forum to deal with all of her claims for statutory accident benefits.

The preliminary issues in this hearing are:

Is Mrs. Andreeski precluded from referring her disputes with Pilot to arbitration?
If Mrs. Andreeski is not precluded from referring her disputes with Pilot to arbitration, can she proceed to arbitration with her claim for weekly income benefits after 156 weeks, or must she first mediate this claim?

Mrs. Andreeski may proceed with the arbitration in respect of her entitlement to supplementary medical and rehabilitation benefits.

Mrs. Andreeski may proceed with the arbitration in respect of her ongoing entitlement to weekly income benefits, provided that she withdraws from her involvement in the related court action (Court File No. 95CU84278) forthwith.

The issue of Mrs. Andreeski's entitlement to weekly income benefits after April 27, 1994 will not be dealt with in the arbitration hearing scheduled for May 20, 21, 22 and 26, 1997, unless written confirmation is received at least 21 days before the first day of the hearing that Mrs. Andreeski has withdrawn from her involvement in the court action.

If Mrs. Andreeski proceeds with the arbitration in respect of her entitlement to weekly income benefits after April 27, 1994, she may include her claim for weekly income benefits after 156 weeks, in the arbitration. She is not required to separately mediate this claim.

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on December 10, 1996, before me, Shemin Manji, Arbitrator.

Applicant: Mrs. Sonja Andreeski

Mrs. Andreeski's Representative: Mr. Lupco (Louie) Andreeski

Pilot's Representative: Mr. Rudolph Lobl Barrister and Solicitor

Exhibits:

Exhibits entered into evidence and other documents on the record are listed in an appendix to the decision.

Reasons for Decision:

Background Facts and Issue

Mrs. Andreeski was injured in an automobile accident on November 12, 1992. At the time of the accident, Mrs. Andreeski was insured under a policy with Pilot. Pilot paid weekly income benefits, pursuant to section 12 of the Schedule, in the amount of $122.94 (after deducting long-term disability benefits she received through her employment), from November 19, 1992 to April 27, 1994. Pilot terminated the benefits on April 27, 1994, on the basis of a medical examination of Mrs. Andreeski by Dr. Arthur Ameis, at the request of Pilot.

On May 23, 1995, Mrs. Andreeski and her husband, Mr. Lupco (Louie) Andreeski, issued a Statement of Claim in the Ontario Court (General Division) against Pilot, claiming:

a) damages for breach of contract in the amount of $100,000.00;²

b) a declaration that the plaintiff, Sonja Andreeski, was and is entitled to full disability benefits payments³ under the terms and conditions of Policy Number 01316985;

c) prejudgment interest on arrears of payments in accordance with the provisions of section 28 of the Courts of Justice Act, R.S.O. 1990, C.C. 43 as amended;

d) exemplary damages of $100,000.00;⁴

e) their solicitor-client costs of (the) action;

On November 8, 1995, Mrs. Andreeski applied for mediation, pursuant to section 280(1) of the Insurance Act, R.S.O. 1990, c. I.8, as amended ("the Act"), in respect of her claim for ongoing weekly income benefits. She also applied for mediation in respect of her claims for certain supplementary medical and rehabilitation benefits and weekly child care benefits. Mediation commenced on November 9, 1995 and in a report dated December 29, 1995, the mediator indicated that mediation had failed in respect of Mrs. Andreeski's claims for ongoing weekly income benefits and supplementary medical and rehabilitation benefits.

On May 6, 1996, Mrs. Andreeski applied for arbitration in respect of all issues not resolved in mediation. In its Response, dated June 7, 1996 and, again, at the pre-hearing on August 8, 1996, Pilot took the position that because Mrs. Andreeski had also commenced an action in the Ontario Court (General Division) for statutory accident benefits, she had to elect to pursue her claims either before the Court or before an arbitrator, pursuant to section 281 of the Act.

Mrs. Andreeski submitted that she should be permitted to pursue her claims both before the Court and an arbitrator because she and her husband were seeking a further remedy in Court, namely, exemplary damages in the amount of $100,000.00 because of the hardship that they have had to endure due to Pilot's refusal to pay benefits.

Analysis

Section 281(1) of the Act provides that if mediation fails, the insured person may bring a proceeding in a court of competent jurisdiction or may refer the matter to an arbitrator.⁵ In my opinion, an insured person may not proceed before a court and an arbitrator in respect of the same matter or issues in dispute.

In this case, Mrs. Andreeski's Court action and arbitration overlap. Mrs. Andreeski is seeking to have the issue of her entitlement to weekly income benefits after April 27, 1994 determined by both a court and an arbitrator.

While Mrs. Andreeski is seeking a further remedy in Court, namely, exemplary damages in the amount of $100,000.00, this remedy is tied to her claim for weekly income benefits after April 27, 1994. Therefore, I am not persuaded that the court proceeding involves a matter or issue that is distinct or separate from that which is encompassed in the arbitration.

On the basis of section 281(1) of the Act, I find that Mrs. Andreeski cannot proceed with the Court action and the arbitration proceeding to determine the issue of her entitlement to weekly income benefits after April 27, 1994.

Pilot submits that Mrs. Andreeski must choose one forum to deal with all her claims for statutory accident benefits. I disagree. Section 281(1) of the Act provides that if mediation fails, the insured person may bring a proceeding in a court of competent jurisdiction or may refer the matter (or issues in dispute⁶) to an arbitrator. In my opinion, an insured person may not proceed before a court and an arbitrator in respect of the same matter or issues in dispute. However, he or she may proceed before a court and an arbitrator in respect of a different matter or unrelated issues in dispute.

My opinion, is consistent with that of Arbitrator Asfaw Seife in Oliveira and Markel Insurance Company of Canada (February 9, 1995), OIC File A-006434 and Arbitrator Nancy Makepeace in Harris and Royal Insurance Company of Canada (January 23, 1997), OIC A95-000267. In Oliveira, Arbitrator Asfaw Seife found no support either in legislation or case law for the insurer's position that an insured person ought to be compelled to refer all of her or his disputes with the insurer to one forum only. Arbitrator Seife stated that if the Legislature had intended to limit an insured person's choice of forum in the manner proposed by the insurer, it would have worded section 281(1) of the Act quite differently. It was Arbitrator Seife's opinion that

...the only limitations imposed by the Act on the insured person's right to refer a matter in dispute to a court or an arbitrator are: 1) the matter must first have been referred to mediation, 2) mediation must have failed, and 3) by necessary implication, the insured person must not have commenced a proceeding in the other forum with respect to the same matter. (Emphasis added)

I agree with Arbitrator Seife's comments.

Therefore, I find that Mrs. Andreeski may proceed with the arbitration in respect of her entitlement to supplementary medical and rehabilitation benefits, specifically her claims for the cost of orthopaedic shoes and for the cost of a functional abilities assessment, separate and apart from any court action for weekly benefits. Mediation has been sought and has failed in respect of these claims. Further, these claims are distinct from the issues in dispute or matter before the court.

Since I have determined that Mrs. Andreeski cannot proceed with her dispute in respect of her ongoing entitlement to weekly income benefits after April 27, 1994 in two forums, the question therefore becomes whether the arbitration proceeding in respect of this issue should be dismissed.

I find it appropriate that Mrs. Andreeski be given an opportunity to "re-elect" the forum in which she wishes to proceed in respect of the issue of her ongoing entitlement to weekly income benefits. I do not believe that Mrs. Andreeski made a binding election to proceed to court prior to mediation. Sections 279 to 288 of the Act set out the mechanism for dispute resolution between insurers and insured persons in respect of statutory accident benefits. Section 281(2) of the Act provides that no person may bring a proceeding in a court or refer a matter to arbitration unless mediation has first been sought and failed. In this case, Mrs. Andreeski commenced a court action for weekly income benefits. She then applied for mediation, and after mediation failed, she applied for arbitration. Thus, Mrs. Andreeski's court action was not properly commenced because the Statement of Claim was issued before the dispute which was the subject matter of the action, i.e., her claim for ongoing weekly benefits, was referred to mediation. I find that after the matter was referred to mediation, Mrs. Andreeski elected to proceed by way of arbitration, rather than in court.

My finding is consistent with the findings of the arbitrators in Gouliaeff and Commercial Union Assurance Company of Canada (August 26, 1993), OIC A-003996 and Togias and Co-operators General Insurance Company (May 4, 1995), OIC A-013485. The fact situation in this case is similar to that in Gouliaeff and Togias. The applicants in Gouliaeff and Togias commenced a court action for accident benefits. They then applied for mediation, and after mediation failed, they applied for arbitration. The arbitrators in Gouliaeff and Togias held that the applicants could proceed with their arbitration proceedings even though they had commenced their court actions for accident benefits prior to applying for arbitration because after mediation the applicants had elected to proceed by way of arbitration rather than in court.

I also find it appropriate that Mrs. Andreeski be given an opportunity to "re-elect" the forum in which she wishes to proceed in respect of the issue of her ongoing entitlement to weekly income benefits based on the considerations set out by E. Macdonald J. in The Citadel General Assurance Company v. Amrick Singh Gogna and Raksha Gogna.⁷ In Gogna, in determining which of two proceedings should go forward, E. Macdonald J. considered: (1) which action began first; (2) who has the chief burden of proof; and, (3) which is the most comprehensive in scope.

In this case, while the Court action was commenced first, it appears that only pleadings have been exchanged. I heard no evidence that the action had proceeded to discoveries. Certainly the action has not progressed to a point where Pilot would be seriously prejudiced by having the matter dealt with in arbitration. Pilot has not asserted any claim in its Statement of Defence that would be thwarted if the matter is dealt with through arbitration, rather than court.⁸ Further, Pilot is not seeking to force Mrs. Andreeski into one forum or the other. Its position is that she should have to choose one forum to deal with all disputes between her and Pilot in respect of her claims for statutory accident benefits.

In respect of the second consideration in Gogna, I find that Mrs. Andreeski has the chief burden of proof in both proceedings.

Lastly, although the relief or remedy being sought by Mrs. Andreeski in respect of the issue of her ongoing entitlement to weekly income benefits is broader in the Court action, I find that the arbitration is more comprehensive in scope. It includes her claims for supplementary medical and rehabilitation benefits.

In conclusion, Mrs. Andreeski may proceed with the arbitration in respect of her entitlement to supplementary medical and rehabilitation benefits. Mrs. Andreeski may proceed with the arbitration in respect of her ongoing entitlement to weekly income benefits, provided she withdraws from her involvement in the related court action (Court File No. 95CU84278) forthwith. The issue of Mrs. Andreeski's entitlement to weekly income benefits after April 27, 1994 will not be dealt with at the arbitration hearing scheduled for May 20, 21, 22 and 26, 1997, unless confirmation is received at least 21 days before the first day of the hearing that Mrs. Andreeski has withdrawn from her involvement in the court action. This is to give Pilot sufficient notice that this issue will be dealt with in the arbitration.

II. If Mrs. Andreeski is not precluded from referring her disputes with Pilot to arbitration, can she proceed to arbitration with her claim for weekly income benefits after 156 weeks, or must she first mediate this claim?

Background Facts and Issue

The requirements for entitlement to weekly income benefits are set out in section 12(1) of the Schedule as follows:

12.-(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident a weekly income benefit during the period in which the insured person suffers substantial inability to perform the essential tasks of his or her employment... (Emphasis added)

After 156 weeks, the requirements for weekly income benefits become stricter. Section 12(5)(b) of the Schedule provides:

(5) The insurer is not required to pay a weekly benefit under subsection (1),

(a) ...

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience. (Emphasis added)

Mrs. Andreeski's weekly income benefits were terminated on April 27, 1994, about a year and a half short of the 156 week mark. She sought ongoing weekly benefits. Mediation took place between November 5, 1995 and December 14, 1995. The Report of Mediator was issued on December 29, 1995. At that time, the 156 week period had expired. Although the 156 week mark expired during the course of mediation, the Report of Mediator indicates that at mediation the discussion was confined to Mrs. Andreeski's claim for "...entitlement to weekly income benefits pursuant to s. 12(1) of the SABS, from April 28, 1994 ongoing."

On May 6, 1996, Mrs. Andreeski applied for arbitration. She sought arbitration of all issues not resolved in mediation. In its response to Mrs. Andreeski's claim for entitlement to weekly income benefits after April 27, 1994, Pilot took the position that Mrs. Andreeski had not sustained any serious injury and that any inability to work that she had was not a result of any injury sustained in the accident.

A pre-hearing was held on August 8, 1996, and at that time it appears that it became clear for the first time that Mrs. Andreeski was claiming ongoing weekly benefits under both sections 12(1) and 12(5)(b) of the Schedule. At that time, Pilot took the position that Mrs. Andreeski could not advance her claim for post-156 week benefits under section 12(5)(b) of the Schedule because mediation had not taken place in respect of this claim. In her pre-hearing letter, the pre-hearing arbitrator defined the issue to be arbitrated as follows:

Can Mrs. Andreeski advance her claims for weekly income benefits under section 12(5) of the Schedule for post-156 week benefits? If so, is Mrs. Andreeski entitled to weekly income benefits after 156 weeks because her injury continuously prevents her from engaging in any occupation or employment for which she is reasonably suited by education, training or experience?

The arbitration hearing was scheduled for December 10, 11 and 12, 1996.

Subsequently, at a resumption of the pre-hearing in November 1996, Pilot requested that the issue of whether Mrs. Andreeski could advance her claim for weekly income benefits for post-156 week benefits under section 12(5)(b) of the Schedule and the issue of whether she could proceed with the arbitration when she had commenced an action in the Ontario Court (General Division) be heard first. The Arbitrator granted Pilot's request. The preliminary issues were scheduled to be heard on the dates originally scheduled for the hearing, and the substantive issues were re-scheduled to be heard on May 20, 21, 22 and 26, 1997.

Analysis

Mrs. Andreeski submits that she has already mediated her claim for weekly income benefits under section 12 of the Schedule. She also submits that she should not be required to mediate her claim for post 156 week weekly income benefits because mediation of this claim would be futile.

Pilot submits that Mrs. Andreeski's claim for post-156 week entitlement under section 12(5)(b) of the Schedule is a different issue from her claim for pre-156 week entitlement under section 12(1) of the Schedule, and requires different evidence to be led. Pilot submits that an arbitrator does not have the jurisdiction to determine Mrs. Andreeski's claim for post-156 week weekly income benefits because this issue has not been mediated. It is not relevant or significant that a mediation on this issue may not be fruitful.

The issue of whether a claim for weekly benefits after 156 weeks must be mediated has been previously considered. In Palumbo and Dominion of Canada General Insurance Company (April 13, 1995), OIC A-007314, Arbitrator Joyce Miller ruled that the applicant could not include his entitlement to weekly income benefits after 156 weeks in the arbitration because, firstly, this issue had not been mediated, and, secondly, both parties did not consent to its inclusion. Arbitrator Miller relied on previous decisions in DeCicco and State Farm Mutual Automobile Insurance Company (February 21, 1992), OIC File P-000277 and Kotsiakos and State Farm Mutual Automobile Insurance Company (July 26, 1994) OIC A-002354 (under appeal), in concluding that post-156 week entitlement was a separate and distinct issue from entitlement up to 156 weeks and did not flow "reasonably or consequentially" from the latter.

The arbitrator's decision in Palumbo was appealed. The Director's delegate dismissed the appeal from the arbitrator's order restricting the scope of the arbitration. She agreed with the arbitrator's conclusion, but for somewhat different reasons. In Palumbo, it was not clear that the applicant was claiming benefits for a period in excess of 156 weeks until the hearing. The Director's delegate held that the arbitrator properly declined to deal with the applicant's post-156 week entitlement because it was unreasonable to expect the insurer to respond to the claim at that late stage. She stated that because the change in the disability test may require different evidence, the parties need reasonable notice that it is in issue.

The substantive issue is whether Mrs. Andreeski is entitled to weekly income benefits after April 27, 1994. In my opinion, the fact that the disability test changes and the scope of the arbitrator's inquiry broadens after 156 weeks does not make the claim for disability benefits after 156 weeks a different issue or matter from a claim for disability benefits before 156 weeks.

Since, in my opinion, Mrs. Andreeski's claim for disability benefits after 156 weeks is not a different matter or issue from her claim for disability benefits before 156 weeks, Mrs. Andreeski need not further mediate the former. She has already mediated her entitlement to weekly income benefits after April 27, 1994 and that mediation has failed.

Because the requirements for entitlement to weekly income disability benefits become stricter after 156 weeks and the scope of the arbitrator's inquiry broader, involving not just an inquiry into the applicant's medical condition and his or her ability to perform his or her employment at the time of the accident but also an inquiry into his or her ability to perform any occupation or employment for which he or she is reasonably suited by education, training or experience, I agree with the Director's delegate that the parties need reasonable notice that it is in issue and an opportunity to prepare their cases accordingly.

In this case, I am satisfied that Pilot has had reasonable notice that Mrs. Andreeski was claiming weekly income benefits for a period in excess of 156 weeks and is not prejudiced by the inclusion of this issue in the arbitration. Mrs. Andreeski's claim for disability benefits for a period in excess of 156 weeks was articulated at the pre-hearing conference on August 8, 1996, some seven months ago. At that time Pilot was given an opportunity to request production from Mrs. Andreeski of any documents it required from her to prepare its case, because at that time all issues, including the preliminary issues, were scheduled to be heard in December 1996. Since then Pilot has had ample time and opportunity to prepare its case, including an opportunity to request further documents and require an updated examination of Mrs. Andreeski by a qualified medical practitioner of its choice.

Order:

Mrs. Andreeski may proceed with the arbitration in respect of her entitlement to weekly income benefits, provided that she withdraws her involvement in the related court action (Court File No. 95CU84278) forthwith. The issue of Mrs. Andreeski's entitlement to weekly income benefits after April 27, 1994 shall not be dealt with at the arbitration hearing scheduled for May 20, 21, 22 and 26, 1997, unless written confirmation is received at least 21 days before the first day of the hearing that Mrs. Andreeski has withdrawn from the related court action.
If Mrs. Andreeski proceeds with the arbitration in respect of her entitlement to weekly income benefits after April 27, 1994, she may include her claim for weekly income benefits after 156 weeks in the arbitration. She is not required to mediate this claim.

March 26, 1997

Shemin Manji Arbitrator

Date

APPENDIX A - THE RECORD

The following exhibits were entered into evidence at the hearing:

Exhibit 1 Ontario Court (General Division) Sonja Andreeski and Lupco Andreeski and Pilot Insurance Company, Notice of Action, Issued April 27, 1995, Court File No. 95CU84278

Exhibit 2 Ontario Court (General Division) Sonja Andreeski and Lupco Andreeski and Pilot Insurance Company, Statement of Claim, Issued May 23, 1995, Court File No. 95CU84278

Exhibit 3 Ontario Court (General Division) Sonja Andreeski and Lupco Andreeski and Pilot Insurance Company, Statement of Defence, Issued February 6, 1996, Court File No. 95CU84278

Footnotes

Prior 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.
It appears from a review of the Statement of Claim that Mr. and Mrs. Andreeski's claim for damages for breach of contract is tied to Mrs. Andreeski's claim for "full disability payments".
It is clear from the balance of the Statement of Claim that "full disability payments" means full weekly income benefits.
It also appears from a review of the Statement of Claim that Mr. and Mrs. Andreeski's claim for exemplary damages arises out her claim in respect of her entitlement to "full disability payments". It does not stand on its own.
This is how section 281(1) read at the time Mrs. Andreeski commenced her proceedings, i.e., prior to November 1, 1996. Section 281(1) was repealed by Bill 59 (the Automobile Insurance Rate Stability Act, 1996) and a new section inserted in its place. The new section is similar, but it uses the words "issues in dispute" instead of "matter".
The words used in section 281(1) as amended by Bill 59.
Unreported decision, released September 16, 1992
Exhibit 3

Footnotes

Prior 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.
It appears from a review of the Statement of Claim that Mr. and Mrs. Andreeski's claim for damages for breach of contract is tied to Mrs. Andreeski's claim for "full disability payments".
It is clear from the balance of the Statement of Claim that "full disability payments" means full weekly income benefits.
It also appears from a review of the Statement of Claim that Mr. and Mrs. Andreeski's claim for exemplary damages arises out her claim in respect of her entitlement to "full disability payments". It does not stand on its own.
This is how section 281(1) read at the time Mrs. Andreeski commenced her proceedings, i.e., prior to November 1, 1996. Section 281(1) was repealed by Bill 59 (the Automobile Insurance Rate Stability Act, 1996) and a new section inserted in its place. The new section is similar, but it uses the words "issues in dispute" instead of "matter".
The words used in section 281(1) as amended by Bill 59.
Unreported decision, released September 16, 1992
Exhibit 3

Sonja Andreeski v. Pilot Insurance Company, 1997 ONICDRG 56

Case Summary

Background Facts and Issue

Analysis

II. If Mrs. Andreeski is not precluded from referring her disputes with Pilot to arbitration, can she proceed to arbitration with her claim for weekly income benefits after 156 weeks, or must she first mediate this claim?

Background Facts and Issue

Analysis

Order:

APPENDIX A - THE RECORD

Footnotes

Sonja Andreeski v. Pilot Insurance Company, 1997 ONICDRG 56

Case Summary

Background Facts and Issue

Analysis

II. If Mrs. Andreeski is not precluded from referring her disputes with Pilot to arbitration, can she proceed to arbitration with her claim for weekly income benefits after 156 weeks, or must she first mediate this claim?

Background Facts and Issue

Analysis

Order:

APPENDIX A - THE RECORD

Footnotes