Neutral Citation: 1997 ONICDRG 6

OIC A-951333

ONTARIO INSURANCE COMMISSION

BETWEEN:

SYLVIA COATES - BOYCE

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Sylvia Coates-Boyce, was injured in a motor vehicle accident on November 22, 1990. She applied for and received statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under Ontario Regulation 672.¹ Effective April 16, 1992, pursuant to section 12 (7) of the Schedule, Zurich reduced the rate of weekly income benefits from $234.44 per week to $185.60 per week, a rate at which Zurich continued to pay at the time of the hearing. The parties were unable to resolve their dispute through mediation with respect to the amount of the benefit and Mrs. Coates-Boyce applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Act").

At the pre-hearing discussion, Zurich raised a preliminary issue: whether Ms. Coates-Boyce is barred by the limitation period in section 281 (5) of the Act from proceeding to arbitration. At the hearing, Ms. Coates-Boyce raised a further issue under section 12 (2), paragraph 1, (iii) of the Schedule: whether she is entitled to a higher rate of benefits in accordance with an offer of employment.

The issues in this hearing are:

Preliminary Issue:

Is Ms. Coates-Boyce barred from proceeding to arbitration on the basis that she failed to apply for arbitration within the two-year limitation period provided under section 281 (5) of the Act?

Substantive Issue:

1. What is the correct amount of weekly income benefits to which Ms. Coates-Boyce is entitled under section 12 of the Schedule?

(a) Is Ms. Coates-Boyce entitled to the minimum $185.60 per week provided under section 12 (7), paragraph 1 (iii) of the Schedule?

or

(b) Is Ms. Coates-Boyce entitled to a benefit amount based on an offer of employment as provided under section 12 (2), paragraph 1, (iii) of the Schedule?

Ms.Coates-Boyce also claims interest on any amounts owing, and her expenses incurred in the hearing.

Result:

1. Ms. Coates-Boyce is not barred by section 281 (5) from proceeding to arbitration.

2. Ms. Coates-Boyce is entitled to benefits at the rate of $185.60 per week.

3. Ms. Coates-Boyce is entitled to her expenses incurred in the arbitration.

Hearing:

The hearing was held in Hamilton, Ontario, on October 7, 1996, before me, Beth Allen, Arbitrator. The proceeding was recorded by Ms. Olivia Cooper of Mark Nimigan Official Examiner's Office. I gave the parties the opportunity to provide written submissions on the limitation period issue. Ms. Coates-Boyce provided written submissions dated October 11, 1996.

Present at the Hearing:

Applicant:

Sylvia Coates-Boyce

Ms. Coates-Boyce's Representative:

David Smye

Barrister and Solicitor

Zurich's Representative:

William J. McCorriston

Barrister and Solicitor

Witnesses:

For the Applicant:

Sylvia Coates-Boyce

Exhibits:

Exhibit 1

Ms. Coates-Boyce's Medical Brief

Exhibit 2

Ms. Coates-Boyce's Document Brief

Exhibit 3

Zurich's Document Brief

Exhibit 4

Zurich's Medical Brief

Exhibit 5

Letter from Ms. Coates-Boyce to Zurich dated May 31, 1995

Zurich also filed a Brief of Authorities.

By letter dated October 11, 1996, Ms. Coates-Boyce filed written submissions on the arbitration decision, Kirkham and State Farm Mutual Automobile Insurance Company (August 15, 1996), OIC A96-000141.

Evidence and Findings:

Is Ms. Coates-Boyce barred by the limitation period from proceeding to arbitration?

Ms. Coates-Boyce was involved in a motor vehicle accident on November 22, 1990. From one week after the accident until April 16, 1992, Zurich paid Ms. Coates-Boyce weekly income benefits of $234.44 per week. Effective April 16, 1992, Zurich reduced the benefit rate to the minimum $185.60 per week and has continued to pay benefits at this rate to the present.

By letter dated July 14, 1992, Zurich advised Ms. Coates-Boyce of the reason for the benefit reduction. The relevant portion of this letter states:

Benefits are payable to an Insured for income received for four weeks preceding the accident or 52 week period preceding the accident. Ms. Boyce did not receive any income for employment during this time therefore she is paid at the minimum of $185.60.

We have no information from the employer stating that her wages were topped up to 93% of her gross income. On the employer's Confirmation of Income form it shows that Ms. Boyce received Sick Leave Benefits from November 20, 1989 to November 24, 1989 at 75%, from November 27, 1989 to December 8, 1989 she received Vacation Pay, from December 11, 1989 to April 8, 1990 she received Sick Leave-No Pay and April 9, 1990 to date she is on an Extension of Leave No Pay.

Ms. Coates-Boyce first disputed the benefit amount when she filed an Application for Appointment of a Mediator dated March 1, 1995. The mediator issued the Report of Mediator on May 26, 1995. Ms. Coates-Boyce applied for arbitration by Application for Arbitration dated June 2, 1995.

Zurich's counsel contended that Ms. Coates-Boyce is precluded from proceeding to arbitration on the quantum issue because she failed to file her application for arbitration within the two-year limitation period provided in section 281 (5) of the Act and section 26 (1) of the Schedule.

Section 281 (5) of the 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 period as may be provided in the Statutory Accident Benefits Schedule. [emphasis added]

Counsel for Zurich submitted that the July 14 letter constitutes a refusal to pay a higher benefit, and this constitutes a "refusal to pay the benefit claimed" within the meaning of section 281 (5) of the Act.

I considered the meaning of the "benefit claimed" as used in section 281 (5) of the Act. The Schedule sets out the various benefits available to an insured: supplementary medical and rehabilitation benefits, section 6; care benefits, section 7; benefits for damaged clothing, section 8; funeral benefits, section 9; death benefits, section 10; and weekly (income) benefits, sections 12 and 13. The insured may claim a certain category of benefit based on the type loss incurred. In my opinion, "the benefit claimed" refers to the type or category of benefit rather than the amount of benefit. By its July 14 letter, Zurich reduced benefits thereby refusing to pay a higher amount. Zurich's refusal is not a refusal to pay a certain category of benefit and, therefore, the July 14 letter is not a "refusal to pay the benefit claimed" within the meaning of section 281 (5) of the Act. Accordingly, the July 14 letter does not trigger the running of the limitation period.

Section 26 (1) of the Schedule uses different language to describe when the limitation period starts to run. This provision states:

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]

Section 26 (1) refers to the two years running within two years from the insurer's refusal to pay "the amount claimed in the application for statutory accident benefits." Ms. Coates-Boyce's application for statutory accident benefits is in evidence and includes no claim to a particular benefit amount. Since I heard no evidence that Zurich refused to pay an amount claimed in the application for statutory accident benefits, I need not determine whether conflict exists between section 281 (5) of the Act and 26 (1) of the Schedule. In the absence of evidence that Zurich refused "to pay the amount claimed in the application for accident benefits," I conclude that the limitation period set out in section 26 (1) of the Schedule does not apply in this case.

Ms. Coates-Boyce is therefore not precluded by the limitation periods in sections 281 (5) and section 26 (1) from commencing arbitration with respect to the quantum of her benefit. I am supported in my interpretation of these provisions by court decisions that have held that legislation that curtails or interferes with rights should be strictly construed.²

The Amount of Ms. Coates-Boyce's Benefit:

Ms. Coates-Boyce was a psychiatric nursing assistant employed with the Hamilton Psychiatric Hospital at the time of the automobile accident. Before the accident, she had a prolonged period of absence from work. Her pre-accident employment status was as follows:

• on sick leave from May 1989 until December 10, 1989

• on maternity leave from December 11, 1989 until April 8, 1990

• on extended unpaid maternity leave from April 9, 1990 to June 8, 1990

• on extended unpaid leave of absence from June 9, 1990 until October 7, 1990

• on extended unpaid leave of absence from October 7, 1990 to the present

On April 25, 1990, Ms. Coates-Boyce was involved in a motor vehicle accident (not the subject matter of this dispute). According to her evidence, she suffered bilateral injury to her jaws, neck, right shoulder and to her mid-lower back. Her family doctor recommended that she not return to work.

When she was not able to return to work on October 7, 1990, the hospital granted an extension of her leave without pay. As a pre-condition to her return to work, the hospital required that Ms. Coates-Boyce submit a medical certificate and provide two weeks' notice to allow the hospital to appropriately assign her to the work schedule. Ms. Coates-Boyce testified that she never did arrange a return date before the second accident since her symptoms did not improve sufficiently.

On November 22, 1990, Ms. Coates-Boyce was involved in the accident which is the subject matter of this hearing. According to her evidence, the second accident aggravated her previous injuries, but created no new symptoms. She testified that since the November 22 accident a return-to-work date has not been set. She explained that as she requested them, the hospital has granted further extensions of her leave without pay.

Zurich based the initial benefit rate of $234.44 on information provided by Ms. Coates-Boyce. Zurich subsequently adjusted the rate based on new information from the employer. Zurich established Ms. Coates-Boyce's entitlement as an "employed" person under section 12 (2), paragraph 1, (i) of the Schedule. Section 12 (2), paragraph 1 sets out the qualifications for weekly benefit entitlement:

12 (2) The following qualifications apply to an insured person who claims a weekly benefit under subsection (1):

1. He or she must have been at the time of the accident,

i. employed or self-employed,

ii. on a temporary lay-off, or

iii. entitled to start work within one year under a legitimate offer of employment made before the accident and evidenced in writing. [emphasis added]

Since Ms. Coates-Boyce did not receive income during the four weeks before the accident, Zurich based her benefit rate on the 52-week pre-accident period. Zurich reduced Ms. Coates-Boyce's benefit to the minimum weekly rate of $185.60 on the basis that her income from employment was less than the $232 deemed gross weekly income provided under section 12 (7)(iii) of the Schedule. Ms. Coates-Boyce had been continuously absent from work from May 1989 and on unpaid leave from April 8, 1990. Section 12 (7), paragraph 1 sets out a formula for calculating gross weekly income:

12 (7) The following rules apply to the calculation of gross weekly income:

1. A person's gross weekly income shall be deemed to be the greatest of,

i. his or her average gross weekly income from his or her occupation or employment for the four weeks preceding the accident,

ii. his or her average gross weekly income from his or her occupation or employment for the fifty-two weeks preceding the accident

iii. $232.

Ms. Coates-Boyce claims that under section 12 (2), paragraph 1, (iii) of the Schedule she was entitled to start work within one year, under an offer of employment involving a weekly salary of $598. According to Ms. Coates-Boyce, her weekly income benefit should be calculated on the basis of this salary pursuant to section 12 (7), paragraph 2, (ii) of the Schedule. Section 12 (7), paragraph 2 also provides a formula for the calculation of benefits:

12 (7) The following rules apply to the calculation of gross weekly income:

2. When a person becomes qualified to receive an income benefit under subparagraph iii of paragraph 1 of subsection (2), the person's gross weekly income shall be the greatest of,

i. if the person was qualified under either subparagraph i or ii of paragraph 1 of subsection (2), his or her gross weekly income as determined under paragraph 1,

ii. the gross weekly income payable under the contract of employment,

iii. $232. [emphasis added]

Ms. Coates-Boyce argued that when she was involved in the November 22, 1990 accident, she held an offer of employment from Hamilton Psychiatric Hospital. She acknowledged that at the time of the accident she was formally employed by the hospital, bound by a collective agreement, and had been absent from work on leave that began May 1989. Ms. Coates-Boyce's evidence is that she intended to return to the same position as a psychiatric nursing assistant.

Ms. Coates-Boyce submitted that her circumstances meet the requirements of section 12 (2), paragraph 1, (iii): that she was entitled to start work within one year; under a legitimate offer of employment made before the accident; and evidenced in writing. She relied on her own testimony and the contents of two pieces of correspondence. Ms. Coates-Boyce referred to a letter to herself from her supervisor at the hospital dated October 3, 1990; and to a letter to her counsel's law office from the supervisor dated November 13, 1990.

The October 3 letter asked Ms. Coates-Boyce to contact her supervisor regarding her return to work. It pointed out that she was scheduled to return on October 7, 1990. It also set forth the condition that before she returns she must provide acceptable medical evidence of her capacity to undertake full duties and maintain acceptable attendance. In the November 13 letter the supervisor responded to questions raised by Ms. Coates-Boyce’s counsel regarding her employment situation. The supervisor stated that Ms. Coates-Boyce was uncertain of her return to work date and indicated that Ms. Coates-Boyce thought she might return in May or June 1990. The supervisor also set forth the condition that, in order to plan her work assignment, Ms. Coates-Boyce should give sufficient advance notice of her return.

Together with Ms. Coates-Boyce's testimony, these letters constitute the entirety of her evidence that before the accident she was entitled to start work within a year under a written offer of employment. According to Ms. Coates-Boyce, her benefit should be calculated under section 12 (7), paragraph 2, (ii) of the Schedule and based on the amount payable under the contract of employment.

Zurich contended that Ms. Coates-Boyce did not hold an offer of employment at the time of the accident. The conditions expressed in the October 3 letter were not fulfilled by Ms. Coates-Boyce before the subject accident, so she was not "entitled" to return. Zurich also contended that a "legitimate" offer contains terms such as a start date, description of duties and pay, but there were no such written terms of employment in this case. Zurich concluded that there was at best a loose oral understanding between the hospital and Ms. Coates-Boyce.

Zurich further contended that Ms. Coates-Boyce's claim runs counter to the intention of the legislation. That is, in this case, Ms. Coates-Boyce is actually employed by the hospital she claims has offered her a position. Zurich asserted that the intention of the offer of employment provision is to compensate those persons who, but for a disabling accident, would have entered gainful employment.

I agree with Zurich's position. Ms. Coates-Boyce's circumstances cannot reasonably be construed as involving an offer of employment within the intention of the legislation. In my view, the legislation contemplates circumstances where an accident prevents an otherwise unemployed person, or a person in line for a wage promotion, from attaining his or her prospective status. It is clear from the evidence that Ms. Coates-Boyce was employed at the time of the subject accident, albeit on an extended unpaid leave, with a rather ill-defined arrangement to return to the same job at some point in the future.

For these reasons, Ms. Coates-Boyce's benefits ought not to be calculated in accordance with section 12 (7), paragraph 2, (ii) of the Schedule. I conclude that Zurich was correct in calculating Ms. Coates-Boyce's entitlement at the minimum rate of $185.60, pursuant to section 12 (7), paragraph 1, (iii) of the Schedule.

Assessment of Expenses:

Ms. Coates-Boyce claimed her expenses incurred in respect of the arbitration. While she did not succeed in her claim for a higher benefit amount, her case is not entirely without merit. I therefore exercise my discretion under section 282 (11) of the Act to allow her her expenses.

Zurich submitted that the arbitration proceeding was unnecessary because Ms. Coates-Boyce's claim is without merit. For this reason, Zurich requested I exercise my authority under section 282 (11.2) and award an assessment in the amount of $2,000 against Ms. Coates-Boyce.

Zurich did not present evidence that Ms. Coates-Boyce's claim was frivolous, vexatious or an abuse of process as required by the legislation. I therefore decline to exercise my discretion to assess an award against her.

Order:

1. Zurich shall pay Ms. Coates-Boyce weekly income benefits at the rate of $185.60.

2. Ms. Coates-Boyce is entitled to her expenses incurred in respect of the arbitration.

January 13, 1997

Beth Allen 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. 2Bhatnager v. Canada (Minister of Employment & Immigration), 1990 CanLII 120 (SCC), [1990] 2 S.C.R. 217, at 228; Morguard Properties Ltd. v. City of Winnipeg (1983), 1983 CanLII 33 (SCC), 3 D.L.R. (4th) 1 at 13 (S.C.C.); Laidlaw v. Municipality of Metropolitan Toronto (1978), 1978 CanLII 32 (SCC), 87 D.L.R. (3d) 161 at 169 ( S.C.C.).