Neutral Citation: 1997 ONICDRG 86

OIC A96-000358

ONTARIO INSURANCE COMMISSION

BETWEEN:

JUDY PROSSER

Applicant

and

PROGRESSIVE CASUALTY INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Judy Prosser was injured in a motor vehicle accident on July 4, 1994. Progressive Casualty Insurance Company ("Progressive") paid Mrs. Prosser caregiver benefits under the Schedule.¹The issue is whether Mrs. Prosser may now elect to receive income replacement benefits instead of caregiver benefits.

I heard this matter in Hamilton, Ontario on January 15, 1997. Mr. David Smye, Barrister and Solicitor, represented Mrs. Prosser. Mr. Bob Robinson, Barrister and Solicitor, represented Progressive. Four witnesses testified and three exhibits were filed.

Result:

1. Mrs. Prosser may elect to receive income replacement benefits.

Evidence and Findings:

Introduction:

Mrs. Judy Prosser was a 36-year-old caregiver of her two children at the time of the July 4, 1994 automobile accident. She was also employed as a nurse. As a result of the accident, Mrs. Prosser could not resume either her nursing work or her homemaker and childcare duties.

Mrs. Prosser was eligible for two alternative weekly disability benefits under the Schedule. She could claim either caregiver benefits based upon her inability to perform her homemaker and childcare duties or income replacement benefits for her inability to perform her duties as a nurse. The Schedule requires Mrs. Prosser to choose one weekly benefit by filing an election form with the Insurer.

Under section 59 of the Schedule, insurers are obligated to provide the insured person with a written explanation of the available accident benefits to assist the person in making an appropriate election of the weekly benefit. Section 59(2) states:

(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.

(Emphasis added)

The Facts:

Mr. Tom Picone, an adjuster with Progressive, interviewed Mrs. Prosser at her home on July 6, 1994, a few days after the accident. Mrs. Prosser's daughter Lisa was present throughout the interview. Mr. Picone tape-recorded Mrs. Prosser's statement. In testimony, Mr. Picone had little recollection of his meeting with Mrs. Prosser, but he admitted that he did not provide Mrs. Prosser with a written explanation of the benefits available to her. The transcript of the recording taken that day confirms that Mr. Picone did not explain the benefits to Mrs. Prosser during the formal part of the interview. Mrs. Prosser and her daughter both testified that Mr. Picone gave them a very general description of caregiver and income replacement benefits after he turned off the tape recorder.

Mrs. Prosser and her daughter both testified that Mr. Picone recommended that she elect the caregiver benefit because it paid a larger weekly amount than the income replacement benefit. Apparently, the amount of Mrs. Prosser's income replacement benefit was established without reference to her earnings from her second job that she had left shortly before the accident. Mrs. Prosser testified that Mr. Picone told her it was not relevant to the calculation of the income replacement benefit. Mrs. Prosser and her daughter also stated that Mr. Picone said she could switch to the income replacement benefit later. Mr. Picone admitted that at the time of his interview with Mrs. Prosser he did not have a good understanding of the differences between the two weekly benefits, and that he was not qualified to advise Mrs. Prosser about her choices. I accept Mr. Picone's admissions and the testimony from Mrs. Prosser and her daughter. I find that Mr. Picone misinformed Mrs. Prosser about the accident benefits available to her.

A claims adjuster, Mr. Christopher Smyth, called Mrs. Prosser after she submitted her Application for Accident Benefits to Progressive. Christopher Smyth testified that he could not recall his conversation with Mrs. Prosser. However, he assumed that the benefits had been explained to Mrs. Prosser earlier. He did not provide her with any additional written information. Mr. Smyth testified that he wrote "caregiver benefit" on Mrs. Prosser's "Election of Weekly Benefit" form. Mrs. Prosser signed and returned this form to Progressive. I find that Mr. Smyth did not correct the misinformation that Mr. Picone provided to Mrs. Prosser. I find that Progressive's negligent misrepresentation of the accident benefits resulted in Mrs. Prosser's election of the caregiver benefit.

Mrs. Prosser retained counsel in September 1994, shortly after her claim was submitted to Progressive. During that month, Progressive wrote Mrs. Prosser's lawyer to explain her eligibility for the two weekly benefits, and the caregiver payments (Exhibit 1, Tab 6):

As requested, please find enclosed copies of the Application for Accident Benefits including the Employer Confirmation of Income and the Health Practitioners Certificate along with Election of Weekly Benefit.

I sent an Election of Weekly Benefit form to the insured as she qualified under (2) areas. First, as an employed person and; second, being a caregiver. The weekly benefit was substantially greater to her as a caregiver.

I find that Progressive's letter and enclosed documents did not satisfy Progressive's duty to correct its original misrepresentations to Mrs. Prosser.

In late January 1995, Mrs. Prosser's lawyer received confirmation of her income from her employer at the time of the accident. By July 1995, Mrs. Prosser's lawyer had most of the information about her second job during the year before the accident. On August 29, 1995, Mrs. Prosser's lawyer advised Progressive that Mrs. Prosser wished to claim the income replacement benefit.

Analysis:

The Insurance Act and the schedule of benefits under Bill 164 are complex. The relevant language of section 59 states that the insurer "shall promptly provide the person" with written information about accident benefits. The legislation requires insurers to explain the available weekly benefits to accident victims in a written form approved by the Ontario Insurance Commission.² Without basic information about potential accident benefits, the insured person is unable to make the reasonably informed decision contemplated by the legislators. Insurers who fail to comply with the statutory standard do so at their peril.

In H'ng and Allstate³ Arbitrator Friendly found that the applicants could not claim death benefits because they failed to particularize the claim as required under section 59(3). Arbitrator Friendly commented on the legislation:

Subsection 59(2) requires the insurer to promptly provide three distinct documents; the application forms; the written explanation of benefits; and additional written information, to allow the applicant to properly prepare and document the claim for purposes of the Schedule.

The process of notification and application, within the context of the legislative scheme as a whole, anticipates the claim will be presented by the applicant in sufficient detail to permit the insurer to act upon it and meet its obligations for timely payment under the Schedule.

I also agree with my colleague's reasoning in that decision that analysis of a claim should look beyond the forms, and review the correspondence and dealings of the parties.

Reviewing the parties' dealings in this manner, the evidence is that Progressive failed to provide Mrs. Prosser with any written information about her accident benefits. It is undisputed that Mrs. Prosser knew nothing about no-fault benefits. I find that Mr. Picone's misinformation and incorrect advice directly led Mrs. Prosser to apply for the caregiver benefit. Further, I find that the company never corrected the erroneous information. Mrs. Prosser relied to her detriment on Progressive's representations, and on these facts Progressive cannot limit her claim to the caregiver benefit.

Progressive argues that Mrs. Prosser made a "deemed election" of caregiver benefits. The so-called "deemed election" under section 61(5) assumes that an insured person who fails to choose a category of weekly benefit elects the highest weekly amount by default. However, section 61 also provides that the insurer must give the person thirty days notice to choose the category of weekly benefit before the default occurs. No evidence suggests that Progressive provided Mrs. Prosser or her lawyer with the required notice that she risked default if she failed to make an election. Moreover, Progressive misrepresented to Mrs. Prosser that she could later elect to receive income replacement benefits. On this evidence, I find that the "deemed election" provision does not apply.

Progressive submits that Mrs. Prosser sat on her right to elect income replacement benefits for too long. The doctrine of estoppel by laches is defined as a failure to do something, assert a claim or enforce a right at the proper time.⁴ Progressive argues that Mrs. Prosser's lawyer is presumed to know her rights under the Schedule. Although the company argues that the failure to claim income replacement benefits for approximately ten months prejudiced its ability to treat Mrs. Prosser's injuries and advance her rehabilitation, there is no evidence from health experts to support Progressive's contention. I agree with Progressive's premise that in general lawyers should know the law, and advise their clients appropriately. However, I do not accept that when an insured person retains a lawyer the insurer is thereby relieved of its statutorily imposed obligations and likewise discharged from any further duty to correct its own errors.

Here, Progressive's omissions and actions resulted in Mrs. Prosser being paid the caregiver benefit. While Mrs. Prosser's lawyer may not have acted swiftly to correct Progressive's errors, I find on the evidence in this case that the company had the responsibility to correct the misrepresentations that resulted in Mrs. Prosser's initial claim for caregiver benefits. In these circumstances, I find that Progressive's negligent misrepresentations, failure to correct them and failure to meet its statutory obligation to provide accurate written information are the overriding material causes of the delay in Mrs. Prosser's election of income replacement benefits.

I conclude that Mrs. Prosser may now elect income replacement benefits by filing an election form with Progressive within thirty days of this decision. Once the election is filed, Progressive should pay Mrs. Prosser income replacement benefits for the entire period of her entitlement less the caregiver benefits she received, together with applicable interest under the Schedule.

Order:

1. Ms. Prosser may elect income replacement benefits in accordance with the procedure set out in this decision.

May 28, 1997

Fred B. Sampliner

Arbitrator

Date

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 Regulation 635/94.
2. 2Section 94(7) of the Schedule: The approved brochures are available through the Insurance Bureau of Canada.
3. 3Hean Kheng H'ng and Tan Ai Keng and Allstate Insurance Company of Canada (March 7, 1997), OIC A96-000988
4. 4Black's Law Dictionary, West Publishing, 4th ed. (1968)