Neutral Citation: 1997 ONICDRG 87

OIC A97-000579

ONTARIO INSURANCE COMMISSION

BETWEEN:

MARK BROWN

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE and DECISION ON A MOTION FOR INTERIM BENEFITS

Issues:

The Applicant, Mark Brown, was seriously injured in a motor vehicle accident on September 2, 1996. He applied for statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.¹ Allstate declined to pay benefits, on the basis that there was no valid policy of insurance in existence. Accordingly, Allstate argued that it is not an insurer for the purposes of this application. The parties were unable to resolve their disputes through mediation and Mr. Brown applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Mr. Brown brought a motion for interim benefits to be paid, pending the resolution of the question whether Allstate is ultimately liable to pay benefits.

Mr. Brown also claims interest on any amounts owing, his expenses incurred in the hearing, and a special award.

Result:

1. Allstate must pay statutory accident benefits to Mr. Brown pending the resolution of any dispute about its liability to pay such benefits.

2. Allstate must pay interim benefits as set out in the body of this decision.

3. Mr. Brown is entitled to his expenses incurred in respect of this hearing on preliminary and interim issues.

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on May 3, 1997, before me, Frederika Rotter, Senior Arbitrator.

Present at the Hearing:

Mr. Brown's Representative: David A. Payne, Barrister and Solicitor

Allstate's Representative: Ian D. Kirby, Barrister and Solicitor

Allstate's Claims Manager: Kevin McConkey

Exhibits:

The parties filed six document books.

Decision on Preliminary Issue:

This matter came before me as an issue for a preliminary determination and a motion for interim benefits. The Applicant, Mark Brown, was seriously injured in a motor vehicle accident on September 2, 1996, and is now a quadriplegic. He has received no statutory accident benefits since the accident. Allstate denies that it is responsible to pay benefits. Mr. Brown requests an interim order, requiring Allstate to pay benefits pending the resolution of the dispute about liability.

Following his accident, Mr. Brown was hospitalized. At the time of the hearing, he had not yet been discharged from hospital. He claims accident benefits on an urgent basis, including attendant care benefits, rehabilitation benefits, supplementary medical benefits and income replacement benefits. It appears that he does not have personal insurance coverage under an automobile insurance policy.

At the time of the accident, Mr. Brown was a passenger in a 1994 Pathfinder, a leased vehicle owned by Nissan Canada Finance Limited. Mr. Brown asserts that this vehicle was insured by Allstate, and accordingly he applied to Allstate for accident benefits, on February 11, 1997. Mr. Brown subsequently applied for benefits to two other insurance companies, and to the Motor Vehicle Accident Claims Fund, as he acknowledges that Allstate is disputing coverage. It is not disputed that Allstate was the first company to whom Mr. Brown applied for benefits.

Allstate denies that it is liable to pay benefits. It states that it had no policy of insurance on the Nissan vehicle in effect at the time of the accident. Allstate acknowledges that it did at one time insure the vehicle, but states that its policy expired on May 18, 1996. Accordingly, it claims that it is not an insurer even for the purposes of disputing liability under the Insurance Act, and Ontario Regulation 283/95 - Disputes Between Insurers. Allstate relies on the definition of insurer set out in section 1 of the Insurance Act., namely :

"insurer" means the person who undertakes or agrees or offers to undertake a contract; ("assureur")

Allstate argues that in the present case there was no existing agreement, undertaking or offer to undertake a contract, and so it cannot be considered an insurer, within the meaning of the Insurance Act. Accordingly, Allstate claims it is not bound by the procedures set out in Ontario Regulation 283/95, governing the resolution of priority disputes between insurers. Allstate claims that the priority rules (set out in section 268 of the Act) and the Regulation only apply to "insurers", within the meaning of the Act - i.e in situations where it is acknowledged that there is a valid and subsisting policy of insurance in force.

Allstate claims that it is in the same position as it would be if an applicant for benefits arbitrarily chose to apply to it for accident benefits in the absence of any contract of insurance. It need not respond to the application. The applicant first has the onus of establishing that Allstate is an "insurer" within the meaning of the Act, before any statutory duty or obligation to respond to the application can be invoked.

Allstate's argument may have some merit in a situation where an applicant candidly admits that he or she has simply applied for accident benefits from a randomly selected insurance company, without asserting any contractual relationship or nexus. In that situation, it may be that the company need not respond to the application. However, this is not the fact situation in the present case.

In the present case, Mr. Brown is asserting that a valid contract exists. Allstate concedes that it provided coverage on the vehicle up to four months before the accident in question. In my view, these facts, prima facie, create enough of a connection between the parties to generate an obligation, on the part of Allstate, to respond to this application. Allstate should invoke the process set out in Ontario Regulation 283/95 - Disputes Between Insurers, if it feels that it is not the insurer who is ultimately responsible for paying benefits in this case.

That regulation provides:

1. All disputes as to which insurer is required to pay benefits under section 268 of the act shall be settled in accordance with this Regulation.

2. The first insurer that receives a completed application for benefits is responsible for paying benefits to an insured person pending the resolution of any dispute as to which insurer is required to pay benefits under section 268 of the Act.

Insurers may dispute their liability to pay statutory accident benefits on numerous grounds. A policy may be void or voidable, for various reasons. Whether or not a valid policy exists in a particular case is a question of fact and law, which can only be determined after a full hearing on the merits.

However, the forum for determining whether a particular insurance company is liable to pay benefits is no longer the Dispute Resolution Group of the Ontario Insurance Commission. Ontario Regulation 283/95 further provides that all disputes about which insurer is required to pay benefits shall be resolved through a private arbitration under the Arbitrations Act, 1991. Accordingly, I find that the question of whether Allstate had a valid policy in effect on the Nissan vehicle must be decided by a private arbitrator under the Arbitrations Act, 1991. I need not decide, as a preliminary matter, whether Allstate is an "insurer" for the purposes of the Regulation, since that is integral to the question which the arbitrator appointed under the Arbitrations Act, 1991 must determine.

In this case, Allstate is using a form of circular logic to support its position. If I accept that it is not an insurer, I must first make a finding on whether a valid policy of insurance, issued by Allstate, was in effect at the time of the accident. This is precisely the issue in dispute between the parties, and in my view, the means for resolving that dispute has been prescribed by Regulation 283/95.

Under the regulation, Mr. Brown has the opportunity to participate in the private arbitration. Whether or not he chooses to participate, it is my view that the decision rendered by the private arbitrator will be binding on Mr. Brown.

In the interim, and pending a finding on liability as among several insurers, the regulation provides, at section 2, that the first insurer that receives a completed application for benefits is responsible for paying benefits to an insured person.

Until an arbitrator appointed under the Arbitrations Act 1991 determines that Allstate is not required to pay benefits under section 268 of the Insurance Act, I cannot find that Allstate is not an insurer. Accordingly, I conclude that pursuant to section 2 of the Regulation, Allstate is responsible for paying benefits to Mr. Brown, on an interim basis.

Decision on Interim Benefits

Mr. Brown has sustained serious and permanent injuries, and thus far he has received no statutory accident benefits from any automobile insurer.

Regulation 283/95 - Disputes Between Insurers was enacted precisely to prevent the sort of harm created by this situation. Under the regulatory scheme, coverage is to be provided in cases where insurance companies, for whatever reason, are disputing their liability to pay benefits. Injured individuals are not supposed to fall between the cracks, as Mr. Brown has done.

In the circumstances of this case, I find it appropriate to make an interim order for the payment of certain benefits.

Section 279(4.1) of the Insurance Act gives arbitrators the discretionary authority to make interim orders pending the final order in any matter. The criteria for determining whether an interim order is appropriate have been developed through various arbitral decisions.² In general, arbitrators will not make interim orders on a routine basis, since an application for interim benefits is determined after only a very summary review of the evidence, and the order itself must be made expeditiously.

An interim order will be made only in special or unusual circumstances. The overriding principle in most cases is that an order will be made only after a hearing which fully canvasses the evidence and positions of both sides.

Interim orders are generally granted where an applicant has (1) established, to a convincing degree, that he or she is entitled to the benefits claimed and (2) demonstrated a need, necessity or urgency for the interim order.

In the present case, I am persuaded that Mr. Brown urgently requires accident benefits in order to facilitate his discharge from hospital and subsequent rehabilitation. I find that, due to the nature and severity of his injuries, he needs, on an urgent basis, certain medical and rehabilitation items and services. Accordingly, pursuant to the criteria enunciated above, I am ordering that the following interim benefits be paid, pending a full arbitration hearing at the Ontario Insurance Commission, determining Mr. Brown's entitlement to all the benefits he has claimed.

Medical and Rehabilitation Benefits:

I find that Allstate is required to pay the reasonable expenses for the goods and services listed below, to the extent that such goods and services are not covered by any other insurer, and in particular, by Mr. Brown's disability insurance carrier.

1. Prescribed equipment costs (including driving assessment) for discharge from hospital, as listed in brief 4, Tab 1,

2. Monthly attendant care benefits, to a maximum of $6,150.28 per month, commencing from the date of Mr. Brown's discharge from hospital.

3. Television expenses of $794.04

4. Expenses for wheel chair ramps: $34.95 per month from December 1996 onwards

5. Dynamic Rehabilitation Case Manager fee - $1,075.84

6. Payment for air ambulance - $1,887.00

7. Bill for services provided by Dynamic Rehabilitation - $1,106.38

8. Cost of obtaining medical records from Sunnybrook Hospital, Lyndhurst Hospital and Recordex Services - $646.10

9. Reasonable expenses for cellular phone

10. Cost of shower commode - $1,419.50

Mr. Brown also claimed $2,995.00 for the cost of a "versatrainer". I was provided with no information as to the nature and function of this item. In the absence of any specific evidence that this item is reasonably required, I am declining to make an interim order that Allstate pay for it.

I am declining to order that Allstate pay, on an interim basis, the cost of housing renovations claimed by Mr. Brown. Housing renovations represent a major expenditure, and I find it would be inappropriate to make any interim order without giving the Insurer a full opportunity to respond to and adjust this aspect of the claim.

I am also declining to order, on an interim basis, the expenses claimed by Mr. Brown that properly would form part of his hearing expenses, such as expenses incurred for obtaining medical reports and the filing fee for the arbitration.

Mr. Brown also seeks a special award, under section 282(10) of the Insurance Act, on the basis that Allstate unreasonably delayed or withheld benefits in this case. I am mindful that a number of the expenses, which I have ordered Allstate to pay on an interim basis, are "pay pending dispute" items under section 36(4) of the Schedule. Under section 268(8) of the Act the Insurer is obliged to pay the expense pending the resolution of a dispute about the expense. Normally, the unreasonable failure to pay such an expense might well attract a special award.

However, I am reluctant to order a special award on an interim basis. A special award is, by its nature, a discretionary item and not a benefit per se, to which an applicant can establish prima facie entitlement. Arbitrators generally order a special award after a full hearing on the merits, which gives them an opportunity to carefully consider the reasonableness of any position adopted by the insurer. I see no urgency or necessity, in this case, to make an interim order for a special award. I conclude that the issue of a special award shall be determined by an arbitrator, after a full hearing, on the merits of this case.

Expenses

In the circumstances of this case, I am awarding Mr. Brown his expenses of this hearing.

Order:

1. Allstate must pay statutory accident benefits to Mr. Brown pending the resolution of any dispute about its liability to pay such benefits.

2. Allstate will pay Mr. Brown his reasonable expenses for the following goods and services to the extent that such expenses are not covered by any other insurance carrier:

a. Prescribed equipment costs (including driving assessment) for discharge from hospital, as listed in Tab 1 of Applicant's Document Brief #4.

b. Monthly attendant care benefits, to a maximum of $6,150.28 month, commencing from the date of Mr. Brown's discharge from hospital.

c. Television expenses of $794.04.

d. Expenses for wheel chair ramps: $34.95 per month from December 1996 onwards.

e. Dynamic Rehabilitation Case Manager fee - $1,075.84.

f. Payment for air ambulance - $1,887.00.

g. Bill for services provided by Dynamic Rehabilitation - $1,106.38.

h. Cost of obtaining medical records from Sunnybrook Hospital, Lyndhurst Hospital and Recordex Services - $646.10.

i. Reasonable expenses for cellular phone.

j. Cost of shower commode - $1,419.50.

3. Mr. Brown is entitled to his expenses incurred in respect of this hearing on preliminary and interim issues.

May 29, 1997

Frederika Rotter Senior 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 and 781/94.
2. 2See for example Malabanan and Canadian General Insurance Company (September 9, 1996), OIC A96-000084; Osbourne and Allstate Insurance Company of Canada (September 5, 1995), OIC A-009110; Lucas and Dominion of Canada General Insurance Company (March 24, 1995), OIC A-009670.