Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1997 ONICDRG 90

Appeal P96-00044

OFFICE OF THE DIRECTOR OF ARBITRATIONS

MARIO ROCCHETTI

Appellant

and

ROYAL INSURANCE COMPANY OF CANADA

Respondent

Before:

Susan Naylor, Director’s Delegate

Counsel:

Robert Matlack (for Mr. Rocchetti)

Mark Baker (for Royal Insurance)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal is dismissed and the arbitrator’s order dated March 29, 1996 is confirmed.
Mr. Rocchetti is entitled to his reasonable appeal expenses.

June 3, 1997

Susan Naylor Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Mario Rocchetti appeals an arbitrator’s order dated March 29, 1996. Mr. Rocchetti first claimed statutory accident benefits but then elected to claim workers’ compensation. Later on, he changed his election and re-applied for accident benefits. Based on the documents before him and the submissions of the parties, the arbitrator held that Mr. Rocchetti did not meet the conditions for receipt of statutory accident benefits in workers’ compensation cases set out in section 21 of the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672, (“Schedule”). Mr. Rocchetti appeals this decision.

The parties supplemented their written material with oral submissions. As a preliminary matter, Mr. Rocchetti argued that he had accepted a settlement offer from Royal Insurance that resolved the appeal. I explain my reasons for rejecting this argument at the end of the decision.

II. THE STATUTORY FRAMEWORK

Sections 20 and 21 of the Schedule address the eligibility of persons who are injured in automobile accidents in the course of employment. The applicable rules are set out below:¹

The insurer will not pay benefits under this Regulation in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers’ compensation law or plan.

21.(1) Despite section 20, the insurer will pay full benefits under this Regulation to a person described in that section until the resolution of any action brought by the person in any court to recover for personal injuries resulting from the accident under which the workers’ compensation claim arose or until the person receives payments under a workers’ compensation law or plan if,

(a) the person makes an assignment to the insurer of any benefits under any workers’ compensation law or plan to which he or she is or may become entitled as a result of the accident; and

(b) the administrator or board responsible for the administration of the workers’ compensation law or plan approves the assignment.

Subsection 21(2) sets out the formula to be used in calculating the amount of benefits recoverable by an insurer under an assignment. It states:

The amount of statutory accident benefits recoverable by the insurer under the assignment in subsection (1) shall be determined in accordance with the following formula;

A = T - C

Where,

A = amount recoverable;

T = total compensation for personal injury received by the insured person under all contracts of automobile insurance excluding any amount received as a special award under subsection 282(10) or 283(7) of the Insurance Act and any amount received as interest;

C = compensation for personal injury the insured person would have recovered under all contracts of automobile insurance had the statutory accident benefits not been paid.

III. BACKGROUND

Mr. Rocchetti was injured in an automobile accident on July 2, 1991, on his way to a job site.

He was protected under the workers’ compensation scheme but the other driver was not. This entitled Mr. Rocchetti to exercise a right of election, pursuant to subsection 10(1) of the Workers’ Compensation Act, R.S.O. 1990, c.W.11, (“WCA”), to claim workers’ compensation benefits or to pursue a tort action. An injured worker who chooses to sue forgoes any right to receive workers’ compensation benefits (“WCB benefits”) for the duration of the law suit,² but may be eligible for statutory accident benefits from his or her motor vehicle insurer under the terms of section 21 of the Schedule. If, when the law suit ends, he or she recovers less than they would have received in WCB benefits, the Workers’ Compensation Board (the Board) “tops-up” the difference under subsection 10(2) of the WCA and the repayment provisions in s.21 come into play.

Mr. Rocchetti did not pursue WCB benefits at first. Instead, he applied for, and received, statutory accident benefits from Royal Insurance Company of Canada (Royal Insurance) at the rate of $678.08 a week. Then, in late October 1991, he elected to claim WCB benefits and executed an assignment in favour of Royal Insurance as required under subsection 21(1)(a) of the Schedule. Royal Insurance continued to pay him accident benefits until February 2, 1992, when his WCB claim was processed. The Board accepted Mr. Rocchetti’s claim on a retroactive basis and paid him benefits at its rate of $527.56 a week. The Board also repaid Royal Insurance under the assignment.³

Later, Mr. Rocchetti decided to withdraw his election to claim WCB benefits and bring a tort action. He advised the Board of this at the end of May 1993, and shortly afterwards started an action. The defendants have admitted liability and the matter has been set down for trial. The Board allowed Mr. Rocchetti to re-elect on condition that he repay the WCB benefits he received (which totalled more than $66,000) out of any judgment or settlement. Mr. Rocchetti signed an assignment and direction to that effect and his WCB benefits stopped as of October 25, 1993. Mr. Rocchetti then re-applied for accident benefits from Royal Insurance, claiming weekly income benefits retroactive to February 2, 1992, as follows:

$150.52 a week from February 2, 1992 to October 25, 1993 (91 weeks) (the balance between the weekly rate of accident benefits ($678.08) and WCB benefits ($527.56)

$678.08 a week from October 26, 1993 ongoing

He also claimed certain supplementary medical and rehabilitation benefits. In his arbitration material, Mr. Rocchetti stated that he was willing to execute another assignment of his entitlement to workers’ compensation benefits in favour of Royal Insurance.

The arbitrator concluded that Mr. Rocchetti did not qualify for statutory accident benefits under the terms of section 21 of the Schedule. He held that Mr. Rocchetti had already received WCB benefits and therefore could not meet the second contingency in subsection 21(1) making benefits payable “until the resolution of any action ...or until the person receives payments under a workers’ compensation law or plan...”. He also held that since Mr. Rocchetti had assigned the proceeds of his law suit to the Board, he was not in a position to make a meaningful assignment to the insurer under subsection 21(1)(a). He concluded that the result he reached was consistent with the legislative goals of administrative simplicity and timeliness of payment.

IV. ANALYSIS

Section 20 of the Schedule restates a longstanding rule that persons who are entitled to workers’ compensation, whether they apply for benefits or not⁴, are excluded from receiving accident benefits from their automobile insurer.⁵ It is agreed that Mr. Rocchetti is entitled to workers’ compensation and therefore falls within the scope of this exclusion.

The general rule set out in section 20 pre-dates the 1991 changes to automobile accident compensation known as the Ontario Motorists’ Protection Plan (OMPP).⁶ Those changes, which included a bar to the recovery of damages except in the most serious cases, enhanced no-fault benefits and measures (including the abolition of the Board’s subrogation right)⁷ designed to shift some of the cost of automobile accidents to other compensation sources, brought other considerations into play. These are discussed by Mr. Allan O’Donnell, Q.C. in Automobile Insurance in Ontario.⁸ He explains that the Government wanted to ensure that the workers’ compensation scheme remained responsible for the costs of the bulk of automobile accident cases, where there was no recovery in tort. However, workers suing for threshold injuries should have access to accident benefits to support them until their law suit ended, like anyone else injured in a non-work related accident. Hence, the legislative drafters created an exception, found at section 21, to the general rule against paying benefits where there is workers’ compensation coverage.

Under section 21, benefits are payable only

until the resolution of any action brought by the person in any court to recover for personal injuries resulting from the accident under which the workers’ compensation claim arose

until the person receives payments under a workers’ compensation law or plan

It is important to note that the regulations do not confer a right on an insured to chose between statutory accident benefits and workers’ compensation. The right of election is within the workers’ compensation regime - the right to elect between claiming workers’ compensation benefits or instituting an action in tort - a consequence of which may give rise to eligibility for accident benefits.

The Director’s Delegate considered the meaning of section 21 in Salmon and Toronto Transit Commission (Markel Insurance), (December 20, 1991, OIC A-000235; upheld June 29, 1992, P-000235). This case concerned someone who claimed accident benefits after going through the formality of starting a law suit even though there was no hope of recovery in damages. The Director’s Delegate ruled that section 21 was an exception to the general exclusion set out in section 20 and should be construed in that light. She rejected a literal interpretation that would entitle anyone who was not in receipt of workers’ compensation to receive accident benefits. She also upheld the arbitrator’s decision that the section contemplated a bona fide action for threshold-type injuries. For the purposes of this appeal, I accept that Mr. Rocchetti’s action is bona fide⁹ and he relies heavily on Salmon in support of his position.

Mr. Rocchetti argues that a fundamental purpose of section 21 is to ensure that insureds who fall within the workers’ compensation regime have a source of benefits while they are pursuing a bona fide tort action. If the arbitrator’s decision is upheld, he will not have the benefit of income support or rehabilitation under either the accident benefit or WCB schemes during his law suit.

In interpreting the Schedule, the general principles of statutory construction must be applied. The words of section 21 must be read in context and the entire provision is presumed capable of coherent meaning.

The problem in Mr. Rocchetti’s case, put succinctly, is that after first getting accident benefits, he was paid more than $66,000 in WCB benefits over a two year period. I agree with the arbitrator that, on a straightforward reading of the subsection, benefits are payable either until the resolution of the law suit or until the person receives workers’ compensation payments. Since Mr. Rocchetti has received a substantial amount of WCB benefits, he would not qualify for accident benefits on this construction.

Mr. Rocchetti argues that the contingencies in section 21 are disjunctive and mutually exclusive: benefits continue “until” his action resolves, even though he has received workers’ compensation payments. Although this proposed construction is awkward given the section’s syntax, it is not an impossible construction if supported by the rest of the subsection read in context. However, in my view, a broader reading of the section does not support Mr. Rocchetti’s position.¹⁰

Section 21 makes the payment of benefits conditional on

(a) the person making an assignment to the insurer of any WCB benefits “to which he or she is or may become entitled as a result of the accident”

and

(b) the Board approving the assignment

Section 21 seems to contemplate two different scenarios in which accident benefits are payable: where the insured has elected to sue under s. 10(2) of the WCA, for the duration of the law suit, and where the person’s eligibility for workers’ compensation is to be determined, until that process is completed. In both cases, the payment of benefits is for a temporary period, to tide the person over until their action is resolved or their workers’ compensation claim allowed and paid. In either case, however, benefits are payable only if the insured assigns his or her entitlement to WCB benefits to the automobile insurer. The assignment requirement works in the context of workers’ compensation benefits that are or will become owing, but makes lesssense in respect of benefits that have already been paid.

The scheme envisages that in the usual course reimbursement under the assignment occurs either when the WCB benefits come on stream, or, where the person has elected to sue (and so forgoes WCB benefits in the interim), out of any workers’ compensation “top-up” available at the end of the action. The reimbursement is calculated in accordance with the formula set out in s. 21(2) of the Schedule. In the case of a successful action in which recovery exceeds any workers’ compensation entitlement, there is no reimbursement to the accident insurer. The repayment provisions broadly operate to make automobile insurers responsible only for losses compensable through the tort-based system.

Mr. Rocchetti argues that had he chosen to receive accident benefits all along, they would have continued until his law suit ended. He argues that “Royal can be in no different position after the determination of Mr. Rocchetti’s tort claim” than if [he] had not had elected WCB and had continued to receive SABS throughout”.

The difficulty with this argument is that Royal is not necessarily in the same position as if accident benefits had been paid all along. For example, since Mr. Rocchetti has already received $66,000 in WCB payments, there is no assurance that there will be equivalent funds in hand to reimburse Royal out of any workers’ compensation “top-up”. There is also the question whose responsibility, if any, it is to make up a shortfall. Mr. Rocchetti asks me to assume that the Board will approve a further assignment of his WCB benefits to Royal Insurance. Given that he has already assigned the proceeds of his action to the Board, in my view, that assumption is, to say the least, premature.

Mr. Rocchetti tries to get round any difficulties by claiming only the difference between WCB benefits and statutory accident benefits for the overlapping period. This avoids an objection based on “double-dipping” but creates its own problems. It leaves both the Board and Royal Insurance making payments over the same period between February 2, 1992 and October 25, 1993. (Mr. Rocchetti has not made any further claim in respect of the eight months before February 2, 1992, the subject of the Board’s repayment to Royal Insurance.) If Mr. Rocchetti’s action is successful, the Board, under the terms of its assignment, will be entitled to reimbursement of all WCB benefits, while Royal Insurance will only have paid the difference between statutory accident benefits and WCB benefits for that period. Mr. Rocchetti’s position seems to imply the need for a complicated administrative re-adjustment when the law suit concludes, to sort out the respective rights and responsibilities of the parties. There is no provision or mechanism in the Schedule that addresses this. In contrast, the repayment provisions seem to contemplate a cleaner, more straightforward interaction between the two systems. I find the arbitrator’s approach more consistent with the overall legislative scheme than the relative complexity and uncertainty involved in Mr. Rocchetti’s approach.

This is not to say that a person is deprived of the right to accident benefits as soon as they receive any WCB benefits. That is far from the situation here, in which Mr. Rocchetti is seeking to switch back to his motor vehicle insurer a second time, after electing to claim compensation and receiving it for close to two years. I agree with the arbitrator that, in these particular circumstances, Mr. Rocchetti’s claim does not fulfill the requirements of section 21. Therefore, under the exclusionary terms of section 20, he is not eligible for further accident benefits from Royal Insurance.

V. SETTLEMENT

On appeal, Mr. Rocchetti advanced an alternative argument. He argued that he had accepted an offer of settlement made by Royal Insurance and that the appeal was therefore moot. Essentially, Mr. Rocchetti was asking me to rule on whether the parties had reached a binding settlement of their dispute, based on correspondence between them. After hearing the parties’ submissions, I gave oral reasons for rejecting Mr. Rocchetti’s argument, which I set out below.

Following the arbitration pre-hearing conference on September 11, 1995, Royal’s representative sent Mr. Rocchetti’s lawyer a brief letter, offering to settle the dispute for a lump-sum payment in return for Mr. Rocchetti’s agreement to forgo any claim for benefits against Royal. The letter was open-ended and did not stipulate any time-frame for acceptance. It was never formally withdrawn in writing or orally.

Mr. Rocchetti took no steps to accept the offer, and proceeded to a hearing of the preliminary issue of whether he was entitled to receive accident benefits under section 21 of the Schedule. The arbitrator’s ruling put an end to Mr. Rocchetti’s claim for benefits, subject to his right of appeal.

Approximately five and a half months after the arbitrator’s decision was issued, on September 11, 1996 - the day scheduled for the hearing of Mr. Rocchetti’s appeal - Mr. Rocchetti’s new lawyer wrote to Royal’s representative purporting to accept the settlement offer made a year earlier. Royal Insurance took the position that disposition of the preliminary issue, and with it Mr. Rocchetti’s claim for benefits, effectively revoked the offer so that it was no longer open for acceptance.

Based on the facts, I have no hesitation in concluding that the offer expired once the arbitrator’s decision was issued disposing of Mr. Rocchetti’s claim for benefits. Professor S.M. Waddams describes the lapse of contractual offers in his textbook, The Law of Contracts. He states:¹¹

If no time limit is specified, the power of acceptance expires after a reasonable time which will, of course, depend on many factors including the subject matter of the transaction, the practise (if any) of the trade and the mode of communication used by the offeror. An offer may also lapse on the occurrence of some condition, express or implied, other than the passing of time.

In this case, the offer was made in the course of the arbitration shortly after the date the hearing into the preliminary issue had been scheduled. Both parties were well aware that an unsuccessful result for Mr. Rocchetti would dispose of his claim. Neither party conducted themselves as if the offer was still in effect after the dismissal of Mr. Rocchetti’s case. It was only on the day of the appeal, a year after the offer had been made, that Mr. Rocchetti purported to accept it. In my view, it is unnecessary to differentiate whether the offer expired by the passage of time or by the occurrence of an implicit condition relating to issuance of the decision. Either applies here.

Mr. Rocchetti suggested that Royal Insurance’s offer could not be withdrawn or revoked unless this was done in writing or by unequivocal oral statement. He relied on several cases, including the decision of the Court of Appeal in North York Condominion Corp. No 5 v. Van Horne Clipper Properties, (1989) 1989 CanLII 4375 (ON CA), 70 O.R. (2d) 317. These cases were decided under Rule 49 of the Rules of Civil Procedure, governing proceedings in civil courts. That Rule attributes cost consequences to the making of written settlement offers in order to promote settlement and discourage unnecessary litigation. Since the Rule stipulates how offers made pursuant to it may be withdrawn (i.e. in writing) it has been held that the common-law rules regarding revocation in other circumstances do not apply.

I do not find the cases relevant. The Rules of Civil Procedure do not apply to administrative tribunals such as Commission adjudicators, who must adjudicate on settlements based on relevant statutory and common-law principles. Moreover, even if the Rules of Civil Procedure were to apply, Rule 49.04 specifies that an offer may not be accepted after a court disposes of the claim in respect of which the offer is made. Mr. Rocchetti cannot selectively rely on one part of the Rule and reject the application of the rest of its provisions.

Royal Insurance submitted that, in any event, the parties had not entered into a binding settlement under the Insurance Act because it had not provided the documentation required under applicable regulations in order to effect a settlement.¹² In view of my decision, it is not necessary to deal with this argument.

VI. EXPENSES

Although it was not successful, Mr. Rocchetti’s appeal raised a significant issue regarding the interpretation and application of the Schedule. In accordance with the usual practice in Commission appeals, he is entitled to his reasonable expenses.