Neutral Citation: 1998 ONICDRG 109

OIC A97-001522

ONTARIO INSURANCE COMMISSION

BETWEEN:

CARMELA DIPIETRO

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON PRELIMINARY ISSUES

Issues:

The Applicant, Carmela DiPietro claims that she is entitled to receive statutory accident benefits, payable under Ontario Regulation 672,¹ from Allstate Insurance Company of Canada, ("Allstate"), as a result of a motor vehicle accident on February 5, 1992.

Allstate alleges that Ms. DiPietro is precluded from proceeding with this arbitration because she settled her claims arising from that accident, and because she commenced this arbitration more than two years after the date on which Allstate refused to pay her statutory accident benefits. Ms. DiPietro disagrees.

The issues in this hearing are:

1. Is Ms. DiPietro precluded from proceeding to arbitration because she settled her claims for statutory accident benefits arising from an accident on February 5, 1992?

2. Is Ms. DiPietro precluded from proceeding to arbitration because she commenced an arbitration more than two years after the date on which benefits were refused?

Result:

1. Ms. DiPietro did not settle her claims for statutory accident benefits arising from an accident on February 5, 1992.

2. Ms. DiPietro's application for arbitration was timely. Ms. DiPietro is not precluded from proceeding to arbitration.

Evidence and Findings:

1. Was there a settlement of the February 1992 claim?

Background

Between 1992 and 1994, Ms. DiPietro was involved in three motor vehicle accidents. The first of these took place on February 5, 1992, the second on November 18, 1992, and the third on September 19, 1994. Ms. DiPietro claimed statutory accident benefits from Allstate in relation to all three accidents. The parties agree that Ms. DiPietro settled her claims in relation to the second and third accidents.² The parties disagree whether Ms.DiPietro also settled her claims in relation to the first accident.

In February 1994, Ms. DiPietro retained counsel to represent her in relation to her claims from the first and second accidents. She applied for mediation and arbitration in relation to the second accident. (This was an earlier arbitration file, A-012755, not the present arbitration.)

The parties had discussions which led to the signing of a release on April 26, 1995. Allstate contends that when Ms. DiPietro signed that document, she released her claims for both the first and second accidents. Ms. DiPietro contends that she only released her claims with respect to the second accident.

The release

The release is a typewritten document drafted by Allstate. At various points in the release there are underlined blank spaces for the insertion of relevant particulars. These were completed in handwriting by Allstate's representative. The document was signed by Ms. DiPietro and witnessed by her former counsel on April 26, 1995.

The relevant insertions state that the Applicant is Carmela DiPietro, the policy period is October 20, 1992 to October 20, 1993, the date of the accident is November 18, 1992, and the amount of the weekly income benefit is $269.67. The consideration is $6,755, in exchange for which Ms. DiPietro released Allstate from all claims for weekly income benefits and supplementary medical benefits in relation to the motor vehicle accident of November 18, 1992 "except orthopedic bed and dental expenses."

Allstate concedes that the release does not mention the February 5, 1992 accident. Allstate asks that I infer from Allstate's practice, the words used in the release, and the correspondence between the parties, that Ms. DiPietro settled her claims for statutory accident benefits in relation to both the February 5, 1992 and the November 18, 1992 accidents, in exchange for $6,755.

Allstate states that when Ms. DiPietro was involved in the second motor vehicle accident on November 18, 1992, she was still receiving weekly income benefits in relation to the first accident. Since her condition was aggravated, it closed out the February 5, 1992 file and continued to pay her $269.67 as weekly income benefits, without a one week waiting period, under the new file. The second date of loss was then used in correspondence, along with a new file number.

Allstate states in its Response: "We believe that this is the correct thing to do and is in our client's best interest, as the 156-week period of partial disability is extended, and she would receive a fresh cap of $500,000 in medical rehabilitation benefits." Allstate submits that this practice supports the position that both claims were settled in April 1995.

Counsel for Ms. DiPietro submitted that there would be situations in which Allstate's practice would not be in the insured person's best interest. For example, if the file close out did not take place, the insured person could have access to two amounts of $500,000 for medical and rehabilitation benefits, instead of one.

At the time of the second motor vehicle accident, Ms. DiPietro was representing herself. There is no evidence that she was aware of Allstate's practice, that it was communicated to her, or that she consented to Allstate's closure of her initial file. Ms. DiPietro's former counsel wrote to Allstate in February 1994 to advise that he had been retained in relation to the first two accidents. There was no evidence that Allstate's practice or the file closure was brought to the attention of her counsel. I am not persuaded that in the absence of specific communication, Ms. DiPietro or her former counsel would conceive that when Allstate stated November 18, 1992 as the date of loss, that Allstate meant to include both the February 5, 1992 and November 18, 1992 accidents.

Allstate relies on the insertion of the words "except orthopedic bed and dental expenses" in the release. Allstate alleges that Ms. DiPietro's dental claim arose from the February 1992 accident. Thus, the only reason for mentioning dental expenses was because the parties were addressing her claims from the February 1992 accident in the settlement. According to Allstate, the proviso "except orthopedic bed and dental expenses" meant that Ms. DiPietro released all claims for supplementary medical benefits arising from the February 1992 accident, with the exception of the orthopedic bed and dental expenses.

More than one dental expense claim appears to have been in issue. Ms. DiPietro claimed that the extraction of a tooth was required on February 27, 1992, as a result of the February accident. The attending dentist's report dated September 28, 1992 with respect to this extraction was submitted and the claim was denied. Ms. DiPietro also submitted a claim for dental x-rays and a plaster model. Allstate disputed that these expenses were the result of the February accident.

When Ms. DiPietro applied for mediation in relation to the second accident of November 18, 1992, Allstate's representative wrote the mediator that Ms. DiPietro was claiming for dentures, and stated that according to the adjuster "Ms. DiPietro believed that scar tissue from her whiplash has spread to her dentures."

In a letter dated February 23, 1995 which referred to a date of loss of November 18, 1992, Allstate's representative forwarded the cheque for $6,755 along with the draft release. He stated that he would "await receipt of the particulars upon which you intend to support a claim for certain dental expenses. Quite frankly, I have not reviewed Ms. DiPietro's file in this regard, and I shall not undertake to do so until you have indicated the nature and extent of this particular claim." It is unclear whether this was a reference to one of the earlier claims which had been submitted and denied, or to a fresh claim. It is also unclear whether this refers to a claim made as a result of the first or second accident.

I find that the proviso in the release relating to the dental expenses does not point to a clear intention of both parties to address dental expenses relating to the first accident which occurred in February 1992. I cannot therefore conclude that the proviso meant that the parties were also settling Ms. DiPietro's claims for statutory accident benefits from the February 1992 accident.

Allstate asked that I infer from the correspondence that both claims were being discussed. The Applicant's former counsel acknowledged that such discussions did take place; however he alleges that Allstate did not accept the Applicant's proposal for a settlement in relation to both 1992 accidents. I accept that the correspondence does include discussions with respect to the first and the second accidents; however the correspondence does not establish that both claims were settled and released in April 1995.

I conclude that the parties were not ad idem, with respect to the inclusion in the settlement of Ms. DiPietro's claims arising from the February 5, 1992 accident. Express language is required to bar the Applicant's claims. The release makes no reference to the February 5, 1992 accident. Based on the evidence adduced before me, I find that Ms. DiPietro did not release her claims for statutory accident benefits arising from the February 5, 1992 accident, when she signed the release on April 26, 1995.

2. Time Limits

Allstate submits that it clearly and unequivocally refused statutory accident benefits in relation to the February 5, 1992 accident by sending three documents to Ms. DiPietro's former lawyer in about August 1994. Under section 281(5) of the Insurance Act, Ms. DiPietro must commence an arbitration proceeding within two years of the date of the refusal. Since her arbitration application was received by the Ontario Insurance Commission on July 10, 1997, Allstate alleges that Ms. DiPietro's arbitration application was out of time.

Ms. DiPietro disputes that Allstate refused her benefits in relation to the February 5, 1992 accident until February 13, 1996. She alleges that her arbitration application, which was received by the Commission on July 10, 1997, was therefore filed within the two year time limit. Ms. DiPietro contends that the documents on which Allstate relied were neither clear nor unequivocal. She also alleges that Allstate did not comply with the provisions of the Schedule which require the notice of refusal to be sent to her, and to be sent to her forthwith.

The Law

Section 281(5) of the Insurance Act provides that an arbitration proceeding "in respect of no-fault benefits must be commenced within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Schedule. There is no longer period provided in the relevant Schedule. A limitation defence must be strictly construed since it denies the Applicant the opportunity to have her claims adjudicated.³

Section 24(8) of the Schedule provides that "If the insurer refuses to pay an amount claimed in an application for no-fault benefits, the insurer shall forthwith give notice to the insured person giving reasons for the refusal."

The arbitration decisions which have considered these provisions of the Act and the Schedule establish the following: "The onus is on the insurer to establish that an applicant has received the proper notice. The refusal relied on must be clear and unequivocal, and must be communicated to the applicant."⁴ "The purported notice of refusal itself must state, clearly and unequivocally, and in a simple straightforward fashion, the fact that the insurer refuses to pay the benefit in question, and the reasons for the refusal."⁵

Clear written notice "is of particular importance where there are multiple accidents, overlapping claims and ongoing negotiations. The two year time period referred to under section 281(5) of the Act begins to run from the time the insurer has complied with the written notice provisions under section 24(8) of the Schedule."⁶

Findings

Allstate submits that the documents, taken in their totality, convey a clear and unequivocal decision by Allstate to terminate Ms. DiPietro's statutory accident benefits in relation to her February 5, 1992 accident. I do not agree.

The first document is Allstate's covering letter, from a senior claims representative, dated August 24, 1994, addressed to Ms. DiPietro's former counsel. The letter refers to the date of loss as November 18, 1992; not February 5, 1992. The letter states that the enclosures consist of : a summary of the total amount of disability payments paid to Ms. DiPietro, an assessment of claim form, and a report based on an insurer's medical examination. The writer sets out particulars of an offer which had been made to close out the file. There is no specific statement in that letter which conveys that Allstate refused further benefits in relation to the February 5, 1992 accident.

The second document provided is a copy of the Assessment of Claim by Insurer form, dated June 9, 1994, signed by a senior claims representative. It is barely legible. I was advised that it had been photocopied from a carbon copy. The carbon copy appears to have slipped while the form was being completed, so that what is legible may or may not be shown in the appropriate space on the form.

The following are the details which I am able to decipher: Policy claiming under: MI 104 296. This policy number relates to the November 18, 1992 accident. There appear to be two dates of incident. The first is 1992/ 02/ 05, or the February 5, 1992 accident; the second date is likely November 18, 1992.⁷

The weekly income benefits and supplementary medical benefit portions of the form were completed as follows:

"Weekly Income Benefits

Not Applicable Claim Accepted in Entirety [X]Portion of Claim Denied Entire Claim Denied The Insurer will pay the amount of $185.00 per week for the period_____ through ________ Explanation: The IME by Dr. Darracott indicates that your complaints are not related to the motor vehicle accide{not legible} and therefore you are no longer eligible for the weekly benefit under the Ontario Motorist Protection Plan. If you have any questions please call 1-800-5 {not legible}624"

"Supplementary Medical and Rehabilitation Benefits

Not Applicable Claim Accepted in Entirety Portion of Claim Denied Entire Claim Denied

The Insurer will pay the amount of $899.01

Explanation: Expenses paid up to June 1, 1994 the date Dr. Darracott's report was received."

In the weekly income benefits section, according to the tick box, a portion of Ms. DiPietro's claim for weekly income benefits is being denied. What portion of the claim is being denied is unclear. A denial of a portion of the claim does not support Allstate's position that Ms. DiPietro's weekly income benefits were being terminated, or that further weekly income benefits were being refused.

The form states that the insurer will pay the amount of the weekly income benefit at $185 per week. The tense is future; the period during which this payment will commence or occur is not specified. As noted earlier, Allstate was paying Ms. DiPietro a weekly income benefit at the rate of $269.67 a week in relation to the motor vehicle accident of February 5, 1992, not $185 per week.

The explanation states that the reason for denying a portion of the claim is Dr. Darracott's opinion that Ms. DiPietro's complaints are not related to the motor vehicle accident, or perhaps the word is "accidents," and that you are no longer eligible for the weekly benefit under the Ontario Motorist Protection Plan. This is a clear statement that Ms. DiPietro is no longer eligible for the weekly income benefit. It does not explain why $185 per week will be paid.

It is unclear, whether the word is "accident" or "accidents," and, if "accident," which accident is being referred to. There is a reference to the report of an examination conducted by Dr. Darracott. Two reports from Dr. Darracott were filed as exhibits. One report is dated June 11, 1992; the other is dated May 6, 1994. According to the covering letter "an IME" report was sent. I take this to mean that one report was sent.

In each of the reports, Dr. Darracott opines that Ms. DiPietro's complaints are not related to the motor vehicle accident. The earlier report mentions the first accident and assists Allstate in pinning down which accident is being referred to. The second report refers to the policy number assigned in relation to the second motor vehicle accident, refers to motor vehicle accident in the singular, but does not specify an accident date. The second report states that it is to be read in conjunction with the first. There was no evidence before me as to which report was sent.

Allstate relies on the report dated June 11, 1992, which refers to the February 5, 1992 accident. I find it puzzling that a report dated in 1992 was used to support a purported termination of benefits in 1994. Nevertheless if the explanation portion of the Assessment of Claim form could be read in isolation from the rest of the form, and read in conjunction with Dr. Darracott's report of June 1992, and the inference that Allstate accepted that opinion is drawn, then a refusal of weekly income benefits in relation to the February 1992 accident would be conveyed. This would support Allstate's position that weekly income benefits in relation to the February 1992 accident were terminated in August 1994. This is not the test, however, nor is it the test suggested by Allstate. I am required to consider the documents which Allstate sent in their totality.

If the May 6, 1994 report was sent, no accident date is mentioned, it would be difficult for the reader to ascertain the date of the accident in relation to which Dr. Darracott expressed his opinion.

None of the tick boxes in the supplementary medical and rehabilitation benefits portion of the form are checked off. The amount that the insurer will pay appears to be $899.01. The explanation refers to June 1, 1994 as the date on which Dr. Darracott's report was received. This tends to suggest that the second of the reports, dated May 1994, was sent.

Section 24(8) of the Schedule requires insurers to provide "written notice to the insured person giving the reasons for the refusal." In the case of Grout and Pilot Insurance Company,⁸ Arbitrator Makepeace concluded that "when an insurer terminates benefits on the basis of a medical report, the report forms part of the insurer's reasons for termination, and should generally be provided to the insured person." In the absence of clear evidence as to which of the reports was provided, I am not prepared to take the serious step of barring the Applicant from an adjudication of her claims.

The summary of accident benefits payments is dated July 29, 1994. It, too, refers to the November 18, 1992 date of loss. It reflects payments made by Allstate between December 21, 1992 and May 12, 1994. None of the payments pre-date the November 18, 1992 accident. Although Allstate does not rely on this document, it was one of the documents which was enclosed with the letter dated August 24, 1994.

I find that the documents on which Allstate relies do not convey a clear and unequivocal refusal of benefits in relation to the February 5, 1992 accident. It is unclear whether the insurer was denying or reducing Ms. DiPietro's weekly income benefits. If there was a reduction in her weekly income benefits, then the stated explanation does not jibe with the reduction. It is also unclear from the explanation and the accompanying documents whether the weekly income benefits are being denied or reduced in relation to the February 5, 1992 accident. There is a similar lack of clarity as to whether the supplementary medical benefits were refused in relation to the first or second accidents, or both accidents. As stated earlier, clear written notice is of particular importance where there are multiple accidents and overlapping claims.

Because of my finding, the two year time period for commencing an arbitration did not begin to run from August 1994. Ms. DiPietro is therefore not precluded from proceeding with this arbitration. It is not necessary to determine whether the documents were sent "forthwith," within the meaning of the Schedule or whether Allstate was required to send the documents to Ms. DiPietro.

Order:

1. Ms. DiPietro may proceed to arbitration in relation to her claims for statutory accident benefits arising from the motor vehicle accident of February 5, 1992.

Suesan Alves

Arbitrator

Date

APPENDIX

Hearing:

The hearing was held in Hamilton, Ontario, Ontario, on April 6, 1998, before me, Suesan Alves, Arbitrator.

Present at the Hearing:

Applicant:

Carmela DiPietro

Ms. DiPietro's

Adam Wagman

Representative:

Barrister and Solicitor

Allstate's

Stuart Aird

Representative:

Barrister and Solicitor

James Greve

Barrister and Solicitor

Allstate's

Mike Tolan

Officer:

The Applicant's daughter Diana DiPietro was also present at the hearing.

Witnesses:

The hearing proceeded on the basis of documentary evidence and submissions. No witnesses were called.

Exhibits:

Twenty five exhibits were filed.

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 On or Between June 22, 1990 and December 31, 1993. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2The Response to the arbitration application states that the claims have been settled. A letter from the Applicant's former counsel states that only Ms. DiPietro's claims for weekly income benefits have been settled.
3. 3Wiggan and Simcoe and Erie General Insurance Company (June 12, 1996 ), OIC P-004204.
4. 4Zeppieri and Royal Insurance Company of Canada (February 17, 1994), OIC A-005237.
5. 5Talany and Royal Insurance Company of Canada (May 3, 1995), OIC A-009300.
6. 6N.R. and Wellington Insurance Company (July 6, 1995), OIC A-000104.
7. 7The month appears to be 11, or November; the day 18. Since the third accident, September 19, 1994, had not as yet occurred it is likely that the year is 1992, and that this is a reference to the second accident on November 18, 1992.
8. 8(May 4, 1995), A-004805.