Financial Services Commission / Commission des services financiers de l’Ontario
Neutral Citation: 1998 ONICDRG 54, 1998 ONFSCDRS 54
Appeal: P97-00044
Office of the Director of Arbitrations
Glenn Graham
Appellant
and
State Farm Mutual Automobile Insurance Company
Respondent
Before: David R. Draper, Director's Delegate
Counsel:
David S. Wilson (for Glenn Graham)
Brad G. Hartley (for State Farm)
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 arbitration order dated June 30, 1997 is confirmed.
No appeal expenses are payable.
October 16, 1998
David R. Draper
Director's Delegate
Reasons for Decision
I. Nature of the Appeal
This is an appeal by Glenn Graham from an arbitration decision dated June 30, 1997, denying his claim for accident benefits under the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, O.Reg. 672/90, as amended, ("the Schedule").
The arbitrator ordered as follows:
(a) the issues in dispute were not settled at mediation;
(b) Mr. Graham is precluded from receiving accident benefits because he is entitled to receive benefits under the Workers' Compensation Act; and
(c) Mr. Graham is not entitled to interim payments under section 21 of the Schedule.
In Mr. Graham's submission, the arbitrator exceeded her jurisdiction in deciding that although the parties reached an agreement at mediation, State Farm Mutual Automobile Insurance Company ("State Farm") was not required to comply because the agreement was based on a misunderstanding. Alternatively, he contends that she erred in her interpretation of the interaction between workers' compensation and accident benefits.
II. Settlement at Mediation
Mr. Graham contends that the first issue before the arbitrator was specific and limited. She was to decide the following: "Were the issues between the parties resolved at mediation?" In his submission, this question was answered at page 7 of the decision, when the arbitrator found that there was an agreement. She was not entitled, he contends, to go on and consider whether the agreement was based on a misunderstanding.
I find no merit in Mr. Graham's position. When the history of this dispute is reviewed, it is clear that by the time it reached arbitration, the issue was whether the agreement reached at mediation was based on a misunderstanding of the situation and, if so, whether State Farm was required to comply with it. My reasons follow.
On January 29, 1993, Mr. Graham was involved in an automobile accident in his employer's parking lot. He continued working until August 1993. While he may have pursued short-term disability benefits through his employer, he did not apply for accident benefits until March 1994, more than a year after the accident and seven months after he stopped working. His application, filed by his lawyer, Mr. David Wilson, states that the accident occurred in the course of his employment, but he had not filed a claim with the Workers' Compensation Board ("WCB").
State Farm rejected Mr. Graham's claim under section 20 of the Schedule, taking the position that he was entitled to benefits under the Workers' Compensation Act and, therefore, it was not required to pay accident benefits. The provisions dealing with workers compensation benefits are found in sections 20 and 21 of the Schedule:
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.
- (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.
In January 1995, Mr. Wilson issued a Statement of Claim on behalf of Mr. Graham in the Ontario Court (General Division) against the owner and driver of the other vehicle. At some point, he also applied for workers' compensation benefits, although it is not clear how he could pursue both claims at the same time.
On March 1, 1995, the WCB advised Mr. Graham by letter that his claim was "initially allowed for health care benefits only," but his claim for lost time benefits was refused. The letter states that he was not granted lost time benefits because he continued working for eight months after the accident and nothing in the medical evidence supported his contention that his time off work was related to the accident. In conclusion, the WCB letter states:
Your claim is limited to health care benefits only. There is no entitlement in this claim for lost time benefits.
The arbitrator notes in her decision that according to Mr. Wilson, the WCB decision is under appeal. There is no indication, however, that the WCB has reconsidered its decision, or even what steps have been taken in the appeal.
In November 1995, more than a year after State Farm refused to pay accident benefits and eight months after the WCB decision, Mr. Graham applied for mediation. He claimed weekly income benefits from August 13, 1993, and unspecified supplementary medical and rehabilitation expenses. Mr. Wilson sent State Farm a large package of documents, including doctors' reports sent to the WCB. The arbitrator found, however, that the package did not include the WCB decision letter.
At the mediation, Mr. Graham was represented by Mr. Wilson. State Farm had not retained a lawyer, but Ms. Phyllis Owens acted as its coordinator and Mr. Will Langille as its contact person. The Report of Mediator, dated December 4, 1995, sets out the following agreements under the category, "Issues Resolved":
In an effort to resolve this dispute [weekly income benefits], Mr. Graham and State Farm agreed that:
i) Mr. Graham's lawyer, David Wilson, will send to State Farm the Workers' Compensation Board's letter dated March 1995 refusing to pay Mr. Graham benefits.
ii) Mr. Graham will sign the appropriate assignment pursuant to s. 21(1) of the SABS [the Schedule] that assigns to State Farm any benefits under the workers' compensation law to which Mr. Graham may become entitled as a result of the motor vehicle accident.
iii) When steps i) and ii) are complied with, State Farm will pay Mr. Graham a weekly income benefit at the rate of $614.80 per week from August 14, 1993 and ongoing, subject to State Farm satisfying itself that the definition of 'gross weekly income' pursuant to s. 12(4)(b) of the SABS [the Schedule] includes 6% vacation pay, and that the correct collateral benefit received by Mr. Graham for the period August 28, 1993 to December 15, 1993 was $580.00 and for the period December 16, 1993 and ongoing was $435.00.
Following the mediation, Mr. Wilson sent State Farm the WCB decision letter. State Farm then sent Mr. Wilson an Assignment of Workers' Compensation Benefits form, which was signed and returned in January 1996.
At that point, State Farm involved the law firm of Gilbert, Wright & Kirby. Mr. Brad G. Hartley, a lawyer at the firm, reviewed the matter and wrote to Mr. Wilson in March 1996. He took the position that because the WCB accepted that Mr. Graham was entitled to make a workers' compensation claim related to the accident, section 20 of the Schedule relieved State Farm from any obligation to pay accident benefits.
Mr. Wilson responded, disagreeing with Mr. Hartley's interpretation, but also claiming that the matter was settled at mediation, with State Farm agreeing to pay benefits as long as Mr. Graham met the agreed-upon conditions. When the dispute was not resolved, Mr. Wilson filed an application for arbitration on behalf of Mr. Graham. In its response, State Farm clearly sets out its position that the agreement reached at mediation was based on a misunderstanding about the WCB's decision and, therefore, was not a true agreement.
A pre-hearing was held before Arbitrator Manji in September 1996. In her confirming letter, she defines the preliminary issue as follows: Was the issue of Mr. Graham's entitlement to weekly income benefits resolved at mediation? She goes on to set out the parties' positions. With respect to State Farm, Arbitrator Manji states as follows:
State Farm contends that this issue was not settled at mediation. It contends that when the matter proceeded to mediation on December 4, 1995, it took the position that section 20 of the Schedule applied in this case and therefore it was not required to pay any benefits to Mr. Graham. State Farm contends that during the course of the mediation State Farm's representative agreed to pay benefits under the Schedule pursuant to section 21 of the Schedule on the understanding that section 21 in fact applied and that Mr. Graham's claim had been rejected by the WCB and that there was an outstanding issue of entitlement in regard to whether Mr. Graham could claim WCB benefits as a result of the accident. As a condition of that and to establish this fact, State Farm contend that it was agreed that the [sic] Mr. Graham's representative would send to State Farm a copy of the letter from the WCB detailing why it had rejected Mr. Graham's claim for workers' compensation benefits.
State Farm was subsequently provided with a copy of the letter from the WCB dated March 1, 1995. According to State Farm the WCB indicates that the WCB has in fact accepted Mr. Graham's claim. It accepted his claim for health care benefits. It denied his claim for benefits for loss [sic] time, on the basis of medical evidence presented to it. In light of this information, State Farm takes the position that section 21 of the Schedule does not apply and it is not required to pay benefits under the Schedule.
It is difficult to imagine a clearer indication that the dispute went beyond whether the parties left the mediation thinking they had an agreement. The issue was whether their agreement was based on a fundamental misunderstanding.
The arbitration hearing on the preliminary issue was before Arbitrator Manji, the same arbitrator who conducted the pre-hearing. The only change in the participants was that, because Mr. Wilson was a witness at the hearing, Mr. Graham was represented by a different lawyer.
In her decision, the arbitrator defines the issue in almost the same words she used in her pre-hearing letter: Were the issues between the parties resolved at mediation? I find nothing to suggest that the hearing was restricted in the manner Mr. Graham suggests. As the arbitrator states later in her decision, "the issue is whether there was a misunderstanding between the parties of the basis of the agreement to pay Mr. Graham interim benefits, pursuant to section 21(1) of the Schedule and, if so, whether State Farm should be held to the agreement in these circumstances." I conclude, therefore, that the arbitrator did not exceed her jurisdiction by deciding an issue not properly before her.
Mr. Graham also submits that the arbitrator erred in concluding that the agreement was based on a misunderstanding about the WCB's decision. This is essentially a factual question, making it difficult to challenge on appeal. After reviewing the appeal record, I find nothing to make me question the outcome. On the contrary, the evidence overwhelmingly supports the arbitrator's findings.
The WCB decision letter was a critical piece of information. For whatever reason, it was not provided to State Farm until after the mediation. The arbitrator found that during the mediation, State Farm acted on its understanding, conveyed by Mr. Wilson, that Mr. Graham's claim for workers' compensation benefits was rejected in its entirety. The arbitrator accepted that Mr. Wilson "may not have intended to mislead the mediator or State Farm," but the information he provided was misleading. There is ample evidence to support these findings, which lead almost inevitably to the arbitrator's conclusion.
Finally, Mr. Graham submits, as he did before the arbitrator, that by sending the assignment form after it received the WCB decision letter, State Farm accepted the agreement despite the information contained in the letter. The arbitrator expressed some concern about this, but was not persuaded State Farm's actions amounted to acceptance of the agreement. I am not prepared to interfere with her assessment. The interaction between accident benefits and workers' compensation can be confusing. Given the history of this claim, it is not surprising that it took State Farm some time to sort it out.
III. Sections 20 and 21 of the Schedule
Mr. Graham submits that section 20 of the Schedule does not apply to his claim because the WCB rejected his claim for lost time benefits. In essence, his argument is that he can claim any benefits that might be available to him under the Schedule that he is unable to obtain from the WCB. Like the arbitrator, I do not accept this interpretation. The WCB accepted that Mr. Graham's accident occurred in the course of his employment and, therefore, he was entitled to claim compensation under its legislation. Not only that, it accepted his claim for health care benefits. I agree with the arbitrator that this allowed State Farm to rely on section 20.
In my opinion, the arbitrator's interpretation is correct, with one exception. At page 19, she relies on the arbitration decision in Davis v. Pafco Insurance Company Limited, (OIC A-000640, February 3, 1997), a case dealing with the post-January 1, 1994 legislation. On appeal, I confirmed this decision, but held that the approach under the new legislation was somewhat different than under the Schedule.1 However, the arbitrator's reliance on Davis was only a minor factor and does not compromise her decision.
In Brasil and State Farm Mutual Automobile Insurance Company, (OIC P96-00041, July 4, 1997), a decision issued just before this appeal was filed, I reached conclusions that mirror the arbitrator's. Although Brasil involved death benefits, the following analysis applies here:
Section 20 of the Schedule should be given its plain meaning, but it must be read in context. In my view, its link to the Workers' Compensation Act is through section 4(1), which states:
- -(1) Where in any employment, to which this Part applies, personal injury by accident arising out of and in the course of employment is caused to a worker, the worker and the workers' dependants are entitled to benefits in the manner and to the extent provided under this Act.
According to this section, entitlement to workers' compensation benefits is triggered when a worker is injured in the course of his or her employment. The entitlement is to the benefits provided in the Workers' Compensation Act. The fact that certain benefits are not provided, or are to be paid to the worker's survivors, does not negate the workers' general entitlement to workers' compensation. In my opinion, it is this general entitlement that brings section 20 of the Schedule into play.
I agree with the arbitrator that the legislation makes compensation available under one system or the other, with very limited overlap. The general rule, reflected in section 20, is that where someone is injured in an accident covered by the Workers' Compensation Act, that is where compensation is provided. This is subject to two exceptions set out in section 21 of the Schedule, both creating an interim role for automobile insurers.
For these reasons, I agree with the arbitrator that Mr. Graham is "entitled to receive benefits under any workers' compensation law or plan," within the meaning of section 20 of the Schedule. This brings the section into play, disentitling him to accident benefits. The fact that the WCB rejected part of his claim does not allow him to claim accident benefits.
Mr. Graham also objects to the arbitrator's interpretation of section 21. I have difficulty following his arguments but, in any event, I agree with the arbitrator's analysis. Section 21 only requires insurers to pay accident benefits on an interim basis "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." In this case, the interim period ended March 1995, when the WCB issued its decision. The situation might be different if Mr. Graham had re-elected to sue rather than claim accident benefits. However, that is not the case here. According to the arbitrator, Mr. Wilson testified that the WCB decision was being appealed, a finding not challenged on appeal.
IV. Appeal Expenses
This is not a case for appeal expenses. As stated above, I found no merit in Mr. Graham's argument that the arbitrator exceeded her jurisdiction on the settlement issue. The arguments about sections 20 and 21 have more substance, but the issues had already been addressed in the Brasil decision. Finally, the resolution of the appeal was substantially delayed. In December 1997, Mr. Wilson advised the Commission that he intended to file further written submissions. Despite follow-up phone calls and letters, and the imposition of deadlines, no further submissions were received.
October 16, 1998
David R. Draper
Director's Delegate