Neutral Citation: 1998 ONICDRG 8, 1998 ONFSCDRS 8

OIC A96-001865

BETWEEN:

MARIE BANSKI

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

The preliminary issue in this case is whether the Applicant, Marie Banski, is precluded by the operation of subsection 281(5) of the Insurance Act, R.S.O. 1990, c.I.8 ("the Act"), as amended, and subsection 26(1) of the Schedule¹ from commencing arbitration proceedings with respect to the merits of her claim for weekly income benefits,

Ms. Banski was injured in a motor vehicle accident on December 28, 1993. Allstate Insurance Company of Canada ("Allstate"), paid her weekly income benefits under the Schedule until August 27, 1994. On November 1, 1995, Ms. Banski applied for mediation; however, the parties were unable to resolve their dispute. The Report of Mediator was issued on December 14, 1995. On November 15, 1996, Ms. Banski applied for arbitration under the Act.

Allstate contends that Ms. Banski's Application for Arbitration is time-barred because it was not filed within two years of Allstate's refusal to pay weekly income benefits. Allstate claims that it gave Ms. Banski notice of its refusal on July 26, 1994 by an Assessment of Claim by Insurer form, ("the Assessment of Claim") dated July 26, 1994. Allstate claims that this document constitutes proper written notice of refusal under section 24(8) of the Schedule.

Ms. Banski maintains that the Assessment of Claim does not satisfy the requirements of subsection 24(8) of the Schedule and argues that Allstate can not rely on it to invoke the limitation period.

Therefore, the specific issue I must decide is :

Does the Assessment of Claim dated July 26, 1994 satisfy the requirements of subsection 24(8) of the Schedule ?

The Assessment of Claim dated July 26, 1994 does not satisfy the requirements of the Schedule. Therefore, Ms. Banksi is not precluded from commencing arbitration proceedings with respect to her claim for weekly income benefits arising from the accident of December 28, 1993.
Ms. Banski is entitled to her expenses incurred in respect of the arbitration proceeding.

Evidence and Analysis:

Subsection 281(5) of the Act states that an Applicant must commence his or her arbitration proceeding concerning a dispute about statutory accident benefits within two years of an insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Schedule

Section 26 of the Schedule states:

26.--(11) A mediation proceeding under section 280 of the Insurance Act or an arbitration or court proceeding under section 281 of the Act in respect of benefits under this Regulation must be commenced within two years from the insurer's refusal to pay the amount claimed in the application for statutory accident benefits or, if the person has attended school or accepted, or returned to, an occupation or employment, as permitted by section 16, within two years of the insurer's refusal to pay further benefits.

(2) Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within 90 days after the mediator reports to the parties under subsection 280(8) of the Act.

Subsection 24(8) of the Schedule provides that if the insurer refuses to pay an amount claimed in an application for statutory accident benefits, the insurer shall forthwith give written notice to the insured person giving reasons for the refusal.

It has been established in several arbitration decisions that a finding that the notice of refusal to pay benefits satisfies the requirements of subsection 24(8) of the Schedule is a prerequisite to any inquiry about the application of time limitations under the Schedule or the Act; and that the purported notice must communicate to the applicant the insurer's refusal to pay a benefit and the reasons for the refusal, in a clear and unequivocal manner.² In Talany and Royal Insurance Company,³ I stated:

In my view, evidence of prior communication, written or oral, between an insured person and the insurer regarding the insurer's refusal to pay benefits, is not a relevant consideration in determining whether the specific document which the insurer relies upon to invoke the statute of limitation satisfies the requirements of subsection 24(8) of the Schedule. In my view, 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. The position of the insurer must be ascertained from an objective reading of the notice itself, independent of any prior communication between the parties.

I take the same approach in this case.

The Assessment of Claim by Insurer form is a form commonly used by insurance companies to advise the insured person of the insurer's decision regarding the benefits claimed. The form states, under the heading Assessment of Claim:

The insurer has reviewed your application and has assessed your claim below. Where the insurer has denied a benefit claim entirely or in part, this is a notice to you of denial of a claim.

Below this statement the categories of benefits are listed and under each benefit category, there are four boxes: □ Not Applicable, □ Claim Accepted in Entirety, □ Portion of Claim Denied and □ Entire Claim Denied. If the insurer decides to pay a weekly benefit, the weekly amount and the duration is entered in the next line. This is followed by "Explanation" - an area where the insurer sets out the reasons for its decision to deny a claim, entirely or in part.

The Assessment of Claim in this case indicates that the claim for weekly income benefits is "Accepted in its Entirety," and that the insurer will pay the amount of $1,086.64 per week. The space for the duration of payment is left blank. Under Explanation, it states:

As discussed, this will be your final settlement for any and all disability benefits as a result of injuries received in the accident of 12.28.93. (Emphasis added)

I find that Allstate's claim that it provided a clear and unambiguous notice of refusal to pay benefits cannot be ascertained from an objective reading of the Assessment of Claim. I find the document is self-contradictory and misleading. It does not state that Allstate refused to pay the benefits claimed; on the contrary, it indicates that Ms. Banski's claim is "accepted in its entirety." However, the form also appears to confirm terms of a prior settlement discussion by stating that the amount of $1,086.64 is Ms. Banski's "final settlement for all and any disability benefits" arising from the accident in question. It does not contain the reasons for the refusal.

Allstate claims that the reasons for the refusal of benefits were provided to Ms. Banski orally by an Allstate claims representative on July 26, 1994, prior to the creation of the Assessment of Claim. Counsel for Allstate submits that the Assessment of Claim should be read in the context of this oral communication.

As I stated above, the document purporting to be the notice of refusal under section 24(8) of the Schedule must state, in a clear, unambiguous and straightforward fashion, the insurer's refusal to pay benefits and the reasons for the refusal. The purported notice in this case, the Assessment of Claim dated July 26, 1994, does not meet these requirements. However, even if I were to consider the prior oral communication, as counsel for Allstate urged, I do not find the evidence in this regard supports Allstate's position.

Allstate relies on the evidence of Ms. Sonia Fearon, its claims representative to support its position on this issue. Ms. Fearon testified that sometime in 1994 she obtained information about Ms. Banski's ability to return to work. She arranged a meeting with Ms. Banski for the purpose of discussing her claim and to explore possibilities of settlement. Ms. Fearon testified that she attended at Ms. Banski's home on July 26, 1994, and "talked about what appeared to be pre-existing problems" and a settlement of the claim on a lump sum basis. She testified that she offered Ms. Banski four weeks of income replacement benefits in the form of a "cash settlement." Ms. Fearon was unsure about the circumstances of the creation of the Assessment of Claim and whether she sent the form to Ms. Banski subsequent to the meeting of July 26, 1994, or if she gave it to her before the conclusion of the meeting.

For her part, Ms. Banski testified that Ms. Fearon visited her on June 22, 1994 and not on July 26, 1994, as Ms. Fearon stated. She was sure of the date because she had marked it in her appointment book, and it was the first day before she started a gradual return-to-work programme. Ms. Banski testified that during the meeting, Ms. Fearon told her that she was capable of returning to work gradually and that she would pay her weekly income benefits and mileage until July 26, 1994. Ms. Banski testified that at the conclusion of the meeting, Ms. Fearon left with her a draft "Agreement" and a cheque for "over $1,000." The draft Agreement also bears the date July 26, 1994 and it indicates that Ms. Banski agrees to a full and final settlement of her case in consideration of Allstate paying her "$1,275.00 for the Weekly Income Benefits and Supplementary Medical and Rehabilitation Benefits to be paid as of the 26th day of July, 1994." Ms. Banski's testimony that Ms. Fearon gave her the cheque at the conclusion of their meeting Is corroborated by her husband.

Ms. Banski testified that she did not sign the Agreement because she did not accept Ms. Fearon's proposal. She cashed the cheque and subsequently referred the matter to her lawyers.

Ms. Fearon next heard from Ms. Banski on October 19, 1994 when she received a letter from her lawyer requesting her to provide an Assessment of Claim "concerning the continuation of Ms. Banski's accident benefits at your earliest possible convenience so that we are in a position to initiate mediation." By letter dated November 9, 1994,⁴ Ms. Fearon responded as follows:

Medical information on file confirms that Ms. B was capable of returning to full time employment and should have done so by mid August, 1994 following the suggested gradual return to work process. The final settlement was to be for all medical and disability benefits with the exception of the two invoices that were outstanding for a gym ball and obus forme. These invoices have now been paid finalizing all claims for medical and disability benefits. Based on the medical reports, no further treatment was required." (Emphasis added)

The parties agree that Ms. Banksi's lawyer received this letter on November 24, 1994. Allstate is not relying on it as a notice of refusal since Ms. Banski filed her Application for Arbitration within two years of the receipt of the letter.

In cross-examination, Ms. Fearon was unable to provide cogent reasons why she prepared the Assessment of Claim indicating that Ms. Banski's claim was accepted in its entirety and that the payment of $1,086.64 was in final settlement of Ms. Banski's claim if in fact her intention was to advise Ms. Banski of the termination of her benefits. Ms. Fearon also stated that she could not recall whether she left the draft Agreement and the cheque for the above amount with Ms. Banski after their meeting or if she mailed them to her later.

Ms. Fearon conceded that the main purpose of the meeting with Ms. Banski was for settlement discussion; and that she would not normally meet with an Insured simply to communicate the Insurer's refusal. I find that the Assessment of Claim reflects Ms. Fearon's understanding of the agreement the parties reached at the meeting. I am not persuaded that Ms. Fearon met with Ms. Banski to tell her that Allstate had decided to terminate her benefits; nor is there any evidence that during the meeting Ms. Fearon clearly and unequivocally advised Ms. Banski that Allstate had decided to terminate her benefits.

In summary, I find the Assessment of Claim does not satisfy the requirements of section 24(8) of the Schedule because it does not communicate, in a clear and unequivocal manner, a refusal to pay benefits or the reasons for the refusal. Assuming that prior oral communication of a refusal to pay benefits is relevant in interpreting the purported notice, I find that in the circumstance of this case, Ms. Fearon made the reference to Allstate's refusal to pay further benefits in the context of the settlement discussion the parties were engaged in at the time.

Accordingly, I find that Ms. Banski is not precluded from proceeding to arbitration with regard to the merits of her claim.

Expenses:

Allstate has not succeeded in its motion. Accordingly, I exercise my discretion to award Ms. Banski her expenses incurred in respect of this proceeding.

Order:

Ms. Banski is not precluded from commencing arbitration proceedings with respect to her claim for weekly income benefits arising from the accident of December 28, 1993.
Mrs. Banski is entitled to her expenses incurred in respect of the arbitration.

July 18, 1998

Asfaw Seife

Arbitrator

Date

APPENDIX

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on January 30, 1998, before me, Asfaw Seife, Arbitrator.

Present at the Hearing:

Applicant's

Murray I. Teitel

Representative:

Barrister and Solicitor

Allstate's

Ian Kirby

Representative:

Barrister and Solicitor

Witnesses:

Sonia Fearon

Insurance Adjuster

Alexander Banski

The Applicant's Husband

Exhibits

Exhibit 1

Insurer's Document Brief

Exhibit 2

Applicant's Document Brief

Exhibit 3

Assessment of Claim dated May 17, 1994 and

February 15, 1994 and May 17, 1994

Footnotes

The Statutory Accident Benefits Schedule —Accidents On or Between June 22, 1990 and December 31, 1993. The Schedule is Ontario Regulation 672, as amended.
See for example Zeppieri and Royal Insurance Company of Canada (February 17, 1994), OIC A-005237, Harris and Royal Insurance Company of Canada (January 23, 1997), OIC A95-000267, Lambropoulos and State Farm Mutual Insurance Company (February 18, 1997), A95-000693
(May 3, 1995), OIC A-009300
The printout enclosed with the November 9, 1994 letter shows that Ms. Banski was paid $543.32 bi-weekly, and each cheque covered a disability period of two weeks. The last such cheque covered the disability period ending July 29, 1994. The last cheque for $1,086.64 does not refer to any period of disability.

Marie Banski v. Allstate Insurance Company of Canada, 1998 ONFSCDRS 8

Case Summary