Kamta Bissoondyal v. State Farm Mutual Automobile Insurance Company, 1999 ONFSCDRS 119

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 1999 ONFSCDRS 119 FSCO A98-001019

BETWEEN:

KAMTA BISSOONDYAL Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON A MOTION FOR INTERIM BENEFITS

Before: Suesan Alves

Heard: March 2, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto. A motion to reopen was heard via teleconference call on May 21, 1999

Appearances: Jamie R. Pollack for Mr. Bissoondyal Ian D. Kirby for State Farm Mutual Automobile Insurance Company

Issues:

Mr. Bissoondyal brought a motion for interim benefits pursuant to Rule 65 of the Dispute Resolution Practice Code — Third Edition. He then moved to reopen the proceedings to permit him to file additional evidence.

The issues on this motion are:

1. Is Mr. Bissoondyal entitled to interim benefits under section 279(4.1) of the Insurance Act from November 1996 until the final order in this matter?

2. What is the amount of income replacement benefit that Mr. Bissoondyal is entitled to receive under sections 10, 81 and 82 of the Schedule?¹

3. Was State Farm entitled to deduct 75 per cent or 90 per cent of Mr. Bissoondyal's post-accident earnings during the 26 week period which commenced on November 25, 1996?

4. Should this proceeding be reopened to admit additional evidence requested by Mr. Bissoondyal?

5. Is Mr. Bissoondyal entitled to expenses of these motions?

Result:

1. Mr. Bissoondyal is not entitled to interim benefits.

2. The amount of Mr. Bissoondyal's income replacement benefit under sections 10, 81 and 82 of the Schedule should be decided by the hearing arbitrator.

3. The issue as to whether State Farm was entitled to deduct 75 per cent or 90 per cent of Mr. Bissoondyal's post-accident earnings during the 26 week period which commenced on November 25, 1996 should also be decided by the hearing arbitrator.

4. The motion to reopen is dismissed.

5. Mr. Bissoondyal's expenses of these motions are in the discretion of the hearing arbitrator.

EVIDENCE AND ANALYSIS:

Background

Mr. Bissoondyal was injured in a motor vehicle accident on May 27, 1996. He sustained sprains to his cervical spine, lumbar spine, left wrist, left shoulder, right knee and left hip.² State Farm paid Mr. Bissoondyal income replacement benefits at the rate of $411.39 between June 3, 1996 and November 1996, based on his pre-accident employment as second shift lead hand welder at Nucap Industries. Mr. Bissoondyal's family physician advised him that he could return to work on November 25, 1996,³ and he did so, at a modified job. In his testimony, Mr. Bissoondyal acknowledged that his pre-accident base hourly rate had been $10.15, and that following his return to work he was paid at a base hourly rate of $10.40.

Mr. Bissoondyal continued to perform modified work at Nucap for a period of approximately a year and eight months. He was then laid off, effective July 8, 1998. Mr. Bissoondyal testified that a month after his lay off, he began to receive unemployment insurance benefits. He continues to receive these benefits.

According to the lay off memo, Mr. Bissoondyal was laid off due to a shortage of work.⁴ Mr. Bissoondyal testified that following his return to work, he received warnings from his employer.

He suggested that the lay off was related to unsatisfactory work performance due to his injuries.

Mr. Bissoondyal claimed interim benefits, interest and a special award. He alleged need, urgency and a breach of section 64 of the Schedule. State Farm disputed that Mr. Bissoondyal met the criteria for an award of interim benefits, and, if he did, then the amount of his post-accident earnings exceeded the amount of any ongoing entitlement to income replacement benefits.

State Farm objected to Mr. Bissoondyal's claim for a special award since he had not provided notice that he intended to seek such relief on the motion. The report of the pre-hearing arbitrator supports State Farm's position with respect to notice. Considerations of fairness and natural justice require notice of such a request.⁵ I heard no submissions which persuaded me to depart from the view that the proper time to determine whether benefits were unreasonably withheld or terminated is after a full hearing on the merits. For these reasons I ruled that I would not decide Mr. Bissoondyal's claim for a special award as part of this motion.

Law

Generally, the proper time and place for a determination of entitlement to benefits is at the hearing.⁶ However, section 279(4.1) of the Insurance Act gives arbitrators the discretionary authority to make interim orders pending the final order in any matter. Interim benefits may be appropriately granted where there is need or urgency, coupled with a consideration of the merits of the Applicant's case.⁷ Counsel agreed that the prima facie test is the appropriate one in considering the merits of the Applicant's case. A further basis for an award of interim benefits is a clear and egregious breach of the benefits stoppage provisions of section 64 of the Schedule.⁸

Mr. Bissoondyal submits that he meets the prima facie and need tests, and that State Farm has failed to comply with section 64 of the Schedule. For the following reasons, I do not agree that Mr. Bissoondyal has established that he is entitled to interim benefits on either basis.

Need

Mr. Bissoondyal testified that in about August 1998, or a month following his lay off, he began receiving unemployment insurance benefits in an unstated amount. There was no suggestion that these benefits are in any jeopardy or are likely to be terminated prior to the arbitration hearing. These benefits provide Mr. Bissoondyal with an ongoing source of income.

Mr. Bissoondyal deposes that he is "financially in need of my income replacement benefits;" however, I was not provided with any additional particulars. In light of his receipt of unemployment insurance benefits, I find that Mr. Bissoondyal has not established that he meets the criteria of need. There was no suggestion of urgency. Since the criteria for an award of interim benefits are need or urgency coupled with a consideration of the merits of the case, I do not need to determine whether Mr. Bissoondyal satisfies the prima facie test.

Stoppage

The more difficult question is whether section 64 of the Schedule applies to the circumstances of Mr. Bissoondyal's case, as he alleges.

Section 64 provides a detailed, mandatory code as to the manner in which income replacement benefits may be terminated by an insurer. Section 64 requires an insurer to provide at least 14 days notice of termination, to pay income replacement benefits for an additional period of 14 days following the receipt of notice, to advise the insured person of the right to request an assessment by a disability DAC, to pay income replacement benefits pending completion of the DAC, and to continue to make such payments if a DAC concludes that the insured person continues to be disabled, pending resolution of any dispute in this regard.

Section 64(1) provides that an insurer shall not stop payment of weekly income replacement benefits "on the ground that the insured person no longer suffers from a disability as a result of the accident in respect of which weekly benefits are paid, except in accordance with this section." Mr. Bissoondyal returned to work on November 25, 1996 on modified duties. Based on the information before me, this appears to have been prompted by a recommendation from his family physician. The circumstances of Mr. Bissoondyal's return to work at modified duties suggest a consensual return to work by the insured person, rather than a stoppage of benefits initiated by the insurer.

Based on the series of Explanations of Assessment and the correspondence between State Farm and counsel for the Applicant, I find that it is also unclear whether there was a stoppage of benefits within the meaning of section 64 of the Schedule. Following Mr. Bissoondyal's return to work, State Farm issued three Explanation of Assessment forms in relation to income replacement benefits. Mr. McKenzie, a claims specialist employed by State Farm, acknowledged that none of the forms contain the advice required by section 64.

On all three forms, the tick box "Not Eligible" was checked off — not "Refused." It is unclear to me why three such forms were issued.⁹ Mr. Bissoondyal recalls receiving one of the forms; his counsel acknowledged receiving copies of all three forms at his law offices.

The correspondence which was filed indicates that Mr. Bissoondyal, through his counsel, protested that he remained substantially disabled and entitled to income replacement benefits, since he returned to modified work, even though no amounts were payable because his post-accident earnings exceeded the amount of his income replacement benefit. He asserted that he would therefore be entitled to a loss of earning capacity benefit.

Eventually, in a letter dated July 7, 1997, State Farm concurred with Mr. Bissoondyal's position that he had not returned to his pre-accident job. However, the Insurer noted that he was making the same income as he had pre-accident.¹⁰ Effectively this reduced his entitlement to zero. I find that it is unclear whether State Farm terminated Mr. Bissoondyal's income replacement benefits, and, if so, whether it was a termination "on the ground that the insured person no longer suffers from the disability as a result of the accident" within the meaning of section 64 of the Schedule.

Arbitrators have considered a clear and egregious breach of section 64 of the Schedule a sufficient basis to ground an award of interim benefits.¹¹ Since the purpose of section 64 is to protect against the untimely termination of benefits,¹² it is not clear to me that section 64 applies to Mr. Bissoondyal, who returned to work on a consensual basis, before State Farm stated that it would no longer pay income replacement benefits. The hearing arbitrator may be provided with additional evidence and may conclude that this was a stoppage of benefits within the meaning of section 64, or that in every case in which an insurer pays income replacement benefits it must comply with the stoppage provisions of section 64, or that section 64 does not apply to Mr. Bissoondyal's case, or may reach some other conclusion.

I believe that it is more appropriate for the hearing arbitrator to determine the question of whether section 64 applies, and, if so, the consequences of State Farm's non-compliance. That arbitrator will have the benefit of more complete information than is available to me on a summary application. I conclude that this is not an appropriate case to exercise my discretion to make an award of interim benefits.

Quantum

Mr. Bissoondyal raised two quantum issues. Firstly, the calculation of the amount of his income replacement benefit. Secondly, a determination of whether he returned to work more than 26 weeks following the onset of disability. If he did, subsection 10(4) of the Schedule limited the amount that State Farm could deduct from his income replacement benefit to 75 per cent of his post-accident earnings during the 26 week period following his return to work. If he did not, State Farm was permitted to deduct 90 per cent of such earnings. Since I am not awarding interim benefits I do not need to determine either issue. Further, in my view, any benefit to the parties in doing so is outweighed by policy considerations. Arbitration issues should be decided at the main hearing. They should not generally be split off and determined on a piecemeal basis.

The Commission's obligation is to conduct speedy hearings with limited resources. Our arbitration unit provides fixed hearing dates. Those dates are available within four months of the pre-hearing. In this context, multiple hearings are not an efficient use of the Commission's resources, and should therefore be discouraged. Accordingly, the quantum issues should be determined by the hearing arbitrator.

Motion to reopen

This decision was on the point of being issued on April 9, 1999, when counsel for the Applicant moved to reopen the hearing. Counsel were offered several dates in April to argue the motion, but were unavailable. I heard the motion on May 21, 1999, via teleconference call.

In the case of Tran and Pilot Insurance Company,¹³ Arbitrator Manji proposed certain considerations which may guide an arbitrator in exercising his or her discretion to reopen a hearing and receive further evidence. In her view, the discretion should be exercised "only in exceptional or extraordinary circumstances. To do otherwise would be to delay and jeopardize the arbitration process and the finality required in the process." The arbitrator should be satisfied that the evidence is not only "relevant, but so weighty that if adduced it would have an important influence on the result of the case. It must also be shown that the lateness of its presentation was justified by unusual circumstances beyond the control of the party seeking to adduce it." I agree with and adopt these criteria, and find that they are equally applicable on the reopening of a motion.

Counsel for the Applicant wished to file a copy of State Farm's closing report dated April 9, 1997, which is also the date of the third Explanation of Assessment. This is an internal file memorandum between the claims examiner and the claims manager. Counsel for the Applicant quoted from the claims manager's comments with respect to the requirement that a denial of benefits be clear and unequivocal in his letter requesting a reopening. I was therefore aware of the evidence which he wished to adduce. Counsel for the Insurer was prepared to consent to the admission of the new evidence, provided he was allowed to offer an explanation.

The closing report was enclosed with other productions from the Insurer, in a letter dated March 29, 1999. The document was therefore unavailable to counsel for the Applicant at the time of the motion for interim benefits on March 9, 1999. I am not persuaded that the document which he seeks to adduce would have any influence on the outcome of the motion for interim benefits. I therefore decline to reopen the hearing to receive a copy of the closing report.

Expenses

Mr. Bissoondyal's expenses of these motions will be in the discretion of the hearing arbitrator.

June 25, 1999

Suesan Alves Arbitrator

Date

Neutral Citation: 1999 ONFSCDRS 119 FSCO A98-001019

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

KAMTA BISSOONDYAL Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Bissoondyal's motion for interim benefits is dismissed.

2. The amount of Mr. Bissoondyal's income replacement benefit under sections 10, 81 and 82 of the Schedule should be decided by the hearing arbitrator.

3. The issue as to whether State Farm was entitled to deduct 75 per cent or 90 per cent of Mr. Bissoondyal's post-accident earnings during the 26 week period which commenced on November 25, 1996 should also be decided by the hearing arbitrator.

4. Mr. Bissoondyal's motion to reopen the motion for interim benefits is dismissed.

5. Mr. Bissoondyal's expenses of the motions are in the discretion of the hearing arbitrator.

June 25, 1999

Suesan Alves Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
2. 2Report of Dr. Chan, family physician, dated July 3, 1997.
3. 3A Worksite assessment and physical demands analysis prepared at the request of counsel for the Applicant, at Tab 3, Exhibit 2 states: "The physician's report, dated July 3, 1997, indicated that by July 10, 1996, Kamta's overall symptoms had improved by 50%. His physician advised Kamta that he could return to work on November 25, 1996."
4. 4Exhibit 7, memo from Nucap dated July 7, 1998.
5. 5Clark and Royal Insurance Company of Canada (P97-00008, September 26, 1997)
6. 6Gomez and Pilot Insurance Company (OIC A-013080, May 10, 1995) and Cripps and AXA Insurance (Canada) (OIC A-013360, August 8, 1997)
7. 7Malabanan and Canadian General Insurance Company (OIC A96-000084, July 26, 1996)
8. 8Sweete and Jevco Insurance Company (OIC A96-000614, October 24, 1996); Fortney and Lombard General Insurance Company of Canada (OIC A97-000553, December 24, 1997); and Coutu and Wawanesa Mutual Insurance Company (OIC A97-001916 , June 5, 1998)
9. 9There are three tick boxes on the Explanation of Assessment Form in relation to income replacement benefits. They are "Eligible," "Not Eligible," and "Refused." The first Explanation of Assessment, dated December 20, 1996 states:"We have complied with the recommendations of the med/rehab DAC. You have returned to work as of Nov. 25 according to your employer. Therefore no further benefits are owed and we will be closing our file. "Two further Explanation of Assessment forms were issued. The Explanation of Assessment dated March 27, 1997 reads: "As we have satisfied the recommendations of the med/rehab DAC, and you have returned to work, we will proceed with closing your file." The Explanation of Assessment dated April 9, 1997 reads: "We have satisfied the recommendations of the med/rehab DAC, and you have returned to work. There is no further entitlement to benefits. Should you wish to dispute this you must file for mediation within 2 yrs. of our refusal to pay benefits. "
10. 10However State Farm disagreed with his claims for a higher rate of income replacement benefits, for a smaller deduction of his post-accident income during the 26 weeks when he returned to work, and suggested that the question of his entitlement to a loss of earning capacity benefit would be more appropriately considered once the two-year mark was reached.
11. 11See for example Sweete and Fortney, supra, footnote 8 in which the breach of section 64 was sufficient; however in those cases, the arbitrators also found that the applicants met the criteria of need. In Coutu, supra, footnote 8 in which the breach of section 64 was sufficient, and there is no mention of need.
12. 12Fortney, supra, see footnote 8 and Henry and Allstate Insurance Company of Canada (OIC P96-00064, July 23, 1997)
13. 13(OIC A-005207, August 16, 1995)