Neutral Citation: 1999 ONFSCDRS 146

FSCO A98-001163

BETWEEN:

IVAN JAKOVLJEVIC

Applicant

and

COMMERCIAL UNION ASSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Eban Bayefsky

Heard:

By telephone conference call on March 23, 1999.

Appearances:

Roy D. MacGillivray and Ron Sullivan for Mr. Jakovljevic

Darrell P. March for Commercial Union Assurance Company

The Applicant, Ivan Jakovljevic, was injured in a motor vehicle accident on August 3, 1995. He applied for and received statutory accident benefits from Commercial Union Assurance Company ("Commercial Union"), payable under the Schedule.¹ Commercial Union paid weekly income replacement benefits until August 11, 1996. The parties were unable to resolve their disputes through mediation, and Mr. Jakovljevic applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issues are:

Is Mr. Jakovljevic precluded from proceeding to arbitration because his application for arbitration was filed beyond the limitation periods set out in section 281(5) of the Act and section 72 of the Schedule?
Is Mr. Jakovljevic entitled to his expenses of the preliminary issue hearing?

Mr. Jakovljevic's arbitration was brought in a timely manner and he is, therefore, entitled to proceed to arbitration.
I remain seized on the issue of expenses of this preliminary issue hearing should the parties be unable to resolve this aspect of the case.

Background:

The Applicant was injured in a motor vehicle accident on August 3, 1995. He received income replacement benefits ("IRBs") at a rate of $292.98 per week until August 11, 1996. The Insurer sent the Applicant an Explanation of Assessment dated August 1, 1996. There is no evidence as to how the Explanation of Assessment was delivered to the Applicant or when he received it. In the section on Income Replacement Benefits on the Assessment form, two boxes were checked off, "Eligible" and "Benefit Refused Explain below." At the bottom of the form, in the section entitled "Reasons benefit(s) refused and other information," the Applicant was asked to forward "cheque stubs for disability income policy" and "sales figures from Nov 1995 through July 1996." It also stated that "no benefits will be paid untill [sic] this information is received."

On March 10, 1998, the Applicant filed an Application for Mediation with the Ontario Insurance Commission. The Applicant disputed the Insurer's termination of his weekly benefits and the calculation of the quantum of these benefits. He also maintained that the Insurer had not yet paid transportation and other medical expenses. The issues of the duration and quantum of IRBs were mediated on May 12, 1998. Specifically, the Applicant sought ongoing IRBs at a rate of $1,000 per week from August 10, 1995 (one week following the motor vehicle accident). The issue of outstanding medical benefits was not addressed at the mediation. The Insurer sought a repayment of IRBs for the period August 10, 1995 to August 11, 1996, due to the Applicant having received workers' compensation and collateral benefits during that time. None of these issues were resolved at mediation. The Mediator sent a letter dated May 12, 1998 to the Applicant outlining his options following the mediation, and enclosing his Report of Mediator, also dated May 12, 1998. The Mediator's materials appear to have been sent by regular mail and were received by the Applicant on May 19, 1998. The Applicant filed an Application for Arbitration by courier with the Commission on August 17, 1998. The Application had been given to the courier on August 12, 1998.

Pursuant to section 281(5) of the Insurance Act, an arbitration proceeding "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 No-Fault Benefits Schedule." Section 72(1) of the Schedule states that an arbitration "shall be commenced within two years from the insurer's refusal to pay the amount claimed...." Section 72(2) of the Schedule states that despite section 72(1), an arbitration "may be commenced within ninety days after the mediator reports to the parties under subsection 280(8) of the Act." The Insurer maintains that the Applicant is precluded from proceeding to arbitration because his application was filed beyond two years from the date of the Insurer's refusal of benefits. In the alternative, the Insurer submits that the Applicant is time-barred because he filed his application beyond ninety days from the date the Mediator reported to the parties. In the event the Applicant's arbitration is found to be timely, the Insurer submits that he is precluded from proceeding on any quantum issue prior to the two years before he filed his application for arbitration because he had not previously disputed the amount of benefits paid to him by the Insurer. The Applicant submits that his application was filed within the legislated time limits in respect of both the Insurer's refusal of benefits and the Mediator's reporting to the parties. He also submits that he is not precluded from arbitrating quantum issues that fall outside the two years preceding the time he filed for arbitration.

Analysis:

i) Timeliness of the Duration Dispute:

Arbitration decisions² have established a number of principles as to the manner in which the limitation periods under the legislation are to be applied. The principles most relevant to the case at hand are that the two-year period begins to run from the date the applicant receives a clear and unequivocal refusal of the benefits he or she has claimed, and that the insurer bears the onus of establishing both that the applicant received such a refusal and the date of receipt.

I find that the Insurer's Explanation of Assessment was not a clear and unequivocal refusal of the benefits claimed by the Applicant. The form stated both that the Applicant was eligible to benefits and that benefits were refused. The form also stated simply that benefits were being refused pending the receipt of certain information. While the request for additional information was only partially satisfied and while benefits were, in fact, discontinued, I find that the Explanation of Assessment did not unequivocally convey to the Applicant that he was disentitled to benefits. On this basis alone, I find that the two-year limitation was not triggered so as to bar the Applicant from proceeding to arbitration.

However, assuming that the termination of benefits was clear and unequivocal, I find that the Insurer has not established when the Applicant received the notice. The Explanation of Assessment was dated August 1, 1996 but did not indicate a date on which benefits would be terminated. Benefits were, in fact, discontinued August 11, 1996. There is no evidence as to how or when the Assessment was delivered to the Applicant. Without knowing the manner of delivery of the Explanation of Assessment, it is impossible to calculate even approximately when the Applicant would have received the Assessment and, therefore, the date on which the limitation period would have started to run. I am, consequently, unable to determine the date by which the Applicant would have been required to file for arbitration. The Insurer submits that the stoppage of benefits is sufficient to trigger the running of the two-year time limit. I reject this. I find that in order to establish that an applicant is statute-barred from proceeding to arbitration, an insurer must show more than that benefits were simply stopped; an insurer must clearly establish when the applicant received notice of the refusal of benefits. The Insurer has not established this and I, therefore, find that the two-year limitation period did not begin to run in August 1996. Accordingly, I find that the Application for Arbitration which was received by the Commission on August 17, 1998 was filed within the two-year limitation period.

Assuming, however, that the Insurer's discontinuation of benefits constituted a clear refusal of benefits and that the refusal was effective the day benefits ceased, namely, August 11, 1996, then, pursuant to sections 281(5) of the Act and 72(2) of the Schedule, the Applicant would have until either two years from August 11, 1996 or ninety days from the date of the Mediator's report to file his Application for Arbitration. I was advised that the Applicant gave his Application for Arbitration to a courier on August 12, 1998 to be delivered to the Commission. The Applicant submitted a Purolator Courier invoice for the delivery which, while not definitively proving the transaction, I accept as establishing that the courier received the Application on August 12, 1998. However, the courier did not deliver the Application to the Commission until August 17, 1998. Pursuant to Rules 6.1 and 7.3(c) of the Dispute Resolution Practice Code concerning the filing and service of documents, the Application would be considered to be filed with the Commission (at the earliest) two days after it was given to the courier, namely, August 14, 1998. If, pursuant to section 281(5) of the Act, the Applicant had until August 10, 1998 to file his Application for Arbitration (being within two years from the date of refusal), then the Applicant's filing of his Application would have been out of time.³

The question, then, is whether, pursuant to section 72(2) of the Schedule, Mr. Jakovljevic's Application was timely in relation to the Mediator's reporting to the parties. The Mediator's report was dated May 12, 1998 and appears to have been sent by regular mail. In the absence of evidence to the contrary, I find that the Commission sent the Report of Mediator by regular mail on May 12, 1998. I reject the Insurer's submission that the Applicant bears the onus of establishing the manner by which the Mediator's report was sent to the parties. In my view, the Insurer bears this onus where it seeks to invoke statutory limitation periods to bar the Applicant's access to the Commission's dispute resolution process. This is particularly the case where, as here, the Insurer does not dispute when the Applicant received the Report of Mediator (namely, May 19, 1998), and where there is no indication that the Report was faxed, couriered or served personally.

Pursuant to Rules 7.3(b) and 8.1(a) of the Dispute Resolution Practice Code, the Mediator's report would be considered to have been delivered to the Applicant (at the earliest) on May 17, 1998, namely, five days after the date on which the report was mailed. May 17, 1998 was a Sunday. While not specifically addressing this situation, I find that Rule 8.1(b) of the Practice Code suggests that receipt of the Mediator's report should be deemed to have occurred on the Monday of that week, namely, May 18, 1998.⁴

Pursuant to section 72(2) of the Schedule, the Applicant would then have to within 90 days of May 18, 1998 to file his Application for Arbitration. Ninety days after May 18, 1998 was Sunday, August 16, 1998. The Applicant would then have until Saturday, August 15, 1998 to file for arbitration. However, pursuant to section 28(h) of the Interpretation Act, R.S.O. 1990, c. (and in a manner similar to Rule 8.1(b) of the Practice Code), I find that Mr. Jakovljevic's Application for Arbitration would have to be filed by the Monday of the week in question, namely, August 17, 1998.⁵ The Commission, in fact, received the Application for Arbitration on August 17, 1998 and, therefore, the Application was filed on time.

In any event, given that the Application had been given to a courier on August 12, 1998, it is (for the reasons outlined earlier) deemed to have been received by the Commission two days later, namely, August 14, 1998, and, therefore, was similarly filed within the legislated time frame.

The Application would also have been filed within ninety days if I used the actual date the Applicant received the Mediator's report, namely, May 19, 1998, and the actual date the Commission received the Application, namely, August 17, 1998. I, therefore, find that Mr. Jakovljevic filed his Application for Arbitration within the ninety-day time limit set out in the Schedule.

Given this result, I find it unnecessary to address the Applicant's submissions as to exercising my discretion under Rule 79 of the Practice Code (pertaining to the Waiver of Procedural Requirements) as a basis for permitting him to proceed with his arbitration. Similarly, I find it unnecessary to address the Applicant's argument that the Insurer did not comply with section 71 of the Schedule (regarding informing the Applicant of the relevant dispute resolution procedures) in relation to the timeliness of his Application for Arbitration.

ii) Timeliness of the Quantum Dispute:

The Insurer paid the Applicant income replacement benefits at a rate of $292.98 per week from one week following the accident to August 11, 1996 (a period of approximately one year). In March 1998, the Applicant applied for mediation on the issue of the quantum of benefits paid to him in the year following the accident, claiming $1,000 per week for this period and ongoing. He applied for arbitration on the quantum issue in August 1998.

The Insurer maintains that, if the Applicant's arbitration is considered timely, he can only proceed on the quantum issue from the date benefits were terminated, namely, August 11, 1996. That is, the Insurer submits that the Applicant cannot arbitrate the quantum of benefits prior to this time since the Insurer had paid the Applicant the disputed amount from the commencement of the claim, but he only filed for mediation in March 1998, well beyond the legislated two-year time limit. The Insurer, therefore, argues that the Applicant is restricted to arbitrating the issue of quantum in the two years preceding his Application for Arbitration and any subsequent period in which he is found to be owed benefits.

The Applicant responds that the Insurer never actually refused to pay him a particular level of benefit, but simply paid the wrong amount from the commencement of the claim, which, it is submitted, is not sufficient to trigger the running of the limitation period. The Applicant, therefore, maintains that he was not required to dispute the quantum of benefits within two years of the first (allegedly) incorrect payment (namely, August 10, 1995) and is similarly not restricted to arbitrating the issue of quantum in the two years preceding his Application for Arbitration and ongoing. In any event, the Applicant submits that the arbitration in general was timely and that he is, therefore, entitled to proceed on the issue of quantum in relation to the entire period in which benefits were paid.

The cases are somewhat at odds on the question of whether payment of an allegedly incorrect amount of benefits triggers the running of the two-year limitation period. The case of Coates-Boyce and Zurich Insurance Company (OIC A-951333, January 13, 1997) found that a letter from the Insurer to the Applicant reducing the amount of benefits previously paid did not constitute a "refusal of benefits claimed" so as to trigger the statutory limitation period.⁶ Wilson and Wellington Insurance Company (A96-000119, May 16, 1997) held that the applicant was not time-barred from arbitrating the question of quantum (both for the period in which the disputed amount was paid and the period following) since the insurer's refusal of benefits only referred to entitlement, not to quantum. Garisto and Halifax Insurance Company (FSCO A97-001481, September 17, 1998) held that a reduction of benefits did constitute a refusal of benefits so as to trigger the running of the limitation period.

In my view, neither Coates-Boyce nor Garisto are directly applicable to the case at hand since they deal with situations in which benefits were reduced, as opposed to being paid (allegedly) incorrectly from the outset. However, the facts of the present case are very similar to those of Wilson where benefits were paid at an amount from the commencement of the claim to the date of termination (and challenged more than two years later), but where the insurer's refusal of benefits only related to the applicant's entitlement, not to the quantum of benefits. As indicated, the applicant in Wilson was found not to be time-barred on the issue of quantum, either for the period in which benefits were initially paid or for his ongoing claim.

Here, the Insurer simply provided notice that, while the Applicant was eligible for benefits, no benefits would be paid until certain financial information was received. As indicated earlier, I do not find that this was a clear and unequivocal refusal of benefits. It was certainly not a clear and unequivocal refusal to pay a particular level of benefits. While the request for financial information might have been related to the calculation of the Applicant's benefits, it is not at all clear that the Insurer was notifying the Applicant that the rate of his benefits was in doubt. As in Wilson, I find that the limitation period with respect to arbitrating the quantum of the Applicant's benefits has not been exceeded since I am unable to determine whether or when the Insurer refused to pay the quantum now being claimed by the Applicant.

The only remaining question is whether the Applicant's "acquiescence" in the quantum established by the Insurer (in the sense that he did not challenge the amount paid until he filed for mediation more than two years from the initial payment) precludes him from arbitrating a higher amount for the full duration of the claim. I find that it does not. As stated earlier, the mere stoppage of benefits does not constitute a clear and unequivocal refusal of benefits. Similarly, the mere payment of a particular quantum of benefits (which goes unchallenged) does not constitute a clear and unequivocal refusal to pay a certain level of benefits. The provisions creating a limitation period do not refer to time running from the date an undisputed payment is made; they focus on the insurer's conduct in denying a benefit claimed. In this case, the clock could not begin to run since there is no evidence that Insurer ever refused to pay the benefit now being claimed by the Applicant. The most that can be said is that the Insurer refused these benefits at mediation, but the mediation was held in May 1998, in which case, the arbitration of the quantum issue would be well within the legislated time limits.

I, therefore, find that the Applicant applied for arbitration on the quantum of his benefits in a timely manner and that he is entitled to arbitrate this issue for the full duration of the claim.

EXPENSES:

The parties did not address the issue of expenses at the preliminary issue hearing. I remain seized of this issue should the parties be unable to resolve this aspect of the case.

July 26, 1999

Eban Bayefsky Arbitrator

Date