Neutral Citation: 1999 ONFSCDRS 16
FSCO A98B000988
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DONNA C. HART
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
REASONS FOR PRELIMINARY DECISION
Before:
M. Kaye Joachim
Heard:
January 5, 1999, in Hamilton, Ontario
Final submissions were received on January 14, 1999.
Appearances:
Donna C. Hart, Applicant
Meredith J. Donohue for Allstate Insurance Company of Canada
Issues:
The Applicant, Donna Hart, was injured in a motor vehicle accident on August 16, 1995. She inquired about statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.1 Allstate alleges that it refused to pay other disability benefits on October 4, 1995 and that the Applicant did not apply for mediation with respect to other disability benefits until more than two years after this refusal. The parties were unable to resolve their disputes through mediation, and Mrs. Hart applied for arbitration at the Financial Services Commission of Ontario2 under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The preliminary issues in this hearing, as set out in the pre-hearing letter, are:
Did the Applicant apply for mediation on the issue of other disability benefits within two years of the Insurer refusing such benefit? If not, what are the consequences?
Whether the issue of entitlement to other disability benefits had been properly mediated, and if not, what are the consequences?
Results:
The Applicant did not apply for mediation on the issue of other disability benefits within two years of the Insurer refusing such benefit. Accordingly, the arbitration of the issue of other disability benefits is barred by the operation of subsection 281(5) of the Insurance Act and subsection 72(1) of the Schedule.
In light of the finding above, it is unnecessary to decide whether the issue of entitlement to other disability benefits was properly mediated.
Procedural Matters:
During the course of the hearing, Mrs. Hart referred to various documents which she believed she had copies of, but had neglected to bring to the hearing. I advised Mrs. Hart that she had two weeks (until January 19, 1999) after the hearing to submit these documents. On January 14, 1999, Mrs. Hart submitted an OCF-14 dated April 30, 1997, and a copy of a facsimile sent to Mediator R. Flynn on May 25, 1998 advising that she would not be able to participate in the May 27, 1998 telephone conference. Mrs. Hart also confirmed that she had only submitted one Application for Accident Benefits in March 1996. As this information did not alter the outcome of my decision on the preliminary issues in favour of the Insurer, I did not feel it was necessary to request a response from the Insurer.
EVIDENCE AND ANALYSIS:
Mrs. Donna Hart was injured in a motor vehicle accident on August 16, 1995. An Allstate claims representative, Michelle Diletti, contacted Mrs. Hart and provided her with an Application for Accident Benefits. Mrs. Hart retained a solicitor, Daniel Hall, to assist her in determining if it was worthwhile to pursue an application for weekly benefits. On October 2, 1995, Mr. Hall wrote to Ms. Diletti and advised that Mrs. Hart had been retired since 1989 and was in receipt of long-term disability benefits from her previous employer in the sum of $783.87 per month, Worker's Compensation Board benefits in the amount of $149.00 per month and a C.P.P. monthly disability payment of $758.00. He asked whether these amounts would be deducted from any claim for other disability benefits:
Prior to my client making a formal claim for Accident Benefits and prior to having you interview her, please advise us to whether or not if my client makes a claim for the other benefit being $185.00 as a housekeeper whether or not each of her sources of income would be deducted from that benefit, thereby making it not worth my client's while to make a claim for Accident Benefits.
By letter dated and faxed on October 4, 1995, Ms. Diletti wrote to counsel for Mrs. Hart and advised that:
AS PER THE POLICY LEGISLATION, LONG TERM DISABILITY BENEFITS AND CANADA PENSION PLAN ARE DEDUCTIBLE FROM THE WEEKLY DISABILITY BENEFIT. WORKER'S COMPENSATION BENEFITS ARE DEDUCTIBLE IF THEY ARE DEEMED TEMPORARY BENEFITS, IF THEY ARE A PERMANENT PENSION BENEFITS THEY ARE NOT DEDUCTIBLE.
THE AUTO POLICY HAS A WEEKLY DISABILITY BENEFIT FOR PERSONS WHO ARE UNEMPLOYED OR HOMEMAKERS AT THE TIME OF THE ACCIDENT. THIS PAYMENT FALLS UNDER "OTHER DISABILITY" IN THE AMOUNT OF $185.00 PER WEEK. WE HAVE CALCULATED YOUR CLIENT'S POSSIBLE BENEFIT UTILIZING SAME, OUR CALCULATIONS ARE AS FOLLOWS.
The letter included two calculations, one in which all benefits were deducted, in which case, there would be no benefit owing. In the second calculation, Ms. Diletti did not deduct the Worker's Compensation Board monthly payment, in case it was a permanent pension and therefore not deductible. In this second scenario, there was also no benefit owing.
The letter stated that there would be no weekly disability amount owing under the other disability benefit and enclosed an Explanation of Assessment by Insurance Company. The Assessment noted that Mrs. Hart was not eligible for other disability benefits, and in the reasons box, made reference to the attached letter.
The letter concluded by noting that if Mrs. Hart wished to make a claim for medical expenses, the Insurer still required a completed application and medical report.
Mrs. Hart testified that she received a copy of the letter of October 4, 1995 with the attached Explanation of Assessment by Insurance Company and discussed it briefly with her lawyer. Mr. Hall had ceased representing her by December 1995. From then until the end of 1997 she consulted approximately 30 lawyers seeking representation on various matters, including her claim for accident benefits. No one would accept her as a client, except Mr. Gennaro Gatto who represented her for a brief period of time in March 1996.
In February 1996, Mrs. Hart contacted Ms. Diletti to inquire why physiotherapy invoices were not being paid. Ms. Diletti advised her that the Insurer would not consider payment of medical expenses because there was no completed application on file. She offered to send another application but was advised that Mrs. Hart's new lawyer would be in touch.
In March 1996, Mrs. Hart submitted an Application for Accident Benefits. Parts 1 to 5 were completed, indicating the person applying, the representative, the accident details, the details of automobile insurance, and details of other insurance. Under Part 6, Expenses, Mrs. Hart indicated that she was applying for expenses, but did not give any details. Under part 7, Applicant Status, "unemployed and have not worked in the last 3 years" was marked. Part 8, Student Attending School, Part 9, Caregiver, and Part 10, Employment History, were not completed. Part 11, Income Tax Status, was completed. The attached Employer's Confirmation of Income Form, Health Practitioner's Certificate and Activities of Daily Living Form were not completed. The Permission to Disclose Health Information was completed.
Upon receiving the Application, the claims adjuster Kim Camick noted in a memorandum to file on April 4, 1996 that the Insured was not entitled to other disability benefits as the collateral benefits were greater than other disability benefits. As no specific expenses were claimed, no payments were made at that time.
Subsequently, Mrs. Hart submitted medical expense claims and the Insurer, after confirming with Mrs. Hart's primary disability carrier, paid some of the requested expenses, the details of which were not before me in this preliminary hearing.
On December 10, 1996, Mrs. Hart spoke with the adjuster Kim Camick. Ms. Camick recorded that Mrs. Hart asked about other disability benefits, that Ms. Camick located the letter of October 4, 1995 and advised Mrs. Hart of its contents, and copied and sent her another copy of the October 4, 1995 letter.
Ultimately, the Insurer decided to send Mrs. Hart to a Designated Assessment Centre ("DAC") to assess the reasonableness and necessity of requested medical treatment. Two assessments were carried out in the summer of 1997, to detemine the reasonableness and necessity of ongoing physiotherapy, massage therapy, a gym membership and temporomandibular joint treatment. The assessors did not assess Mrs. Hart's entitlement to other disability benefits.
Following the DAC Assessments, the Insurer advised Mrs. Hart of her right to dispute the assessment recommendations by filing an Application for Mediation.
In February 1998, the Insurer offered to settle Mrs. Hart's entire medical and disability claim file.
On March 11, 1998, Mrs. Hart submitted an Application for Mediation indicating that she was disputing the Insurer's denial of initial entitlement to other disability benefits. She specifically referred to the Insurer's letter of October 4, 1995 and to their subsequent offer to settle in February 1998. She also ticked off the boxes indicating she was disputing entitlement to medical benefits, rehabilitation benefits, attendant care benefits, loss of earning capacity benefits, and interest. She provided no particulars of any claimed expenses.
On March 19, 1998, a Mediator with the Financial Services Commission advised that he would attempt to resolve the issues in dispute within 60 days from the date of appointment, that is, by May 19, 1998. A telephone mediation was scheduled for May 13, 1998. On May 6, 1998, the claims adjuster, Robin Tambur, made a note to file that the Mediator called to relay a request from the Applicant for a new date for mediation, outside the 60 day time limit. The adjuster agreed to the date of May 27, 1998. On May 22, 1998, the adjuster noted another call from the Mediator advising that the Applicant was requesting an in-person mediation in Hamilton that day. This date was not possible as the Mediator had another mediation booked that morning in Toronto.
On May 27, 1998, the telephone conference was scheduled for 2:00 p.m. The claims adjuster made a note to file that the Mediator called to advise that he could not get through to the Applicant. The Mediator also advised that the Applicant might feel more secure with a lawyer. The Mediator called back at 3:10 p.m. and advised the mediation would not take place.
Mrs. Hart's evidence of the mediation process was sketchy. She confirmed she either requested or consented to an extension of the time limits and that she requested a face-to-face meeting in Hamilton. On May 27, 1998, she stated that she was suffering from severe diarrhoea and advised the Mediator by fax that she was unable to participate. She stated that the Mediator advised her to proceed to Arbitration.
In the Report of Mediator, the Mediator stated, in part:
The insured advised by fax that she would not be able to participate in the mediation and I was unable to reach the insured on the date set for the mediation. As the accident occurred in 1995 and considering the circumstances and in order not to compound any potential limitation issues there may be, mediation was deemed failed.
The Report of Mediator was issued on May 28, 1998. On July 8, 1998, Mrs. Hart filed an Application for Arbitration in which she alleged that other disability benefits, loss of earning capacity benefits, medical benefits, attendant care benefits, interest, expenses, special award and other disputes were all in dispute. She provided no details with respect to any of her claims. The Insurer challenged Mrs. Hart's right to proceed with her claim for other disability benefits.
Time Limitations:
Section 281(5) of the Insurance Act sets out a time limit for commencing an arbitration proceeding:
A proceeding in a court or an arbitration proceeding in respect of statutory accident 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 Statutory Accident Benefits Schedule, R.S.O. 1990, c. 1.8, s. 281(5); 1993, c.10, s. 1
The time limit for arbitration set out in section 281(5) has not been extended under the Schedule. However, section 72 of the Schedule establishes a time limit for commencing mediation. It states:
72 (1) 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 a benefit under this Regulation shall be commenced within two years from the insurer's refusal to pay the amount claimed...
(2) Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within ninety days after the mediator reports to the parties under subsection 280(8) of the Act.
The Dispute Resolution Practice Code, promulgated by the Financial Services Commission, confirms the statutory and regulatory time limits and clarifies that, if the mediation is commenced within the two year limitation period, an insured person may apply for arbitration within 90 days after the Report of Mediator is issued:
11.1 A mediation, neutral evaluation or arbitration must be started no later than:
(a) 2 years from the date the insurer refused to pay an amount claimed; or
(b) as provided in the Statutory Accident Benefits Schedule.
11.2 Despite Rule 11.1, an insured person may apply for arbitration within 90 days after the mediator reports to the parties in the Report of Mediator or within 30 days after the neutral evaluator, appointed by the Director, reports to the parties in the Report of Neutral Evaluator, whichever is later.
Thus, an applicant must commence an arbitration proceeding within two years of the insurer's refusal to pay benefits. The only exception to this is, where the applicant has commenced a mediation proceeding within two years of the insurer's refusal to pay benefits, the Schedule permits the applicant to commence an arbitration proceeding after the two year period, so long as the arbitration proceeding is commenced within ninety days of the Report of the Mediator. In those cases, however, the mediation process must still have been commenced within two years after the insurer refused the benefits.
Conclusions:
The onus is on the Insurer to establish a clear and unequivocal refusal of benefits.3 In this case, I find that rather than filing a formal application for other disability benefits, Mrs. Hart, through her lawyer, made a written inquiry as to whether it would be worth her while to apply for other disability benefits, in light of her receipt of collateral benefits. On October 4, 1995, Allstate clearly advised Mrs. Hart, through her counsel, that it was refusing her claim for other disability benefits on the basis that her collateral sources of disability income reduced her entitlement to zero. Whether or not that decision was correct is not an issue before me. That was Allstate's position at that time, and it was communicated clearly and unequivocally. Allstate also included an Explanation of Assessment by Insurance Company clearly denying entitlement to other disability benefits. Allstate established that the letter and the Assessment were sent by fax and regular mail on October 4, 1995. Mrs. Hart did not dispute receiving a copy of the letter and the Assessment from her counsel around that time and discussing the matter with him.
Mrs. Hart argued that she was not aware of the two year limitation period. However, the two year period begins to run when benefits have been refused, not when an insurer advises an applicant of his or her rights to mediation and of the existence of the time limit.4
I find that the two year time period to commence a mediation or arbitration to challenge Allstate's refusal of other disability benefits commenced on October 4, 1995. If Mrs. Hart wished to challenge Allstate's refusal of other disability benefits, she was required to commence a mediation or arbitration proceeding with respect to that issue by October 4, 1997. The Applicant did not apply for mediation with respect to the issue of other disability benefits until March 11, 1998. She only filed for arbitration on November 8, 1998, well outside the two year limitation period.
There was no evidence that Allstate did or said anything after the letter of October 4, 1995 to cause Mrs. Hart to believe that Allstate was reconsidering its decision with respect to other disability benefits. Mrs. Hart did subsequently inquire about why she was not receiving other disability benefits in December 1996 and was sent another copy of the letter of October 4, 1995. Although Mrs. Hart filed an Application for Accident Benefits in March 1996, this application was directed at medical expenses and did not affect in any way Allstate's earlier refusal of other disability benefits. Although Allstate offered to settle Mrs. Hart's claim for other disability benefits in February 1998, settlement negotiations do not extend the limitation period.5
I find that Mrs. Hart applied for mediation and arbitration with respect to the issue of other disability benefits outside the two year limitation period and I have no discretion to extend those time limits.6
Accordingly, Mrs. Hart's claim for other disability benefits is barred by the operation of subsection 281(5) of the Insurance Act and subsection 72(1) of the Schedule.
Mediation:
In light of my conclusion that Mrs. Hart's claim for other disability benefits is barred from arbitration, it is unnecessary to decide whether this issue was properly mediated.
Expenses:
If the parties are unable to agree on expenses, if any, I may be spoken to.
January 22, 1999
M. Kaye Joachim
Arbitrator
Date
Neutral Citation: 1999 ONFSCDRS 16
FSCO A98-000988
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DONNA C. HART
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Mrs. Hart's claim for other disability benefits is barred by the operation of subsection 281(5) of the Insurance Act and subsection 72(1) of the Schedule.
January 22, 1999
M. Kaye Joachim
Arbitrator
Date
Footnotes
- The 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 and 463/96.
- Effective July 1, 1998, the Ontario Insurance Commission was changed to the Financial Services Commission of Ontario, pursuant to the Financial Services Commission of Ontario Act, S.O. 1997, c.28.
- Zeppieri and Royal Insurance Company of Canada (OIC A-005237, February 17, 1994), confirmed on appeal (P-005237, December 22, 1994), and Zere and Royal Insurance Company of Canada (OIC A-001827, April 22, 1994)
- Veldhuizen and Coseco Insurance Company (OIC A-015549, October 12, 1995).
- Zere, supra note 3.
- Rahman and Co-operators General Insurance Company (OIC A-000254, December 21, 1993).