Neutral Citation: 1999 ONFSCDRS 230
FSCO A99-000202
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
MARIA MARTON-LAMBERTI
Applicant
and
GENERAL ACCIDENT ASSURANCE CO. OF CANADA
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
Asfaw Seife
Heard:
By way of written submissions, filed September 21, 1999.
Appearances:
John R. McCarthy for Mrs. Marton-Lamberti
Joseph M. Grossman for General Accident Assurance Co. of Canada
Issues:
The Applicant, Maria Marton-Lamberti, was injured in a motor vehicle accident on November 25, 1993. General Accident Assurance Co. of Canada ("General Accident") paid her weekly income benefits pursuant to section 12 of the Schedule1 at the rate of $480 per week from December 2, 1993 to November 23, 1996. The parties were unable to resolve their dispute regarding Mrs. Marton-Lamberti's entitlement to further weekly income benefits through mediation. On February 22, 1999, Mrs. Marton-Lamberti applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
At the pre-arbitration hearing, General Accident raised the issue that Ms. Marton-Lamberti's Application for Arbitration is time-barred.
The preliminary issue is:
Is Mrs. Marton-Lamberti precluded from proceeding to arbitration because her Application for Arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Act and subsection 26(1) of the Schedule?
Result:
Mrs. Marton-Lamberti is not precluded from commencing arbitration proceedings.
EVIDENCE AND ANALYSIS:
The parties agree that the following facts are substantially correct:
General Accident has paid Ms. Marton-Lamberti weekly income benefits for a period of 156 weeks after the accident, under section 12(1) of the Schedule. By a letter dated February 10, 1997, addressed to Mrs. Marton-Lamberti's first solicitors, General Accident stated:
We are in receipt of yours dated January 28, 1997 for which we thank you. We have forwarded this information to our accountants and are presently awaiting their decision.
Enclosed is General Accident's draft DT17336 which finalizes Ms. Marton's [sic] disability benefits up to and including November 23, 1996. We are also enclosing an assessment form detailing that we believe there has been an over payment. Once the accountants advise us as to the amount, we shall inform you. As we have advised you in the past, we believe that the over payment is considerable and could possibly be in the area of $22,000 to $25,000 or even greater. We shall advise.
The Assessment of Claim enclosed in the letter shows that the box "Portion of Claim Denied" is checked and under it a line stating: "The Insurer paid the amount of $480 per week for the period 156 weeks Dec.2/93 Nov.23/96." Under the heading "Explanation," the form states, where legible:
Original Employer's Confirmation signed by Maria Marton [sic] [illegible]...at $600 per wk [sic] gross. Income tax records submitted...[illegible...] Dec. 13, 1996 reveal gross weekly wages of $397.96. Ms. Marton [sic] was paid $480.00 per wk disab. benefit for 156 weeks. Weekly benefit should have been $318.31 per week. Therefore, overpayment of $161.63 x 156 ...$25,214.25
Neither Ms. Marton-Lamberti nor her lawyers have received any other correspondence from General Accident relating to the termination of her weekly income benefits.
Analysis:
Subsection 281(5) of the Act provides that 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 Schedule.
Subsection 26(1) of the Schedule states:
26.—(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 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
General Accident relies on the letter of February 10, 1997 and the Assessment of Claim form as being proper written notice of refusal to pay Ms. Marton-Lamberti weekly income benefits after November 23, 1996.
General Accident submits::
It is the insurer's position that the limitation period began to run in this case on November 23, 1996, which was the date on which the initial 156-week period ended. Alternatively, it is submitted that the limitation period began to run on February 10, 1997, which was the date the insurer's representative wrote to the applicant's counsel advising that benefits would not be paid after 156 weeks subsequent to the accident. Either way, the application for arbitration which was received by the FSCO on February 22, 1999, was commenced out of time.
General Accident further submitts:
It is respectively [sic] submitted that it was or ought to have been self-evident to Ms. Marton-Lamberti's solicitors why benefits were terminated after 156 weeks. There could have been no doubt, particularly for a law firm experienced in this area of law, that benefits were not being paid past 156 weeks simply because the insurer was of the view that the applicant did not meet the significantly more stringent eligibility requirements for benefits subsequent to 156 weeks after the accident.
Counsel for General Accident has effectively conceded that the purported notice of refusal does not state the Insurer's reasons for the refusal. As discussed above, the legislation requires that the insurer provide written notice not only of its refusal to pay benefits, but also the reason for the refusal. I find no merit in General Accident's submission that reason for the refusal to pay benefits "was or ought to have been self-evident to Ms. Marton-Lamberti's solicitors..." In Talany and Royal Insurance Company of Canada,3 I stated that the position of the insurer must be ascertained from an objective reading of the notice itself, independent of any prior communication between the parties. In this case, I find neither the letter of February 10, 1997 nor the Assessment of Claim form constitute proper notice of refusal under the Schedule — because neither document contains the reasons for refusal. The onus is on the insurer to communicate its reasons, in a clear and unequivocal manner. This did not happen in this case. Rather, General Accident relied on Ms. Marton-Lamberti's lawyers to discern the reasons.
Also, I do not find that the purported notice of refusal clearly and unequivocally communicates General Accident's refusal to pay benefits. I agree with Ms. Marton-Lamberti's submission that the letter of February 10, 1997 seems to suggest that General Accident has finalized disability payments up to and including November 23, 1996 only. I agree that the focus of the letter is the alleged overpayment, an issue which was left open until General Accident received the report from its accountants. In my view, General Accident did not address in its letter or the Assessment of Claim Ms. Marton-Lamberti's entitlement to benefits after the post-156 period. If it intended to do that, then I find that the documents in question are unclear on this point.
I find no merit in General Accident's suggestion that the simple act of stoppage of benefits at the 156-mark of the accident means the Insurer is refusing to pay further benefits because the insured does not meet the stricter test of disability for further benefits, under subsection 12(5)(b) of the Schedule. In my view, the refusal to pay benefits could be made on a number of reason, including overpayment. It is the insurer's responsibility to advise the insured the specific reason(s) it felt were responsible for its refusal to pay benefits.
In the result, I find Ms. Marton-Lamberti's Application for Arbitration is not time-barred. She may proceed with the arbitration hearing, previously scheduled.
EXPENSES:
I exercise my discretion to award Mrs. Marton-Lamberti her expenses incurred in respect of this preliminary issue.
November 29, 1999
Asfaw Seife Arbitrator
Date
Neutral Citation: 1999 ONFSCDRS 230
FSCO A99-000202
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
MARIA MARTON-LAMBERTI
Applicant
and
GENERAL ACCIDENT ASSURANCE CO. 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. Marton-Lamberti is allowed to proceed with the arbitration hearing.
General Accident shall pay Ms. Marton-Lamberti her expenses incurred in respect of this preliminary hearing.
November 29, 1999
Asfaw Seife Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule —Accidents On or Between June 22, 1990 and December 31, 1993, Regulation 672 of R.R.O. 1990, as amended by Ontario Regulations 660/93 and 779/93.
- See for example Zeppieri and Royal Insurance Company of Canada (OIC A-005237, February 17, 1994); Harris and Royal Insurance Company of Canada (OIC A95-000267, January 23, 1997); Lambropoulos and State Farm Mutual Automobile Insurance Company (A95-000693, February 18, 1997).
- (OIC A-009300, May 3, 1995)