Neutral Citation: 1999 ONFSCDRS 250

FSCO A97-002164

BETWEEN:

LEKHWANTIE NANDKUMAR

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

David Muir

Heard:

November 8, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Jeffrey Wm. Strype for Ms. Nandkumar

Albert M. Conforzi for Economical Mutual Insurance Company

The Applicant, Lekhwantie Nandkumar, was injured in a motor vehicle accident on November 30, 1995. She applied for and received statutory accident benefits from Economical Mutual Insurance Company ("Economical"), payable under the Schedule.¹ Economical terminated weekly caregiver benefits on August 22, 1996. The parties were unable to resolve their disputes through mediation, and Ms. Nandkumar 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 issue is:

Was Ms. Nandkumar entitled to elect to claim weekly income replacement benefits instead of weekly caregiver benefits?

Ms. Nandkumar was entitled to elect to receive income replacement benefits when she did so at the pre-hearing on March 12, 1998.

Ms. Nandkumar seeks the right to elect to choose weekly income replacement benefits claiming that she was never given the opportunity to make that election. Economical takes the position that Ms. Nandkumar is seeking a re-election prohibited by subsection 61(7) of the Schedule, there having been a deemed election by operation of subsection 61(5).

No viva voce evidence was called in respect of this matter. The parties relied instead on documents filed with the Commission in accordance with the Practice Code.

Background:

Ms. Nandkumar was a wife and the mother of two children under the age of 16 at the time of the motor vehicle accident. She had been employed for several years but was on lay off from her employment at the time of the accident.

Ms. Nandkumar applied for benefits under the Schedule. The application is undated but was received by Economical on January 22, 1996.² In a letter dated January 26, 1996 Economical wrote to Ms. Nandkumar recording a telephone call on January 24, 1996 and asking for documents in support of an IRB claim.³ On an Explanation of Assessment dated January 24, 1996, Economical indicated that Ms. Nandkumar was entitled to income replacement benefits and caregiver benefits.⁴ The caregiver benefit was calculated as being $300.60. There is no calculation of the IRB with the explanation that further documentary evidence was required from the employer.

On February 19, 1996⁵ Economical wrote to Ms. Nandkumar acknowledging the receipt of some employment documentation and renewed the earlier requests for other documents "to determine your income replacement benefit." Enclosed with the letter were three brochures sent to Ms. Nandkumar for her information.

One of these brochures (IFC 75096) deals with the election of benefits for those potentially entitled to more than one. The brochure states that insured persons may be entitled to more than one benefit, but they can only receive one. The brochure describes the three weekly benefits available and various scenarios where persons may be entitled to more than one. The brochure also explains what insured persons ought to take into account when making their choice. It describes how the choice ought to be made, by the use of an "Election of Weekly Benefit Form." This form must be completed, dated, signed and returned "within 30 days to the insurance company or broker whose address is at the bottom of the form."

The form referred to in the brochure (OCF-10/59) has been prescribed pursuant to section 94(9) of the Schedule. It was never provided to Ms. Nandkumar and was never requested by her.

Economical paid weekly caregiver benefits in the amount of $307.60 from one week post accident to August 21, 1996. In an Explanation of Assessment form dated September 19, 1996⁶Economical advised that it was terminating weekly benefits. On the form both income replacement benefits and caregiver benefits are checked off, indicating that the explanation for the termination applied to both.

Ms. Nandkumar made an application for mediation. In the mediator's report dated April 30, 1997, amongst the disputes between the parties is said to be whether or not Ms. Nandkumar was entitled to elect between income replacement benefits and caregiver benefits.⁷

The parties were unable to resolve this issue but made a procedural agreement which required, amongst other things, that Ms. Nandkumar provide Economical with income tax and other information so that Economical could calculate an IRB benefit for Ms. Nandkumar's review "and allow Ms. Nandkumar to make an election."

The parties remain unable to agree on the quantum of an IRB entitlement and that issue remains in dispute between the parties.

The first clear and unambiguous statement from Economical respecting the issue of Ms. Nandkumar's election of benefit is found in the response to the application for arbitration. At that time Economical indicated that it was relying upon an express or deemed election by Ms. Nandkumar such that she was restricted to a claim for ongoing caregiver benefits. In taking this position Economical relied upon section 61 of the Schedule.

Ms. Nandkumar elected to receive IRB's rather than caregiver benefits at the pre-hearing discussion on March 12, 1998.

The Law:

The relevant provisions of the Schedule are:

59.-(1) A person who wants to apply for benefits under this Regulation shall notify the insurer within thirty days after the circumstances arose that gave rise to the entitlement to benefits, or as soon as practicable thereafter.

(2) The insurer shall promptly provide the person with,

(a) the appropriate application forms;

(b) a written explanation of the benefits available under this Regulation; and

(c) written information to assist the person in applying for benefits, including information to assist the person in making any possible elections.

61.-(1) No more than one weekly benefit shall be paid to an insured person under this Regulation for the same period of time.

(2) If it appears from an application for benefits under this Regulation that, in the absence of subsection (1), a person would be entitled to receive more than one weekly benefit under Part II, section 15 and Part IV, the insurer shall notify the person that the person must, within thirty days of receiving the notice, elect which weekly benefit he or she wishes to receive.

(3) Within thirty days of receiving the notice, the person shall elect which weekly benefit he or she wishes to receive.

(5) If the person does not elect which benefit he or she wishes to receive within the thirty day period referred to in subsection (3), the person shall be deemed to have elected the highest weekly benefit.

(7) Subject to subsection (6), an election under this section may not be changed.

Analysis:

The resolution of this preliminary issue dispute is resolved by an examination of the language of section 61.

Subsection 61(1) provides that no more than one benefit can be paid to an insured person for the same period of time.

Subsection 61(2) requires that where it appears that a person would be entitled to more than one benefit of an enumerated type, "the insurer shall notify the person that the person must, within thirty days of receiving the notice, elect which weekly benefit he or she wishes to receive" (emphasis added).

Subsection 61(3) provides that the insured person shall elect which benefit he or she wishes to receive, "within thirty days of receiving the notice "(emphasis added).

Subsection 61(5) provides that if a person does not make the election within the thirty day period provided for in subsection 61(3) then there shall be a deemed election of the higher weekly benefit.

Subsection 61(7) provides that an election made under the section may not be changed.

Economical relies upon the letter of February 19, 1996 which it says constitutes notification or notice to Ms. Nandkumar that she must elect, within 30 days of that date, which weekly benefit she wished to receive, as required by subsection 61(2). It also says that the section does not require a "capital N" notice, and that having provided written information as required by subsection 59(2)(b) and (c) its obligations in subsection 61(2) have been met.

I do not agree. The obligations of an insurer under these two provisions are not co-extensive. The obligation to provide notice or notification under subsection 61(2) is a separate and different obligation from the requirement in subsection 59(2)(b) and (c) to provide information to assist the person in making the election. To my mind the question becomes whether or not Economical has met its obligations under subsection 61(2).

The letter of February 19, 1996 on its face is not a notice or notification required by subsection 61(2). It is not in the form prescribed pursuant to subsection 94(9). The letter is primarily concerned with information gathering in order to determine what the quantum of an income replacement benefit for Ms. Nandkumar might be. It also directs Ms. Nandkumar to make application for benefits under other insurance schemes for loss of income and medical expenses. The letter does not mention the requirement of the Schedule that Ms. Nandkumar must choose between the two benefits she may be entitled to. It does not advise her that she must make her election within thirty days of its receipt or have that choice made for her by operation of subsection 61(5).

Informational brochures are attached and referred to in the body of the letter. However the letter does not direct the recipient to read them, nor advise Ms. Nandkumar that they amount to notice or notification of an important choice which she faces. I find that Ms. Nandkumar was never provided with the notice required in subsection 61(2).

If no notice or notification is provided as required by subsection 61(2) then, in my view, the time limit contained in subsection 61(3) does not begin and the deemed election provision of subsection 61(5) is not triggered. If the deemed election has not occurred the provisions of subsection 61(7) do not come into play.

In Prosser and Progressive Casualty Insurance Company (OIC A96-000358, May 28, 1997) Arbitrator Sampliner came to a similar conclusion about the operation of section 61 in a situation where, unlike this case, the insured person had made an election using the prescribed form as provided by the insurer.

Progressive argues that Mrs. Prosser made a "deemed election" of caregiver benefits. The so-called "deemed election" under section 61(5) assumes that an insured person who fails to choose a category of weekly benefits elects the highest weekly amount by default. However section 61 also provides that the insurer must give the person thirty days notice to choose the category of weekly benefit before the default occurs. No evidence suggests that Progressive provided Mrs. Prosser or her lawyer with the required notice that she risked default if she failed to make an election. Moreover, Progressive misrepresented to Mrs. Prosser that she could later elect to receive income replacement benefits. On this evidence, I find that the "deemed election" provision does not apply.

There is no evidence of a misrepresentation here. However I take it from the Arbitrator's reasons that this fact was not determinative of his view of the requirements of section 61 and that the failure to provide notice of the election and the consequences of it, was equally important.

Economical relied upon the decision of Popen and State Farm Insurance Company (OIC A97-000048, October 2, 1997). In my view that case is not helpful. In that case the insured person had received a notification or notice as required by subsection 61(2) as well as the prescribed election of weekly benefit form which very clearly sets out the need to make the election and the consequences of the failure to do so.

EXPENSES:

The parties did not speak to the issue of expenses and may do so now if they are unable to resolve that issue.

I am not seised of the merits of this arbitration.

December 17, 1999

David Muir Arbitrator

Date