Mohamed v. State Farm Mutual Automobile Insurance Company, 1999 ONFSCDRS 47

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 1999 ONFSCDRS 47

FSCO A98-001464

BETWEEN:

ABDILLAHI JAMA MOHAMED

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Joyce Miller

Heard:

March 10, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Ric Fleury and Micheal Lake for Mr. Mohamed

Casey Van Moorlehem for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Abdillahi Jama Mohamed, was injured in a motor vehicle accident on September 8, 1996. He applied for accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.¹ State Farm denied Mr. Mohamed's claim on July 15, 1998. The parties were unable to resolve their disputes through mediation, and Mr. Mohamed applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended ("the Act").

The preliminary issue is:

1. Should Mr. Mohamed claim be dismissed as an abuse of process, frivolous, and vexatious proceeding, for failure to comply with section 138 of the Courts of Justice Act prohibiting a multiplicity of legal proceedings?

2. Is Mr. Mohamed entitled to his expenses incurred in this preliminary issue hearing under subsection 282(11) of the Act?

3. Is State Farm entitled to its expenses incurred in this preliminary issue hearing under subsection 282(11) of the Act?

Result:

1. Mr. Mohamed's claim against State Farm is not dismissed.

2. Mr. Mohamed is entitled to his expenses incurred in this preliminary issue hearing.

3. State Farm is not entitled to its expenses.

EVIDENCE AND SUBMISSIONS:

Mr. Mohamed was involved in an accident on September 8, 1996. At the time of the accident he was driving a rented van. Mr. Mohamed applied for accident benefits to the insurer of the van, American Home Insurance Company ("American Home"). On October 24, 1996, American Home denied Mr. Mohamed's claim on the basis that "Injuries outlined are not consistent with accident details. Primary auto insurer may be valid through spouse."

On November 30, 1997, Mr. Mohamed made a claim for accident benefits to his wife's insurer, State Farm.² State Farm denied Mr. Mohamed's claim. No evidence was presented as to why his claim was denied. Mr. Mohamed applied for mediation. The mediator's report of November 6, 1998 stated that Mr. Mohamed's claim for medical expenses failed. The report further stated that:

As a preliminarly [sic] issue, the insurer maintained that the insured had made application for statutory accident benefits against another insurer first and that pursuant to the provisions of regulation 283/95 Disputes Between Insurers, the insured had no jurisdiction to proceed to mediation. The insurer also questioned the standing that the insured had to apply for benefits with Sate [sic] Farm given section 268 of the Insurance Act and Section 138 of the Courts of Justice Act with respect to avoiding multiplicity of proceedings. The insurer also indicated that the insured failed to comply with section 59 of the SABS.

Mr. Mohamed filed for arbitration on December 2, 1998. In response State Farm requested a preliminary issue motion to have Mr. Mohamed's claim dismissed for duplicity of proceedings.

State Farm submitted that once American Home had denied benefits Mr. Mohamed should not be permitted to apply for accident benefits to State Farm. State Farm submitted that since Mr. Mohamed chose to apply to American Home for accident benefits he was obligated to pursue his claim via mediation and arbitration against American Home. State Farm equated applying to an insurer for accident benefits after a denial by another insurer as being frivolous, vexatious and an abuse of process.

Mr. Mohamed denied that his claim against State Farm was frivolous, vexatious or an abuse of process. Mr. Mohamed submitted that he applied to State Farm for accident benefits because when American Home denied his claim it told him to go to his wife's insurer. Mr. Mohamed submitted that he commenced an arbitration against State Farm because he believes State Farm is the correct insurer. He further submitted if there is a priority dispute it is between the insurers to sort out.

Analysis and Findings:

For the following reasons I find that Mr. Mohamed's claim against State Farm should not be dismissed.

I find that there is no legal basis for State Farm's position that once American Home denied Mr. Mohamed's claim that he was barred from pursuing his claim against State Farm. I accept Mr. Mohamed's submission that he applied to State Farm because he believed State Farm was the correct insurer. If under the priority rules State Farm turns out not to be the primary insurer, then State Farm has recourse against the proper insurer pursuant to Ontario Regulation 283/95 - Disputes Between Insurers.

I also find that there is no legal basis to support State Farm's position that because Mr. Mohamed applied to two insurers for benefits, but only proceeded to arbitration against one of them, that this amounted to a duplicity of proceedings and an abuse of process. Applying for accident benefits is not the same as commencing a legal proceeding. I received no probative evidence that Mr. Mohamed had engaged in a duplicity of proceedings.

Accordingly, I find that State Farm's motion to dismiss Mr. Mohamed claim is denied.

EXPENSES:

I exercise my discretion to award Mr. Mohamed his expenses incurred in this preliminary issue hearing.

March 25, 1999

Joyce Miller

Arbitrator

Date

Neutral Citation: 1999 ONFSCDRS 47

FSCO A98-001464

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ABDILLAHI JAMA MOHAMED

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. State Farm shall pay Mr. Mohamed his reasonable expenses incurred in this preliminary issue hearing.

March 25, 1999

Joyce Miller

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 and 463/96.
2. 2Exhibit 8, Ontario Automobile Insurance Application for Accident Benefits, dated November 30, 1997 The application was not the correct form and Mr. Mohamed re-submitted another application form on May 20, 1998. See Exhibit 10, Application for Accident Benefits (OCF-1) May 20, 1998