Neutral Citation: 1999 ONFSCDRS 56

FSCO A98-001115

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RICHARD CALL

Applicant

and

PILOT INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Eban Bayefsky

Heard:

By way of an agreed statement of fact and written submissions, completed February 26, 1999.

Counsel:

Stephen B. Abraham for Mr. Call

Grant E. Black for Pilot Insurance Company

Issues:

The Applicant, Richard Call, was injured in a motor vehicle accident on November 28, 1995. He applied for and received statutory accident benefits from Pilot Insurance Company ("Pilot"), payable under the Schedule.¹ Pilot terminated weekly income replacement benefits on December 5, 1997. Pilot subsequently reinstated benefits and Mr. Call sought interest on the late payment of income replacement benefits between April 3, 1998 and July 17, 1998. Pilot refused to pay interest as requested by Mr. Call. The parties were unable to resolve this dispute through mediation, and Mr. Call applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. A pre-hearing conference took place on December 7, 1998, at which I presided. The parties consented to my proceeding to hear the issue of Mr. Call's entitlement to interest.

The issues in this hearing are:

1. Is Mr. Call entitled to interest at a rate of 2 per cent per month compounded for late payment of benefits between April 3, 1998 and July 17, 1998, pursuant to section 68 of Schedule?

2. Is Mr. Call entitled to his expenses incurred in this arbitration proceeding?

Result:

1. The Insurer shall pay Mr. Call interest at 2 per cent per month on $27,850.54 from April 21, 1998 to July 17, 1998, pursuant to section 68 of the Schedule.

2. The Insurer shall pay Mr. Call his reasonable expenses incurred in the arbitration, pursuant to section 282(11) of the Act.

EVIDENCE AND ANALYSIS:

Background:

On November 28, 1995, Mr. Call was injured when the bicycle he was riding was struck by an automobile. He began receiving income replacement benefits ("IRBs") on December 5, 1995 at a rate of $185 per week. On October 27, 1997, Mr. Call wrote the Insurer requesting a loss of earning capacity benefit ("LECB") offer from the Insurer. On November 14, 1997, the Insurer wrote Mr. Call indicating that based on a recent medical report, weekly income replacement benefits would be terminated. Mr. Call requested a disability assessment at a Designated Assessment Centre ("DAC"). In February 1998, the DAC reported that Mr. Call was still unable to return to his pre-accident job. On February 26, 1998, the Insurer wrote Mr. Call's lawyer indicating that it was prepared to reinstate benefits on the condition that the Insurer be granted an extension until the end of the month to present its LECB offer. By letter dated March 2, 1998 to the Insurer, Mr. Call accepted this condition. He also sought immediate payment of the outstanding IRBs and interest at 2 per cent per month, the Insurer apparently having terminated benefits despite the pending DAC process. On March 18, 1998, the Insurer made an LECB offer of zero dollars.

By letter dated April 3, 1998, Mr. Call responded to the LECB offer and also revisited the question of his pre-accident earnings for the purposes of recalculating his entitlement to weekly income replacement benefits. In support of the latter, Mr. Call provided tax records recently received from Revenue Canada in Sudbury. These tax records consisted of T-4, T-4A and T-4U forms. On April 21, 1998, the Insurer wrote Mr. Call requesting additional financial information on the basis that the T-4 slips provided were insufficient; specifically, the Insurer requested the Notices of Assessment from Revenue Canada for the years 1993 and 1994.

By letter dated July 14, 1998 (received July 17, 1998), the Insurer notified Mr. Call that they had re-evaluated his income replacement benefit claim on the basis of the T-4 slips submitted and provided Mr. Call with a cheque in the amount of $27,850.54, representing the benefits owing from December 5, 1995 to July 1, 1998. In the same letter, the Insurer stated that it did not feel that interest was owing given that it had not yet received the Notices of Assessment requested from Mr. Call. Mr. Call no longer had Notices of Assessment for the years requested by the Insurer and Mr. Call's lawyer had never received this information from Revenue Canada. On September 21, 1998, Mr. Call's lawyer received a printout for Mr. Call's 1993, 1994 and 1995 tax records.

On November 13, 1998, the Insurer wrote Mr. Call's lawyer indicating that based on the Residual Earning Capacity DAC report and an accountant's report, Mr. Call was entitled to loss of earning capacity benefits in the amount of $312.88 per week commencing November 5, 1998. By letter dated November 17, 1998, Mr. Call accepted this offer.

On December 7, 1998, Mr. Abraham's office made inquiries of Revenue Canada concerning Mr. Call's Notices of Assessment. They were told that any changes made as a result of a Notice of Assessment would be adjusted on the computer printouts and that Revenue Canada does not keep actual copies of Notices of Assessments.

Submissions:

Mr. Call maintains that he is entitled to interest at 2 per cent per month compounded on the late payment of income replacement benefits, pursuant to section 68 of the Schedule. Section 68 states that "if a payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly." Mr. Call is only seeking interest from April 3, 1998, the date he responded to the Insurer's LECB offer and enclosed the tax documents in support of a recalculation of his income replacement benefits.

Mr. Call submits that there is nothing to suggest that the tax information he provided in early April 1998 was "insufficient," as stated by the Insurer, and that, in any event, the Insurer made the increased income replacement benefit payment on July 17, 1998, despite its not having received any additional tax information from Mr. Call. At no time did the Insurer indicate why it considered the tax information provided by Mr. Call to be "insufficient." Mr. Call emphasizes that, in its July 14, 1998 letter providing him with the outstanding amounts, the Insurer stated that it had re-evaluated his benefits "based on the T-4 slips that you have submitted." Mr. Call also notes that the Insurer calculated his LECB entitlement based on the original tax information provided, without additional, more "sufficient," material from him. Mr. Call submits that, even if he could have provided the Notices of Assessment sought by the Insurer, they would have had no effect at all on the calculation of the IRBs or LECBs owing. He submits that the Insurer could easily have provided the late payment on April 21, 1998, when it had reviewed his tax information. Finally, he submits that the Insurer's refusal to pay interest on the late IRB payment on the basis that he did not provide the Notices of Assessment is nothing more than an attempt to "stonewall" him, by not paying him amounts to which he is rightfully entitled.

In response, the Insurer submits, simply, that Mr. Call did not receive Notices of Assessment or computer printouts from Revenue Canada for the years 1993 and 1994 until September 21, 1998 and that these were necessary as proof that Revenue Canada accepted Mr. Call's reports of his own income. In the absence of such records, the Insurer submits that it was not obligated to make any payments to Mr. Call and should have waited until that material was received. The Insurer, therefore, maintains that there was no late payment and that no interest is payable.

Analysis:

On the basis of the above, I find that Mr. Call is entitled to interest at 2 per cent per month compounded on the late payment of $27,850.54, for the period April 21 to July 17, 1998, pursuant to section 68 of the Schedule.

Under section 68, interest becomes payable if a benefit payment is overdue. On July 17, 1998, the Insurer provided Mr. Call a cheque for benefits that, based on the recalculation of Mr. Call's income replacement benefits, ought to have been paid between December 5, 1995 (the week following the accident) and July 1, 1998. By making this payment, the Insurer acknowledged that benefits were owed to Mr. Call. However, the Insurer delayed payment of the outstanding benefits on the basis that Mr. Call had not provided sufficient financial information. The Insurer has now submitted that it was not required to pay Mr. Call the outstanding IRBs and, in fact, should have further delayed the payment until it had received the requested documentation.

The difficulty, however, is that the Insurer did make the payment and, in doing so, indicated that it had re-evaluated Mr. Call's IRB entitlement based on the financial information he had provided. The Insurer then calculated Mr. Call's LECBs in November 1998, again despite not having received any additional information from Mr. Call.

The Insurer submits that Notices of Assessment and/or computer printouts from Revenue Canada were necessary to establish that Revenue Canada accepted the veracity of Mr. Call's reports of his own income. However, even if this were true from Revenue Canada's perspective, it did not prevent the Insurer from making a substantial payment of outstanding IRBs, as well as from further calculating the LECBs owing to Mr. Call. There is also no indication that the documents requested by the Insurer would have had any impact on its calculation of the IRBs or LECBs. This is particularly true in light of the fact that none of the payments or calculations were changed once the computer printouts were received in the fall of 1998. The Insurer has also not indicated why the documents it requested were necessary for its calculations.

On this basis, I reject the Insurer's submission that, without the Revenue Canada information, it did not need to pay IRBs to Mr. Call in July 1998 and that the benefits were not overdue as of April 1998. I find that the Insurer could have, and did, properly determine the benefits owing to Mr. Call despite not having the additional financial information it requested, and that the payment of outstanding IRBs should have occurred in April 1998, the point at which the Insurer had all the information it required to determine the benefits owing. The benefits were, therefore, overdue, and interest accrued, as of that time.

The issue now is the precise moment at which the payment became overdue (section 68 of the Schedule stating that interest is payable "from the date the amount became overdue..."). While Mr. Call seeks interest from April 3, 1998, the date he requested a recalculation of the quantum of his IRBs (and provided supporting documentation), I find that April 21, 1998 would be a more sensible date. At that point, the Insurer had reviewed Mr. Call's request for a redetermination of his IRBs and the supporting material. The Insurer also decided that it needed additional information (information which was not, in fact, necessary). I find that it would be unreasonable to determine that the IRBs were overdue prior to the point at which the Insurer had reviewed the relevant material. In any event, Mr. Call submitted that the Insurer could easily have provided the outstanding IRBs on April 21, 1998, the date by which the Insurer had reviewed his tax information. I, therefore, find that the Insurer should have paid the additional benefits as of April 21, 1998, and that they were overdue as of that date. Interest should, therefore, be paid at 2 per cent per month compounded from April 21, 1998 to July 17, 1998.

Expenses:

Mr. Call sought his expenses of the arbitration. The Insurer sought an order dismissing the claim and denying Mr. Call his expenses. Mr. Call has been largely successful on the issue of interest. I exercise my discretion to award Mr. Call his reasonable expenses of the arbitration. The parties may apply for an assessment, should they be unable to agree on the amount owing.

April 8, 1999

Eban Bayefsky

Arbitrator

Date

Neutral Citation: 1999 ONFSCDRS 56

FSCO A98-001115

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RICHARD CALL

Applicant

and

PILOT 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. The Insurer shall pay Mr. Call interest at 2 per cent per month compounded on $27,850.54 for the period of April 21, 1998 to July 17, 1998, pursuant to section 68 of the Schedule.

2. The Insurer shall pay Mr. Call his reasonable expenses of the arbitration, pursuant to section 282(11) of the Act.

April 8, 1999

Eban Bayefsky

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.