Neutral Citation: 1999 ONFSCDRS 65

FSCO A98-000334

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RYAN C. REESOR

Applicant

and

MOTOR VEHICLE ACCIDENT CLAIMS FUND

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

K. Julaine Palmer

Heard:

April 6, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

L. Craig Brown for Mr. Reesor

Thomas H. Clemenhagen for Motor Vehicle Accident Claims Fund

Albert M. Conforzi for Allianz Insurance Company of Canada

David H. Lauder for Pilot Insurance Company

Ivan Luxenburg for Co-operators General Insurance Company

Issue:

Ryan Reesor was injured in a motor vehicle accident on July 16, 1994. He applied to both the Motor Vehicle Accident Claims Fund ("MVAC") and Allianz Insurance Company of Canada ("Allianz") for statutory accident benefits, payable under the Schedule.¹ Two other insurers were also potentially involved in the accident. Disagreement arose as to who was responsible to pay Mr. Reesor benefits and as to whether Ontario Regulation 283/95, "Disputes Between Insurers," applied to his case. The parties were unable to resolve their disputes through mediation and Mr. Reesor 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:

Does Ontario Regulation 283/95 apply to this matter, so that the issue of which insurer is required to pay benefits must be resolved through an arbitration under the Arbitration Act, 1991?

Result:

Ontario Regulation 283/95 applies. The issue of which insurer is required to pay benefits must be resolved through an arbitration under the Arbitration Act, 1991.

EVIDENCE AND ANALYSIS:

At this preliminary issue hearing I heard brief oral submissions from five counsel. No evidence was called. Only Allianz filed any material.

The background to this arbitration is complex. Its complexity arises from the unique circumstances of Mr. Reesor's accident, his parents' motor vehicle insurance situation, and the timing of his applications for accident benefits.

When the accident occurred on July 16, 1994, Mr. Reesor was not an occupant of a vehicle, but was unfortunately run over by a vehicle. At the time, Mr. Reesor was a post-secondary student who lived at home. Although he, himself, did not own a motor vehicle, his parents owned vehicles that had been insured by Co-operators, at least until earlier in July. Vehicles insured by Allianz or Pilot may have injured Mr. Reesor.

Co-operators, Pilot, and Allianz participated in the pre-hearing process and in this preliminary issue hearing, although Mr. Reesor had not filed formal applications for arbitration against them.

Two pre-hearing discussions were held. At the pre-hearing stage, it was unclear whether Mr. Reesor had filed an application for accident benefits with Co-operators. The application for arbitration discloses that he filed an application for accident benefits with MVAC on July 5, 1995 and with Allianz about a year later, on July 12, 1996. By the time of the preliminary issue hearing, Mr. Reesor did not allege that he had submitted an application for accident benefits to Co-operators.

In order to resolve this dispute, it was important to determine whether Mr. Reesor had filed an application with Co-operators before March 27, 1995, the date on which Ontario Regulation 283/95 came into effect. That regulation removes disputes between insurers as to which insurer is liable under section 268 of the Insurance Act from arbitration by this Commission to private arbitration, under the Arbitration Act, 1991. The regulation also provides rules for determining which insurer is responsible to pay interim accident benefits.

Following the pre-hearing discussions, Mr. Phil Thorpe, National Accident Benefits Manager of Co-operators, conducted inquiries within his company to find any application for benefits Co-operators had received relating to Mr. Reesor. In a letter dated January 22, 1999, he wrote that he had found neither an application nor a claim file. Co-operators says its only activity with respect to the accident was a brief letter from one of its underwriters to the Applicant's solicitors on March 2, 1995, responding to a request from Mr. Walter Reesor, the Applicant's father. The letter confirmed that no automobile insurance policy with Co-operators was in force after 12:01 a.m., July 6, 1994.

As a result of this information, at the hearing none of the insurers nor Mr. Reesor submitted that the Commission had jurisdiction to decide which insurer is responsible, as would be the case where such a dispute arose before O.R. 283/95 came into force.² Implicitly, the parties accept that any applications which were made, or disputes which arose, post-dated March 27, 1995. Accordingly, I find this is a matter for private arbitration.

Mr. Reesor's counsel expressed some concern with collateral issues arising from MVAC's position that MVAC may not have been the first insurer to have received a "completed application for benefits," as the language of O.R. 283/95 provides. He submitted that the Commission should decide to which insurer Mr. Reesor first submitted a completed application for benefits. He described a "Catch-22" situation that could result with no insurer taking responsibility to initiate a private arbitration under the Arbitration Act, 1991, as contemplated by the regulation. MVAC's counsel submitted that the issue raised by Mr. Reesor was not before the Commission, but gave assurances that MVAC would arrange the private arbitration, at which Mr. Reesor would be able to present evidence and fully participate.

Once the responsible insurer is determined through private arbitration, Mr. Reesor should contact the case administrator to schedule a further pre-hearing discussion to resolve the substantive issues of this case and set a date for a hearing, if necessary.

EXPENSES:

No submissions were heard on the issue of expenses of this preliminary issue hearing. I defer the issue of expenses to the hearing arbitrator.

April 22, 1999

K. Julaine Palmer Arbitrator

Date