Gloria Hermoza v. Allstate Insurance Company of Canada, 1999 ONFSCDRS 66

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 1999 ONFSCDRS 66 FSCO A98-001144

BETWEEN:

GLORIA HERMOZA Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Dirk C. VanderBent

Heard: February 22, 1999, in Niagara Falls, Ontario.

Appearances: Ashley R. Gnys for Mrs. Hermoza Grant E. Black for Allstate Insurance Company of Canada

Issues:

The Applicant, Gloria Hermoza, was injured in a motor vehicle accident on December 16, 1990. She applied for and received statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.¹ Allstate terminated weekly income benefits on May 17, 1992. Mrs. Hermoza claimed further weekly benefits after having returned to work.

Allstate took the position that she was barred from receiving further benefits pursuant to subsection 16(2) of the Schedule.² The parties were unable to resolve their disputes through mediation, and Mrs. Hermoza 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 issues are:

1. Is Mrs. Hermoza barred from receiving weekly benefits pursuant to subsection 16(2)?

2. When does the disability entitlement test change pursuant to subsection 12(5)?

Result:

1. Mrs. Hermoza is not barred from receiving weekly benefits.

2. The disability entitlement test refers to 156 weeks of disability, and Mrs. Hermoza's receipt of post-accident employment income will not delay or interrupt the running of the 156 weeks.

EVIDENCE AND ANALYSIS:

Facts:

The parties proceeded by way of an agreed statement of fact. No witnesses gave evidence at this hearing. I summarize the facts as follows. Mrs. Hermoza held two jobs at the time of the accident. She was a school bus driver, and also worked as a counselor in a group home for the mentally challenged. As a result of the motor vehicle accident, she received weekly income benefits, pursuant to section 12, from December 23, 1990, until she returned to work at both jobs on May 18, 1992. Mrs. Hermoza stopped working as bus driver on May 26, 1996. She temporarily stopped working as counselor at the same time, but eventually returned to this work, albeit at reduced hours, as of December 1996.

Mrs. Hermoza asserts that she was never able to fully discharge her duties as a bus driver after the accident, as she required the assistance of family members who performed the heavier tasks of her job for her. The parties did not agree on this aspect of the evidence. However, they conceded that it was unnecessary for me to make a finding of fact for the purpose of adjudicating the preliminary issues.

Question #1: Is Mrs. Hermoza's application barred by subsection 16(2)?

Two years after the accident, Mrs. Hermoza clearly worked for a period in excess of 90 days. Does subsection 16(2) prohibit her from qualifying from further benefits? This section provides:

16.-(1) Subject to section 15 and subsection (3), a person receiving a benefit under this Part may attend school or accept, or return to, work at any time during the first two years following the accident for any period of time without affecting his or her benefits under this Part if, as a result of the accident, he or she is unable to continue at school or in the occupation or employment.

(2) Subject to section 15 and subsection (3), after the two year period referred to in subsection (1), a person receiving a benefit under this Part may attend school or accept, or return to, an occupation or employment for periods of up to ninety days without affecting his or her benefits under this Part if he or she, as a result of the injury, is unable to continue at school or in the occupation or employment.

(3) The insurer is not required to pay weekly benefits under section 13 for any week in which the insured person attends school.

This issue has been the subject of several arbitration decisions. In Russell and Co-operators? and a subsequent case, Theuma and Halifax,³ the arbitrators concluded that section 16 applied and ultimately determined that the applicants were no longer eligible for weekly benefits. Subsequent to these decisions, arbitrators in Lafleur and Zurich,⁴ and Whyte and Metropolitan,⁵ concluded that subsection 16(2) did not have the effect of barring an insured person from receiving further benefits where the insured worked for more than 90 days two years post accident. Subsection 16(2) was interpreted to provide only that the insured person would lose an evidentiary presumption of ongoing eligibility for benefits. The analysis in Lafleur and Whyte has been accepted and applied in other decisions.⁶

In Lafleur, the Arbitrator found that subsection 16(2) does not clearly stipulate that an insured person be precluded or prohibited from receiving benefits. She noted that the legislation does not provide for this even by negative implication. In her view, if the legislature had intended that benefits be permanently terminated, it would have said so in clear and precise language. She cited case law which considered a claim for no fault benefits under an earlier version of the Insurance Act, where the Court concluded that the effect of the legislative provisions did not eliminate entitlement.⁷ The rationale of this decision was based on the policy consideration that an insured person should not be discouraged or penalized for making legitimate efforts to return to work. The Arbitrator therefore reached the following conclusions. It is general eligibility for benefits that is affected by the operation of subsection 16(2), and not entitlement to payments in a specific period. This subsection creates a rebuttable presumption that an insured person does not remain disabled. The insured person bears the onus of rebutting this presumption, and must re-establish the nexus or connection between the accident and the disability. The Arbitrator distinguished Russell and Theuma, stating that these cases did not closely consider how subsection 16(2) should be interpreted. She also noted that the case law dealing with the predecessor legislation had not been presented to the arbitrators in these cases.

In Whyte, the arbitrator noted that there is no requirement in subsection 12(1) that the disability need be continuous. Only subsection 12(5)(b) requires that an insured person demonstrate that his or her disability is continuous, and this requirement is not imposed until after a period of 156 weeks. Accordingly, subsection 16(2), which takes effect during the currency of the first 156 weeks, must have some effect other than to bar an insured person from further benefits, merely because he or she returns to work for more than 90 days.

Despite able representation by both counsel, no new arguments were raised in this hearing. On behalf of State Farm, Mr. Black emphasized that the arbitrators in Russell and Theuma ultimately disallowed the insured person's claim for continued entitlement, notwithstanding that these decisions may not have expressly addressed the interpretation of how benefits would be "affected" under section 16. He reiterated the argument that the only meaningful and sensible interpretation of how benefits are to be affected under subsection 16(2), is that benefit entitlement is extinguished.⁸ He submitted that the inclusion of section 16 in the Schedule clearly indicated a legislative intention to restrict the availability of weekly benefits where insured persons have returned to work.

On behalf of Mrs. Hermoza, Mr. Gnys emphasized that it is difficult for insured persons to establish entitlement to a weekly income benefit, due to the restrictive nature of the disability test. Once entitlement has been established, it is a matter of serious consequence for an insured person to lose the evidentiary presumption of ongoing entitlement. Therefore, interpreting section 16 as affecting only the presumption of ongoing eligibility, still imbues this section with a significant effect, and does not deprive it of its full meaning and purpose within the context of the Schedule. He reiterated that the Schedule encourages insured persons to pursue an early return to work and argued that the interpretation adopted in Lafleur is more consistent with this objective. He asserted that an interpretation which altogether precludes ongoing entitlement can only serve to discourage insured persons from returning to work and making concerted efforts to continue their employment.

I have concluded that subsection 16(2) does not bar an insured person from receiving further benefits because he or she has returned to work for more than 90 days. While subsection 16(2) could be interpreted in the manner urged upon me by Allstate, I find that a closer analysis of the Schedule, as was undertaken in Lafleur and Whyte, ultimately does not support Allstate's interpretation. In reaching my conclusion I adopt the reasons set forth in these two decisions, and I have accepted Mrs. Hermoza's submissions which were consistent with these reasons. Accordingly, I find that Ms. Hermoza is not barred from advancing her claim for weekly benefits, pursuant to subsection 16(2) of the Schedule.

Question #2: When does the disability entitlement test change pursuant to subsection 12(5)?

State Farm asserted that the change in the test for continued entitlement after 156 weeks, applies on the three year anniversary date of the accident. Mrs. Hermoza asserted that the 156 week period contemplated by subsection 12(5), refers to 156 weeks of payment, or alternatively, 156 weeks of disability. I referred counsel to the decision of Director's Delegate Susan Naylor in Coles and Dominion of Canada General Insurance Company,⁹ which addressed this issue. She concluded that subsection 12(5) refers to 156 weeks of disability. She stated:

. . . in Lafleur and Zurich Insurance Company, . . . the arbitrator held that the 156 weeks ran continuously from the date of the accident. However, more recent arbitration decisions have read 156 weeks to be 156 weeks "of disability", allowing delayed onset or breaks in disability to extend the initial period. See Whyte and Metropolitan Insurance, (April 30, 1996, OIC A-009277); Caruso and Guarantee Company of North America, (May 9, 1996, OIC A-006856); Gulizia and Dominion of Canada General Insurance Company, (January 1, 1997, OIC A-000359, appeal pending). . . I find these considerations persuasive.

I am bound by the decision of the Director's Delegate. Accordingly, I find that subsection 12(5) refers to 156 weeks of disability.

In Coles, the issue to be determined was whether the receipt of collateral benefits could affect the running of the 156 week period. The Director's Delegate found that it had no effect, stating:

All the cases have acknowledged that the language used in paragraph 12(5)(b) or its equivalent under Schedule "C" is unclear and capable of more than one meaning. It could refer to 156 weeks "from the accident", "of disability" or "of payments". A technical analysis of the provisions does not materially help. . . . in my view, an overall contextual reading better supports the view that receipt of collateral benefits does not delay or interrupt the running of the 156 weeks.

Mrs. Hermoza's situation involves post-accident employment income, rather than receipt of collateral benefits. It is clear that an insured person may be disabled for the purposes of subsection 12, while engaging in post-accident employment. Therefore I find that there is no logical distinction between receipt of collateral benefits and post-accident employment income, for the purpose of ascertaining whether an insured person has accumulated 156 weeks of disability. Accordingly, I find that the receipt of post-accident employment income will not delay or interrupt the running of the 156 weeks.

I have not been asked to address whether Mrs. Hermoza's post-accident return to work supports the conclusion that she ceased to be substantially unable to perform the essential tasks of her employment, nor have I been asked to determine the number of weeks she has been disabled since the accident. These issues will be adjudicated by the hearing arbitrator, if not otherwise resolved between the parties.

Expenses:

The parties may return before me any claim for expenses of this hearing of the preliminary issues, if they are unable to resolve such claims between themselves.

April 23, 1999

Dirk C. VanderBent Arbitrator

Neutral Citation: 1999 ONFSCDRS 66 FSCO A98-001144

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

GLORIA HERMOZA Applicant

and

ALLSTATE INSURANCE COMPANY 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:

1. Mrs. Hermoza is not barred from receiving weekly benefits pursuant to subsection 16(2).

2. The disability entitlement test under subsection 12(5), refers to 156 weeks of disability, and Mrs. Hermoza's receipt of post-accident employment income will not delay or interrupt the running of the 156 weeks.

April 23, 1999

Dirk C. VanderBent Arbitrator

Footnotes

1. 1The 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.
2. 2In this decision, any reference to section 16 is to section 16 of the Schedule.
3. 3Russell and Co-operator General Insurance Company (OIC A-005417, December 20, 1993)
4. 4Lafleur and Zurich Insurance Company (OIC A-004141, May 11, 1995)
5. 5Whyte and Metropolitan Insurance (OIC A-009277, April 30, 1996)
6. 6Chudy and West Wawanosh Mutual Insurance Company (OIC A96-000924, January 23, 1997), Macaulay and Royal Insurance Company of Canada (OIC A96-000538, July 22, 1997), Ralston and Progressive Casualty Insurance Company (A-004609, August 8, 1995)
7. 7Dowling v. Phoenix Continental Management Ltd. (1989), 1989 CanLII 4364 (ON HCJ), 70 O.R. 2d 311 (H.C.J.). The provisions for no fault benefits in effect at the time stated: "a person receiving a weekly payment who, within 30 days of resuming his occupation or employment is unable to continue such occupation or employment as a result of such injury, is not precluded from receiving further weekly payments ..."
8. 8This argument was raised by the insurer in Lafleur, supra.
9. 9(FSCO P-007416, July 28, 1997), Application for Judicial Review pending.