Neutral Citation: 2000 ONFSCDRS 109
FSCO A99-000376
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
ROSA CAICEDO, LIBORIA MONTIEL and DAVID PAREJA
Applicants
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before:
Stewart McMahon
Heard:
March 27, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Frank A. Sabetti for Rosa Caicedo, Liboria Montiel and David Pareja
Jeremy R. Solomon for State Farm Mutual Automobile Insurance Company
Issues:
The Applicants, Rosa Caicedo, Liboria Montiel and David Pareja, were involved in a motor vehicle accident on December 30, 1997. At the time of the accident the Applicants were occupants of a vehicle owned and operated by Rosa Caicedo. The Applicants applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.1 State Farm denied the claims on the basis that the policy issued to Ms. Caicedo had been cancelled approximately a month before the accident.
The parties were unable to resolve their disputes through mediation, and Rosa Caicedo, Liboria Montiel and David Pareja applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The pre-hearing letter indicates that in light of State Farm's refusal, the Applicants sent an application for benefits to the Pilot Insurance Company, which insured the other vehicle involved in the accident. Pilot refused to pay benefits and referred the Applicants back to State Farm.
Initially, the Applicants invoked Regulation 283/95 (Disputes Between Insurers). They took the position that State Farm was bound to pay benefits pending a resolution of the "priority dispute" with Pilot. At the pre-hearing, State Farm took the position that because it had cancelled the policy it was not an "insurer" that could conceivably owe benefits to the Applicants and that accordingly Regulation 283/95 did not apply to it. A hearing date was set to deal with two preliminary issues: 1) was the policy in effect at the time of the accident? and 2) had State Farm complied with Regulation 283/95?
The parties did not proceed with the preliminary issues. Counsel for both parties appeared on the first day of the hearing with an agreed statement of facts. Counsel for the Applicants indicated that he was now satisfied that the policy had been cancelled prior to the accident, and that the proper disposition of the matter was an order dismissing the Applicants' claims against State Farm. The Applicants' counsel indicated that he intended to pursue the matter with Pilot.
Result:
On consent of all parties, the Applicants' claims are dismissed, without expenses.
EVIDENCE AND ANALYSIS:
Regulation 283/95
In those cases where coverage may be available from more than one insurer, Section 268 of the Insurance Act sets out a "priority" list which stipulates which insurer must pay benefits in any given case. Regulation 283/95 was passed to ensure that injured persons, who are otherwise entitled to benefits, are not deprived of them pending a potentially protracted dispute between insurers over which company is responsible for paying benefits. This is achieved by making the first insurer that receives an application for benefits, responsible for paying the benefits pending a private arbitration that sorts out which insurer is ultimately responsible.
Prior to the passage of Regulation 283/95 these "priority disputes" were dealt with by the Dispute Resolution Group of the Financial Services Commission. However, paragraph 7(1) of Regulation 283/95 provides that these inter-company disputes are to be dealt with by a private arbitrator appointed pursuant to the Arbitrations Act, 1991, S.O. 1991, c.17, rather than by the Commission.
On occasion, insurers have denied benefits and tried to avoid the effect of Regulation 283/95 by arguing that their companies did not afford coverage to any of the individuals involved in the accident. These insurers have pressed arbitrators at the Commission to determine the "coverage" issue on a preliminary basis before they honour the claim for benefits. They argued that until there has been a ruling that they are "an insurer", the Regulation does not apply to them.
In Mariona and Canadian General Insurance Company (A96-000717, September 25, 1998) the arbitrator concluded that she had the authority to deal with the coverage issue. In Brown and Allstate Insurance Company of Canada (A97-000579, May 29, 1997) Senior Arbitrator Rotter decided that the coverage issue should be dealt with as part of the private arbitration contemplated by Regulation 283/95, and that in the interim the first insurer to receive the demand for benefits was bound to pay them. A judicial review of the Brown decision was dismissed.
However, in this case the Applicants' counsel has abandoned his demand that State Farm (the company his clients first applied to) pay the benefits pending a private arbitration disposing of the "priority dispute." In these circumstances it does not appear that Regulation 283/95 is a bar to my dismissing the claim on consent. Pilot, which is not a party to this proceeding, or this agreement, is obviously not bound by the decision.
EXPENSES:
Neither party asked for expenses at the hearing.
June 16, 2000
Stewart McMahon
Arbitrator
Date
Neutral Citation: 2000 ONFSCDRS 109
FSCO A99-000376
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
ROSA CAICEDO, LIBORIA MONTIEL and DAVID PAREJA
Applicants
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:
- On the consent of all parties, the Applicants' claims are dismissed without expenses.
June 16, 2000
Stewart McMahon
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.