Melanie Allison v. Guarantee Company of North America, 2000 ONFSCDRS 181

Neutral Citation: 2000 ONFSCDRS 181

FSCO A00–000119

BETWEEN:

MELANIE ALLISON

Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Joyce Miller

Heard:

July 6 and 31, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received on September 11, 2000.

Appearances:

Patrick Mazurak for Ms. Allison

Hans P. Engell for Guarantee Company of North America

Issues:

The Applicant, Melanie Allison, was involved in a motor vehicle accident on June 16, 1996. She applied for statutory accident benefits from Guarantee Company of North America ("Guarantee"), payable under the Schedule.¹ Guarantee alleges that on April 1, 1997 it denied Ms. Allison's claim for Education Disability Benefits and that Ms. Allison did not apply for mediation with respect to Education Disability Benefits until more than two years after its refusal. The parties were unable to resolve their disputes through mediation, and Ms. Allison 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:

Is Ms. Allison precluded from proceeding to arbitration because her application for arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Insurance Act and subsection 72(1) of the Schedule?

Result:

Ms. Allison is precluded from proceeding to arbitration.
If needed the parties may now speak to me about expenses.

Background:

Ms. Allison was involved in a motor vehicle accident on June 16, 1996. At the time Ms. Allison was a grade 12 high school student. The accident occurred just after she had finished her classes for the year but before her final exams. Ms. Allison, however, was able to write her final exams and graduated that year.

Sometime in March 1997 Ms. Allison applied for accident benefits from Guarantee.² In her application Ms. Allison indicated that at the time of the accident she was attending school on a full-time basis.

On March 26, 1997 Ms. Angelica Velman, a rehabilitation consultant at Sibley & Associates Inc. provided Guarantee with a report of an assessment with Ms. Allison. In this report Ms. Velman listed Ms. Allison's daily activities and essential tasks prior to the car accident as being:

attending school full time
exercising three time a week at the gym
socializing with her friends
helping out at home occasionally

As well Ms. Velman noted that:

The claimant explained that she had not planned on returning to school in the fall of 1996 and just planned on finding a job and working for a year to see what she wanted to do with the next several years of her life.

Sometime in March 1997 Dr. June Dies-Keys, a chiropractor, provided Guarantee with a Health Practitioner's Certificate.³ In the Certificate she responded "Yes. Now", to the question "Can the applicant return to normal daily activities?"

On April 1, 1997 Guarantee sent Ms. Allison an Explanation of Assessment in which it stated that her application for accident benefits was denied. The "Benefit Refused" box was checked off under the heading "Education Benefits". The reason given for the refusal was "not eligible for student benefit as there was not an inability to complete education as per section 15-2(i) of SABS."

Sometime in June Ms. Allison wrote to Ms. Lynn Highley, the claims adjuster at Guarantee.⁴In this letter Ms. Allison stated:

Thank-you for sending me the Statuatory (sic) Benefits Schedule, however I am still unclear as to why I am not entitled to a weekly education disability benefit as per Part III#15(1) of the Schedule.

At the time of the accident (June 16 1996) I was still in school and was undecided as to what I was going to do next. [Emphasis in the original]

Since the accident, which has set me back I was unable to return to school in Sept '96, however I am hoping that I will be able to attend University in Sept of 97 for which I have made application.

On June 23, 1997 Guarantee sent Ms. Allison another Explanation of Assessment form. Under the heading "Education Benefits" the box "Not Eligible" was checked off. At the hearing Ms. Highley testified that in all Explanation of Assessment forms where the insurer is maintaining its refusal of benefits after an initial refusal was given, it was common practice to check off the "Not Eligible" box. The June 23, 1997 Explanation of Assessment stated in the box for "Reason benefit(s) refused", that "no medical documentation on file indicating you were medically impaired from returning to school in the fall."

Sometime in 1999 Ms. Allison retained counsel. On June 3, 1999 Ms. Allison's counsel wrote to Guarantee requesting a copy of their file. On August 4, 1999 Ms. Allison's counsel applied for mediation. In the Application for Mediation under the question "What is in dispute" it stated: "Ms. Allison claims entitlement to education disability benefits in accordance with Section 15(1). Ms. Allison was unable to attend school in September 1996." [Emphasis added]

Guarantee submits that Ms. Allison is precluded from proceeding to arbitration because her application for arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Insurance Act and subsection 72(1) of the Schedule.

Ms. Allison disputes Guarantee's submission and claims that Guarantee's refusal was not clear and unequivocal. Ms. Allison submits that Guarantee did not provide her with the proper information or assist her in understanding her rights when she applied for accident benefits; that at the time she applied for accident benefits she was unsophisticated and unrepresented; that Guarantee was obligated to let her know that there was a two-year limitation period; that the rolling limitation period should apply; that pursuant to section 59 of the Schedule Guarantee was obligated to assist her in making an election between a claim for income replacement benefits and education benefits; and that Guarantee did not assist her to apply for accident benefits when she had a second car accident on March 11, 1997. Ms. Allison submits that for all of these reasons Guarantee's notice of refusal of benefits was not valid.

The Law:

The limitation period for statutory accident benefit proceedings is set out in subsection 281(5) of the Insurance Act and section 72 of the Schedule.

Subsection 281(5) of the Insurance Act provides that an insured person may only refer issues in dispute to an arbitrator within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Schedule.

Section 72 of the Schedule requires that a mediation, as well as an arbitration proceeding, must be commenced within two years from the insurer's refusal to pay the amount claimed. It also extends the time limit for commencing an arbitration proceeding. As long as a mediation proceeding is commenced within two years of the insurer's refusal to pay benefits, the dispute can be referred to arbitration within 90 days after the mediator reports to the parties on the outcome of the mediation.

The leading case on limitation period is Zeppieri and Royal.⁵ This decision, which has been affirmed on appeal and which has been followed in numerous arbitration decisions, sets out a two-step approach. First, the insurer has to show that the refusal was clear and unequivocal and was communicated to the applicant in writing, with supporting reasons. And second, the insurer has to show that it is not estopped from relying on the limitation period because the applicant relied on its actions to his or her detriment. Ongoing negotiations or requests for further information, however, do not extend the time limits for disputing a clear and unequivocal refusal of benefits.

Findings:

For the following reasons I find that Guarantee provided Ms. Allison with a clear and unequivocal refusal of Education Disability Benefits in writing on April 1, 1997.

I do not accept Ms. Allison's submission that she was an unsophisticated applicant who neither understood how to apply for accident benefits, nor understood that her application for Education Disability Benefits was denied on April 1, 1997.

At the time that Guarantee refused Ms. Allison's claim for accident benefits, Ms. Allison was 18 years old, English was her first language, she was a high school graduate and did not suffer from any known mental defect. As well, Ms. Allison testified that her mother, who had previously applied for accident benefits, had assisted her with her claim.

Ms. Allison testified that her mother reviewed the application form for accident benefits with her. Her mother communicated with Guarantee regarding her claim. Her mother attended with her at Sibley & Associates when she was assessed by Dr. Bernstein. As well, at Ms. Allison's request, Guarantee provided her with a copy of the Schedule.

Accordingly, I find that Ms. Allison had sufficient knowledge of the process when she applied for accident benefits. I find that when Ms. Allison wrote to Guarantee in June 1997 she was only seeking further clarification as to why she was denied benefits. I find that she clearly understood that her application for Education Disability Benefits had been denied by Guarantee on April 1, 1997.

Ms. Allison submitted that Guarantee was obligated to let her know that there was a two-year limitation period.

While I am sympathetic to Ms. Allison's submission that the Explanation Assessment form which was used to deny her benefits should have stated that there is a two-year limitation period, this, however, is not the law. The Explanation of Assessment is a form approved by the Commission. This form clearly states on top of the first page: "...If you disagree with our assessment, please contact us immediately. ... If we cannot settle the application to your satisfaction, you have the right to ask for mediation, through the Ontario Insurance Commission. You can contact them in Toronto at (416) 250-6750 or toll free at 1-800-668-0128."

In the Smith v. Co-operators General Insurance Co.,⁶ the Ontario Court of Appeal had to deal with an identical notification. The majority decision rejected the appellant's argument that the applicant must be informed of the two-year limitation period for the notice required by section 71 to be effective. The majority held that "... by advising the appellant that if she wished to challenge the decision to terminate benefits she had a right to request mediation through the Ontario Insurance Commission, the respondent insurer provided the precise information the appellant needed at that point in her dispute with the respondent, thereby satisfying the requirements of s. 71 of the Statutory Accident Benefits Schedule."

I accept that I am bound by the majority decision in Smith v. Co-operators. Accordingly, I find that Guarantee was not obligated to advise her of the two-year limitation period.

Ms. Allison submitted that I should accept the concept of the rolling limitation period wherein "... each claim for each type of periodic benefit be treated as a separate claim with respect to each specific interval of time." Ms. Allison submitted that "... the ruling of the Directors Delegate in the Kirkham case [which rejected the rolling limitation period] is patently wrong, and completely at variance with the entire scheme of the accident benefit system..." as well as being "... directly at odds with the reasoning of the Ontario Court of Appeal in the case of Wilson's Truck Lines Ltd. v. Pilot Insurance Company..."

Kirkham and State Farm⁷ is a decision of the Director's Delegate and I am bound by this decision. Accordingly, I find that the rolling limitation period does not apply.

Ms. Allison submitted that Guarantee did not consider that she may have been employed at the time of the accident and should have assisted her in making an election for income replacement benefits. Ms. Allison submitted that in not assisting her, Guarantee had failed in its procedural obligation to her and therefore Guarantee's denial of benefits was not valid. I disagree with this submission.

I was not presented with any probative evidence to support Ms. Allison's claim that she was working before the accident and that Guarantee should have considered that she was entitled to an income replacement benefit.

I give little weight to the April 14, 1997 physiotherapist's report which notes in the box "CLIENT ATTENDANCE & COMPLIANCE" that Ms. Allison was "Compliant but extremely vague about past work experience and future plans. May resume cleaning handyman type of job, may do retail." I do not find this to be indicative of the fact that she was employed at the time of the accident. I find this statement vague and in contradiction to other clear evidence presented that Ms. Allison was not working before the accident. [Emphasis added]

For example, in her application for benefits she described herself as a full-time student, no mention was made of any employment. In the report of March 26, 1997 when Ms. Allison provided Sibley & Associates information on her daily activities prior to the accident, she did not mention any part-time work as part of her activities. On June 17, 1997 she told Dr. Peter Bernstein, at an Insurer's Examination ("IE"), that prior to the accident she "has not been gainfully employed". A Medical Rehabilitation DAC report of September 12, 1997 notes that "[Ms. Allison] proclaims that she has never been gainfully employed and that since the accident has only worked on a volunteer basis as a summer camp counsellor ... "

I give little weight to Ms. Allison testimony that prior to the accident she was employed as a babysitter from November 1995 to April 1996. This evidence was given in reply when she was shielded from cross-examination. I was left with the impression that this statement was made to shore up her defence.

At the time Ms. Allison filed for mediation she was represented by counsel. Her application for mediation clearly stated that she was claiming Education Disability Benefits. I find that the mediation application confirms that the only benefit that Ms. Allison could and did apply for was an Education Disability Benefit. I, therefore, give no weight to her submission that Guarantee should have considered that she was entitled to an income replacement benefit.

Ms. Allison submitted that pursuant to section 59 of the Schedule the Insurer failed to provide her with information or assistance with respect to a second car accident she had on March 11, 1997. Ms. Allison submitted that Guarantee "failed to even provide Application Forms or to request an Application with respect to that accident." Ms. Allison submitted that this is indicative of Guarantee’s failure to meet its procedural obligation to her.

I do not find this submission to be relevant to the issue in this proceeding. In fact, I find it to be a spurious submission. Nevertheless, for the sake of completeness, I will deal this submission.

On June 17, 1997 when Ms. Allison saw Dr. Bernstein for an Insurer’s psychological assessment, he reported that "Ms. Allison was in a recent motor vehicle accident in March of 1997...She said that her overall condition was not altered in any way as a result of her involvement in this most recent motor vehicle accident." [Emphasis added]

On September 12, 1997 Dr. N.E. Morris, a psychologist who examined Ms. Allison as part of a medical rehabilitation DAC, stated in his report that: "Ms. Allison cites that she was involved in another motor vehicle accident in March, 1997 when she was the driver and sole occupant of the 1992 Saturn. She alleges that her car was struck on the passenger side but denies having sustained any new injuries or aggravation of her previous complaints as a result." [Emphasis added]

On September 9 and 11, 1997 Ms. Allison was examined by a chiropractor, a physiotherapist and an orthopaedic surgeon as part of the medical rehabilitation DAC. Their report, which is not dated, states that "In March 1997, Ms. Allison was the seat-belted driver and sole occupant of a car that was involved in a T-bone-type collision with a truck. Her car was again struck on the passenger side. She stated that she was not injured, and did not note any significant change in her symptoms.

At the hearing Ms. Allison confirmed that she had told the medical practitioners that she was not injured in the March 1997 accident. That being the case, I agree with Guarantee's submission that it reasonably inferred that Ms. Allison had no claim to make from the second accident. More importantly, I find, whether or not Guarantee provided Ms. Allison with an application package regarding her second accident, this submission is not relevant to this preliminary issue hearing.

In conclusion, I find that Guarantee provided Ms. Allison with a clear and unequivocal refusal of Education Disability Benefits, in writing, on April 1, 1997. I find that in her June 1997 letter to Guarantee, Ms. Allison understood that her application for Education Disability Benefits had been refused. I also find that the June 23, 1997 Explanation of Assessment merely reconfirmed Guarantee's original refusal of benefits and was not a new refusal. I find that when Ms. Allison applied for mediation for an Education Disability Benefit on August 4, 1999 she was outside the two-year limitation period as prescribed in the legislation.

Accordingly, I find that pursuant to subsection 281(5) of the Insurance Act and subsection 72(1) of the Schedule Ms. Allison's claim for Education Disability Benefits is barred from arbitration.

EXPENSES:

If needed I may now be spoken to on the issue of expenses.

September 29, 2000

Joyce Miller Arbitrator

Date