Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2000 ONFSCDRS 200

Variation/Revocation P99-00045

OFFICE OF THE DIRECTOR OF ARBITRATIONS

DONNA C. HART

Applicant for Variation/Revocation

and

ALLSTATE INSURANCE COMPANY OF CANADA

Respondent

Before:

Susan Naylor, Director's Delegate

Appearances:

Donna C. Hart, representing herself

Meredith J. Donohue (for Allstate Insurance)

APPEAL ORDER

Under section 284 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The application for variation/revocation is allowed in part. The arbitration order dated January 22, 1999 is revoked. The appeal order dated July 13, 1999, and the arbitration order dated March 11, 1999 are varied as follows:

The question of Donna Hart's entitlement to other disability benefits is remitted to an arbitrator for a hearing. Unless otherwise ordered or agreed to, the issues for determination are as identified in the arbitration pre-hearing letter dated November 2, 1998 as amended on November 18, 1998 and December 4, 1998, and as identified herein.

Paragraph 2 of the appeal order providing that no expenses are payable is revoked. An order is substituted allowing Mrs. Hart appeal expenses fixed at $350.
The balance of Mrs. Hart's application for variation is dismissed.
Mrs. Hart is entitled to the expenses of her application for variation/revocation, fixed at $250.

November 7, 2000

Susan Naylor Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF APPEAL

This proceeding involves an application for variation/revocation brought under s. 284 of the Insurance Act, R.S.O. 1990, c.I.8, as amended. Donna Hart applied to revoke an appeal order dated July 13, 1999, which confirmed two arbitration orders dated January 22, 1999 and March 11, 1999, respectively. Because Mrs. Hart's accident occurred on August 16, 1995, her entitlement to statutory accident benefits is governed by the Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended, ("Schedule").

The first arbitration decision dealt with benefits falling under the rubric of "other disability benefits," (ODBs), payable under Part V of the Schedule. ODBs are payable to those suffering "a partial or complete inability to carry on a normal life," who do not otherwise qualify for an income replacement benefit or for a benefit as a caregiver or student. They are paid at $185 a week, less deductible collateral benefits. Mrs. Hart claimed ODBs going back to the week after the accident and ongoing.

Following a preliminary hearing, the arbitrator held that Mrs. Hart was too late to apply for mediation and arbitration in regards to her right to ODBs because of the two-year time limit in the Insurance Act and Schedule.

In her applications for mediation and arbitration, Mrs. Hart also raised her right to unspecified medical, rehabilitation and attendant care benefits, and loss of earning capacity benefits (LECBs).

They were the subject of the arbitrator's second decision, following further written submissions. The arbitrator ruled that Mrs. Hart had not provided any details of her claims. She therefore dismissed Mrs. Hart's application for arbitration. However, she made it clear that Mrs. Hart could go back to mediation if she provided further details of her claims and applied in a timely fashion.

Mrs. Hart appealed these orders. Director's Delegate Draper dismissed the appeal in his July 13, 1999 decision.

Mrs. Hart now brings an application to have these orders revoked. She asks me to substitute orders allowing her application for arbitration to go ahead and granting her the benefits she seeks. In her application for variation/revocation, she raised her entitlement to ODBs, LECBs, medical benefits, rehabilitation benefits, expenses and interest. She also claimed compensation for mental pain and suffering.

Mrs. Hart has represented herself at all stages of the proceedings.¹ Despite her best efforts, understandably, she has had difficulty focussing her objections to the disposition of her claims and in sometimes appreciating the parameters of the review processes. Because of the obvious difficulties Mrs. Hart confronted, she was afforded substantial leeway in the presentation of her case, both here and in the earlier proceedings. In dealing with her application, I have tried to distill the substance of her objections as best I can in order to give fair consideration to the real merits.

II. BACKGROUND

The factual backdrop to this application is set out in full in the arbitration and appeal decisions. What transpired was essentially non-contentious, although the conclusions to be drawn from the events were not. The following summarises the key findings:

Mrs. Hart applied for mediation on March 11, 1998. She did not attend the mediation, later citing poor health. The mediator's report, failing the mediation, was issued on May 28, 1998. Mrs. Hart applied for arbitration on July 7, 1998.

Section 281(5) of the Insurance Act and s. 72 of the Schedule set the time frame for bringing proceedings. Under the former, a court or arbitration proceeding must be commenced 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(1) of the Schedule applies the two-year limit to mediation, as well as arbitration, with some qualifications. Section 72(2) extends the time for arbitration, allowing someone to apply within 90 days after the mediator's report. However, as the arbitrator explained, this is only if the application for mediation is itself in time.

According to the arbitrator's findings, as accepted on appeal, Mrs. Hart "never made a formal application for ODBs."² She did submit an application for accident benefits dated March 5,1996, but, as found, that application was directed only at recovering medical expenses and did not cover ODBs.

On October 2, 1995, some six weeks after the accident, Mrs. Hart's then-lawyer³ wrote to Allstate. In his letter,⁴ the lawyer informed Allstate that Mrs. Hart had been retired since 1989 and was receiving monthly payments from three sources:

long-term disability (LTD) benefits from Bell Canada, her previous employer, of $763.87;
Canada Pension Plan (CPP) disability payments of $758;
Workers' Compensation (WCB) benefits of $149.

The letter asked Allstate to advise, before Mrs. Hart made a "formal claim" for ODBs, whether her collateral benefits would be deducted "making it not worth my client's while to make a claim for Accident Benefits."

Allstate's response dated October 4, 1995 informed Mrs. Hart's lawyer that "as per the policy legislation," LTD benefits and CPP benefits were deductible, and that the workers' compensation payments were deductible if they were temporary, but not if they were permanent benefits. It offered two calculations, including and excluding the workers' compensation benefits as a deduction. Under both scenarios, Mrs. Hart was left with a zero statutory accident benefit. Allstate attached an Explanation of Assessment form, confirming that Mrs. Hart was not eligible for a benefit and referencing its calculations.

The arbitrator held that Allstate's October 1995 letter started the limitation period running. Mrs. Hart did not apply for mediation until March 1998, more than two years later. Therefore, her applications for both mediation and arbitration were time-barred. Although Mrs. Hart filed for application within 90 days of the mediator's report, this did not help her because her application for mediation was not filed within the requisite two years.

The arbitrator found that although Mrs. Hart had made inquiries rather than filing a formal application, Allstate thereby:

clearly advised Mrs. Hart, through her counsel, that it was refusing her claim for other disability benefits on the basis that her collateral sources of disability income reduced her entitlement to zero. Whether or not that decision was correct is not an issue before me. That was Allstate's position at the time and it was communicated clearly and unequivocally.⁵

The arbitrator found that this refusal started the time clock running. She further held that Allstate never did anything later on to suggest it was reconsidering its decision, so as to prevent it from raising a limitations defence. Delegate Draper upheld these findings on appeal. He set out the crux of his reasoning at p. 9-10 of his decision, as follows:

I accept that, generally, the insurer's refusal to pay benefits will come in response to a formal application. This is the procedure contemplated in ss. 59-62 of the [Schedule]. However, there will be exceptions. In this case, if Mrs. Hart had applied for mediation after receiving the October 4, 1995 letter, Allstate could not have argued that her application was premature.

However, I also accept that an insurer cannot unilaterally turn a preliminary inquiry into an application. If Mrs. Hart had responded to Allstate's letter by submitting a formal application for OBDs, the analysis might be different. That is not what happened.

In essence, the arbitrator found that Mrs. Hart never made a formal application for ODBs. I accept this finding, and in the circumstances, am not persuaded that she erred in concluding that the two-year time limit ran from Allstate's letter of October 4, 1995. Even if Mrs. Hart had been able to persuade the arbitrator that her formal application included a claim for ODBs, she would have faced serious questions about the timeliness of the application.

He therefore dismissed the appeal of the arbitrator's order.

III. ANALYSIS AND CONCLUSIONS

The power to vary or revoke appeal and arbitration orders is found in s. 284 of the Insurance Act, which states:

284.--(1) Either the insured person or the insurer may apply to the Director to vary or revoke an order made by an arbitrator or the Director.

(2) If an application is made to vary or revoke an arbitrator's order, the Director may decide the matter or he or she may appoint the same arbitrator or some other arbitrator to determine it.

(3) If the arbitrator or Director is satisfied that there has been a material change in the circumstances of the insured or that evidence not available on the arbitration or appeal has become available or that there is an error in the order, the arbitrator or Director may vary or revoke the order and may make a new order if he or she considers it advisable to do so.

(4) An order made, varied or revoked under subsection (3) may be prospective or retroactive.

Under s. 284(1), an application for variation/revocation may be brought in respect of an arbitration order or an appeal order. This case involves both.⁶ Under s. 284(3), exercise of the variation/revocation power is contingent on one of three criteria being satisfied:

there has been a material change in the circumstances of the insured
evidence not available on the arbitration or appeal has become available, or
there is an error in the order.

If, but only if, the criteria are met, there is a discretion to disturb the order, including substituting a new order.

Mrs. Hart relied on all three criteria in her application for variation/revocation, but her case essentially boils down to whether there was an error in the appeal and arbitration orders under review, or whether evidence not available has become available.

To meet the "evidence not available" criterion, the party generally must have acted diligently at the prior adjudicative stage. Inadequate or sloppy preparation does not justify a rehearing. The applicable principles are discussed in Ready and Progressive Casualty Insurance Company (P-004768/005403 and V-004768/005403, June 25, 1997)⁷, in which it was said: "The legislation places limits on when an order may be reviewed in the interests of ensuring that, in an adversarial process, the parties prepare adequately for the hearing and to secure a finite end to the adjudicative process."

As with any statutory language, the scope of the term "error in the order" must be construed in the context in which it appears. The variation/revocation process is not intended to duplicate the appeals route, although there may be some overlap. It has been held that "error in the order" does not encompass an erroneous interpretation of the law. In Sittler and Canadian General Insurance Company and Pilot Insurance Company, (OIC P-000951 and V-000951, August 11, 1995), Director Sachs reasoned that errors of law were "precisely" those caught by the appeal provisions of the Insurance Act, and that, if they were covered, there would be no reason for having a structured, time-limited appeals process.

Errors in an order include mistakes in the order needing correction, such as mathematical or calculation-type errors, or discrepancies between the form of the order and the reasons given for it.⁸ However, while the language of the provision covers accidental slips or mistakes through oversight or inadvertence, where the form of the order deviates from that intended, it is not limited to those situations.⁹ Nor does it equate to an error on the face of the "formal" order, as distinct from the body of the decision.¹⁰ The scope of the variation/revocation power cannot, surely, turn solely on how the Commission chooses to frame its decisions.

In Wawanesa Mutual Insurance Company and Caringi, (OIC V-000860, November 4, 1996), the Director intervened after the arbitrator declined to rule on the deductibility of certain collateral benefits and made no order for repayment, being under the mistaken impression that the insurer had dropped its request for repayment. As suggested in Caringi, (and without attempting to catalogue all examples), an error in the order may arise where an arbitrator has overlooked or has not dealt with a matter which, explicitly or implicitly, should have been addressed, or where the adjudicator has misunderstood the submissions made in a material respect.

Mrs. Hart identifies three areas allegedly giving rise to an error in the orders:

disregarding the fact that the payments Mrs. Hart was receiving were not deductible from her ODBs, contrary to the original information communicated by Allstate;
concluding that Allstate's October 1995 letter and assessment notice constituted a refusal triggering the time limits, when no formal application had been submitted;
concluding that Mrs. Hart had not submitted an application in regards to ODBs, when she had a reasonable excuse for not complying with the time limits for filing an application.

In its letter of October 4, 1995 triggering the time limit, Allstate took the position that Mrs. Hart would not recover any OBDs, once collateral benefits were off set. At arbitration, on appeal and in the hearing before me, Mrs. Hart argued that she should succeed because this information was wrong. She relied on the decision in Cugliari v. White (1998), 1998 CanLII 5505 (ON CA), 38 O.R. (3d) 641, in which it was held, under an earlier version of the legislative scheme, that CPP benefits are not deductible. The appeals delegate briefly discussed Mrs. Hart's arguments, but concluded, as did the arbitrator, that whether Allstate's calculation was wrong was not the issue. Rather it was whether mediation was time-barred.

Consideration of Cugliari was, in point of fact, a distraction in this case. Allstate's October 1995 response appears to reflect the then-state of the law under the previous version of the Schedule, not the version applying to Mrs. Hart. The collateral benefits in issue here were not received as a result of the accident.¹¹ Unlike the earlier regulations, the rules applying to Mrs. Hart distinguish between payments received as a result of the accident and unrelated payments. Non-accident-related benefits are deductible only if they are, or were at a particular time, temporary disability benefits.¹² Putting it at its highest, it is not obvious that any of the benefits qualified as such.

The issue for the arbitrator, as framed, was whether Mrs. Hart had brought proceedings within two years of the insurer's refusal to pay the benefits claimed.

As discussed in the appeal decision, two sets of time frames are relevant in advancing a claim for accident benefits: one for making an initial claim and the other for challenging the decision of the insurer with respect to a claim. The earlier proceedings focussed on the latter.

Part XV of the Schedule deals with procedures for making a claim, as well as for payment and non-payment of benefits. The first step is the provision of notice¹³, which then prompts the insurer's obligation to provide appropriate application forms. It was found that these requirements were fulfilled. The next step is submission of a completed application for the benefits. Under s. 59(3), an application for the benefits must be provided to the insurer within 90 days of receipt of the forms. However, s. 59(4) provides that a failure to comply with the time limits for giving notice or for submitting an application "does not disentitle a person to benefits if the person has a reasonable excuse." Unlike the prior version of the regulations, non-compliance may be excused no matter how long the delay.

Delegate Draper accepted that, in the usual course, a refusal to pay, triggering the time limits, would be contingent on receipt of a completed application form. He also agreed that an insurer could not unilaterally turn a preliminary inquiry into an application that could be refused. However, he found that there were exceptions to the general rule, of which this could be viewed as one. In arriving at his conclusion, he made several points at p. 9-10 of his decision:

if Mrs. Hart had applied for mediation after receiving Allstate's October letter, Allstate could not have argued that, because there was no formal application for benefits, her application was premature.
Mrs. Hart did not file a formal application for benefits in response to Allstate's letter. Had she done so, the analysis might have been different.
Even if Mrs. Hart had been able to persuade the arbitrator that her March 1996 application included ODBs, she would have faced serious questions about the timeliness of the application.

At p. 9 of his decision, Delegate Draper accepted the arbitrator's findings that instead of filing a formal application, Mrs. Hart asked Allstate for its position on her entitlement to ODBs and that Allstate's response letter represented a clear and unequivocal refusal to pay those benefits, triggering the time limit. Allstate argues that Mrs. Hart takes issue with this conclusion on grounds that it is wrong in law and fact. It says, relying on the Sittler decision, that she is simply trying to reargue her appeal and that, there being no error in the order, her application must be dismissed. In my view, however, there is a further dimension to Mrs. Hart's position.

Delegate Draper accepts the finding that Allstate refused to pay benefits claimed even though there was no formal application for the benefits. In other words, it did not matter that Mrs. Hart had not filed a formal application; there was, nonetheless a refusal of a benefit claim, starting the time running. His decision, however, is equivocal. It goes on to say that had Mrs. Hart filed an application after receiving Allstate's response, the analysis might have been different.

The problem is that this reasoning "puts the cart before the horse." In order to determine whether a benefit claimed has been refused, one must first address whether the benefit has been claimed. Delegate Draper relies on the fact that Mrs. Hart did not make a formal application for ODBs. He leaves open whether it would have made a difference had she done so. However, if whether Mrs. Hart had applied for benefits is material to the decision, it follows that so too are her reasons for not applying for benefits at that time. This involves consideration, under s. 59(4), of whether she had a reasonable excuse for not submitting an application in a timely fashion. However, the issue whether Mrs. Hart had a reasonable excuse was never dealt with.

The question was not specifically identified through the pre-hearing process or at the hearing. However, this was not a situation in which a party, with the benefit of hindsight, tries to reargue his or her case by raising brand new issues never raised before.

At both the arbitration and appeal stages, Mrs. Hart tried to put in evidence material relevant to the question of "reasonable excuse". After the preliminary hearing and first decision, she was invited to make submissions on whether her application for arbitration should be dismissed. In her response, Mrs. Hart specifically referenced s.59(4) attaching a copy of the provision. She also filed a number of documents including a Notice by Landlord of Termination At End of Term or Rental Period, dated May 12, 1995 and effective as of July 31, 1995. The relevance of the document to the issues in arbitration was not obvious and the arbitrator dismissed her application without hearing from her. On receipt of the arbitrator's preliminary decision, Mrs. Hart wrote to Director Sachs, objecting to the decision¹⁴, again singling out the "reasonable excuse" provision. She did not proceed with her appeal at that juncture, waiting until the arbitrator's second decision was issued.¹⁵ At that point she proceeded with her appeal, citing as grounds of appeal Allstate's failure to follow the rules, without providing further specifics.

In her submissions before me, Mrs. Hart clarified that she filed the eviction notice to show she had a reasonable excuse for not taking action. She explained that at the time of the accident and the period immediately following it, she was going through acute familial and legal problems apparently relating to her step son's efforts to have her evicted from her home. She suggested that these ongoing problems presented a serious distraction, excusing her failure to file an application at that point. Because of the way the issues at arbitration were framed and went forward, Mrs. Hart never got a fair opportunity to address the issue.

If the issue is whether Mrs. Hart had a reasonable excuse for not filing a timely application rather than whether a limitation period has started to run, other evidence that was not viewed as carrying much weight may assume more importance. For example, whether the information provided to Mrs. Hart about her benefits was wrong or misleading may be more relevant. Likewise, Mrs. Hart's understanding of the scope of the application that she filed, or the circumstances surrounding it, or of the assessment by the medical and rehabilitation designated assessment centre, may be pertinent in determining whether her failure to act at an earlier stage is excusable.

Mrs. Hart never submitted a formal application for ODBs. However, this would not necessarily preclude her from applying for mediation. This conclusion does not depend on the finding that Allstate's response was a "refusal" which could be disputed. It could be that Allstate would have been barred from raising an objection, based on the ordinary operation of the principles of estoppel.

In my view, the question whether Mrs. Hart had a reasonable excuse for not applying for ODBs in a timely fashion was implicitly one that had to be addressed in order for the adjudicator to arrive at his conclusion that Allstate's actions triggered the time limit. Mrs. Hart tried to raise the issue by submitting material evidence and provisions on point. While she might have put her position forward more clearly at an earlier stage, the difficulties under which she was operating must be taken into account. In his decision, Delegate Draper referred more than once to the difficulties she struggled with in representing herself. They were evident in the course of the proceeding before me. In all the circumstances, it would not be fair to describe her efforts as seriously wanting.

I am satisfied that there is an error in the orders in so far as they failed to address whether Mrs. Hart's non-compliance with the time lines for applying for benefits was excusable. I cannot be confident that the result in the prior proceedings would have been the same, had consideration been given to the question. Having concluded that the criteria for intervention in s. 284(3) are met, there is a discretion as to the remedy. I may vary or revoke the orders in issue, and make a new order, if appropriate.

Mrs. Hart has raised her entitlement to ODBs on an ongoing basis, covering the period up to 104 weeks after the accident and the period beyond the 104-week mark. She also claimed a loss of earning capacity benefit under Part VI of the Schedule. Given the time that has elapsed, I am reluctant to send the parties back to arbitration for a new hearing in regards to Mrs. Hart's entitlement to ODBs. However, in my view, there is no reasonable alternative. There has been no hearing on the merits of Mrs. Hart's claim to benefits. The material before me is limited. Mrs. Hart confirmed that she has provided me with all the medical documents on which she relies. However, she has not had an opportunity to give her side of the story in testimony nor has Allstate had an opportunity to test her evidence or introduce its evidence. The medical reports and records on file provide little support for a claim after 104 weeks, based on the more stringent disability test.

However, I cannot conclude, since Mrs. Hart has had no opportunity to testify, that she has no possible chance of success or that the result is a foregone conclusion.

Mrs. Hart also claims LECBs. The option of LECBs does not come into play unless the arbitrator finds that Mrs. Hart qualified for ODBs and continued to qualify for those benefits 104 weeks after the onset of disability. Furthermore, they are available to only those who by reason of the accident are prevented from earning what they could have earned at the time of the accident, and who would have returned to the work force at some point afterwards. In any event, as indicated in the mediator's report, any issue concerning LECBs is premature.

The issues relating to Mrs. Hart's entitlement to ODBs therefore are returned to an arbitrator for a new hearing. Subject to the parties' agreement or to a further order of an arbitrator, the hearing will deal with the issues identified in the arbitration pre-hearing letter dated November 2, 1998 and amended on November 18, 1998 and December 4, 1998. In addition, it will deal with the issue whether Mrs. Hart has a reasonable excuse for not complying with the time lines for submitting an application for ODBs.

Mrs. Hart also raises her right to various other benefits. The arbitrator ruled that she had not provided any details of the services or amounts claimed, and had not mediated her claims. She therefore dismissed the balance of the application for arbitration. The order was upheld on appeal. Mrs. Hart has not demonstrated any basis to intervene in those parts of the orders. It seems quite clear that Mrs. Hart has no unpaid claims at this point, nor has she identified specific services that she requires. This is possibly because her employment health plan has covered her medical needs to date. Her application for variation/revocation in respect of these benefits therefore is denied. Mrs. Hart also claimed compensation for pain and suffering. There is no such category of benefit under the Schedule. Therefore, this aspect of Mrs. Hart's claim must also fail.

Mrs. Hart's application for variation/revocation succeeds in part. I will ask the Arbitration Unit to arrange a meeting between the parties and an arbitrator, with a view to mapping out the next steps and identifying common ground. The balance of Mrs. Hart's application for variation/revocation is denied.

Mrs. Hart is entitled to her expenses in regards to her application for variation/revocation. She was not awarded her expenses on the appeal. In view of the result here, she should get her expenses. Since she incurred no legal fees and the hearings were held in her home town, her expenses will be modest. Her total expenses for both proceedings together are fixed at $550, representing her filing fees and $100 per proceeding to cover miscellaneous costs for items such as photocopying, courier charges and mail and fax costs. I leave it to the arbitrator appointed to conduct the hearing, at the end of the process, to deal with expenses incurred in regard to the previous arbitration proceedings.