Neutral Citation: 2000 ONFSCDRS 32

FSCO A96-001901

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOSEPH CUNNINGHAM

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

David Evans

Heard:

August 4, 1999, in St. Catharines, Ontario Further written submissions were received on October 22 and October 29, 1999

Appearances:

Meredith J. Donohue for Mr. Cunningham

Joseph J. Sullivan for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Joseph Cunningham, was born on July 29, 1979. He was injured in a motor vehicle accident on September 19, 1994, when he was still a minor and was just starting Grade 10. With his mother acting as his agent, he elected and received weekly income replacement benefits ("IRBs") from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.¹ State Farm terminated IRBs on August 18, 1996. After turning 18 in 1997, Mr. Cunningham asked to change his weekly benefit election from IRBs to education disability benefits ("EDBs"). The parties were unable to resolve their disputes through mediation, and Mr. Cunningham 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:

1. May Mr. Cunningham, a minor at the time of the motor vehicle accident on September 19, 1994, elect now to receive EDBs in lieu of weekly IRBs, despite the prohibition against re-election in subsection 61(7) of the Schedule?

Result:

1. Mr. Cunningham was put to his election of weekly IRBs prematurely. Accordingly, the prohibition against re-election in subsection 61(7) of the Schedule does not apply. As to the effects of this finding on Mr. Cunningham's claim, if the parties cannot agree between themselves, they may reconvene before me to make further submissions.

EVIDENCE AND ANALYSIS:

The essence of this matter is the election of weekly benefits. The basic rule, set out in subsection 61(1) of the Schedule, is that no more than one weekly benefit shall be paid to an insured person for the same period of time. Otherwise, an insured person might be entitled to receive some combination of IRBs (Part II of the Schedule), EDBs (section 15) or caregiver benefits (Part IV) in breach of that rule. Section 61 further limits the ability of an insured person to change an actual or deemed election.

Mr. Cunningham had just turned 15 at the time of the September 19, 1994 accident. Because of his work history, he was entitled to claim IRBs. However, due to the nature of his injuries and the fact that he was still attending school, he might have been entitled to receive EDBs when he turned 16. His mother elected for him to receive IRBs, which were eventually terminated after a disability assessment. Mr. Cunningham now seeks to re-elect and claim EDBs on several grounds. After the hearing, I requested and received written submissions on the further question of whether the election was premature.

Section 61 states:

61.-(1) No more than one weekly benefit shall be paid to an insured person under this Regulation for the same period of time.

(2) If it appears from an application for benefits under this Regulation that, in the absence of subsection (1), a person would be entitled to receive more than one weekly benefit under Part II, section 15 and Part IV, the insurer shall notify the person that the person must, within thirty days of receiving the notice, elect which weekly benefit he or she wishes to receive.

(3) Within thirty days of receiving the notice, the person shall elect which weekly benefit he or she wishes to receive.

(4) Pending receipt of the person's election, the insurer shall pay one of the weekly benefits to which the person is entitled and, when the insurer receives the election, the insurer shall adjust the amount of the weekly payments retroactively to the date the person became entitled to the weekly benefits that the person has elected.

(5) If the person does not elect which benefit he or she wishes to receive within the thirty day period referred to in subsection (3), the person shall be deemed to have elected the highest weekly benefit.

(6) If a person ceases to receive weekly caregiver benefits under Part IV because there is no longer anyone who meets the qualifications set out in subsection 18(5) and the person meets the qualifications set out in paragraph 5 of subsection 7(1), the insured person is entitled to elect to receive weekly income replacement benefits under Part II and the insurer shall notify the person of that entitlement.

(7) Subject to subsection (6), an election under this section may not be changed.

Factual Background:

On September 19, 1994, Mr. Cunningham was riding a bicycle when he was struck by a car. He suffered significant injuries including a prolonged period of unconsciousness and post traumatic amnesia. On September 23, 1994, orthopaedic surgical repair of his fractured right humerus (with radial nerve involvement) was completed. He was transferred from the ICU to a medical unit on September 29, 1994, and discharged home on October 7, 1994.

Mr. Cunningham attended a multidisciplinary treatment program at Niagara Rehab four times weekly from October 25, 1994 to June 20, 1995. On discharge, he still had reduced right shoulder range of motion and strength, and he still showed various frontal lobe deficits.

Mr. Cunningham returned to school on a part-time basis in January 1995 with considerable resource support. By the end of the summer of 1995, the speech pathologist thought that Mr. Cunningham's ongoing treatment needs for his speech deficits could be met within the school system.

Mr. Cunningham returned to his part-time work as a general kitchen helper/busboy in the spring and summer of 1995, but with reduced hours. In February 1996, he was identified by the school as having special needs and qualified for ongoing resource support. State Farm submits that as of July 1996, Mr. Cunningham was no longer disabled due to the motor vehicle accident. In the fall of 1997, the restaurant closed for renovations, and Mr. Cunningham was laid off. When it re-opened under a new name in the early winter, Mr. Cunningham was not offered a job.

Ms. Gerritje (Carol) Vande Kraats (formerly Cunningham) is Mr. Cunningham's mother. She is a registered practical nurse. She testified that shortly after the accident (she did not remember the exact date) Mr. James Eshuis, the claims adjuster for State Farm, attended at her home with an Application for Accident Benefits that she completed. She has continued to fill in her son's applications for various benefits since then.

Ms. Vande Kraats testified that she also had the Employer's Confirmation of Income completed by Mr. Cunningham's workplace, the Mangia Mangia Italian Eatery and Bar, where he had worked in the kitchen 20 to 30 hours per week at minimum wage before the accident. After Mr. Cunningham was discharged from the hospital on October 7, 1994, Mr. Eshuis visited the Cunningham family on October 12th to discuss the election that had to be made between IRBs and EDBs.

Ms. Vande Kraats testified that Mr. Eshuis did not tell her the amounts of the weekly benefits Mr. Cunningham would get under each option. He did tell her and she understood that under the Schedule, IRBs and EDBs were the only weekly benefits claims that Mr. Cunningham could make, but she could not recall him advising her how the election would affect any potential future loss of earning capacity benefits ("LECBs") claim. He did not advise her to discuss the election with counsel. She did consult a lawyer, but only regarding a possible tort claim.

Mr. Eshuis testified that he recalled the family intending to retain a lawyer.

Ms. Vande Kraats testified that her recollection of the meetings with Mr. Eshuis was very foggy due to other situations in her life. However, she recalled that she filled in most of the Election of Weekly Benefit form and signed it.

The top of the Election of Weekly Benefit form reads as follows:

Although you may be eligible for more than one of the weekly benefits listed in Explanation of Assessment by Insurance Company, you can only receive one of these benefits. You must choose which benefit you wish to receive.

IMPORTANT: Before you choose which benefit you want to receive, read the information that is included with this form. Once you have made your choice, it cannot be changed.

[Emphasis as in the original]

Ms. Vande Kraats testified that Mr. Eshuis had also brought three pamphlets explaining the potential benefits and options available to Mr. Cunningham. She read them but did not feel that they adequately explained the difference between EDBs and IRBs. She chose the IRBs because they were immediately available, whereas the EDBs would only be available almost a year later, and Mr. Cunningham might not be entitled to them at that point.

One of the brochures provided to Ms. Vande Kraats provides information on the election of benefits. Under the heading "Choosing a Weekly Benefit," after explaining that the insured person must choose the most appropriate benefit, the brochure reads: "Generally, once you have made a choice, it cannot be changed."

Ms. Vande Kraats testified that Mr. Cunningham eventually returned to work at his former workplace and stayed until the restaurant closed for renovations. He is currently working for a car rental company cleaning vehicles. He has been classified as a student with special needs at Niagara College where he now attends. From the fall of 1998 to the spring of 1999 he was in a modified programme. He was to enter the regular stream in the fall of 1999 with a reduced course load. His plans are to continue at Niagara College as well as to work part-time.

Findings and Conclusion:

After the hearing ended, I wrote to the parties. I noted that only one weekly benefit (IRBs) was payable to Mr. Cunningham until he turned 16, as EDBs are not payable "for any period before the insured person attains sixteen years of age." I asked for written submissions on whether the election was premature, and if so, what effect would this have on Mr. Cunningham's claim?

State Farm responded that an election had to be made as soon as it received the Application for Accident Benefits because Mr. Cunningham potentially qualified for both IRBs and EDBs, but the EDBs were simply not payable until he turned 16. In its view, subsection 61(2) does not require that both benefits be immediately payable, as subsection 61(2) states that an election should be given where "a person would be entitled to receive more than one weekly benefit."

I am not persuaded that subsection 61(2) is meant to be so future-oriented as State Farm suggests, as the suggested meaning is equivalent to requiring an election where "a person will be entitled to receive more than one weekly benefit." The verb form used, however, is conditional, and it is conditioned on the important first part of subsection 61(2): "If it appears from an application for benefits under this Regulation that, in the absence of subsection (1), a person would be entitled to receive more than one weekly benefit..." (emphasis added). Subsection (1) is, of course, the prohibition against double benefits for the same period of time, which I note specifically refers to payment and not entitlement.

The phrase would be entitled to receive" in subsection 61(2) is unique in the Schedule. However, the similar phrase would be entitled to benefits" appears in s. 76(4) of the Schedule in an analogous way. Section 76 deals with the interaction between the Schedule and Workers' Compensation Benefits. As with subsection 61(1), subsection 76(1) sets out a prohibition:

(1) The insurer is not required to pay benefits under this Regulation in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers' compensation law or plan.

Subsection 76(4) then sets out certain procedures in certain conditions:

(4) If a person who would be entitled to benefits under this Regulation in the absence of subsection (1) elects to bring an action referred to in section 10 of the Workers' Compensation Act and there is a dispute concerning the insurer's liability to pay an expense for a vocational rehabilitation program that the person was attending at the time of the election and continues to attend, the insurer shall pay the expense pending resolution of the dispute. [Emphasis added]

The opening of subsection 76(4) could be recast to more closely match that of subsection 61(1): "If, in the absence of subsection 1, a person who would be entitled to benefits under this Regulation elects..." The phrase "would be entitled to benefits" clearly does not refer to the future but rather to a present condition. In the case of section 76, that present condition is entitlement to receive benefits under any worker's compensation law or plan. I find that, by analogy, the phrase would be entitled to receive more than one weekly benefit" in subsection 61(2) also refers to a present and not a future condition.

Furthermore, the relevant portions of both subsections 61(1) and (2) refer to payment and receipt and not just entitlement. Subsection (2) does not simply refer to entitlement; if it did, then the section could simply require an election where a person is entitled to more than one weekly benefit. However, the election is only triggered where the person would be entitled to receive more than one weekly benefit. At the time the election was put to him, Mr. Cunningham was not entitled to receive more than one weekly benefit; he was potentially entitled to more than one weekly benefit once he reached age 16, but that is not the test.

I further note that section 61 refers to the present in the remaining portions of that section. The remainder of subsection 61(2) requires the insurer to notify the insured. Subsection 61(3) then requires the insured to respond within thirty days of the notice to elect which weekly benefit he or she wishes to receive. Obviously, one cannot elect to receive a benefit that is not payable. Pending receipt of the election, subsection 61(4) then requires that the insurer "shall pay one of the weekly benefits." This requirement is logical only if one of the weekly benefits is in fact payable. The situation is not the same as that where a zero benefit is payable because deductions have reduced the benefit to nil; here, EDBs were not yet payable.

Accordingly, I find that subsection 61(2) does indeed require that both benefits be immediately payable. As only one benefit was payable when Mr. Cunningham is purported to have elected IRBs, I find that the election was premature.

In passing, I find that the pamphlet shown to Ms. Vande Kraats, You May Be Eligible for More Than One Type of Weekly Benefit, implicity refers to current eligibility to receive more than one benefit and not future eligibility. In giving an example of electing IRBs versus EDBs, the pamphlet refers to a hypothetical graduate of a teacher's college who was working part-time in another field at the time of the accident. This scenario deals with a present entitlement to receive benefits and would have been no help to Mr. Cunningham or his mother in assessing his situation, which dealt with uncertain future rights. Similarly, the Election of Weekly Benefit form also implicitly refers to current eligibility to receive benefits, for it states: "[Y]ou can only receive one of these benefits. You must choose which benefit you wish to receive." Again, Mr. Cunningham could not choose to receive a benefit that was not payable. I find nothing in these forms to suggest that a different interpretation of section 61 is intended.

When I wrote to the parties, I asked for their written submissions on whether the election was premature. However, their submissions did not address my further question, namely, if the election were premature, what effect would this have on Mr. Cunningham's claim?

Mr. Cunningham has only asked for leave to re-elect from his 18th birthday. However, it may be that he should have been put to his election when he turned 16. I do not know how the parties propose to deal with the matter in that light. Accordingly, I make no order except that Mr. Cunningham remains entitled to his election. As to the effects of this finding on his claim, if the parties cannot agree between themselves, they may reconvene before me to make further submissions.

EXPENSES:

The question of expenses was deferred until all other issues in dispute were decided. Therefore, the issue of Mr. Cunningham's expenses of this arbitration proceeding may now be addressed.

February 9, 2000

David Evans

Arbitrator

Date

Neutral Citation: 2000 ONFSCDRS 32

FSCO A96-001901

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOSEPH CUNNINGHAM

Applicant

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:

1. Mr. Cunningham was put to his election of weekly income replacement benefits prematurely. Accordingly, the prohibition against re-election in subsection 61(7) of the Schedule does not apply and Mr. Cunningham may still be put to his election. As to the effects of this finding on his claim, if the parties cannot agree between themselves, they may reconvene before me to make further submissions.

2. The issue of expenses may now be spoken to.

February 9, 2000

David Evans

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule "refers to the original O.R. 776/93, and "1995 Schedule "refers to O.R. 776/93 as amended.