Neutral Citation: 2000 ONFSCDRS 7

FSCO A99–000160

BETWEEN:

DOMINGOS ANTUNES

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

M. Kaye Joachim

Heard:

By telephone conference call on November 9, 1999. Written submissions were received by December 6, 1999.

Appearances:

Scott Tottle for Mr. Antunes Rita L. Urbonavicius for Allstate Insurance Company of Canada

The Applicant, Domingos Antunes, was injured in a motor vehicle accident on October 25, 1991. He 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 October 28, 1994. Mr. Antunes applied for mediation in November 1998 and for arbitration in February 1999. The parties were unable to resolve their disputes through mediation, and Mr. Antunes 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 Mr. Antunes precluded from proceeding to arbitration because his application for arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Act and subsection 26(1) of the Schedule?

Mr. Antunes is precluded from proceeding to arbitration.

The parties agreed that the following facts were relevant to these proceedings:

Mr. Antunes was born in Portugal on December 1, 1948 and immigrated to Canada in 1973. He is able to speak limited English but is unable to read or write in the English language.
On October 25, 1991, Mr. Antunes was involved in a motor vehicle accident in which he sustained soft tissue injuries to his neck and back. He submitted an undated Application for Accident Benefits to Allstate.
The only medical evidence addressing disability prior to the expiry of the 156-week disability period comes from Mr. Antunes' family physician, Dr. David Evans. On July 13, 1994, Ms. Susan Andich, a rehabilitation counsellor retained by Allstate met with Dr. Evans at his office. At that time, Dr. Evans stated that Mr. Antunes did not appear to be totally and permanently disabled from working. He further stated that Mr. Antunes would be capable of completing any sedentary occupation which does not involve any repetitive bending, twisting, lifting (greater than 15 pounds), prolonged squatting and prolonged neck extension.
Allstate terminated Mr. Antunes' weekly benefits as of October 28, 1994 by way of an Ontario Automobile Insurance Assessment of Claim by Insurer form dated August 17, 1994 which provided as follows:

"Please by advised your benefits will cease as of 10/28/94 at which time the maximum of 156 weeks per OPF 1 Section 2.22 will have been paid. Documentation on file does not support entitlement criteria per OPF 1 Section 2.26(b). Copy enclosed"

Mr. Antunes received weekly disability benefits for a period of 156 weeks. At that time, Mr. Antunes did not dispute the termination of his weekly benefits nor did he advance a claim for entitlement to further weekly benefits post-156 weeks.
There is no further medical evidence addressing the issue of disability from employment until the report of Dr. Evans dated September 10, 1997 in which he states:

Unfortunately in spite of medication, physiotherapy and numerous specialist consultations, this condition has not improved in the 6 years since his injury and he has in fact, developed chronic pain syndrome such that in my opinion he is disabled and not fit to return to gainful employment.

By letter dated April 27, 1998, Mr. Antunes' counsel wrote to Allstate advising that Mr. Antunes was now advancing a claim for weekly disability benefits post-156 weeks based on the report of Dr. Evans dated September 10, 1997.
An application for mediation dated November 10, 1998 seeking benefits post-156 weeks, was forwarded to the Dispute Resolution Group and received on or about November 17, 1998.
A mediation hearing was conducted on January 22, 1999, at which time the dispute was unable to be resolved.
An application for arbitration was received by the Dispute Resolution Group on or about February 11, 1999.

The Legislation:

Section 12(1) of the Schedule states:

The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident a weekly income benefit during the period in which the insured person suffers substantial inability to perform the essential tasks of his or her occupation or employment if the insured person meets the qualifications set out in subsection (2) or (3).

Section 12(5) of the Schedule states:

The insurer is not required to pay a weekly benefit under subsection (1),

(a) for the first week of the disability;

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience.

Section 26(1) of the Schedule states:

A mediation proceeding under section 280 of the Insurance Act or an arbitration or court proceeding under section 281 of the Act in respect of benefits under this Regulation must be commenced within two years from the insurer's refusal to pay the amount claimed in the application for statutory accident benefits or, if the person has attended school or accepted, or returned to, an occupation or employment, as permitted by section 16, within two years of the insurer's refusal to pay further benefits.

The relevant limitation period for commencing an arbitration is set out in Subsection 281(5) of the Insurance Act:

A proceeding in a court or an arbitration proceeding in respect of no-fault benefits 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 No-Fault Benefits Schedule. 1990, c. 2, s. 65, part.

The Claim Period:

At the hearing, Mr. Antunes clarified that his current claim is for weekly benefits under subsection 12(5)(b), commencing September 10, 1997 and ongoing, on the basis that he is continuously prevented from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience. Despite this relinquishment of the right to weekly benefits between October 1994 and September 1997, some of Mr. Antunes' submissions directly challenged whether his right to dispute entitlement to weekly benefits between October 1994 to September 1997 was statute barred. Accordingly, I will deal with whether Mr. Antunes' right to claim weekly benefits for any period after October 1994 is statute barred.

Separate Claim for Weekly Benefits Under Subsection 12(5)(b):

Mr. Antunes attempted to distinguish his current claim under subsection 12(5)(b) from his initial claim for weekly benefits under subsection 12(1). He submitted that his initial application for benefits was not an application for benefits under subsection 12(5)(b). Mr. Antunes submitted that he did not challenge the termination of section 12(1) weekly benefits in October 1994 because he did not believe that the medical evidence available at that time supported a claim for entitlement under subsection 12(5)(b). He argued that since he never made a separate application for section 12(5)(b) benefits, Allstate has never refused these benefits, and there is no applicable limitation period barring him from mediating or arbitrating entitlement to weekly benefits under subsection 12(5)(b).

I reject the submission that insureds must make a separate application for benefits under subsection 12(5)(b) of the Schedule. As discussed in greater detail below, section 12 provides for one weekly benefit; it is merely the criteria for entitlement which become more stringent after 156 weeks of disability. The insurer must assess the insured's ongoing entitlement beyond the 156 week mark under the more stringent requirements of section 12(5)(b). The benefit remains the same; it is merely the test for entitlement which changes. An insured need not make a further application for benefits at that time.

I find that Allstate was obliged to and considered Mr Antunes' ongoing entitlement to benefits under section 12(1), as limited by subsection 12(5)(b), of the Schedule, and specifically refused to pay those benefits on the basis that Mr. Antunes did not meet the entitlement criteria.²

Clear and Unequivocal Refusal:

Mr. Antunes submitted that Allstate's purported notice of refusal did not clearly and unequivocally refuse further benefits. He submitted that the language of the purported notice of refusal was not presented in a simple and easy to understand form such that an unsophisticated person would ascertain the insurer was refusing to pay further benefits and the reason for the refusal.³

I note that Mr. Antunes submitted that he did not dispute Allstate's termination of benefits in October 1994 because he did not believe that the medical evidence available at that time would support entitlement under subsection 12(5)(b). Implicit in that assertion is an admission that he understood that his benefits were being terminated and that he made a conscious decision not to dispute the termination of benefits at that time.

In addition I find that, from an objective standpoint, Allstate's refusal was clear and unequivocal. The Assessment of Claim dated August 17, 1994 stated, in part:

The Insurer has reviewed your application for no-fault benefits and has assessed your claim below.

Where the Insurer has denied a benefit claim entirely or in part, this is a notice to you of denial of a claim.

Weekly Income Benefits

Explanation: Please be advised your benefits will cease as of 10/28/94 at which time the maximum of 156 weeks per OPF 1 Section 2.22 will have been paid. Documentation on file does not support entitlement criteria per OPF 1 section 2.26 (b) copy enclosed.

Enclosed with the Notice of Assessment were copies of sections 2.22 and 2.26 of the policy (these sections of the policy correlate with sections 12(1) and 12(5)(b) of the Schedule).

I find that the Notice of Assessment dated August 17, 1994 clearly advises Mr. Antunes that his weekly income benefits will not be paid beyond October 28, 1994, because documentation on file does not support ongoing entitlement after 156 weeks under section 2.26 of the policy (subsection 12(5)(b) of the Schedule). While the language of the policy and Schedule is not easily understandable by unsophisticated persons, it not the insurer's responsibility to explain the entitlement provisions in its notice of refusal. It is sufficient that the insurer clearly advises that benefits will cease on a specified date because the insured does not meet the criteria in the policy.

I find that Allstate refused to pay ongoing weekly benefits on August 17, 1994, or at the latest, at the time when the benefits ceased, October 28, 1994. Mr. Antunes had two years to apply for mediation and arbitration. Mr. Antunes applied for mediation in November 1998, and for arbitration in February 1999, well outside the two year limitation period. Accordingly, Mr. Antunes is precluded from proceeding to arbitration to dispute Allstate's refusal to pay benefits beyond October 28, 1994, because his applications for mediation and arbitration were filed beyond the two-year limitation period set out in subsection 281(5) of the Act and subsection 26(1) of the Schedule.

Recurrences or Relapses After the 156th Week of Disability:

Mr. Antunes submitted that he is not statute barred from arbitrating his application for weekly benefits from September 17, 1997. He first notified Allstate of this claim in April 1998, and Allstate refused to pay the benefit. He filed for mediation and arbitration in respect of Allstate's refusal to pay this benefit within two years of this latest refusal.

Mr. Antunes submitted that there is no statutory requirement to claim weekly benefits under subsection 12(5)(b) at the 156th week of disability. He submitted that he can make a claim for such benefits at any time when he actually begins to meet the eligibility criteria. Where, as alleged here, the insured suffers a recurrence or relapse of accident-related injuries, the insured may then make a claim under subsection 12(5)(b). There is no time limitation in the Schedule for making such claims.

Mr. Antunes relied upon the wording of subsection 12(5)(b) to support his interpretation that a claim for weekly benefits can be made for "any period in excess of 156 weeks" [emphasis added] in which the "injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience." He submitted that to interpret "any period" to mean the period immediately following 156 weeks would be to add words to the Schedule.

Mr. Antunes emphasized the legislative changes in the wording of the Schedule. The predecessor to subsection 12(5)(b) specifically referred to the insured's condition "at the end of the 104 week period." The Schedule applicable to this case does not contain the words "at the end of the 156 week period." Mr. Antunes submitted that this legislative change indicates that insureds need not meet the subsection 12(5)(b) criteria at the end of the 156 week mark, and that there may be an interruption between the 156th week of disability and a subsequent claim for post-156 week benefits.

Mr. Antunes acknowledged that subsection 12(5)(b) imposes a continuity requirement, but asserts that the words "continuously prevented" in subsection 12(5)(b) relates to the quality, nature and duration of any claimed period of disability. He asserted that it cannot also be interpreted as a requirement that the entitlement period for benefits be continuous from the end of the 156-week period. To do so would import a double meaning to the word "continuous" and ignore the everyday meaning of the phrase "any period."

Mr. Antunes submitted that one of the purposes of the Schedule is to provide income replacement benefits during periods of disability related to the accident. He submitted that interpreting subsection 12(5)(b) to compensate accident victims who suffer a relapse, recurrence, or deterioration of their condition is consistent with this underlying policy.

Conclusion:

The provisions of the Schedule should be interpreted remedially, having regard to the ordinary sense of the words used, the context of the provision in which they appear, and the overall statutory scheme.

However, I do not agree that Mr. Antunes may submit a new application under subsection 12(5)(b) in respect of a relapse, deterioration, or recurrence of disability which occurred almost three years after Allstate had terminated weekly benefits.

Section 12 Benefits:

Section 12 provides for the payment of weekly income benefits during the period that the insured suffers a substantial inability to perform the essential tasks of his or her occupation or employment, provided that the inability arose within two years of the accident.⁴ The insured continues to be entitled to weekly benefits as long as he or she suffers a "substantial inability." This entitlement criteria becomes more onerous after 156 weeks of disability. After 156 weeks, in addition to experiencing a substantial inability to perform his or her own occupation, the insured must also establish that he or she is "continuously prevented from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience."⁵

Section 12 must be considered as a whole, not as separate and unrelated provisions. In that context, the words "for any period" in subsection 12(5)(b) can be understood to distinguish the post-156 week period from the pre-156 week period. Those words do not confer a separate and independent ground of entitlement.

Legislative History:

The predecessor to section 12, Schedule 'C' to the Insurance Act, R.S.O. 1980, c. 218, provided:

Part II - Loss of Income

Subject to the provisions of this Part, a weekly payment for the loss of income from employment for the period during which the insured person suffers substantial inability to perform the essential duties of his occupation or employment, provided,

(c) no payments shall be made for any period in excess of 104 weeks except that, if, at the end of the 104 week period, it has been established that such injury continuously prevents such person from engaging in any occupation or employment for which he is reasonably suited by education, training or experience, the insurer agrees to make such weekly payments for the duration of such inability to perform the essential duties.

The meaning of "continuously prevents" in this provision has been the subject of some judicial consideration. In Roberts v. Safeco Insurance Co.,⁶ Watts J. held that the insured person must prove "disability or incapacity of the requisite nature, extent or degree which is and remains uninterrupted. There must be, in other words, no abatement in the degree, nature or extent of the disability."

In Newton v. The General Accident Assurance Company,⁷ Mr. Newton returned to his job after receiving accident benefits for 104 weeks. A year later his leg gave out due to knee injuries suffered in the accident and he was unable to work at heavy labouring jobs. Justice Steele held that the language of Schedule 'C' required him to look at Mr. Newton's ability to work at the end of the 104-week period. He stated:

In my opinion, if, at the end of the 104-week period, an insured is able to pursue employment for which he is reasonably suited, there is no obligation upon the insurer to continue such payments. If at some later time the injuries from the motor vehicle accident should preclude the insured from continuing in such employment, there is no obligation upon the insurer to recommence the payments. The word "continuously" in paragraph (c) reinforces this view. [Emphasis added]

Although the current Schedule does not contain the words "at the end of the 156 week period," the word "continuously" is present in subsection 12(5)(b). Arbitrators have considered the effect of this legislative change to the Schedule.

In Bouassali and Zurich Insurance Company⁸ Arbitrator Palmer considered whether an insured who did not meet the post-156 week test at the 156 week mark, could nonetheless claim weekly benefits for a three month period of disability following surgery, ten months after the 156th week of disability. Arbitrator Palmer found that for the three month period, the insured was prevented from engaging in any occupation or employment for which he was reasonably suited. However, she found that the word "continuously" in subsection 12(5)(b) precluded its application to this temporary interruption.

The requirement to look strictly at the time when weekly benefits end under the "own occupation" test is no longer there, but the necessity for continuity of disability remains.

Director Delegate Draper upheld her finding on this point and also stated:

The wording of s.12(5)(b) is somewhat different. While the focus is less obviously on the insured person's condition at 156 weeks, the requirement of continuous disability remains.⁹

In Zurich Insurance Company and Lanctot,¹⁰ released together with Bouassali, Director Delegate Draper declined to comment on the specific situation which has arisen here:

I do not find it necessary to answer the broader question of whether any period of ineligibility after 156 weeks automatically extinguishes the insurer's obligation to pay weekly benefits, as argued by Zurich and suggested by some of the Schedule 'C' decisions. Given the lack of submissions on behalf of the insured person, that issue is better left for another case.

I disagree with Mr. Antunes' submission that the omission of the words "at the end of the 156 week period" in subsection 12(5)(b) indicates a legislative intention that an insured may bring a claim for a relapse at any time in the post-156 week period. I agree with Arbitrator Palmer and Director Delegate Draper that while the legislative change lessens the focus on the 156 week mark, the requirement of continuity is still there.

While temporary improvements or returns to work will not necessarily preclude ongoing entitlement under subsection 12(5)(b),¹¹ there must be some element of continuity from the 156th week of disability. It is unnecessary to define what length of interruption in disability after 156 weeks extinguishes the insurer's obligation to pay weekly benefits. However, on the facts as alleged, I find that the requisite element of continuity is lost.

Mr. Antunes last received weekly benefits in October 1994. If he was capable of engaging in employment for which he was reasonably suited between October 1994 and September 1997, it is difficult to see the continuity of disability. If he was continuously disabled from October 1994 then his real dispute is with respect to the termination of benefits in October 1994, which I have already decided is statute barred. Mr. Antunes cannot escape the effect of the limitation period by abandoning his claim for entitlement between October 1994 and September 1997 and alleging a relapse. This would be akin to a "rolling time limit" argument, which has been specifically rejected by the Divisional Court in Kirkham and State Farm Mutual Automobile Insurance Company.¹²

My interpretation that an interruption of disability of almost three years interrupts the requisite element of continuity is consistent with the scheme of the Schedule which fosters the expeditious resolution of claims.

Statutory Provisions Relating to Timeliness:

The scheme of the Schedule clearly demonstrates an intention that claims for accident benefits be dealt with in an expeditious and timely fashion. Initial notice of claims must be given to the insurer within 30 days of the accident or as soon as practicable thereafter. Applications for accident benefits must be submitted within 90 days. Although an arbitrator may relieve against these short time frames, there must still be compliance within two years of the accident.¹³ This dovetails with the requirement in subsection 12(2)2 that the substantial inability must arise within two years of the accident.

Accident victims who experience a substantial inability more than two years after the accident are not entitled to weekly income benefits under the Schedule.

The concern with timeliness continues with respect to the resolution of disputes. Insureds must commence a mediation within two years from the insurer's refusal to pay the amount claimed in the application for no-fault benefits. I find that accident victims who experience relapses more than two years after the termination of their benefits are not entitled to claim further weekly benefits under the Schedule.

If Mr. Antunes' approach to recurrences was adopted, there would be no limitation period preventing insureds from claiming recurrences after the 156th week of disability. There is no requirement in the Schedule to notify the insurer promptly of any claim of a recurrence (the section 22 notice provision applies only to initial notice of the claim) or to make a claim with respect to a recurrence in any timely way.

In this case, Mr. Antunes did not notify Allstate of his claim for weekly benefits from September 1997, until April 1998. Theoretically, an insured could suffer a recurrence ten years after the initial refusal, and wait a further five years before filing a claim, since there are no limitation periods in the Schedule addressing recurrences or relapses (other than section 16 which is not applicable here).

A similar argument with respect to relapses was made by the insured in Veldhuizen and Coseco.¹⁴ In that case the insured's non-earner disability benefits were terminated in August 1992. In January 1994 the insured requested that her benefits be reinstated, but she did not apply for mediation of the initial refusal within two years. The insured argued that the limitation period had not expired because of her request for reinstatement of benefits. Her submissions were rejected. I agree with the comments of Arbitrator Bayefsky who stated:

...section 26 of the Schedule only permits an extension of the limitation period where there has been a further refusal to pay benefits following a section 16 return to work or school. The limitation period is not interrupted by an applicant returning to his or her normal activities within the meaning of section 13 of the Schedule, even if there has been a further refusal of benefits. Nor does an application for reinstatement nullify the insurer's initial refusal of benefits (and the subsequent running of the limitation period). Subsection 26 would only allow the clock to begin running again where an applicant’s benefits are actually reinstated and then terminated a second time; a mediation could then be brought in respect of the second period of benefits.

However, where an applicant receives section 13 disability benefits, resumes his or her normal activities, and then suffers a relapse, an arbitration can only proceed if mediation has been applied for within two years of the insurer's initial refusal of those benefits. Just as disabilities arising more than two years after the accident will not be compensated, so too will relapses mediated more than two years from the initial refusal not be arbitrated. Whether a section 13 applicant returns to pre-accident activities, suffers a relapse and applies for and is refused a reinstatement of benefits is, therefore, irrelevant for the purposes of the section 26 limitation period. The mediation process must be commenced within two years of the initial refusal in order to preserve the applicant’s rights to further benefits. (Emphasis added)

A similar conclusion with respect to relapses was reached in Shirani and Wellington Insurance Company.¹⁵

I conclude that Mr. Antunes' claim for benefits under subsection 12(5)(b) beyond September 17, 1997 is also statute barred.

EXPENSES:

The parties may now address the issue of expenses if they are unable to resolve the matter between themselves.

January 14, 2000

M. Kaye Joachim Arbitrator

Date