Neutral Citation: 2000 ONFSCDRS 88

FSCO A99-000269

BETWEEN:

SANTOSH KAUR

Applicant

and

CIBC INSURANCE

Insurer

Before: Judith Killoran

Heard: February 14 and 17, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto. Written submissions were received on February 15, 16 and 18, 2000.

Appearances: Rajneesh Sharda for Mrs. Kaur Lorraine Takacs for CIBC Insurance

The Applicant, Santosh Kaur, was injured in a motor vehicle accident on November 29, 1995. She applied for and received statutory accident benefits from CIBC Insurance ("CIBC"), payable under the Schedule.¹ CIBC terminated weekly income replacement benefits on September 16, 1996. The parties were unable to resolve their disputes through mediation, and Mrs. Kaur applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Insurance Act").

The preliminary issues are:

Is Mrs. Kaur precluded from proceeding to arbitration on the issues of rehabilitation, housekeeping and supplementary medical benefits because a separate Application for Arbitration on these issues was not filed within the two-year limitation period set out in subsection 281(5) of the Insurance Act and subsection 72(1) of the Schedule?
Shall the issues of income replacement benefits and entitlement to a loss of earning capacity offer be heard together with the issues of rehabilitation, housekeeping and supplementary medical expenses at the arbitration hearing?

Mrs. Kaur may proceed to arbitration on the issues of rehabilitation, housekeeping and supplementary medical benefits.
The issues of income replacement benefits, entitlement to a loss of earning capacity offer, rehabilitation, housekeeping and supplementary medical expenses shall be heard together at the arbitration hearing.

At the outset of the hearing, CIBC raised a number of preliminary objections related to the Applicant's failure to produce certain documents, to file an expert's report and to disclose a brief and witness list. However, a larger question emerged which was: What are the issues to be adjudicated at the arbitration hearing?

Both parties requested a short adjournment of the hearing to allow time to file written submissions on the following: 1) Whether the issues of rehabilitation, housekeeping and supplementary medical benefits were statute barred from proceeding to arbitration; and 2) If not, whether these issues should be heard together with the issues of income replacement benefits and entitlement to a loss of earning capacity offer at the arbitration hearing on the substantive issues. Counsel filed written submissions on February 15 and 16, 2000. The hearing on the preliminary issues resumed on February 17, 2000 for oral submissions, and a final written submission was received on February 18, 2000.

The parties agreed that problems arising due to the late disclosure of the brief and witness list, delays with productions and the filing of an expert's report would be remedied by adjourning the main hearing to June 2000. As well, counsel for the Applicant undertook to produce and update all outstanding productions within 60 days of the hearing on the preliminary issues. Rulings governing the admissibility of documents and the issue of expenses of this hearing were left to the discretion of the hearing arbitrator.

Background

Santosh Kaur was involved in a motor vehicle accident on November 29, 1995. She applied for and received benefits under the Schedule. Mrs. Kaur subsequently attended an insurer's medical examination ("IE"). Following release of the IE report dated June 21, 1996, CIBC advised Mrs. Kaur that her benefits would be terminated. When Mrs. Kaur objected to the termination of benefits, CIBC referred her to a multi-disciplinary assessment at a designated assessment centre (a "DAC") on April 29, 1997. The DAC found that Mrs. Kaur was not disabled.

CIBC issued an Explanation of Assessment dated September 11, 1997 which confirmed the original denial of benefits payable after September 16, 1996. Mrs. Kaur applied for mediation.

CIBC and Mrs. Kaur participated in a telephone mediation on December 1, 1998. The mediator's report of the same date set out the issues remaining in dispute as income replacement benefits and entitlement to a loss of earning capacity benefits offer. The mediator noted under a heading entitled "Supplementary Medical Benefits - Part 7" that he had no jurisdiction. In his explanation, the mediator stated: "Ms. Kaur filed for mediation for outstanding rehabilitation benefits. However at mediation the insurer advised that these expenses have not yet been submitted". Rehabilitation benefits are found in Part 8 and so, it is unclear whether the mediator was including supplementary medical benefits in his finding of "no jurisdiction."

On February 23, 1999, Mrs. Kaur filed an Application for Arbitration, which included claims for rehabilitation, housekeeping and supplementary medical benefits. In its response of April 8, 1999, CIBC objected to these claims being included in the Application and the arbitration proceeding, as they had not been mediated, as required by the Insurance Act. Mrs. Kaur filed no reply to this objection.

A pre-hearing discussion was held by conference call on June 22, 1999. In his pre-hearing letter dated June 22, 1999, the pre-hearing arbitrator determined that the issues at the arbitration hearing were:

Is the Applicant entitled to income replacement benefits pursuant to Part 2 of the Schedule after September 16, 1996?
Is the Applicant entitled to an offer for loss of earning capacity pursuant to Part 6 of the Schedule?
Is either party entitled to expenses of the arbitration proceeding?

The arbitrator also noted that the Applicant claimed interest on any amounts owing.

Based on the pre-hearing letter, CIBC submitted that it understood that the issues for arbitration were those as set out above. Mrs. Kaur filed no objection to this letter.

However, in the interim, a further mediation had been conducted and a Report of Mediator issued on May 14, 1999 which noted that the following issues remained in dispute:

Rehabilitation benefits as recommended by Dr. Malik, at an approximate total cost of $8,000: that is, $1,400 to $1,600 for psychotherapeutic intervention, $4,400 to $5,400 for a work conditioning/hardening program and $1,000 to $1,200 for a driver reintegration program.
Reimbursement of $21,972 for housekeeping expenses incurred from September 16, 1996 to December 1, 1998.
Reimbursement of the following medical expenses: taxi for $1,760.15, mileage (2,763 km @ $.30 per km) of $828.90, and miscellaneous prescriptions, an exercise machine and hospital fees totalling $297.02.

Mrs. Kaur also claimed interest on overdue payments.

The Law

Subsection 281(2) of the Insurance Act limits an insured's right to proceed to arbitration as follows:

No person may bring a proceeding in any Court, refer the issues in dispute to an arbitration under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed and, if the issues in dispute were referred for an evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties.

Subsection 281(5) of the Insurance Act sets out the following limitation period:

A step authorized by subsection (1) must be taken within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Statutory Accident Benefits Schedule.

Section 72 of the Schedule further particularizes time limits for proceedings. It requires that a mediation, arbitration or court proceeding under section 281 of the Insurance Act shall be commenced within two years from the insurer's refusal to pay the amount claimed. Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within 90 days after the mediator's report to the parties under subsection 280(8) of the Insurance Act. If a mediation fails, a report must be provided to the parties and the 90-day period begins to run.

Preliminary Issues

CIBC submitted that as there are no extensions of time limits set out in the Insurance Act or the Schedule, the maximum time within which an issue can proceed to arbitration is two years after the refusal to pay benefits or 90 days after a mediator's report, failing which the right to proceed to arbitration is statute barred. CIBC relied on past arbitration decisions to assert that an arbitrator does not have any discretion to extend the time limits prescribed.²

CIBC argued that the Application for Arbitration of February 23, 1999, which purported to deal with issues not included or dealt with during the mediation of December 1, 1998 and the subsequent Report of the Mediator, cannot proceed by inclusion with other issues. According to CIBC, where issues have not been identified in a particular mediation and subsequent report, the time limit continues to apply. CIBC took the position that as these benefits had been refused as of September 11, 1997 and a separate Application for Arbitration had not yet been filed for them, Mrs. Kaur was statute barred from proceeding on these issues as of September 11, 1999. According to CIBC, Mrs. Kaur could only proceed to arbitration on the issues of rehabilitation, housekeeping and supplementary medical benefits if she had filed a separate Application for Arbitration subsequent to the May 14, 1998 mediation and prior to September 11, 1999.

CIBC asserted that the notice to terminate benefits and a refusal to pay benefits was clearly and unequivocally communicated to Mrs. Kaur in an Explanation of Assessment dated September 11, 1997. According to CIBC, Mrs. Kaur acknowledged the denial of benefits when she proceeded by way of Application for Mediation. Mrs. Kaur argued that on many occasions, there have been discussions, settlement and otherwise, between counsel on all issues currently within the body of the Application for Arbitration. CIBC responded that any further investigations, requests for documents, settlement discussions or any other discussions did not affect the clear and unequivocal notice to refuse benefits. It submitted that any such discussions did not constitute a waiver of the limitation period.

Mrs. Kaur forwarded to the Commission a fax dated March 2, 1999 together with the Report of the Mediator and the Application for Arbitration containing all the issues. The fax confirmed a request that the entire application be processed as the Insurer was not responding to the request for benefits. Subsequently, the entire application was processed. Mrs. Kaur submitted that as the Application for Arbitration was processed in its entirety, the Insurer had full notice that all issues contained in the application were to be arbitrated.

Mrs. Kaur noted that CIBC responded to the Application for Arbitration of February 23, 1999, which clearly identified the issues that were in dispute, including those of housekeeping, rehabilitation and supplementary medical benefits. Although CIBC claimed initially that these issues were never mediated, the subsequent Report of the Mediator dated May 14, 1999 now refutes this. The parties agreed that the Insurer's representative, who was present at the mediation of December 1, 1998, failed to notify CIBC's counsel that the mediation had occurred and failed.

CIBC submitted that it made all necessary preparations for the scheduled arbitration on the basis of the issues identified in the pre-hearing letter of June 22, 1999. However, on February 11, 2000, a pre-hearing settlement conference was held with an arbitrator at the Commission. It was at that time that Mrs. Kaur advised that she was challenging the issues as identified in the pre-hearing letter. CIBC argued that the pre-hearing letter set out the issues correctly and this was confirmed by Mrs. Kaur's failure to object to that letter.

CIBC objected that Mrs. Kaur had failed to make any formal requests for consolidation, failed to apply for arbitration with respect to the May 14, 1999 mediation and failed to take the necessary procedural steps set out in the legislation to proceed to arbitration with respect to the issues of rehabilitation, housekeeping and supplementary medical expenses.

Mrs. Kaur submitted that although there may be a procedural "glitch," the Application for Arbitration is complete. According to Mrs. Kaur, the prejudice to her of finding that she should have proceeded by way of separate Application for Arbitration would be substantial in that the two-year limitation period has expired while any prejudice to CIBC is remedied by allowing adequate time for CIBC to prepare for a hearing on all the issues. As well, Mrs. Kaur objected that the effect of separating the issues is to add unnecessary expense to the dispute resolution process.

Findings

Any inquiry about the application of time limitations has as a prerequisite that the insurer's notice of refusal to pay benefits must satisfy the requirements of the Schedule. The onus is on the insurer to establish that the notice communicates to the applicant the insurer's refusal to pay a benefit and the reasons for the refusal, in a clear and unequivocal manner.³

I find that as of September 11, 1997, CIBC had communicated to Mrs. Kaur a clear and unequivocal denial of income replacement benefits, rehabilitation, housekeeping and supplementary medical benefits. The Explanation of Assessment stated:

Mrs. Santosh Kaur has attended a Disability DAC on April 29, 1997. It indicated that she was not disabled from returning to her pre-accident activities. As such, she is not entitled to weekly income benefits. A flare up of her injuries is not enough to reinstate her benefits or make her eligible for benefits. Proper medical documentation must be provided to show the causal relationship between her flare up and the motor vehicle accident and the resulting injuries. This insurer is not responsible for any expenses without this relationship.

The Explanation of Assessment is clearly referring to all benefits in dispute, not just the weekly income benefits when it states: "A flare up of her injuries is not enough to reinstate her benefits or make her eligible for benefits." As well, the reference to "any expenses" encompasses more than the weekly benefits. Finally, when the Explanation of Assessment is reviewed in conjunction with the DAC report (which was sent to Mrs. Kaur on June 11, 1997) which found that Mrs. Kaur was not disabled and did not require further formal physiotherapy, I find that Mrs. Kaur received clear and unequivocal notice as of September 11, 1997 that CIBC was refusing to pay all benefits in dispute.

I find that CIBC's arguments about the expiration of the limitation period lack merit. Although I agree with CIBC's submissions that it provided clear and unequivocal notice of the termination of all benefits to Mrs. Kaur as of September 11, 1997, I consider it puzzling that CIBC argued on December 1, 1998 that the mediator had no jurisdiction to deal with some of these same benefits because they had not been refused by the Insurer. I find that Mrs. Kaur should not be penalized because the mediator found that he had no jurisdiction to deal with those issues.

In Woodman v. State Farm Mutual Automobile Insurance Co.,⁴ the judge quoted approvingly from Pilon v. Zurich⁵ where there had not been mediation of all the accident benefits claims and Cunningham J. was "satisfied that the plaintiff has acted within the spirit of the procedures set out in the Insurance Act and has done everything in his power to resolve the matters in issue." In Woodman, the judge found no valid reason to hold the plaintiff to a strict technical adherence to the requirements of subsection 281(2) of the Insurance Act.

Similarly, I find that Mrs. Kaur has acted within the spirit of the procedures set out in the Insurance Act. In fact, Mrs. Kaur has complied with the requirements of subsection 281(2) of the Insurance Act. I am not persuaded that because the issues of rehabilitation, housekeeping and supplementary medical expenses were not mediated until May 14, 1999, after the filing of the Application for Arbitration, that these issues should not have been included in the Application for Arbitration and required another separate Application for Arbitration subsequent to the May 14, 1999 mediation in order to proceed to a hearing.

All of the benefits in dispute were mediated as of May 14, 1999. None of Mrs. Kaur's rights or entitlements should be jeopardized because CIBC's counsel was not informed by her client that the mediation of May 14, 1999 occurred. The legislative scheme demands that no issues may proceed to arbitration prior to mediation. The scheme has been complied with. All issues which Mrs. Kaur seeks to have heard at the arbitration hearing have been mediated. As well, Mrs. Kaur filed an Application for Arbitration on February 23, 1999 which included the issues of rehabilitation, housekeeping and supplementary medical expenses. This is well within the two-year limitation period. Therefore, Mrs. Kaur is entitled to proceed to arbitration on the issues of rehabilitation, housekeeping and supplementary medical benefits.

In Dhir and Non-Marine Underwriters, Mbrs. of Lloyd's,⁶ the arbitrator considered whether to combine two arbitration proceedings at the request of the insurer, without the consent of the applicant. The arbitrator reviewed section 9.1 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22, as amended (the "SPPA"), which addresses the authority of tribunals to combine proceedings. It states, in part, that where, "two or more proceedings ... involve the same or similar questions of fact, law or policy, the tribunal ... may ... combine the proceedings or any part of them with the consent of the parties ..." Subsection 9.1(4) of the SPPA states that "the consent requirements of clauses (1)(a) and (b) do not apply if another Act or a regulation that applies to the proceedings allows the tribunal to combine them or hear them at the same time without the consent of the parties." The arbitrator concluded that there are no provisions in the Insurance Act allowing applications to be combined without the parties consent. Therefore, he found that, depite an inherent authority to control their own process, arbitrators would likely require the consent of the parties to combine proceedings.

Mrs. Kaur’s case can be distinguished from Dhir as Mrs. Kaur is not requesting that two separate applications for arbitration be combined and heard together. Rather, Mrs. Kaur is requesting that all issues which have been mediated, albeit at two separate mediations, comprising the subject matter of one Application for Arbitration, should be heard together. To satisfy this request does not require an order combining applications. Only one Application for Arbitration has been submitted to the Commission.

Although it was unorthodox that the Application for Arbitration included issues that had not yet been mediated, those issues were mediated within a short time of the filing. The Commission did not reject the application or deliver written notice of jurisdictional concerns or deficiencies as provided for by the Dispute Resolution Practice Code (Third Edition, April 15, 1997). The entire application was processed by the Commission despite its irregularities and Mrs. Kaur relied on the Commission's acceptance of the application. Procedurally, it is regrettable that Mrs. Kaur did not ensure that all the benefits in dispute were included in the pre-hearing letter. However, CIBC received notice of all benefits in dispute from the time the Application for Arbitration was filed.

Therefore, I conclude that the issues to be adjudicated at the hearing on the substantive issues are income replacement benefits, entitlement to a loss of earning capacity offer, rehabilitation, housekeeping and supplementary medical expenses.

EXPENSES

I leave the matter of expenses of this preliminary issues hearing to the discretion of the hearing arbitrator.

May 11, 2000

Judith Killoran Arbitrator

Date