Neutral Citation: 2001 ONFSCDRS 11 FSCO A00-000816

BETWEEN:

ANDREW HUBBARD Applicant

and

PEMBRIDGE INSURANCE COMPANY (PAFCO Insurance Company) Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Eban Bayefsky

Heard: By pre-hearing telephone conference on November 7, 2000; written submissions completed on December 18, 2000.

Appearances: Andrew C. Murray for Mr. Hubbard Eric K. Grossman for Pembridge Insurance Company (PAFCO Insurance Company)

Issues:

The Applicant, Andrew Hubbard, was seriously injured in a motor vehicle accident on September 11, 1993. He was nine years old at the time. In January 2000, when Mr. Hubbard turned sixteen years old, he applied for statutory accident benefits from Pembridge Insurance Company (Pafco Insurance Company) ("Pembridge"), payable under the Schedule.¹ Pembridge denied Mr. Hubbard's request on the basis that he did not meet the test for entitlement set out in paragraph 13(8)(b) of the Schedule, namely, that his injuries continuously prevented him from engaging in substantially all of the activities in which he would normally engage. Mr. Hubbard's position is that his entitlement should be determined pursuant to the less onerous pre-156 week test under subsection 13(1), namely, that, as a result of the accident, he has suffered a substantial inability to perform the essential tasks in which he would normally engage. The parties were unable to resolve their disputes through mediation, and Mr. Hubbard 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. Hubbard's entitlement to benefits to be determined pursuant to the post-156 week test under paragraph 13(8)(b) of the Schedule or the pre-156 week test under subsection 13(1) of the Schedule?

Result:

Mr. Hubbard's entitlement to benefits is to be determined pursuant to the pre-156 week test under subsection 13(1) of the Schedule.

EVIDENCE AND ANALYSIS:

Mr. Hubbard submitted that, as of the date he turned sixteen, the pre-156 week test of entitlement governed his application for benefits, despite the fact that more than three years had passed since the accident. The Insurer submitted that, as more than three years had elapsed since the accident, the applicable test was the more onerous post-156 week test.

Pursuant to paragraph 13(2)3, an insured must have attained the age of sixteen before being eligible to receive a weekly benefit. Pursuant to paragraph 13(8)(b), an insurer is not required to pay a weekly benefit for any period beyond 156 weeks unless the insured's injuries continuously prevent him or her from engaging in substantially all of his or her normal activities. The sections do not clearly indicate which test applies where, as here, an insured is injured before turning sixteen, remains disabled for more than three years and then applies for benefits upon turning sixteen. However, for the following reasons, I find that the Legislature intended that, in these circumstances, the pre-156 week test should be applied first, rather than skipping over it and immediately applying the more onerous post-156 week test.

Paragraph 13(2)3 states that an insured "must attain the age of sixteen years before being eligible to receive the weekly benefit." The weekly benefit referred to is that in subsection 13(1). In fact, subsection 13(2) begins with the words, "the following qualifications apply to an insured person who claims weekly benefits under subsection (1)." The legislation uses the word "attain" rather than the word "be" in the phrase, "He or she must attain the age of sixteen years...." This suggests that payment of the subsection 13(1) weekly benefit will be delayed pending the insured turning sixteen years of age. This, in turn, suggests that upon turning sixteen, the insured's entitlement to a weekly benefit is to be determined pursuant to the provisions of subsection 13(1).

The respective language of subsection 13(1) and paragraph 13(8)(b) also supports this approach. Subsection 13(1) opens with the words, "the insurer will pay...," whereas subsection 13(8) states that "the insurer is not required to pay...for any period in excess of 156 weeks...." This suggests a progression from initially paying benefits on the basis of the subsection 13(1) test of entitlement, to determining whether further payments need to be made beyond 156 weeks on the basis of the paragraph 13(8)(b) test of entitlement.

Paragraph 13(2)3 specifically links the fact of an insured's turning sixteen to the receipt of benefits under subsection 13(1). No such link is made to the payment of benefits under paragraph 13(8)(b), nor does paragraph 13(8)(b) mention an insured's age at all. Therefore, subsection 13(1) and paragraph 13(2)3 establish the framework in which payments are to be made to an insured who has turned sixteen, whereas paragraph 13(8)(b) establishes the basis upon which benefits are to be paid to any insured after a period of 156 weeks. In the circumstances of this case, the subsection 13(1) test would govern Mr. Hubbard's initial entitlement to weekly benefits, once he qualified for benefits upon attaining sixteen years of age.

Paragraph 13(8)(b) states that an insurer is not required to pay a weekly benefit beyond 156 weeks unless the insured's injury continuously prevents him or her from performing substantially all of his or her usual activities. In my view, this suggests that an insurer is already in the process of paying the insured weekly benefits. Section 13, therefore, establishes a two-step process for determining an insured's entitlement, the first within the first 156 weeks and the second within the period following 156 weeks. However, where, as here, the insured has not been able to claim benefits because he has not yet turned sixteen (and where the insurer, therefore, has not been required to begin paying the insured), the initial test of entitlement must be that provided for under subsection 13(1), which presumes that the insurer has not already begun the process of paying the insured.

A number of arbitration decisions have addressed the meaning of the phrase "for any period in excess of 156 weeks" contained in subsection 13(8)(b).² However, these cases address how the 156 weeks are to be measured, not when the test is to commence. More specifically, the cases do not address the present situation where, by virtue of an insured's age, benefits have not been claimed until well after three years from the date of the accident. I, therefore, find the cases of limited, if any, application to the present case.

However, to the extent that they provide any guidance, the following observations may be made. The cases stand for the proposition that the stricter test under paragraph 13(8)(b) applies after 156 weeks of disability, not after 156 weeks from the time of the accident. I do not find, as the Insurer submitted, that by emphasizing the duration of the insured's disability, these cases suggest that this is the sole determinant of the applicable test. In my view, where, by virtue of a non-disability related factor, an insured has not been able to claim benefits until after three years from the time of the accident, the question of the applicable test should not turn simply on the length of the insured's disability. Nor, as the cases do suggest, should the claim be determined simply on the basis of the time elapsed since the accident. I find that the appropriate test should be the first of the two-step process noted above and the one most closely linked to the insured having turned sixteen years of age.

Paragraph 13(2)1 states that an insured is only entitled to benefits if, within two years of the accident, he or she has suffered a substantial inability to perform his or her essential pre-accident tasks. This suggests that the pre-156 week test is to apply, despite the passage of two years from the date of the accident. I find that this supports the view that the pre-156 test is to be applied first, even though a significant period of time has elapsed since the accident.

Some insureds may be severely injured at the time of an accident, but they need not immediately establish that their injuries continuously prevent them from engaging in their usual activities. Their entitlement to benefits is initially determined under the pre-156 week test. Then, if they continue to be disabled beyond 156 weeks, they must satisfy the more onerous test. Similarly, if by virtue of their age, they cannot apply for benefits until at least three years has elapsed, they should not be required to immediately meet the more onerous test of entitlement. Their entitlement should first be determined under the pre-156 week test and, then, if they continue to be disabled for a further three years, they should be required to meet the more onerous test.

Finally, I find that the Insurer's interpretation would lead to an anomalous situation, depending on an insured's age at the time of the motor vehicle accident. That is, the closer an insured was to turning sixteen at the time of the accident, the longer the pre-156 test would apply to determining his or her initial entitlement to benefits. By virtue of the fact that insureds are precluded from applying for benefits until they are sixteen, different tests would apply depending on their age at the time of the accident.

For example, if an insured were fifteen years old at the time of the accident, then upon turning sixteen, he or she could invoke the pre-156 test (since only one year had passed since the accident) and could continue to do so for a further two years, at which point (namely, after the passage of three years of disability), the stricter post-156 week test would apply. However, if an insured were thirteen years old at the time of the accident, then upon turning sixteen, the stricter post-156 test would immediately apply in determining his or her initial entitlement. The insured would be precluded from invoking the less onerous pre-156 week test. Therefore, by virtue of the first insured being closer to turning sixteen at the time of the accident, he or she could take advantage of the easier pre-156 week test (both initially and for an additional two years), whereas the second insured would be barred from invoking it all. In my view, section 13 should be interpreted so as to avoid this anomaly. Entitlement should be determined consistently, and not (except for the specific requirement of being sixteen) depending on an insured's age at the time of the accident. For the reasons noted above, I find that the most coherent interpretation of section 13 is that the pre-156 week test under subsection 13(1) should apply once an insured turns sixteen.

I, therefore, find that Mr. Hubbard's entitlement to weekly benefits should first be determined under subsection 13(1) and, then, if he continues to be disabled for three additional years, his right to benefits should be determined under paragraph 13(8)(b).

EXPENSES:

The parties did not make submissions on the matter of expenses. I can address this issue, should the parties be unable to resolve it.

February 1, 2001

Eban Bayefsky Arbitrator

Date

ARBITRATION ORDER