Greta Wachmenko v. Canada Life Casualty Insurance Company, 2001 ONFSCDRS 111

Financial Services Commission of Ontario

Neutral Citation: 2001 ONFSCDRS 111 FSCO A00-000446

BETWEEN:

GRETA WACHMENKO Applicant

and

CANADA LIFE CASUALTY INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: John Wilson

Heard: April 19, 2001, at the offices of the Financial Services Commission of Ontario in Toronto

Appearances: Karen L. Watt for Mrs. Wachmenko Luke C. Mullin for Canada Life Casualty Insurance Company

Issues:

The Applicant, Greta Wachmenko, was injured in a motor vehicle accident on September 12, 1994. She applied for statutory accident benefits from Canada Life Casualty Insurance Company ("Canada Life"), payable under the Schedule.¹ Benefits were paid following the accident. Canada Life issued a notice of assessment denying weekly income replacement benefits on December 13, 1995. The parties were unable to resolve their disputes through mediation, and Mrs. Wachmenko 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. Is Mrs. Wachmenko precluded from proceeding to arbitration because her application for arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Act and subsection 72(1) of the Schedule?

Result:

1. Mrs. Wachmenko is precluded from proceeding to arbitration.

EVIDENCE AND ANALYSIS:

The parties jointly submitted a brief of agreed documents and proceeded on agreed facts at the hearing.

The statement of agreed facts shows that Mrs. Wachmenko was paid income replacement benefits from September 12 to December 25, 1994. Following an explanation of assessment issued by the Insurer, she applied for mediation of loss of earning capacity benefits, housekeeping, medical, chiropractic expenses, as well as physiotherapy and travel expenses.

A mediation was held by telephone on August 23, 1995, with a Report of Mediator issued on the same day. Although the report shows that Mrs. Wachmenko was unrepresented at the mediation, her counsel noted that she was almost continually represented by many different counsel in this matter.

Canada Life issued another explanation of assessment on December 13, 1995 confirming that benefits would not be reinstated.

On April 4, 1996, Mrs. Wachmenko, now represented by another solicitor, Mr. Philip Zylberberg, made another application for mediation on the subject of income replacement benefits. The Ontario Insurance Commission, as it was at the time, declined to accept the second application since it considered that there was already a failed mediation on the issue, and it lacked jurisdiction to mediate further.

In September 1996, Mr. Zylberberg wrote to the Commission again, noting its disinterest in resuming the mediation, and requesting a copy of an application for arbitration.

Although the Ontario Insurance Commission failed to act on Mr. Zylberberg's repeated requests for a resumption of the mediation, he, as Mrs. Wachmenko's solicitor, remained in touch with Canada Life.

As a result of these discussions meetings took place, resulting in the payment on November 29, 1996, of some $17,316.00 to Mrs. Wachmenko, by Canada Life. The Insurer characterized the payment as "under protest."

Canada Life claimed a repayment of benefits from Mrs. Wachmenko and requested mediation on January 13, 1997.

A further mediation was held on March 24, 1997. The covering letter from the mediator, and the Mediator's Report both stated that all issues were resolved at mediation. The body of the report, however implied that there might be issues remaining that could be dealt with once a DAC report and some medical records were available for review.

Throughout 1998, further assessments were done of Mrs. Wachmenko by Canada Life and settlement discussions took place. No action was taken by Mr. Zylberberg, however to move the matter along by filing for arbitration. In February 1999, however, he wrote to the OIC requesting that mediation be re-opened. Canada Life, in turn, suggested a conference call, without the benefit of a mediator, which was agreed to.

From October 1999 to January 2000 contact continued between the parties with a view to settling the matter. By March 2000, all hopes of settlement seem to have been dashed since Mr. Zylberberg wrote to the Commission, requesting an application for arbitration form. On May 1, 2000, he filed the completed application with the Commission. The Insurer, in its response to the application, then raised the issue of limitations.

Subsection 281(5) of the Insurance Act provides the basis for the time-limits on an application for mediation or arbitration.

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

Subsection (1) refers to the commencement of a court action or an arbitration.

The jurisprudence at the Commission has interpreted and clarified these legislative requirements over the years. Jakovljevic and Commercial Union Assurance Company, (FSCO A98-001163, July 26, 1999) a decision of Arbitrator Bayefsky, provides a useful summary of the matters to be considered in evaluating a limitations defence.

Arbitration decisions have established a number of principles as to the manner in which limitation periods under the legislation are to be applied. The principles most relevant to the case at hand are that the two year period begins to run from the date the applicant receives a clear and unequivocal refusal of the benefits he or she has claimed, and that the insurer bears the onus of establishing both that the applicant received such a refusal and the date of the receipt.

There are a number of refusals listed in the agreed statement of facts supplied by the parties. The last explanation of benefits listed was dated November 29, 1996. This refusal gave rise to a mediation which took place on March 25, 1997.

Section 72 of the Schedule provides:

(1) 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 a benefit under this Regulation shall be commenced within two years from the insurer's refusal to pay the amount claimed or, if the person has engaged in an employment as permitted by section 14 or has returned to elementary, secondary or post-secondary education as permitted by section 17, within two years of the insurer's refusal to pay further benefits.

(2) Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within ninety days after the mediator reports to the parties under section 280(8) of the Act.

According to the agreed statement of facts the mediator reported to the parties about the last mediation on March 25, 1997. Mrs. Wachmenko applied for arbitration on May 1, 2000, more than two years from any refusal by the Insurer, and more than 90 days from the date when the mediator reported to the parties. Provided that the date of the last explanation of assessment was a clear and unequivocal refusal as characterized by Jakovljevic (supra), there can be no question that this arbitration was commenced well beyond the time-limits set by the Act and the Schedule.

Having regard to the documents jointly submitted, and the agreed statement of facts, which acknowledges that the various explanation of assessment letters was, indeed, received by Mrs. Wachmenko, I find that Canada Life has provided at least prima facie evidence that it has met the requirements outlined in Jakovljevic (supra).

The agreed statement of facts also includes references to settlement discussions and meetings between Mr. Zylberberg and Canada Life prior to the filing of the arbitration application.

Although Canada Life, in its argument addressed the question of estoppel in relation to the conduct of the Insurer following the last mediation, I heard no evidence from either party that Mrs. Wachmenko believed that the Insurer had waived the limitations through ongoing discussions, nor that she relied upon such a waiver, if, indeed, it took place. Indeed, counsel for Mrs. Wachmenko chose not to rely on estoppel at all in her submissions.

I find that once the Insurer raised prima facie evidence of non-compliance with the statutory limitation periods, it became incumbent upon Mrs. Wachmenko to adduce evidence of any exception to the limitation.

Reading the correspondence between the solicitors supplied as part of the agreed documents brief, I am struck by the relaxed attitude taken by Mrs. Wachmenko's solicitor to the passage of time. However, in the documents and letters I find nothing to convince me that he was lulled into that attitude by the actions or statements of the Insurer.

As Director's Delegate Draper stated in Derman and State Farm (Appeal P009521, January 29, 1997):

In my view, an applicant cannot expect to extend the limitation period indefinitely while he or she attempts to document the claim. There may be good reasons to continue negotiating after mediation fails, but before applying to the court or arbitration. However, the limitation period will run unless the insurance company has agreed not to rely on it, or has misled the applicant in some material way about the limitation period. As stated above, I find ample evidence for the arbitrator's conclusion that State Farm did nothing to preclude it from relying on the limitation period.

Counsel for Mrs. Wachmenko advanced the theory that the mediation had not concluded, with the result that the time-limit prescribed in the Act did not begin to run.

Admittedly, the Report of the Mediator, dated March 25, 1997, contains the following comments which could be interpreted as keeping the mediation open:

Ms. Wachmenko and Canada Life agreed that they will attempt to resolve the issues between them after receiving and reviewing the DAC report, the notes and records of Dr. Koka and the hospital records noted above. If they cannot resolve the issues, both parties wish to return to mediation.

The mediator, in his report as well as in his covering letter, also indicates that all the issues in dispute have been resolved.

Subrule 23.1 of the Dispute Resolution Practice Code, Third Edition, April 15, 1997 provides:

If a party believes that the Report of Mediator is not accurate, the party should notify the mediator and the other parties in writing, with reasons, within 10 days of receiving the Report.

There is no evidence that Mrs. Wachmenko, or her solicitor, disagreed with the mediator's observation that all issues in dispute had been settled at mediation. Rule 19 of the Code deals with the time-limits for mediation. Subrule 19.1 provides that "Mediation will be completed within 60 days of the Application for Mediation being filed." Subrules 19.2 and 19.3 provide a mechanism to extend the period for mediation upon mutual agreement and notice in writing to the mediator.

There is no evidence of a written confirmation of any extension filed by either party. Nor does the mediator characterize his report as an interim report, or provide any hint that the delivery of the report is not to be considered as the time when "the mediator reports to the parties" as provided for in subsection 72(2) of the Act.

Mrs. Wachmenko's view of the arbitration process would result in an unending process, subject to re-opening at any time at the wish of either party. This position is apparently based on the mediator's rather cryptic addendum: "If they cannot resolve the issues, both parties wish to return to mediation."

While this statement could possibly mean that the mediation never ends, the more probable interpretation is that if further issues develop, the parties wish to refer them to a mediation as well. While the commitment to alternative dispute resolution is highly commendable, it can hardly be seen as grounds for keeping that particular mediation open for another four years.

Although the general onus in this preliminary issue is on the Insurer, it is Mrs. Wachmenko who is putting forward the notion that the mediation never ended, and it is incumbent upon her to prove her assertion. She has not met that onus.

I find, on the balance of probabilities, that the mediation terminated with the delivery of the Report of Mediator of March 25, 1997. Consequently, I find that Mrs. Wachmenko's application for arbitration, on May 1, 2000, was brought outside of the time-limits provided for in the Act and the Schedule.

I find that the application for arbitration is barred by subsection 281(5) of the Act and that Mrs. Wachmenko may not proceed to arbitration.

EXPENSES:

I exercise my discretion to award Mrs. Wachmenko her expenses incurred in this preliminary issue hearing.

July 20, 2001

John Wilson Arbitrator

Neutral Citation: 2001 ONFSCDRS 111 FSCO A00-000446

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

GRETA WACHMENKO Applicant

and

CANADA LIFE CASUALTY 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. Mrs. Wachmenko is precluded from proceeding to arbitration.

July 20, 2001

John Wilson Arbitrator

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.