Neutral Citation: 2001 ONFSCDRS 120

FSCO A00-001311

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

SAHRA JIMCAALE

Applicant

and

TTC INSURANCE COMPANY LIMITED

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

David Leitch

Heard:

August 8, 2001.

Appearances:

Paul Caprani for Ms Jimcaale

Leonard Wilgus for TTC Insurance Company Limited

Issues:

The Applicant, Salira Jimcaale, was involved in a motor vehicle accident on April 19, 2000. She applied for statutory accident benefits from TTC Insurance Company Limited ("TTC"), payable under the Schedule.¹ At the pre-hearing, TTC raised the following preliminary issues:

Is Ms. Jimcaale the spouse of a named insured under a contract of insurance with RBC Insurance?
Must Ms. Jimcaale claim statutory accident benefits from RBC Insurance?

Result:

The first preliminary issue is outside the jurisdiction of an arbitrator at the Financial Services Commission of Ontario.
Pending resolution of the first preliminary issue in the proper forum, TTC is responsible for paying Ms. Jimcaale the statutory accident benefits to which she is entitled.

The Facts:

The evidence establishes the following facts.

Ms. Jimcaale was involved in two accidents in the month of April, 2000. The first happened on April 14 when she was driving a motor vehicle and the second happened on April 19 when she was riding in a Toronto Transit Commission bus.

On April 20, 2000, one day after the second accident, Mr. Jimcaale completed two Applications for Accident Benefits, one for each accident, both claiming caregiver benefits. However, she did not send both Applications to the same insurer at the same time.

Ms. Jimcaale sent her Application regarding the first accident to RBC Insurance ("RBC"), indicating in Part 4 that she was covered as a "spouse" under a policy RBC had issued to Ali Osman in respect of the vehicle she had been driving.² With Mr. Caprani's assistance, Ms. Jimcaale negotiated a full and final settlement of her claim against RBC on June 13, 2000.³

On June 19, 2000,⁴ Ms. Jimcaale sent her Application regarding the second accident to TTC, indicating in Part 4 that she was not covered under any policy issued to herself, her spouse, her provider or listing her as a driver.⁵

At the hearing, TTC's claims adjuster, Ms. Victoria Hughes, acknowledged that TTC was the first Insurer to receive Ms. Jimcaale's completed Application for benefits in respect of her April 19, 2000 accident. Ms. Hughes testified that upon receipt of this Application and a Disability Certificate⁶ on June 28, 2000, she noticed a reference to the April 14, 2000 accident in the Disability Certificate. By letter dated July 4, 2000 to Mr. Caprani, Ms. Hughes requested "information regarding the insurance company, policy number and claims adjuster handling the accident benefit file for the April 14, 2000 accident."⁷ Mr. Caprani failed to supply this information as requested.⁸

On August 11, 2000, Ms. Jimcaale provided a signed statement to TTC in which she acknowledged that her claim with respect to the April 14, 2000 accident had been made "through my husband's insurer."⁹ In a letter to Ms. Hughes dated August 14, 2000, Mr. Caprani wrote:

Your claims adjuster took our client's statement August 11, 2000...It was found out that our client has coverage with her ex-husband's insurance and I would think that you will be putting them on notice in this regard.¹⁰

By letter to Mr. Caprani dated August 22, 2000, Ms. Hughes responded as follows to his suggestion that she put RBC "on notice":

To date, there is no dispute between the TTC and your client's insurance company, RBC. Section 268(5) states that if a person is a named insured or the spouse, or the dependent of a named insured, he or she shall claim benefits under that policy.

We [sic] therefore returning your client's application to accident benefits for your further handling.

We deny any claim for accident benefits through the TTC Insurance Company.¹¹

Ms. Hughes testified that she understood Mr. Caprani's letter of August 14, 2000 to be a reference to the Priorities Regulation governing disputes between insurers.¹² However, she stated that she believed that Ms. Jimcaale was obliged to present her April 19, 2000 claim to RBC and that it was then RBC's decision whether to invoke the Priorities Regulation in order to resolve any dispute between itself and other insurers.

On December 6, 2000, Ms. Hughes telephoned Ms. Kim Douna of RBC to request that RBC refund TTC its expenses in relation to Ms. Jimcaale's April 19, 2000 claim. Ms. Hughes' confirmation letter to Ms. Douna stated that RBC's policy was in effect on the day of the accident, that RBC had not denied coverage to Ms. Jimcaale and that, as the spouse of RBC's policyholder, Ms. Jimcaale was obliged to claim from RBC in accordance with section 268(5) of the Insurance Act.¹³

At the hearing, Ms. Douna acknowledged receiving Ms. Hughes' telephone call and letter demanding payment from RBC. However, she testified that RBC had received no notice about Ms. Jimcaale's April 19, 2000 claim prior to December, 2000. Ms. Douna also testified that RBC had not received any notice under the Priorities Regulation with respect to this claim and that RBC did not reply to Ms. Hughes' letter of December 6, 2000. She stated that RBC would not cover this claim without proof that Ms. Jimcaale was the spouse of its policyholder and that RBC would also question why it was not put on notice within 90 days of TTC's receipt of the Application, as required by the Priorities Regulation.

The Arguments:

In keeping with the position taken by Ms. Hughes as outlined above, Mr. Wilgus argued that the governing provision was section 268(5) of the Insurance Act, which reads, in part, as follows:

(5)....... if a person is a named insured under a contract evidenced by a motor vehicle liability policy or the person is the spouse or a dependant, as defined in the Statutory Accident Benefits Schedule, of a named insured, the person shall claim statutory accident benefits against the insurer under that policy.

Underlining the word "shall," Mr. Wilgus submitted that Ms. Jimcaale was required by this section to claim statutory accident benefits for the April 19, 2000 accident from RBC because its policy named her spouse as an insured. There was, in Mr. Wilgus's submission, no need to refer to the Priorities Regulation; on the facts of this case, section 268(5) eliminated any priority issue.¹⁴ In any event, he continued, the Priorities Regulation could not be interpreted or applied in a way which would override its enabling statute, the Insurance Act.

Mr. Wilgus further submitted that RBC did nothing to identify a dispute between insurers of the type the Priorities Regulation was intended to resolve. In particular, he maintained, RBC did not deny that its policy was in force on April 19, 2000 and it did not deny that Ms. Jimcaale was the policyholder's spouse. However, Mr. Wilgus acknowledged that RBC could have disputed these issues through the Priorities Regulation had Ms. Jimcaale presented her claim to RBC.

Finally, Mr. Wilgus argued that I should reject any attempt by a claimant to use the Priorities Regulation to achieve double recovery for overlapping injuries: one recovery from an insurer to whom the claimant represents him/herself as the spouse of a named insured and another recovery from an insurer to whom he/she represents him/herself as otherwise uninsured. Mr Wilgus alleged that Ms. Jimcaale's conduct in this case, particularly the holding back of her second claim until the first had been settled with another insurer, was consistent with an intention to attempt to achieve double recovery.

In his submission, Mr. Caprani denied that his client had attempted to engage in "double-dipping."

Analysis and Conclusion:

For present purposes, the most relevant portions of the Priorities Regulation are sections 1 to 7. They read as follows:

All disputes as to which insurer is required to pay benefits under Section 268 of the Act shall be settled in accordance with this Regulation.
The first insurer that receives a completed application for benefits is responsible for paying benefits to an insured person pending the resolution of any dispute as to which insurer is required to pay benefits under section 268 of the Act.
(1) No insurer may dispute its obligation to pay benefits under section 268 of the Act unless it gives written notice within 90 days of receipt of a completed application for benefits to every insurer who it claims is required to pay under that section.

(2) An insurer may give notice after the 90-day period if,

(a) 90 days was not a sufficient period of time to make a determination that another insurer or insurers is liable under section 268 of the Act; and

(b) the insurer made the reasonable investigations necessary to determine if another insurer was liable within the 90-day period.

(3) The issue of whether an insurer who has not given notice within 90 days has complied with subsection (2) shall he resolved in an arbitration under section 7.

An insurer that gives notice under section 3 shall also give notice to the insured person using a form approved by the Superintendent.
(1) An insured person who receives a notice under section 4 shall advise the insurer paying benefits in writing within 14 days whether he or she objects to the transfer of the claim to the insurers referred to in the notice.

(2) If the insured person does not advise the insurer within 14 days that he or she objects to the transfer of the claim, the insured person is not entitled to object to any subsequent agreement or decision to transfer the claim to the insurers referred to in the notice.

(3) An insured person who has given notice of an objection is entitled to participate as a party in any subsequent proceeding to settle the dispute and no agreement between insurers as to which insurer should pay the claim is binding unless the insured person consents to the agreement or 14 days have passed since the insured person was notified in writing of an agreement and the insured person has not initiated an arbitration under the Arbitration Act, 1991.

The insured person shall provide the insurers with all relevant information needed to determine who is required to pay benefits under section 268 of the Act.
(1) If the insurers cannot agree as to who is required to pay benefits or if the insured person disagrees with an agreement among insurers that an insurer other than the insurer selected by the insured person should pay the benefits, the dispute shall be resolved through an arbitration under the Arbitration Act, 1991.

(2) The insurer paying benefits under section 2, any other insurer against whom the obligation to pay benefits is claimed or the insured person who has given notice of an objection to a change in insurers under section 5 may initiate the arbitration but no arbitration may be initiated after one year from the time the insurer paying benefits under section 2 first gives notice under section 3.

In the case of State Farm Mutual Automobile Insurance Company and Mohamed and American Home Assurance Company,¹⁵ a Director's Delegate made the following observations about how this regulation is to be interpreted and applied:

The Priorities Regulation creates a distinction between "the first insurer to receive a completed application for benefits" ("the first insurer") and the insurer with priority under s.268 of the Act ("the priority insurer”).
The first insurer must pay accident benefits under the SABS-1994 even if it believes it is not the priority insurer.
To contest its obligation to continue paying benefits, the first insurer must give written notice, according to the procedures established in the Priorities Regulation, that it is not the priority insurer. If it does not give notice, it cannot argue that another insurer is the priority insurer, subject to getting an extension under s.4 of the Priorities Regulation. [The reference to s. 4 is an error; the only provision of the regulation which provides for extensions is subsection 3(2)].
The first insurer is only obliged to pay benefits if the insured person has established his or her entitlement. If it refuses any part of the claim, however, the insured person has a right under the Act to contest that decision through the dispute resolution system. It would defeat the purpose of the Priorities Regulation if that process had to wait for the outcome of the priorities dispute.
The first insurer, or any other insurer, cannot defend a claim in the dispute resolution system by arguing that it is not the priority insurer. The Priorities Regulation has moved that jurisdiction to arbitrators acting under the Arbitrations Act,1991.¹⁶

I agree with and, in any event, am bound by this statement of the law. Applying it to the present case, I find that TTC was the insurer that first received Ms. Jimcaale's completed Application for benefits in respect of her April 19, 2000 accident. I, therefore, find that TTC was required to pay whatever benefits Ms. Jimcaale was entitled to, despite its belief that RBC was the priority insurer. TTC could have contested its obligation to continue paying benefits by giving notice to RBC in accordance with the procedures established in the Priorities Regulation. However, as an arbitrator at the Financial Services Commission of Ontario, I do not have jurisdiction to determine whether RBC is the priority insurer. Jurisdiction with respect to that, and related questions, has been transferred to arbitrators acting under the Arbitrations Act, 1991. TTC cannot defend this claim before the Financial Service Commission of Ontario on the ground that it is not the priority insurer.

As I stated near the conclusion of the hearing, I agree with Mr. Wilgus that section 268(5) of the Insurance Act is clear. Still, its application requires a factual determination as to whether or not Ms. Jimcaale was, on April 19, 2000, a "spouse" under the RBC policy issued to Ali Osman. TTC was certainly entitled to take the position that Ms. Jimcaale was a "spouse" under the RBC policy but, in my view, TTC was not entitled to ignore the reality that this factual issue generated a priority dispute between itself and RBC.

The Priorities Regulations was intended to resolve this kind of dispute. In accordance with its procedures, TTC bore the onus, as the insurer who first received the completed Application, to both seek resolution of the priority dispute by giving notice to RBC and to pay the claim pending the resolution of the priority dispute. TTC's conduct and argument in this case have amounted to a clear attempt to shift both parts of that onus to RBC. I reject that argument as contrary to the wording and purpose of the Priorities Regulation.

In view of this conclusion, I make no finding or comment with respect to TTC's allegation that Ms. Jimcaale's conduct was consistent with an intention to attempt to achieve double recovery. However, I observe that it is not the Priorities Regulation which creates the potential for this kind of abuse. On the contrary, the Priorities Regulation reduces (though does not eliminate) this potential by providing insurers with a legal mechanism for determining which of them is responsible for paying any claim while requiring only one insurer to pay the claimant in the meantime.

The priority dispute in this case thus remains unresolved. I nevertheless repeat the Director's Delegate's observation that the purpose of the Priorities Regulation would be defeated if the dispute resolution process at the Financial Services Commission of Ontario was stopped pending the resolution of the priorities dispute. The parties are, therefore, reminded that they are expected to be available by telephone on September 7, 2001 at 10:00 a.m. to set a date for hearing of the other issues listed in the pre-hearing letter dated April 12, 2001.

EXPENSES:

I exercise my discretion and award Ms. Jimcaale her expenses incurred in this preliminary issue hearing.

August 16, 2001

David Leitch Arbitrator

Date