Financial Services Commission of Ontario

Neutral Citation: 2001 ONFSCDRS 131

FSCO A00-000709

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

SUZI GEBRU

Applicant

and

COSECO INSURANCE CO//HB GROUP/DIRECT PROTECT

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

William J. Renahan

Heard:

August 16 and 17, 2001 at the offices of the Financial Services Commission of Ontario in Toronto

Appearances:

Carolyn Amendola for Suzi Gebru

Alexander M. Voudouris for Coseco Insurance Co./HB Group/Direct Protect

Issues:

The Applicant, Suzi Gebru, was injured in a motor vehicle accident on August 25, 1999. She applied for statutory accident benefits from Coseco Insurance Company/HB Group/Direct Protect ("Coseco"), payable under the Schedule.¹ Coseco has not paid benefits. It relied on subsection 59(1) of the Schedule which provides that an insurer is not required to pay benefits to a person who is entitled to receive benefits under any workers' compensation law. Mrs. Gebru relied on subsection 59(2) which exempts a person from subsection 59(1) where they have elected to bring a tort action in Court and where the election was not made primarily for the purpose of claiming statutory accident benefits. Coseco argued that Mrs. Gebru made the election primarily for the purpose of claiming statutory accident benefits. The parties were unable to resolve their disputes through mediation, and Mrs. Gebru 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. Gebru precluded, pursuant to section 59 of the Schedule, from proceeding to arbitration because she brought her Court action primarily for the purpose of claiming statutory accident benefits?

Result:

1. Section 59 of the Schedule does not preclude Mrs. Gebru from proceeding to arbitration.

EVIDENCE AND ANALYSIS:

Background:

Mrs. Gebru was involved in a motor vehicle collision on August 25, 1999. At the time, she worked as a home care worker, providing personal care to elderly clients in their homes. The accident occurred as Mrs. Gebru was traveling from one client's home to another. Mrs. Gebru claims that she has not returned to work because of injuries she sustained in the motor vehicle accident. Her injuries include soft tissue injuries to her neck and back.

The first subsections of section 59 to consider are (1) and (2) which provide:

59. (1) The insurer is not required to pay benefits under this Regulation in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers' compensation law or plan.

(2) Subsection (1) does not apply in respect of an insured person who elects to bring an action referred to in section 10 of the Workers' Compensation Act so long as the election is not made primarily for the purpose of claiming benefits under this Regulation.

Mrs. Gebru conceded that she was entitled to receive benefits under a workers' compensation plan. Accordingly, under subsection (1), Coseco is not required to pay benefits unless Mr. Gebru brings herself within the exception provided in subsection(2).

Subsection 59(2) refers to legislation which was repealed. The Workers' Compensation Act, R..S.O. 1990, c.W.11, as amended, was repealed effective January 1, 1998.² Section 15(b) of the Interpretation Act, R.S.O. 1990, c.I.11 deals with references in legislation to repealed legislation. Among other things, it provides that a reference in an unrepealed regulation to a repealed Act, shall be construed to be a reference to the provisions of any substituted Act relating to the same subject matter. The substituted Act in this case is the Workplace Safety and Insurance Act, 1997, S.O. 1997, c.16.

Section 10 of the repealed Workers' Compensation Act deals with the rights of a person whose injuries occur in circumstances where the worker is entitled to claim workers' compensation benefits and where the worker is also entitled to claim damages in a Court action against some person other than his or her employer. Section 10 sets out the procedure for the worker to follow in order to elect to claim either workers' compensation benefits or damages in a Court action. Section 30 of the Workplace Safety and Insurance Act, 1997, deals with the same subject matter. Accordingly, I construe the reference to section 10 of the Workers' Compensation Act in the Schedule as a reference to section 30 of the Workplace Safety and Insurance Act, 1997.

Positions of the parties:

For the purpose of this application, Coseco conceded that Mrs. Gebru's injuries would meet the threshold for tort actions defined in section 267.5 of the Insurance Act. However, it argued that Mrs. Gebru would not establish liability in a Court action and therefore her election to bring a Court action was "made primarily" for the purpose of claiming benefits under" the Schedule. Mrs. Gebru testified that the motor vehicle accident occurred at an intersection as she proceeded on a green light and was struck by Mrs. Grace Defreitas who drove through a red light. Coseco called Mrs. Defreitas and an independent witness who testified that, on the contrary, Mrs. Defreitas was proceeding on a green light when she was struck by Mrs. Gebru's vehicle.

Mrs. Gebru argued that Salmon and Toronto Transit Commission (Markel Insurance), (OIC P-000235, June 15, 1992) stands for the proposition that I cannot determine whether an action is viable in terms of the defendant's liability. I can only determine whether Mrs. Gebru's injuries had no chance of meeting the threshold. She also argued that I cannot make a finding on liability at an early stage in the Court action.

I do not agree with Mrs. Gebru's first argument. In Salmon, the arbitrator and Director Delegate considered the 1990 Statutory Accident Benefits Schedule.³, Section 20 of the 1990 Schedule relieves an insurer from paying benefits to a person who is entitled to worker's compensation benefits. Section 21 provides an exception to the exclusion as follows:

21.-(1) Despite section 20, the insurer will pay full benefits under this Regulation to a person described in that section until the resolution of any action brought by the person in any court to recover for personal injuries resulting from the accident under which the workers' compensation claims arose or until the person receives payments under a workers' compensation law or plan if,

(a) the person makes an assignment to the insurer of any benefits under any workers' compensation law or plan to which he or she is or may become entitled as a result of the accident; and

(b) the administrator or board responsible for the administration of the workers' compensation law or plan approves the assignment.

The arbitrator and Director's Delegate found the words "any action" used in section 21 of the 1990 Schedule ambiguous when considered along with the threshold provisions in the Insurance Act. To avoid the ambiguity, the Director's Delegate interpreted the words "any action" as referring to "a bona fide action in respect of threshold-type injuries." Although it was not necessary for the purpose of the decision, the Director's Delegate noted that there was nothing in the 1990 Schedule to suggest that the phrase be interpreted to mean an action that is viable in terms of the defendant's solvency or liability or otherwise.

The test under section 59 of the current Schedule is different from the test under the 1990 Schedule. The test is whether the election to bring an action was made primarily for the purpose of claiming statutory accident benefits. I do not find these words ambiguous. I find nothing in these words which limit my jurisdiction to determining whether the action is a bona fide action in respect of threshold-type injuries. If I found that an action was not viable in terms of the defendant's solvency or liability or otherwise, I could determine that the injured worker brought the action primarily for the purpose of claiming statutory accident benefits and that, pursuant to section 59 of the current Schedule, the insurer was not required to pay benefits.

I am sympathetic to Mrs. Gebru's second argument. The strength and weakness of a case change over time. What might look like a promising case when a lawyer first interviews a client, may appear to have no merit after productions or discovery. In this case, Mrs. Gebru's assessment of the merits of her case may have changed after she heard the testimony of Mrs. Defreitas and her witness at this hearing. The legislators could not have intended that the determination of whether an election to bring an action was made primarily for the purpose of claiming statutory accident benefits may change as the action progresses. The determination must be made according to the circumstances at a particular point of time. Events which happen after that particular point of time can still be relevant in determining the issue, but they must be relevant to a particular point in time. Arbitrators undertake a similar analysis in determining whether an insured has commenced an arbitration which is frivolous, vexatious or an abuse of process within the meaning of section 282 (1.2) of the Insurance Act.⁴ They consider the circumstances at the time the insured commences the application for arbitration. Events which occur after the insured commenced the application may shed light on the insured's state of mind at the time he or she commenced the application.

The only point in time that can be relevant to the issue of whether Mrs. Gebru's election to bring an action was made primarily for the purpose of claiming accident benefits is the time she made such an election.

The test in Salmon involved a determination of whether the injured person brought the action in good faith. This test involves a determination of the injured person's motives. The test under the current Schedule is whether the election to commence a Court action was made primarily for the purpose of claiming statutory accident benefits. As was the case in Salmon, this test involves a determination of the person's motives.

Evidence after the time of Mrs. Gebru's election to commence a Court action may shed light on Mrs. Gebru's motives at the time of the election. However, the question is: at the time Mrs. Gebru elected to commence a Court action, did she make the election primarily so that she could claim statutory accident benefits?

Time of election:

The statutory accident benefits scheme and the workers' compensation scheme are meant to fit to together, without overlap.⁵ The date of election is significant.

The provisions for electing between making a claim for workers' compensation benefits and for commencing an action are set out in section 30 of the Workplace Safety and Insurance Act, 1997 as follows:

30.(1) This section applies when a worker or a survivor of a deceased worker is entitled to benefits under the insurance plan with respect to an injury or disease and is also entitled to commence an action against a person in respect of the injury or disease.

(2) The worker or survivor shall elect whether to claim the benefits or to commence the action and shall notify the Board of the option elected.

(4) The election must be made within three months after the accident occurs or, if the accident results in death, within three months after the date of death.

(5) The Board may permit the election to be made with a longer period if, in the opinion of the Board, it is just to do so.

(6) If an election is not made or if notice of election is not given, the worker or survivor shall be deemed, in the absence of evidence to the contrary, to have elected not to receive benefits under the insurance plan.

Although the parties adduced some evidence on the issue, they did not specifically address the issue to when Mrs. Gebru elected to make a claim in tort. Besides determining the point at which I should determine whether her election to sue was made primarily for the purpose of claiming statutory accident benefits, the date is important for determining when Coseco might become liable to pay weekly benefits. Subsection 59(3) of the Schedule provides that if a person is entitled to receive benefits under the Schedule as a result of an election to make a tort claim, no weekly benefits are payable to the person in respect of any period in time before the person makes the election.

Mrs. Gebru testified that it was her intention from the outset to sue Mrs. Defreitas and not to claim workers' compensation benefits. She also testified that she did not know the difference between a tort action and a claim for no-fault accident benefits. Before she retained her current counsel, Mrs. Gebru was represented by a paralegal.

Mrs. Gebru's employer notified the Workplace and Safety Insurance Board ("WSBB") of the accident on September 2, 1999. The Employer's Report of Injury is the only completed form in the WSIB file. The last memo in the file is dated January 6, 2000 and indicates that Mrs. Gebru did not return any of the forms in the WSIB sent to her, including election forms, and the WSIB treated the file as abandoned.

On March 20, 2000, Mrs. Gebru signed a completed election form whereby she purported to elect to claim benefits under the Workplace Safety and Insurance Act, 1977. Mrs. Gebru testified that her signature was witnessed by the paralegal she first retained. She testified that the paralegal told her that "he wanted to go into arbitration." I heard no other explanation as to why Mrs. Gebru signed a form to elect workers' compensation benefits. The Workers' Compensation file was released to counsel for the Insurer on July 23, 2001. No election form was in the file. I find that Mrs. Gebru did not return the election form to the Board and that Mrs. Gebru did not make a formal election to claim workers' compensation benefits.

Subsection 30(6) of the Workplace Safety and Insurance Act, 1997 provides that where an election is not made, the worker is deemed to have elected not to receive benefits under the insurance plan. The question is when is this election deemed to have taken place?

Mrs. Gebru filed her statement of claim on April 10, 2001. This is conclusive evidence that she made an election to bring a Court action. The evidence which I heard relevant to the issue of whether Mrs. Gebru's election to sue was made so that she could claim accident benefits does not change from the date of the accident to April 10, 2001. Therefore, for the purpose of deciding this preliminary issue, and since the parties did not address the issue of when Mrs. Gebru elected or was deemed to have elected to sue, I need not decide when the election took place, except to find that it was prior to April 10, 2001.

Whether election to sue was made primarily for the purpose of claiming accident benefits:

The police attended the accident scene on August 25, 1999. Although both drivers claimed that the collision occurred as they were proceeding on a green light, the police charged neither driver. After the accident, both Mrs. Gebru and Mrs. Defreitas went to a collision reporting centre and completed collision reports. A week after the accident, Mrs. Gebru retained a paralegal to claim accident benefits. Upon receiving the application for accident benefits, Coseco advised Mrs. Gebru of the procedure she must follow to elect to bring a Court action and claim benefits. Upon receiving information of the accident from Mrs. Gebru's employer, the WSIB asked Mrs. Gebru to sign a consent for the release of functional abilities' information and informed her that she had to choose whether to bring her own legal action or apply for statutory accident benefits. It also asked for a report from Mrs. Gehru's doctor.

On September 15, 1999, Coseco's adjuster recorded a statement from Mrs. Gehru in which she again advised that the collision occurred as she was proceeding on a green light. On November 22, 1999, Coseco again advised Mrs. Gehru of the procedure to follow if she wanted to claim statutory accident benefits. On March 20, 2000, Mrs. Gehru signed the WSIB election form to claim benefits under the Workplace Safety and Insurance Plan. As mentioned earlier, I find that this election was not delivered to WSIB.

Mrs. Gehru changed representatives to her current counsel who represented Mrs. Gebru at the prehearing of this matter at the Financial Services Commission on October 31, 2000. Her counsel indicated that this was the first time Mrs. Gebru learned that liability was an issue with respect to the motor vehicle accident. Mrs. Gebru issued a Statement of Claim against Mrs. Defreitas which was filed on April 10, 2001. That action was defended and both parties have filed Affidavits of Documents. Mrs. Gebru has obtained a number of medical reports for use in this arbitration. One of those reports from an orthopaedic surgeon who conducted an examination on April 17, 2001 can also be used in the tort action as the examiner expresses the opinion that Mrs. Gebru's

injuries meet the threshold under the Insurance Act. Examination for discovery of Mrs. Gebru is scheduled for November 12, 2001.

The only evidence up to the time of the hearing of this preliminary issue is that both Mrs Gebru and Mrs. Defreitas thought they were traveling on a green light when the collision occurred. Mrs. Defreitas and her witness presented persuasive evidence at the hearing of this preliminary issue that Mrs. Defreitas was traveling on a green light when the collision occurred. However, that evidence does not persuade me that at the time Mrs. Gebru commenced her Court action, she knew that the collision occurred because she had failed to stop at a red light. At best, it would persuade me that Mrs. Gebru honestly mistook that she was traveling on a green light. Such a mistake might make her liable for the collision in a Court action. However, it would not mean that she commenced the Court action so that she could claim statutory accident benefits. I heard no evidence to persuade me at the time that Mrs. Gebru commenced her Court action, she or her representative felt that a Court action had no chance of success.

Conclusion:

I find that at some point on or before April 10, 2001, Mrs. Gebru was deemed to have elected to commence a Court action. I find that she did not commence that action primarily for the purpose of claiming statutory accident benefits.

EXPENSES:

Expenses incurred in this preliminary issue hearing are in the discretion of the hearing arbitrator.

September 11, 2001

William J. Renahan

Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 131

FSCO A00-000709

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

SUZI GEBRU

Applicant

and

COSECO INSURANCE CO./HB GROUP/DIRECT PROTECT

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Section 59 of the Schedule does not preclude Mrs. Gebru from proceeding to arbitration.

September 11, 2001

William J. Renahan

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulations 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 smf 303/98.
2. 2S.O. 1997, c.16, s.18
3. 3Ontario Regulation 672/90
4. 4See for example, Richard and Lombard General Insurance Company of Canada (OIC A97-001526, April 29, 1998) and Nguyen, Ung Van and Scottish & York Insurance Company Ltd. (FSCO A00-000136, May 10, 2001)
5. 5Davis and Pafco Insurance Company (OIC P97-00010, July 22, 1997)