Neutral Citation: 2001 ONFSCDRS 138

FSCO A00-000699

BETWEEN:

RAYMOND KIRBY

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

William J. Renahan

Heard:

August 21, 2001, in Hamilton, Ontario.

Appearances:

D. Robert Findlay for Mr. Kirby

William A. McClelland for Dominion of Canada General Insurance Company

The Applicant, Raymond Kirby, was injured in a motor vehicle accident on October 24, 1995. He applied for and received statutory accident benefits from Dominion of Canada General Insurance Company ("Dominion"), payable under the Schedule.¹ Dominion terminated weekly income replacement benefits on October 7, 1996. The parties were unable to resolve their disputes through mediation, and Mr. Kirby 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. Kirby precluded from proceeding to arbitration because his 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?

Mr. Kirby's application for arbitration was filed within the two-year limitation period and therefore Mr. Kirby is not precluded from proceeding to arbitration.

Mr. Kirby is 51 years old. On October 24, 1995 he suffered injuries, including soft tissue injuries to his neck and back, in a motor vehicle accident. At the time, he worked full-time as a cleaner in a fast food restaurant. He has not returned to that work since the accident. He testified that after Dominion terminated weekly income replacement benefits he did some part-time work delivering pizzas.

Dominion paid weekly income replacement benefits to Mr. Kirby until October 7, 1996. It terminated weekly benefits on the basis of a medical assessment it commissioned from Dr. John Darracott whose specialties include physical medicine and rehabilitation. Dr. Darracott thought Mr. Kirby could gradually return to full-time work by October 7, 1996.

The procedure for stopping weekly benefits is set out in section 64 of the Schedule. In accordance with subsection 64(2), Dominion notified Mr. Kirby, by letter dated August 30, 1996, that it intended to stop weekly benefits on October 7, 1996. Mr. Kirby looked for a lawyer and retained Mr. D. Robert Findlay. Subsection 64(3) allows the insurer to stop paying weekly benefits unless the insured person gives the insurer written notice that he wishes to have his disability assessed at a Designated Assessment Centre ("DAC"). On October 4, 1996, Mr. Findlay faxed to Dominion notice that Mr. Kirby wished to have a disability assessment. The disability assessment was not carried out. This hearing dealt mainly with the reason the assessment was not carried out. In November 1999, Mr. Kirby applied for mediation with respect to the termination of his weekly income replacement benefits. Dominion relied on the two-year limitation period in subsection 281(5) of the Insurance Act and claimed that the application was more than two years after October 7, 1996, the date of the refusal to pay benefits. Citing Allstate Insurance Company of Canada and Francis (FSCO P99-00014, June 11, 1999), Mr. Kirby argued that the limitation period did not start to run until a DAC released a report and that, although he had requested a DAC assessment, no such assessment was performed. Dominion arranged a disability DAC without prejudice to its right to rely on the limitation period. The disability DAC was completed on June 27, 2000.

Dominion argued that it could not arrange a DAC earlier because Mr. Kirby did not return two forms to it, an OCF-5 and OCF-14. The OCF-5 is a Permission to Disclose Health Information form. By signing it, the insured authorizes his treating practitioners to give his insurer any information relating to his health. The OCF-14 is a Permission to Disclose Health Information to the Assessment Centre form. By signing it, the insured authorizes his insurer to give the DAC any health information it has. A DAC may require documented health information concerning the applicant and it cannot obtain that information or review it without the consent of the applicant.

Mr. Kirby argued that he never received the forms.

If I accepted Dominion's claim that Mr. Kirby did not return the Permission to Disclose forms to it, the simple answer as to whether the application for mediation was out of time is found in subsections 64(9) and (14) of the Schedule which provide as follows:

(9) For the purpose of the assessment,

(a) the insured person and the insurer shall provide the person or persons who conduct the assessment with such information as is reasonably necessary; and

(b) the insured person shall submit to such reasonable, physical, psychological and mental examinations as are requested by the person or persons who conduct the assessment.

(14) If the insured person does not submit to an assessment that he or she requests under subsection (3) or does not comply with the requirements of subsection (9), the insurer may withhold payment of the weekly benefits until the person submits to the assessment or complies with subsection (9) respectively, after which time the insurer shall,

(a) resume payment of the benefits; and

(b) pay the benefits that were not paid if the assessment report determines that benefits should continue to be paid.

If an insured person exercises his right under subsection 64(3) to be assessed at a DAC and then fails to provide information or submit to an examination, the insurer's remedy is to withhold payment of the weekly benefits until the person provides the information or submits to the examination. In this case, Mr. Kirby submitted the Permission to Disclose forms on April 11, 2000. Accordingly, if Mr. Kirby did not comply with his duty to cooperate until April 11, 2000, Dominion could withhold payment of weekly benefits until Mr. Kirby cooperated. These provisions do not effect the running of the limitation period. Under the authority of Francis, the limitation period would not start to run until the DAC released its report in June 2000. Therefore, even if I accepted Dominion's argument that Mr. Kirby failed to return the Permission to Disclose forms, Mr. Kirby's application for mediation was filed in time.

However, the parties asked me to make a factual finding as to whether Dominion sent the Permission to Disclose forms to Mr. Kirby when it stopped paying weekly benefits and to make a determination of the consequences of such a finding with respect to the limitation defence.

Whether Dominion sent the Permission to Disclose forms to Mr. Kirby?

Mr. Christopher Hylton, an accident benefits adjuster, wrote the stoppage letter of August 30, 1996. In the letter he explained why Dominion decided to stop paying weekly benefits beyond October 6, 1996 and he added "Attached is an explanation of Assessment for your Attention." He advised Mr. Kirby of his right to ask for a disability assessment at a DAC as follows:

If you wish to give notice that you are appealing our decision to cease benefits and would like to attend an Independent Assessment at a Designated Assessment Center as per Section 64(3), please read and complete the following documents.

"The following documents" are not identified. The only subsequent reference to documents is the last paragraph which stated:

Attached is an information sheet explaining your rights and obligations.

Mr. Hylton also advised Mr. Kirby that:

If you wish to contest your Insurer's decision, you must provide written notification for the insurer indicating your desire to be examined by an independent assessment centre.

The letter ends with the short form "encl." for "enclosure."

The copy of the letter which was filed as an exhibit includes a copy of section 64 and Dominion's explanation of what Mr. Kirby could do if he disagreed with Dominion's decision to stop paying weekly benefits. The explanation of assessment, also dated August 30, 1996, was filed as a separate exhibit. It refers Mr. Kirby to the "enclosed letter."

Neither the stoppage letter, Dominion's written explanation of Mr. Kirby's rights, the copy of section 64 of the Schedule, or the explanation of assessment contain any reference to the Permission to Disclose forms. Mr. Hylton testified that it was Dominion's policy at the time to enclose a copy of an OCF-14 and an OCF-5 form so that the insured could request a disability DAC. Mr. Hylton's notes of August 30, 1996 refer to him sending a letter advising Mr. Kirby that he would not receive benefits beyond October 7, 1996. Another note is "Send Assessment Notice." Mr. Hylton's notes contain no reference to the Permission to Disclose forms.

By facsimile transmission of October 4, 1996, Mr. Findlay notified Dominion that Mr. Kirby wanted an assessment.

I find that Mr. Hylton replied to this request for an assessment in a letter mistakenly dated October 3, 1996. The letter was also sent by facsimile transmission which Mr. Findlay received October 11, 1996. This letter is a response to Mr. Findlay's request for a DAC assessment and therefore Mr. Hylton could not have written the response before Mr. Findlay made the request. I find that Mr. Hylton wrote his letter dated October 3, 1996 after October 4, 1996 and sent it by facsimile transmission on October 11, 1996. The pertinent part of the letter is as follows:

Upon receipt of the Permission to Disclose Health Information to the Assessment Centre (OCF-14) and Permission to Disclose Health Information (OCF-5) sent to the insured in my letter dated August 30, 1996, I will be most happy to make arrangements for him at a Disability Designated Assessment Centre.

Mr. Kirby testified that he always completed and returned forms Dominion sent to him and that the stoppage letter did not include any forms for him to sign. However, Mr. Kirby admitted that a letter from Dominion which stated that he had not responded to Dominion's request five months earlier for Permission to Disclose forms so that it could arrange a medical/rehabilitation DAC was likely accurate. Therefore, I do not accept Mr. Kirby's testimony that he did not receive the Permission to Disclose forms and that he would have returned them if he had received them.

Mr. Hylton testified that it was Dominion's policy at the time to send the OCF-14 form to the insured along with the stoppage notice so that the insured could use it to request a disability DAC assessment. The form authorizes the insurer to release the insured's medical information to the DAC. It is not a request for a DAC. However, Mr. Hylton's letter, which was misdated October 3, 1996, in response to Mr. Findlay's notice requesting a DAC, states that the Permission to Disclose forms were sent to Mr. Kirby one month earlier. I therefore find it likely that it was Dominion's policy to send the Permission to Disclose forms with the stoppage letter.

I find that neither Mr. Kirby or Mr. Hylton could remember whether the Permission to Disclose forms were actually enclosed in the stoppage letter.

The question is whether Mr. Hylton followed Dominion's policy of enclosing the Permission to Disclose forms with the stoppage letter. Besides misdating the letter in response to Mr. Findlay's request for a DAC assessment, Mr. Hylton made other mistakes in his correspondence. The direction that Mr. Kirby should "read and complete the following documents" if he wanted a DAC assessment has no meaning since it does not identify those documents and the only documents that are mentioned in the letter is an information sheet which did not require completion. Further, the "information sheet explaining your rights and obligations" makes no reference to an obligation to complete and return Permission to Disclose forms. Nothing in the stoppage letter or enclosures refers to Permission to Disclosure forms. Further, the Permission to Disclose health information to the assessment centre form is not a written notice that an insured wishes an assessment, although Dominion may have treated it as such. Lastly, the stoppage letter includes spelling, grammatical and typographical errors.

In view of these mistakes and lack of clarity in the stoppage letter I find that Mr. Hylton was careless in writing the letter. I am not satisfied that he followed Dominion's policy of including the Permission to Disclose forms with the stoppage letter. I find that the best and most reliable evidence of what Dominion sent to Mr. Kirby on August 30, 1996 is the letter of August 30, 1996. Since that letter does not refer to Permission to Disclose forms, I find that Dominion did not send those forms to Mr. Kirby.

Consequences on limitation defence:

In the event that I found that Dominion did not send the Permission to Disclose forms, Dominion argued that Mr. Kirby failed to complete his request for a DAC assessment or that he abandoned his request. It argued that Mr. Hylton's misdated letter of October 3, 1996 made it clear that Dominion would have arranged the disability DAC assessment if Mr. Kirby provided Dominion with Permission to Disclose forms.

Very little activity took place on the weekly benefit issue over the next three years. In November 1996, Dominion arranged for an investigator to take video surveillance of Mr. Kirby which revealed that Mr. Kirby was working part-time delivering pizzas. On November 3, 1996, Mr. Hylton noted in his records "Rec'd video surveillance. Based on report reject his request to perform Dis DAC." Mr. Hylton explained in his testimony that he would not have rejected Mr. Kirby's request for an assessment and that he did not know what his thoughts were at the time.

On April 18, 1997, Mr. Findlay wrote to Dominion and asked for a copy of the DAC assessment. Dominion did not respond to that request and Mr. Findlay did not follow up with a further request. Mr. Findlay also made a note in his file that he would apply for mediation upon receipt of the DAC report.

I find it likely that over the next two years Mr. Findlay forgot about his request for the DAC assessment and forgot about his request for a copy of the DAC report.

In November 1999, Mr. Kirby applied for mediation. Mr. Hylton had left Dominion by this time. In April 2000, another Dominion adjuster asked for and received the Permission to Disclose forms from Mr. Kirby and made arrangements for the disability DAC assessment.

The question is whether I should construe these findings as a failure to complete a request for a disability DAC assessment or an abandonment of the request which started the limitation period running in 1996. This involves a consideration of who has the duty to provide the Permission to Disclose forms. Guidelines issued by the Minister's Committee on the Designated Assessment Centre System and a Guideline issued by the Commissioner of Insurance provide guidance on this issue.

Arbitrator Palmer considered the statutory authority of the Minister's Committee on the Designated Assessment Centre System to publish Guidelines for Designated Assessment Centres in Avdalimov and CGU Insurance Company of Canada.² She noted that section 7 of the Insurance Act authorizes the Minister of Finance to establish committees to perform functions assigned to it by the Minister and that paragraph 121(4)(c) of the Act provides that the regulations may require a person be examined or assessed,

(i) by an assessment centre designated by a committee appointed under section 7, in accordance with procedures, standards and guidelines established by that committee or by the Minister.

The Guideline applicable to the assessment Mr. Kirby asked for in October 1996 is the Interim Guidelines for Designated Disability Assessment Centres published by the Ontario Insurance Commission in September 1994. This Guideline directs the insurance company to submit a "carefully prepared, complete referral" to the DAC. The referral package should include a Permission to Disclose Health Information form signed by the client. "To avoid delays" at the referral stage of the process, "insurance companies are encouraged to ensure that all relevant information is submitted to the DAC."

Under section 268.3 of the Insurance Act, I am required to consider guidelines issued by the Commissioner on the interpretation of and operation of the Schedule. Commissioner's Guideline No. 2/95 provides guidance on the claims process. It sets out insurers' and claimants' responsibilities. Insurers' responsibilities include helping claimants complete all forms and cooperating with representatives retained by claimants to help claimants with their claims. Claimants' responsibilities include completing all forms promptly, giving third parties the right to release information about them needed by insurers to evaluate their claim for benefits, taking part in assessments including those done by DACs and giving third parties permission to disclose reasonably necessary information.

As noted by Director's Delegate Draper in Malabanan and Canadian General Insurance Company (OIC P96-00073, February 4, 1998), "The DAC process is meant to proceed quickly. In part, this is due to the insurer's obligation to continue paying benefits until the results are known."

The Guidelines of the Minister's Committee and of the Commissioner indicate to me that the onus is on the insurer to provide the Permission to Disclose forms. Further, it is in the insurer's interest to provide the Permission to Disclose forms so that the DAC process proceeds quickly. Lastly, in my opinion, subsections 64(9) and (14) of the Schedule provide the insurer with a remedy where the insured person fails to comply with his duty to sign and return Permission to Disclose forms by allowing the insurer to withhold payment of weekly benefits until the insured person complies.

I find that all the circumstances place the onus on the insurer to provide the Permission to Disclose forms to the person who requests a disability DAC assessment. Since this was not done in this case, Mr. Kirby's failure to provide completed OCF-5 and OCF-14 forms did not amount to a failure to complete his request for a DAC assessment or an abandonment of that request.

Mr. Hylton's note of November 3, 1996 demonstrated that he was prepared to deny Mr. Kirby a disability DAC assessment. Mr. Hylton did not correct Mr. Findlay in April 1997 when Mr. Findlay mistakenly thought that a DAC assessment had taken place and asked for a copy of the report. I find that Dominion ignored Mr. Kirby's legal right to a DAC assessment. Accordingly, the limitation period did not start to run from the date Dominion stopped paying weekly benefits. The limitation period started to run from the date of release of the DAC assessment report, June 27, 2000. The application for mediation was filed before this date and therefore was not statute-barred.

EXPENSES:

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

September 26, 2001

William J. Renahan Arbitrator

Date