Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2001 ONFSCDRS 176

Appeal Order P00-00034

Appellant

and

Respondent

Before:

Stewart M. McMahon, Director’s Delegate

Counsel:

Robert E. Seabrook (for Mr. Rumble)

Richard J.T. Shaheen (for South Easthope)

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal is dismissed.
Mr. Rumble is awarded his expenses of the appeal.

November 28, 2001

Stewart M. McMahon Director’s Delegate

Date

The Appellant, Lawrence Rumble, appeals from the arbitrator’s decision denying him further weekly benefits.

Following an automobile accident, Mr. Rumble was paid “other disability benefits” (“ODBs”) on the basis that he suffered from a partial inability to carry on a normal life, as that term is defined in s.2 of the SABS-1994.¹ These benefits were suspended for approximately 28 weeks on the basis that Mr. Rumble had improved and was not entitled to benefits. When his condition deteriorated, his benefits were reinstated. The Insurer subsequently terminated benefits on the second anniversary of the accident on the basis that Mr. Rumble was not suffering a “complete inability to carry on a normal life,” as defined in s.3 of the SABS. Mr. Rumble claimed that he was entitled to a further 28 weeks of benefits based on the “partial inability” test. The arbitrator dismissed this claim, stating that the “partial inability” test cannot form the basis of a claim beyond the second anniversary of the accident. Mr. Rumble appeals this ruling.

Mr. Rumble’s condition continued to deteriorate to the point where he claimed that approximately 14 months after the second anniversary of the accident, he met the “complete inability” test. Mr. Rumble claimed further benefits from this point onward. The arbitrator dismissed this claim on the basis that Mr. Rumble did not continuously meet the “complete inability” test from the second anniversary onward. Mr. Rumble appeals this ruling.

The arbitration proceeded on the basis of an agreed statement of facts, which can be summarized as follows:

Mr. Rumble was injured in a motor vehicle accident on March 9, 1996. At the time of the accident, he was retired. As a result of his injuries, he suffered from a partial inability to carry on a normal life and consequently received ODBs.
Mr. Rumble recovered to the point where by August 12, 1996, he no longer met the partial inability test and benefits were terminated.
Mr. Rumble’s condition deteriorated and by February 27, 1997, he again met the partial inability test. His benefits were reinstated. The interruption in benefits lasted 28 weeks and four days.
Mr. Rumble’s benefits were terminated on the second anniversary of the accident. As of that date, Mr. Rumble met the partial inability test, but not the complete inability test. Even if the transition date from the partial inability test to the complete inability test is delayed by 28 weeks and four days, Mr. Rumble still did not meet the complete inability test as of that date.
However, Mr. Rumble continued to deteriorate to the point where as of May 1, 1999, he suffered from a complete inability to carry on a normal life, subject to a consideration of the “continuous” element of the complete inability test.
Mr. Rumble’s disability continued unabated to the time of the arbitration hearing.

After the appeal hearing, I was advised that Mr. Rumble died in May 2001.

The transition from the partial inability test to the complete inability test.

The SABS-1994, includes four categories of weekly benefits. As a retired person, Mr. Rumble fits in the “other disability benefits” category. Entitlement to these benefits is governed by s. 19 of the SABS. Subsection 19(1) provides that the insured is entitled to ODBs if he or she suffers from either a partial or complete inability to carry on a normal life. However, subsection 19(7)(c) limits the insurer’s exposure, by providing that no benefit is payable “more than 104 weeks after the insured person first qualified...unless the person is suffering a complete inability to carry on a normal life...” The complete text of ss.19(1) and 19(7), read as follows:

19(1) An insured person who sustains an impairment as a result of an accident is entitled to a weekly disability benefit if the insured person, as a result of and within two years of the accident, suffers a partial or complete inability to carry on a normal life and,

(7) no weekly disability benefit is payable under this section

(c) more than 104 weeks after the insured person first qualified for weekly disability benefits, weekly income replacement benefits or weekly caregiver benefits, unless the insured person is suffering a complete inability to carry on a normal life as a result of the accident. [emphasis added]

I have highlighted the opening words of s.19(7)(c) “more than 104 weeks after the insured person first qualified” because they mark the point at which the insurer can demand evidence of a complete inability to carry on a normal life. The transition point becomes an issue in this case, due to the fact that Mr. Rumble improved temporarily, and did not receive benefits for approximately 28 weeks.

The Insurer took the position that the phrase “more that 104 weeks after the person first qualified” refers to 104 calender weeks, and accordingly, after the second anniversary of the accident,² it no longer owed Mr. Rumble benefits based merely on the “partial inability” test.

In contrast, Mr. Rumble submits that the Insurer may not demand evidence of a complete inability until he has received 104 weeks of benefits based upon the “partial inability” test. He demands a further 28 weeks and four days of benefits based on the Insurer’s agreement that he continued to meet the “partial inability” test when benefits were terminated on the second anniversary of the accident.

Mr. Rumble relies upon jurisprudence that considered the transition provisions in the pre-OMPP standard automobile policy, and in sections 12 and 13 of the OMPP (SABS-1990).³

In Howe v. Economical Insurance Co. (1989), 1989 CanLII 4246 (ON HCJ), 70 O.R. (2d) 305 (Ont. Dist Ct.), Gautreau J. rejected the “calendar” approach urged upon him by the insurer. He concluded that the provisions of the pre-OMPP policy required the insurer to pay 104 weeks of benefits based upon the initial test, before it could demand evidence that the insured met the stricter criteria. Judge Gautreau relied on the fact that the transition provisions are ambiguous, and could equally occur after 104 weeks of benefits have been paid, or alternatively, after 104 calendar weeks. He also noted that interpreting it to mean 104 weeks of benefits would encourage attempts to return to work. In contrast, interpreting it as 104 calendar weeks, would penalize a person who temporarily returned to work.

After some debate, the Commission’s jurisprudence considering the SABS-1990, applied a similar test. See Whyte and Metropolitan Insurance, (FSCO A-009277, April 30, 1996), and Coles and Dominion of Canada General Insurance Company (FSCO A-007416, February 13, 1995, revd. FSCO P-007416, July 28, 1997, upheld on judicial review [1999] O.J. No. 2927), which stand for the proposition that the initial period runs for 156 weeks of disability.

The effect of these three decisions is to delay the transition to the second “period” if the person improves temporarily, and allows the insured to qualify for the full 104 (or 156 in the case of the SABS-1990) weeks of benefits, notwithstanding the passing of the second (or third) anniversary of the accident.

Mr. Rumble argues that these same principles apply to the transition provisions in s.19(7)(c) of the SABS-1994, and that he should be awarded a further 28 weeks of benefits, on the basis that he continued to meet the partial inability test at the time benefits were terminated. In dismissing Mr. Rumble’s claim, the arbitrator correctly noted that the inclusion of loss of earning capacity benefits (“LECBs”) in the SABS-1994, significantly changes the equation and reduces the comparative value of the older cases.

The SABS-1990 and its predecessor compensated for disability through the payment of “weekly benefits.” As noted already, these benefits were divided into two periods, with ongoing entitlement during the second period based on a stricter set of criteria. However, the SABS-1994 is a more complicated scheme that combines a typical disability benefit with an LECB. For some categories of weekly benefits, there is no option; if the person qualifies for LECBs, the insurer is permitted to pay this benefit in place of a weekly benefit. For other groups, such as ODB claimants, there is an option. If they continue to qualify for weekly benefits for a prescribed period of time, they may either continue to seek payment of weekly benefits, or they may apply for an LECB. For ODB claimants, and those other claimants who qualify under the “partial inability test,” there is a shift to the more difficult “complete inability” test, if they forgo LECBs in favour of continued weekly benefits.

The phrase that marks the beginning of the transition to LECBs, or that marks the point where the insured first has an election, is the same for all categories of weekly benefits. It takes place at “104 weeks after the onset of the disability in respect of which he or she first qualified.”[see ss. 21(1)1, 21(1)4, 21(1)6, and 21(1)7]. The arbitrator concluded, and I agree, that this phrase is not ambiguous, and that it refers to the point in time 104 calendar weeks after the onset of disability, and not to the point in time when the insured has received 104 weeks of weekly benefits.⁴

The arbitrator stated that the weekly benefits and the LECBs are designed to work together. Based on this, he reasoned that the transition point from weekly benefits to LECBs should occur at the same time as the transition from the “partial inability” test to the “complete inability” test. I agree. This means that the phrase “more than 104 weeks after the insured person first qualified,” which governs the transition from the “partial inability” test to the “complete inability” test, must also refer to the point in time 104 calendar weeks after the person first qualified, and not to the point in time when the insured has received 104 weeks of ODBs.

Beyond the need to harmonize the transition provisions, I also agree with the arbitrator’s conclusion that the phrase “more than 104 weeks after the insured person first qualified” is not ambiguous in the same way that the provisions in the pre-OMPP policy or the SABS-1990 were, and the wording does not suggest a point in time when the insured has received 104 weeks of benefits.

For all of these reasons, I uphold the arbitrator’s ruling, and dismiss this ground of appeal. Mr. Rumble is not entitled to further benefits beyond the second anniversary of the accident, unless he can establish that he suffers from a complete inability to carry on a normal life as defined in s. 3 of the SABS.

Must the insured person meet the complete inability test as of the 104-week-mark to qualify for ongoing ODBs, or may he qualify at a later date?

Irrespective of whether the transition to the “complete inability” test occurs at the second anniversary, or is delayed by 28 weeks, Mr. Rumble concedes that as of that time he was not suffering from a “complete inability to carry on a normal life.” However, he argues that he meets all the criteria of the “complete inability” test as of May 1, 1999. Mr. Rumble makes no claim for benefits in the interim between the 104-week-mark and May 1, 1999, but seeks benefits from this point onward.

The definition of a “complete inability to carry on a normal life” is found in s. 3 of the SABS. It reads as follows:

For the purpose of this Regulation, a person suffers a complete inability to carry on a normal life as a result of an accident if, and only if, as a result of the accident, the person suffers an impairment that continuously prevents the person from engaging in substantially all of the activities in which the person ordinarily engaged before the accident. [emphasis added]

Mr. Rumble submits that there is nothing in the definition of a complete inability to carry on a normal life that stipulates any particular commencement date. He argues that the “continuously prevents” element means only that he must demonstrate that he continuously meets the test throughout the period that he seeks benefits, and the fact that it took time for his disability to develop should not be an impediment to a claim for benefits.

In opposition to this, the Insurer argues that unless Mr. Rumble can demonstrate that his disability “continuously prevents” him from engaging in his ordinary activities as of the 104-week-mark, no more benefits are payable.

In Antunes and Allstate Insurance Company of Canada (FSCO P00-00011, November 28, 2001), released together with this decision, I dealt with the same issue in the context of a claim pursuant to the 1990 version of the SABS. Like Mr. Rumble, Mr. Antunes did not meet the stricter criteria as of the transition date, but did at a later date. Mr. Antunes argued that the “continuous” element speaks only to the quality of his condition during the time that he is claiming benefits, and that it is immaterial that he was not continuously disabled prior to that time. I rejected this argument, noting that the principle flaw in Mr. Antune’s reasoning was the belief that s. 12(5)(b) of the SABS-1990 provided the basis for a separate or distinct claim. Mr. Rumble’s argument suffers from the same fatal flaw.

Mr. Rumble advances the claim for benefits from May 1, 1999, as though it is a separate or “stand-alone-claim,” distinct from his initial claim. It is not. Section 19(7)(c) does not provide the basis for a distinct claim. Mr. Rumble’s claim is pursuant to s. 19(1). The effect of s.19(7)(c) is to limit the insurer’s exposure for ongoing benefits after 104 weeks. It does so by imposing additional criteria for entitlement to benefits. Specifically, unless the insured’s impairment “continuously prevents the person from engaging in substantially all of the activities in which the person ordinarily engaged before the accident,” no further benefits are payable. At the 104-week-mark, the insurer must assess its exposure to pay further benefits based on these additional criteria. If the insured cannot meet all of the criteria as of the 104-week-mark, the insurer has no further exposure to pay weekly benefits.

The insured person cannot put himself in a better position by arguing that he is not pursuing benefits at the 104-week-mark, thereby avoiding the obligation to satisfy the additional criteria as of that time. The fact that it is a single benefit subject to additional criteria means that he cannot assert a new claim at some later date. The fact that the disability must be “continuous” means that he cannot resurrect the same claim at some later date. Please see the Antunes case for a fuller discussion.

Mr. Rumble argues that providing a stand alone definition of a complete inability enhances his argument that he can qualify for further benefits at some point beyond the 104-week-mark. I reject this assertion. The purpose of s. 3 is to provide a definition for one of the terms found in s.19(7)(c). It has no independent purpose, nor does it form the foundation of an independent benefit. Mr. Rumble’s submission that it is unfair to deny him a benefit merely because it took time for his disability to fully manifest itself is understandable. However, the SABS, by its very nature represents a compromise. It represents a tradeoff between flexibility and certainty, and between entitlement to benefits irrespective of fault, and a system that cannot always compensate injured motorists as fully as they might be compensated in a fault-based system. In my view, it would distort the intention of the drafters to interpret s. 19(7)(c) in the fashion proposed by Mr. Rumble.

IV. CONCLUSION

I affirm the arbitrator’s ruling, and dismiss the appeal.

V. EXPENSES

This appeal raised legitimate questions about a section of the SABS that had not yet been dealt with on appeal. In the circumstances, I award Mr. Rumble his expenses of the appeal.