Neutral Citation: 2001 ONFSCDRS 181

FSCO A00-001283

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ABDUL NAHSARI

Applicant

and

BELAIR INSURANCE COMPANY INC.

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Joyce Miller

Heard:

Written submissions were received from all parties by September 20, 2001.

Appearances:

George Malakassiotis, agent for Mr. Nahsari

Scott W. Densem, counsel for Belair Insurance Company Inc.

Issues:

The Applicant, Abdul Nahsari, was injured in a motor vehicle accident on March 7, 1998. He applied for and received statutory accident benefits from Belair Insurance Company Inc. ("Belair"), payable under the Schedule.¹ Belair terminated accident benefits on May 25 and August 4, 1998. The parties were unable to resolve their disputes through mediation, and Mr. Nahsari 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 Mr. Nahsari 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 Insurance Act and subsection 51(1) of the Schedule?

Result:

1. Mr. Nahsari is 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 Insurance Act and subsection 51(1) of the Schedule.

2. If required, I may now be spoken to on the issue of the expenses of this arbitration proceeding.

Background:

On March 7, 1998, Mr. Nahsari was stopped at the intersection of Danforth Road and Savarian Street in Toronto for a police spot check. Another vehicle travelling at a high rate of speed, not realizing Mr. Nahsari's car was stopped, rear-ended Mr. Nahsari's vehicle and caused it to collide with the car in front of him.

Mr. Nahsari applied for and received accident benefits which included caregiver benefits, and medical and rehabilitation benefits.

On March 20, 1998, Mr. Nahsari provided Belair with a Treatment Plan from Recovery Rehab for physiotherapy, massage therapy and active exercise treatments. By letter dated April 27, 1998, Belair advised Mr. Nahsari's former lawyer, Mr. Peter Cozzi, that it approved the goods and services outlined in the Treatment Plan. The letter went on to say "[w]e will not be accepting any billing for services that are administered outside of the recommendations of the Plan dated March 20, 1998. We will also require a further Treatment Plan at the expiry of the one dated March 20, 1998 before giving approval for any expenses incurred." A copy of this letter was sent to Mr. Nahsari.

On May 8, 1998, Recovery Rehab submitted a further Treatment Plan proposing a program of physiotherapy, massage therapy and active exercise treatments for Mr. Nahsari.

On May 25, 1998, Belair wrote to Mr. Nahsari and copied the letter both to Mr. Cozzi and Recovery Rehab. Belair stated that based on its medical documentation, namely, an insurer's examination by Dr. Grossman on May 13, 1998, the Treatment Plan proposed by Recovery Rehab was being denied. The letter stated that in accordance with paragraph 38(12)(a) and section 43 of the Schedule, they required an assessment to be conducted by a Designated Assessment Centre (DAC).

As well, on May 25, 1998, Belair wrote to both Mr. Nahsari and Mr. Cozzi that his weekly caregiver benefits were being terminated on June 11, 1998.

Mr. Nahsari underwent two DAC assessments, a medical and rehabilitation DAC on June 23 and 25, 1998, as well as a disability DAC assessment conducted on the same dates.

On August 4, 1998, Belair wrote to both Mr. Nahsari and Mr. Cozzi that pursuant to the DAC reports, no further treatment or rehabilitation expenses would be paid after the first treatment plan dated March 20, 1998. As well, Belair advised Mr. Nahsari and his lawyer that, pursuant to the disability DAC report, caregiver benefits would be paid up until August 4, 1998 and that Belair confirms its refusal to pay any further weekly benefits as a result of the accident.

Mr. Nahsari changed representatives at some point in the beginning of the year 2000.

On February 15, 2000, Mr. Nahsari's new representative, P.A.I.N. Specialists Inc. & Associates ("P.A.I.N. Specialists"), wrote to Belair asking that they provide "a copy of the original accident benefits package completed by Mr. Nahsari for our records."

Belair did not respond to this request.

On February 16, 2000, P.A.I.N. Specialists wrote to Mr. Cozzi requesting Mr. Nahsari's file as well as inquiring whether any application for mediation had been filed on behalf of Mr. Nahsari. Mr. Nahsari alleges that he received no response from Mr. Cozzi.

On July 11, 2000, Mr. George Malakassiotis, a representative at P.A.I.N. Specialists, wrote to Belair. Under the subject heading "Request to disclose a copy of the Accident Benefits file", Mr. Malakassiotis stated, "Please be advised that we had requested a copy of the aforementioned file on February 15, 2000, and one has not yet been provided. Please provide our office with a copy of Mr. Nahsari's accident benefits claim."

Belair did not respond to this request.

On October 26, 2000, Mr. Nahsari filed an application for mediation with FSCO. A mediation was conducted and failed on December 1, 2000. On December 6, 2000, the Report of the Mediator was issued. On December 13, 2000, Mr. Nahsari applied for arbitration.

Submissions:

Submissions from Mr. Nahsari

Mr. Nahsari submits that the preliminary issue was not mediated pursuant to subsection 281(2) of the Insurance Act and was not agreed upon and, therefore, this preliminary issue should be precluded from proceeding.

Mr. Nahsari submits that Belair continued to pay caregiver and housekeeping benefits up to February 17, 1999 and therefore did not give a clear and unequivocal refusal to pay these benefits as of August 4, 1998.

Mr. Nahsari submits, as a result, Belair's argument with respect to the time limitation is flawed in relationship to the caregiver and housekeeping benefits. Mr. Nahsari submits that he should therefore be allowed to proceed to arbitration with respect to the caregiver and housekeeping benefits based on the fact that the Insurer continued addressing and paying his benefits up until February 17, 1999.

Mr. Nahsari further submits that Belair neglected to provide P.A.I.N. Specialists with a copy of his file despite numerous requests to do so, and as such engendered the delay and the commencement of these proceedings. Mr. Nahsari submits that had Belair provided his representatives with a copy of the file upon their several requests he would have been able to address all of the issues well within the two-year limitation period. Hence, Mr. Nahsari submits Belair is estopped from relying on the limitation period.

Mr. Nahsari submits that Belair has continued not to assist him with respect to providing him with information on his file regarding any other mediation that may have been held. He submits that on July 17, 2001, P.A.I.N. Specialists wrote to Belair asking if it would disclose to their office any copies of an application for mediation filed on behalf of Mr. Nahsari by his previous representative as well as any copy of the Report of the Mediator issued by FSCO in relation to an application for mediation. Belair did not respond to this letter.

Mr. Nahsari submits that because Belair has refused to respond to his requests, his representatives were forced to proceed with his claim with only limited information.

Submissions by Belair

Belair's submits that pursuant in subsection 281(5) of the Insurance Act the issue of whether Mr. Nahsari is out of time raises a substantive issue of law that goes to jurisdiction and does not need to be mediated.

Belair submits that Mr. Nahsari received clear and unequivocal notice that his medical and rehabilitation benefits were terminated as of May 25, 1998, and that his caregiver benefits were terminated as of August 4, 1998. Therefore, the two-year limitation period to commence an arbitration in respect of these benefits ended on May 25, 2000 and August 4, 2000, respectively.

Belair submits that an Explanation of Benefits Payable form dated February 17, 1999 with respect to caregiver and housekeeping benefit expenses was in response to a letter dated February 3, 1999 from Mr. Cozzi submitting claims for these expenses. Belair submits that it never changed its original position to pay benefits after August 4, 1998. It did not pay any benefits after that date. The further refusal was only in respect to a claim made after that date.

Belair submits that it was Mr. Nahsari's obligation to ensure that he maintained his documentation in good order and provided his representatives with the necessary information and/or documentation to properly present his claim. Accordingly, it was not Belair's obligation to ensure that his representatives have copies of documentation that Belair quite reasonably would assume would be available from Mr. Nahsari's former representative or from Mr. Nahsari himself.

Belair submits that the fact Mr. Nahsari's documentation was not complete and whether or not he was able to obtain copies of the documents from Belair could in no way be interpreted as a waiver from Belair of its rights to rely upon the limitation period in section 281 of the Insurance Act.

Further, Belair submits it was always open to Mr. Nahsari or his representatives to have contacted FSCO to check and see whether any applications for mediation or arbitration had been submitted in connection with his claims. Checking with FSCO would have informed Mr. Nahsari or his representatives whether those claims had been protected in any way by the dispute resolution process.

The Law:

The limitation period for statutory accident benefit proceedings is set out in subsection 281(5) of the Insurance Act and section 51 of the Schedule.

Subsection 281(5) of the Insurance Act provides, in part, that an insured person may only refer issues in dispute to an arbitrator within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Schedule.

Section 51 of the Schedule requires that a mediation, as well as an arbitration proceeding, must be commenced within two years from the insurer's refusal to pay the amount claimed. It also extends the time limit for commencing an arbitration proceeding. As long as a mediation proceeding is commenced within two years of the insurer's refusal to pay benefits, the dispute can be referred to arbitration within 90 days after the mediator reports to the parties on the outcome of the mediation.

Zeppieri and Royal,² which has been affirmed on appeal and which has been followed in numerous arbitration decisions, sets out a two-step approach to determine whether a limitation period is applicable. First, the insurer has to show that the refusal was clear and unequivocal and was communicated to the applicant in writing, with supporting reasons. Secondly, the insurer has to show that it is not estopped from relying on the limitation period because the applicant relied on its actions to his or her detriment. Ongoing negotiations or requests for further information between the applicant and the insurer do not extend the time limits for disputing a clear and unequivocal refusal of benefits.

An arbitrator does not have the jurisdiction to grant an aggrieved party relief from forfeiture.³ It is also settled law that arbitrators have no jurisdiction to extend the two-year limitation period. This issue was decided in the case of Kirkham and State Farm⁴, and has been affirmed on appeal by the Director's Delegate, upheld by the Divisional Court on Judicial Review,⁵ and consistently followed in arbitration decisions. Succinctly, this case stands for the proposition that if an insured does not apply for arbitration within two years of an insurer's refusal to pay further benefits, then the limitation period cannot be extended. Consequently, there is no "rolling limitation" period available to an insured.

ANALYSIS AND FINDINGS:

The burden of proof rests with Belair to show that, on a balance of probabilities, Mr. Nahsari commenced an arbitration outside the prescribed limitation period. For the following reasons I find that Belair has discharged its burden.

First, I do not accept Mr. Nahsari's submission that the preliminary issue of whether he is out of time was not mediated and therefore I do not have the jurisdiction to hear this issue. I agree with Belair's submission that pursuant in subsection 281(5) of the Insurance Act the issue of whether Mr. Nahsari is out of time raises a substantive legal defence that goes to jurisdiction and does not need to be mediated.

Where a defence is raised that the insured is out of time, the limitation period must be resolved in favour of the insured as a condition precedent to the insured being entitled to proceed to mediation and to pursue recovery of the of the statutory accident benefits in dispute. This is different than the requirement pursuant to subsection 281(2) of the Insurance Act that statutory accident benefits claims that are in dispute must be mediated and fail before they can be arbitrated.

Accordingly, I find that I have the jurisdiction to hear and decide the issue of whether Mr. Nahsari is out of time in his application to arbitrate his dispute with Belair even though this matter was not mediated.

Second, I find that Belair by its letters of May 25, 1998 and August 4, 1998 gave "clear and unequivocal" notice in writing to Mr. Nahsari and his previous counsel, Mr. Cozzi, that Mr. Nahsari's claims for further treatment from Recovery Rehab and for caregiver and housekeeping benefits were being refused.

I was not provided with any evidence, either by affidavit or supporting documentation, that after Belair's original termination of Mr. Nahsari's benefits in August 4, 1998 Belair paid additional monies on these claims so as to extend the limitation period. I agree with Belair that any further Explanation of Benefits Payable form sent to Mr. Nahsari after the "clear and unequivocal" denial of benefits on August 4, 1998 was Belair's formal response to these additional claims. I agree with Belair that the further claims made for caregiver and housekeeping benefits in February 1999 by Mr. Nahsari's previous counsel and Belair's refusal to pay these claims on February 17, 1999 does not extend the limitation period.

Third, I find it most unfortunate that Belair chose to ignore and not respond to the letters dated February 15, 2000 and July 11, 2000 sent by Mr. Nahsari's present representative requesting Belair to provide "a copy of the original accident benefits package completed by Mr. Nahsari" as well as "to disclose a copy of [Mr. Nahsari's] Accident Benefits file." At the time these requests were made, Belair had terminated Mr. Nahsari's benefits and it would appear that the new representative was seeking information about the status of the claim. Had Belair acted on these requests it is most likely Mr. Nahsari would not be facing this limitation problem.

However, I agree with Belair that the issue of estoppel does not apply in this case. An estoppel⁶ can be created to suspend the operation of a limitation period where an insurer lulls an insured into a false sense of security that a limitation period will not be relied upon in the defence of a matter. For this to occur it must be clear from the insurer's words or conduct that the insurer has communicated to the insured that it will not rely upon the limitation period with respect to a claim. There is no evidence of that in this case.

Nor is there any evidence that by its silence and inaction Belair induced Mr. Nahasari to believe it would not rely upon the limitation period. Accordingly, I agree with Belair that, despite the fact it did not respond to the requests made by Mr. Nahsari's representative for a copy of Mr. Nahsari's accident benefit file, this cannot be interpreted as a waiver by Belair of its rights to rely upon the limitation period pursuant to subsection 281(5) of the Insurance Act.

Accordingly, I find that Mr. Nahsari is barred from proceeding to arbitration as he failed to comply with the limitation requirements under subsection 281(5) of the Insurance Act and subsection 51(1) of the Schedule.

EXPENSES:

If required, I may now be spoken to on the issue of the expenses of this arbitration proceeding.

December 5, 2001

Joyce Miller Arbitrator

Neutral Citation: 2001 ONFSCDRS 181

FSCO A00-001283

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ABDUL NAHSARI

Applicant

and

BELAIR INSURANCE COMPANY INC.

Insurer

ARBITRATION ORDER

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

1. This arbitration is dismissed.

December 5, 2001

Joyce Miller Arbitrator

. . .where one person ('the representor') has made a representation to another person ('the representee') in words, or by acts and conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive), and with the result, of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in the proper manner, objects thereto.

[Spencer Bower on the Law Relating to Estoppel by Representation, 3rd ed. by Turner (London, Butterworths, 1977), p. 9 quoted in Pannenbecker v. Dominion of Canada General Ins. Co. (1977), [1977 CanLII 667 (AB SCTD)](https://www.canlii.org/en/ab/abqb/doc/1977/1977canlii667/1977canlii667.html), 76 D.L.R. (3d) 132 at pp. 139-40 (Alta. S.C.T.D.), rev. on other grounds [1978 CanLII 1952 (AB SCAD)](https://www.canlii.org/en/ab/abca/doc/1978/1978canlii1952/1978canlii1952.html), 93 D.L.R. (3d) 450 (S.C. App. Div.).]

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.
2. 2Zeppieri and Royal Insurance Company of Canada (OIC A-005237, February 17, 1994); affirmed on appeal (OIC P-005237, December 22, 1994)
3. 3See for instance Lopez and Commercial Union Assurance Company of Canada (FSCO A98-001223, April 13, 1999); Brauen and Personal Insurance Company of Canada (FSCO A99-000441, July 14, 1999); Rahman and Co-operators General Insurance Company (OIC A-000854, December 21, 1993); and Zeppieri, supra.
4. 4Kirkham and State Farm Mutual Automobile Insurance Company (OIC A96-000141, August 15, 1996); appeal decision (OIC P96-00069, January 27, 1997); Application for judicial review dismissed (March 31, 1998) Court File No. 510/97 (Div.Ct.).
5. 5Leave to appeal the Divisional Court decision to the Court of Appeal was denied (July 19, 1998), Court File No. M22347 (C.A.).
6. 6In her decision Offeh and Allstate Insurance Company of Canada (OIC A-006494, October 25, 1994), Arbitrator Manji has defined "Estoppel" as follows: