Financial Services Commission of Ontario
Neutral Citation: 2001 ONFSCDRS 6 FSCO A00-000197
Between: Paul So, Applicant and Zurich Insurance Company, Insurer
Decision on a Preliminary Issue
Before: John Wilson Heard: July 10, 2000, by written submissions Appearances: Andrew Suboch for Mr. So Sandi Smith for Zurich Insurance Company
Issues:
The Applicant, Paul So, was injured in a motor vehicle accident on May 26, 1997. He applied for and received statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. So applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. At the pre-hearing of this matter, on May 1, 2000, I ordered that a preliminary issue hearing be held on two issues.
The preliminary issues are:
Is Mr. So 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?
Is Mr. So barred from claiming treatment expenses due to his failure to comply with subsections 38(1) and 38(2) of the Schedule?
Result:
Mr. So is precluded from proceeding to arbitration by reason of his failure to comply with the applicable time-limits.
By reason of the above finding, the issue of non-compliance with subsections 38(1) and 38(2) of the Schedule is moot and will not be addressed.
Evidence and Analysis:
An Agreed Statement of Facts was filed with the Commission, which was referred to in both parties' submissions. Mr. So, in his submissions, has added further references that could conflict with the apparently agreed facts. In evaluating this matter, I have relied only upon those facts that appear to be common to both parties, as well as the documents and submissions supplied by the parties. For the purposes of the decision, I have summarized the chronology of the claim as follows:
Mr. So was involved in an accident, while exiting from a Canadian Tire Store on May 26, 1997. He received treatment from the Back Care and Sports Injuries Rehabilitation Centre ("Back Care") and claimed the cost of those treatments from his Insurer.
Zurich wrote to refuse a claim for direct payment of the treatment expenses within days of the first treatment.
After Mr. So completed and filed a claim for accident benefits, the rehabilitation centre filed a treatment plan, which was rejected by Zurich.
By July 9, 1997, Zurich had advised both the Applicant and the treatment facility that the treatment plan was rejected and that no direct billing would be accepted. Around the same time, Zurich arranged for a medical treatment disability assessment to be undertaken.
By August 8, 1997, Zurich wrote to Mr. So that the first 15 treatments would be covered but reiterated that direct billing would not be considered. Zurich also provided an Explanation of Assessment Form on August 11, 1997, denying payment of an invoice for services rendered by Back Care.
On August 22, 1997, Mr. So participated in the Medical Rehabilitation DAC at the Back Institute, which concluded that there was no further requirement for chiropractic or physiotherapy treatment.
On September 2, 1997, Zurich issued an Explanation of Benefits, which relied on the DAC results to deny further chiropractic or physiotherapy treatment.
On October 6, 1997, a further explanation of benefits was issued refusing payment of another invoice from Back Care.
Zurich continued, in the same vein through to the end of 1997, writing to both Mr. So and Back Care, reiterating its unwillingness to fund further treatments.
On July 28, 1998, Back Care wrote a confirming letter to Zurich, indicating that Zurich had agreed to pay for treatments up to the date of the DAC.
Apparently the disagreement over the funding of treatment continued, since Mr. So filed for mediation with the Commission. His application was received by the Commission on September 8, 1999, and the report of the mediator was issued on January 19, 2000.
The disputes were not settled at mediation, and Mr. So filed for arbitration. His application was date stamped by the Commission on February 15, 2000.
Section 281 (5) of the Insurance Act provides:
A proceeding in a court or an arbitration proceeding in respect of statutory accident benefits must be commenced within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Statutory Accident Benefits Schedule.
Zurich alleges that Mr. So was out of time when he applied for mediation. Its assertion is that either of the August 11, 1997 Explanation of Benefits or the September 2, 1997 Explanation of Benefits operated as a "refusal to pay benefits" as provided for in section 281(5) of the Insurance Act. If either are found to be valid refusals, then the September 2, 1999 mediation application would be more than two years from the date of such a refusal.
Having examined the copy of the September 2, 1997, Explanation of Benefits submitted, I accept that it is a valid refusal as contemplated by Section 281(5), and by the Schedule. It is in writing, contains a description of the benefit refused and the reasons for the refusal, and leaves no doubt that the Insurer has refused benefits.
Notwithstanding that the Insurer may have requested further information from Mr. So after the refusal letter of September 2, 1997, I find that the letter stands on its own as a clear refusal of benefits. By requesting further information, Zurich merely undertook to carry out its obligations to the Insured. The appeal decision of the Director of Arbitrations in Zeppieri and Royal Insurance Company of Canada (OIC P-005237, December 22, 1994) reaffirmed the approach taken by arbitrators at the Commission that reconsideration of a decision by an insurer does not necessarily override a prior clear refusal or termination of benefits.
Taken in the context of the Insurer's consistent refusal to pay the benefits claimed, it is hard to see that Mr. So was lulled into complacency by Zurich's request for information. Indeed, his representative's faxed letter dated August 31, 1999, shows anything but complacency. It reveals an urgent awareness of a time-limit inexorably ticking away. I find that there is no evidence that Zurich either waived its refusal by requesting further information, or led Mr. So to believe that the refusal would not be relied upon by Zurich.
Mr. So submits, quite properly, that the onus is on the Insurer to prove that the proper notice was provided to him.
Arbitrator Bayefsky, in Jakovljevic and Commercial Union Assurance Company (FSCO A98-001163, July 26, 1999) summarized the principles involved in such cases.
The principles most relevant to the case at hand are that the two-year period begins to run from the date the applicant receives a clear and unequivocal refusal of the benefits he or she has claimed, and that the insurer bears the onus of establishing both that the applicant received such a refusal and the date of the receipt.
The Insurer alleges that it sent the termination letter to Mr. So, but did not submit copies of delivery receipts, or other evidence corroborating its allegation. It does, however, allege that Mr. So had actual knowledge of the September 2, 1997 letter and points to references in correspondence by his representative in support of this assertion.
In a letter addressed to Mr. Richard Szymczak of Zurich, dated August 31, 1999, Mr. Joseph Cheung of Anthony, Richardson & Associates stated:
Please be advised that the time is running out and September 2nd, 1999 will be 2 years from the day of denial, if we cannot resolve be sue [sic] end of September 1st 1999. We will have to proceed the mediation process in term of protecting our client's right of not being sue by the treating facilities.
Mr. So states in his written submissions that:
Failing to know the manner of delivery of the denial of benefits, it is impossible to calculate even approximately the date on which the limitation period would have started to run. Therefore, it is impossible for the insurer to rely on such a limitation period. The failure to provide any such evidence either by way of receipt of notice by Canada Post or by Affidavit of Service or Affidavit of Receipt prevents any calculations as to when the limitation period would have begun which in turn, prevents any reliance on such limitation period by Zurich.
The notice requirements outlined by Arbitrator Bayefsky in Jakovljevic (supra) stem from the requirements of the governing legislation, The Insurance Act and the Schedule, as interpreted consistently by arbitrators. Nowhere, however, does either the Insurance Act or the Schedule mandate the manner in which such a notice is to be delivered. Only the statutory conditions of the policy, outlined in section 12 of Ontario Regulation 777/93, speak to formal notice provisions. As noted by Arbitrator Evans in Holguin and Allstate Insurance Company of Canada, (OIC A-009270, July 26, 1995), even this provision is permissive rather than mandatory.
Black’s Law Dictionary comments under the heading of "notice" that:
Notice is either (1) statutory, i.e. made so by legislative enactment; (2) actual, which brings the knowledge of a fact directly home to the party; or (3) constructive. Constructive notice may be subdivided into: (a) Where there exists actual notice of matter, to which equity has added constructive notice of facts, which an enquiry after such matter would have elicited; and (b) where there has been a designed abstinence from inquiry for the very purpose of escaping notice.
The principle of actual notice, which the Insurer relies upon, is a time-honoured concept deriving from the Courts of Equity. The Supreme Court of Canada in United Trust v. Dominion Stores (1976), 1976 CanLII 33 (SCC), 71 D.L.R. (3d) 72 considered whether the introduction of a statutory scheme in the Land Titles Act abrogated the time-honoured equitable principles of actual notice. Spence J. observed:
However, in Ontario, only a few years after the enactment of the Land Titles Act, the Courts have expressed a disinclination to imply such an extinction of the doctrine of actual notice. There is no doubt that such doctrine as to all contractual relations and particularly the law of real property has been firmly based in our laws since the beginning of equity. It was the view of those Courts, and it is my view, that such a cardinal principle of property law cannot be considered to have been abrogated unless the legislative enactment is in the clearest and most unequivocal of terms.
That the concept of actual notice persists in the area of statutory accident benefits is consistent with the findings of Arbitrator Evans in Holguin (supra) and Director's Delegate Draper in Derman and State Farm Mutual Automobile Insurance Company, (OIC P-009521, January 29, 1997). In Derman (supra), the Director's Delegate found evidence supporting termination in the Application for Mediation and approved of the hearing arbitrator's findings "that the actions of Mr. Derman and his lawyers made it clear they understood that State Farm refused to pay weekly benefits beyond August 31, 1991."
I find that there has been no clear, unequivocal, legislative enactment in the area of accident benefit matters covered by the Schedule, and that the principle of actual notice continues to apply to such cases.
It is apparent from the material filed by the parties that Mr. Cheung was an agent representing Mr. So in his dealings with the Insurer. It is also apparent that Mr. Cheung believed that the date of denial was September 2, 1999. The only possible question remaining is whether his statement in this letter can be construed as, in effect, an admission by Mr. So that he received the refusal of benefits on September 2, 1999, as alleged by Zurich.
The Nova Scotia Supreme Court, Appeal Division, in Robert Simpson Eastern Ltd. v. Dombrowski [1977] N.S.J. No. 16, found that admissions may be made outside of pleadings. Macdonald J.A. found that:
(T)he respondent made a clear admission in his letter of June 9, 1976, to which I have referred, that he was indebted to Simpson's in the amount of $1,905.53. In the face of such an admission and on application of the proper principles it would, in my opinion, be impossible for the respondent to succeed in his defence as to such amount.
Likewise in Chang v. Euro Scotia Funding Ltd. [1994] N.S.J. No. 278, Grant J. found that a pre-trial letter containing an admission bound a defendant.
The letter and cheque are both documents of the defendant. In a general way they speak for themselves once before the court. Here we have what I consider to be an acknowledgement or an admission of fact in writing coupled with a proposal to repay at a future date, then with the attempt to repay through an N.S.F. cheque. I find that the circle is completed and the case made out by the applicant, upon whom the burden rests on a balance of probabilities.
I find that the letter from Mr. Cheung is at least prima facie evidence that Mr. Cheung was aware of the September 2 notice from the Insurer. On the evidence before me, the most obvious inference to be drawn from the letter is that Mr. Cheung in fact received the information from Mr. So, who, in turn, had received the stoppage information from the Insurer as alleged.
Mr. So admits, in his submissions, that Mr. Cheung, a paralegal, was representing him at the time that he wrote the letter acknowledging the September 2 deadline, but states that "a paralegal acting on behalf of an Applicant cannot waive an Applicant's rights." Mr. So cites no jurisprudence in support of this assertion.
It is clear law that a solicitor, properly retained, may bind a client, or compromise proceedings, unless the client has limited the retainer, and the limitations in the retainer are known to the opposing side. Mr. Cheung, although functioning as a lawyer for all intents and purposes, was an unregulated paralegal.
As Evans J.A. of the Ontario Court of Appeal noted in Scherer v. Paletta (1966), 1966 CanLII 286 (ON CA), 57 D.L.R. (2d) 532, at p. 534:
The authority of a solicitor arises from his retainer and as far as his client is concerned it is confined to transacting the business to which the retainer extends and is subject to the restriction set out in the retainer. The same situation, however, does not exist with respect to others with whom the solicitor may deal. The authority of a solicitor to compromise may be implied from a retainer to conduct litigation unless a limitation of authority is communicated to the opposite party.
Although it might be claimed that a paralegal, taking on a lawyer's traditional role, also assumes a lawyer's responsibilities, the matter can be dealt with more simply under the law of Agency.
There is no dispute that Mr. Cheung, at the time of his letter to Zurich, was an agent for Mr. So in dealing with his statutory accident benefits claim against Zurich.
The law of Agency, in this respect, has been consistent since the 19th century. In Kirkstall Brewery Co. v. Furness Railway Co., (1874) L.R. 9 Q.B. 468, Cockburn C.J. stated:
Then, if Podmore was the agent of the defendants, and if it was within the scope of his duty and authority to do what the principal, if on the spot, would have done, what he says while he is so acting is equally admissible as if said by the principle himself.
As Evans J.A. further noted, somewhat more recently, in Scherer v. Paletta (supra):
A client having retained a solicitor in a particular manner, holds that solicitor out as his agent to conduct the matter in which the solicitor is retained. In general, the solicitor is the client’s authorized agent in all matters that may reasonably be expected to arise for decision in the particular proceedings for which he has been retained. Where a principal gives an agent general authority to conduct any business on his behalf, he is bound as regards third persons by every act done by the agent which is incidental to the ordinary course of such business or which falls within the apparent scope of the agent’s authority.
This approach is consistent with the statement of Sopinka, Lederman and Bryant in The Law of Evidence in Canada (Butterworth's Toronto 1992) at page 293 that "... if statements are made by a party in a representative capacity and were made in that connection, those statements are admissible against the party he or she represents."
I find that Mr. Cheung's letter constitutes evidence of an admission of receipt of the Insurer's notice of discontinuance of benefits by Mr. So, and that such an admission by Mr. Cheung may be fairly attributed to Mr. So as being within the scope of his apparent authority as agent and representative of Mr. So.
The Insurer having raised prima facie evidence that Mr. So had received the notice, and, indeed, had actual knowledge of the stoppage notice, it is incumbent upon Mr. So to provide some credible evidence to refute the Insurer’s case.
As noted in Sopinka et al, The Law of Evidence in Canada, (supra) at page 73 "... from the opponent’s viewpoint, the failure to adduce any evidence to meet a prima facie case renders that party susceptible to an adverse determination on that issue."
I have found that Mr. Cheung’s letter is binding upon Mr. So and creates a rebuttable inference that Mr. So received the Insurer's notice of termination, and had actual knowledge of its contents.
This inference is, as well, consistent with Mr. So's actions in this matter. It would seem odd that he would attend a DAC or retain counsel if he was not aware that the Insurer was refusing to pay for his treatment at Back Care.
Mr. So had an opportunity to rebut the evidence contained in Mr. Cheung's letter but he has not adduced any evidence on this point. Instead, he relies simply on the Insurer's onus of proof referred to in Jakovljevic (supra) and his unsupported assertion that an admission by an agent cannot bind him.
The burden of proof in these matters is on the balance of probabilities, not beyond a reasonable doubt. I have found that the letter from Mr. Cheung is prima facie evidence of receipt of the notice by Mr. So, and he has adduced no evidence to rebut the Insurer's evidence. Therefore, it is open to me to find that the Insurer has met the burden of proof in this matter, and I so find.
I find that Mr. So did not commence mediation pursuant to section 50 of the Schedule within two years of the Insurer's refusal to pay the amount claimed. Since the mediation itself was out of time, Mr. So cannot rely upon subsection 51(2) of the Schedule which extends the deadline to apply for arbitration to 90 days following the delivery of the mediator's report.
I find, as well, that Mr. So is barred 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.
Failure to File Treatment Plans:
In light of my findings on the time-limit issue, the second preliminary issue in this matter is moot and need not be addressed.
Expenses:
Should the parties be unable to agree on the issue of expenses, I may be spoken to on this issue.
January 10, 2001
John Wilson Arbitrator
Date
Arbitration Order
Neutral Citation: 2001 ONFSCDRS 6 FSCO A00-000197
Between: Paul So, Applicant and Zurich Insurance Company, Insurer
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Mr. So is precluded from proceeding to arbitration by reason of his failure to comply with the time-limits prescribed by the Insurance Act and the Schedule.
January 10, 2001
John Wilson Arbitrator
Date
Footnotes
- The 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.