Neutral Citation: 2001 ONFSCDRS 61
FSCO A00-000031
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
OM DHAWAN
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
Beth Allen
Heard:
On February 26, 2001
Appearances:
Roland Spiegel for Mr. Dhawan
Ian D. Kirby for State Farm Mutual Automobile Insurance Company
Issues:
The Applicant, Om Dhawan, was injured in a motor vehicle accident on June 28, 1998. He applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.1State Farm terminated benefits for physiotherapy under section 14 and refused to pay expenses associated with certain medical examinations claimed pursuant to section 24 of the Schedule. The parties were unable to resolve their disputes through mediation, and the Applicant applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Shortly before the date scheduled for the arbitration hearing, the parties entered into settlement discussions. It is State Farm's position that the parties reached a binding, full and final settlement of all issues in dispute as well as of all outstanding and future claims. The Applicant denies that a resolution was reached.
The preliminary issue is:
Did the parties enter a binding agreement, thereby precluding the Applicant from proceeding to arbitration?
Result:
The parties reached a binding settlement of all issues in dispute as well as of all outstanding and future claims in relation to the accident.
The parties made no submissions as to expenses.
EVIDENCE AND ARGUMENTS
Factual Background:
State Farm has the burden to prove that the parties effected a binding settlement of the Applicant's accident benefit claims.
Undisputed facts:
Both Mr. Grant Peever, a claims manager with State Farm, and Mr. Roland Spiegel, the Applicant's representative, testified at the hearing.
On Monday, January 29, 2001, Mr. Spiegel contacted Mr. Peever on his car cell phone to discuss a settlement of the Applicant's accident benefit claims. Neither the Applicant, the treatment providers, nor State Farm's counsel were present for this discussion. Mr. Spiegel, a paralegal, had full authority to settle all accident benefit claims on behalf of the Applicant.2 The day following the discussion, Mr. Peever sent, and Mr. Spiegel received, a letter dated January 30, 2001 which purports to confirm the settlement figure agreed upon during the January 29 discussion, with an attached notice of settlement and a release, as required by section 9.1 of Regulation 664 under the Insurance Act, R.S.O 1990 c.I.8, as amended (the "Settlement Regulation"). Below, I reproduce the Settlement Regulation in its entirety:
9.1 (1) In this section, "settlement" means an agreement between an insurer and an insured person that finally disposes of a claim or dispute in respect of the insured person's entitlement to one or more benefits under the Statutory Accident Benefit Schedule.
(2) Before a settlement is entered into between an insurer and an insured person, the insurer shall give the insured person a written notice that contains the following:
A description of the benefits that may be available to the insured person under the Statutory Accident Benefits Schedule and any other benefits that may be available to the insured person under a contract of automobile insurance.
A description of the impact of the settlement on the benefits described under paragraph 1, including a statement of the restrictions contained in the settlement in the insured person's right to mediate, litigate, arbitrate, appeal or apply to vary an order as provided in sections 280 to 284 of the Act.
A statement that the insured person may rescind the settlement within two business days after the settlement is entered into by delivering a written notice to the insurer.
A statement that the tax implications of the settlement may be different from the tax implications of the benefits described under paragraph 1.
If the settlement provides for the payment of a lump sum in an amount offered by the insurer and, with respect to a benefit under the Statutory Accident Benefits Schedule that is not a lump sum benefit, the settlement contains a restriction on the insured person's right to mediate, litigate, appeal or vary an order as provided in section 280 to 284 of the Act, a statement of the insurer's estimate of the commuted value of the benefit and an explanation of how the insurer determined the commuted value.
A statement advising the insured person to consider seeking independent legal, financial and medical advice before entering into the settlement.
(3) A settlement may be rescinded by the insured person, within two business days after the settlement is entered into, by delivering a written notice to the insurer.
(4) If the insurer did not comply with subsection (2), the insured person may rescind the settlement after the period mentioned in subsection (3) by delivering a written notice to the insurer.
(5) A restriction on an insured person's right to mediate, litigate, arbitrate, appeal or apply to vary an order’s provided in section 280 to 284 of the Act is not void under section 279(2) of the Act if,
(a) the restriction is contained in an settlement; and
(b) the insurer complied with subsection (2).
There is no allegation that the notice does not comply with the Settlement Regulation.
To date, Mr. Spiegel has not responded in writing on behalf of the Applicant confirming or denying the agreement as set out in the January 30, 2001 letter. Mr. Spiegel testified that he talked to the Applicant and the providers about settlement several times after January 29. By letter dated February 2, 2001, State Farm advised the Commission that a full and final settlement of all claims had been reached and that Mr. Spiegel would arrange for the arbitration to be dismissed.
Mr. Spiegel telephoned Mr. Peever on February 9, 2001 and advised that he could not resolve the matter for the amount stated in the January 30 letter.
The parties disagree on whether the January 29, 2001 discussion culminated in a binding settlement agreement. This case turns on credibility.
Disputed facts:
Mr. Peever testified that he agreed to participate in the discussion on January 29, 2001 because Mr. Spiegel was interested in a global settlement of all issues. Mr. Peever claimed that he would not have participated if the Applicant was not interested in a full and final settlement.
Mr. Peever recalled that Mr. Spiegel presented an initial demand figure of "X dollars" which State Farm rejected. Mr. Peever testified that, he (Mr. Peever) made a counter offer of "Y dollars" and he and Mr. Spiegel ultimately agreed to settle all claims for this amount on a full and final basis. Mr. Peever testified that no conditions or time deadlines were attached to the settlement. He stated that the purpose of the January 30, 2001 letter was to confirm the terms of settlement and provide the Applicant with the prescribed notice and release. The relevant portion of the letter states as follows:
I attach herewith a release to be signed by your client, Om Dhawan, for the agreed amount of "Y dollars." [reference to "Y dollars" included by arbitrator]
Please return the appropriate release, as well as letters from Integrated Health Services, and Deahy Medical Assessments agreeing to the settlement as noted.
Please also send along with the release your confirmed discontinuance of the arbitration at the Financial Services Commission. I will need their documentation showing this matter has been discontinued prior to releasing the funds.
Once I receive the enclosed documentation and the 48 hour cooling off period has expired, the funds will be issued in favour of Om Dhawan, and sent to your office.
Mr. Spiegel's evidence was not entirely clear. He testified that when he approached Mr. Peever for settlement, he had authority to fully settle all claims. However, according to Mr. Spiegel, he told Mr. Peever that he was not prepared to settle all claims for the Y dollar figure. Mr. Spiegel's evidence is that he would take the Y dollar figure, which, according to him, was exclusive of outstanding medical expenses, and speak to his client and the providers to get instructions. It was not clear from Mr. Spiegel's version of the discussion whether in the end he refused to recommend the Y dollar figure to the Applicant and providers or whether he intended to recommend that figure and to attempt to settle on that basis. In testimony, Mr. Spiegel described the Y dollar figure as "a proposal" rather than "an agreement." He testified that he told Mr. Peever that he would consult with the providers to try to obtain reductions on the accounts in the interest of a full and final settlement.
Mr. Spiegel also testified that in the discussion, Mr. Peever stipulated that the Applicant had until Friday, February 2, 2001 to accept State Farm's offer. Mr. Peever strongly denies this. He contends that State Farm and the Applicant had reached an unconditional oral agreement on January 29 – that State Farm offered the Y dollar figure and Mr. Spiegel accepted it on behalf of the Applicant. Mr. Peever testified that his confirmation letter, which he prepared the next day, confirms the agreed upon figure. He further pointed out that, as is his customary practice, he would have set out any time deadline in his confirmation letter, if indeed such a condition existed.
State Farm's counsel cross-examined Mr. Spiegel as to why he did not respond to Mr. Peever's January 30, 2001 letter, confirming or denying its contents. He responded that he had attempted to call Mr. Peever a number of times after the January 29 discussion without success. Mr. Spiegel admitted that he did not leave a voice-mail message for Mr. Peever, although he admitted having Mr. Peever's office and cell phone numbers. Mr. Spiegel testified that, in any event, he did not have to respond in writing or leave a phone message because after Friday, February 2, the deadline would be exceeded and the "proposal" would be "null and void."
Mr. Spiegel testified that he presented the Y dollar figure to his client and it was declined. It is his evidence that because the Applicant did not accept the figure, no binding agreement exists.
Mr. Spiegel submitted that non-lawyer legal representatives ought not be held to the same professional standard as lawyers. He argued that although non-lawyers are entitled to represent clients at the Commission, small claims court and other tribunals, they are not conferred the same authority and power that lawyers enjoy in these forums. He submitted that greater weight is attributed to the actions of lawyers. Mr. Spiegel argued, however, that irrespective of this, there was no binding agreement in this case.
Counsel for State Farm submitted that the Applicant authorized Mr. Spiegel to represent him with respect to his accident benefit claims and to enter into binding agreements on his behalf. He argued that the Insurance Act and Regulations and the Dispute Resolution Practice Code3 accord agents and other non-lawyer representatives who hold themselves out as representing insured persons, the same rights and privileges accorded lawyers and the same obligations to honour agreements entered into on behalf of their clients. It is State Farm's view that no special latitude should be granted to Mr. Spiegel because of his non-lawyer status.
REASONS FOR DECISION
After considering the evidence and submissions, I conclude that State Farm has met the burden of proving a binding full and final agreement between the Applicant and State Farm of all of the Applicant's accident benefit claims. I do not accept Mr. Spiegel's evidence that no settlement was reached.
I find that on January 29, 2001, State Farm, through its representative Mr. Peever, made an offer in the amount of Y dollars, which was accepted by the Applicant through his representative, Mr. Spiegel. I accept that a binding oral agreement was reached between the parties to fully and finally settle all of the Applicant's accident benefit claims. I find that Mr. Peever's version of the January 29, 2001 telephone discussion with Mr. Spiegel and the subsequent developments, have a clearer and more credible ring. There were inconsistencies and confusion in areas of Mr. Spiegel's testimony.
I believe that the January 30, 2001 letter and notice confirmed the terms of the settlement. The parties thereby "entered into" an unconditional agreement on January 30, 2001 within the meaning of subsection 9.1(2) of the Settlement Regulation.
I do not accept Mr. Spiegel's evidence that the Y dollar figure was a "proposal" that was conditional upon a February 2, 2001 deadline for the Applicant's acceptance. I find Mr. Peever's evidence credible that if there were such a deadline, he would have set it out in the confirmation letter. I find this view of the evidence is bolstered by the fact that Mr. Spiegel did not promptly respond to the January 30, 2001 letter to question its contents.
Mr. Spiegel did not comply with the rescission requirements of subsection 9.1(3) of the Settlement Regulation which require written notice of rescission be delivered to the Insurer within two business days ( "the cooling off period") of the settlement having been entered into. Mr. Spiegel called Mr. Peever on February 9, 2001, one week after the February 2 "cooling off" date, to say the Applicant did not accept the settlement.
Subsection 9.1 (4) permits a party to rescind the agreement in writing after the two day "cooling off" period, if the insurer has not complied with the Settlement Regulation. Mr. Spiegel does not allege non-compliance and I find that State Farm has satisfied the regulatory requirements. As required by subsection 9.1 (2) of the Settlement Regulation, the written notice contains the information prescribed in paragraphs 1 through 5 of subsection (2). It informs the Applicant of his to right rescind the settlement agreement in writing within two business days after the settlement was entered into and informs him of his right to rescind the settlement after the "cooling off period" if the insurer fails to comply with subsection (2). It also contains the information required under subsection (5).
In conclusion, I find that the Applicant had until February 2, 2001 to rescind the agreement in writing. He failed to do this. Instead, he contacted State Farm a week after the cool ing off period had lapsed to attempt to rescind the agreement. I find that there was a valid, binding settlement and that the parties have fully and finally settled all of the Applicant's present, past and future claims against State Farm in relation to the June 27, 1998 accident.
The Applicant is therefore precluded from proceeding to arbitration.
Concerning Mr. Spiegel's concern about the status of non-lawyer representatives in arbitration hearings, I agree with State Farm's counsel's view that the legislation and procedural rules that govern the Commission's dispute resolution process allow agents and other non-lawyer representatives, who hold themselves out as representing insured persons, the same rights and privileges as well as the same obligations accorded lawyers. Non-lawyer representatives, like lawyers, must comply with the law and honour agreements into which they enter on behalf of their clients. I find that Mr. Spiegel has failed to do this.
EXPENSES
I encourage the parties to settle the expense issue related to this proceeding. Failing this, they can bring the issue before an arbitrator for assessment.
ORDER:
I order the matter dismissed.
The Applicant's statutory accident benefit claims against State Farm were fully and finally settled before the hearing date.
April 20, 2001
Beth Allen
Arbitrator
Date
SCHEDULE
Witnesses:
For the Applicant: Roland Spiegel
For the Applicant: Grant Peever
Exhibits:
Exhibit 1
Letter from State Farm dated January 30, 2001 with attached Notice of Settlement and Full and Final Release
Exhibit 2
Application for Arbitration dated April 12, 1999 with attached Authorizations dated November 1, 1999, January 12, 1998 and December 1, 1998.
Legal Authorities:
Case Brief by State Farm
Neutral Citation: 2001 ONFSCDRS 61
FSCO A00-000031
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
OM DHAWAN
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
I order the arbitration dismissed.
The Applicant's statutory accident benefits claims against State Farm had been fully and finally settled before the arbitration hearing date.
April 20, 2001
Beth Allen
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.
- Following the February 26, 2001 hearing, State Farm under cover of a letter dated March 1, 2001, filed a copy of an Application for Arbitration dated April 12, 1999 and signed by Mr. Roland Spiegel, as the Applicant's representative; copies of authorizations dated November 1, 1999, January 12, 1998, signed by the Applicant and authorizing Mr. Spiegel as a representative of DEAHY to make binding decisions on his behalf at mediation; and an authorization dated December 1, 1998 authorizing Mr. Spiegel as his general agent "to institute and prosecute through to conclusion, including the absolute right to compromise and settle any claim I might have for payment of medical and rehabilitation benefits provided by DEAHY pursuant to the provisions of the Statutory Accident Benefits Schedule."
- Dispute Resolution Practice Code, (3rd edition, April 15, 1997)