Patricia Coutu v. Wawanesa Mutual Insurance Company, 2002 ONFSCDRS 98

Neutral Citation: 2002 ONFSCDRS 98

FSCO A01-001446

BETWEEN:

PATRICIA COUTU

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

William J. Renahan

Heard:

By telephone conference call on June 10, 2002.

Appearances:

Barbara L. Legate for Mrs. Coutu

Katherine Kolnhofer for Wawanesa Mutual Insurance Company

Issues:

The Applicant, Patricia Coutu, was injured in a motor vehicle accident on January 3, 1996. She applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.¹ Wawanesa terminated weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mrs. Coutu applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues are:

Is Wawanesa entitled to cross-examine Mrs. Coutu on her affidavit in support of an application for interim benefits and is Mrs. Coutu entitled to an order for interim benefits?

Result:

It is not necessary to determine whether Wawanesa has the right to cross-examine Mrs. Coutu because on the material filed, Mrs. Coutu is not entitled to an order for interim benefits.

EVIDENCE AND ANALYSIS:

At an arbitration commenced in February 1999, the parties agreed that Mrs. Coutu would attend a Designated Assessment Centre ("DAC") for an assessment of her residual earning capacity. Among other things, the parties agreed that the Insurer had a right to "claim a credit for any future payments, if any, should the REC/DAC [residual earning capacity assessment at a Designated Assessment Centre], an arbitration or a court determine that the amount of the LEC [loss of earning capacity] benefit is less than the amount of the income replacement benefits." After the assessment, Wawanesa continued to pay income replacement benefits of about $277.69 per week. In February 2001 it replaced the income replacement benefit with a loss of earning capacity benefit which it calculated to be $100.19 per week. On the basis that the income replacement benefits it paid exceeded the loss of earning capacity benefits it was required to pay, it calculated an overpayment of $17,058.13. I heard no evidence to explain why Wawanesa continued to pay income replacement benefits instead of loss of earning capacity benefits. Wawanesa reduced the LEC 20 per cent, to $80.15 per week, to recover the overpayment.

I presided at the pre-hearing of this matter on May 30, 2002. The issues in dispute included:

What is the amount of the Applicant's pre-accident earning capacity under section 29 of the Schedule?
What is the amount of the Applicant's residual earning capacity under section 30 of the Schedule?
What were the terms of repayment the parties agreed to at the arbitration hearing in February 1999?

At the pre-hearing discussion, the Applicant asked for an order for interim benefits in the amount of the income replacement benefits. The Insurer objected to dealing with the issue at the pre-hearing on the grounds that it had not received ten days notice as required by Rule 67.5 of the Dispute Resolution Practice Code (Fourth Edition). It also asked for an order that the Applicant appear before an arbitrator so that counsel could cross-examine the Applicant on the affidavit she filed in support of her application for interim benefits.

I adjourned the application so that the Insurer had ten days notice to respond to the application and indicated that I would hear submissions on the issue of whether the Insurer had the right to cross-examine the Applicant. I also indicated that if I decided against the right to cross-examine, I might rule on the application for interim benefits on the basis of the material filed.

On June 10, 2002, I heard submissions by teleconference on the right to cross-examine.

Right to cross-examine on an affidavit:

In Nelson and Liberty Mutual Insurance Company, (FSCO A00-000253, February 16, 2001), the arbitrator concluded that "most insured persons must expect to give oral evidence in support of an interim benefits motion." However, in Charles and Dominion of Canada General Insurance Company, (FSCO A00-000572, March 7, 2001) the arbitrator noted that the general practice on motions was to tender evidence by affidavit with documentary evidence appended by way of exhibits. Most of the decisions on interim benefits at the Commission are made on the basis of affidavit evidence. I do not have to decide whether the Insurer has a right to cross-examine the Applicant in this case because I have decided that the documentary material does not satisfy an essential criteria for an order for interim benefits.

Entitlement to interim benefits:

Section 279(4.1) of the Insurance Act gives arbitrators the discretionary authority to make interim orders pending the final order in any matter. An order for interim benefits is not routine. Obviously, an order for interim benefits prejudices an insurer in those cases where an arbitrator later determines that the insurer is entitled to a repayment which the insurer cannot recover. The overriding principle in most cases is that an order will be made only after a hearing which fully canvasses the evidence and positions of both sides. The first criteria the applicant must satisfy for entitlement to an order of interim benefits is that his or her need is urgent and cannot await for a full hearing.

Generally, a disabled insured is entitled to weekly income replacement benefits or loss of earning capacity benefits to replace a portion of his or her lost income. When the insurer terminates those benefits and the insured claims that he or she still cannot return to work, the insured will normally suffer financially. This is particularly so, when most claimants are of modest or low income and do not have income protection plans from employment. This is one reason an insured seeks, and is entitled to, as speedy a resolution of his or her claim as possible. However, the routine financial suffering that one expects in these circumstances, by itself, is not grounds to satisfy the urgency requirement. If it were, applications for interim benefits and interim orders would become more routine. In my view, the usual financial loss and suffering an insured endures where a court or arbitrator later determines that the insured was entitled to benefits which the insurer withheld, is compensated for by the automatic payment of interest at 2 per cent per month provided for in the Schedule. Where the decision maker finds that the insurer unreasonably withheld benefits, the insured is compensated by a special award under subsection 282(10) of the Insurance Act.

I reviewed the history of this application and the written material filed and found that the Applicant did not make out a case of urgency.

The Insurer reduced the weekly benefit from $277.69 to $80.15 on February 22, 2001. About nine months later, in November 2001, Mrs. Coutu applied for arbitration. That same month, Mrs. Coutu's husband left the matrimonial home. In February 2002, Mr. Coutu lost his job. Three months later, on May 21, 2002, Mrs. Coutu notified the Insurer that it would ask for interim benefits at the pre-hearing scheduled for May 30, 2002. The timing of the application for interim benefits does not suggest urgency.

The grounds upon which Mrs. Coutu claims that her application is urgent are financial and are set out in her affidavit which I reproduce:

Subsequent to the collision in 1996 through to November 21, 2001, my husband, William Coutu, and I had been struggling with marital difficulties.
On November 21, 2001 my husband moved out of our home. He has lost his job, wherein he was earning approximately $40,000 per annum, in February 2002 and he has been unable to support me.
The only other financial support that I have, apart from my statutory accident benefits from Wawanesa (being $80.15 per week), is $100 every two weeks from my daughter-in-law for driving my three grandchildren to school. However, after my daughter-in-law gives birth to her fourth child in or about June 2002, she will be able to drive her children to school and my services will no longer be needed.
I was required to use my husband's accumulated holiday pay to satisfy my March 2002 mortgage payment of approximately $876.00 per month.
I had to sell household items to obtain funds to support myself and to pay for my April 2002 Mortgage.
My husband has only provided me with $400 which was used towards the May 2002 mortgage payment. I had to borrow money to cover the rest of the mortgage.
On the day prior to Wawanesa' reduction of my income benefits, February 21, 2001, I leased a vehicle for approximately $463 per month.
In total, including the mortgage and vehicle lease payments and other household expenses, my monthly expenses are approximately $1,700.

In her request for an opportunity to cross-examine Mrs. Coutu, counsel submitted that the affidavit raised many unanswered questions. I agree. However, I do not believe it is up to the opposing party to cross-examine the insured to flesh out the facts to support the insured's argument that her need for interim benefits is urgent.

I do not have clear evidence on who owns the home and who is responsible for paying the mortgage. I have no evidence on Mrs. Coutu's net worth, and if Mr. Coutu has an interest in the house, I have no evidence on his net worth. In particular, I have no evidence of investments or savings or other resources. I do not know who Mrs. Coutu borrowed money from or the terms of the loan. I cannot determine if it is reasonable for Mr. or Mrs. Coutu to borrow money.

Mrs. Coutu's claim that she sold household items is too vague to have meaning. Her financial situation varies depending on whether those items were those one would find at a garage sale or antiques.

I do not know what the consequences are to Mrs. Coutu if she does not pay the vehicle lease payments.

I am not satisfied that Mrs. Coutu's need for interim benefits on the grounds of financial hardship is urgent.

The hearing in this matter is scheduled to commence on July 22, 2002. Hopefully, the arbitrator hearing this case will deliver a decision in a timely manner. If the arbitrator determines that Mrs. Coutu is entitled to increased benefits, she will automatically receive interest at 2 per cent per month which, in most cases, will fairly compensate her for overdue payments.

EXPENSES:

Expenses are in the discretion of the hearing arbitrator.

June 21, 2002

William J. Renahan Arbitrator

Date