Neutral Citation: 2003 ONFSCDRS 145

FSCO A00-000971

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TERRY SOZANSKI

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Susan Sapin

Heard:

By telephone conference call on June 5, 2003.

Appearances:

Mr. Sozanski represented himself

Todd J. McCarthy for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Terry Sozanski, was injured in a motor vehicle accident on January 19, 1993. State Farm Mutual Automobile Insurance Company ("State Farm") refused to pay statutory accident benefits payable under the Schedule¹ on the ground that Mr. Sozanski failed to submit an application for those benefits within the two-year time limit prescribed by section 22 of the Schedule. The parties were unable to resolve their disputes through mediation, and Mr. Sozanski 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 to be determined at this hearing is:

1. Is Mr. Sozanski's claim for statutory accident benefits invalidated by subsection 22(2) of the Schedule because he failed to submit his application for statutory accident benefits within two years of the accident?

Result:

1. Mr. Sozanski's claim for statutory accident benefits is invalidated by subsection 22(2) of the Schedule because he failed to submit his application for statutory accident benefits within two years of the accident.

2. Mr. Sozanski's application for arbitration is dismissed.

PRELIMINARY MATTERS:

1) Inability of Mr. Sozanski to attend the arbitration hearing in person.

Mr. Sozanski advised that he was unable to attend the preliminary issue hearing in person because he was prevented from leaving the United States for 30 days by order of an American judge. He advised that he wished to proceed with the arbitration by teleconference. Counsel for State Farm, who attended at the Commission on the morning of the hearing together with Ms. Veronica Westwater, State Farm's claims representative, objected, arguing that State Farm required Mr. Sozanski to attend personally because his credibility was a key issue and could not be adequately tested unless he was present. State Farm wrote to Mr. Sozanski to advise that if he was not personally present at the hearing, it would ask the arbitrator to dismiss his claims.

The motor vehicle accident in question occurred over ten years ago. Mr. Sozanski's Application for Arbitration was received on September 15, 2000. A pre-hearing was eventually held on January 6, 2003, after being adjourned six times, four times at the request of Mr. Sozanski and twice at the request of State Farm.² The preliminary issue hearing, scheduled for April 22 and 23, 2003, was adjourned to June 5, 2003, because Mr. Sozanski was unable to attend in person. The hearing of the merits is scheduled to begin September 29, 2003.

On June 5, 2003, the parties agreed to an electronic hearing. State Farm attended in person at the offices of the Financial Services Commission, and Mr. Sozanski participated via teleconference.

2) Failure to produce documents

At the pre-hearing in this matter held on January 6, 2003, the parties agreed on production exchange in accordance with their ongoing obligation to exchange documents under Rule 32 of the Dispute Resolution Practice Code (4th ed., May 31, 2001) (the "Code"). The pre-hearing arbitrator's letter to the parties of the same date confirming the discussion sets out the consequences provided for by Rule 34 of the Code should either party fail to produce documents as agreed.

State Farm maintained that Mr. Sozanski did not comply with his undertaking and did not provide it with the documents upon which he intended to rely at the preliminary issue hearing. Mr. Sozanski insisted that he had mailed the 76 documents in question to State Farm on September 10, 2001. State Farm denied receiving these documents.

For its part, State Farm brought its entire, and extensive, file to the hearing; however, with a few exceptions, it maintained that its file did not contain the documents referred to in Mr. Sozanski's list.³ I have no reason to doubt this assertion.

There is no evidence that either party approached the Commission for assistance in enforcing undertakings to produce documents prior to the preliminary issue hearing, despite several adjournment requests and despite the fact that it was evident, or should have been, at the pre-hearing that State Farm did not have Mr. Sozanski's documents.

Given the parties' agreement to proceed via electronic hearing and in order to ensure as full and fair a hearing as possible in light of the lack of supporting documentary evidence, I agreed to accept in evidence a document contained in the arbitration file entitled "Exhibits for Terry Sozanski," listing 77 documents and records of telephone conversations and meetings between Mr. Sozanski and State Farm representatives, in chronological order. I accepted this document, not as evidence of the truth or accuracy of its contents, but for ease of reference and in order to assist Mr. Sozanski to present his case in a coherent and orderly fashion.⁴

I also accepted two documents e-mailed by Mr. Sozanski to the Senior Arbitrator the morning of the hearing, because they are relevant to the issue in dispute. These are a copy of an application for benefits dated May 3, 1993 and a record of a payment made to Mr. Sozanski by State Farm on May 17, 1995.⁵

The law:

Under subsection 22(1) of the Schedule, an insured person must give initial notice of a claim to the insurer, in writing, within thirty days of the accident or as soon as practicable thereafter. The insured person then has ninety days from the date of the notice to "furnish to the insurer" a completed application for statutory accident benefits. Subsection 22(2) provides that "a failure to comply with a time limit set out in subsection (1) does not invalidate a claim if the claimant has a reasonable excuse and so long as there is compliance within two years of the accident." [Emphasis added].

According to the Concise Oxford Dictionary, to "furnish" means to "cause to have possession or use of" - a more onerous requirement than to merely submit or provide. To use that particular word in subsection 22(2) is to intend that the insurer actually receives the application, and that it is the insured person's responsibility to see that it does so. Furthermore, the two-year time limit is absolute - a reasonable excuse will not save a claim where the application was furnished after that time.

The onus is on State Farm to establish, on a balance of probabilities, that Mr. Sozanski did not furnish it with a completed application for statutory accident benefits before January 19, 1995.

In this case, there is no credible evidence to persuade me that Mr. Sozanski furnished State Farm with a completed application for benefits within two years of his accident.

EVIDENCE AND ANALYSIS:

It is not disputed that on January 19, 1993, Mr. Sozanski, a resident of Ontario, was injured when the car he was driving was rear-ended in Houston, Texas. Mr. Sozanski was insured under his father's Ontario insurance policy with State Farm Mutual Automobile Insurance Company. It happened that the driver who hit Mr. Sozanski was also insured with State Farm, under a Texas policy.

Mr. Sozanski testified that he contacted his insurance agent in Ontario when the accident occurred and was told to file his claim with the local office in Texas. He stated he faxed the State Farm office in League City, a suburb of Houston, requesting coverage under his Ontario policy. He stated that State Farm's representative told him State Farm would "adjudicate all matters at one time and would open one claim for both parties [Mr. Sozanski and the driver who hit him] to settle all issues." The claim number assigned was 53-U169-566.

Mr. Sozanski testified that he obtained a copy of his Ontario automobile insurance policy from his agent in Ontario and on April 24, 1993, he drove to the League City office and personally delivered a copy of his policy to the claims representative there, as she did not have one. He stated that the League City office then forwarded to him an application for benefits, which he filled out and hand-delivered to that office on May 3, 1993. He stated he intended it as an application for statutory accident benefits available to him under his father's Ontario policy, and assumed that State Farm would treat it as such.

Veroncia Westwater, a claims representative with State Farm's Mississauga office since 1989, also testified at the hearing. She testified that she first became aware of Mr. Sozanski's claim when she received a completed Ontario Automobile Insurance Application for Accident Benefits from him dated August 3, 1995 on or about that date. She identified the claim number on that form as an Ontario claim number, 60-1352571. Ms. Westwater testified that she received no information about the accident from Mr. Sozanski prior to August 1995. She investigated the claim after receiving this application, but declined to pay Mr. Sozanski any accident benefits under the Schedule as a result of this application.

Ms. Westwater attended the hearing with an extensive file, and when cross-examined by Mr. Sozanski I find she searched diligently through it to attempt to find documents to which he referred. Among the documents in Ms. Westwater's file was an "application for benefits form" from Mr. Sozanski dated February 6, 1995,⁶ bearing the same Ontario claim number as the August 3, 1995 form. Ms. Westwater stated, however, that unlike the August form, it is not an Ontario form. The form identifies the State Farm insurance claim office as the Texas office. Mr. Sozanski's explanation was that he submitted this form to State Farm after it split his claim into two parts on January 17, 1995. The two parts were the "liability" issues on the one hand, and the "rest of the losses and medical expenses and lost wages and interest" on the other. Mr. Sozanski asserted that State Farm then assigned the Ontario claim number to the file as of 4:30 p.m. on January 17, 1995, barely two days before the expiry of the two-year limit. He maintained that State Farm afterwards paid for chiropractic treatment under that claim number after he completed and submitted the February 6, 1995 application at State Farm's request.⁷

That may well be. However, as that application is dated more than two years after the accident, it is outside the two-year time limit prescribed by the Schedule.

Ms. Westwater's file did not contain the application for benefits dated May 3, 1993 which Mr. Sozanski maintains he hand-delivered to State Farm's Houston office on that date.

Despite the fact that this missing document is the single most important piece of evidence in support of Mr. Sozanski's claim that he applied for statutory accident benefits available to him through his father's Ontario insurance policy with State Farm within two years of the accident, and despite the fact that State Farm maintains it never received the document, and despite the fact that Mr. Sozanski undertook to provide all documents relevant to his case to State Farm at the pre-hearing held January 6, 2003 and presumably has had the document in his possession all along, Mr. Sozanski chose to wait until the morning of the preliminary issue hearing to e-mail this document to the offices of the Financial Services Commission.

The format in which Mr. Sozanski chose to submit this particular piece of self-serving evidence renders it impossible to determine whether the document is authentic. There is no evidence whatsoever that State Farm ever received it. I have no reason to doubt Ms. Westwater's evidence that the document was not in State Farm's file, but several reasons to doubt Mr. Sozanski's testimony that he intended to, and in fact did, apply to State Farm for Ontario statutory accident benefits on May 3, 1993.

Firstly, it is clear from the Report of Mediator dated June 22, 2000, which forms part of the arbitration record, that Mr. Sozanski has been aware since at least that time that State Farm was relying on the defence that it never received an application for benefits from him within two years after the accident. I find Mr. Sozanski was aware at least from the time of the pre-hearing that State Farm did not receive the package of 76 documents he claimed he sent it in September 2001, which supposedly included the May 1993 application. Given the crucial importance of this document to his case, Mr. Sozanski's excuse for not providing the document earlier, that State Farm should have had the document in its file in the first place or in any event after he sent it to them in 2001, in the face of State Farm's denial that it had the document, is not only lame but undermines his credibility. This is a difficulty Mr. Sozanski could easily have remedied by producing this and other documents to support his case well before this hearing.

Secondly, I find that letters sent to Mr. Sozanski from State Farm's Texas office on March 9, April 16 and June 11, 1993 belie Mr. Sozanski's assertion that he intended all along to claim statutory benefits under his father's Ontario policy.⁸ These letters indicate State Farm paid medical expenses submitted by Mr. Sozanski under the Texas claim number, and referred to it as his "pending liability claim." I find State Farm was not paying medical benefits under Mr. Sozanski’s Ontario policy because liability terminology would have no meaning under the statutory no-fault benefits scheme in place in Ontario at that time. I find it unlikely, therefore, that he applied for Ontario benefits as he alleges in May 1993.

Thirdly, these letters indicate that State Farm was unable to contact Mr. Sozanski for long periods, which suggests to me he was not vigorously pursuing his claims in the two years after the accident.

Lastly, a fourth letter dated April 5, 1994, from Karen Gresham, Senior Claim Representative for State Farm in Houston, further supports my finding that Mr. Sozanski likely did not submit an Ontario claim within two years of the accident:⁹

I am writing in regard to the recent conversation I had with you on April 4, 1994. At that time, I stated that my offer of $7,500 would stand and I would be no longer accepting any of your bills as we would not be paying for them. I also gave you the Statute of Limitations on this file which is two years from the date of your original loss. We will be holding the claim open for you until January 19, 1995, at which point if the claim has not settled by that date, we will close this claim...

Again, I find the "Statute of Limitations" referred to is clearly American, and there is nothing to indicate in this or in any of the previous letters, that State Farm was treating Mr. Sozanski's claim as a claim for statutory benefits under Ontario law. The lack of evidence of any responses on the part of Mr. Sozanski to these letters, either in writing or other, to support his assertion that he intended all along to claim statutory benefits under Ontario law, suggests to me that this is a self-serving assertion made in hindsight, after State Farm refused to continue benefits and he realized he had missed (or was about to miss), the two-year time limit for claiming benefits under the Ontario policy.

I further find that this letter clearly indicates that both parties were hoping to settle the claim. I find it reasonable to infer that Mr. Sozanski did not accept the settlement, and, realizing the two-year time limit was fast approaching, submitted a claim for statutory accident benefits under the Ontario no-fault scheme on February 6, 1995, missing the time limit by more than two weeks.

Although Mr. Sozanski testified that the decision to treat his claim as a Texas claim was State Farm's, I was presented with no evidence that this was the case, or that such a decision could, or would, be made without the consent of the insured person. Mr. Sozanski presented no evidence to support his testimony that he first notified a State Farm agent in Ontario of the accident, or that he intended to apply for benefits available to him through an Ontario policy in the two years after the accident. I find it more likely than not that Mr. Sozanski chose to pursue his claim through the other driver's State Farm policy.

I further find no evidence of any action on the part of State Farm that would prevent or delay the running of the two-year time limit. Based on the preponderance of the evidence presented, I find it more likely than not that Mr. Sozanski, unfortunately, waited until it was simply too late to apply for statutory accident benefits under the Schedule.

Accordingly, I find that Mr. Sozanski's claim is invalidated by subsection 22(2) of the Schedule and he is therefore barred from proceeding to arbitration. His application for arbitration is dismissed.

EXPENSES:

Each party shall bear its own expenses of the arbitration. Although Mr. Sozanski did not conduct his case according to the rules set out in the Code, resulting in inefficiency, delay and unnecessary expense to State Farm, I took into account the facts that he was not represented, the issue in dispute in this preliminary hearing was of considerable importance to him, State Farm's defence was not complex, and the hearing, when it did take place, did not involve an undue amount of time. For those reasons I decline to award State Farm its expenses of this proceeding.

September 23, 2003

Susan Sapin Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 145

FSCO A00-000971

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TERRY SOZANSKI

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:

1. Mr. Sozanski's claim for statutory accident benefits is invalidated by subsection 22(2) of the Schedule. Accordingly, Mr. Sozanski is not entitled to statutory accident benefits under the Schedule as a result of his January 19, 1993 motor vehicle accident, and is barred from proceeding to arbitration on his claims.

2. Mr. Sozanski's application for arbitration is dismissed.

September 23, 2003

Susan Sapin Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents Before January 1, 1994, Regulation 672 of R.R.O. 1990, as amended by Ontario Regulations 660/93 and 779/93.
2. 2Letter of Arbitrator Renahan to the parties dated April 22, 2003.
3. 3Exhibit 11
4. 4Exhibit 11
5. 5Exhibits 9 and 10
6. 6Exhibit 7
7. 7One of the documents relied on by Mr. Sozanski to support this claim was a "payment transmittal" to him from State Farm dated May 17, 1995 in the amount of $4,959 (Exhibit 10). This was one of the two documents Mr. Sozanski e-mailed to FSCO the morning of the preliminary issue hearing. I find this type of document, submitted electronically, inherently unreliable as it is impossible to determine if it has been altered from its original state. I place no weight upon this document.
8. 8Exhibits 2, 3 and 4
9. 9Exhibit 12