Neutral Citation: 2003 ONFSCDRS 155
FSCO A02-000335
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
MICHAEL ALPHONSE MEEHAN
and
ANNE BEATRICE MEEHAN
Applicants
and
WAWANESA MUTUAL INSURANCE COMPANY
Insurer
DECISION ON A MOTION FOR INTERIM BENEFITS
Before:
William J. Renahan
Heard:
October 17, 2003, by teleconference.
Appearances:
Donald R. Good, Barrister and Solicitor, for Mr. and Mrs. Meehan
Andrew K. Lee, Barrister and Solicitor, for Wawanesa Mutual Insurance Company
Issues:
I advised the parties of my decision in this matter on October 24, 2003. Following are my reasons.
The Applicants, Michael Alphonse Meehan and Anne Beatrice Meehan, were injured in a motor vehicle accident on September 26, 1999. They applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.1 Wawanesa terminated Mrs. Meehan's weekly income replacement benefits on August 12, 2002 and Mr. Meehan's weekly income replacement benefits on September 2, 2002. The parties were unable to resolve their disputes through mediation, and Mr. and Mrs. Meehan applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Mr. and Mrs. Meehan brought a motion pursuant to section 67 of the Dispute Resolution Practice Code — Fourth Edition for interim benefits to be paid to them pending the resolution of their dispute with Wawanesa.
The issues on this motion are:
Is Mr. Meehan entitled to interim income replacement benefits pursuant to section 279(4.1) of the Insurance Act?
Is Mrs. Meehan entitled to interim income replacement benefits pursuant to section 279(4.1) of the Insurance Act?
Result:
Mr. Meehan is not entitled to interim income replacement benefits.
Mrs. Meehan is not entitled to interim income replacement benefits.
EVIDENCE AND ANALYSIS:
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 criterion the applicant must satisfy for entitlement to an order of interim benefits is that his or her need for an interim determination is urgent and cannot await a full hearing. The second criterion deals with the merits of the case.
As I said in Coutu and Wawanesa Mutual Insurance Company, (FSCO A01-001446, June 10, 2002), 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 now consider the evidence I received on the issue of whether the Applicants have demonstrated that they urgently require an interim determination of their entitlement to income replacement benefits pending a final determination.
Urgency:
The motor vehicle accident occurred on September 26, 1999. In his affidavit, Mr. Meehan deposed that he has constant back, neck and shoulder pain. His treating physician has determined that the accident caused spine and brain injuries and possibly a myocardial injury. In her affidavit, Mrs. Meehan deposed that she has chronic pain and chronic exhaustion. Her treating physician believes that she may have sustained brain injuries. Each claimant deposes that the accident prevents them from completing any activity for which they are suited given their education and experience.
Mr. and Mrs. Meehan operated a dairy farm at the time of the accident. The farm lost money and Mr. Meehan drove a school bus part time to help finance the operation of the farm. The farm operation lost more money after the accident and Wawanesa calculated income replacement benefits on the amount by which the loss increased after the accident. Including part-time income from driving a bus in the calculation, Wawanesa calculated and paid Mr. Meehan an income replacement benefit of $400 per week. It paid Mrs. Meehan slightly less than $400 per week.
Wawanesa refused to pay rehabilitation expenses of about $20,000 and the Meehans applied for arbitration. The rehabilitation issues were scheduled to be heard on September 23, 2002. In the months leading up to the hearing, Wawanesa terminated income replacement benefits for both Mr. and Mrs. Meehan. On September 10, 2002, the Meehans asked for an adjournment of the hearing so that they could apply for a determination that each was catastrophically impaired. Mr. Good submitted that each met the definition of catastrophic impairment and would therefore qualify for rehabilitation benefits in excess of the $100,000 policy limit. Mr. Good said that the Meehans would need about $600,000 to modify the farm to accommodate their disabilities. The request for an adjournment was allowed and the hearing was scheduled for May 5, 2003.
On September 29, 2002, the Meehans' counsel at that time, Mr. Yegendorf, applied for interim income replacement benefits. The motion was scheduled for October 28, 2002 and adjourned because Mr. Yegendorf could not proceed due to a personal emergency. The motion was adjourned to December 13, 2002 and the issues of entitlement to income replacement benefits were added to the hearing. The Meehans retained a new counsel, Edward Bergeron, who advised the Commission he might not be ready for December 13, 2002. Two days before the scheduled hearing of the motion, the Meehans applied for an adjournment. The arbitrator denied the request. At the hearing of the motion, another arbitrator allowed the request for an adjournment and adjourned the motion to February 28, 2003. On February 25, 2003, Wawanesa requested an adjournment on the grounds the Meehans had not produced documentation. The motion was adjourned sine die.
Prior to the scheduled hearing date of May 5, 2003, Mr. Bergeron asked for permission to withdraw. Permission was granted, and a new hearing date was set for July 7, 2003.
Mr. Good represented the Meehans at the hearing which commenced on July 7, 2003 in Ottawa. At the opening, Wawanesa asked for an adjournment because of non-production of documents. With the consent of Mr. Good, the hearing arbitrator adjourned the hearing sine die.
On July 25, 2003, the Meehans applied to Wawanesa for a determination that they each suffered a catastrophic impairment.
Mr. Meehan is 49 and Mrs. Meehan is 45. They support four young children. Their total income is from social assistance and is about $1,090 per month. In April 2003, they applied for relief under the Farm Debt Mediation Act. Mr. Good advised that the process allows farmers to stave off creditors for a maximum of 120 days while they try to settle their debts. In that application, the Meehans state that they have total fixed assets of $326,200 and total current and long-term liabilities of $517,856. Their debts exceed their assets by $189,916. The electricity supplier advised the Meehans that it would issue a service interruption order if the Meehans' electricity bill of $4,860 was not paid by September 30, 2003. At the time of hearing this motion, the Meehans still had electricity
The Meehans are in dire financial circumstances and require a speedy determination of their entitlement to benefits. The question is whether this need for a speedy determination satisfies the first criterion of urgency.
The first hearing was scheduled to commence September 23, 2002. It was to deal with rehabilitation benefits. It was adjourned at the Meehans' request because the Meehans wanted to apply for a determination that they each suffered a catastrophic impairment. The doctor who supported the applications first treated the Meehans on January 14, 2003. I heard no explanation why the Meehans did not complete the application until July 16, 2003, ten months after they asked for the adjournment so that they could apply for such a determination.
On September 10, 2002, a hearing date was set for May 2003. Two weeks later the Meehans applied for interim benefits. I heard no evidence to explain why the Meehans agreed to a hearing date eight months into the future when they claimed an urgent need for a speedy determination.
The last hearing date to determine the Meehans' entitlement to income replacement benefits was scheduled to commence July 7, 2003. The hearing was adjourned with the Meehans' consent because they had not produced documents.
The extraordinary remedy of interim benefits usually prejudices an insurer where an arbitrator later determines that the insured is not entitled to interim benefits and the insurer is entitled to an order for repayment which is unenforceable. In my view therefore, an insured should take all reasonable steps to obtain an ordinary remedy before asking for an extraordinary remedy.
In this case, I find no evidence that the Meehans made any effort to have the hearing in this matter conducted in a timely manner. They agreed to a hearing date eight months into the future at a time when they claimed they urgently needed a determination of entitlement.
In fact, the evidence is that they either delayed or consented to the delay of their hearing. The first hearing was adjourned so that they could apply for a determination that they suffered a catastrophic impairment and they did not make that application until ten months later. At the last scheduled hearing date they appeared and consented to an adjournment because they had not produced documents.
In my view, they have not demonstrated an urgency of such a nature as to entitle them to pursue the extraordinary remedy of interim benefits.
Merits:
Since the Meehans have not made out a case of urgency, it is not necessary or helpful for me to comment on the merits of their cases.
The hearing is scheduled to commence in Ottawa on January 26, 2004.
EXPENSES:
The question of expenses of the motion is deferred to the hearing arbitrator.
November 4, 2003
William J. Renahan
Arbitrator
Date
Neutral Citation: 2003 ONFSCDRS 155
FSCO A02-000335
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
MICHAEL ALPHONSE MEEHAN
and
ANNE BEATRICE MEEHAN
Applicants
and
WAWANESA MUTUAL 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:
Mr. Meehan is not entitled to interim income replacements benefits.
Mrs. Meehan is not entitled to interim income replacement benefits.
The issue of entitlement to expenses of this motion are in the discretion of the hearing arbitrator.
November 4, 2003
William J. Renahan
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, 303/98, 114/00 and 482/01.