Neutral Citation: 2003 ONFSCDRS 181
FSCO A02-001057
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
C.R.
Applicant
and
LOMBARD GENERAL INSURANCE COMPANY OF CANADA
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
Lawrence Blackman
Heard:
May 29 and June 13, 2003, at the Financial Services Commission of Ontario offices in Toronto.
Written submissions were received on June 9, 2003.
Appearances:
Wendy Moore Johns for C.R.
Tracy L. Brooks for Lombard General Insurance Company of Canada
Issues:
This is a story about fault, which may seem odd at first, as this case involves a first-party insurance claim, and first-party automobile insurance has been characterized as a no-fault system.
Due to the very personal nature of certain facts pertaining to the Applicant's mother, I asked the parties if they had any objection to anonymizing the names of the Applicant and his mother. Neither party objected and, accordingly, their names have been anonymized.
On December 18, 2000, C.R. was a pedestrian when struck by a private bus. The bus was insured by Lombard General Insurance Company of Canada ("Lombard"). In November 2001, C.R. applied to Lombard for statutory accident benefits payable under the Schedule1 Lombard denied C.R.'s claim, citing his late application for benefits in the absence of a reasonable explanation.
Mediation failed to resolve this dispute. Accordingly, C.R. 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 issues now before me are:
Is C.R. excluded from proceeding to arbitration by operation of subsection 50(a) and sections 31 and 32 of the Schedule?
Is either party liable to pay the other party's legal expenses in respect of this preliminary issue hearing, pursuant to subsection 282(11) of the Insurance Act?
Result:
C.R. is not excluded from proceeding to arbitration.
If the parties cannot agree on the expenses of this preliminary issue hearing, they may request an appointment for a determination of same in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001).
EVIDENCE:
I make the following factual findings based on the oral and written evidence received and the Agreed Statement of Facts filed:
C.R. was born on October 13, 1982 and, hence, had turned 18 a couple of months before the accident. C.R. was then in Grade 11 and was living with his mother, K.R., and his much younger brother. K.R. has been separated from the boys' father for over twelve years. In addition to being the boys' care provider, K.R. was also their financial provider, working two jobs at the time of the accident. The boys' father had provided only sporadic child support. C.R. had been employed part time during the school year as well as working during the summer months. C.R. did not contribute to the household expenses.
At approximately 9:45 p.m. on December 18, 2000, C.R. was walking his dog across King Street West in Toronto with a friend, when there was an exchange of racial words with the driver of a privately owned bus. The two young men punched the windows of the vehicle. The driver accelerated the bus, running over and killing the dog and injuring C.R.
As a result of the accident, C.R. sustained, amongst other injuries, a fracture of his right zygomatic arch (cheek), a head injury with facial abrasions and lacerations, a fracture of the right scaphoid (wrist) bone, a chest wall contusion, a lumbo-sacral strain, headaches, dizziness and short-term memory loss. He was taken by ambulance to St. Joseph's Health Centre. He was discharged the next day. On March 27, 2001, surgeons excised the part of his eyebrow ring which had become embedded near his right eyelid.
Neither C.R. nor his mother have ever owned a car nor have they ever had any automobile insurance. C.R. did not know the insurer of the bus.
After his discharge from hospital, K.R. took several weeks off work to care for her son, which included assisting him eating, dressing, cooking, getting in and out of bed, getting to the toilet, getting into the shower, making sure he got to his medical appointments, getting his medication and attending to his injuries. C.R. was in significant pain and in significant emotional distress, especially over the death of his dog.
C.R. was charged with mischief following this accident. K.R. found a lawyer to represent her son for this criminal charge. There were many court attendances by C.R. K.R. would make sure her son attended, as she was concerned that he would be incarcerated if he failed to appear. K.R. would, especially early on, accompany her son to court for moral support. After numerous attendances at court, the criminal charge was withdrawn against C.R. Criminal charges against the bus driver are still pending.
Because of her financial responsibilities, K.R. returned to work in mid-January 2001, earlier than she wished. She made arrangements that either her mother or a friend would take care of C.R. in her absence. K.R. was not aware at that time that there was an insurance company that was responsible for paying her son's medical expenses.
In February or March 2001, C.R. went back to high school. By May 2001, he was taking part in gym activities as well as he could manage. C.R. dropped out of school in the fall of 2001. I accept the evidence of Dr. L.M. Picard, neurologist, contained in his December 10, 2001 consultation note that C.R. still appeared to be suffering the residua of his accident, which he presumed included a head injury which had resulted in memory difficulties.
Some time prior to April 4, 2001, K.R. retained the law firm of Thomson, Rogers regarding civil aspects of this accident. On April 4, 2001, Thomson, Rogers obtained the motor vehicle accident report pertaining to the accident. The report noted Lombard as the insurer of the involved vehicle, under Policy Number CBP0851276.
Prior to this accident, due to the pressures of raising two boys on her own, working a day and a night job to support her children, running the household (including paying bills and attending to household paperwork) and dealing with the loss of her brother a year and a half before the accident, K.R. was very stressed and turned to alcohol. After the accident, dealing with her son's injuries and attending to his legal matters, especially the pressing criminal legal matters, increased her stress and her drinking.
On May 1, 2001, C.R. began physiotherapy at Kings Professional Rehabilitation Centre ("Kings"). On June 12, 2001, Lombard received a completed treatment plan from Kings, dated May 1, 2001. As testified by Lombard's representative, Mr. N. Rizakos, I find that the Policy Number CBPO851276 as well as the words "new AB" were probably inserted on the treatment plan by someone at Lombard, as they have a different script and a different colour than the writing on the original document. The form sets out, amongst other things, the Applicant's full name and mailing address. As agreed by Mr. Rizakos, I find that Lombard was certainly alerted by this letter to a possible claim from C.R.
I accept the evidence of Mr. Rizakos that Lombard's own insured never reported to the Insurer any physical damage to the bus. I have no evidence that the physical injuries sustained by C.R. were ever reported to Lombard by the owner or operator of the bus.
On May 14, 2001, C.R.'s family physician, Dr. R. Ramroopsingh, completed an invoice addressed to Lombard Insurance in the amount of $81.18 for reviewing C.R.'s chart and completing a form and/or photocopying medical records. I received no evidence whether, and if so, when, Lombard received this form.
I do not accept that any significant steps were taken by the adjuster then handling this file to contact C.R. by telephone after receiving the correspondence from Kings on June 12, 2001. The only evidence before me of any such attempts was a letter dated June 3, 2002, which purports that the Insurer tried to reach the Applicant, but without success. There is no contemporaneous record of same. No one handling the file at the time in question was called to testify.
I accept the evidence of Mr. Rizakos, whom I found to be a very credible and fair-minded witness, that it is important that an insurer receive early notice of a claim for accident benefits as they may need to investigate or obtain a statement from the insured person. Further, as insurers are regulated by the Schedule, they need to get the appropriate forms to the insured as quickly as possible to ensure the prompt payment of benefits. Mr. Rizakos testified, and I accept, that after receiving Kings' treatment plan on June 12, 2001, Lombard never arranged for an insurer's medical examination, nor was there anything preventing the Insurer from arranging such an examination.
On July 18, 2001, Lombard forwarded to C.R. an accident benefits application package (consisting of a covering letter and six enclosed forms, namely an Application for Accident Benefits, an Employer's Confirmation of Income, a Disability Certificate, Permission to Disclose Health Information, an Activities of Normal Life form and a Treatment Plan) requesting the completion and return of the package within 30 days of receipt. The covering letter stated that should the Accident Benefits form not be received within 30 days after receiving the package, Lombard would proceed to close C.R.'s Accident Benefits file.
Mr. Rizakos testified, and I find, that there is no explanation in the adjuster's notes as to why it took Lombard 36 days to respond to the form from Kings. Mr. Rizakos testified that the 36 days from the date Lombard received the treatment plan to the date it responded cannot be considered to be prompt.
K.R. received Lombard's July 18, 2001 letter. She supposes that she read it. She would have opened the letter even had it been addressed to C.R. She did not respond to the letter because she did not want to deal with it. She did not show her son the letter as he would get agitated when reminded of the trauma and she wanted to protect him.
K.R. never told her son to deal with the accident himself, as he was not able to do so. I found C.R. to be neither a self-sufficient adult nor mature for his age even when he came to testify, which was more than two years after the accident. I accept C.R.'s evidence that as far as he was concerned, "insurance stuff" was "a pain in the butt;" that being just 18 he felt that it was not his responsibility or his department. He left these matters to his mother.
On September 19, 2001, having not received the completed application for accident benefits, Lombard wrote C.R. confirming that they had not received the required forms, that as C.R. did not wish to present an accident benefits claim, that they would be putting their file in abeyance for 30 days after which they would proceed to close their file. Mr. Rizakos testified, and I agree, that no where in the September 19, 2001 letter did Lombard indicate that if the application for accident benefits was not received within 30 days that C.R. would not be entitled to benefits.
On November 22, 2001, Thomson, Rogers wrote Lombard advising that they had been retained by C.R. and enclosed a completed application package. That letter was received by Lombard on November 28, 2001.
On November 29, 2001, by telephone and by correspondence with Thomson, Rogers, Lombard's then adjuster requested an explanation as to why the claim was not reported until approximately six months after the accident and why the completed application package was not submitted to Lombard within 30 days of receipt.
By letter dated December 7, 2001, Ms. Johns of Thomson, Rogers advised Lombard that the application was delayed because of efforts to determine the owner, operator and insurer of the bus that struck their client. Ms. Johns indicated that her firm first thought that Faber Insurance Adjusters was the insurer of the bus and wrote them. When her firm received the motor vehicle accident report noting Lombard as the insurer, she states that her firm proceeded to advise their clients of the proper parties involved. No explanation is provided as to why her firm did not put Lombard on notice immediately or shortly after learning of its status.
On January 29, 2002, Lombard denied C.R.'s application for accident benefits on the basis that he had failed to submit the completed application forms to Lombard within the requisite 30 days and had failed to provide a reasonable explanation for same. There was a specific denial of non-earner benefits, caregiver benefits, medical and rehabilitation benefits, attendant care benefits, case management benefits, lost education benefits, housekeeping and home maintenance benefits and replacement or repair of damaged clothing and other items.
The Application for Mediation herein was received by FSCO's Dispute Resolution Group on March 25, 2002. C.R. sought $2,370 for physiotherapy expenses, $1,570 for attendant care benefits, and $562.56 for damaged clothing and other items. Mediation failed on June 14, 2002. C.R. commenced arbitration proceedings on June 14, 2002.
SUBMISSIONS AND ANALYSIS:
Subsection 50(a) of the Schedule provides that an insured person shall not commence a mediation proceeding unless he or she has notified the insurer of the circumstances giving rise to a claim for a benefit and has submitted an application for the benefit within the times prescribed by Part X. The parties agree that it follows from this provision that:
(a) failure of the insured person to comply with the time lines under Part X means that the insured is excluded from proceeding to arbitration; and,
(b) exclusion from arbitration means exclusion regarding any claim at any time under the Schedule.
The time line for notification by a "person who wants to apply for a benefit" is set out in subsection 32(1) of the Schedule, namely, "within 30 days after the circumstances arose that gave rise to the entitlement to the benefit, or as soon as practicable thereafter." Pursuant to subsection 32(2) of the Schedule, the insurer shall "promptly" provide "the person" with the "appropriate application forms," a written explanation of the benefits available under the Schedule, information to assist the person in applying for benefits and information regarding specific elections. Subsection 32(3) of the Schedule states that "the person" shall submit an application for the benefit to the insurer within 30 days after receiving the application forms.
Subsection 31(1), however, provides that the above time limits do not disentitle "the person" to a benefit if the person has a "reasonable explanation."
As set out in Carruthers and Royal & SunAlliance Insurance Company of Canada (FSCO P02-00015, April 10, 2003), these provisions raise the following issues:
(1) Notification - s. 32(1)
(a) did C.R. notify Lombard within 30 days of the day upon which the circumstances arose that gave rise to the entitlement to the benefit?
The parties agree that on December 18, 2000 the circumstance arose that gave rise to C.R.'s entitlement to the benefit. The parties agree that C.R. did not notify Lombard within 30 days of December 18, 2000.
(b) did C.R. notify Lombard as soon as practicable thereafter?
The parties agree that it was not "practicable" for the Applicant to have notified Lombard before April 4, 2001, being the date C.R.'s counsel received the relevant motor vehicle accident report.
The parties disagree as to when Lombard was first properly notified as required under subsection 32(1). Lombard submits that it was first notified by C.R. about this accident by correspondence dated November 22, 2001 from C.R.'s counsel, who indicated that they had been retained by the Applicant and enclosed the completed application package.
The Applicant submits that Lombard received the requisite notice no later than June 12, 2001, when Lombard states that it received the Kings' treatment plan. Lombard argues that it is unreasonable to impute notice simply on the basis of an initial contact from a third party to the Insurer.
I find that on June 12, 2001 C.R. complied with his obligation to notify Lombard.
Notwithstanding that she was dealing with the prior 1994 Schedule2 I agree with Arbitrator Joachim, in Johnson and GAN Canada Insurance Company (FSCO A99-000290, December 9, 1999), that the time limit for advising the insurer of an intention to make a claim for accident benefits must be interpreted in a purposive fashion. The purpose of notice most importantly triggers the opportunity of the Insurer to exercise its rights and obligations under the Schedule. Kings' treatment plan sets out the name and full address of the Applicant. It addresses impairment disability. It provides treatment plan goals. It details the treatment plan itself, including specifying the estimated cost of $3,620.
In my view, the Kings' treatment plan met both of the purposes Director Draper indicated in Carruthers (supra) that notice was intended to provide. Firstly, it alerted Lombard to not merely a potential claim but a concrete one, thus allowing it to evaluate the situation at an early stage. Secondly, it provided Lombard with sufficient information to, in fact, initiate the application process "by triggering the insurer's obligation to provide the appropriate forms and information about the available benefits and how to obtain them."
Further, the Insurer's evidence was that based on this letter, they endeavoured to contact the Applicant by telephone. The evidence of the Insurer was also that nothing prevented them from subsequently arranging an insurer's medical examination, should they have so wished. I received no evidence that the letter failed to trigger any insurer rights under the Schedule.
This notice provision (as in Johnson) does not specify the detail which must be provided. I agree with Arbitrator Joachim that given the brevity of the time period and the consequences to the insured, the requirements should not be interpreted too strictly. I agree with Director Draper in Carruthers that given accident benefits are payable on a first-party basis, regardless of fault, the application process should not present undue obstacles. I also concur with Arbitrator Evans in Carruthers and Royal & SunAlliance Insurance Company of Canada (FSCO A99-000923, May 30, 2002) that the initial notice does not require a high degree of specificity. I note that the provision does not even require that the notice be in writing.
The Insurer submits that the correspondence from Kings, a third party, cannot be imputed to C.R. To accept this premise would also mean that notice from C.R.'s mother would have been invalid, given that K.R. had no greater status in law than Kings. I agree with Director Sachs in Oliveira and Zurich Insurance Company and The Personal Insurance Company of Canada (OIC P-002691, March 21, 1994), that the legislation "must be interpreted within the entire scheme of statutory accident benefits, which is flexible and remedial."
I also agree with Arbitrator Renahan in Kuronen and Allstate Insurance Company of Canada (OIC A-951897, December 29, 1995) (upheld on appeal OIC P96-000026, January 31, 1997), that such notice provisions can be interpreted similarly to the remedial "relief from forfeiture" section 129 of the Insurance Act, that is:
Where there has been imperfect compliance with a statutory condition as to the proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it considers just.
To decide otherwise regarding notice would stand in the face of the letter from Mr. Michael P. Reid, AB Technical Specialist with Lombard, to Ms. Johns dated June 3, 2002, that:
It is the position of Lombard that the first notification it received regarding the Applicant's potential Accident Benefits claim was when it received a Treatment Plan from Kings Professional Rehabilitation Centre on June 12, 2001.
Moreover, Lombard's letter of July 18, 2001 does not indicate any problem with inadequate notice and their letter of November 29, 2001, in fact, queries why "this claim was not reported until approximately 6 months after the accident," i.e. June 12, 2001 (emphasis added). Lombard's position also stands in the face of Mr. Rizakos' testimony that the treatment plan received June 12, 2001 first alerted Lombard to the possibility of a claim from C.R. and that Lombard's position had not changed in any way from the June 3, 2002 letter noted above.
In my view, the real question in this case is whether the notice provided on June 12, 2001 was provided as soon as practicable after Thomson, Rogers received the motor vehicle accident report on April 4, 2001 and, if not, whether there is a reasonable explanation.
The phrase "as soon as practicable" is not defined in the Schedule. The Concise Oxford Dictionary (Oxford University Press, 1990) defines "practicable" as "that can be done or used," or "possible in practice." The phrase "as soon as practicable" would seem to imply some measure of flexibility. I note the comment of Arbitrator Evans in Carruthers that the phrase "or as soon as practicable thereafter: "
would apply even more forcefully in the complicated situation where [the applicant] did not have his own insurance and would have to seek it from another insurer."
I agree that the onus is on the Applicant that notice was given "as soon as practicable." The Applicant, however, failed to advance any argument specifically addressed to whether he provided notice "as soon as practicable." Rather, the Applicant submitted that this issue melded into the question of reasonable explanation. As I find that these are two distinct questions, I find that C.R. did not provide notice "as soon as practicable" and hence did not comply with the notice time limit in subsection 32(1).
(2) Pursuant to subsection 31(1), does C.R. have a reasonable explanation for not complying with subsection 32(1)?
I agree that the onus is on the Applicant to provide a reasonable excuse for not complying with the notice time limit in subsection 32(1); see Kaur and Liberty Mutual Insurance Company, (FSCO P99-00060, June 7, 2000).
Initially, the Applicant, through his counsel, provided an excuse by letter dated December 7, 2001. The explanation that at first they thought that Faber Insurance Adjusters was the insurer takes one only to April 4, 2001. The comment that they proceeded to advise their clients of the proper parties involved does not address C.R.'s failure to notify Lombard prior to June 12, 2001.
Hence, a further excuse was provided at the hearing, namely that this youthful Applicant became withdrawn following the accident as a result of his emotional and physical injuries, and relied on his mother to handle this civil matter, which she neglected, in part as a result of her excessive use of alcohol.
I agree with the Insurer that an explanation must be real, genuine and truthful. I found K.R. to be a highly responsible person. To her great credit, after this accident, this single mother took care of her son, returned to evidently both of her pre-accident jobs, ensured proper care for C.R. in her absence from the home, ensured his legal representation for the criminal charge, retained counsel for the civil matter and continued to care for both children and for the household.
I agree that the test of a "reasonable excuse" is both a subjective and objective test that should take account of both personal characteristics and a "reasonable person" standard. I agree with Arbitrator Evans in Carruthers that a reasonable excuse requires a reasonable explanation. I find that I have the duty to consider all of the evidence before me and to determine whether there is a "reasonable excuse" for failing to notify the Insurer between April 4 and June 12, 2001, a period of little more than two months.
I look first at the personal characteristics of C.R. When he gave his evidence before me, C.R. struck me as a rather immature 20-year old. At the time of the accident he had just turned 18. He was still in grade 11. He was living at home, as he is now. He worked at jobs typical of what a teenage high school student might do. He was not contributing to household expenses.
For such an individual, I find that it was reasonable to turn to someone older for help, such as his mother, which he did. I further find, given the complexity of insurance that it was reasonable for K.R. to turn to a law firm for help, which she did. Thomson, Rogers was retained prior to April 4, 2001. Ms. Johns elicited in chief that K.R. did not respond to correspondence allegedly sent to her by the law firm. I received no evidence or submission as to why Thomson, Rogers did not notify Lombard directly, immediately after April 4, 2001, why it would not be their responsibility to do so to protect their client, nor why they would require specific prior instructions to do so.
Director Draper, on appeal in Carruthers, confirmed that ignorance of the law, alone, is not an excuse. In Carruthers, Arbitrator Evans stated that, simply saying "I relied on counsel" is no different from saying that "I relied on myself," and, absent other circumstances, is no explanation at all.
However, Arbitrator Evans indicated that one circumstance that could serve as an explanation is that the applicant monitored the advancement of his case and then took steps to retain other counsel when he found that counsel were not acting in his interests. Arbitrator Evans stated that over "a long enough period, such as a year in this case, I find that an applicant has a responsibility to take an interest in the advancement of his or her own case and cannot simply leave everything to the agent."
In this case, it did not take a year to notify Lombard. Rather, some two months after the correct insurer had been identified, Lombard was notified by Kings. I received no evidence as to how Kings ascertained that Lombard was the insurer, but given that it was C.R. who was attending the clinic, I am persuaded and do find that C.R. and/or K.R. were crucial links in that process. I am further persuaded and do find that such a process was necessitated in the absence of their counsel providing appropriate notice to Lombard. In my view, C.R. and K.R. acted reasonably.
I agree with Arbitrator Renahan in Kuronen (supra) that:
In my opinion, the reasonable excuse advanced by the claimant must be examined with regard to all the circumstances connected to the delay, including prejudice to the insurer, hardship to the claimant and whether it is equitable to relieve against the consequences of the failure to comply with the time limit.
I also agree with Arbitrator McMahon in Makrikostas and Allianz Insurance Company of Canada (FSCO A98-001300, May 13, 1999) that:
The passage of time will virtually always lead to some prejudice, hence the notice requirement. At the same time, the inclusion of a relief provision indicates that the drafters did not intend to automatically preclude all late claims merely on the basis of the prejudice inherent in the late notice.
In this case, any prejudice to Lombard of a delay of some two months, from April 4 to June 12, 2001, pales in relationship to this young Applicant being barred from all claims under this policy of insurance.
In Kuronen, the applicant's stay in jail or on the street, his addiction to alcohol and drugs in addition to his suffering the effects of his accident injuries and the break-up of his marriage, were found to be reasonable excuses for a delay of almost four years from the accident to the date of notice. In Deol and Liberty Mutual Insurance Company (FSCO A99-000292, July 28, 2000), the age of the 18-year old Applicant, his lengthy hospital stay, his unfamiliarity with the scheme of accident benefits available together with reliance on incorrect advice of an insurance agent were reasonable excuses for a delay of almost four years from the accident to the date of notice.
This case is more complicated, C.R. not having his own insurance coverage. I also find as determining factors C.R.'s youth, his efforts to find representation, the further steps taken to provide notice on June 12, 2001 in the absence of counsel's assistance, an ultimate delay of only two months, the absence of significant prejudice to Lombard and the hardship to the Applicant. In light of these combined factors, I find that C.R. had a reasonable explanation for failing to comply as soon as practicable in giving notice. I agree with Arbitrator Renahan in Kuronen that:
One of the purposes of the no-fault accident benefit system is to provide defined benefits to insured victims of motor vehicle accidents in a timely manner. Another purpose is to provide a speedy, informal, convenient and inexpensive process to resolve disputes as to entitlement and amount of benefits. Both purposes of the legislation would be frustrated if [an applicant's] only recourse was to sue his former lawyer for negligence.
3. Provision of documents
(a) Did Lombard promptly provide the appropriate application forms and other required information?
Subsection 32(2) of the Schedule requires an insurer to "promptly" provide the insured with the appropriate application forms as well as a written explanation of the benefits available under the Schedule, information to assist the person in applying for benefits and information on any possible elections. The Schedule does not specifically state at what point this information is to be provided promptly by the insurer.
C.R. argued that the 36 days it took Lombard to respond to the Kings' treatment plan was not prompt. Lombard submits that in the circumstances, its response within 36 days of receiving the correspondence from Kings was reasonable in the circumstances.
The word "promptly" is not defined in the Schedule. The Concise Oxford Dictionary (Oxford University Press, 1990) defines the adjective "prompt" in the context of something done readily, at once, forthwith or with alacrity. I agree with the evidence of Mr. Rizakos that 36 days for Lombard to respond to the treatment plan from Kings, received by them on June 12, 2001, was not prompt. I am not sure, however, what, if anything, turns on this in the context of this case.
I did, however, bring to the attention of counsel Arbitrator Leitch's decision in Horvath and Allstate Insurance Company of Canada (FSCO A02-000482, June 9, 2003) regarding what information must be provided to an insured person. I allowed a further opportunity for submissions from counsel on this point.
Horvath held that the requirement on the insurer to promptly provide the insured person with information to assist that person in applying for benefits must be interpreted and applied in light of the Supreme Court of Canada decision in Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] S.C.J. No. 34. Arbitrator Leitch held that the consumer protection principles confirmed in that decision should apply to notice provisions as well as to limitation periods. Arbitrator Leitch agreed that "the goal in both cases is the same: to protect consumers by ensuring that they are provided with information which will assist them to avoid having their claims rejected or dismissed, not on their merits, but because they are out of time."
I agree with Arbitrator Leitch that such information includes "information about the potential consequences of failing to either comply with [the time limit] or to provide a reasonable explanation for non-compliance. Without this information, insured persons may think that the only consequence of their own delay will be delay in receiving benefits."
Lombard submits that neither Horvath nor Smith apply to this case because:
C.R. was represented by counsel throughout; and,
further information would not have made any difference because K.R. was not reading her mail.
I note that in the first level decision of Smith v. Co-operators General Insurance Co. [1999] O.J. No. 2484, MacKinnon J. states that "[t]he plaintiff was at all times represented by counsel and accordingly, should have been aware of the two-year limitation." Nonetheless, the Supreme Court of Canada, in determining in that case that the limitation period had never begun to run, held that courts are obliged "to impose bright-line boundaries between the permissible and the impermissible without undue solicitude for particular circumstances that might operate against claimants in certain cases."
In my view, the duty on the insurer applies whether or not the applicant was represented and whether or not one might speculate that the further information would not have been read. I find the appeal decision in Kuchiak and Wawanesa Mutual Insurance Company (FSCO P97-00025A, December 8, 1997) consistent with the Supreme Court of Canada approach. In Kuchiak, Director's Delegate Rotter stated that:
The arbitrator found that, in this case, Ms. Kuchiak's counsel, and not the insurer, had the primary responsibility to inform Ms. Kuchiak of her rights, and to advise and assist her in making the appropriate choices in applying for statutory accident benefits. Thus, she did not feel it was appropriate to impose any sanction for Wawanesa's breach of its duty to provide information.
In my opinion, this approach does not adequately address the issue of an insurer's responsibility to comply with its obligations under subsection 59(2). The S chedule mandates that information be forwarded to applicants for benefits. It does not create an exception for applicants who are represented by counsel. Accordingly, I conclude that Wawanesa breached its obligation to provide an explanation of the benefits available and information under subsection 59(2).
I also conclude that, here, Ms. Kuchiak may have been prejudiced by Wawanesa's failure to send the required information. Had she received an informational brochure3, she might well have been immediately alerted to the fact that it was open to her to apply for the dependant's benefit, as well as the spousal benefit.
I find that Lombard failed to provide C.R. with sufficient information to assist him in applying for benefits, namely, clearly and specifically in straightforward language informing him that if he did not submit his application within 30 days after receiving the forms, not only would Lombard close its file, but that he would also be barred from receiving any statutory benefits for all time.
(b) what are the consequences of Lombard not complying with subsection 32(2)?
In Smith, the Supreme Court of Canada decided that as proper information was not given by the insurer to the insured, a valid refusal had not been given, and hence the limitation period did not begin to run.
In Horvath, Arbitrator Leitch held that:
Allstate did not discharge its obligation under section 32(2)(c) to inform Ms. Horvath of the potential consequences of her failure to comply with the time limit imposed by section 32(3) or to provide a reasonable explanation for non-compliance. I conclude that Allstate is not, therefore, entitled to rely upon that time limit to defeat Ms. Horvath's claims for statutory accident benefits.
Section 32 of the Schedule implicitly sets out the consecutive steps for claiming benefits. It is the applicant's initial notice obligation which implicitly triggers a prompt obligatory response by the insurer to provide, amongst other things, information to assist the applicant in applying for benefits. The consumer protection intent of the legislation requires such information to be sufficient to allow an insured, in an informed manner, to submit his or her application. Implicitly, the applicant's obligation to submit an application within thirty days of receiving the application forms includes the prerequisite that the applicant has first received information from the insurer necessary to complete those forms and to appreciate the consequences of not submitting the forms properly or in a timely manner. To find otherwise reduces the insurer's obligations under paragraphs 32(2)(b) to (d) to mere impotent suggestions as to best insurer practices.
Hence, I find that the time limit for an applicant to submit an application to the insurer begins to run only when the insurer has complied with its requirements under subsection 32(2). As such proper information was not provided by Lombard, I find that the time limit for C.R. to respond never started to run. Accordingly, I find that subsection 32(3) is not a bar to C.R.'s arbitration claim.
(4) Application for Benefits
(a) Did C.R. submit an application for the benefit to Lombard within 30 days after receiving the application forms?
Given my finding above, it is not necessary to deal with this question.
(b) If not, does he have a reasonable explanation for failing to comply with this time limit?
In the alternative, if I am wrong in my finding that the subsection 32(3) time limit never began to run, I find that the failure of the Insurer of properly setting out the consequences to their insured of failing to comply with subsection 32(3) constituted a reasonable explanation for C.R. failing to comply with this time limit.
EXPENSES:
Having now determined the preliminary issues in dispute, if the parties cannot agree on the entitlement to or the amount of the expenses of this proceeding, they may request an appointment for a determination of same in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001).
December 22, 2003
Lawrence Blackman
Arbitrator
Date
Neutral Citation: 2003 ONFSCDRS 181
FSCO A02-001057
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
C.R.
Applicant
and
LOMBARD GENERAL INSURANCE COMPANY OF CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
C.R. may proceed with his arbitration.
If the parties cannot agree on the expenses of this preliminary issue hearing, they may request an appointment for a determination of same in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001).
December 22, 2003
Lawrence Blackman
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.
- The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
- Such as the one prepared by the Insurance Bureau of Canada and approved by the OIC in preparation for the implementation of Bill 164 (the new statutory scheme). The I. B. C. prepared a series of pamphlets providing the information and explanations required under subsection 59(2). The pamphlet on death benefits specifically notes that a dependant's claim can be made in addition to a spousal claim. [footnote in original]