Neutral Citation: 2003 ONFSCDRS 30

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FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

QIAN CHEN

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A MOTION FOR INTERIM BENEFITS

Before:

David J. Evans

Heard:

November 28, 2002, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Gary Spector for Mrs. Chen

Joanna M. Chadwick for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Qian Chen, was injured in a motor vehicle accident on March 27, 2001. She applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.¹ State Farm subsequently terminated weekly income replacement benefits (IRBs), and Mrs. Chen seeks their reinstatement from July 19, 2001 and ongoing. The parties were unable to resolve their disputes through mediation, and Mrs. Chen applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Mrs. Chen has brought a motion for interim benefits pursuant to section 279(4.1) of the Insurance Act to be paid to her pending the resolution of her dispute with State Farm.

The issue on this motion is:

Is Mrs. Chen entitled to interim benefits?
Mrs. Chen also claims interest on any amounts owing and her expenses incurred on this motion.

Result:

Mrs. Chen is not entitled to interim benefits.
The issue of expenses is reserved to the hearing arbitrator.

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. This includes the power to award interim benefits.

Interim benefits are payable where, first, the applicant has put forward at least a prima facie case for entitlement based on her health and, second, the applicant's finances create an urgency for the interim order.²

I did not hear evidence about both these criteria because the motion was imperfect: I understand that the Insurer was prepared to adjourn in order to allow Mrs. Chen to perfect the motion, should Mrs. Chen testify about her health, but Mrs. Chen's representative elected to proceed with her simply testifying about her finances, given his view that this alone entitles her to interim benefits. However, I find that her motion must fail in light of the lack of medical information.

Mrs. Chen argued that cases have awarded benefits purely based on financial need, citing in particular the Charles case.³ However, Arbitrator Wilson repeated the proposition that an applicant must provide evidence for both criteria, and he considered Mr. Charles' evidence of his case for entitlement in reaching his decision. The Charles case does not assist Mrs. Chen.

Mrs. Chen also argued that State Farm's failure to comply with section 37 of the Schedule entitles her to interim benefits on that basis alone. She relies on the Fortney case.⁴

Section 37 of the current Schedule sets out the procedure an insurer must follow when stopping or refusing IRBs. Fortney dealt with the similar section 64 in the previous schedule.⁵ However, the situations are different. In Fortney, the insurer had failed to pay benefits pending an assessment by a designated assessment centre (DAC); Mrs. Chen did not request a DAC assessment.

In this case, the closest parallel to Fortney is State Farm's initial non-payment of benefits for the appropriate period after sending its notice of termination of benefits. Its adjuster had sent initial notice on July 19, 2001, but had failed to enclose an OCF-17 (Notice of Stoppage of Weekly Benefits). This was sent on October 3, 2001.⁶ Paragraph 37(3)(a) required State Farm to pay the benefits through to October 17, 2001, but State Farm failed to do so until October 31, 2002.

Nonetheless, unlike in Fortney, by the time of the interim benefits hearing, the insurer had rectified its default. I find Fortney inapplicable on this basis.

Mrs. Chen also argued that the termination notice sent by State Farm was unsigned. I find this a mere technicality.

Mrs. Chen also argued that State Farm had a positive obligation to pay benefits because its notice was defective. She appears to be relying on the Smith v. Co-operators case.⁷

Again, the situations are entirely different. Smith did not deal with an insurer's positive obligation to pay benefits based on the merits of the case; rather, the insurer was not entitled to assert a limitation defence because its notice of termination of benefits was defective. The distinction between an insurer's right to raise a defence and an insured's entitlement to payment of benefits was clearly drawn by Gonthier J. in the very first paragraph of the decision:

[T]here was no proper refusal made and the limitation period did not begin to run. The appellant is not barred from bringing her action. However, I make no conclusion about the merits of her claim, which a trial judge must assess. [Emphasis added]

Accordingly, as Mrs. Chen called no evidence relevant to establishing a prima facie case on the merits of her claim, the motion is denied.

I leave the matter of expenses to the hearing arbitrator.

March 5, 2003

David J. Evans Arbitrator

Date