Shyama Hosein v. Royal & SunAlliance Insurance Company of Canada, 2004 ONFSCDRS 148

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 2004 ONFSCDRS 148 FSCO A03-001407

BETWEEN:

SHYAMA HOSEIN Applicant

and

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Judith Killoran

Heard: July 19, 2004, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Shawn Jafari for Mrs. Hosein Jamie Pollack for Royal & SunAlliance Insurance Company of Canada

Issues:

The Applicant, Shyama Hosein, was injured in a motor vehicle accident on April 24, 2002. The parties were unable to resolve their disputes through mediation, and Mrs. Hosein applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. Royal & SunAlliance Insurance Company of Canada ("Royal") seeks an order, pursuant to section 32 of the Schedule,¹ precluding Mrs. Hosein from proceeding to arbitration on the issues of caregiver and housekeeping and home maintenance benefits. Royal claims that Mrs. Hosein did not make a claim for caregiver and housekeeping and home maintenance benefits until nearly one year after receiving the appropriate statutory accident benefit forms from the Insurer.

The preliminary issue is:

1. Is Mrs. Hosein barred from proceeding to arbitration by reason of section 32 of the Schedule?

Result:

1. Mrs. Hosein is not precluded from proceeding to arbitration by reason of section 32 of the Schedule.

EVIDENCE:

On April 24, 2002, Mrs. Hosein was involved in an accident where the entire front of her car was smashed. At the time she felt no pain, but afterwards she felt pain in her back and her neck. The next morning, she could not go to work. Mrs. Hosein testified that when contacted by Royal on April 25, 2002, she told the Claims Representative that she had not hired anyone to assist with her household chores or caregiving duties.

An Application for Benefits package was sent by Royal to Mrs. Hosein subsequent to this telephone conversation. In the meantime, Mrs. Hosein testified that she found that she could not continue with her caregiving and housekeeping responsibilities. Consequently, she retained the services of a caregiver and a housekeeper. Mrs. Hosein testified that the application forms were submitted to Royal on a monthly basis in which she sought $100 weekly in housekeeping benefits and $250 weekly for caregiving benefits.

Mrs. Hosein testified that she spoke to Mr. Sameer Hosein, who was referred to her by a friend, within two days of the accident. Mr. Hosein came to her home during the week of April 27, 2002. Meanwhile, Mrs. Hosein had attended at Provincial Legal Services Inc. ("Provincial") on April 25, 2002. She informed them of the pain in her back and neck and they informed her of the benefits to which she might be entitled.

Mrs. Hosein testified that Mr. Hosein would come to her home in the mornings, help with breakfast and lunch and take her nine-year old son to school. He would pick up her son in the afternoon, spend time with him and help him with his homework and games. Mr. Hosein did the laundry, dishes, vacuuming and cleaned the washroom. Mrs. Hosein claimed to employ Mr. Hosein for six months to assist with housekeeping and caregiving.

Mrs. Hosein stayed home from work for only one day. Her work was modified so that it was less strenuous. Her employer allowed her to come in later and leave earlier. Also, she moved into the administration section receiving goods in the warehouse and doing quotations rather than continuing with her prior job duties of pouring paint into machines.

Ms. Lori Budden testifed for Royal. She was the Claims Representative who handled Mrs. Hosein's accident benefit claim. She made notes of her conversation with Mrs. Hosein on April 25, 2002.² Mrs. Hosein apparently said that her son was nine-years old and was okay on his own. While Mrs. Hosein was not asked directly if she required any housekeeping or caregiving assistance, she stated that she expected to return to work on April 26, 2002. It does not appear that Royal informed Mrs. Hosein of her eligible benefits under the Schedule.

Ms. Budden conceded that she recalled receiving, on May 13, 2002, an Activities of Normal Life form (OCF-12) dated April 26, 2002, that indicated there were housekeeping chores that Mrs. Hosein could do in the past but could not do after the accident.³ She also received a Disability Certificate signed by Dr. Ali Nourali after an examination on April 24, 2002. Dr. Nourali stated that Mrs. Hosein required assistance with housekeeping, including vacuuming, heavy shopping, washing dishes, mopping and cleaning room/bathroom.⁴ Pain, stiffness and a limited range of motion together with an inability to lift heavy objects and sit/stand for long periods of time were listed as activities that Mrs. Hosein could not perform.

In a covering letter dated May 8, 2002, Provincial forwarded, on behalf of Mrs. Hosein, an Application for Accident Benefits.⁵ In the Application for Accident Benefits, Mrs. Hosein made a claim for caregiver benefits but did not fully complete Part 7 which asked for details of the people she was caring for at the time of the accident.⁶

Royal responded to the Application for Accident Benefits in an Explanation of Benefits dated May 27, 2002.⁷ In this Explanation, Royal advised that Mrs. Hosein was required to submit a completed Election of Benefits form as she had indicated that she was employed at the time of the accident. Under housekeeping and home maintenance expenses, Royal stated:

The OT report completed by International Health Assessments Corporation indicates that you require 6-8 hours of housekeeping per week. We have reimbursed you at a rate of $10.00 per hour for 8 hours per week. A cheque will be issued under separate cover.

An Election of Benefits form was returned to Royal on or around May 30, 2002, in which Mrs. Hosein elected to be eligible for caregiver benefits.⁸ In a further Explanation of Benefits dated June 5, 2002, Royal advised:

We acknowledge receipt of your election form. Payment under this section is based on additional incurred expenses and subject to limitations imposed under this section. Your application for benefits is not complete in the caregiving section. As you have not supplied us with the names, birthdates etc. of the persons in need of care. Please also provide us with documentation to support caregiving expenses that you incurred prior to the motor vehicle accident.

While I find that Royal received no response from Mrs. Hosein to its request for further information at that time, neither did Royal inform Mrs. Hosein as to the consequences of not providing the requested information.

Mrs. Hosein testified that she dropped off her completed expense forms on a weekly basis with someone at Provincial, who said she would submit them to Royal on her behalf.

Mrs. Hosein testified that she called Provincial after about six weeks when she was not receiving any benefits. She was assured that the expense forms were being sent to Royal.

Mr. Hosein signed an invoice for caregiving expenses with the last day of January 24, 2003 for services. Mrs. Hosein testified that she filled in the date when the form was witnessed. Exactly the same amount of services were claimed for November, December 2002 and January 2003. A total of 15.5 hours of housekeeping per week was claimed together with a total of 16.5 hours of caregiver services per week.

On October 22, 2002, Royal sent a letter to Mrs. Hosein indicating that, as there had been no activity on the file, it was to be closed in 30 days. However, this correspondence from Royal was sent only to Mrs. Hosein and not to her representative. On June 10, 2003, Provincial submitted all completed Application for Expenses (OCF-6) forms for housekeeping and caregiving from April 2002 to January 2003.⁹

On June 25, 2003, Royal forwarded a letter and an Explanation of Benefits to which it outlined sections 32 and 33 of the Schedule.¹⁰ Royal asked for a "written reasonable explanation" as to why caregiver and housekeeping expenses were not submitted within 30 days of incurring them. The documents to substantiate the claims were not received until after the benefit claim period had expired. Royal submitted that if it had received the claim in a timely fashion, it could have scheduled an in-home examination for caregiving and housekeeping benefits.

Royal objected that the application for caregiving and housekeeping and home maintenance expenses and the expense forms were not submitted in a timely fashion nor contemporaneous with the accident. Royal stated that it had never received information about the expense claims until June 2003 notwithstanding many requests. For this reason, Royal submitted that Mrs. Hosein had not complied with the Schedule.

Mrs. Hosein did not deny receiving the letter from Royal dated October 22, 2002. I find therefore that she did receive the letter notifying her that the file would be closed in 30 days if she did not send any further information. No one testified on behalf of Provincial that the completed expense forms had been received from Mrs. Hosein and that Provincial had forwarded the forms to Royal prior to June 2003. Consequently, I find that the forms were not forwarded to Royal until June 10, 2003.

ANALYSIS

As discussed earlier, on June 25, 2003, Royal forwarded a letter and enclosures to Mrs. Hosein advising her that it was relying on section 32 and subsection 33(1) of the Schedule ¹¹ Royal set out the specified sections, as follows:

32.(1) A person who wants to apply for a benefit under this Regulation shall notify the insurer within 30 days after the circumstances arose that gave rise to the entitlement to the benefit, or as soon as practicable thereafter.

(2) The insurer shall promptly provide the person with,

(a) the appropriate application forms;

(b) a written explanation of the benefits available under this Regulation;

(c) information to assist the person in applying for benefits; and

(d) information on any possible elections relating to income replacement, non-earner and caregiver benefits.

(3) The person shall submit an application for the benefit to the insurer within 30 days after receiving the application forms.

(4) If a person is required by an insurer to submit an additional application in respect of a benefit that the person is receiving or may be eligible to receive, the person shall submit the additional application to the insurer within 30 days after receiving the additional application forms from the insurer.

33.(1) A person applying for a benefit under this Regulation shall, within 14 days after receiving a request from the insurer, provide the insurer with the following:

1. Any information reasonably required to assist the insurer in determining the person’s entitlement to a benefit.

2. A statutory declaration as to the circumstances that gave rise to the application for benefit.

3. The number, street and municipality where the person ordinarily resides.

4. Proof of the person’s identity.

In that same letter, Royal pointed out that subsection 2 (of section 33) states that "the benefit is not payable for any period before the person complies with subsection (1)."

The Director's Delegate in H'ng et al and Allstate Insurance Company of Canada¹² stated that:

I agree with the arbitrator that "the process of notification and application, within the context of the legislative scheme as a whole, anticipates the claim will be presented by the applicant in sufficient detail to permit the insurer to act upon it and meet its obligations for timely payment under the Schedule."

In Lopez and Canadian General Insurance Group¹³, the arbitrator stated that: "... an application for accident benefits must be reasonably complete, and must provide sufficient information to permit the insurer to properly assess the claim."

I note that in Royal's factum, Royal relies on section 32 of the Schedule as revised by Ontario Regulation 281/03. I consider that it is more appropriate to apply section 32 as it existed both at the time of the accident and, indeed, until October 2003; that is, as found in Ontario Regulation 403/96. However, if I am incorrect and it is the revised section 32 which should be applied, my findings would not change. Mrs. Hosein complied with the requirements section 32 under both Regulations.

While Royal restricted its argument at the hearing that the proper application of section 32 would disentitle Mrs. Hosein to caregiving and housekeeping and home maintenance benefits, I feel obliged to comment on the application of section 33, as found in both Ontario Regulations 403/96 and 281/03, as Royal referred to section 33 in its correspondence to Mrs. Hosein. I rely on the decision of Director’s Delegate Makepeace in Iankilevitch and CGU Insurance Company of Canada,¹⁴ wherein she found that subsection 33(2) was intended as only a delay provision not as a penalty provision that affects ultimate entitlement. I believe that the reasoning of the Director’s Delegate can also be applied to an interpretation of section 32. As with section 33, section 32 also requires a purposive approach as described in Tesfay and Allstate Insurance Company of Canada,¹⁵ and by the arbitrator in Iankilevitch:

In my view, section 33 should be interpreted in a purposive, rather than a punitive, manner. The purpose of section 33 is to ensure that insured persons facilitate the insurer’s ability to obtain sufficient information to assess a claim for benefits.

I find that Mrs. Hosein did notify Royal of her caregiving and housekeeping and home maintenance claims in a timely fashion. Her Application for Accident Benefits was "in sufficient detail" and it did "provide sufficient information to permit the insurer to properly assess the claim." Royal was informed in the telephone conversation between its Claims Representative and Mrs. Hosein on April 25, 2002 that Mrs. Hosein had a nine-year old son. Royal received an Activities of Normal Life dated April 26, 2002 that indicated that Mrs. Hosein could not perform certain housekeeping tasks that she could do before the accident. As well, the Disability Certificate from Dr. Nourali dated April 26, 2002, stated that Mrs. Hosein required assistance with certain housekeeping tasks. It is apparent that Royal received an occupational therapist's report from International Health Assessment Corporation by May 27, 2002 documenting Mrs. Hosein's need for housekeeping assistance. As well, Mrs. Hosein submitted an Application for Accident Benefits dated May 27, 2002 and an Election of Benefits form dated May 30, 2002, for caregiver benefits.

Consequently, I find that Mrs. Hosein is not precluded from proceeding to arbitration by reason of section 32 of the Schedule.

When Royal forwarded its Explanation of Benefits form dated June 5, 2002 and its correspondence dated October 22, 2002 advising Mrs. Hosein that it intended to close her file, Royal did not inform her of the consequences of failing to provide it with the information requested. If I am incorrect about the sufficiency of the information provided by Mrs. Hosein, I rely on the arbitrator's decision in Horvath and Allstate Insurance Company of Canada¹⁶ which held that the consumer protection principles enunciated in Smith v. Co-operators General Insurance Co.¹⁷ should apply to notice provisions as well as to limitation periods. The arbitrator stated 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."

In Horvath, Arbitrator Leitch held that such information includes "information about the potential consequences of failing to either comply with [the time limits] 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." Arbitrator Blackman also addressed this issue in C.R. and Lombard General Insurance Company of Canada.¹⁸ He ruled that as Lombard failed to provide the Applicant with sufficient information to assist him in applying for benefits, clearly and specifically in straightforward language, and did not inform him not only that Lombard would close his file but would bar him from receiving statutory benefits for all time, the time limits did not begin to run for the Applicant. This is similar to Arbitrator Leitch’s ruling in Horvath 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.

Alternatively, Arbitrator Blackman stated in C.R. that if he were wrong in finding that the time limit under subsection 32(3) never began to run, the failure of the insurer to properly set out the consequences to their insured of failing to comply with subsection 32(3) constituted a reasonable explanation for the insured failing to comply with the time limit. If I am incorrect in finding that Mrs. Hosein provided sufficient information to Royal, I apply the same reasoning found in Horvath and C.R. to the case before me. Therefore, Mrs. Hosein is not barred from proceeding to arbitration by reason of section 32 of the Schedule.

EXPENSES:

I encourage the parties to resolve the issue of expenses. If unable to do so, they may apply to me for an expense hearing under the provisions of the Dispute Resolution Practice Code (Fourth Edition, updated October 2003).

October 6, 2004

Judith Killoran Arbitrator

Date

Neutral Citation: 2004 ONFSCDRS 148 FSCO A03-001407

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

SHYAMA HOSEIN Applicant

and

ROYAL & SUNALLIANCE 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:

1. Mrs. Hosein is not precluded from proceeding to arbitration by reason of section 32 of the Schedule.

October 6, 2004

Judith Killoran Arbitrator

Date

Footnotes

1. 1The 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.
2. 2Exhibit 7
3. 3Exhibit 5
4. 4Exhibit 6
5. 5Exhibit 1, Tab 1
6. 6Exhibit 1, Tab 2
7. 7Exhibit 1, Tab 3
8. 8Exhibit 1, Tab 4
9. 9Exhibit 3
10. 10Exhibit 1, Tab 7
11. 11Exhibit 1, Tab 7
12. 12(OIC P97-00017, October 1, 1997)
13. 13(OIC A97-001035, June 20, 1997), confirmed on appeal (OIC P97-00041, April 8, 1998)
14. 14(FSCO P03-00013, August 31, 2004) appeal
15. 15(FSCO A97-001439, April 7, 1999)
16. 16(FSCO A02-000482, June 9, 2003)
17. 172002 SCC 30, [2002] S.C.J. No. 34
18. 18(FSCO A02-001057, December 22, 2003)