Neutral Citation: 2005 ONFSCDRS 19

FSCO A04-000142

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TERRY GURNEY

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Joyce Miller

Heard:

Oral Submissions by telephone conference call on June 17, 2004. Written submissions received on May 27, 2004. Further written submissions received by October 22, 2004.

Appearances:

Anthony J. Potestio for Mr. Gurney Eric K. Grossman for Allstate Insurance Company of Canada

Issues:

The Applicant, Terry Gurney, was injured in a motor vehicle accident on November 16, 1996. He applied for and received statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.¹ Allstate denied Mr. Gurney's claim for accident benefits for medical rehabilitation and housekeeping expenses 104 weeks post accident and further denied indexation of his income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. Gurney applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Mr. Gurney entitled to indexation of weekly income replacement benefits pursuant to the transitional provisions of the Schedule?

2. Is Mr. Gurney entitled to claim supplementary medical and rehabilitation benefits for a period in excess of 104 weeks post accident pursuant to the transitional provisions of the Schedule.

Result:

1. The transitional provision, section 70, of the Schedule does not provide for indexation of income replacement benefits; however, pursuant to paragraph 27(1)5, I find that Allstate was obligated to offer Mr. Gurney the choice of purchasing the optional benefit of indexation before he chose to accept Allstate's offer under Option 1 in the Insurance Bureau of Canada's brochure. Despite this conclusion, I find that I do not have the jurisdiction to order a remedy for this omission by Allstate.

2. Temporal limits do not apply to subsection 70(3) of the Schedule. Mr. Gurney is entitled to claim supplementary medical and rehabilitation benefits for a period in excess of 104 weeks post accident.

3. The parties did not make submission on the issue of expenses. This issue is left to the hearing arbitrator.

Agreed Statement of Facts

The parties provided the following agreed statement of facts, which I accept

1. Allstate provides insurance coverage to Terry Gurney in respect of a 1986 Buick Regal LTD under policy number 040884680 covering the policy period from August 11, 1996 to February 11, 1997.

2. On November 16, 1996, Mr. Gurney was involved in a single vehicle accident on the Trans Canada Highway in the District of Thunder Bay where he sustained various injuries.

3. For the purposes of this hearing only, the parties agree that Mr. Gurney did not sustain a catastrophic impairment as defined in the Statutory Accident Benefit Schedule.

4. Mr. Gurney advanced a claim for Statutory Accident Benefits to Allstate.

5. Allstate has accepted Mr. Gurney's claim and has paid to him various accident benefits.

6. At the time of Mr. Gurney’s accident, the transitional coverages afforded in section 70 of the Schedule were in effect.

7. The declaration sheet reflecting coverage for the period August 11, 1996 to February 11, 1997 shows, inter alia, medical coverage premium of $50.00 and income replacement limits of $1,000.00 with a premium of $30.00.

8. The declaration sheet reflecting coverage for the period February 11, 1997 to August 11, 1997, which is the first post Bill 59 renewal, shows, inter alia, medical coverage premium of $48.00 and income replacement limits of $400.00 with a premium of $27.00.

9. In or about the beginning of November 1996, Allstate provided Mr. Gurney with brochures prepared by the Insurance Bureau of Canada which informed him of the implementation of the Auto Insurance Rate Stability Act, 1996. A copy of the brochures that were forwarded to Mr. Gurney by Allstate are appended as Schedule A.

10. The parties disagree about what affect the section 70 transitional coverages have in respect of four specific types of claims.

(a) Mr. Gurney's entitlement to indexation of his weekly income replacement benefit pursuant to part 2 of the Statutory Accident Benefit Schedule.

(b) Mr. Gurney’s right to claim supplementary medical and rehabilitation benefits after the ten year anniversary of the accident (the parties agree that the transitional benefits afford Mr. Gurney enhanced non-catastrophic monetary limits of $1,000,000.00).

(c) Mr. Gurney's right to claim housekeeping and home maintenance benefits beyond 104 weeks of the accident.

(d) Do the Loss of Earning Capacity Provisions of Bill 164 apply to Mr. Gurney's claim?

THE LAW

Section 70 of the Schedule provides:

(1) Despite anything else in this Regulation, if a motor vehicle liability policy is in effect on the day this Regulation comes into force, subsections (2) and (3) apply until the earlier of the following:

1. The first expiry date under the motor vehicle liability policy.

2. The date on which the motor vehicle liability policy is terminated by the insurer or the insured.

(2) The following benefits are deemed to be included in the motor vehicle liability policy, and are applicable to an insured person in respect of the motor vehicle liability policy:

1. The optional income replacement benefit referred to in paragraph 1 of subsection 27 (1) that fixes the amount referred to in subparagraph ii of paragraph 2 of subsection 7 (1) at $1,000.

2. The optional caregiver and dependant care benefit referred to in paragraph 2 of subsection 27 (1).

3. The optional death and funeral benefit referred to in paragraph 4 of subsection 27 (1).

(3) The sum of the medical, rehabilitation and attendant care benefits paid under the motor vehicle liability policy for any one accident in respect of an insured person who does not sustain a catastrophic impairment as a result of the accident shall not exceed $1,000,000, and the limits set out in clauses 19 (1) (a) and (2 (a) do not apply.

1. Do the Transitional Provisions of the Schedule provide for indexation of weekly income replacement benefits?

Mr. Gurney's Submissions

Mr. Gurney submitted that prior to the enactment of Bill 59 Allstate sent him a brochure which offered him two options. These options are as follows:

OPTION 1. DO NOTHING UNTIL YOUR NEXT POLICY RENEWAL DATE.

Insurance companies will automatically include the coverages A, B, C, D, E and F described below:

A. The new plan’s standard of up to $400 weekly income replacement benefits will be increased to $1,000.

B. The benefit for injured unpaid caregivers will be increased to $325 per week (from the standard level of $250) and to $75 per week for each additional dependant (from the standard level of $50); dependant care benefits will be provided to employed persons (up to $150 per week).

C. The death benefit for the surviving spouse of "named insured" and/or spouse will increased to $50,000 (from the standard level of $25,000), and to $20,000 for surviving dependants (from the standard level of $10,000).

D. The funeral benefit limit will be increased to $8,000 (from the standard level of $6,000).

E. $1,000,000 of coverage for medical, rehabilitation and attendant care expenses will be available (instead of the new plan’s limits, for non-catastrophic injuries, of $100,000 for medical and rehabilitation expenses and $72,000 for attendant care expenses).

F. The existing deductibles for loss or damage to your car will be retained.

When your policy comes due for renewal, the new plan, described in the attached brochure, will apply.

OPTION 2. MOVE TO THE NEW PLAN PRIOR TO YOUR SCHEDULED RENEWAL DATE.

You may ask your insurer to cancel your existing policy, without penalty; choose the options you want under the new plan; and ask your insurer to issue the appropriate new policy. If you decide to shop for coverage with another insurance company, you may ask your insurer to cancel your existing policy; there is a "short rate" financial penalty for doing this.

Your agent or broker will be pleased to provide more information and can provide you with the best advice on what you should do between November 1, 1996 and your renewal date.

Mr. Gurney, who had chosen Option 1, submitted that pursuant to subsection 27(1) of the Schedule, Allstate failed to offer him, for a price, the optional benefit of indexation before he chose Option 1. Mr. Gurney concedes that while the transitional provisions in section 70, which were incorporated in Allstate's Option 1, paragraphs A to E, do not deal with indexation, nevertheless, paragraph 27(1)5 of the Schedule mandates that Allstate shall offer its insureds the optional benefit of indexation.

Paragraph 27(1)5 provides:

Every insurer shall offer the following optional benefits:

5. An optional indexation benefit, as described in section 29.

Mr. Gurney submitted that pursuant to section 70 of the Schedule, the legislature, by deeming certain benefits, similar to the optional benefits in section 27, to be added to the SABS -1996 level of benefits, did not relieve Allstate of its obligation to offer Mr. Gurney the optional benefit of indexation pursuant to paragraph 27(1)5. Accordingly, Mr. Gurney submitted that the fact that Allstate did not comply with paragraph 27(1)5 of the Schedule precluded Allstate from denying Mr. Gurney access to the optional benefit of indexation.

Allstate's Submissions

Allstate submitted that the Insurance Bureau of Canada's brochure ("IBC ") clearly indicated what Mr. Gurney was getting when he chose either Option 1 or 2. Allstate further submitted that in choosing Option 1 Mr. Gurney got all the optional benefits afforded to him under section 70 which included a $1,000 a week income replacement benefit. Allstate pointed out the indexation option was not mentioned in section 70 and was therefore not part of the transitional package. Allstate further pointed out that the brochure sent to Mr. Gurney did list the optional benefit of indexation under the heading of "Optional Increased Accident Benefits." Accordingly, Allstate submitted, Mr. Gurney had notice of this option and was afforded the opportunity to buy the optional benefit of indexation.

ANALYSIS AND FINDINGS

For the following reasons I find that, pursuant to subsection 27(1)5, Allstate was required to offer Mr. Gurney the optional benefit of indexation when he opted for Option 1 but failed to do so. Nevertheless, I find that I do not have the jurisdiction to provide a remedy for this omission.

The first thing to note is that when the changes in the accident benefits legislation was announced Mr. Gurney did not receive one brochure from Allstate, he received two brochures. The first brochure which consists of two pages is headed: "On November 1, 1996 Ontario Car Insurance Changes: Automobile Insurance Rate Stability Act, 1996."

This brochure outlines the two options noted above. I think it is relevant to note the preamble to the two options offered in the first brochure:

On November 1, 1996, Ontario adopts a new system of automobile insurance. While automobile owners must, by law, carry certain minimum levels of automobile insurance, policyholders will be able to buy the automobile insurance that best suits their requirements. Also, claimants will have more access to the court system to seek recovery of losses from "at-fault" drivers and vehicle owners.

The Ontario government has devised a new auto insurance system to provide more choice for consumers, price stability and fairness. Please read carefully the accompanying brochure, especially the section concerning "optional increased accident benefits". During the transitional period, the following applies.

[emphasis added]

IF YOU ARE BUYING A NEW POLICY

From November 1, 1996, your insurer will cover you under the new plan.

IF YOUR VEHICLE IS ALREADY INSURED

From November 1, 1996, you have the following options.

Following this preamble the brochure outlines the two options. As noted above, Option 1 concludes with the statement "When your policy comes due for renewal, the new plan, described in the attached brochure, will apply." [emphasis added]

The "new plan" is described in the second brochure which consists of four pages. The first page of this brochure begins with the heading: "What you should know about Car Insurance in Ontario: Auto Insurance Rate Stability Act, 1996." The brochure then describes the coverage an insured must have, the basic accident benefits under the new legislation an insured is entitled to, as well it describes under the heading "Optional Increased Accident Benefits," the optional benefits outlined in section 27 of the Schedule.

What is clear from the first brochure is that when an insured chooses Option 1, the insured would get the transitional benefits outlined in paragraphs A to E under Option 1. These benefits, outlined in paragraphs A to E, in turn, reflect the benefits outlined in the transitional section 70 which are similar to some of the optional benefits outlined in section 27.

I agree with Allstate's submission and Mr. Gurney's concession that the optional benefit of indexation cannot be read into section 70. Nevertheless, I find the fact that section 70 does not include the optional benefit of indexation as part of the transitional provision did not relieve Allstate of its obligation, pursuant to subsection 27(1)5 of the Schedule, to offer Mr. Gurney the choice of buying the additional optional benefit of indexation when he chose Option 1.

Under Option 1, Allstate offered its policyholders a transitional upgrade of the accident benefits provided in the SABS-1996 at no extra cost. This option, which reflects section 70, was offered as a trade-off for the fact that an insured's accident benefits decreased under the new legislation in mid-contract. There is nothing in the legislation which states that if Mr. Gurney chose the transitional upgrade in Option 1 he was barred from an offer to purchase the optional benefit of indexation of his income replacement benefit.

I can give little weight to Allstate's submission that even though Mr. Gurney chose Option 1, he had notice from the second brochure of the insurer's offer that he could purchase immediately, optional benefits, including the optional benefit of indexation, mandated by section 27 of the Schedule. In my view, I find that Allstate cannot rely on either the opening paragraphs of the first brochure or the outline of benefits listed in the second brochure as a clear offer to Mr. Gurney under Option 1 that prior to the expiration of his policy he had the choice to purchase the balance of optional benefits pursuant to section 27 of the Schedule.

While it would have been prudent for an insured to have read both brochures provided by the insurer before making a decision, the concluding sentence of Option 1 implies that the second brochure does not apply to Option 1 when an insured chooses Option 1. That is, it is clear from reading the first brochure that if an insured chose Option 1, then the "new plan" offered in the "attached brochure," (which includes information on "Optional Increased Accident Benefits") "will apply" when the insureds' "policy comes due for renewal." Moreover, the heading for Option 1 states "DO NOTHING UNTIL YOUR NEXT POLICY RENEWAL DATE." It is obvious from this statement that, when Option 1 is chosen, an insured does not necessarily have to be concerned about the information in the second brochure until the renewal of his policy comes up. Succinctly, the insured is led to believe if Option 1 is chosen, then the insured has no further options until his or her policy comes due for renewal.

As noted above, the transitional section 70 offered some of the optional benefits, pursuant to section 27, at no cost, as a trade-off for a decrease in accident benefits in mid-contract. These trade-off optional benefits were reflected in Option 1. Clearly, there is nothing in Allstate's Option 1 offer to indicate to Mr. Gurney that when he chose Option 1 he was also being offered the choice of buying the balance of the optional benefits available under section 27 of the Schedule, including the optional benefit of indexation. In my view, pursuant to section 27, the offer to purchase the balance of optional benefits should have been clearly and unambiguously communicated to Mr. Gurney under Option 1. It was not.

In conclusion, I find that pursuant to section 27 of the Schedule Allstate was required to offer Mr. Gurney, if he chose Option 1, the further choice of buying the balance of optional benefits (including the optional benefit of indexation) which were not included in paragraphs A to E in Option 1 and which are a reflection of section 70 of the Schedule. Nevertheless, having come to this conclusion, I find that the Schedule does not provide a remedy for this situation. Accordingly, because my jurisdiction to order a remedy is limited to what is allowed under the legislation, I, therefore, find I do not have the jurisdiction to order a remedy.

2. Do the Transitional Provisions of the Schedule allow supplementary medical and rehabilitation benefits for a period in excess of 104 weeks post accident?

Background

At the time that Mr. Gurney provided his written submissions for the oral hearing on June 17, 2004, the appeal decision in the case of State Farm Mutual Automobile Insurance Company and L.F.² had not been issued. In the appeal decision, Director's Delegate overturned the Arbitrator's interpretation of subsection 70(3) of the Schedule.³

In his decision, the Arbitrator dealt with the issue of whether the applicant was entitled to attendant care benefits post-104 weeks of his accident, the parties having agreed that the applicant fell within the transitional provision of subsection 70(3), but disagreed on the effect of this provision. The present case also deals with durational limits under subsection 70(3), but in respect of medical rehabilitation benefits.⁴

In his written submissions, Mr. Gurney relied almost exclusively on the interpretation and findings of the Arbitrator in L.F. with respect to subsection 70(3) to support his position that time limits do not apply. More specifically, he relied on the Arbitrator's finding that "a just and reasonable outcome" is obtained only by interpreting subsection 70(3) as setting aside the temporal limits of subsection 18(2) of the Schedule.⁵

Since the interpretation of subsection 70(3) is the key issue in this hearing, I think it would be helpful to cite the relevant portions of the L.F. arbitration and appeal decisions as background.

In dealing with the implications of the transitional provisions of subsection 70(3) of the Schedule, the Arbitrator made the following comments and conclusions:

The parties agree that L.F. falls within section 70. The parties disagree as to the effect of this provision.

The Insurer submits that because this transitional provision speaks specifically to monetary limits and is silent regarding duration, the subsection 18(2) 104-week limit on attendant care benefits under this Schedule stands.

The Applicant submits that section 70 can only be given a rational meaning by interpreting it as also setting aside the 104-week time period limit under subsection 18(2).

Subsection 19(2) of the present Schedule states that the maximum attendant care benefit payable in respect of an insured is $72,000 (except where the insured sustained a catastrophic impairment as a result of the accident, which is not argued in this case).

I find that $72,000 is not a randomly selected number. Rather, it is the mathematical result of the maximum period normally available for attendant care (twenty-four months under subsection 18(2), i.e. 104 weeks or two years) multiplied by the maximum monthly amount for attendant care ($3,000 under paragraph 16(5)(a) for non-catastrophic impairment).

$3,000 was also the maximum monthly amount available for attendant care under the preceding 1994 Schedule⁶ (excepting for more significant injuries as specified). There was, however, no time limit on attendant care benefits available in the 1994 Schedule. There is no indication in the present Schedule of any intent to liberalize the available monthly amount for attendant care.

If effect were to be given to both subsection 18(2) (the durational limits) and paragraph 16(5)(a) (the monetary maximums) of the present Schedule, then the maximum amount available for attendant care would remain at $72,000, despite the transitional provision of section 70.

I do not find this to be "a reasonable and just outcome."⁷ Nor is this result consistent with the "general presumption that changes to the wording of legislation are purposeful."⁸

Rather, I find that a "just and reasonable outcome" is obtained only by interpreting subsection 70(3) of the Schedule regarding paragraph 19(2)(a) as continuing a $3,000 monthly maximum (now enshrined in paragraph 16(5)(a) of the Schedule) and thus consequentially setting aside the subsection 18(2) durational limit and continuing the indefinite availability of attendant care benefits.

Succinctly, I find that there is no limit on the duration of available attendant care in cases where section 70 applies. I find that section 70 does not disturb the monthly limit of $3,000 available for attendant care.

In referring to the Arbitrator's interpretation, the Director's Delegate made the following comments and conclusions:

The Arbitrator considered two possible interpretations of the transition provision - it removes the monthly limit on attendant care benefit, but applies the temporal limit; or that it removes the temporal limit, while leaving the monthly limit in place. He rejected the third alternative - that s. 70(3) affects neither the temporal limit nor the monthly maximum on ACBs, and effectively leaves in place the $72,000 overall maximum for ACBs -because he concluded this would make the transition provisions redundant as applied to ACBs. This assumes that the legislature meant to suspend the application of the ACB provisions of the SABS-1996 considered as a distinct category of benefits. It is not the most plausible reading of s. 70, which expressly applies to "the sum of the medical rehabilitation and attendant care benefits paid" [emphasis added]. Considering the substantial reduction in these benefits under the SABS-1996, I conclude s. 70 was intended to provide a middle ground during the transitional period. Accordingly, Mr. F is eligible for up to $1,000,000 in medical rehabilitation and ACBs, though he would otherwise be entitled only to a maximum of $72,000 of ACBs and $100,000 in medical benefits under the SABS-1996. This interpretation does not make s. 70 redundant, though the monthly maximum, temporal limit and (effectively) the overall maximum on ACBs in the SABS-1996 apply to him as if there were no transitional provision. [emphasis added]

This interpretation is most faithful to the legislative text and its underlying objective. The stark difference in the maximum medical, rehabilitation and ACBs available in the SABS-1994 and the SABS-1996 reflects the significant restoration of tort rights in the 1996 amendments to the Insurance Act. I am not persuaded this is an unreasonable or unjust outcome.

Accordingly, the Director’s Delegate concluded:

Though s. 70(3) could have been drafted more clearly, I am not persuaded this justifies departing from the plain words of the text in the way the Arbitrator did. I think it more likely that the omission of any reference to s. 16(5) or s. 18(2) was deliberate, and reflected the legislature's focus on the overall maximum for medical, rehabilitation and ACBs. [Attendant Care Benefits]

While Mr. Gurney provided his initial written submissions before the appeal decision was issued, Allstate provided its response after the appeal decision was issued and relied on the appeal decision to support its position that "temporal" limits applied to Mr. Gurney's claim for medical and rehabilitation benefits. Allstate further submitted that pursuant to the appeal case of Vo and Maplex General Insurance Company,⁹ I was bound to follow Director's Delegate's decision in L.F. Mr. Potestio, counsel to Mr. Gurney, submitted in his oral argument that in his view the appeal decision was wrongly decided. He submitted that it made no sense to give access to a level of benefits of $1,000,000 and then turn around and limit the duration to this access to two years.

Mr. Potestio, however, agreed with the Insurer that I am bound by Director's Delegate’s appeal decision in L.F. and he submitted that he intended to appeal the reasoning in Director's Delegate's decision to a higher level. Consequently, he submitted in his oral argument he would focus on the remaining issue of indexation.

After the oral arguments were made and I had an opportunity to review all of the evidence, including Exhibit 1, the IBC brochures dealing with the new changes to Ontario car insurance, I exercised my discretion pursuant to Rule 43 of the Dispute Resolution Practice Code to reopen the hearing and allow the parties to provide further submissions on the issue of temporal limits and section 70 of the Schedule.

In my letter dated August 17, 2004 to the parties' counsel, I noted the following: Exhibit 1, the brochure titled "Ontario Car Insurance Changes:" states:

OPTION 1. DO NOTHING UNTIL YOUR NEXT POLICY RENEWAL DATE.

Insurance companies will automatically include the coverages A, B, C, D, E and F described below:

E. $1,000,000 of coverage for medical, rehabilitation and attendant care expenses will be available (instead of the new plan’s limits, for non-catastrophic injuries, of $100,000 for medical and rehabilitation expenses and $72,000 for attendant care expenses). [emphasis in bold added]

Option 1 concludes "When your policy comes due for renewal, the new plan, described in the attached brochure, will apply."

I pointed out to the parties that:

Option 1 E raises the issue as to whether, when making its offer to its policyholders, Allstate was conceding that temporal limits do not apply and that this is in keeping with the purpose of the transitional section 70 as a trade off for decreasing benefits in mid-contract. Neither counsel addressed this issue in their submissions.

SUBMISSIONS

Allstate's Submissions

Allstate submits that Option 1, paragraphs A to F, mirrors almost exactly that which is contained in the transitional provisions of section 70 and that it was the intent of the drafters of the legislation, as well as Allstate in particular in its brochure, to provide coverages only as set out in A through F if Option 1 is followed.

Allstate submits that "if the inured person wanted broader coverage than that contained in Option [1] A through F, the insured person had the opportunity to pursue Option 2, which was to move to the new plan prior to the scheduled renewal date."

Allstate submits that "nothing in these brochures extend Allstate's obligations to Mr. Gurney beyond that which is set out in the Act and the Statutory Accident Benefits Schedule. The wording is precise and virtually identical."

Accordingly, Allstate submits that there is nothing in the IBC brochure that extends or otherwise alters the evidence before me from that which was decided by the Director's Delegate in L.F.

As well, Allstate submits "that when read in its entirety, this brochure clearly articulates the options respecting transitional coverages to the date of the next renewal. It is respectfully submitted that nothing in the brochure could reasonably be read to extend temporal limits of the Bill 164 coverages."

Finally, Allstate submits that "any suggestion or concern that Mr. Gurney was disadvantaged by the transitional provisions, that concern has already been addressed by [the] Director’s Delegate in State Farm v. L.F. as being one created by the legislature as opposed to by an Insurer and it is respectfully submitted that this fact is unchanged by the presence of this brochure...." [emphasis in original].

Mr. Gurney's Submissions

Mr. Gurney submits that I am not bound to follow the Director’s Delegate’s appeal decision if I conclude that there is a factual basis to distinguish that decision. Mr. Gurney submits that in her decision, the Director’s Delegate concluded that the transitional provisions were intended to provide a "middle ground" of benefits and that the monthly maximum and temporal limits of the SABS-1996 would apply to attendant care benefits. Mr. Gurney submits that the Director's Delegate was not asked to interpret subsection 70(3) in the context of Exhibit 1 - the IBC brochure sent to him to deal with the transition period.

Mr. Gurney submits that in this brochure Allstate offered him two options for coverage during the transitional period. The means of acceptance for Option 1 was for him to do nothing until his next policy renewal date. Mr. Gurney therefore submits that the brochure represented an offer by Allstate which specified silence as the means of acceptance, and the consideration would be the exchange of benefits between the parties. Mr. Gurney submits that this made up the necessary elements to establish a contract during the transitional period, the terms of which are set out in paragraphs A to F of Option 1.

In his submissions of the terms under Option 1, Mr. Gurney points that:

• In paragraph E of Option 1 by including the words "instead of the new plan's limits," Allstate is making it clear in its offer that the Option 1 coverage would include limits that would differ from Option 2 and the limits in the new plan, (i.e., the SABS-1996).

• The SABS-1996 has separate monetary limits for medical/rehabilitation and attendant care. Option 1 provides a global amount of coverage for these benefits.

• There is no reference to any temporal limits for coverage available under Option 1. By referring to a monetary limit for benefits under paragraph E without reference to a temporal limit, could lead to an interpretation that Option 1 does not have temporal limits.

Mr. Gurney submits that the Director’s Delegate did not have the brochure as evidence before her when she made her interpretation that temporal limits applied.

Mr. Gurney submits that it would have been reasonable for him to interpret the express terms of the Option 1 coverage as providing him with a level of coverage which was different and greater than the level of benefit available to him under the SABS-1996. The brochure’s description of the "Basic Accident Benefits" would have also made it clear that there were both monetary and temporal limits applicable to coverage under the SABS-1996. This however is inconsistent with the wording of Coverage E where there is no reference to temporal limits under the new plan.

Mr. Gurney submits that he disagrees with Allstate's submission that the coverages outlined in paragraphs A to F of Option 1 "mirror" the coverage contained in the transitional provisions of section 70. Mr. Gurney submits that Allstate would be correct in its interpretation if the transitional provisions expressly set out temporal limits. However, he states "[i]n fact, as the Director's Delegate states in her decision, the wording of section 70(3) is 'less than crystal clear. '"

Mr. Gurney further submits that "Allstate's offer in Option 1 to its policy holders to 'do nothing' and offer its policy holders access to $1,000,000.00 of coverage for medical/rehabilitation and attendant care benefits, is in keeping with the trade-off of benefits for an enhanced access to tort rights. The coverage afforded by Option 1, ($1,000,000.00 limits without temporal limits) would be far less than the Bill 164 benefits which allowed for unlimited attendant care coverage and an additional $1,000,000.00 of medical/rehabilitation coverage without temporal limits."

Mr. Gurney submits that he disagrees with Allstate’s "submission that an insured person had broader coverage available to him during the transitional period by pursuing Option 2 (moving to the new Plan) prior to the scheduled renewal date of the insured person's policy." Mr. Gurney submits that "[t]he broader coverage in the new plan required the purchase of optional benefits."

Mr. Gurney submits that "to move to the new plan and purchase additional or optional benefits prior to the expiration of his policy is a far different scenario than allowing him access to these optional benefits at the expiration of his policy. By enacting the transitional provisions, the legislature recognized that it was reducing benefits mid-contract and it therefore created a middle ground of benefits until such time as the contract expired. By requiring Mr. Gurney to opt out of this middle ground of coverage prior to the expiration of the policy to obtain an enhanced level of benefits [as Allstate submits], is inconsistent with the spirit of the transitional provisions and would make them ineffective."

ANALYSIS AND FINDINGS

In Vo and Maplex General Insurance Company,¹⁰ the Director of Arbitrations held that "Decisions of the Director, to the extent they cannot be distinguished are binding on the arbitrators." She further noted that cases may be distinguishable because of their factual basis or a new interpretive argument.

For the following reasons I agree with Mr. Gurney's submission that there is a factual basis in the present case to distinguish the appeal decision in State Farm and L.F. and which supports the interpretation of subsection 70(3) that temporal limits do not apply.

As noted above, subsection 70(3) provides:

The sum of the medical, rehabilitation and attendant care benefits paid under the motor vehicle liability policy for any one accident in respect of an insured person who does not sustain a catastrophic impairment as a result of the accident shall not exceed $1,000,000, and the limits set out in clauses 19 (1) (a) and (2) (a) do not apply.

In her L.F. decision, the Director's Delegate acknowledges the lack of clarity of subsection 70(3) when she states that, "I agree that s. 70(3) is less than crystal clear" and that subsection 70(3) "could have been drafted more clearly." Despite these observations, the Director's Delegate nevertheless concluded that subsection 70(3) was not so unclear as to justify the Arbitrator's analysis and conclusion that temporal limits did not apply.

As noted above, according to the Director's Delegate's interpretation of subsection 70(3), temporal limits apply to subsection 70(3) and the amount for attendant care benefits is limited to $72,000. This is the same amount limited under SABS-1996 for "Basic Accident Benefits," unless optional benefits are purchased. However, according to the Arbitrator’s interpretation, subsection 70(3) would be redundant if it limited attendant care benefits to $72,000.

The Director's Delegate dealt with the issue of redundancy by focusing on the words "the sum of" and extrapolates that her interpretation of section 70 "does not make s. 70 redundant, though the monthly maximum, temporal limit and (effectively) the overall maximum on [attendant care benefits] in the SABS-1996 apply to [Mr. F.] as if there were no transitional provision."

With respect, the Director's Delegate's interpretation does not answer the question that if the Legislature wished to limit attendant care to $72,000 for two years and not compensate an insured in mid-contract for the decrease in benefits under the new plan, why did it include attendant care as a benefit in the transitional provision?

As noted above, in its offer to Mr. Gurney and its other insureds, Allstate in Option 1 of its brochure states as follows:

OPTION 1. DO NOTHING UNTIL YOUR NEXT POLICY RENEWAL DATE.

Insurance companies will automatically include the coverages A, B, C, D, E and F described below:

E. $1,000,000 of coverage for medical, rehabilitation and attendant care expenses will be available (instead of the new plan’s limits, for non-catastrophic injuries, of $100,000 for medical and rehabilitation expenses and $72,000 for attendant care expenses). [emphasis in bold added]

Clearly, Allstate, in making its offer to Mr. Gurney as outlined in the IBC's brochure, emphasizes the fact that the new plan's limits of $72,000 for attendant care expenses do not apply if Option 1, which reflects the transitional subsection 70(3), is chosen. Given that the new plan limits attendant care to two years, $3,000 per month maximum, to a maximum of $72,000, by not limiting attendant care expenses to $72,000 it would appear that the logical conclusion made by this insurer and the insurance industry was that temporal limits do not apply to medical rehabilitation and attendant care expenses.

Applying the Director's Delegate's interpretation, the offer by Allstate under Option 1 which states, in part, "DO NOTHING UNTIL YOUR NEXT POLICY RENEWAL DATE" .... "When your policy comes due for renewal, the new plan, described in the attached brochure, will apply", clearly lulls an insured into a false sense of security. That is, if an insured chooses Option 1, then, under paragraph E of Option 1, the insured is led to believe that he or she is entitled to more than $72,000 for attendant care. This, however, would be contrary to the Director's Delegate's interpretation of subsection 70(3) which only allows an insured a maximum of $72,000 for attendant care.

While it follows from Allstate's offer to its insureds in Option 1 that the temporal limits will not apply to attendant care and medical and rehabilitation benefits, adjudicators are not bound to follow the insurance industry's interpretation of a legislative provision in its brochure. Nevertheless, Allstate's offer to its insureds in the IBC brochure, in my opinion, is consistent with the Arbitrator’s analysis and conclusion that temporal limits do not apply to subsection 70(3). Moreover, it is also supported by Director's Delegate Draper's view on statutory interpretation in Tustin and Canadian General Insurance Group¹¹ wherein the Delegate cited the Court of Appeal in Bapoo v. Co-Operators General Insurance Co.,¹² which held:

The interpretation of a statutory provision should not only comply with the legislative text and promote the legislative purpose, it should produce a reasonable and just outcome. . . . Avoiding unjust or unacceptable results is an essential part of the court’s task in interpreting statutory language. (p.624)

[emphasis added]

In my view, the insurance industry’s interpretation in its brochure and the Arbitrator’s interpretation in L.F. not only promote the legislative purpose of subsection 70(3), but avoids an unjust and unacceptable result.

In her decision, the Director's Delegate concludes that the legislative purpose of section 70 "... was intended to provide a middle ground during the transitional period." From this I would extrapolate that, the legislative purpose for providing the transition section 70 was to partially compensate an insured for the decrease of an insured's benefits in mid-contract. To say, as the appeal decision states, that temporal limits apply to subsection 70(3) because the decrease in accident benefits is compensated by an increase in tort rights does not, in my view, recognize that the legislative purpose of subsection 70(3) is distinct from the overall purpose of the SABS-1996. As pointed out in the L.F. arbitration decision, the "general presumption [is] that changes to the wording of legislation are purposeful."¹³ In my view, the legislative purpose of subsection 70(3) is to compensate an insured’s decrease of benefits in mid-contract. This purpose would be nullified if temporal limits apply.

Using the example of attendant care benefits, if there is no difference between what the SABS-1996 provides under "Basic Accident Benefits" if you do not buy optional benefits and what subsection 70(3) provides under the Director's Delegate's interpretation of subsection 70(3), then the transitional provision has no effect. Under Bill 164 there were no temporal limits for attendant care. Under the new plan, there are both temporal and monetary limits unless optional benefits are purchased. The transitional section offers a lower benefit than Bill 164 but a higher benefit than the new plan. That is, the transitional section is compensating an insured for a reduction in benefits in mid-contract.

Using the example of medical rehabilitation benefits, if temporal limits apply, then the provision of $1,000,000 for medical rehabilitation benefits, except for an extraordinarily rare case, has no meaningful effect if it has to be incurred within 104 weeks. Like the example of attendant care benefits, limiting medical rehabilitation benefits of $1,000,000 to two years would not be consistent with the purpose of the transitional provisions to compensate an insured for a reduction of benefits in mid-contract.

In conclusion, I find the IBC brochure a significant piece of evidence which was not before the Director's Delegate in L.F. when she interpreted the less than clearly drafted section 70. I find that the insurance industry's brochure lends support to the interpretation that temporal limits do not apply to subsection 70(3). I also find the IBC brochure, which includes the offer made by Allstate to Mr. Gurney and its other insureds in paragraph E under Option 1, supports the Arbitrator's reasoning in L.F. and adheres to the legislative purpose of subsection 70(3) to compensate an insured for a decrease in benefits in mid-contract.

Accordingly, for these reasons I find that temporal limits do not apply to subsection 70(3) of the Schedule. I, therefore, find that Mr. Gurney is entitled to claim supplementary medical and rehabilitation benefits for a period in excess of 104 weeks post accident.

EXPENSES:

The parties did not make submission on the issue of expenses. This issue is left to the hearing arbitrator.

February 15, 2005

Joyce Miller Arbitrator

Date

Neutral Citation: 2005 ONFSCDRS 19

FSCO A04-000142

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TERRY GURNEY

Applicant

and

ALLSTATE 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. Mr. Gurney is entitled to claim supplementary medical and rehabilitation benefits for a period in excess of 104 weeks post accident.

2. The issue of expenses is left to the hearing arbitrator.

February 15, 2005

Joyce Miller Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2(FSCO P02-00026, June 3, 2004)
3. 3(FSCO A00-000364, August 21, 2002)
4. 4Mr. Gurney withdrew his claim for housekeeping at the commencement of the hearing.
5. 5Subsection 18(2) of the Schedule: "No attendant care benefit is payable for expenses incurred more than 104 weeks after the accident."
6. 6The 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. [footnote in original]
7. 7Director’s Delegate Draper in Tustin and Canadian General Insurance Group (FSCO P99-00004, August 13, 1999) citing the Court of Appeal in Bapoo v. Co-Operators General Insurance Co. (1997), 1997 CanLII 6320 (ON CA), 36 O.R. (3d) 616: The interpretation of a statutory provision should not only comply with the legislative text and promote the legislative purpose, it should produce a reasonable and just outcome. . . . Avoiding unjust or unacceptable results is an essential part of the court's task in interpreting statutory language. (p.624) [footnote in original]
8. 8Director's Delegate Naylor in State Farm Mutual Automobile Insurance Company and Kristensen (FSCO P99-00051, July 6, 2000) citing Driedger, p. 451. [footnote in original]
9. 9(OIC P-002777, December 12, 1997)
10. 10(OIC P-002777, December 12, 1997)
11. 11FSCO P99-00004, August 13, 1999
12. 12(1997), 1997 CanLII 6320 (ON CA), 36 O.R. (3d) 616
13. 13Director's Delegate Naylor in State Farm Mutual Automobile Insurance Company and Kristensen (FSCO P99-00051, July 6, 2000) citing Driedger, p. 451.