Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2006 ONFSCDRS 95

FSCO A05-002327

BETWEEN:

HARRICHAN NARAIN

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Richard Feldman

Heard: By written submissions received on March 22, 2006, April 28, 2006 and May 2, 2006.

Appearances:

Robert N. Franklin for Mr. Narain

Dan Rabinowitz for ING Insurance Company of Canada ("ING")

Preliminary Issue:

The parties have agreed that the following preliminary issue should proceed by way of a written hearing:¹

1. Was ING entitled to stop paying income replacement benefits to Mr. Narain at the 104-week mark without issuing a notice of stoppage or offering a DAC, in light of Arbitrator Feldman's findings in the order of June 24, 2005 (File No. A03-001749)?

Result:

1. Notwithstanding the findings contained in the order of June 24, 2005 in File No. A03-001749, ING was not entitled to stop paying income replacement benefits to Mr. Narain at the 104-week mark without issuing a notice of stoppage or offering a DAC.

Background:

The facts giving rise to this Application are not in dispute.

The Applicant, Harrichan Narain, was injured in a motor vehicle accident on April 10, 2003. He applied for and received statutory accident benefits from ING, payable under the Schedule.² Amongst other things, Mr. Narain applied for and received income replacement benefits. These income replacement benefits were terminated by ING on December 8, 2003. Mr. Narain disputed the termination of those benefits. That issue, together with others, proceeded to arbitration (File No. A03-001749) and was heard by me (together with an application filed by Ms. Mangroo, another occupant of the vehicle) on February 21, 22, 23, 24, 28, March 1 and March 2, 2005. The decision in that case was issued on June 24, 2005.

At the time of the accident, Mr. Narain was 32 years old and was generally quite healthy. Prior to the accident, Mr. Narain worked primarily as a labourer in shipping and receiving. He is also licenced to operate a forklift. His last job prior to the accident was as a shipper/receiver. Amongst other things, this job required the ability to squat, bend and lift repetitively.

During a total of approximately eight of the twenty-three months between the accident on April 10, 2003 and the conclusion of the hearing on March 2, 2005, Mr. Narain worked full-time as a forklift operator. Despite his ability to work as a forklift operator, he was able to prove, on a balance of probabilities, that he suffered a substantial inability to perform the essential tasks of his employment as a shipper/receiver. In particular, I found that he was unable to squat, bend and lift repetitively. Consequently, ING was ordered to pay Mr. Narain income replacement benefits up to the last day of the hearing (March 2, 2005). The last day of the hearing, however, was only about 99 weeks after the accident and no determination was made in the order as to Mr. Narain's entitlement to income replacement benefits beyond the last day of the hearing or beyond 104 weeks after the accident.³

After receiving the order of June 24, 2005, ING paid to Mr. Narain income replacement benefits up to March 2, 2005, together with interest (in compliance with the order of June 24, 2005). ING also paid income replacement benefits from March 3, 2005 up to April 10, 2005.

Despite demands for payment of income replacement benefits for periods subsequent to April 10, 2005 (i.e. after the 104-week mark),⁴ ING has refused to pay such benefits. ING did not provide a Notice of Stoppage or offer Mr. Narain the opportunity to attend a disability assessment at a designated assessment centre (a "Disability DAC"). ING takes the position that it is not required to provide a Notice of Stoppage or offer a Disability DAC because the reasons for the decision dated June 24, 2005 in Application number A03-001749 support ING's position that Mr. Narain does not meet the post-104 week test.

Counsel for ING states in his written submissions that since Mr. Narain was found (at the time of the hearing) to be able to work as a forklift operator on a full-time basis, the claimant would not meet the post-104 week test, the principle of res judicata applies and the Applicant is estopped from pursuing this claim. Counsel for ING provided no case law to support this position.

Mr. Narain has demanded payment of income replacement benefits for the period from April 11, 2005 through June 12, 2005 and from November 26, 2005 onwards.⁵ The parties were unable to resolve this dispute through mediation, and Mr. Narain filed this application for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

THE LAW:

Section 37 of the Schedule sets out the procedure that an insurer must follow if it determines that a person is no longer entitled to receive an income replacement benefit (or other specified benefits). The procedure under s. 37 (prior to March 2006)⁶ can be summarized as follows. The insurer must give the insured person a notice of its determination (with reasons) and specify a date for stopping the benefit which must be at least 14 days after the day the notice of stoppage is received by the insured person. The notice of stoppage must also inform the insured person of the right to require a designated assessment in accordance with section 43. If, within 14 days after receiving the notice of stoppage, the insured person provides the insurer with a disability certificate from a health practitioner under section 34 and provides written notice that he or she requires a designated assessment, the insurer must schedule such an assessment and continue paying the benefit at least until the report from that assessment is received. If the insured person does not provide a disability certificate and demand a designated assessment, the insurer may stop payment of the benefits on the date set out in the notice of stoppage.

EVIDENCE AND ANALYSIS:

In this case, ING originally stopped paying income replacement benefits in December 2003. ING did not again pay income replacement benefits until after receiving the order of June 24, 2005. At the 104-week mark, ING was not paying benefits as it was awaiting the outcome of the previous application. It is understandable that ING did not issue a notice of stoppage in April 2005 as it was taking the position that it was entitled to terminate the benefits in December 2003.

After receiving the order of June 24, 2005, ING paid the income replacement benefits and interest ordered (up to March 2, 2005, the last day of the hearing) and then voluntarily paid additional income replacement benefits up to the end of the 104-week period (from March 2, 2005 to April 10, 2005). Since Mr. Narain had worked on a full-time basis as a forklift operator for a total of about 8 months during the first 104 weeks after the accident, ING concluded that Mr. Narain was clearly not suffering a complete inability to engage in any employment for which he is reasonably suited by his education, training or experience. Although this may be a reasonable inference, I did not actually make this determination in my order of June 24, 2005 nor would such a determination have been necessary to resolve the issues that were before me on that application.

ING was not entitled to ignore the provisions of section 37 because I found that Mr. Narain was, as of March 2, 2005, capable of operating a forklift and had in fact worked as a forklift operator for extended periods of time between December 2003 and March 2005. My order of June 24, 2005 only makes a determination as to the condition of Mr. Narain as of March 2, 2005. While it is unlikely, it is possible that by April 10, 2005 Mr. Narain suffered a complete inability to engage in any employment for which he is reasonably suited by his education, training or experience. Section 37 is meant to provide him with an opportunity to challenge the decision of the Insurer by providing new medical evidence (a disability certificate and a report from a disability DAC) if he so wishes. Nothing in the order of June 24, 2005 relieves ING of its obligations to comply with the requirements of section 37. The principle of res judicata does not apply because the issues are not identical. The current application deals with a different period of time and a different legal threshold than the previous application.

The Commission's interpretation of the Schedule must be consistent with the principle of consumer protection. Mr. Narain has been deprived of his rights under the Schedule as a result of ING's failure to follow the procedures set out in section 37. If ING had followed the correct procedure and had Mr. Narain elected to have a designated assessment, ING would have had to pay income replacement benefits pending the outcome of the DAC.⁷ By not following the requirements of section 37, ING has deprived Mr. Narain of the opportunity for an independent medical assessment of his condition at the relevant time and the right to continued receipt of income replacement benefits (pending the DAC report).

I therefore conclude that, notwithstanding the findings contained in the order of June 24, 2005 in File No. A03-001749, ING was not entitled to stop paying income replacement benefits to Mr. Narain at the 104-week mark without issuing a notice of stoppage or offering a DAC.

EXPENSES:

If the parties cannot agree on the issue of entitlement to or amount of expenses, they may make submissions on both issues in accordance with Rule 79 of the Dispute Resolution Practice Code.

June 9, 2006

Richard Feldman Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2006 ONFSCDRS 95

FSCO A05-002327

BETWEEN:

HARRICHAN NARAIN

Applicant

and

ING 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. Notwithstanding the findings contained in the order of June 24, 2005 in File No. A03-001749, ING was not entitled to stop paying income replacement benefits to Mr. Narain on April 10, 2005 without issuing a notice of stoppage or offering a designated assessment in accordance with the provisions of section 37 of the Schedule.

June 9, 2006

Richard Feldman Arbitrator

Date

Footnotes

1. 1i.e. based only upon written submissions made on behalf of the parties.
2. 2The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
3. 3at which time the "test" changes to whether Mr. Narain, as a result of the accident, is suffering a complete inability to engage in any employment for which he is reasonably suited by education, training or experience.
4. 4It is undisputed that demands for payment of such benefits were sent by counsel for the Applicant on June 30, 2005 and July 20, 2005.
5. 5There is no claim from June 13, 2005 through November 25, 2005 as Mr. Narain was working as a general labourer during that period.
6. 6As of March 1, 2006, DACs were eliminated (except for assessments that had already been scheduled prior to that date) and section 37 was completely revised.
7. 7Which benefits may have been subject to repayment.