Francesco Andriano v. Wawanesa Mutual Insurance Company and Republic Western Insurance, 2007 ONFSCDRS 166

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2007 ONFSCDRS 166

FSCO A06-000001

BETWEEN:

FRANCESCO ANDRIANO

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

and

REPUBLIC WESTERN INSURANCE

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Robert A. Kominar

Heard: May 16, 2007 at the Financial Services Commission of Ontario, in Toronto

Appearances: Amin Sachedina for Mr. Andriano Kevin D.H. Mitchell for Wawanesa Mutual Insurance Company Tom Harley for Republic Western Insurance

Issues:

The Applicant, Francesco Andriano, was injured in a motor vehicle accident on January 17, 2004. He applied for statutory accident benefits at various times from Republic Western Insurance (“Republic Western”) and from Wawanesa Mutual Insurance Company (“Wawanesa”), payable under the Schedule.¹ Both insurers declined to adjust his accident benefit claims. The parties were unable to resolve their disputes through mediation, and Mr. Andriano 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 issue is:

1. Which insurer was the first insurer to have received a completed Application for Accident Benefits from Mr. Andriano?

2. What are the consequences of the answer to question 1?

Result:

1. Republic Western Insurance was the first insurer to have received a completed Application for Accident Benefits from Mr. Andriano.

2. Republic Western is responsible for adjusting Mr. Andriano’s accident benefit claims pending any other determination made through the priority dispute resolution process. As such, Republic Western shall be substituted for Wawanesa as the respondent insurer in this Application for Arbitration.

EVIDENCE AND ANALYSIS:

This preliminary issue originated from submissions made by Wawanesa during the pre-hearing in this arbitration that it has no statutory obligation to deal with Mr. Andriano’s claims for accident benefits arising out of the automobile accident which he was involved in on January 17, 2004. The warrant for the position adopted by Wawanesa lies in its argument that it was not the first insurer to have received a completed Application for Accident Benefits from Mr. Andriano; rather Republic Western was, and therefore Republic Western must adjust the accident benefit claims until its responsibility for doing so is discharged either by way of agreement or the decision of a priority dispute arbitrator acting under the authority of the Arbitration Act.²

Although the Insurance Act mandates a distinct private arbitration procedure from arbitration at the Financial Services Commission of Ontario (the “Commission”) for insurers to engage when there is a dispute between them about the priority of claims for accident benefits, the issue before me here is of a quite different nature. My role is not, in any way, to determine the ultimate priority between insurers in Mr. Andriano’s situation.³ If that question cannot be amicably resolved between Republic Western and Wawanesa, which evidence to date suggests it cannot be, they will need to bring the matter before a private arbitrator as provided for in the legislation.

It is by now trite to observe that the legislative purpose of the accident benefits regime in Ontario is to provide prompt, easily accessible, helpful and fair responses by insurers to people who have been injured in automobile accidents. The relationship between someone claiming accident benefits and a first party insurer is not intended to be adversarial. Even though there may at times be disagreement as to which insurer really ought to pay accident benefits, based on the hierarchy established in our law, auto insurance legislation has been drafted in a way that makes that an issue to be argued between insurers. People injured in automobile accidents should, ideally, never need to become involved in these priority disputes.⁴ Insurers are quite reasonably deemed to possess the resources in both time and dollars to resolve these disputes between themselves completely in the background of any ongoing accident benefit claims. Unfortunately, Mr. Andriano’s case surfaces one of the flaws in the current system, as he has been quite involuntarily dragged into a rather technical legal dispute between two automobile insurers; which I note have both so far declined to remit this problem to a private arbitrator for a decision, seemingly because the stalemate between them has not provided motivation to either insurer to have a determination as to which company really should be paying accident benefits at the end of the day. Mr. Andriano has, as a consequence, regrettably been caught in the middle. This situation is certainly not in keeping with the spirit of accident benefits law or the priority dispute system and, in my view it is utterly unconscionable that these two insurers have locked Mr. Andriano into the position which they have to date. Mr. Andriano’s claims have not just fallen through the proverbial cracks during a priority dispute; it would be more accurate to say that they have fallen into a black hole created by these two insurers, which seem to have stumbled into a situation that has de facto allowed them to avoid using the priority dispute system which was explicitly created to guarantee that this sort of situation would not occur.

Thus, the question before me is not priority related, but rather which of these two insurers, on the facts, was the first to have received a completed Application for Accident Benefits and therefore should have adjusted his accident benefit claims pending any binding priority decision. This is codified in the Priority Regulations under the Insurance Act,⁵ which provide that:

1. All disputes as to which insurer is required to pay benefits under section 268 of the Act shall be settled in accordance with this Regulation.

2. The first insurer that receives a completed application for benefits is responsible for paying benefits to an insured person pending the resolution of any dispute as to which insurer is required to pay benefits under section 268 of the Act.

In order to answer this question, it is necessary to set out in some detail the chronology of Mr. Andriano’s interactions with both Republic Western and Wawanesa.

Mr. Andriano was moving from his residence to a new home at the time of the motor vehicle accident. He rented a truck from U-Haul on January 17, 2004 to accomplish that move and he claims that he was injured during the time he was using the rented vehicle. A clause in the rental agreement, entered into between Mr. Andriano and U-Haul, states that “U-HAUL TRUCK CUSTOMERS are insured by a business auto policy.” ⁶ In addition to this standard liability insurance which comes with all U-Haul vehicles Mr. Andriano purchased optional “Safemove” coverage from U-Haul, which the contract describes as providing him with additional “medical protection” among other things. The rental contract explicitly requires that all accident claims arising out of use of the rental truck be sent to U-Haul’s office in Stoney Creek, Ontario.

Mr. Andriano returned the rental vehicle to U-Haul on January 18, 2004. Inscribed by hand onto the return receipt, ostensibly by a U-Haul representative, are the words “customer hurt getting into truck, slipped,” which in my view unequivocally confirms that U-Haul, through its rental agent, was on notice as of January 18, 2004 that Mr. Andriano was claiming that he had sustained some sort of injuries while using their rental vehicle.

Upon learning of Mr. Andriano’s claim that he had been injured, U-Haul/Republic Western⁷ promptly retained the services of a firm of independent insurance adjusters, Cunningham Lindsey, to take a statement from him. The statement taken reflects the standard type of questions asked by insurers of many people after they have been involved in motor vehicle accidents: dealing with how the accident occurred, employment details, the nature of injuries sustained and medical treatment sought for them, the need for assistance with personal care and housekeeping, etc. This statement is recorded as having been taken at 10:00 a.m. on February 2, 2004, with Mr. Andriano’s daughter assisting him with translation as he is not completely fluent in English. U-Haul did not retain a professional Italian interpreter to assist Mr. Andriano with the taking of this statement.

On the same date, there is a communication sent by someone whom the parties agree is Mr. Andriano’s insurance broker on a form known as a CSIO Automobile Loss Notice. This is a form which insurance brokers use to notify an insurer of an automobile accident. It appears from the fax transmission record to have been sent at 4:53 p.m. from the broker to Wawanesa, which I observe to be well after Republic Western took a statement from Mr. Andriano. On the form is recorded Mr. Andriano’s name as well as a Wawanesa policy number. Mr. Andriano advised the adjuster from Cunningham Lindsey during his statement that, although he did not own a car, he used his daughter’s car regularly and that the “insurance is actually in my name.” This insurance was placed through Wawanesa. On the bottom of this form, in a section set aside for additional “remarks” are the words “Adjuster from U-Haul - Rosanna Presuti” along with telephone contact information for her. Also handwritten on the bottom of the form are found the words “System Down.”

On February 5, 2004, Wawanesa wrote to Mr. Andriano in response to receiving the CSIO Automobile Loss Notice, enclosing an accident benefits application package.

Mr. Andriano, at some point in time, retained a paralegal agent to represent him in the matter and as a result, on February 9, 2004, one Mr. Ostrovsky wrote to Ms Presutti, the adjuster for Republic Western at Cunningham Lindsey, enclosing an Application for Accident Benefits (OCF-1). It is noteworthy that the covering letter references the Wawanesa policy number, although it was explicitly addressed to Cunningham Lindsey. The actual OCF-1 which was prepared is addressed to “Cunningham Lindsey, Wawanesa Insurance, AB Claims, Rosanne Presutti.” Mr. Andriano disclosed the existence of a Wawanesa policy again in Part 4 of the OCF-1. The date stamp indicates that Cunningham Lindsey received this application for accident benefits on February 11, 2004.

On February 16, 2004, Ms Presutti wrote back to Mr. Ostrovsky indicating that she was representing U-Haul Canada in the matter, saying:

This will confirm my telephone conversation with Julia of your office on February 13, 2004, confirming receipt of Mr. Andriano’s application for accident benefits.

It appears that this application was sent to us in error, as it is addressed to Wawanesa Insurance, who is your client’s automobile insurance carrier.

As we do not represent Wawanesa Insurance, Julia of your office has agreed to forward Mr. Andriano’s application for accident benefits onto the appropriate insurer, Wawanesa Insurance and we will close our file accordingly.⁸

On February 16, 2004, Mr. Ostrovsky’s office sent a second copy of Mr. Andriano’s application for accident benefits onto Wawanesa Insurance, as suggested by Ms Presutti.

On February 17, 2004, Ms Presutti prepared a document titled “Notice to Applicant of Dispute Between Insurers” and sent it to Mr. Andriano.⁹ In that notice, she states that the Application for Accident Benefits was in fact received by her office but was “directed to Wawanesa.”

On March 9, 2004 Ms Phung, the Wawanesa file adjuster, acknowledged receipt of the “Dispute between Insurers.” She asked to be provided with some relevant documentation to assess the situation and pointed out to Republic Western through Cunningham Lindsey that the Insurance Act requires the first insurer to receive a completed application to pay benefits pending a priority ruling.

On the next day Ms Phung wrote to Mr. Andriano advising him that Wawanesa would not respond to his claims for accident benefits as Cunningham Lindsey, who represented U-Haul/Republic Western, had received the first completed application for benefits. Notwithstanding Wawanesa’s position that it would not pay benefits, Ms Phung arranged to take another statement from Mr. Andriano about the details of the accident on March 17, 2004.

Mr. Ostrovsky proceeded to submit various housekeeping and prescription medication expense claims to Cunningham Lindsey on March 17, 2004 and he also forwarded an OCF-22 requesting approval for an assessment by Sunrise Health to them on March 18. On March 19 Ms Presutti wrote to Mr. Andriano directly advising him that her client, Republic Western, was refusing to pay for the proposed assessment on the basis that it should have been sent to Wawanesa and not to them.

On March 25, 2004 Ms Presutti wrote to Ms Phung at Wawanesa advising her that Republic Western took the position that “the application was sent to us in error” and therefore that they would not be responding to any claims Mr. Andriano asserted arising out of this accident.

In response to this correspondence Mr. Ostrovsky’s office resubmitted the housekeeping and prescription expenses which had originally been sent to Republic Western to Wawanesa, only to be advised by Ms Phung on March 31st that all of Mr. Andriano’s claims had to be submitted to U-Haul. A vicious circle of insurer unresponsiveness had now been created.

At this point in time Mr. Andriano’s representative was in regular contact with both Republic Western and Wawanesa yet neither insurer was willing to respond to any of his claims for benefits, quite contrary to the spirit and intention of the accident benefits legislation and regulations.

On June 7, 2004 Ms Presutti wrote to Mr. Andriano, tersely advising him that Republic Western Insurance had instructed Cunningham Lindsey to close their file with respect to this motor vehicle accident.

Mr. Andriano, at some point in time, chose to retain new legal representation, this time from a law firm. On May 12, 2005 his new representatives were advised, this time by Mr. Mastromatteo who is the designated ADR Director of Republic Western, that a freshly prepared Application for Accident Benefits which they had received was being returned as it was, in Republic Western’s view, likely that it had been really intended for Wawanesa.

The incessant bouncing of responsibility for Mr. Andriano’s claims back and forth between Wawanesa and Republic Western continued into the mediation process at the Commission, as Mr. Andriano’s legal representatives, quite understandably, not being certain where to seek recourse for their client, filed two Applications for Mediation with the Commission, one against Wawanesa and one against Republic Western.

From the material before me it appears that the Mediation Unit of the Commission administratively closed the Republic Western file and allowed the claim against Wawanesa to proceed to mediation. I have no information as to what basis the Mediation Unit had for making the decision which it did. Frankly, from the information before me, and in light of my conclusions in this matter, it appears to have been an unwarranted decision. In this case the Mediation Unit at the Commission appears to have adjudicated on what it saw as a priority dispute between insurers and clearly it had no jurisdiction to do so. The end result was that it caused Mr. Andriano a significant and unnecessary delay in getting his claims addressed by an accident benefit insurer. This is not to suggest in any way that the Mediation Unit intended to bring about this result, however the outcome of its decision in fact created a challenge for Mr. Andriano going forward to arbitration as he, in effect, was being told that he could not initiate an arbitration against Republic Western because he had not mediated any issues with them.

ANALYSIS

Having set out the factual background giving rise to this dispute, the law is not, on its face, particularly complex. There is no doubt, and in fact both Wawanesa and Republic Western agree, that the first insurer to receive a completed Application for Accident Benefits is legally required to adjust the claim, pending the outcome of a priority dispute or any agreement between them as to which insurer should deal with the matter.

However, as in many cases, what on the surface appears to be a straight factual issue easily becomes a question of mixed fact and law. How does one determine which insurer received a “competed application for accident benefits?” What criteria are involved in making that determination?

Wawanesa argues that Mr. Andriano approached U-Haul/Republic General first, in the temporal sense, with an Application for Accident Benefits and therefore it must be legally deemed to be the first insurer to have received a completed application for benefits; as a result it must adjust Mr. Andriano’s claims pending the outcome of a priority dispute.

Republic Western however argues that, even though its independently retained adjusters, Cunningham Lindsey, were the first in time to have been contacted by Mr. Andriano regarding this accident, he contacted them under the mistaken apprehension that he was communicating with agents for Wawanesa, who in fact had in place a policy covering his daughter’s vehicle which he drove regularly. Republic Western further argues that when Mr. Andriano disclosed the existence of a Wawanesa policy number to their adjuster during the statement which she took from him, he thereby manifested an “intention” to make a claim for accident benefits to Wawanesa. The end result of this, according to Republic Western’s view of the matter, is that Mr. Andriano actually always intended to send his application for benefits to Wawanesa, but inadvertently and mistakenly sent it to the wrong address, which just happened to be Cunningham Lindsey, who represented Republic Western not Wawanesa.

In effect, the question before me is whether the intentions, explicit or implicit, of an applicant are relevant to determining which insurer first receives a completed application for accident benefits.

I find, after carefully considering the matter, that the intentions of an applicant for accident benefits are irrelevant, in most cases, to determining which insurer first receives a completed application for accident benefits. The primary justification for this conclusion lies in the reality that the priority dispute resolution process was explicitly created to keep applicants for benefits, to the greatest extent possible, out of such disagreements between insurance companies. Although there were many other potential solutions for resolving disputes between insurers, the legislature chose to establish the default position as being that the first insurer to receive a completed application for benefits must adjust the claim. Recognizing that applicants for benefits will not always make the “correct” choice among the various insurers available, given the complex relationships between them, the legislature established a completely independent dispute resolution process, which uses completely different arbitrators from those at the Commission, to resolve such disputes between insurers. I find, that the only plausible inference that can be drawn from the design of this dispute resolution process is that applicants for accident benefits are, in most cases, expected to be largely uninvolved in it. The priority dispute system is one that operates primarily between insurers, and barring some unusual situation where an applicant for benefits believes that his or her claims should be adjusted by one insurer rather than another, it should operate invisibly in the background of any claims for accident benefits.

Having said this, it is clear that encouraging insurers in attempts to discern the “real” or “mistaken” intentions of an applicant in presenting a claim to them for accident benefits would be counterproductive and inconsistent with the policy that accident benefits should be readily available to people injured in automobile accidents without any unwarranted concern for ultimate determinations of priority. Insurers are sophisticated litigants, which have the luxuries of time and resources to sort such problems out between themselves without any need to jeopardize or delay the processing of claims made by those involved in automobile accidents and who very often need prompt attention to their condition.

Although I find that inquiries into the subjective intentions of an applicant for accident benefits are generally irrelevant to a determination of which insurer first received a completed application for benefits there are still some aspects of this process that need to be carefully considered and which do place some restraints on it.

The priority regulation provides that the first insurer to receive a “completed” application for benefits is required to adjust the file pending a priority dispute. The law in Ontario is clear that a “completed” application does not need to be submitted on any specific form, such as a fully and perfectly completed OCF-1. I agree with the position adopted by Justice Lissaman in Liberty Mutual Insurance Co. v. Commerce Insurance Co. ¹⁰ where he distinguishes “completed applications for benefits” from “formal complete applications for benefits.” In coming to his conclusion Justice Lissaman agreed with the private arbitrator in a priority dispute that this question does not really engage a technical issue of whether an application was remitted on the proper form with all the ‘I’s’ dotted and ‘T’s’ crossed” , but rather a question of whether an insurer, in fact, had sufficient information in its possession to know that a person involved in an automobile accident was potentially making a claim for accident benefits and that they had sufficient particulars to meaningfully move forward in adjusting any such claim.

In this case there is no dispute that Mr. Andriano first approached U-Haul/Republic Western with his claim for accident benefits. I find it to be particularly salient that the rental contract that Mr. Andriano was required to sign by U-Haul before renting the vehicle explicitly advised him that all claims arising out of accidents must be submitted to them and that he was covered by their insurance policy. Mr. Andriano and his legal representatives did nothing other than what U-Haul contractually required him to do after an accident when they sent the Application for Accident Benefits to them.

Notwithstanding that Mr. Andriano first approached U-Haul/Republic Western with a claim for accident benefits, the evidence I have before me inexorably leads me to the conclusion that Ms Presutti, the independent adjuster at Cunningham Lindsey, went out of her way to divert Mr. Andriano from Republic Western and onto Wawanesa. I find that, after learning that there may have been a Wawanesa policy in place which might rank higher in priority than itself Republic Western summarily closed the door on Mr. Andriano and thereafter steadfastly refused to adjust his accident benefit claims. This is exactly what they should not have done under the legislation and the kind of situation which the priority dispute system was created to prevent. Insurers ought to deal with such matters between themselves and not become engaged in urging insured persons to send their claims elsewhere or self-adjudicating disputes which are mandated by law to be determined by private arbitrators. An insurer’s belief, even if is a reasonable belief, that it is certain to prevail in a priority dispute does not give it reasonable grounds to just avoid participating in the priority dispute system. The correct result of a priority dispute is what is agreement upon between insurers, or awarded by an arbitrator.

Republic Western has argued that the alleged “mistake” that Mr. Andriano, and subsequently his legal representatives made, in sending his Application for Accident Benefits to them rather than to Wawanesa changes the situation and clothed them with valid justification for not adjusting his claim. With respect, I completely disagree. Although it is not my role to decide the priority dispute between these two insurers, it is manifestly clear that there is a “question” here that should have been remitted to a private arbitrator if the two companies were unable to negotiate a solution between themselves. The fact that Mr. Andriano identified a potential Wawanesa policy on his daughter’s car as having been in existence at the same time he submitted an Application for Accident Benefits to Republic Western clearly raised the possibility that a priority issue may have been in the air.

The fatal error which Republic Western made, in my view, was that they chose not to follow the mandated dispute resolution process for adjudicating such issues, but instead chose to insist that their view on priority was infallibly correct and, logically following from that, that they therefore had no legal responsibility to adjust Mr. Andriano’s claims. If this sort of response were statutorily sanctioned, then one might be able to understand Cunningham Lindsey’s attempts to redirect Mr. Andriano to the “right” insurer as being helpful and well intentioned. The problem, of course, is that such actions by insurers are not sanctioned, and frankly it is not particularly surprising, notwithstanding that it is unfair to Mr. Andriano, that Wawanesa chose to respond to Republic Western’s thrust with its own deeply entrenched and narrowly legalistic parry that first application means first application and nothing more.

I have no doubt that the proper course of action in this situation would have been for Republic Western to adjust Mr. Andriano’s claims, file a priority dispute with Wawanesa and then actually remit the matter to the jurisdiction of an arbitrator. Had that happened then Mr. Andriano’s accident benefit claims would have been dealt with in the manner the legislation contemplates, and these two insurers could have locked horns in front of a private arbitrator to sort out their differences without prejudicing Mr. Andriano. This case is an example of why the priority dispute system is important and why insurers should not be allowed to avoid it or divert around it. The contextual reality is that, section 7(2) of the Priority Regulation imposes a limitation period for initiating an arbitration which may or may not now play a role in this case, although that is also a matter for a priorities arbitrator to deal with. The result though is that both insurers here are interested in prevailing on this preliminary issue. This is not the way the system is supposed to function. It is one of the virtues of the accident benefits dispute resolution system that it allows findings to be made as to which insurer first received a completed Application for Accident Benefits outside of the priority system; otherwise insurers could effectively resist claims for benefits simply by declining to put the priority dispute in front of an arbitrator, as happened here.

There is one final issue which I wish to address. Republic Western raised the point that, notwithstanding the priority dispute system, there has to be some control over applications for accident benefits being made to insurers without rhyme or reason. The point being that even with the priority dispute resolution process in place, insurers should not have to contend with responding to what are in effect random and capricious applications made by applicants for no better reason than that they threw a dart at a board populated with names of insurers and hit a specific one.

Notwithstanding my decision here, I acknowledge that Republic Western raises a valid concern here; however the facts do not support that it is a relevant concern in this situation. The Ontario Court of Appeal has clearly stated in dealing with this issue, citing with approval Arbitrator Jones’ reasoning in a priority dispute, that “only in the most extreme cases, where the connection with the insurers is totally arbitrary should the insurer refuse to pay.”¹¹ In effect there is a “nexus test” that the court recognizes for dealing with Applications for Accident Benefits “As long as there is some nexus – some connection - between the insurer receiving an application for benefits and the insured, the insurer must pay pending the determination of its obligation to do so.” ¹²

The Director of Arbitrations has recently cited the Court of Appeal’s reasoning in Kingsway General Insurance Co. v. West Wawanosh Insurance Co. ¹³ I find it to provide relevant guidance in the way such issues should be determined by adjudicators.

Insurers subject to this Regulation are sophisticated litigants who deal with these disputes on a daily basis. The scheme applies to a specific type of dispute involving a limited number of parties who find themselves regularly involved in disputes with each other. In this context, it seems to me that clarity and certainty of application are of primary concern. Insurers need to make appropriate decisions with respect to conducting investigations, establishing reserves and maintaining records. Given this regulatory setting, there is little room for creative interpretations or for carving out judicial exceptions designed to deal with the equities of particular cases.

I find that there are two inferences to be drawn from these decisions of the Court of Appeal: first, as long as there is some reasonable connection, or nexus, between and applicant for accident benefits and an insurer, then the first insurer in time to receive enough information to start adjusting a claim must do so pending the outcome of a priority determination; second, the determination of which insurer was the first to receive a completed application for benefits is not a subtle exercise in “balancing equities,” or inquiring into subjective intentions or motives. Rather it is a straightforward, even mechanical, evaluation of the facts.

In this case I specifically find that there clearly was nexus between Mr. Andriano and Republic Western. The rental agreement for the truck involved in the accident explicitly advised Mr. Andriano that he was covered by U-Haul’s liability insurance. Mr. Andriano was encouraged to purchase additional insurance which covered among other things extra medical coverage when he rented, and he was also required to report all accident claims directly to U-Haul/Republic Western. Mr. Andriano did exactly what he was contractually required to do. He and his legal representatives chose to send his claims to Republic Western on the basis of this contract only to have them “redirected” by Republic Western’s independent adjuster to Wawanesa. In the circumstances I am uncertain how Republic Western can plausibly argue that there is no nexus present. There was nothing “random” or “totally arbitrary” in Mr. Andriano’s decision to send his claims to Republic Western. Frankly, it seems completely understandable why someone who was injured while using a rental vehicle that was insured by the rental company might believe that claims for benefits should be sent to the rental vehicle insurer.

Whether Republic Western is in fact the highest priority insurer is irrelevant in coming to this decision. Mr. Andriano has the right to be wrong in making the initial decision as to which company he should send his claims.

To reiterate, my decision has nothing to say about the ultimate priority between Republic Western and Wawanesa in this accident. The only reason that this matter is before me is that both insurers chose not to follow through with the designated process for resolving such disputes and retain an arbitrator to adjudicate on the matter.

I find therefore that Republic Western was the first insurer to have received a completed Application for Accident Benefits from Mr. Andriano and therefore that it was required to adjust Mr. Andriano’s claims pending any decision made in a priority dispute and further that Mr. Andriano was entitled to access the Commission’s mediation and arbitration processes against Republic Western and not Wawanesa. As a result, I find that the appropriate remedy at this point in time is to substitute Republic Western for Wawanesa as the Respondent in this Application for Arbitration going forward. I find that I have the authority to grant this remedy based on Republic Western’s attorning to my jurisdiction and having participated in the preliminary issue hearing. In the event that there are procedural issues which Republic Western now believes need to be addressed, the pre-hearing may be resumed to deal with them.

EXPENSES:

None of the parties made submissions on expenses. If the issue of expenses cannot be resolved between them, an expense hearing on the preliminary issue may be arranged as provided for in the Dispute Resolution Practice Code, and I will decide the issue. In this case I find that it is not appropriate to reserve the expense decision on the preliminary issue to the ultimate hearing arbitrator.

August 31, 2007

Robert A. Kominar Arbitrator

Date

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2007 ONFSCDRS 166

FSCO A06-000001

BETWEEN:

FRANCESCO ANDRIANO

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

and

REPUBLIC WESTERN INSURANCE

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Republic Western Insurance was the first insurer to have received a completed Application for Accident Benefits from Mr. Andriano.

2. Republic Western shall be substituted for Wawanesa as the Insurer of record in this arbitration, nunc pro tunc.

August 31, 2007

Robert A. Kominar Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 21991 S.O. c. 17
3. 3I note that after Wawanesa raised the question of its legal responsibility to respond to Mr. Andriano’s claims at the pre-hearing, it was agreed that the Commission would invite Republic Western to make submissions, if it wished, on the question of whether it was the first insurer to have received a completed application for benefits or not. Initially Republic Western “declined” the invitation to participate and attempted to appeal my decision that an arbitrator has jurisdiction to determine the question of which insurer first received a completed application for benefits. Following correspondence from the Director of Arbitrations confirming the view that determination of priority between insurers is not the same issue as determination of which insurer was the first to receive an application for benefits, Republic Western attorned to the jurisdiction of the Commission to decide this issue and as a result participated in the preliminary issue hearing. At the preliminary issue hearing both insurers and the applicant accepted the jurisdiction of the Commission to hear and decide this question.
4. 4Note that there is a process whereby accident benefit claimants can choose to become involved in the dispute as to which insurer is required to pay benefits.
5. 5Ontario Regulation 283/95 amended to Ontario Regulation 305/98.
6. 6I note that this is a standard contract of adhesion, prepared by U-Haul and not subject to negotiation or amendment by Mr. Andriano.
7. 7Republic Western is, as Mr. Harley advised, effectively the entity through which U-Haul self insures its approximate 90,000 vehicles in North America. It is a “captured” insurer as Mr. Harley noted, and only covers U-Haul vehicles.
8. 8Emphasis added
9. 9Section 4 of the Priority Regulations require that this notice be given to an insured person by an insurer which intends to initiate a priority dispute. An insured person has the option of participating in that dispute if he or she so chooses. It is my understanding that this is option is seldom exercised.
10. 10[2002] I.L.R. 1-4049, p. 36.
11. 11Kingsway General Insurance Co. v. Ontario (Minister of Finance) 2007 Carswell Ont 405. Ontario Court of Appeal, p 5. (emphasis added)
12. 12Ibid.
13. 13(2002) 2002 CanLII 14202 (ON CA), 58 O.R. (3rd) 251.