Gurjinder Singh Sumal v. American Home Assurance Company, 2007 ONFSCDRS 169

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 169

FSCO A03-000693

BETWEEN:

GURJINDER SINGH SUMAL

Applicant

and

AMERICAN HOME ASSURANCE COMPANY

Insurer

Before: Robert A. Kominar

Heard: December 13, 2005, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions received by December 8, 2005.

Appearances: Patrick Mazurek for Mr. Sumal

Brian G. Sunohara for American Home Assurance Company

Issues:

The Applicant, Gurjinder Singh Sumal, was injured in a motor vehicle accident in the State of Texas on October 23, 2002. He applied for statutory accident benefits from American Home Assurance Company (“American”), payable under the Schedule.¹ American denied his claims based on its view that he was entitled to benefits from the Workplace Safety & Insurance Board (WSIB). The parties were unable to resolve their disputes through mediation, and Mr. Sumal 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 issues are:

Is Mr. Sumal precluded, by operation of section 59 of the Schedule, from receiving any statutory accident benefits based on his having applied for, having had his application approved and his being in receipt of Workplace Safety and Insurance Act (WSIA.) benefits arising out of this accident?
Notwithstanding that Mr. Sumal is in receipt of loss of income benefits through WSIB, is he entitled to proceed to arbitration with claims for any statutory accident benefits that are not covered by WSIA regulations?
What effect, if any, does the fact that the accident occurred in the State of Texas have on the operation of section 59 of the Schedule?

Result:

Mr. Sumal is precluded from claiming statutory accident benefits arising out of this accident.
Mr. Sumal cannot raise claims for statutory accident benefits arising out of this accident which the WSIB has denied or are not covered under the WSIA.
Mr. Sumal’s entitlement to accident benefits is not affected by the accident having occurred in the State of Texas, given the specific facts.

EVIDENCE AND ANALYSIS:

The factual background of the automobile accident which gave rise to these issues is rather straightforward. Mr. Sumal was, as described in a report made to the Workplace Safety & Insurance Board, a “co-driver” of a tractor trailer that was involved in a single vehicle automobile accident in the State of Texas on October 23, 2002. He was not driving at the time of the accident and he does not recall much of what happened; but it appears that his co-driver advised him afterwards that a tire blew out and that he lost control of the vehicle, resulting in the accident.

It is not completely clear from the material before me who reported this accident to the WSIB or when; but American’s file information reflects that Mr. Sumal reported it to his foreman on the date of the accident. Mr. Sumal claims that he did not personally report the accident to WSIB. However, it is obvious that “someone” notified WSIB, since on November 4, 2002 a “Worker’s Report of Injury/Disease” (Form 6 under WSIA) was completed under Mr. Sumal’s name, setting out the details of the accident, the nature of his injuries and that his co-driver was the only witness of the accident. Mr. Mazurek suggests that either the trucking firm which Mr. Sumal was working for, or that firm’s insurer, may have done so. At the end of the day it is not particularly relevant to this inquiry who reported the incident to WSIB.

Mr. Sumal alleges that he was self-employed at all material times and, as a result, not governed by the WSIA. Mr. Mazurek submits that Mr. Sumal never registered with WSIB and that the entity described as his “employer”, Raycan Transport, never registered him either. He bases this submission on a facsimile dated November 11, 2002 from Raycan to someone identified only as Mike Lamb. There is no information before me as to who Mike Lamb is, but the communication appears, on the face of it, to be providing this individual with a copy of the trucking contract associated with this claim. It also says “I have no WSIB #.” Mr. Mazurek suggests that this document should be interpreted as confirming that Raycan never registered Mr. Sumal as an employee with WSIB. To be clear, however, this correspondence does not refer to Mr. Sumal directly, and there was another individual, who was driving at the time of the accident, who may have been referenced in this communication as well.

As a result of the accident being reported to WSIB a claim file was opened, and to make a long story short, Mr. Sumal’s claim for WSIA benefits was registered on November 4, 2002. He was at that point asked to complete some documentation and return it to WSIB. The next relevant event in this file, from the evidence before me, occurred on July 6, 2003 when Mr. Sumal executed an “Election to Claim Benefits” (Injury, Death or Exposure Outside of Ontario). This document was witnessed by his then paralegal representative, which is relevant as the document states that it is invalid unless witnessed. Mr. Sumal obviously had retained a legal representative to advise him by that point in time.

Mr. Sumal’s application for benefits was ultimately approved by the WSIB. There is no dispute between the parties that the WSIB determined that Mr. Sumal was entitled to “loss of earning” benefits under WSIA, retroactive to the date of the accident, and that that he has actually received them. In a letter dated July 29, 2003, the WSIB claims adjudicator outlines the details of the calculation the WSIB made of Mr. Sumal’s loss of earning benefits.

In this arbitration Mr. Sumal is claiming income replacement benefits, medical benefits, rehabilitation benefits, attendant care benefits, housekeeping benefits, loss of clothing benefits, transportation back to Canada reimbursement, interest, expenses and a special award.

ANALYSIS

Both the Schedule and the WSIA system for work-related injuries are ideally meant to be self- contained schemes for dealing with specific types of accidents. However, life is never as formally rational as legislative schemes would like it to be, and so there are times when situations suggest the possibility of both schemes governing. Sometimes people who are working are injured as a result of an automobile accident, and in those cases there can be conflict between the statutory accident benefits available under the Insurance Act and the workplace accident benefits available under the Workplace Safety and Insurance Act. Given the significant probability of such situations arising, the legislature has provided some guidance as to which “scheme” of benefits is to prevail. Although both counsel agree about the relevant law in this case, there is a dispute about how to apply that law to these facts.

The interaction between the statutory accident benefit scheme and the workplace insurance scheme is set out in the law as follows:

Statutory Accident Benefits Schedule

Section 59

(1) The insurer is not required to pay benefits under this Regulation in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers’ compensation law or plan.

(2) Subsection (1) does not apply in respect of an insured person who elects to bring an action referred to in section 10 of the Worker’s Compensation Act (“WSIA”) so long as the election is not made primarily for the purpose of claiming benefits under this Regulation.

(3) If a person is entitled to receive benefits under this Regulation as a result of an election made under section 30 of the Workplace Safety and Insurance Act, 1997, no income replacement, caregiver or non-earner benefit is payable to the person in respect of any period of time before the person makes the election.

(4) If a person who would be entitled to benefits under this Regulation in the absence of subsection (1) elects to bring an action referred to in section 30 of the Workplace Safety and Insurance Act, 1997 and there is a dispute concerning the insurer’s liability to pay an expense for a vocational rehabilitation program that the person was attending at the time of the election and continues to attend, the insurer shall pay the expense pending resolution of the dispute.

(5) Despite subsection (1), if there is a dispute about whether subsection (1) applies to a person, the insurer shall pay full benefits to the person under this Regulation pending resolution of the dispute if,

(a) The person makes an assignment to the insurer of any benefits under any workers’ compensation law or plan to which he or she is or may become entitled as a result of the accident; and

(b) The administrator or board responsible for the administration of the workers’ compensation law or plan approves the assignment.

In essence, people who are injured in automobile accidents related to their employment ought to claim benefits through the WSIA scheme unless they meet the requirements of section 59(2) of the Schedule. It is absolutely clear that the only path out of the default WSIA scheme is related to a bona fides intention of the applicant to commence a tort action. This is made explicit by the requirement that the election out of the WSIA scheme not be made primarily for the purposes of claiming accident benefits under the Schedule. In Ontario, legal recourse after an automobile accident is covered by the statutory accident benefit scheme and tort law. Thus, if a valid election out of the workers’ compensation scheme is made, it logically must be primarily to pursue a tort claim. There is no evidence before me that Mr. Sumal ever commenced a tort action against anyone arising out of this accident.

The benefits available to an applicant under the Schedule and under the WSIA regulations, although similar, are not identical. The implication of this is that individuals who are injured in accidents which are related both to their employment and to automobile accidents will quite likely be tempted to weigh the benefits which they might be entitled to under one scheme with those which they might be entitled to under the other. There is nothing particularly mysterious about this and I do not find that there is anything sinister in such an inquiry. There is no reason that people who are injured in automobile accidents should not claim the maximum benefits to which they may be entitled to under law.

The difficulty in this case is that there is no dispute that Mr. Sumal was involved in an accident while he was working, that he is entitled to and has been approved for WSIA benefits, and that he has in fact actually received them. From the evidence before me it is unquestioned that he has received loss of income benefits through WSIB, which he acknowledges are in fact in excess of those he might have received as income replacement benefits under the Schedule.

The law also makes it completely clear that the Workplace Safety and Insurance Appeals Tribunal (WSIAT) has exclusive jurisdiction to adjudicate who is covered under WSIA as well as all issues related to that question. However, this is a moot point in this case as Mr. Sumal was approved for and paid WSIA benefits. But it is important to note that if Mr. Sumal wished to argue that he really should not have been approved for WSIA benefits, as counterintuitive as that proposition might be, he should have brought that matter to WSIAT.

As both parties agree, the relevant time for assessing an individual’s intention to pursue a tort action is at the time the election is made.² Mr. Mazurek argues, however, that there was no reasonable possibility that Mr. Sumal could have made an informed decision about such an election at that point in time. He notes that Mr. Sumal did not really know how the accident happened, and had no basis for understanding the conflict of laws implications of the accident having happened in Texas as opposed to Ontario. Further, he suggests that a tort claim in this matter may well have included the manufacturer of the tire that blew, as well as his putative “employer” and the driver of the vehicle. All of these factors, Mr. Mazurek argues, make it unreasonable to bind Mr. Sumal to the consequences of any choices he may have made shortly after the automobile accident.

Mr. Sunohara, on the other hand, argues that the statutory accident benefit scheme and the workers’ compensation scheme are legislatively intended to operate as mutually exclusive benefit regimes. Apart from the very limited option available for “opting out” of the WSIA scheme for the purposes of pursuing a tort claim, there is no election between schemes available based on an assessment of the benefits one might recover in one rather than the other. Both workers’ compensation and automobile accident benefits were explicitly created to limit access to tort litigation in certain common accident situations in favour of statutory guarantees of specific no-fault benefits being made available to injured people. Both accident benefits and workers’ compensation have interfaces with tort law, but only in limited circumstances.

I agree with Mr. Sunohara’s interpretation of the situation. The only valid election here is one to pursue a tort claim, not to seek statutory accident benefits as opposed to workers’ compensation benefits. There are cases that arise at the Commission where there is some dispute as to whether an insured person was entitled to claim WSIA benefits, or whether they were applied for, or whether they were properly denied by the WSIB. None of those situations apply to Mr. Sumal, as he admits that he ultimately applied for WSIA benefits, was found to be entitled to them, and ultimately received them. To this end Mr. Mazurek’s arguments that an auto insurer is required to pay pending the resolution of a dispute about entitlement to WSIA benefits, pursuant to section 59(5) of the Schedule, do not apply in these circumstances. Notwithstanding that Mr. Sumal executed an assignment of WSIA benefits in favour of his auto insurer, he is not able to pick and choose which benefits assist him most. This, in my view, would defeat the legislative purpose of creating two specific benefit regimes, each with their own benefit criteria. The choice of pursuing a tort action is what counts, and once that choice is made, the no-fault benefit scheme which applies is fixed, despite the fact that many people believe the choice is really between those two benefit schemes.

Mr. Mazurek argues that Mr. Sumal was financially compelled to complete an application for workers’ compensation benefits because his auto insurer refused to pay benefits, despite the requirement that an auto insurer pay all benefits pending the resolution of a dispute regarding entitlement to workers’ compensation. I have no doubt that Mr. Sumal, like many other people, experienced financial stress as a result of his not being able to work for some time after the automobile accident. The legal options for recovering lost income as well as medical treatment, etc. are now codified in the statutory accident benefit scheme and the workers’ compensation scheme. If Mr. Sumal had difficulties in claiming various workers’ compensation benefits, then his remedy lay in accessing the dispute resolution system provided for under the WSIA. It was not to attempt to opt out of that scheme and into the auto insurance scheme.

Mr. Mazurek argued that “dispute” about entitlement to workers’ compensation benefits should be given a broad interpretation to the effect that Mr. Sumal’s inability to obtain specific benefits, such as housekeeping assistance, from the WSIB should trigger the auto insurer’s obligation to deal with those claims. Despite the creativity of this argument, I do not accept it as reasonable. Although I am not making any specific finding that an individual must have initiated formal legal proceedings against the WSIB for there to be a “dispute”, I do find that it is not warranted to conclude that there can be a meaningful “dispute” about entitlement when the WSIB has accepted a claim and has paid the benefits that they deem to be owing. To interpret “dispute” any other way would, as Mr. Sunohara argues, allow applicants to bounce back and forth between the statutory accident benefit and workers’ compensation schemes on each and every benefit category. That is clearly not consistent with the legislative purpose underlying these two distinct benefit schemes. The “dispute” which section 59(5) of the Schedule refers to, in my view, is a threshold dispute between an applicant and the WSIB about whether he or she is “entitled to receive benefits” – in other words, whether the applicant is covered by the WSIA scheme or not. That sort of dispute must be distinguished from one related to “which” specific benefits an applicant may be entitled to receive or their quantification after initial entitlement to WSIA benefits is determined.

The consequence of this is that Mr. Sumal never had the type of dispute about his WSIA benefits that is contemplated by section 59(5) of the Schedule and, therefore, American had no obligation to process his claim for benefits pending the outcome of such a dispute.

Mr. Mazurek argues that Mr. Sumal’s financial situation after the accident put him under duress when he elected WSIA benefits. The reality is that both of the no-fault benefit schemes being discussed here have provisions which are meant to address loss of income concerns. Loss of income is a natural, almost universal, consequence of such accidents. But to argue that when problems occur in claiming benefits from one benefit scheme, one should be allowed to try the other one is not the way our law is structured.

In conclusion, I find that Mr. Sumal was at all material times entitled to benefits under the WSIA. Further, I find that Mr. Sumal did not elect to opt out of the WSIA scheme primarily to pursue a tort action and therefore he did elect to opt out primarily to claim statutory accident benefits. As such his election does not comply with the requirements of section 59 of the Schedule. Finally, I find that Mr. Sumal was never involved in a dispute over entitlement to WSIA benefits as described in section 59(5) of the Schedule and, therefore, American was not required to process his accident benefit claims pending resolution of such a dispute.

Therefore Mr. Sumal is precluded from proceeding to arbitration on the issues he has raised in this Application for Arbitration.

EXPENSES:

No submissions were made on expenses. If the parties cannot resolve the issue themselves, an expense hearing may be arranged through the case administrator and I will determine the issue.

September 5, 2007

Robert A. Kominar Arbitrator

Date