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

Neutral Citation: 2007 ONFSCDRS 180 FSCO A07-000276

BETWEEN:

DOMINIKA GADACZ Applicant

and

ING INSURANCE COMPANY OF CANADA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Fred Sampliner Heard: August 27, 2007, in London, Ontario.

Appearances: Talaal Bond for Ms. Gadacz Corinne P. Habkirk for ING Insurance Company of Canada

Issues:

The Applicant, Dominika Gadacz, was injured in a motor vehicle accident on December 23, 2005. She applied for and received statutory accident benefits from ING Insurance Company of Canada (“ING”), payable under the Schedule.¹ ING refused Ms. Gadacz’ request to switch from payment of weekly caregiver benefits to income replacement benefits. The parties did not resolve this dispute through mediation, and Ms. Gadacz 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. Can Ms. Gadacz elect income replacement benefits under Part II of the Schedule?

Result:

1. Ms. Gadacz may elect income replacement benefits under Part II of the Schedule.

EVIDENCE AND ANALYSIS:

This matter determines whether Ms. Gadacz is entitled to change her election from one weekly benefit to another under section 36 of the Schedule. The evidence consists of Ms. Gadacz’ brief testimony, the parties’ agreed statement of facts, and three document briefs. The parties made oral submissions, and Ms. Gadacz’ counsel also prepared a factum.

Background:

Ms. Gadacz had been employed as a personal support worker at a home for disabled people until she developed pregnancy complications and went onto sick benefits about four months before the accident. Two weeks prior to the accident she gave birth, and started receiving maternity benefits under the employment insurance regime.

Ms. Gadacz’s injuries from the accident were characterized as soft tissue neck and low back sprain by her family doctor, and she received treatment and medication. Ms. Gadacz testified that her pain did not subside, and continues to be a chronic condition.

The parties agree that ING promptly provided Ms. Gadacz with a full explanation of the types of weekly benefits available to her. Her Application for Accident Benefits indicated to ING she could qualify for two types of weekly disability benefits. Ms. Gadacz initially chose to receive an income replacement benefit, based her inability to conduct her pre-accident work duties.

However, Ms. Gadacz decided to change her election to a caregiver benefit in March 2006, shortly after she retained legal counsel. This benefit provided her with a weekly payment for her lost abilities in caring for her newborn baby as a result of the accident injuries.

ING did not contest Ms. Gadacz’ re-selection of the type of weekly benefit because changes during the early period of a claim are specifically contemplated under section 36 of the Schedule:

(1) Only one of the following benefits may be paid to a person in respect of a period of time:

1. An income replacement benefit.
2. A non-earner benefit.
3. A caregiver benefit.

(2) If a person’s application indicates that he or she may qualify for more than one of the benefits referred to in subsection (1), the insurer shall notify the person that he or she must elect within 30 days after receiving the notice which benefit he or she wishes to receive.

They also agree that she made an informed choice.

ING began paying Ms. Gadacz $42.63 weekly in caregiver benefits, representing 5.5 hours replacement labour. This amount was based on the recommendations of an in-home assessment of her caregiver disability. Her payment was reduced to $7.75 a week in June 2006 after the report of a second insurer examiner.

Ms. Gadacz’ financial circumstances and ongoing complaints caused her to re-assess her initial choice of caregiver benefits later that summer. She testified that her maternity benefits expired in early August 2006, and about the same time she was unsuccessful when she tried to resume her pre-accident employment duties. Without adequate income, she subsequently moved with her child to her parents’ home.

During this same time period Ms. Gadacz retained her present counsel. In September 2006, Ms. Gadacz’ lawyer wrote ING requesting that her benefits be converted from the caregiver benefits back to her original choice of income replacement benefits. ING denied Ms. Gadacz had a right to change the weekly benefit category again, and continued to pay Ms. Gadacz $7.75 per week for caregiver benefits.

ING argues that its initial letter to Ms. Gadacz clearly explaining her choices of the available weekly benefits also plainly stated it was not revocable. ING contends that the policy does not specifically accord her a right to change the type of her disability benefits mid-stream. Furthermore, opening the door to multiple elections severely prejudices an insurer’s ability to manage claims under shifting standards of entitlement.

The Law and Analysis:

First, ING’s argument that Ms. Gadacz made an irrevocable choice to receive caregiver benefits is not supported by a plain reading of section 36. The section quite clearly limits the insured to receipt of one benefit at a time, but there is no language that either directly states or implies that the drafters intended to limit the insured to a single election of a weekly benefit. On the contrary, if the election was intended as irrevocable the drafters would have placed specific wording to provide for that effect, as was contained in the previous Bill 164 Schedule.

The removal of the Bill 164 language from this Schedule indicated to Director’s Delegate Makepeace the legislative intent to leave re-elections open to factual determination.²

The Delegate clearly stated this proposition in the Anthony decision: “SABS-1996 allows for re-election of weekly benefits in some circumstances.”

ING presented no case law or argument to contradict Anthony. I fully agree with Director’s Delegate Makepeace that re-elections of weekly benefits are allowed in this Schedule, and I reject ING’s argument that an insured is limited under the policy to one initial election under section 36.

The second argument that Ms. Gadacz may not change her weekly benefit because ING explicitly told her the initial election was irrevocable has broad policy implications. Accepting the argument would effectively mean that an insurer can by notice override specific provisions enacted by the Legislature. There is no portion of the Schedule allowing either party this unilateral right to change the policy, and no statute or case law supports the notion. I dismiss it.

This brings me to consider the guiding factors in late elections set out in the Anthony decision: time passed since the initial election, reasons for the delay, reasons for seeking re-election, the effect of the re-election and prejudice to the insurer. The evidence is unchallenged and consistent on all points.

The documents show that six months passed from Ms. Gadacz’ March 2006 initial election of caregiver benefits to her September 2006 notice of re-election. Ms. Gadacz’ testimony is that the delay and reason for her seeking income replacement benefits was due to her August 2006 failure to resume her pre-accident employment, and consequent inability to financially secure her and her child’s welfare once the maternity benefits ceased. Her lawyer’s letter to ING set out the reasons for her financial distress.

I am satisfied with this evidence. I find that Ms. Gadacz had legitimate reasons for seeking a delayed re-election in August/September 2006, and promptly notified ING.

The prejudice issue is slightly more complicated. It is important to understand that Ms. Gadacz did not seek conversion of the caregiver benefits she received during the first six months into income replacement benefits. Prejudice to ING under that scenario is more likely because of the difficulty with retrospective disability analysis.

However, in this case Ms. Gadacz claimed ongoing income replacement benefits going forward from her September 20, 2006 letter to ING seeking re-election. At that point, ING had a right under the policy to request Ms. Gadacz to submit to an insurer’s medical examination³, which would have provided relevant data and professional opinion.

The evidence is that ING has not pursued its right to an insurer’s examination or sought to conduct a worksite assessment of Ms. Gadacz’ duties. Thus, I find that ING’s lack of medical evidence results from its failure to pursue medical investigation from September 2006 onwards.⁴ ING’s refusal to adjust Ms. Gadacz’ claim for income replacement benefits forms the basis of my decision to dismiss its prejudice argument.

Conclusion:

Ms. Gadacz had good reason to seek re-election when she did not resume her pre-accident work in August 2006 and the termination of her maternity benefits left her without adequate supporting income. Her notification to ING of her need to change benefit categories at that time did not cause prejudice to ING. Rather, the prejudice from her selection of a different weekly benefit falls squarely on ING’s own failure to gather medical information and adjust the claim.

Finally, the Schedule is accepted as consumer legislation that should be given a broad and liberal interpretation.⁵ In my view, income replacement benefits are designed to give an insured person basic financial support during his or her recovery from automobile accident injuries, and this category certainly fits Ms. Gadacz’ circumstances. On consideration of the appropriate criteria for re-election, I find that Ms. Gadacz is entitled to elect income replacement benefits from September 20, 2006.

EXPENSES:

I find that Ms. Gadacz is completely successful in this preliminary issue, and that the evidence was efficiently presented. I exercise my discretion to award Ms. Gadacz her expenses incurred in this preliminary issue hearing.

The parties may contact the caseworker to arrange an assessment if they cannot agree on the amount.

September 21, 2007

Fred Sampliner Arbitrator

Date

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

Neutral Citation: 2007 ONFSCDRS 180 FSCO A07-000276

BETWEEN:

DOMINIKA GADACZ 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. ING shall allow Ms. Gadacz to re-elect income replacement benefits from September 20, 2006.
2. ING shall pay Ms. Gadacz her expenses of this preliminary issue hearing.

September 21, 2007

Fred Sampliner Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Anthony and RBC General Insurance Company (FSCO P03-00023, July 22, 2004)
3. 3Section 42 of the Schedule
4. 4Definition of “laches” - A failure to do something which should be done or to claim or enforce a right at a proper time, delay that warrants presumption that party has waived his right. Black’s Law Dictionary (Fourth Edition, 1968)
5. 5Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129