Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 187
FSCO A08-000248
BETWEEN:
STEPHEN GROSICKI
Applicant
and
NON-MARINE UNDERWRITERS, MBRS. OF LLOYD’S
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Arbitrator Suesan Alves
Heard: By telephone conference call on October 3, 2008
Appearances: Douglas Bryce for Mr. Grosicki
James R. Townsend for Non-Marine Underwriters, Mbrs. of Lloyd's
Issues:
The Applicant, Stephen Grosicki, was injured in a motor vehicle accident on August 30, 2002. He applied for and received statutory accident benefits from Non-Marine Underwriters, Mbrs. of Lloyd’s (“Lloyd’s”), payable under the Schedule.1 Mr. Grosicki applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended, claiming income replacement benefits, the cost of examinations, interest, expenses and a special award.
Lloyd’s alleges that Mr. Grosicki’s claims for income replacement benefits are time barred by section 281(5) of the Insurance Act, (the “Act”). Mr. Grosicki disputes that this is the case. He submits that he is entitled to resume receiving income replacement benefits under section 11 of the Schedule and that his claim for those benefits is timely.
The preliminary issue is:
- Is Mr. Grosicki precluded from proceeding to arbitration with his claim for resumed income replacement benefits from March 27, 2006 because his application for arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Act?
Result:
- Mr. Grosicki is precluded from proceeding to arbitration on his claims for further income replacement benefits by subsection 281(5) of the Act.
EVIDENCE AND ANALYSIS:
Mr. Grosicki was injured in a motor vehicle accident on August 30, 2002. Lloyd’s accepted that he was entitled to receive income replacement benefits and paid those benefits commencing on September 7, 2002 until September 24, 2003.
Lloyd’s put Mr. Grosicki’s income replacement benefits in stoppage on July 11, 2003, based on an insurer’s examination. Lloyd’s informed Mr. Grosicki that he could request a disability DAC, and that if he did so by July 28, 2003, his income replacement benefits would continue until the report of the DAC was received. As Lloyd’s paid income replacement benefits until the date it sent him the DAC report, I infer that Mr. Grosicki requested the disability DAC by July 28, 2003.
The DAC assessors concluded that Mr. Grosicki did not suffer “a severe inability” to perform the essential tasks of his pre-accident employment. Lloyd’s concluded that Mr. Grosicki was no longer substantially disabled.
In a letter dated September 24, 2003, Lloyd’s informed Mr. Grosicki that his income replacement benefits were terminated, provided him with a copy of the DAC assessment dated September 16, 2003, a copy of section 51 of the Schedule and of sections 279-283 of the Insurance Act. Lloyd’s also informed Mr. Grosicki that he had the right to dispute the termination by mediation and arbitration or a court proceeding; and that there was a two-year time limit for taking such steps. I find this was a clear and unequivocal refusal of Mr. Grosicki’s income replacement benefits.
Mr. Grosicki accepted this termination and on September 29, 2003, five days after his benefits were terminated, he returned to work at his pre-accident employer where he worked for almost 30 months.
As of March 27, 2006, Mr. Grosicki went off work on a disability. He alleges that his disability was due to his injuries from the motor vehicle accident of August 30, 2002. There is a dispute between Mr. Grosicki and Lloyd’s as to the cause of this disability. Mr. Grosicki received short- term disability benefits followed by employment insurance benefits. In December 2006, counsel for Mr. Grosicki asked Lloyd’s to resume payment of Mr. Grosicki’s income replacement benefits as of March 27, 2006, when he went off work
On April 25, 2007, counsel for Lloyd’s advised that Lloyd’s refused to resume payment as requested. Lloyd’s took the position that Mr. Grosicki had two years after the refusal of September 24, 2003, or until September 24, 2005, to apply for mediation and arbitration. Lloyd’s submits that Mr. Grosicki’s claim for further income replacement benefits is time barred by section 281(5) of the Insurance Act, because he applied for mediation on July 9, 2007 and for arbitration on February 7, 2008 just shy of four years after Lloyd’s refused his claim for further income replacement benefits.
Section 281 of the Insurance Act provides:
Litigation or arbitration
- (1)Subject to subsection (2),
(a) the insured person may bring a proceeding in a court of competent jurisdiction;
(b) the insured person may refer the issues in dispute to an arbitrator under section 282; or
(c) the insurer and the insured person may agree to submit any issue in dispute to any person for arbitration in accordance with the Arbitration Act, 1991. 1996, c. 21, s. 37.
Limitation
(2) No person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed and, if the issues in dispute were referred for an evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties. 1996, c. 21, s. 37.
Limitation period
(5) A step authorized by subsection (1) must be taken within two years after the insurer’s refusal to pay the benefit claimed or within such longer period as may be provided in the Statutory Accident Benefits Schedule.
Mr. Grosicki submits that at the time he returned to work he agreed with the Insurer’s position. There was no dispute between the parties and no issue which could be mediated or arbitrated. He submits that any applicable limitation period would begin to run from the date of Lloyd’s refusal to resume his benefits under section 11 on April 25, 2007. Since he applied for mediation and arbitration within two years of the date of that refusal, his applications for mediation and arbitration are timely and he is entitled to proceed to have an adjudication of his entitlement to further income replacement benefits on the merits.
Mr. Grosicki relies on section 11 of the Schedule which provides:
- A person receiving an income replacement benefit may return to or start an employment at any time during the 104 weeks following the onset of the disability in respect of which the benefit is paid without affecting his or her entitlement to resume receiving benefits under this Part if, as a result of the accident, he or she is unable to continue in the employment. O. Reg. 403/96, s. 11.
The Applicant submits that the Insurer’s position gives no effect to section 11 of the Schedule. The Insurer submits that the Applicant’s position ignores the time limit provisions of the Act and that a regulation cannot override those provisions.
Mr. Grosicki’s argument, that because he returned to work, a provision in the Schedule gives him two limitation periods, is quite similar to the argument advanced in the case of Haldenby v. Dominion of Canada General Insurance Company.2 In that case the argument was rejected both at the trial level and by the Ontario Court of Appeal.
In Haldenby, the insured argued that section 281(5) of the Insurance Act set a general limitation period which required a person to initiate proceedings within two years of the insurer’s refusal to pay the benefit claimed, or within such longer period as may be provided by the Schedule. However, she argued that section 26(1) of the Bill 68 Schedule provides a longer period for an insured person who had returned to work to initiate proceedings. Thus there were two separate and distinct limitation periods, one which is two years from the insurer’s refusal to pay the amount claimed. If, however, the insured person attended school or returned to work as permitted by section 16 of that Schedule, then he or she would be required to commence proceedings within two years of the insurer’s refusal to pay further benefits, after reapplication.
The Court of Appeal held that “…s. 26(1) contemplates one limitation period. It is the insurer’s refusal which triggers the limitation period that can arise out of two types of situation. Indeed, the two parts of s.26(1) apply respectively to the situations where (1) the insurer refuses to pay the amount claimed by the insured; or in the alternative where (2) the insurer refuses to pay further benefits if the claimant went to school or returned to work as permitted by s.16.”
One of the difficulties the Court of Appeal identified was that Ms. Haldenby’s argument, if accepted, would allow a person receiving benefits who had successfully returned to work to apply for further benefits at any time in an undetermined future, and would “unreasonably controvert the systemic need for finality, certainty and the principle of diligence.”
Each of the Statutory Accident Benefits Schedules contains a provision permitting persons who return to work while “receiving income replacement benefits,” to resume those benefits under certain circumstances.3 Based on Haldenby, they do not get the benefit of two limitation periods. By implication they must return to work before a refusal which triggers the limitation period, or commence mediation or a court or arbitration proceeding in relation to a claim for resumed benefits before the limitation period expires.
Although the return to work provisions in the Bill 68 Schedule are somewhat different from those in the Bill 59 Schedule at issue in this case, I find the underlying principle expressed in Haldenby applicable.
As stated earlier, Lloyd’s refusal of Mr. Grosicki’s income replacement benefits on September 24, 2003 was clear and equivocal. Lloyd’s informed him of his rights and remedies and the applicable time limits within which he was required to take steps to dispute the refusal. I conclude that the refusal of September 24, 2003 triggered the limitation period. For the reasons given by the Court of Appeal in Haldenby, I find that Mr. Grosicki is precluded by section 281(5) of the Insurance Act from proceeding with his claim for further income replacement benefits from March 27, 2006.
Expenses:
If the parties are unable to agree on expenses they may follow the procedure set out in Rule 79 of the Dispute Resolution Practice Code—Fourth Edition, Updated October 2003.
November 21, 2008
Suesan Alves Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 187
FSCO A08-000248
BETWEEN:
STEPHEN GROSICKI
Applicant
and
NON-MARINE UNDERWRITERS, MBRS. OF LLOYD’S
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Mr. Grosicki is precluded from proceeding to arbitration with his claims for further income replacement benefits commencing March 27, 2006 by section 281(5) of the Insurance Act.
November 21, 2008
Suesan Alves Arbitrator
Date
APPENDIX A
Sections 16 and 26 of the Bill 68 Schedule
- (1) Subject to section 15 and subsection (3), a person receiving a benefit under this Part may attend school or accept, or return to, work at any time during the first two years following the accident for any period of time without affecting his or her benefits under this Part if, as a result of the accident, he or she is unable to continue at school or in the occupation or employment. R.R.O. 1990, Reg. 672, s. 16 (1).
(2) Subject to section 15 and subsection (3), after the two-year period referred to in subsection
(1), a person receiving a benefit under this Part may attend school or accept, or return to, an occupation or employment for periods of up to ninety days without affecting his or her benefits under this Part if he or she, as a result of the injury, is unable to continue at school or in the occupation or employment. R.R.O. 1990, Reg. 672, s. 16 (2).
(3) The insurer is not required to pay weekly benefits under section 13 for any week in which the insured person attends school. R.R.O. 1990, Reg. 672, s. 16 (3).
26.–(1) A mediation proceeding under section 280 of the Insurance Act in respect of benefits under this Regulation must be commenced within two years from the insurer’s refusal to pay the amount claimed in the application for statutory accident benefits or, if the person has attended school or accepted, or returned to, an occupation or employment, as permitted by section 16, within two years of the insurer’s refusal to pay further benefits.
Sections 14 and 72 of the Bill 164 Schedule
- (1) A person receiving weekly income replacement benefits under this Part may return to or start an employment at any time during the 104 weeks following the onset of the disability in respect of which the benefits are paid without affecting his or her entitlement to resume receiving benefits under this Part if, as a result of the accident, he or she is unable to continue in the employment. O. Reg. 776/93, s. 14 (1).
(2) After the 104-week period referred to in subsection (1), a person receiving weekly income replacement benefits under this Part may return to or start an employment for periods of up to ninety days without affecting his or her entitlement to resume receiving benefits under this Part if, as a result of the accident, he or she is unable to continue in the employment. O. Reg. 776/93, s. 14 (2).
- (1) A mediation proceeding under section 280 of the Insurance Act or an arbitration or court proceeding under section 281 of the Act in respect of a benefit under this Regulation shall be commenced within two years from the insurer’s refusal to pay the amount claimed or, if the person has engaged in an employment as permitted by section 14 or has returned to elementary, secondary or post-secondary education as permitted by section 17, within two years of the insurer’s refusal to pay further benefits. O. Reg. 776/93, s. 72 (1).
(2) Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within ninety days after the mediator reports to the parties under subsection 280 (8) of the Act. O. Reg. 776/93, s. 72 (2).
Sections 11 and 51 of the Bill 59 Schedule
A person receiving an income replacement benefit may return to or start an employment at any time during the 104 weeks following the onset of the disability in respect of which the benefit is paid without affecting his or her entitlement to resume receiving benefits under this Part if, as a result of the accident, he or she is unable to continue in the employment. O. Reg. 403/96, s. 11.
(1) A mediation proceeding or evaluation under section 280 or 280.1 of the Insurance Act or a court proceeding or arbitration under clause 281 (1) (a) or (b) of the Act in respect of a benefit under this Regulation shall be commenced within two years after the insurer’s refusal to pay the amount claimed. O. Reg. 403/96, s. 51 (1).
(2) Despite subsection (1), a court proceeding or arbitration under clause 281 (1) (a) or (b) of the Insurance Act may be commenced within 90 days after the mediator reports to the parties under subsection 280 (8) of the Act or within 30 days after the person performing the evaluation provides a report to the parties under section 280.1 of the Act, whichever is later. O. Reg. 403/96, s. 51 (2).
Footnotes
- The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- CanLII 16603
- The provisions of each of the three Schedules are set out in Appendix “A”.```