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

Neutral Citation: 2008 ONFSCDRS 46

FSCO A07-001075

BETWEEN:

SURESH BHAMBI

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

Before: Eban Bayefsky

Heard: December 20, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Rameshwer S. Sangha for Mr. Bhambi

Todd J. McCarthy for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Suresh Bhambi, was injured in a motor vehicle accident on August 26, 2004. He applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ State Farm denied Mr. Bhambi’s claim for income replacement benefits, housekeeping benefits and the cost of two functional assessments. The parties were unable to resolve their disputes through mediation, and Mr. Bhambi 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:

Is Mr. Bhambi precluded from proceeding to arbitration because his application for arbitration was filed beyond the two-year limitation period, and the additional ninety-day limitation period, set out in section 281.1 of the Act and section 51 of the Schedule?

Result:

Mr. Bhambi is barred from proceeding to arbitration. His arbitration is dismissed.

EVIDENCE AND ANALYSIS:

Background

Mr. Bhambi was injured in a motor vehicle accident on August 26, 2004. Over the next several weeks and months, Mr. Bhambi claimed various statutory accident benefits. On October 25, 2004, State Farm issued an Explanation of Benefits Payable by Insurance Company (an “OCF-9” form) denying Mr. Bhambi’s claim for the cost of an in-home assessment. This issue went to a fast-track assessment at a Designated Assessment Centre (a “DAC”), after which State Farm issued a further OCF-9 on November 8, 2004 confirming its denial of the cost of the in-home assessment.

On November 23, 2004, State Farm issued an OCF-9 denying Mr. Bhambi’s claim for the cost of a functional abilities evaluation (an “FAE”). Based on a fast-track DAC assessment, State Farm issued a further OCF-9 on December 9, 2004, confirming its denial of the cost of the FAE.

On December 8, 2004, State Farm issued an OCF-9 denying Mr. Bhambi’s claim for housekeeping benefits from August 30 to October 22, 2004 since Mr. Bhambi had not yet provided a variety of information concerning the services provided. State Farm stated that it would review the matter once the information was received.

On February 15, 2005, State Farm issued an OCF-9 discontinuing Mr. Bhambi’s receipt of income replacement benefits (“IRBs”) effective March 4, 2005, on the basis of a section 42 medical examination dated February 3, 2005. In the same OCF-9, State Farm denied housekeeping benefits beyond February 15, 2005 on the basis of the section 42 examination. At the same time, State Farm issued a Notice of Stoppage of Weekly Benefits and Request for Assessment (an “OCF-17”) confirming the stoppage of Mr. Bhambi’s IRBs as of March 4, 2005. Mr. Bhambi did not return the enclosed forms requesting an assessment in response to the Notice of Stoppage.

On March 16, 2005, State Farm issued an OCF-9 denying Mr. Bhambi’s claim for housekeeping benefits from October 25 to December 31, 2004 because Mr. Bhambi had not yet provided the required information concerning the services performed. State Farm stated that it was requesting this information pursuant to section 33 of the Schedule.

Mr. Bhambi applied for mediation on the issues of IRBs, housekeeping and the two assessments on August 16, 2006. The Mediator issued his report on November 22, 2006. Mr. Bhambi applied for arbitration on the four issues on May 24, 2007. As set out in the pre-hearing letter of October 17, 2007, the substantive issues in the arbitration are Mr. Bhambi’s entitlement to IRBs from March 5, 2005 to August 25, 2006, to housekeeping benefits from August 30, 2004 to August 26, 2006, and to the costs of an FAE dated October 4, 2004 and an in-home assessment dated October 22, 2004.

Mr. Jonathan Adamson, State Farm’s adjuster for Mr. Bhambi’s file (and the only person to testify at the hearing), stated that State Farm mailed all of the relevant correspondence and documentation (in particular, the various OCF-9s) to Mr. Bhambi’s home on Kensington Road in Brampton, Ontario. Mr. Adamson testified that State Farm obtained Mr. Bhambi’s address from information supplied by his initial representatives (SAT Insurance Claims Inc.) and from other information contained in State Farm’s file. Mr. Adamson also testified that copies of these materials were either faxed or mailed (or both) to Mr. Bhambi’s representatives. Mr. Adamson noted that each OCF-9 sent to Mr. Bhambi and his representatives contained the following statement:

WARNING: TWO YEAR TIME LIMIT

You have TWO YEARS from the date of the insurer's refusal to pay, or reduction of a benefit, to arbitrate or commence a lawsuit in court. You may have longer than two years if the arbitration or lawsuit is commenced 90 days from the date the mediator provides his or her mediation report, or within 30 days from the date the neutral evaluator provides his or her report.

Mr. Bhambi’s representative only asked one question of Mr. Adamson in cross-examination, namely, whether State Farm took any action or paid any benefits after receiving correspondence from Dr. A.K. Ahluwalia dated November 17, 2006, to which Mr. Adamson simply replied that he would have to check State Farm’s accident benefits file. Mr. Bhambi’s representative did not pursue this matter further. He asked no further questions of Mr. Adamson. In re-examination, Mr. Adamson reviewed his file and testified that he did not see Dr. Ahluwalia’s correspondence in the file. He testified that he believed that State Farm first received the correspondence with the Application for Arbitration which was filed on May 24, 2007.

Legislation

The relevant provisions are as follows:

Insurance Act:

s. 281.1(1) A mediation proceeding…or arbitration under section 281 shall be commenced within two years after the insurer's refusal to pay the benefit claimed.

s. 281.1(2) Despite subsection (1), a proceeding or arbitration under clause 281(1)(a) or (b) may be commenced,

(b) if mediation fails but there is no evaluation under section 280.1, within 90 days after the mediator reports to the parties under subsection 280(8).

Schedule:

s. 51(1) A mediation proceeding…or arbitration...in respect of a benefit under this Regulation shall be commenced within two years after the insurer's refusal to pay the amount claimed.

s. 51(2) Despite subsection (1), [an] arbitration…may be commenced within 90 days after the mediator reports to the person under subsection 280(8) of the Act….

The Parties’ Submissions

State Farm conceded that the substantive issues in this arbitration (IRBs, housekeeping and the two assessments) were mediated within two years of its refusal of these claims. However, State Farm maintained that Mr. Bhambi failed to commence his arbitration within two years of its refusal of these benefits or within 90 days of the mediator’s report (which was issued on November 22, 2006). State Farm noted that Mr. Bhambi did not dispute that State Farm clearly and unequivocally refused benefits or that he received the various OCF-9s.

In response, Mr. Bhambi simply stated that the effective date of the Notice of Stoppage (March 4, 2005) was the date of State Farm’s refusal of benefits, that IRBs were being claimed from March 5, 2005 and that housekeeping benefits were being claimed from August 30, 2004. Mr. Bhambi had no further comments on the limitation period issue or State Farm’s submissions on this issue.

State Farm responded that even if the date of its refusal was the effective date of the Notice of Stoppage, Mr. Bhambi’s arbitration would still be out of time.

Findings

I find that Mr. Bhambi is precluded from proceeding to arbitration.

I find that State Farm clearly and unequivocally refused to pay the benefits Mr. Bhambi sought in his mediation and arbitration, namely, IRBs, housekeeping benefits and the costs of two functional assessments. The February 15, 2005 OCF-9 clearly denied Mr. Bhambi IRBs effective March 4, 2005. The December 8, 2004 and March 16, 2005 OCF-9s clearly denied Mr. Bhambi housekeeping benefits during the periods claimed on the basis that he had not yet provided the required information. The February 15, 2005 OCF-9 clearly denied Mr. Bhambi housekeeping benefits as of that date on the basis of a section 42 medical examination. The October 25 and November 8, 2004 OCF-9s clearly denied Mr. Bhambi the cost of the in-home assessment. The November 23 and December 9, 2004 OCF-9s clearly denied Mr. Bhambi the costs of the FAE.

I find that State Farm sent these refusals to Mr. Bhambi and his representatives and that they received them. I accept Mr. Adamson’s uncontradicted evidence that they were mailed to Mr. Bhambi and either faxed or mailed (or both) to Mr. Bhambi’s representatives. Mr. Bhambi did not deny receiving the correspondence and I heard no evidence to the effect that the correspondence was not received by either Mr. Bhambi or his representatives.

Instead of considering the relevant limitation periods in relation to each of the denials, I find that State Farm’s position that Mr. Bhambi failed to apply for arbitration in a timely fashion can be addressed most simply by using as the reference point the date of the last of the OCF-9s, namely March 16, 2005. Allowing five business days for delivery (assuming the OCF-9s were sent by regular mail to both Mr. Bhambi and his representatives), Mr. Bhambi would have received the last of the refusals on March 23, 2005.

Therefore, pursuant to section 281.1(1) of the Act and section 51(1) of the Schedule, Mr. Bhambi would have had until March 23, 2007, at the latest, to apply for mediation or arbitration in respect of the various OCF-9s. State Farm concedes that Mr. Bhambi applied for mediation on the different issues within the allotted two years. However, State Farm maintains that Mr. Bhambi failed to comply with the two-year deadline since he applied for arbitration on May 24, 2007, roughly two months after the two-year time limit. Even if State Farm were correct in this submission, I find that this case can be determined on the basis of sections 281.1(2)(b) of the Act and 51(2) of the Schedule, both of which state that, despite the two-year limit for applying for mediation or arbitration, an arbitration can be commenced within ninety days of the Mediator’s report. The Mediator issued his report on November 22, 2006. Again, allowing five business days for delivery, Mr. Bhambi would have had until February 27, 2007 to file his Application for Arbitration. As noted, Mr. Bhambi applied for arbitration on May 24, 2007, roughly three months after the ninety-day time limit. I, therefore, find that Mr. Bhambi did not apply for arbitration within the time limit set out in sections 281.1(2)(b) of the Act and 51(2) of the Schedule.

To the extent it is relevant to my determination, Mr. Bhambi provided no explanation as to why he failed to comply with the limitation period. I also heard no evidence to the effect that State Farm misled, misinformed or otherwise hindered Mr. Bhambi’s ability to proceed to arbitration in a timely fashion. I note, in this regard, that each of the OCF-9s clearly advised Mr. Bhambi and his representatives of the relevant limitation periods.

In all of the circumstances, I find that Mr. Bhambi failed to comply with the relevant limitation periods and that he is barred from proceeding to arbitration. His arbitration is dismissed.

EXPENSES:

The parties did not address the issue of expenses of the preliminary issue hearing. If required, they may make submissions in accordance with Rule 79 of the Dispute Resolution Practice Code.

March 27, 2008

Eban Bayefsky Arbitrator

Date