Neutral Citation: 2008 ONFSCDRS 86 FSCO A06-001801

BETWEEN:

FORTUNATO E. GALATI Applicant

and

CERTAS DIRECT INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Robert A. Kominar Heard: November 14, 2007, in St. Catharines, Ontario Appearances: Mr. Galati represented himself Julie Janoscik for Certas Direct Insurance Company

Issues:

The Applicant, Fortunato E. Galati, was injured in a motor vehicle accident on December 6, 2002. He applied for various statutory accident benefits from Certas Direct Insurance Company (“Certas”), payable under the Schedule.¹ Certas denied claims for non-earner, caregiving, housekeeping and attendant care benefits. The parties were unable to resolve their disputes through mediation, and Mr. Galati 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 in dispute are:

Is Mr. Galati prevented from proceeding to arbitration because he filed his Applications for Mediation and Arbitration beyond the 2-year limitation period provided for in sections 280 and 280(1.1) of the Insurance Act?
Is Certas entitled to delay the payment of benefits to Mr. Galati pursuant to section 31 of the Schedule because he failed to notify Certas of his intention to apply for benefits within the timeframes set out in that section?
Is Certas entitled to rely of section 33 of the Schedule to deny payment of benefits on the basis that Mr. Galati failed to provide information reasonably required to allow Certas to assess his entitlement to benefits which he claimed?

Result:

Mr. Galati is precluded from proceeding to arbitration because he commenced his applications for mediation and arbitration after the 2 year limitation period provided for in sections 280 and 280 (1.1) of the Insurance Act.

EVIDENCE AND ANALYSIS:

Legal Representation

On the day of the Preliminary Issue hearing, neither the counsel for the Insurer nor the Commission knew whether Mr. Galati would attend. He had not provided the Commission with an address or telephone number at which communications could be sent to him. Mr. Galati did, however, attend at the preliminary issue hearing just before the proceedings commenced.

I asked Mr. Galati about the problems the Case Administrator had in communicating with him and whether he was prepared to proceed with the hearing. I also asked him whether or not he had legal representation. In the past, Mr. Galati has had legal counsel involved in his accident benefit claims. However, this has not been the case recently. Mr. Galati had previously asked for an adjournment of the proceedings due to health concerns and the withdrawal of the legal counsel he had at the time from the case, which was granted. It is fair to say that various arbitrators dealt with the procedural aspects of this case and, from my review of the evidence before me, had encouraged Mr. Galati to consider retaining a new representative, which he never did.

On the morning of the preliminary issue hearing Mr. Galati advised me that he had recently consulted with his nephew, Chris Galati, whom he said was a lawyer and who was prepared to take on his case. I asked Mr. Galati why his nephew was not in attendance, or had not communicated with either the Commission or the Insurer if this was the case. Mr. Galati’s response was that he did not know but thought that he was busy. On further inquiry, it was apparent that Mr. Galati did not know whether or not his nephew was actually a lawyer. My sense of Mr. Galati’s comments were that his nephew may have been a law student, an articling student, or possibly working as a paralegal. On the other hand, I had no information that would allow me to reasonably conclude that his nephew was not a lawyer qualified to practice in Ontario.

Mr. Galati advised me that his nephew was prepared to “take his case on” if he could obtain an adjournment. The procedural history of this file clearly indicates that Mr. Galati has been encouraged by other arbitrators to retain legal counsel prior to this hearing. Counsel for the Insurer noted that Mr. Galati has, on numerous occasions, alluded to his intention to retain new counsel; however he never has followed through when given the opportunity. Notwithstanding the frustration expressed by the Insurer’s counsel, I concluded that it was important to determine whether Mr. Galati had actually arranged for his nephew to take his case on, and if so what consequences would exist. I therefore adjourned the hearing for approximately half an hour and advised Mr. Galati to contact his nephew by telephone and ask him to participate by way of teleconference, if he chose to do so. Mr. Galati advised me that he had a telephone number to contact his nephew, and he ostensibly left the hearing room to contact him.

When the hearing resumed, Mr. Galati advised me that he had not been able to reach his nephew and that he did not actually have a direct phone number to contact him, even though he had earlier advised me that this person was apparently standing by to receive a phone call. Mr. Galati recounted a narrative which suggested that his nephew did not actually have an office and that his “father” answered the phone for him and that he did not know where his son was. My conclusion from all of this was that, whether or not Mr. Galati’s nephew was a lawyer or not, he clearly was not ready and willing to represent Mr. Galati in these proceedings. Given that Mr. Galati had been strongly encouraged to retain legal counsel if he wished to well before the hearing date and had not done so, I concluded that procedural fairness required that I proceed with the preliminary issue hearing as scheduled. I note that Mr. Galati personally consented to the preliminary issue hearing date being set for February 13, 2008 and therefore he had been provided a reasonable opportunity to retain legal representation if he so intended.

FACTS

The relevant facts in this preliminary issue hearing are not complex. Mr. Galati was involved in a motor vehicle accident on December 6, 2002. The benefits he is claiming that are relevant to this hearing are non-earner, caregiving, housekeeping and attendant care.

Mr. Galati’s claims for non-earner and caregiver benefits were denied by Certas in an OCF-9 dated December 8, 2003. The Insurer asserted that these claims were denied because Mr. Galati had advised them that he was self-employed at the time of the accident and that he was not the primary caregiver for any person in need of care. His claims for entitlement to housekeeping and attendant care were denied in an OCF-9 dated January 28, 2004. Housekeeping and attendant care were denied on the basis of the Insurer’s determination that he did not meet the requisite disability test to qualify for these benefits, based on independent medical examinations which they had conducted.

Mr. Galati and Certas engaged in a series of communications after these denials. Certas asked him for various forms of information which might clarify his claims for benefits. Specifically, Certas inquired about the reasons why Mr. Galati did not notify them within 30 days of the accident of his intention to claim benefits, what the status of his wife was such that he would be entitled to claim caregiver benefits for her, whether his wife actually resided with him as of the date of the accident and thereafter, and whether he incurred any expenses with regard to care he may have provided to her. It is fair to conclude, based on the evidence before me, that Mr. Galati did not respond to these requests. In fact Mr. Galati did not advise Certas of the accident until approximately six months after it happened. Mr. Galati is also claiming that she was the person whom he was required to provide care for after the accident and was also the one who was simultaneously providing him with attendant care and housekeeping services. Certas, reasonably in my view, had a number of questions about this situation.

On December 8, 2003, Certas requested that Mr. Galati provide them with a disability certificate. Mr. Galati did not provide the disability certificate and Certas ultimately notified him that no benefits which he had claimed would be payable from December 29, 2003 until he provided a disability certificate. Mr. Galati did not respond to this request either.

On July 28, 2004 Certas wrote to Mr. Galati advising that since they had not received any communication from him, they were going to close their file. Mr. Galati responded by fax with a handwritten note, on August 18, 2004, saying that he wished to “defend his rights” and asked that his file not be closed. Certas heard from Mr. Galati next by way of a lengthy fax received on August 31, 2004 wherein he outlined what he believed he should have been entitled to as benefits. It is noteworthy that within this communication, which can be best characterized as a settlement proposal, Mr. Galati states that he is aware of the 2 year limitation for initiating mediation proceedings.

Despite the lack of documentation Certas continued to communicate with Mr. Galati through September 2004 in an effort to determine what the status of his wife was and whether he was entitled to caregiver benefits as a result of the accident. On October 18, 2004, Mr. Galati faxed another document which is best described as a settlement proposal to Certas. This document is a handwritten letter attached to a page which appears to outline accident benefits. Mr. Galati ostensibly circled various benefits and noted specific amounts of money which he believed he should be entitled to on this page.

Mr. Galati seems to have retained legal counsel in December 2004 who requested a complete copy of his accident benefits file. That copy was provided to counsel within 4 days of the request. The Insurer and Mr. Galati’s counsel apparently communicated about the Insurer’s need for various forms of information. On January 26, 2006, Mr. Galati’s legal counsel advised the Insurer that they were no longer representing him.

As a result of this development, Mr. Galati was advised that his option was to apply for mediation if he believed that he was entitled to benefits. The Commission forwarded an Application for Mediation which it had received from Mr. Galati, dated May 9, 2006, to Certas. The Insurer responded raising the limitation period defence that is the subject of this preliminary issue hearing.

This matter is slightly more complicated due to various deficiencies in Mr. Galati’s initial Application for Mediation. The Commission, from the evidence before me, received the Application for Mediation on December 6, 2005. It was determined that the application was deficient and could not be registered as presented and so returned to Mr. Galati. The Commission wrote to Mr. Galati on December 20, 2005 advising of the deficiency and providing him with a grace period of 20 days to correct the problems, which would have allowed him until January 9, 2006.

It is clear from the documentary evidence that Mr. Galati’s Application for Mediation was deficient in a number of ways and that the Mediation Unit at the Commission was attempting to communicate with him to correct the situation. Mr. Galati was clearly not responding to these inquiries. Many of the claims he was asserting were not accident benefit related. The file was ultimately assigned to a mediator on May 9, 2006.

ANALYSIS

Although it is true that the Schedule must be interpreted with a consumer protection perspective, as provided for in Smith v. Cooperators General Insurance Company², this does not, and cannot mean, that applicants for benefits can ignore the provisions in the legislation and regulations. Limitation periods are put in place for a reason, and it is unreasonable to expect that insurers respond to claims that are asserted so long after the fact that they are practically unable to assess whether or not the Applicant’s statements are true. In its wisdom, the legislature had determined that 2 years after a denial of a benefit is a reasonable period of time for a person to bring a dispute to the Commission if he or she wants to pursue it.

I appreciate that Mr. Galati was not legally represented at this hearing. However, I offered him the opportunity to have legal counsel involved if that was possible, and it turned out that it was not. Mr. Galati had no explanation to offer as to why he did not provide the Insurer with the documentation which it had requested of him. He had no explanation as to why he waited as long as he did to notify Certas of the accident. He had no explanation as to why he believed that the Schedule entitled him to some of the claims he asserted which do not seem to relate to accident benefits in any way that I can discern. His evidence was limited to rather forcefully expressing that he was frustrated with the Insurer and that he simply believed that it was the obligation of his Insurer to “take care of him.” He had no explanation as to why he had not retained new legal representation despite having at least 3 arbitrators advise him that he should consider doing this. He had no reasonable explanation as to why his nephew was not available to participate in the hearing by teleconference. Of particular note, Mr. Galati had no explanation to offer as to why he did not respond to the Commission’s request that he correct the deficiencies in his Application for Mediation within the 20 day grace period. He also was not able to help me understand whether his former legal counsel had explained the consequences of time limitations to him, however as I noted below there is written correspondence from Mr. Galati which indicates that he did know about the 2 year limitation period.

The question can be raised as to whether Mr. Galati did commence a mediation within the 2 year period, although Mr. Galati did not specifically raise this argument himself at the hearing. It is clear that by the time his application was deemed by the Commission to be in a form the mediation unit would register, the limitation period had expired. It is a moot point as to whether the limitation period can be extended to include the grace period of 20 days which Mr. Galati was offered to correct deficiencies, because Mr. Galati did not comply with that period and according to the Commission’s policies his file was closed after they received no response from him within that period of time. Mr. Galati did not offer any evidence as to why he did not deal with the problems in his application within the 20 days and in fact his failure to do so is consistent with the pattern of non-communication with Certas he has had throughout his claim.

In conclusion, I find that Mr. Galati did not commence a mediation with regard to the benefits in dispute in this arbitration within 2 years of those claims being denied by the Insurer. Further, I find that Mr. Galati offered no evidence that would allow me to conclude that he had any explanation as to why this time period was inadequate for him. Even if one adopts a very broad interpretation of the consumer protection aspect of accident benefit law, it cannot be the case that time limits in the legislation can be randomly ignored by applicants.

Mr. Galati suggested that the problem arose out of the relationship, or lack of relationship, he had with his legal counsel at the time. Although I appreciate that Mr. Galati may not have had a positive relationship with his former lawyer, I cannot ignore that he apparently took no active steps to retain other counsel, even after being encouraged to do so by no less than 3 other arbitrators at the Commission. I find that his suggestion that his nephew would represent him is implausible. Any law student, articling student, paralegal, or lawyer should have understood that Mr. Galati’s hearing was likely to proceed on the date it was set, unless they participated and persuaded me that there was a good reason to grant him an adjournment to seek new representation. The fact that Mr. Galati ultimately advised me that he could not even contact this person notwithstanding that he was apparently waiting in the wings for a call, leads me to conclude that no specific arrangements were made for legal representation prior to the hearing date. The challenge the Commission had in communicating with Mr. Galati prior to the hearing only reinforces my conclusion on this point.

Even if there is some leeway that should be granted to a self-represented litigant based on the consumer protection aspect of the Schedule, which I am not deciding here, I find that it does not apply in Mr. Galati’s case. The constant thread of the evidence here is that Mr. Galati did not notify Certas in a timely fashion of his claim for benefits, and that when he did he failed to provide them with relevant information to assess his claims in a timely fashion. After Certas denied his claims for benefits, Mr. Galati failed to institute mediation proceedings within 2 years of Certas’ denial and thus has missed the limitation period. Nothing which Mr. Galati testified to in this hearing remotely encourages me to believe that he did not know about the limitation periods involved. He responded to the Insurer when he believed it was necessary, but did the opposite when he did not think it was important or in his interests. In conducting himself this way, he made a mistake and it is not a mistake for which Certas should be responsible. At various points in the process, Mr. Galati had legal representation, and from this I draw the conclusion that he was likely advised about the importance of limitation periods.

Having said all of this, it is clear to me that Mr. Galati has had a very challenging life and I do not for one moment believe that he had any intention to manipulate Certas in this case. Rather, I believe that he has not properly understood the boundaries of accident benefits and hence has claimed for benefits that would never be covered under the Schedule. Notwithstanding this, Certas should not be put to the obligation of paying benefits which have not been rationally supported. In this case, it is unequivocally clear to me that Mr. Galati has not provided Certas with any prima facie evidence that he is entitled to the benefits which he has claimed and further, that he has not pursued those benefits through the mechanisms of the Dispute Resolution Process provided for in the legislation.

As a result, I find that Mr. Galati is not entitled to proceed to arbitration on his claims for non-earner, housekeeping, attendant care, and caregiver benefits.

EXPENSES:

The parties made no submissions as to expenses. I strongly encourage them to resolve this between themselves. If this is not possible within 30 days of this decision and expense hearing may be arranged, and I will decide the matter.

May 28, 2008

Robert A. Kominar Arbitrator

Financial Services Commission of Ontario