Fortunato E. Galati v. Certas Direct Insurance Company, 2010 ONFSCDRS 148

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2010 ONFSCDRS 148

Appeal P09-00006

OFFICE OF THE DIRECTOR OF ARBITRATIONS

FORTUNATO E. GALATI Appellant

and

CERTAS DIRECT INSURANCE COMPANY Respondent

BEFORE:

David Evans

REPRESENTATIVES:

Fortunato E. Galati, unrepresented Ralph D’Angelo and Julie Janoscik for Certas Direct Insurance Company

HEARING DATE:

June 21, 2010 in St. Catharines, Ontario

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal of the Arbitrator’s order dated May 28, 2008 is dismissed, but paragraph 1 thereof is substituted with the following:

   1. Mr. Galati is precluded from proceeding to arbitration.

2. If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

December 23, 2010

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Mr. Galati appeals the Arbitrator’s decision that his claims against Certas Direct Insurance Company (“Certas”) under the SABS–1996¹ for various statutory accident benefits are dismissed.

II. BACKGROUND

Mr. Galati was injured in a motor vehicle accident on December 6, 2002, and about six months later notified Certas that he was seeking accident benefits. (I will return to the effect of the delayed notification to Certas below.) In an OCF-9 dated December 8, 2003, Certas denied Mr. Galati’s claims for non-earner benefits on the basis that he claimed to have been self-employed and denied his claim for caregiver benefits on the basis that he was not the primary caregiver for any person in need of care. His claims for housekeeping and attendant care benefits were denied in an OCF-9 dated January 28, 2004 because Certas determined that he did not qualify for them under the applicable disability test.

In addition, Mr. Galati made other claims that were denied at later dates.

The Commission’s mediation unit received Mr. Galati’s Application for Mediation on December 6, 2005, or just less than two years after the first refusal to pay. However, the unit considered the application deficient and returned it to him on December 20, 2005, providing him with a 20-day grace period to correct its deficiencies: Rule 12.3(b) of the Dispute Resolution Practice Code provides that if an Application for Mediation is deficient in one of several ways or raises jurisdictional concerns, it will be held in abeyance for 20 days from delivery of notice of the deficiency or concern. In turn, Rule 12.4 provides that where the applicant does not satisfy the jurisdictional concerns or rectify the deficiencies set out in the notice, the application may be rejected thereafter. The Arbitrator noted:

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.

Mediation failed, and Mr. Galati subsequently applied for arbitration. Certas sought a preliminary issue hearing on the basis that, among other things, Mr. Galati’s claim was out of time: pursuant to s. 51(1) of the SABS, a mediation proceeding in respect of a SABS benefit “shall be commenced within two years after the insurer’s refusal to pay the amount claimed.” It submitted that the mediation proceeding was not commenced until May 2006, or more than two years after the refusals to pay noted above.

The Arbitrator noted that the grace period would have allowed Mr. Galati until January 9, 2006 to re-file the Application for Mediation within the statutory time limit. The Arbitrator wrote that “[i]t 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.”

The Arbitrator found 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.” He concluded that Mr. Galati was “not entitled to proceed to arbitration on his claims for non-earner, housekeeping, attendant care, and caregiver benefits,” and his order dismissed those claims.

III. ANALYSIS

The limitation issue regarding the claims just discussed was not the only issue before the Arbitrator because Certas sought to exclude Mr. Galati’s other claims on other grounds. For instance, on April 27, 2005 a treatment plan dated April 18, 2005 in the amount of nearly $4,000 for extractions and dentures was denied. The claim for this plan would not be caught by the two-year limitation period, as mediation commenced in May 2006.

The exclusionary grounds Certas raised were, first, that Mr. Galati allegedly failed to provide information reasonably required to allow Certas to assess his entitlement to the claimed benefits, contrary to s. 33 of the SABS. The Arbitrator made findings of fact about this issue. For instance, he found that Certas sought but never received an explanation from Mr. Galati for his claim to have both provided care to and received care from his wife. That is, Mr. Galati claimed he had been a caregiver to his wife before the accident, so he was entitled to caregiver benefits. At the same time, he claimed that because of his injuries, his wife was providing him with attendant care after the accident. Certas also had questions about how Mr. Galati’s wife could be a person in need of care, whether she actually resided with him at the time of the accident and thereafter, and whether he incurred any expenses in having care provided for her. The Arbitrator stated that “Certas, reasonably in my view, had a number of questions about this situation.”

Second, Certas raised Mr. Galati’s failure to notify it of his claims until about six months after the accident, contrary to the 30-day notice requirement in s. 32(1), as it then read.

While the Arbitrator listed the Insurer’s additional exclusionary grounds at the beginning of his decision, he stated nothing about them in his order.² Mr. Galati therefore submits that he should be entitled to a hearing about the dental and other treatment plans, as these issues were included in his mediation and arbitration applications and are not time-limited under s. 51(1).

However, the notification issue provides a complete answer to this submission. Subsection 32(1) of the SABS as it stood at the time of the accident provided that “[a] person who wants to apply for a benefit under this Regulation shall notify the insurer within 30 days after the circumstances arose that gave rise to the entitlement to the benefit, or as soon as practicable thereafter.” Subsection 31(1) provided relief from the time limits in s. 32: “A person’s failure to comply with a time limit set out in this Part [which included s. 32 but not s. 51] does not disentitle the person to a benefit if the person has a reasonable explanation.”³

The Arbitrator listed the notification issue as being whether Certas was “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.” In fact, a failure to meet the requirements of ss. 32(1) and 31(1) meant not merely a delay but a permanent loss of payment: Carruthers and Royal & SunAlliance Insurance Company of Canada, (FSCO P02-00015, April 10, 2003), affirming (FSCO A99-000923, May 30, 2002).

I find that Mr. Galati is excluded from arbitration because, while the Arbitrator did not specifically include the notification issue in his order, he made the following relevant findings of fact about it: “Mr. Galati did not advise Certas of the accident until approximately six months after it happened… Certas asked him for various forms of information which might clarify his claims for benefits… Certas inquired about the reasons why Mr. Galati did not notify them within 30 days of the accident of his intention to claim benefits.”

Most importantly, the Arbitrator made the specific factual finding that Mr. Galati “had no explanation as to why he waited as long as he did to notify Certas of the accident.” If there was no explanation for the delay, there was no reasonable explanation for the delay.

Normally, an arbitrator’s failure to deal with all issues in dispute would mean returning the matter to the arbitrator for determination. That is not necessary here because: the notification issue was before the Arbitrator, having been raised as an issue at the pre-hearing; the Arbitrator listed the notification issue at the beginning of his decision; and, he found as a fact that there was no explanation – let alone a reasonable explanation pursuant to s. 31(1) – for the delay. Therefore, the Arbitrator’s reasons provided all the necessary elements to exclude Mr. Galati from arbitration due to the delay in notification.

The notification issue is determinative of all of Mr. Galati’s claims, in that it precludes him from proceeding with any claims arising out of the accident. Nonetheless, I should like to point out with respect to the limitation issue that the Arbitrator did not discuss the effect of Rule 12.4, noted above, on what happens after the expiry of the grace period. To reiterate, it provides that, where the applicant does not satisfy the jurisdictional concerns or rectify the deficiencies in the Application for Mediation set out in the written notice within the 20 days’ grace period, the Application may be rejected. It is not clear to me that the mere passage of the 20 days without a response from the applicant means that the application is automatically deemed to be rejected. The Arbitrator also made no finding that there ever was a rejection by the Dispute Resolution Group. However, it is not necessary for me to consider this issue further.

The appeal is dismissed.

On a formal note, paragraph 1 of the Arbitrator’s order states that “Mr. Galati’s claims for attendant care, housekeeping, caregiver and non-earner benefits are dismissed.” In fact, all of Mr. Galati’s claims are barred by the notification issue. As s. 283(5) of the Insurance Act provides that I may substitute my order for that of the Arbitrator, a new paragraph 1 will be substituted indicating that Mr. Galati is precluded from proceeding to arbitration.

IV. EXPENSES

If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

December 23, 2010

David Evans Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2I was informed at the appeal hearing that after the parties received the Arbitrator’s order, Certas wrote to the Arbitrator seeking clarification of the extent of his order but received no response.
3. 3O. Reg. 281/03 amended s. 32 so that for accidents on or after October 1, 2003, notification had to be given seven days after the accident but late notification meant only that the insurer could delay determining entitlement to certain benefits: see ss. 32(1.1)(b) and (6) as they read effective October 2003.