Donna Pilleggi v. TTC Insurance Company Limited, 2010 ONFSCDRS 55

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

Neutral Citation: 2010 ONFSCDRS 55

FSCO A09-000881

BETWEEN:

DONNA PILLEGGI Applicant

and

TTC INSURANCE COMPANY LIMITED Insurer

DECISION ON A MOTION

Before: Joyce Miller

Heard: December 21, 2009 at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were received by October 8, 2009

Appearances: Matthew Consky for Ms. Pilleggi Steve Anderson for TTC Insurance Company Limited

Issues

The Applicant, Donna Pilleggi, alleges that on April 11, 2007 she was injured as a result of a motor vehicle accident. She applied for statutory accident benefits from TTC Insurance Company Limited (“TTC”) payable under the Schedule.¹ TTC denied her application for benefits on the basis that Ms. Pilleggi was not injured as a result of a motor vehicle accident. The parties were unable to resolve their disputes through mediation, and Ms. Pilleggi applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The Commission records show that prior to any pre-hearing being set, on May 20 and 26, 2009 Mr. Consky wrote to TTC’s counsel, Mr. Steve Anderson, with a copy to the Commission, stating that he wished to deal with a preliminary matter in regards to a determination as to whether the TTC has either waived its right or is stopped from denying that Ms. Pilleggi is covered under a policy of insurance with the TTC.

The records also show that on June 2, 2009, Mr. Consky wrote directly to the Commission stating the following:

This letter is to confirm that our client wishes to bring a motion prior to the prehearing, to determine whether the insurer has waived its right or is estopped from denying that the applicant is covered under a TTCICL policy of insurance, which is their current position. [emphasis added]

A telephone discussion was scheduled for Monday, July 6, 2009 at 12:30 p.m. Without providing any notice, Mr. Anderson did not participate in this conference call. As a result I set out a timeline for written submissions on the issue of whether TTC had waived its right to deny that Ms. Pilleggi was an “insured person” under a TTC policy.

On July 7, 2009, Mr. Anderson advised the Case Administrator that he would not be able to provide his submissions by the date that I assigned, July 24, 2009. In addition, he advised that TTC was raising as a preliminary issue in respect of whether Ms. Pilleggi was involved in a motor vehicle accident.

On August 27, 2009, a pre-hearing discussion in this case was held by telephone conference call. At this discussion it was decided that TTC’s preliminary issue would be held first, followed by Ms. Pilleggi’s motion.

A preliminary issue on whether Ms. Pilleggi was injured as a result of an “accident” as defined in section 2(1) of the Schedule, was set for November 5, 2009 and concluded on December 21, 2009. A motion presented by Ms. Pillegi on whether the TTC was estopped from denying her claim was scheduled to be heard on December 21, 2009 at 1:30 p.m. On December 21, 2009 at the conclusion of the preliminary issue hearing the parties advised that they would were relying on their written submissions on the motion and the oral hearing was not required.

On April 9, 2010, I issued my decision on the preliminary issue, wherein I found that Ms. Pilleggi was not involved in an accident pursuant to section 2(1) of the Schedule. On April 22, 2010, I advised the parties of my decision on the motion with reasons to follow. The following are my reasons for denying Ms. Pilleggi’s motion.

The motion issue is:

Has TTC waived its right to assert that Ms. Pilleggi is not covered under a policy of insurance with TTC?

Result:

TTC has not waived its right to assert that Ms. Pilleggi is not covered under a policy of insurance with TTC. Accordingly, Ms. Pilleggi’s motion is dismissed.

BACKGROUND:

The background facts to this motion were presented by the affidavit of Sam Spadafora on behalf of Ms. Pilleggi and Guri Pannu on behalf of TTC. Neither party requested an opportunity to cross-examine on the affidavits. Accordingly, where there was agreement, I have abstracted the following relevant facts:

Ms. Pilleggi advised the TTC that on April 11, 2007 she was injured as a result of an incident on a TTC bus.
On May 2, 2007, Ms. Marianne Boccongelle on behalf of the TTC wrote to Ms. Pilleggi and provided her with an “Application Package” for statutory accident benefits. In her letter, Ms. Boccongelle specified: “Please note that payment of any benefits and/or expenses is subject to confirmation of the incident involving a Commission vehicle” [bold in the original]
On May 30, 2007, Mr. Wasyl Lewycky, on behalf of TTC, acknowledged that TTC had received from Ms. Pilleggi her application for accident benefits along with other relevant documents and an application for expenses, in the amount of $48.70.

The letter further advised that the submitted expenses were not payable, as the TTC was unable to confirm the accident and that consequently Ms. Pilleggi was not covered under a policy of insurance with TTC. Mr. Lewycky also advised that TTC’s investigation was continuing.

On August 2, 2007, the TTC formally denied Ms. Pilleggi’s claim on the basis that it was unable to confirm that her injuries “if any resulted out of the direct use and/or operation of TTC vehicle insured with the TTCICL.”
On May 28, 2008, Ms. Pilleggi’s previous counsel applied for mediation on her behalf.
The mediator’s report issued on January 27, 2009 reported that the TTC had raised a preliminary issue, claiming that Ms. Pilleggi was not involved in an “accident” pursuant to section 2(1) of the Schedule.
On March 2, 2009, Mr. Lewycky wrote to Ms. Pilleggi requesting a section 42 evaluation of her entitlement to income replacement and housekeeping benefits. Mr. Lewycky quoted and placed reliance on the arbitral decision of Sherkat and Co-Operators General Insurance Company.² Mr. Lewycky also requested a disability certificate.
On March 24, 2009, Ms. Pilleggi’s new counsel, Mr. Mathew Consky, provided TTC with a disability certificate along with the invoice for the certificate.
On April 7, 2009 the TTC advised Ms. Pilleggi that the section 42 examinations were scheduled for April 21 and 22, 2009.
On April 8, 2009, Mr. Consky advised the TTC that Ms. Pilleggi consented to attend the section 42 examinations.
On May 14, 2009, Ms. Grace Ling of York Physiotherapy and Rehabilitation Centre confirmed that their invoice in the amount of $213.72 for the previously submitted

OCF-3 had been paid by the TTC.

On June 19, 2009, Mr. Lewycky provided Mr. Consky with the section 42 reports – an in home assessment report and a chiropractic report by Dr. Leontidis. Mr. Lewycky also requested that Ms. Pilleggi provide the TTC with her attending physician’s clinical notes and records pursuant to section 33 of the Schedule.
Dr. Leontidis in his report deferred his opinion as to whether Ms. Pilleggi qualified for an income replacement benefit until such time as he had the opportunity to review “her family physician’s complete medical notes/records and other pertinent information.” Regarding her housekeeping duties, Dr. Leontidis concluded that she did not suffer a substantial inability to perform her housekeeping and home maintenance duties as a result of the alleged accident.
On September 11, 2009, Mr. Consky wrote to Mr. Lewycky advising that he had difficulty complying with TTC’s section 33 request [for the clinical notes and records of the family doctor].
On September 11, 24 and October 2, 2009, Mr. Consky wrote to Mr. Lewychky requesting a determination of Ms. Pilleggi’s benefits.
On October 7, 2009, Mr. Lewycky wrote to Mr. Consky and advised that a determination of his client’s benefits could not be made without the section 33 medical documents requested.

SUBMISSIONS

Ms. Pilleggi’s Submissions

Ms. Pilleggi submits that the TTC waived its right to deny her access to statutory accident benefits on the basis that she is not an “insured person” covered by a policy of insurance.

Ms. Pilleggi submits that despite TTC’s position in August 2, 2007 that it could not confirm that she was injured in an accident involving a vehicle insured by the TTC and therefore denied her claim for statutory accident benefits, on March 2, 2009, TTC began to treat her as an “insured person” by sending her to a section 42 examination and requiring her to provide a disability certificate.

Ms. Pilleggi submits that by requiring her to attend a section 42 examination and provide a section 24 disability certificate, both of which only being applicable to “insured persons”, it was in fact the intention of the TTC to treat her as an “insured person.”

Ms. Pilleggi submits that TTC and their adjuster Mr. Lewycky, specifically, knew or ought to have known that by treating her as an “insured person” the TTC would be waiving its right to continue to deny her claim on the basis that she was not an “insured person” covered by a contract of insurance.

Ms. Pilleggi submits that the TTC’s reliance on the decision in Sherkat and Co-operators³ as a basis for sending her to a section 42 examination can be distinguished on the facts. Ms. Pilleggi submits that in Sherkat, wherein it was held that an insurer is entitled to a section 42 examination notwithstanding the fact that no benefits have been paid, there was no issue that the applicant was an “insured person” covered by a policy of insurance.

Ms. Pilleggi submits that sections 24 and 42 of the Schedule relate to rights available to and relationships between insurers and “insured persons” within a given contract of insurance. Ms. Pilleggi submits that the schedule makes a distinction between the “insured person” covered by a policy of insurance, as indicated in sections 24 and 42, and the “person applying for a benefit” who may not be covered by a policy of insurance, as indicated in section 33.

Ms. Pilleggi submits that the TTC in relying on the Sherkat decision in support of the to the proposition that she was required to submit to the section 42 examinations, notwithstanding the fact that no benefits had been paid to date, it was the conscious and deliberate intention of the TTC to treat her as an “insured person” covered by a policy of insurance and in doing so has waived its right to deny same.

Ms. Pilleggi submits that given that consumer protection is the main objective of automobile insurance law, an insurer may not simultaneously deny the existence of a contractual relationship with an applicant while taking advantage of powers that only exist within that contractual relationship, particularly when subjecting an applicant to medical examinations, which as stated by former Senior Arbitrator Naylor, “inherently intrusive and an invasion of individual privacy.”⁴

Ms. Pilleggi further submits that by TTC’s asking the section 42 assessor to comment on the injuries occasioned in the April 11, 2007 accident, TTC has explicitly acknowledged that she was involved in an accident pursuant to the Schedule.

Accordingly, for all of these reasons, Ms. Pilleggi submits that TTC:

Knowingly gave up its right to deny that she was an “insured person” covered by a policy of insurance;
Expressly and unequivocally treated her as an “insured person” covered by a policy of insurance; and
Consciously intended to abandon its right to deny that she as an “insured person” covered by a policy of insurance,

and has therefore waived its right to deny that she is an “insured person” covered by a policy of insurance.

TTC’s Submissions

TTC submits that it well established that an insurer under the Schedule maintains the right to refuse or terminate the payment of benefits to the claimant. It is also well established that the Schedule allows an insurer to investigate an applicant’s claim for benefits regardless if those benefits were initially refused by the insurer. As a result, an insurer’s compliance with the legislative intent cannot be construed as a waiver of any of the rights it possesses.

TTC relies on the cases of Quraishi and Belair Insurance Company Inc.⁵, Sherkat and Co-operators General Insurance Company⁶ and Mora and Pafco⁷ in support of its position that it did not waive its right to deny that Ms. Pilleggi is not covered under its policy of insurance because it continued to investigate her claim.

Specifically, TTC submits that pursuant to the Schedule it had a right to request a section 42 examination as long as there was an outstanding claim. Moreover, TTC points out that Ms. Pilleggi consented to attend the section 42 examinations despite TTC’s “wholesale” denial of coverage. Accordingly, TTC submits that in agreeing to attend these examinations, Ms. Pilleggi was agreeing to TTC’s right to these examinations, despite TTC’s denial of her claim.

Accordingly, for these reasons, TTC submits that at no time while dealing with Ms. Pilleggi’s claim for benefits did it waive its right to deny that Ms. Pilleggi is not covered under its policy of insurance.

ANALYSIS AND FINDINGS

In the case of McDonald and Guarantee Company of North America⁸, Arbitrator Evans reviewed and summarized the criteria for the application of the principle of waiver, which is as follows:

A party must knowingly forego reliance upon some known right or defect: one should not be able to waive rights of which one was not fully aware or apprised.⁹
The conduct purporting to be a waiver must be express and unequivocal.¹⁰
What must be ascertained is a conscious intention to abandon a known right.¹¹

This criterion was accepted and applied by Arbitrator Renahan in the case of Quraishi. The facts and the conclusion in the Quraishi case are both similar and applicable to the facts in the present case.

In the Quraishi case, Belair paid weekly income replacement benefits claimed by Mr. Quraishi. Later on, Belair reconsidered its position and terminated benefits on the basis that Mr. Quraishi was not covered under the policy of insurance as he was, not involved in an “accident” within the meaning of the policy.

At the preliminary issue hearing, which found that Mr. Quraishi was not involved in an “accident,” Mr. Quraishi argued that Belair had waived its right to terminate his benefits. Mr. Quraishi argued that since Belair had paid income replacement benefits he was treated as an “insured person” and therefore covered under a valid policy of insurance.

Arbitrator Renahan pointed out in his decision that Belair had complied with the legislative intent that insurers make payments promptly on the understanding that they may recover payments made in error. Arbitrator Renahan held that Belair’s compliance with the legislative intent cannot be construed as a waiver of its right to reconsider its decision to make payments. I agree with this finding and that it is applicable to the present case.

In the present case the issue is whether TTC waived its rights to its position that Ms. Pilleggi was not an “insured person” because TTC had requested that she attend a section 42 examination and provide a disability certificate. Specifically, the question is whether TTC knowingly, expressly and unequivocally consciously intended to abandon a known right, namely, to deny its position that Ms. Pilleggi was not involved in an “accident” pursuant to section 2(1) of the Schedule.

For the following reasons, I find that Ms. Pilleggi failed on a balance of probabilities to prove that the TTC waived its right to its position that Ms. Pilleggi was not an “insured person.”

I agree with the TTC’s submission that the Sherkat and Mora decisions make it clear that an insurer has the right to request an applicant to attend a section 42 examination as long as the claim for benefits continue.

The Sherkat case dealt with the issue of whether the applicant was precluded from proceeding to arbitration because he had failed to attend an insurer’s medical examination pursuant to section 65 of the Schedule which under the previous legislation is similar to a section 42 examination.

One of the issues in the Sherkat case was whether an insurer could seek an insurer’s medical examination where the insurer was no longer paying benefits to the applicant. As the arbitrator in that case, I made the following findings:

To interpret section 65 to disallow an insurer's medical examination where benefits are not being paid would be manifestly unfair. For example, where an insurer suspects an insured is claiming accident benefits for injuries not received from a motor vehicle accident and refuses to pay benefits, the result, if the Applicant’s interpretation is accepted, would force an insurer to go to arbitration without being allowed the benefit of a section 65 examination. The insurer would therefore be put in the position of not being able to properly defend its case. I conclude that in amending section 65, the Legislature did not intend such an unfair result.

In dealing with a similar section under the pre-1994 Schedule,¹² Arbitrator Makepeace in the case of Mora¹³ held that:

... the plain language of the section indicates that an insurer can require an examination as long as there is a claim for weekly benefits, even if benefits have been refused or terminated ... [S]ubsection 23(2) was intended to provide insurers with a means of investigating an insured person's ongoing disability claim... The Insurer's right to request an examination continues as long as the claim.¹⁴

I agree with these findings.

Accordingly, I find that a section 65 examination is available to the Insurer in a situation where a claim for accident benefits is made by the Applicant and no benefits have been paid for various reasons.¹⁵

In the present case, after Ms. Pilleggi’s claim was denied, she continued to pursue her claim through mediation and applying for arbitration after mediation failed as is her right to do so under the Regulations. In my view, pursuant to the reasoning in Sherkat and Mora as long as an applicant maintains a claim for benefits, the insurer has a right to continue to adjust the file, in a reasonable manner and this would include requesting that an applicant attend at a section 42 examination and provide a disability certificate even in the case where the claim has been denied.

As noted in Sherkat, it would be manifestly unfair for an insurer, who has refused a claim on the basis that an applicant was not involved in an accident pursuant to section 2 of the Schedule, to be precluded from defending its case on the substantive issues, in the event the insurer’s initial position was wrong.

It is established law that an individual who puts his or her medical condition at issue in a litigious process becomes obligated to submit to various medical examinations and to permit access to what would otherwise be confidential information. Section 42 of the Schedule provides an insurer with the means to adjust, in a reasonable manner, an applicant’s continuing claim for statutory benefits.

TTC made it very clear in its letter of March 2, 2009 that it was relying on the reasoning in the Sherkat case for requesting a section 42 examination, even though it maintained a denial of Ms. Pilleggi’s claim for benefits. I agree with TTC’s submission that its’ request to have Ms. Pilleggi attend the section 42 examinations, despite its refusal to pay benefits, falls squarely within the legislative intent of the Schedule.

Accordingly, on the facts of this case, I find that TTC’s compliance with the legislative intent of the Schedule cannot be construed as a waiver of its right to maintain its position that Ms. Pilleggi was not involved in an “accident” and as a result was not an insured person under a TTC policy.

EXPENSES:

If needed, I may be spoken to on the issue of expenses.

May 5, 2010

Joyce Miller Arbitrator

Date