Kulaveerasingam Ramalingam v. State Farm Mutual Automobile Insurance Company, 2010 ONFSCDRS 75

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2010 ONFSCDRS 75

FSCO A08-001571

BETWEEN:

KULAVEERASINGAM RAMALINGAM

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Edward Lee

Heard: July 13, 2009, October 7, 8, 2009, February 24, 25, 2010, and March 3, 2010, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: David S. Wilson for Mr. Ramalingam

Robert S. Franklin for State Farm Mutual Automobile Insurance Company

This case has a long and arduous history. Mr. Ramalingam was involved in an automobile accident on January 9, 2002. State Farm Mutual Automobile Insurance Company (“State Farm”) paid income replacement benefits (“IRBs”) and housekeeping and home maintenance benefits until July 27, 2002, when they were terminated following insurer’s medical examinations.

Mediation took place and failed in November 2002, and the insured applied for arbitration that month. The hearing on the merits was scheduled for September 2003, but later adjourned. A motion for interim benefits was heard in April 2003 by Arbitrator Alves, and in September 2003, she issued an interim order awarding IRBs and housekeeping and home maintenance benefits to the applicant from the date of the interim motion and onward.

In April 2004, State Farm brought a motion to vary the interim order of Arbitrator Alves on the grounds that her order could not continue past the 104 week mark. A decision was rendered on the variation in June 2004 wherein Arbitrator Alves varied that portion of her interim order dealing with housekeeping and home maintenance so that State Farm was not obliged to pay housekeeping and home maintenance after January 9, 2004.

In July 2005, Arbitrator Rogers conducted a hearing and issued the final order in this matter in August 2005.

In July 2007, the insured applied for a determination of catastrophic impairment. Mediation on this issue failed and the mediator’s report was issued in June 2008. The present application for arbitration was filed on July 23, 2008. In this application, the insured now claims housekeeping and home maintenance benefits from January 9, 2004 onward, as well as a determination that the insured has suffered a catastrophic impairment.

At the pre-hearing discussion for this arbitration conducted on October 8, 2008 before Arbitrator Richards, the insurer indicated that it would raise preliminary issues at the arbitration hearing.

When the arbitration hearing commenced before me in July 2009, there was dispute as to the insurer’s preliminary issues. The insured sought a clarification of the issues and argued that some of them should be disallowed as they were not contemplated within the original pre-hearing letter of Arbitrator Richards. I received written submissions and heard argument in October 2009, and I rendered a decision on November 24, 2009, wherein I determined that the insurer could indeed raise the issues it sought to argue. Oral argument was heard on the preliminary issues in February 2010 and March 2010.

Briefly stated, the insurer argues that the claims for post 104 week housekeeping and home maintenance benefits, and the claim for a catastrophic determination are barred by the two-year limitation periods found in either the Schedule¹ or in the Limitations Act 2002, S.O. 2002, c. 24., or by res judicata and the effects of the orders of Arbitrator Alves and Arbitrator Rogers.

The preliminary issues are:

1. Is there a limitations defence for the claim for a determination of catastrophic impairment?

2. What is the effect of res judicata and the arbitration orders of Arbitrator Alves (June 8, 2004) and Arbitrator Rogers (September 29, 2005)?

3. Is there a limitations defence for the claim for housekeeping and home maintenance?

4. Is there a section 50 defence because the Insured did not bring the claims in timely fashion?

Result:

1. There is no limitations defence for the claim for a determination of catastrophic impairment.

2. (a) The claim to catastrophic impairment is not barred by the arbitration orders of arbitrators Alves or Rogers.

(b) The claim for housekeeping is barred by the arbitration order of Arbitrator Rogers.

3. Given my answer to question 2(b) it is not necessary for me to answer this question.

4. There is no section 50 defence because the insured did not bring the claim in a timely fashion.

5. Is there a limitations defence for the claim for a determination of catastrophic impairment?

Arguments:

State Farm submitted that the letter² of January 16, 2004 written by Claims Representative Jeff Kope of State Farm to Mr. Wilson was a valid refusal to Mr. Ramalingam’s claim for a designation of catastrophic impairment. That letter contained the following statement:

With respect to the Housekeeping Benefits pursuant to Section 22 beyond 104 weeks, payment of these claimed expenses will be discontinued on the basis of the available medical information and evidence which leads us to conclude that Mr. Ramlingam is not catastrophically impaired for which there is no longer any available entitlement pursuant to section 22(3).³ [italics mine]

In addition, State Farm argued that although the letter made no reference to the dispute resolution process (as required by section 49 of the Schedule), its validity could be successfully challenged as the catastrophic designation was not a “benefit”. Thus section 49 did not apply to this letter.

Therefore, the commencement of the limitation period for the claim for a catastrophic designation was triggered on January 16, 2004. State Farm noted that although the Schedule contained no specific limitation period for the stand-alone issue of catastrophic impairment, a limitation period for claiming catastrophic impairment was found in the Limitations Act, 2002 (“Limitations Act”).⁴

Sections 4 and 5 of the Limitations Act, 2002, S.O. 2002, c.24 read as follows:

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. [italics mine]

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

State Farm argued that Mr. Ramalingam was aware of his own medical condition and by January 2004, he knew all the requisite facts which would cause the limitation period to commence. Accordingly, Mr. Ramalingam had two years from January 2004 to make his claim under Section 4 of the Limitations Act, 2002. As the claim for a catastrophic designation was not advanced until February 2007, the two year limitation period had long since expired. Mr. Ramalingam’s claim for catastrophic impairment is therefore barred.

Mr. Ramalingam made several arguments in response. First, he argued that the letter of January 16, 2004 could not be considered a valid denial because Mr. Ramalingam had not made a claim for catastrophic impairment at that time. Second, he argued that the Limitations Act, 2002 was not the applicable legislation in regard to the issue of catastrophic impairment, and that Mr. Ramalingam’s self-knowledge could not be considered a triggering point for any limitation period. Third, he argued that the Schedule and the Insurance Act provided a complete dispute resolution scheme to deal with these issues, and there was no requirement under either legislation for Mr. Ramalingam to claim catastrophic impairment at the point of time suggested by State Farm.

Analysis:

I agree with Mr. Ramalingam’s position concerning State Farm’s letter of January 16, 2004. Arbitrators have consistently held that the general scheme of the Schedule requires an applicant to make a claim before it can be validly denied. In Ross and TTC Insurance Company⁵ Arbitrator Alves held as follows:

The claims and denial process contemplates that a claim is crystallized, submitted by the insured person, and that only after there has been a clear and unequivocal written denial does the limitation period begin to run. I find that an insurer cannot gratuitously deny a claim which has not been submitted.⁶ [Italics mine]

In the present case, State Farm presented no evidence that the insured submitted a claim for a catastrophic designation in January 2004 or before, resulting in the “denial letter” of January 16, 2004. No forms or medical reports regarding catastrophic impairment were presented; no letter was written or communication made to State Farm requesting a designation of catastrophic impairment. Without considering whether the January 16, 2004 letter met the requirements of a valid denial, I find that Mr. Ramalingam simply did not apply for a catastrophic designation in January 2004 or before. No claim was crystallized. Therefore the letter of January 16, 2004 cannot be considered a denial triggering any limitation period.

Nor am I convinced that Mr. Ramalingam was required to make a claim for catastrophic impairment at that time. I do not accept that Mr. Ramalingam’s knowledge of his own circumstances triggered a two-year limitation period in January 2004, pursuant to the provisions of the Limitations Act.

Instead, I find merit in Mr. Ramalingam’s argument that the provisions regarding dispute resolution found in sections 279 to 283 of the Insurance Act form a complete scheme for the resolution of all disputes concerning benefits, and the catastrophic designation.

Section 279(1) reads as follows:

Disputes in respect of any insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled shall be resolved in accordance with sections 280 to 283 and the Statutory Accident Benefits Schedule [italics mine].

Mr. Ramalingam cited the decision of Arsenault and Dumfries Mutual Insurance Company⁷ where the Ontario Court of Appeal held as follows:

Section 279(1) is a mandatory provision for the resolution of disputes “in respect of any insured person’s entitlement to no-fault benefits or in respect of the amount of no-fault benefits to which an insured is entitled”. There is no option for an insured but to proceed in accordance with the scheme outlined in ss 280 to 283 if the dispute is in respect of entitlement issues.⁸

The Court also agreed that the words “in respect of” found in section 279(1) should be attributed the “widest possible scope”.⁹

Given the Court’s interpretation of these provisions of the Insurance Act, I am not convinced that it is necessary to turn to the Limitations Act for a limitation period or triggering point for the claim for catastrophic impairment.

The Schedule is silent as to a specific limitation period for the issue of catastrophic impairment, but section 2(2) of the Schedule makes it clear that Mr. Ramalingam did not have to make his claim for catastrophic impairment in January 2004.

Section 2(2) reads as follows:

Clauses (1.1) (f) and (g) do not apply in respect of an insured person who sustains an impairment as a result of an accident that occurs before October 1, 2003 unless,

(a) the insured person’s health practitioner states in writing that the insured person’s condition has stabilized and is not likely to improve with treatment; or

(b) three years have elapsed since the accident.

According to section 2(2), an insured may not even apply for a catastrophic designation in regard to clauses (1.1)(f) and (g) unless the insured’s condition has “stabilized and is not likely to improve”, or “three years have elapsed since the accident”. Therefore, I do not accept State Farm’s argument that Mr. Ramalingam was required to apply for the catastrophic designation in January 2004. At that time, the three year period of section 2(2)(b) had not elapsed. Nor was there evidence that his condition had stabilized.

Finally, even if I am wrong in regard to my analysis of the applicability of the Limitations Act, I do not accept State Farm’s proposition concerning section 5(b) of the Limitations Act, that Mr. Ramalingam was aware of all the requisite facts required to make his claim in January 2004.¹⁰ There was no evidence that Mr. Ramalingam knew the requisite facts at that time.

Therefore, I do not find that there is a limitations defense for the claim for a determination of catastrophic impairment.

2. What is the effect of res judicata and the arbitration orders of Arbitrator Alves (June 8, 2004) and Arbitrator Rogers (September 29, 2005)?

Arguments:

State Farm argued that the arbitration orders¹¹ of Arbitrator Alves and Arbitrator Rogers dealt with Mr. Ramalingam’s claims for post 104 week housekeeping and home maintenance benefits and for a catastrophic designation.

State Farm referred me to the following comments made by Arbitrator Alves in her order:

The parties agree that Mr. Ramalingam has no further entitlement to housekeeping benefits under section 22 of the Schedule, because he is not “catastrophically impaired.”¹²

Mr. Ramalingam agrees that he has no entitlement to housekeeping and home maintenance benefits under section 22 of the Schedule after the 104 week period. That portion of the Order is varied to terminate as of January 9, 2004.¹³

State Farm also cited the following sentence in Arbitrator Rogers’ order: “On July 4, 2005, Mr.Ramalingam conceded that all amounts for housekeeping had been paid.”¹⁴

State Farm also noted comments made by Director’s Delegate Makepeace in her letter decision¹⁵ of February 1, 2005:

In early June 2004, the Arbitrator varied her initial order to clarify that it applied only to pre 104 week benefits, since she had not considered the more stringent post 104 week test. That she now did, and ordered IRBs to be continued beyond the 104 week mark, granting the claimant’s cross-motion. Mr. Ramalingam conceded that housekeeping and home maintenance expenses were not available to a non-catastrophic claimant beyond 104 weeks. [Italics mine]

According to State Farm, the issues of entitlement to post 104 week housekeeping and home maintenance benefits and catastrophic impairment were the subject matters of those arbitral orders. Those issues were dealt with on consent and by arbitral order. As such, they became res judicata and Mr. Ramalingam was estopped from bringing them anew.

In response, Mr. Ramalingam noted the following definition of res judicata applied by Arbitrator Rogers in his decision Rodrigues and Jevco Insurance Company¹⁶:

An issue that has been definitively settled by judicial decision. An affirmative defense barring the same parties from litigating a second lawsuit on the same claim, or any other claim arising from the same transaction or series of transactions and that could have been—but was not—raised in the first suit...” [italics mine]

He also referred me to the following definition of “issue estoppel” set out in the decision of Milstein v. Old Willoughby Realty Ltd.:

Issue estoppel is a branch of res judicata (the other being cause of action estoppel) which precludes the relitigation of issues previously decided in court in another proceeding. For issue estoppel to be successfully invoked, three preconditions must be met: (1) the issue must be the same as the one decided in the prior decision; (2) the prior judicial decision must have been final; and (3) the parties to both proceedings must be the same, or their privies.¹⁷

Mr. Ramalingam argued that neither form of estoppel or res judicata could apply in the present case because the issues of post 104 week housekeeping and home maintenance and catastrophic impairment were never adjudicated in the orders of Arbitrators Alves or Rogers.

Analysis:

The Issue of Catastrophic Impairment:

First, I note that when Arbitrator Killoran conducted the original pre-hearing discussion in regard to this matter, she did not list a claim for a catastrophic designation as an issue to be decided at the arbitration.¹⁸ Apart from interest and expenses, that letter listed the only following issues: income replacement benefits, “from July 22, 2002 and ongoing”, and “payments for housekeeping and home maintenance services”.

When the matter came before Arbitrator Alves as a motion for interim benefits, she set out the issues as follows: “Is Mr. Ramalingam entitled to interim income replacement benefits and interim housekeeping and home maintenance benefits pursuant to section 279(4.1) of the Insurance Act, R.S.O. 1990, c.I.8, as amended?”¹⁹

In her variation order of the decision on interim benefits, Arbitrator Alves addressed the following issue: “Should the Order of September 5, 2003 awarding Mr. Ramalingam interim benefits be varied under section 284 of the Insurance Act, R.S.O. 1990, c. I.8, as amended?”

Based on the issues set out by Arbitrator Alves, it is clear that she never considered the question of catastrophic impairment in her interim or variation order. The parties presented no evidence in regard to this question and no part of the Alves’ decisions address this issue.

In argument, State Farm emphasized the following portion of the Alves decision and the fact that it was on “consent”:

The parties agree that Mr. Ramalingam has no further entitlement to housekeeping benefits under section 22 of the Schedule, because he is not “catastrophically impaired.²⁰ [italics mine]

I am not convinced that this portion of the Alves decision resolves the question of catastrophic impairment in State Farm’s favour. The operative word in the sentence cited above is ‘is’. All that Arbitrator Alves recognized was that the applicant, at that time, acknowledged that he was not catastrophically impaired.

I have already decided that nothing in the Schedule or any legislation brought to my attention obliged the applicant to claim he was catastrophically impaired at that time. The Schedule does not specifically require the applicant to seek a catastrophic designation at the two-year anniversary of the motor vehicle accident. At the time of the Alves decision, Mr. Ramalingam could not have even applied to be catastrophically impaired under section 2(2)(b) of the Schedule because three years had not yet elapsed since the accident.

Because catastrophic impairment was not an issue before Arbitrator Alves, the matter was not decided. I find that nothing in either of the Alves orders can amount to res judicata or an estoppel to prevent Mr. Ramalingam from later claiming that he was catastrophically impaired.

The same reasoning can be applied to the February 1, 2005 decision of Director’s Delegate Makepeace. The Director’s Delegate recognized that Mr. Ramalingam conceded that post 104 week housekeeping was “not available to a non catastrophic claimant”. I did not take this statement to mean that Mr. Ramalingam had made a claim for catastrophic impairment and had been determined to be not catastrophically impaired. It only reiterates that at the time, Mr. Ramalingam was not claiming he was catastrophically impaired.

This reasoning is also applicable to the order of Arbitrator Rogers which was the final determination of Mr. Ramalingam’s application for arbitration (filed in 2002). As in the Alves orders, catastrophic impairment was not listed as an issue in the preface of the Rogers decision. No evidence or arguments were heard on catastrophic impairment.

State Farm drew my attention to the following observation of Arbitrator Rogers at page 11 of his decision: “On March 8, 2004 counsel for Mr. Ramalingam wrote to State Farm’s counsel seeking payment of “considerable arrears”. Counsel did not pursue payment of post 104 housekeeping benefits. The reason given was that he was assuming for the moment that [his] client is not claiming that he is catastrophically impaired.”²¹ [Italics mine]

I take this to mean that the applicant was not advancing a claim to catastrophic impairment at that time. Therefore, catastrophic impairment was not the subject of adjudication in the Rogers decision. As that issue had not been decided, there can be no res judicata and no estoppel preventing Mr. Ramalingam from later advancing this claim.

The Issue of Housekeeping and Home Maintenance:

In contrast, it is clear that housekeeping and home maintenance was indeed an issue before both Arbitrators Alves and Rogers. As noted above, the pre-hearing letter of Arbitrator Killoran listed the housekeeping benefit as an issue to be determined at the arbitration.

Arbitrator Alves resolved that issue on an interim basis in her order of September 5, 2003 where she determined Mr. Ramlingam was entitled to the housekeeping benefit at a rate of $100.00 per week from April 29, 2003, “pending the final order in this matter”.²²

Arbitrator Alves later changed her interim order in her variation order.

The Order of September 5, 2003 should be varied retroactively, pursuant to section 284 of the Act. State Farm is not obliged to pay interim housekeeping and home maintenance benefits under section 22 of the Schedule after January 9, 2004.²³

When the matter came before Arbitrator Rogers for final arbitration, he made a series of rulings including a finding that State Farm was required to pay a special award because it unreasonably delayed or denied payment of housekeeping benefits awarded by Arbitrator Alves.

Mr. Ramalingam argued that the issue of the post 104 week housekeeping benefit was never determined by the final order of Arbitrator Rogers, and that no adjudication of that issue took place. Thus it would still be open to Mr. Ramalingam to now pursue his claim for housekeeping from January 2004 onward in his present application for arbitration filed in 2008.

State Farm argued that the housekeeping benefit was a single discrete issue that could not be broken into distinct and separate pre 104 week and post 104 week parts, determinable at different times and in different applications. The housekeeping claim had been commenced and then arbitrated on an interim basis before Arbitrator Alves. Arbitrator Alves recognized her order was made pending final decision. That issue had to be resolved on a final basis by Arbitrator Rogers.

Therefore, it was incumbent upon Mr. Ramalingam to present and continue his case in regard to housekeeping (whether pre 104 week or post 104 week) before Arbitrator Rogers. The arbitration hearing before Arbitrator Rogers commenced on July 26, 2005, after the passage of the two-year anniversary mark. Mr. Ramalingam did not seek to adjourn or to continue his arbitration hearing on the housekeeping benefit pending a catastrophic determination at some later date. He did not attempt to reserve a right to proceed with his housekeeping claim in the future. State Farm noted that Mr. Ramalingam made the following concession before Arbitrator Rogers: “On July 4, 2005, Mr. Ramalingam conceded that all amounts for housekeeping had been paid.”²⁴

I am in agreement with the position taken by State Farm on this issue. To accept the position of Mr. Ramalingam would allow the housekeeping claim to be broken into two separate and distinct issues: one concerning the pre 104 week period and another for post 104 weeks. It would then be possible to break up the arbitration to hear the two issues. Mr. Ramalingam directed me to no jurisprudence or authority in the Schedule to support the proposition that the housekeeping claim is composed of two separate and distinct issues.

Further, accepting Mr. Ramalingam’s position could lead to results incompatible with present arbitral jurisprudence. An example might be an insured who applies for housekeeping and has his hearing commenced and concluded before the passage of the two-year mark. If the arbitrator decided that the insured was not entitled to housekeeping, the insured would then have a second opportunity to claim post 104 week housekeeping later on. An insurer might then be required to issue two denials for every housekeeping claim: one for the pre 104 week period, and another for the post 104 period. I know of no jurisprudence or authority which suggest these conclusions.

Mr. Ramalingam argued that he was precluded from raising the issue of post 104 week housekeeping before Arbitrator Rogers because he was not claiming catastrophic impairment at the same time. He argued that it could not have been the intention of the legislator that an insured would be precluded from seeking post 104 week housekeeping unless he was simultaneously seeking a determination of catastrophic impairment.

I am not convinced that the situation is as simple as suggested. The relevant provisions of the Schedule are the following:

22(1) The insurer shall pay for reasonable and necessary additional expenses incurred by or on behalf of an insured person as a result of an accident for housekeeping and home maintenance services if, as a result of the accident, the insured person sustains an impairment that results in a substantial inability to perform the housekeeping and home maintenance services that he or she normally performed before the accident.

The amount payable under this section shall not exceed $100 per week.

No payment is required under this section for expenses incurred more than 104 weeks after the onset of the disability.

Subsection (3) does not apply if the insured person sustained a catastrophic impairment as a result of the accident.

Section 22(1) sets out the test for entitlement to the housekeeping benefit. Sections 22(3) and 22(4) act to relieve the insurer of the obligation to pay the housekeeping benefit after 104 weeks unless the insured has sustained a catastrophic impairment. Under these provisions, an insured makes a claim for housekeeping, period. The test for entitlement does not change after 104 weeks. The passage of time affects the payment of that benefit.

An insured may certainly apply for and meet the test for entitlement to housekeeping after the 104 week mark, even if he is not seeking a determination of catastrophic impairment. Nevertheless, the insurer would not be required to pay the benefit. Conversely, it is also conceivable that an insured might be catastrophically impaired, but still be substantially able to perform his pre-accident housekeeping tasks, and thus be denied the housekeeping benefit.

In the present case, housekeeping was an issue before Arbitrator Alves. It was commenced and resolved on an interim basis with the final determination of that issue left to Arbitrator Rogers. When it came before Arbitrator Rogers, Mr. Ramalingam presented no evidence. I do not find there was a bar to Mr. Ramalingam presenting his post 104 week housekeeping claim. It was open to Mr. Ramalingam to present his case but he did not do so. He could have raised it, but did not. Even if Mr. Ramalingam was not then in a position to claim catastrophic impairment, he could have sought to reserve his right to present evidence later, or sought an adjournment, or possibly requested some other form of consideration from the arbitrator. Again, he did not do so.

As a result, I find that the effect of res judicata and the order of Arbitrator Rogers is that Mr. Ramalingam’s claim for post 104 week housekeeping benefits is barred.

3. Is there a limitations defence for the claim for housekeeping and home maintenance?

Arguments:

State Farm argued that it denied Mr. Ramalingam’s claim for housekeeping benefits by delivering the Explanations of Benefits Payable (OCF-9’s) of July 9, 2002²⁵ and December 12, 2002.²⁶ These OCF-9’s and their accompanying correspondence amounted to valid refusals which triggered the commencement of the limitation period in July 2002 (the first OCF-9), or alternatively and at the latest, in December 2002 (the second OCF-9). As mediation for the post 104 week housekeeping benefit in the present application was not filed until January 30, 2008, the two-year limitation period of section 51 of the Schedule expired long ago, and the claim for the post 104 week housekeeping benefit was now time-barred and could not be brought to arbitration.

Mr. Ramalingam argued that he responded to the OCF-9 of July 9, 2002 by applying for mediation on November 12, 2002. The housekeeping issue was adjudicated as part of an order for interim benefits²⁷ issued by Arbitrator Alves on September 5, 2003. That order was then the subject of a variation decision²⁸ issued by Arbitrator Alves on June 8, 2004, and the issue was further addressed in a final arbitration hearing by Arbitrator Rogers who issued a decision²⁹ on August 29, 2005.

Mr. Ramalingam submitted that because mediation commenced and occurred on the issue of housekeeping within the two-year period, and an arbitration took place determining that Mr. Ramalingam was in fact entitled to the housekeeping benefit to the 104 week mark, the limitation period of section 51 had been interrupted, and his post 104 week housekeeping claim could not now be prescribed by the OCF-9’s of July 9, 2002, and December 12, 2002.

In the alternative, Mr. Ramalingam argued that the OCF-9’s of July 9, 2002 and December 12, 2002 were invalid because they did not conform to requirements set out in the Schedule in regard to the right to dispute provisions or in the decision of Smith and Co-operators.³⁰

The Law:

Section 51 of the Schedule sets out the time limit for commencing a mediation or evaluation following an insurer’s denial of a benefit claimed.

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.

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.

Analysis:

Given my answer to question two, it is not necessary for me to address this question. The claim advanced at present by Mr. Ramalingam deals with the post 104 week period. I have already decided that the housekeeping claim is one single issue that cannot be separated into distinct parts. The housekeeping claim was heard and resolved on a final basis before Arbitrator Rogers. That decision determined the issue of housekeeping. Therefore I need not determine now whether the OCF-9’s of 2002 have any effect on the post 104 week period for the housekeeping benefit.

4. Is there a section 50 defence because the Insured did not bring the claims in timely fashion?

State Farm’s counsel, Reisler Franklin LLP, argued that no claim had actually been made to State Farm, the insurer, in regard to the post 104 week housekeeping benefit. State Farm’s counsel stated that it received Mr. Wilson’s (on behalf of Mr. Ramalingam) correspondence of July 8, 2009³¹ regarding the post 104 week housekeeping claim. According to State Farm’s counsel, this claim was not submitted to State Farm, the insurer. Given that Reisler Franklin LLP is neither State Farm nor State Farm’s adjuster, the correspondence did not constitute a proper claim for accident benefits.

Therefore any claim for expenses submitted to Reisler Franklin LLP was not a claim pursuant to Section 32(1.1) of the Schedule. Section 32(1.1) requires an insured to notify the insurer of his intention to apply for a benefit no later than the 30th day after the circumstances arose giving rise to the entitlement to the benefit. No reasonable explanation was given under section 31 for failing to notify the insurer of the post 104 week claim for housekeeping benefits. Under Section 50 of the Schedule, an insured who has not notified the insurer of the circumstances giving rise to the claim or submitted an application for benefits within the prescribed times cannot proceed to mediation. Therefore, Section 50 bars the claim for post 104 week housekeeping benefits.

Mr. Ramalingam responded by saying that it was entirely appropriate for him to provide his correspondence and receipts for post 104 week housekeeping from January 2004 and onward to Reisler Franklin LLP, because Reisler Franklin LLP was at all relevant times, acting as counsel for State Farm. According to section 68(2) of the Schedule, Mr. Ramalingam could properly deliver these documents to State Farm’s counsel, Reisler Franklin LLP.

Mr. Ramalingam also argued that section 32 of the Schedule targeted the initial stages of an insured’s application for benefits, and not an insured’s continuing obligation to provide information about the benefits the insured was seeking. Therefore, the fact that housekeeping receipts were provided long after the expiry of the 30 day period of section 32 would not constitute a bar to the application for post 104 week housekeeping benefits.

The Law

Section 50 of the Schedule reads as follows:

An insured person shall not commence a mediation proceeding under section 280 of the Act unless,

(a) the insured person notified the insurer of the circumstances giving rise to a claim for a benefit and submitted an application for the benefit within the times prescribed by this Regulation; [italics mine] and

(b) the insured person, if he or she was required to undergo a designated assessment under section 43, has undergone the designated assessment and has complied with that section.

Section 32(1.1) of the Schedule reads as follows:

32(1.1) A person shall notify the insurer under subsection (1) no later than,

(a) the 30th day after the circumstances arose that gave rise to the entitlement to the benefit, or as soon as practicable after that day, if those circumstances arose as a result of an accident that occurred before October 1, 2003; [italics mine] or

(b) the seventh day after the circumstances arose that give rise to the entitlement to the benefit, or as soon as practicable after that day, if those circumstances arose as a result of an accident that occurred on or after October 1, 2003.

(2) The insurer shall promptly provide the person with,

(a) the appropriate application forms;

(b) a written explanation of the benefits available under this Regulation;

(c) information to assist the person in applying for benefits; and

(d) information on any possible elections relating to income replacement, non-earner and caregiver benefits.

(3) The person shall submit a signed application for the benefit to the insurer within 30 days after receiving the application forms.

Analysis:

State Farm called no evidence in regard to this issue. No representative of State Farm appeared to testify that they never received the documents in question, or had not received notice of the claim for post 104 week housekeeping benefits. I noted that mediation on this issue (post 104 week housekeeping) occurred on June 19, 2008 in the presence of a representative of State Farm. A representative of State Farm also attended at the pre-hearing discussion on October 8, 2008 where housekeeping was listed as an issue for arbitration. The issue of non-delivery of documents or lack of notice was never raised.

I find merit in Mr. Ramalingam’s argument that the documents in question are not specifically targeted by section 32(1.1) of the Schedule. The documents consist of the letter from Mr. Wilson of July 8, 2009 (which makes reference to housekeeping documentation and payments), and an accompanying sheet of handwritten notes, possibly indicating payments or non-payments for specified periods of time.³²

Sections 32(1) and following appear to set out the reciprocal obligations of the insured and the insurer to exchange information and complete forms at the initial stage of an application for benefits.³³ Section 32(1.1) requires an insured to notify the insurer of his intention to apply for a benefit “...no later than the 30th day after the circumstances arose that gave rise to the entitlement of the benefit...”. Section 32(2) requires an insurer to “promptly” provide the insured with amongst other things, the appropriate application forms and a written explanation for the benefits available under this regulation, as well as information to assist the insured and information in regard to the possible election of certain types of benefits.

Mr. Ramalingam referred me to the decision of Harril and Pilot Insurance Company³⁴ where an applicant received housekeeping benefits from December 2001 to March 2002. At the pre-hearing discussion of June 1, 2004, the claim was extended to the period ending June 30, 2002. Particulars of the claim were not provided until July 27, 2004.

The arbitrator ruled as follows:

Pilot framed its position as a breach of Ms. Harril’s obligation to notify Pilot of her intention to apply for a benefit as required by subsection 32(1) of the Schedule, but the facts do not support that position. Pilot did not and could not claim that Ms. Harril failed to give prompt notice of her intention to claim housekeeping benefits. In January 2002, Ms. Harril delivered an OCF-12 (Activities of Normal Life) setting out her need for housekeeping assistance. Pilot assessed her housekeeping needs in February 2002. Ms. Harril delivered an Application for Expenses upon which Pilot paid $880 before mediation, and Pilot did not request a further application, as it was entitled under subsection 32(4) of the Schedule.

Pilot’s real position appears to be that Ms. Harril failed to promptly provide “information reasonably required to assist the insurer in determining the person’s entitlement to a benefit” as required by paragraph 1 of subsection 33(1) of the Schedule.

Pilot’s submission that this conduct precludes Ms. Harril from receiving the claimed benefits was addressed in the Appeal decision in Iankilevitch and CGU Insurance. Director’s Delegate Makepeace ruled that the remedy for breach of section 33 is delay in the insurer’s obligation to pay, not forfeiture.³⁵

I agree with the analysis used in the Harril case. There was no evidence that Mr. Ramalingam did not give notice of his intention to claim housekeeping benefits within 30 days of the circumstances that gave rise to his entitlement to his benefit. Mr. Ramalingam filed for mediation and arbitration in November 2002.

Mr. Ramalingam’s application was eventually decided by arbitration order.³⁶ In my opinion, the current breach (if any) pertains to housekeeping invoices which State Farm now argues have been delivered late, or not at all, and may be actionable under other provisions of the Schedule, but not section 32(1.1).

Therefore I do not find that there is a section 50 or section 32(1.1) limitations defence to the claim for housekeeping and home maintenance benefits.

EXPENSES:

The parties did not address the issue of expenses and I leave this issue to the arbitrator who resolves this matter on a final basis.

June 4, 2010

Edward Lee

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2010 ONFSCDRS 75

FSCO A08-001571

BETWEEN:

KULAVEERASINGAM RAMALINGAM

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. There is no limitations defence for the claim for a determination of catastrophic impairment.

2. (a) The claim to catastrophic impairment is not barred by the arbitration orders of arbitrators Alves or Rogers.

(b) The claim for housekeeping is barred by the arbitration order of Arbitrator Rogers.

3. Given my answer to question 2(b) it is not necessary for me to answer this question.

4. There is no section 50 defence because the insured did not bring the claim in a timely fashion.

June 4, 2010

Edward Lee

Arbitrator

Date

Footnotes

1. 1The Statutory Accidents Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Letter of Mr. Kope of State Farm, January 16, 2004 at Tab 13, Ex. I-3
3. 3Ibid., at page 1
4. 4S.O. 2002, c. 24.
5. 5(FSCO A01-000064, April 5, 2002)
6. 6Ibid., at page 13
7. 7Docket No. C35942, January 8, 2002 at paragraph 15
8. 8Arsenault and Dumfries Mutual Insurance Company Ontario Court of Appeal at page 6
9. 9Ibid., at page 6
10. 10Ex. I-1, Submissions of Mr. Franklin, July 20, 2009 at paragraph 29 at page 6
11. 11Arbitration order of Arbitrator Alves, June 8, 2004 at Ex. I-3, Tab 17; and arbitration order of Arbitrator Rogers at Ex. I-3, Tab 20, I-3.
12. 12(FSCO A02-001646, June 8, 2004) at page 5
13. 13Ibid., at page 14
14. 14Ramalingam and State Farm Mutual Insurance Company (FSCO A02-001646 August 29, 2005), at page 2
15. 15Letter decision of Director`s Delegate Makepeace dated February 1, 2005 at page 4, Tab 19, I-3
16. 16(FSCO A08-002458, November 4, 2009)
17. 17Milstein v. Old Willoughby Realty Ltd. [2004] O.J. No. 580, at page 8
18. 18I-3, Tab 10, Pre-hearing letter of Arbitrator Killoran, March 24, 2003
19. 19I-3, Tab 11
20. 20Alves Order I-3, tab 17
21. 21I-3 Tab 20, Arbitrator Rogers decision at page 11
22. 22I-3 Tab 11, Arbitrator Alves, Interim Order at page 2
23. 23I-3 Tab 17, Arbitrator Alves at page 2
24. 24(FSCO A02-001646 August 29, 2005) at page 2
25. 25OCF-9 July 9, 2002, Exhibit I-3, Tab 3
26. 26OCF-9 December 12, 2002, Exhibit I-3, Tab 5
27. 27I-3, Tab 11, Interim Order of Arbitrator Alves
28. 28I-3, Tab 17, Variation Application and Motion for Interim Benefits, Arbitrator Alves
29. 29I-3 Tab 20, Order of Arbitrator Rogers August 29, 2005
30. 30Smith v. Co-operators General Insurance Company 2002 SCC 30, [2002] 2 S.C.R., 129
31. 31I-3, Tab 33
32. 32I-3 Tab 33
33. 33Iankilevitch and CGU Insurance Company of Canada (FSCO P03-00013), Appeal at page 12
34. 34(FSCO A04-000039, February 14, 2005)
35. 35Ibid., at page 3
36. 36Order of Arbitrator Rogers