Jeffrey Temple v. Co-operators General Insurance Company, 2010 ONFSCDRS 9

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

Neutral Citation: 2010 ONFSCDRS 9

FSCO A08-001585

BETWEEN:

JEFFREY TEMPLE

Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Edward Lee

Heard: By telephone conference call on December 4, 2009.

Appearances: Teri-Ellen Haddy for Mr. Temple Bruce A. Keay for Co-operators General Insurance Company

Issues:

The Applicant, Jeffrey Temple, was injured in a motor vehicle accident on August 29, 2005. He applied for and received statutory accident benefits from Co-operators General Insurance Company (“Co-operators”), payable under the Schedule.¹ The parties disagreed about when weekly income replacement benefits were denied and were unable to resolve their dispute through mediation, and Mr. Temple applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Is Mr. Temple precluded from proceeding to arbitration because his application for arbitration was filed beyond the two-year limitation period set out in subsection 281 of the Insurance Act and subsection 51(1) of the Schedule?

Result:

Mr. Temple is precluded from proceeding to arbitration because his application for arbitration was filed beyond the two-year limitation period set out in subsection 281 of the Act and subsection 51(1) of the Schedule.

The parties proceeded by way of an agreed statement of facts², and teleconference after providing written submissions. Neither party presented a witness. The facts are as follows:

Mr. Temple was involved in an accident on August 29, 2005. Following his accident, he returned to work until September 9, 2005. He ceased work from September 10, 2005 to September 26, 2005. He then returned to work on September 27, 2005 and continued until January 2007. From January 1, 2007 to May 24, 2007 he attempted to work, but was off work for various time periods. He has not worked since May 25, 2007.

Soon after his accident, Co-operators provided Mr. Temple with a package which included an application for accident benefits package and other documentation including information about available benefits under the Schedule.

A Co-operators representative met with Mr. Temple at his home on September 13, 2005 at which time the application for accident benefits was completed. They discussed the income replacement benefit (“IRB”) and the availability of collateral benefits from Mr. Temple’s employer.

On September 20, 2005, Co-operators wrote to Mr. Temple’s employer, requesting a Confirmation of Income form, and information concerning Mr Temple’s collateral benefits.

On September 20, 2005, Co-operators wrote Mr. Temple acknowledging receipt of his application for accident benefits, and informing him that he was to be considered under the income replacement benefit category. The letter confirmed the meeting of September 13, 2005, and advised that based on preliminary calculations, no IRB was payable at that time, but once income and sickness and accident benefits information had been received from the employer, Co-operators would readjust and recalculate the IRB, if necessary. An OCF-9 (Explanation of Benefits form) followed on September 20, 2005, confirming this information.

On or about November 2, 2005, a Co-operators adjuster telephoned Mr. Temple and learned from Mr. Temple’s common-law wife that Mr. Temple had returned to work.

On November 2, 2005 Co-operators sent Mr. Temple an OCF-9 which indicated that he was no longer eligible for an IRB because he had returned to work.

On January 16, 2007, Mr. Temple telephoned Co-operators and spoke with an adjuster, seeking information about his claim.

Co-operators requested that Mr. Temple complete Permission to Disclose Information forms (OCF-5s) to allow them to obtain medical records. On January 22, 2007, Co-operators wrote his doctors to obtain their notes and records.

On September 24, 2007, Co-operators wrote Mr. Temple to confirm that they had previously discussed the IRB claim with him and that they had now received the requested notes and records from his doctors, but they were unable to consider his request for a re-instatement of IRBs because their records did not indicate that he had reported or was treated for the injury he was currently reporting as a result of the accident.

Counsel for Mr. Temple wrote Co-operators on October 15, 2007 and requested that IRBs be paid. Co-operators did not respond to this letter.

Mr. Temple’s Application for Mediation was received by FSCO on January 10, 2008, and his Application for Arbitration was received by FSCO on July 24, 2008.

THE LAW:

Section 51 of the Schedule requires that a mediation or arbitration proceeding be commenced within two years after the insurer’s refusal to pay the benefit claimed.

51(1) 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.

ARGUMENTS:

Co-operators argues that Mr. Temple failed to commence his mediation proceeding within two years after his claim for income replacement benefits was refused. Co-operators issued a refusal to Mr. Temple’s claim when it sent him the OCF-9³ of November 2, 2005, which included the following statement: “we understand that you have returned to work and therefore are no longer entitled to be considered under the policy for weekly benefits.” The mediation process was not commenced until January 10, 2008, and the claim is thus statute-barred.

Mr. Temple presents two arguments in response. He argues that the OCF-9 of November 2, 2005 was not a valid refusal because at that time, Mr. Temple had not yet made a claim for income replacement benefits. The claim for income replacement benefits was actually made in January 2007 when he telephoned Co-operators about the process to apply for and to receive benefits. A “clear and unequivocal denial” of this request was not provided by Co-operators until September 2007, when Mr. Temple received an explicit written refusal to his claim for income replacement benefits. Therefore, the application for mediation was commenced within two years of the refusal, and is not statute-barred.

In the alternative, Mr. Temple argues that even if the OCF-9 of November 2, 2005 was valid, Co-operators ought to be estopped from relying on that denial and invoking the limitation period because of its conduct in dealing with Mr. Temple’s claim.

The impugned conduct was two-fold: first, Co-operators failed to respond to Mr. Temple’s request in a timely fashion. After receiving Mr. Temple’s claim in January 2007, Co-operators did not respond in writing until September 2007, a delay of almost nine months. Second, Co-operators did not provide notice to Mr. Temple that it intended to rely on the OCF-9 of November 2, 2005, and thus breached its duty to fully inform Mr. Temple of the dispute resolution process, including its position regarding the limitation date.

Based on these arguments, it is clear that I must first decide whether the OCF-9 of November 2, 2005 was a valid refusal. Second, if the OCF-9 of November 2, 2005 was indeed a valid refusal, then I must decide if Co-operators is estopped from relying on that refusal and limitation period because of its conduct in dealing with the claim.

Was a valid refusal sent to Mr. Temple on November 2, 2005?

There was no argument from Mr. Temple that the OCF-9 of November 2, 2005 was invalid or deficient because it was unclear or equivocal or that it contravened or did not conform to any of the requirements set out in the Insurance Act or stemming from the decision of Smith v. Co‑operators General Insurance Co.⁴

Instead, Mr. Temple argued that he had not been claiming income replacement benefits at the time he completed his Application for Accident Benefits on September 13, 2005. According to Counsel, Mr. Temple was merely complying with the insurer’s requests and instructions received when he completed the application. He also provided pay stubs and employment information at his meeting with the claims representative because he had been required to do so by Co‑operators.

Counsel for Mr. Temple referred to the decision of Ross and TTC Insurance Company Limited⁵, where an arbitrator determined that an applicant’s submission of an Application for Accident Benefits did not amount to a claim for income replacement benefits. She ruled 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. [Emphasis mine].⁶

Using this analysis, Counsel argued that Mr. Temple’s claim did not “crystallize” on September 13, 2005, because he was not then claiming IRBs. In fact, the claim only “crystallized” in January 2007 when he phoned Co-operators and requested information regarding his benefits.

There were other similarities between the two cases. In Ross, the arbitrator took the following factors in account when determining whether the applicant had indeed made a claim for IRBs.

At that time Ms. Ross was receiving the full amount of her salary from her employer while performing modified work. The amount of her IRB would have been zero. I find it unlikely in these circumstances — where she had no loss, and nothing to gain from making an application for an IRB — that Ms. Ross was asserting a claim for an IRB.⁷

Counsel suggested that Mr. Temple was in an analogous situation. He, too, would have received a net IRB of zero because of his collateral benefits. He, too, had no loss and nothing to gain from making an application for IRBs in September 2005.

Analysis:

Although there are basic similarities, the two cases are distinguishable on the facts. First and foremost, Ms. Ross was working and receiving a full salary when she submitted her application. She was injured on August 15, 1996, but did not submit her Application for Accident Benefits until January 28, 1997. Up to that time, she had missed only two full and seven partial days of work due to therapy and rehabilitation. For five months after her accident she worked at her full salary. She then submitted her Application for Accident Benefits and continued to work at full salary for another ten months until December 5, 1997, when she was terminated for reasons related to her accident.

In the case at bar, Mr. Temple was off work from September 10, 2005 to September 26, 2005, and he completed his Application for Accident Benefits on September 13, 2005. There was no evidence that he knew when he might return to work at that time. In his Application for Accident Benefits at Part 8 (Income Replacement Determination), he answered “yes” to the question: “Do your injuries prevent you from working?” He then answered the question: “From what date?” with the words: “September 9, 2005”.

Given that Ms. Ross was working at full salary and would continue to work for another ten months even after completing her application form, there was evidence on which the arbitrator could decide that Ms. Ross had not been considering IRBs when she competed her application form. The facts are different in Mr. Temple’s case.

Another distinction is that Ms. Ross made a request in her Application for Accident Benefits for “loss of income because of time lost for rehabilitation”. She later repeated this somewhat ambiguous request in conversations with claims representatives and raised the issue of coverage for missed time due to rehabilitation. The arbitrator considered this evidence to determine that Ms. Ross’ primary interest at the time she submitted her application was to claim reimbursement for various supplemental medical and rehabilitation expenses rather than income replacement benefits. In the present case, there was no such ambiguity.

Counsel also suggested that Mr. Temple’s case was similar to Ms. Ross’ in that the amount of his IRB would also have been zero because he had collateral benefits. Therefore, it was unlikely that he had been intending to apply for IRBs in September 2005 because he too, would have had no loss, and nothing to gain from making such an application. Again, I am not convinced that this was a correct analogy. In Ross, the applicant was at work full time, receiving her full salary. She would not have been eligible for IRBs. Mr. Temple was not working at the time of the submission of his application. He was eligible for IRBs and would have received them apart from a deduction for his collateral benefits.

Finally, Counsel suggested that further indicia of Mr. Temple’s intention could be inferred from his never having provided the collateral benefit information sought by Co-operators. Counsel argued that that was because Mr. Temple had not formulated the intention to claim income replacement benefits at that time. I am not convinced that the evidence supports this inference. Mr. Temple did not testify before me. It is entirely possible that Mr. Temple did not provide the collateral benefit information merely because he returned to work two weeks after completing his Application for Accident Benefits.

In Ross, the arbitrator drew conclusions in regard to the applicant’s true intentions based on the fact that the applicant continued to work and receive a full salary before and after she submitted her Application for Accident Benefits. The arbitrator also had evidence that there were ambiguous discussions and requests about supplemental medical and rehabilitation benefits mixed with her inquiries about income replacement at the time of her application. These factors are not present in the case at bar.

I find that Mr. Temple did indeed make a claim for income replacement benefits when he completed his Application for Accident Benefits on September 13, 2005. I find that the denial of that claim in the OCF-9 of November 2, 2005 was valid.

Is Co-operators estopped from relying on its limitations defence because of its conduct?

Counsel relied on the decision of Zeppieri and Royal Insurance Company of Canada to support her argument that Co-operators should be estopped from relying on its limitations defense. In that case the arbitrator ruled as follows:

In my view, a two-step process must determine whether the limitation period applies in the circumstances of this case. First, it is necessary to ask whether, and when, there was a refusal to pay benefits; and second, whether the insurer may rely on a limitation period that runs from the date of the refusal.⁸

In the same decision, the arbitrator made the following comment:

An insurer may be estopped from raising a limitation period against an applicant, in circumstances in which the applicant reasonably relies on the insurer’s conduct, to the applicant’s detriment.⁹

In the present case I have already ruled that the OCF-9 of November 2, 2005 was a valid refusal to pay IRBs. Mr. Temple argued that Co-operators’ conduct precluded its reliance on the limitations defense, because Co-operators failed to respond to Mr. Temple’s request for IRBs in January 2007 until nine months had passed. This delay was to his detriment.

Co-operators responded that once it received Mr. Temple’s request for benefits in January 2007, it asked Mr. Temple to provide disclosure forms to allow them to investigate his claim. Co-operators wrote to Mr. Temple’s doctors on January 22, 2007 to obtain medical notes and information. It was not Co-operators’ fault that the requested information was not received until later, and Co-operators wrote Mr. Temple on September 24, 2007 informing him that they were unable to consider his request for a re-instatement of IRBs.

Counsel for Mr. Temple argued that attributing the nine-month delay to investigation was insufficient. In fact, Co-operators did not nothing but wait for the doctors to provide the requested information. Co-operators should have referred Mr. Temple to a section 42 examination, or met with Mr. Temple’s family to obtain more information about his injuries, as contemplated in its own adjuster’s notes.

Analysis:

In Zeppieri, the arbitrator ruled as follows:

Insurance companies are responsible for investigating new information provided after benefits are terminated and must fairly re-evaluate an applicant's claim in light of the new information provided. The re-evaluation of claims on an ongoing basis is integral to a system of periodic benefits, and is a continuing obligation owed to an applicant. The fact that an insurance company reconsiders a prior decision to terminate benefits (as it must do) does not mean that a refusal of benefits only can take place at the completion of that process. To interpret the language of s. 281(5) in this manner would largely deprive it of meaning.

The Applicant's solicitors asked Royal Insurance to reconsider its decision, and provided additional information in support of the Applicant's case. I must determine whether, in its subsequent dealings with the Applicant and her solicitors, anything in the conduct of the Insurer bars it from relying on the limitation period. In my view, the usual principles of estoppel govern the enforceability of the limitation period.¹⁰[Emphasis mine]

In the instant case, as in Zeppieri, Co-operators was obliged to investigate new information and new requests provided by Mr. Temple. Co-operators responded to Mr. Temple’s request of January 2007 by seeking further information from his doctors.

In Zeppieri, repeated requests were made by the applicant’s lawyer to reconsider its earlier decision to terminate weekly benefits. This reconsideration did not change the fact that the Insurer relied on a previous notice of termination.¹¹ In the same way, Co-operators’ decision to reconsider the benefit cannot be equated to a decision to vitiate the refusal of November 2, 2005.

Further, in Zeppieri, the applicant’s counsel embarked on a year-long sequence of written and oral communications wherein repeated requests were made to reinstate the benefit. The arbitrator held that despite the repeated requests, negotiations and communications, the Insurer did not mislead the applicant or induce them into believing that a limitation period, if applicable, would not be relied on.¹²

This reasoning was upheld by the Director of Arbitrations in the Zeppieri appeal:

Despite Ms. Ahmadi’s able submissions, I also do not accept that the respondent’s unresponsiveness to continued pleas or negotiation attempts on behalf of the appellant by counsel was conduct which could reasonably lead them to believe the respondent would not insist on its strict rights in any subsequent arbitration or court action.¹³

In the same way, I find that Co-operators’ conduct did not amount to an estoppel. Although Co-operators took nine months to respond to Mr. Temple’s request (during which time they may have been awaiting medical documentation), nothing in their behaviour leads me to conclude that they had lulled Mr. Temple into believing that they were not going to rely on the previous denial of November 2, 2005.

Further, when Co-operators did respond on September 24, 2007, the limitation period had not yet expired. There was still time for Mr. Temple to dispute the refusal of November 2, 2005. There was even time on October 15, 2007 when Mr. Temple’s counsel wrote Co-operators on his behalf.

Given my finding above, I do not find it necessary to address Mr. Temple’s final argument that Co-operators breached its duty to inform Mr. Temple of the dispute resolution process by not informing him of its position regarding the limitation date.

I find that Co-operators is not estopped from relying on its limitations defense.

Therefore, Mr. Temple is precluded from proceeding to arbitration because his application for arbitration was filed beyond the two-year limitation period set out in subsection 281 of the Insurance Act and subsection 51(1) of the Schedule.

EXPENSES:

The parties did not address the matter of expenses. They are encouraged to resolve this issue. If they are unable to do so, they may contact me in accordance with the provisions of the Dispute Resolution Practice Code.

January 21, 2010

Edward Lee Arbitrator

Date