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

Neutral Citation: 2011 ONFSCDRS 81

FSCO A08-001638

BETWEEN:

RIMVYDAS NARUSEVICIUS Applicant

and

OLD REPUBLIC INSURANCE COMPANY Insurer

Before: Alec Fadel

Heard: April 12, 2011, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were closed on May 27, 2011

Appearances: Kelley Campbell for Mr. Narusevicius Kevin S. Adams for Old Republic Insurance Company

Issues:

The Applicant, Rimvydas Narusevicius, was seriously injured in a motor vehicle accident involving three tractor-trailers on November 23, 2003. He applied for and received statutory accident benefits from Wawanesa, his accident benefits insurer, payable under the Schedule.¹ A dispute arose concerning Mr. Narusevicius’ entitlement to accident benefits which the parties were unable to resolve through mediation, and Mr. Narusevicius applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Old Republic Insurance Company (“Old Republic”) replaced Wawanesa as insurer in this arbitration after a priority dispute was resolved.

The preliminary issue is:

Is Mr. Narusevicius’ election to opt out of the benefit scheme of the Workplace Safety and Insurance Act valid, in that it was not made primarily for the purpose of obtaining statutory accident benefits as provided for under section 59(2) of the Schedule?

Result:

Mr. Narusevicius’ election was valid being that it was not made primarily for the purpose of obtaining statutory accident benefits.

EVIDENCE:

Mr. Narusevicius was an occupant of the first tractor-trailer and was in the back of the cab sleeping when the accident occurred. He testified that he remembered waking after the collision and seeing his co-driver covered in blood next to his bed, his chest was hurting badly, he could not speak and their truck was on fire. The applicant sustained injuries that included 4 fractures of his spine, head injuries, herniated discs and has suffered high levels of anxiety since the accident. The insurer does not dispute that this was a significant accident. According to his testimony, the applicant has not driven since this accident. The applicant retained counsel shortly after the accident, made a claim for accident benefits and began to receive income replacement, attendant care, housekeeping and various medical and rehabilitation benefits from Wawanesa.

The parties agree that the applicant was deemed to have elected to pursue a tort action when he did not file an election to collect benefits through Workplace Safety and Insurance Board (“WSIB”) within three months of the accident pursuant to s. 30(6) of the Workplace Safety and Insurance Act (“WSIA”). Wawanesa obtained an assignment of the applicant’s WSIB benefits at the outset of the claim and filed same with the WSIB. Wawanesa did not raise a s. 59 defence when filing its response to the application for arbitration.

The applicant commenced a court action against several of the drivers and owners of the tractor-trailers within the limitation period. All but one of the defendants made an application to the Workplace Safety and Insurance Appeals Tribunal (“WSIAT”) under s. 31 of the WSIA for a determination of the applicant’s right to sue, as s. 27 and 28 of the WSIA prohibit a worker who is injured in the course of employment from suing their employer, another employer or another worker acting in the course of their employment. In a decision dated October 5, 2009, the WSIAT decided that at the time of the accident Mr. Narusevicius was a worker in the course of his employment and his tort claim was barred as against all but one of the defendants to the tort action. The remaining defendant in the tort action was the driver of the third tractor-trailer.

The evidence shows that following release of the WSIAT decision, the applicant’s spouse filled out and filed, on his behalf, an election to collect WSIB benefits dated November 23, 2009. Ms. Naruseviciene testified that following receipt of the WSIAT decision, she and her husband believed that the applicant had to apply for WSIB benefits noting that his lawyer, at the time, did not explain the effect of the WSIAT decision on their lawsuit. According to her, the applicant’s lawyer also indicated that he had to continue with the lawsuit. Ms. Naruseviciene testified that she sent in the WSIB election form since the applicant had no income for years and they felt he had no choice but to apply to WSIB after the WSIAT decision. She confirmed that she telephoned to speak with a WSIB representative following submission of the election form and a letter dated January 12, 2010 from WSIB spoke of “next steps” and indicated that the file would be transferred to Toronto for an entitlement decision. A letter from the applicant’s solicitor, at the time, to the WSIB dated February 10, 2010 confirmed that they were adjourning the accident benefits arbitration pending their decision. A further letter dated February 19, 2010 from WSIB to the applicant indicated that WSIB was unable to adjudicate the claim due to unresolved issues with the third party insurer.

Finally, a letter from WSIB dated March 8, 2010 to the applicant’s representative, at the time, indicates that for an unknown reason, the applicant was sent a second election form following the issuance of the WSIAT decision. It states that the second election form was never approved and for all intents and purposes was considered “null and void.” The letter goes on to explain that the applicant may be entitled to WSIB benefits if the right of action of the worker was removed against all defendants in the civil action (which did not happen in this instance). The letter continues that pursuant to s. 30(14) of the WSIA when a worker elects to take legal action they can preserve their entitlement to future WSIB benefits by complying with that section. The letter continues that if the applicant chose to make a request under s. 30(14), he was to provide the entire litigation file so that WSIB could be satisfied that any settlement was reasonable in lights of the merits of the civil action. In testimony Ms. Naruseviciene stated that she did not actually withdraw her husband’s claim for WSIB benefits.

The insurer claims that the applicant is not entitled to accident benefits by virtue of s. 61 of the Schedule (formerly s. 59) because he is entitled to receive benefits from the WSIB. It submits that the exemption in s. 61(2) does not apply given that the applicant’s election to commence a tort action was primarily for the purpose of claiming accident benefits and is therefore not bona fide. Further, it submits that if the initial election was bona fide that it is no longer so, after the applicant “re-elected” for WSIB benefits following the issuance of the decision by the WSIAT.

ANALYSIS:

The relevant parts of s. 61 (formerly s. 59) of the Schedule reads as follows:

(1) The insurer is not required to pay benefits under this Regulation in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers’ compensation law or plan.

(2) Subsection (1) does not apply in respect of an insured person who elects to bring an action referred to in section 30 of the Workplace Safety and Insurance Act, 1997 so long as the election is not made primarily for the purpose of claiming benefits under this Regulation.

In the Mahadeo and Aviva Canada appeal decision the Director’s Delegate referred to the applicable principles pertaining to s. 59(1) of the Schedule:

The claimant has the burden of bringing himself within the exception provided in subsection 59(2). The test is whether the election was made primarily for the purpose of claiming accident benefits. The reference to "purpose" indicates there is a subjective element to the enquiry, and the parties agree that the purpose for the election must be assessed as at the time of the election. However, I reject the submission that the apparent strength of any action and the steps taken to pursue it are beyond the scope of the enquiry. The link is plainly set out in subsection 59(2). . .

The exception is available if the election to bring an action was not made primarily for the purpose of claiming accident benefits. Assessing the purpose for the election requires consideration of subjective and objective factors.²

In Sumal and American Home³ the Director’s Delegate referred to Lin and Liu and ING⁴ where it was stated that “the implicit pre-requisites of subsection 59(2) of the Schedule include that the insured person is entitled to claim benefits under the WSIA and has the right to sue someone for his or her injuries.” The Delegate noted that while s. 31(2) of the WSIA gives WSIAT exclusive jurisdiction to determine whether this right of action has been taken away, FSCO “has jurisdiction to determine the intention for which an election was made. The crucial determination is not whether an intention exists to bring a tort action, but whether that is the primary purpose of an insured person electing not to proceed with a WSIB claim.” The Delegate also referred to the arbitration decision Gebru and Coseco⁵ agreeing that “the point in time relevant to whether the election to bring an action was made primarily other than for the purpose of claiming accident benefits is when the insured person makes the election.” The Delegate noted that in the appeal decision in Gebru the Director held:

Quite properly [the arbitrator] did not focus exclusively on the viability of Ms. Gebru's court action. The regulation makes it clear that the issue is the insured person's reason for making the election. While arbitrators must consider “objective” factors in evaluating the insured person's motivation, including the strength of the court action, the steps taken to pursue the claim, and any advantages that might have led the insured person to prefer accident benefits over workers’ compensation, it is difficult to see how the test itself can be “objective.”

The Delegate also referred to Mahadeo where it was noted that “a claimant’s action or inaction, before and after making the election, provides important evidence of his purpose in making the election. Delay in bringing an action or failure to prosecute it are likely to undermine a claimant’s accident benefits claim.”

Mr. Narusevicius initially elected to pursue accident benefits by not making the election for WSIB benefits. Indeed, a third party action was commenced within the limitation period and examinations for discovery have taken place. The court action includes a claim by the applicant’s spouse under the Family Law Act, R.S.O. 1990, c. F.3. In testimony, both the applicant and his spouse made clear that the applicant’s intention at the outset was to sue in tort for pain and suffering. In cross-examination, the applicant was asked several times in different ways why he commenced a civil action and his initial response was that he initiated a lawsuit so that he could have all that was available to him. Given the circumstances of the accident, this was an appropriate consideration at the time. Ms. Naruseviciene also testified that initially when the applicant was speaking with his lawyer, they were being advised on issues such as claiming for pain and suffering and indicated that given her husband’s significant injuries they wanted to pursue a court action against the drivers. She did not agree that they initiated a lawsuit for the purpose of claiming accident benefits and stated it was for pain and suffering, loss of income and a family law claim. I do not accept that the applicant’s evidence supports that he initiated a lawsuit primarily so that he could collect accident benefits as his evidence made clear that he was interested in suing the drivers responsible for the accident, in addition to medical benefits, so that he would have access to greater compensation.

The insurer claims that the applicant, in applying for WSIB benefits after the WSIAT decision, re-elected to receive those benefits and is no longer entitled to accident benefits. I do not agree. The insurer has provided no authority to support that the applicant is entitled to “re-elect” to collect WSIB benefits after he has already elected to pursue a tort action and has claimed accident benefits. Therefore, the issue before me is whether or not the applicant made a valid election when he initially decided to commence a tort action and apply for accident benefits.

In any event, even if re-election was provided for in the relevant legislation, I find that the applicant’s actions after the WSIAT decision are more reflective of the disappointment and confusion he experienced upon receiving the WSIAT decision and do not reflect an intention to no longer proceed with what they believed to be a valid tort claim. The applicant’s evidence, which I accept, was that he was not being advised on the appropriate steps to take by his solicitor at the time and therefore made a decision to make the WSIB election out of a sort of desperation. After receipt of the WSIAT decision, the evidence shows that the applicant was not in a state to deal with next steps and left this for his wife. According to Ms. Naruseviciene, the applicant’s prior solicitor was of no assistance and left the decision to apply for WSIB benefits up to her.

All along, after first consulting with his solicitor, the applicant intended to pursue a tort action and I find that this was not for the primary purpose of claiming accident benefits. I do not find that the subsequent WSIB election supports that the applicant’s intention was to collect WSIB benefits in lieu of continuing with the court action. I find it significant that by this time the accident benefit insurer had terminated the applicant’s weekly income replacement benefit which he had not received since March 18, 2007 and was an obvious motivating factor for the WSIB application.

The insurer submits that the tort claim is now likely worthless given that liability for the remaining defendant is highly questionable and in any event will be only held to be severally liable for the applicant’s damages. The strength of the tort claim is one factor to consider in my decision, and I find that initially the applicant had reason to believe that he had a valid tort claim to pursue. Further, after issuance of the WSIAT decision, although the applicant applied for WSIB benefits, he was also informed by his solicitor that he could continue with the tort action and at no time believed that this claim was worthless.

The insurer argues that the case law supports that the applicant’s actions after the election are relevant but as the case law illustrates that is mainly for the purpose of assisting in the determination of intent at the time of making the election. The applicant did not apply for WSIB benefits at any time until after issuance of the WSIAT decision and I am satisfied that his primary intention all along was to proceed with a court action.

EXPENSES:

The issue of expenses shall be dealt with by the hearing arbitrator after issuance of their decision on entitlement.

September 21, 2011

Alec Fadel Arbitrator

Date