Financial Services Commission of Ontario

Neutral Citation: 2011 ONFSCDRS 88 FSCO A10-000158

BETWEEN:

ANDREW HAYWARD Applicant

and

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Lloyd (J. R.) Richards Heard: July 15, 2011, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were received on June 30, July 12 and 13, 2011. Appearances: Kyle Smith for Mr. Hayward Robert S. Franklin for Royal & SunAlliance Insurance Company of Canada

Overview:

The Applicant, Andrew Hayward, was injured in a motor vehicle accident on January 15, 2009. He applied for weekly income replacement benefits from Royal & SunAlliance Insurance Company of Canada (“Royal”), payable under the Schedule.¹ Royal has not paid accident benefits to date. The parties were unable to resolve their disputes through mediation, and Mr. Hayward applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Issue:

The preliminary issue is:

1. Is Mr. Hayward precluded from receiving accident benefits pursuant to subsection 59(1) of the Schedule?

Result:

1. Mr. Hayward is precluded from receiving accident benefits pursuant to subsection 59(1) of the Schedule.

EVIDENCE AND ANALYSIS:

The Law:

Section 59 of the Schedule addresses the relationship between statutory accident benefits and workers’ compensation. The Workplace Safety and Insurance Board (WSIB) provides workers’ compensation benefits. The Schedule’s interaction with the workplace insurance scheme recognizes workplace insurance as the presumed accident benefits provider where an accident occurs in the course of a worker’s employment. Subsection 59(1) states that automobile insurers are not required to pay benefits where an insured person is entitled to workers’ compensation benefits. However, subsection 59(2) allows an insured person who is entitled to workplace benefits to make an election under workers’ compensation legislation to start a legal action against the person alleged to be responsible for his injury, so long as the election is not made primarily for the purpose of claiming accident benefits under the Schedule. When the worker elects to start a legal action, the worker is not entitled to claim workers’ compensation benefits but is entitled to claim accident benefits from an automobile insurer.

Subsection 59(5) states that where there is a dispute about whether an insured person is entitled to workers’ compensation benefits, the automobile insurer pays accident benefits to the person pending resolution of the dispute. The automobile insurer is only obligated to pay accident benefits pending resolution of the dispute if the insured person makes, to the automobile insurer, an assignment of any workers’ compensation benefits to which he is, or may become entitled as a result of the accident. The WSIB must approve the assignment.

Background:

Mr. Hayward’s interactions with Royal:

January 15, 2009 – date of the motor vehicle accident.

January 16, 2009 – Royal alleges that it recorded an initial call with Mr. Hayward on this date, during which Mr. Hayward stated that when the accident occurred on January 15, 2009, he was on his way to the bank and then downtown for a sales call. Royal wrote to Mr. Hayward on January 16, 2009 advising him that it understood that he was in the course of his employment at the time of the motor vehicle accident. In its correspondence Royal also stated that, generally, accident benefits are not payable to individuals entitled to workplace benefits, unless such individuals elect to sue an at-fault person.² Royal’s correspondence advised Mr. Hayward to contact them within 30 days, failing which Royal would assume that Mr. Hayward was covered by workplace benefits and had decided not to start a legal action against an at-fault person.

February 13, 2009 – Mr. Hayward signed an Application for Accident Benefits on this date and forwarded it to Royal, which was within 30 days of Royal’s correspondence to Mr. Hayward on January 16, 2009.³ In the application, Mr. Hayward indicated that the motor vehicle accident in which he was involved did not occur while he was at work.

February 19, 2009 – Mr. Hayward gave a statement to Royal on this date stating that the accident did not occur in the course of his employment and that he had never filed a workplace benefits claim.⁴

February 20, 2009 – On this date Royal informed Mr. Hayward by Explanation of Benefits that he was not entitled to certain accident benefits, including income replacement benefits, because at the time of the motor vehicle accident he was driving without a valid driver’s licence. Royal took this position because at the outset of Mr. Hayward’s claim, Royal obtained the police report filed in relation to the motor vehicle accident, which stated that Mr. Hayward’s licence was suspended at the time of the motor vehicle accident.⁵ Mr. Hayward contested Royal’s position concerning his driver’s licence status at the time of the motor vehicle accident and the issue was sent to a preliminary issue hearing.

November 30, 2010 – Well before the arbitrator’s decision in the preliminary issue hearing on Mr. Hayward’s driver’s licence status, Royal requested copies of Mr. Hayward’s employment file. Mr. Hayward’s counsel advised Royal that Mr. Hayward’s employer had refused to provide the employment file.⁶ It appears that Mr. Hayward’s employer relented because Royal alleges that it received the employment file on November 30, 2010. The employment file contained WSIB documents.

February 10, 2011 – The arbitrator at the preliminary issue hearing dealing with Mr. Hayward’s driver’s licence status released a decision on this date, finding that Mr. Hayward could pursue accident benefits under the Schedule.⁷

Mr. Hayward’s interactions with WSIB:

February 2, 2009 – Mr. Hayward signed a WSIB Worker’s Report of Injury/Disease on February 2, 2009, and a fax confirmation indicates that he forwarded this form to the WSIB on March 3, 2009.⁸ The report indicates that Mr. Hayward was on his way to meet a client when the accident took place.

March 10, 2009 – By letter of this date, the WSIB requested that Mr. Hayward’s employer complete a Form 7, which is an Employer’s Report of Injury/Disease.⁹

March 25, 2009 – Mr. Hayward signed a WSIB election form on this date,¹⁰ which states that Mr. Hayward had not started a legal action and that he understood that by choosing workers’ compensation benefits he transferred his right to start an action against an allegedly at-fault person to the WSIB and could not take any legal action on his own against anyone concerning the January 15, 2009 motor vehicle accident. The form further states that by signing the form Mr. Hayward informed the WSIB of his choice to claim benefits under the Workplace Safety Insurance Act, 1997, S.O. 1997, c. 16, Sched. A, (“WSIA”) for injuries resulting from the motor vehicle accident.

April 8, 2009 – Mr. Hayward’s employer completed the WSIB Form 7 on this date. The WSIB, by letter of the same date, advised Mr. Hayward that he had been allowed a claim for health care benefits only, as it appeared that Mr. Hayward had not missed any time from work. The letter also advised Mr. Hayward to contact the WSIB if he did miss any time from work and he wished the WSIB to review the claim.¹¹

May 27, 2009 – The evidence establishes that Mr. Hayward did request a review of his WSIB claim because on this date¹² Mr. Bill Chambers, an eligibility adjudicator at the WSIB, advised Mr. Hayward that his claim would be limited to health benefits only. The WSIB made health care benefits available to Mr. Hayward until April 9, 2009.¹³

June 3, 2009 – Mr. Hayward advised the WSIB, by letter of this date, that he wished to appeal the WSIB decision to deny him loss of earnings benefits.¹⁴

May 18, 2010 – Mr. Hayward states that he commenced a legal action against the allegedly at-fault person in the January 15, 2009 motor vehicle accident by Statement of Claim dated May 18, 2010.¹⁵ Mr. Hayward states that the defendants in the claim have filed their Statement of Defence and examinations for discovery were conducted on June 1, 2011.

April 14, 2011 – Mr. Hayward withdrew his WSIB appeal and any claim for benefits from the WSIB by letter dated April 14, 2011.¹⁶

Royal’s position:

Royal submits that Mr. Hayward is precluded from receiving any accident benefits by operation of subsection 59(1) of the Schedule because he applied for and was approved for workers’ compensation benefits from the WSIB arising out of the January 15, 2009 motor vehicle accident. Royal contends that Mr. Hayward was pursuing workplace benefit claims and accident benefits simultaneously.

Royal asserts that Mr. Hayward withdrew his workplace benefit claims mere days before the commencement of this arbitration hearing and that he cannot now abandon his entitlement to workplace benefits in an attempt to claim accident benefits. Royal further argues that it is irrelevant that Mr. Hayward was found to be entitled to WSIB health care benefits only and not loss of earnings benefits. His entitlement to any workplace benefits satisfies the Schedule’s subsection 59(1) requirements.

Royal’s position is that the exception under subsection 59(2) of the Schedule is only applicable where a worker elects to proceed with a legal action rather than proceed with a claim for workers’ compensation benefits. Royal submits that Mr. Hayward’s formal election to receive workplace benefits is found in his March 25, 2009 election form to the WSIB and that Mr. Hayward’s application for accident benefits cannot be considered his election. Royal argues that Mr. Hayward made his election to claim workplace benefits within two months of the motor vehicle accident, which is within the three-month timeline stipulated under the WSIA. Mr. Hayward then decided to commence his legal action on May 18, 2010, which is sixteen months after the motor vehicle accident. Mr. Hayward’s decision to commence the legal action against the allegedly at-fault person was, therefore, made well after his decision to claim workplace benefits.

Royal asserts that subsection 59(5) does not apply to Mr. Hayward’s case because there is no dispute about Mr. Hayward’s entitlement to WSIB benefits. A dispute cannot be held to mean a dispute between the WSIB and Mr. Hayward about entitlement to specific workplace benefits. Rather, a dispute refers only to a dispute about whether subsection 59(1) applies to Mr. Hayward.

Mr. Hayward’s position:

Mr. Hayward submits that Royal is estopped from asserting section 59 of the Schedule as a defence to his claims because Royal wrongfully denied benefits to which he is entitled.

Further, Royal breached its duty of good faith to him by misleading him when it initially denied him benefits.

Mr. Hayward states that Royal advised him that he was not entitled to benefits because, at the time of the motor vehicle accident, he was driving with a suspended licence. At arbitration, on the suspended licence issue, the arbitrator determined that Mr. Hayward could pursue accident benefits despite Royal’s position concerning the suspended licence. Mr. Hayward’s contention is that Royal misinformed him and he relied on the misinformation and applied for workplace benefits. In Mr. Hayward’s view, Royal is estopped from asserting section 59 as a defence because he relied on Royal’s representation to his own detriment. Mr. Hayward submits that he applied for workplace benefits on March 3, 2009, which is after Royal denied his benefits by correspondence dated February 20, 2009. It is the denial that Mr. Hayward claims is a misrepresentation. Mr. Hayward argues that if Royal is entitled to deny benefits to which he is entitled for any period of time based on his WSIB application, then it is clear that he relied on this misrepresentation to his own detriment.

Mr. Hayward argues that Royal seeks to profit from its conduct in his case, and further that Royal clearly took an adversarial position towards him from the commencement of his claim. In his view, Royal represented to him that he was not entitled to accident benefits due to his suspended licence, and having lost on that issue, now seeks to have him disentitled to benefits due to the election he made that was prompted by their misrepresentation.

Mr. Hayward also asserts that if Royal is not estopped as a result of its wrongful denial of benefits, then he is free to elect to accept accident benefits under the Schedule by assigning any workplace benefits to Royal under subsections 59(5) (a) and (b) of the Schedule from the date of his application for benefits.

Mr. Hayward states that he signalled his intention to Royal to pursue accident benefits under the Schedule when he submitted an Application for Accident Benefits to Royal shortly after the January 15, 2009 motor vehicle accident. Given that Royal was aware of the WSIB issue at the point he signalled his intention, Mr. Hayward argues that the proper step for Royal to have taken upon receiving his Application for Accident Benefits would have been to provide him with an Assignment of Workplace Safety and Insurance Benefits Form. In Mr. Hayward’s view, if Royal would have provided the form to him, his completing the form pursuant to subsection 59(5) would have resolved the WSIB issue and confirmed his full entitlement to accident benefits under the Schedule. Instead, Mr. Hayward claims that Royal has never provided him with the requisite form.

Mr. Hayward claims that Royal failed in its positive duty to inform him of his entitlement to benefits. He states that Royal did not provide him with an Assignment of Workplace Safety and Insurance Benefits form deliberately so that it would not have to pay him benefits. Mr. Hayward requests that the assignment form that he completed recently before this arbitration hearing be deemed effective as of the date Royal was supposed to have provided the form to him. Further, Mr. Hayward states that his accident benefits entitlement under the Schedule ought to be effective as of February 13, 2009, which was the date of his Application for Accident Benefits.

Mr. Hayward alleges that he has indicated his intention to commence a legal action several times since the motor vehicle accident. He applied for accident benefits under the Schedule when Royal informed him that he had no entitlement to accident benefits if he did not intend to bring a legal action. He subsequently followed through and commenced the action on May 16, 2010. Mr. Hayward claims that he meets the appropriate threshold for commencing a legal action, pursuant to section 267.1 of the Insurance Act.

Findings:

Estoppel

I find that Royal is not estopped from asserting section 59 of the Schedule as a defence to Mr. Hayward’s claims.

In addressing estoppel as it applies to limitation periods, this Commission has held that “[a]n insurer may be estopped from relying on the limitation period if the applicant relied to his or her detriment on the insurer’s conduct or if the insurer unreasonably delayed the applicant in processing the claim.”¹⁷ I accept that this reasoning can apply to a range of insurer conduct. Insurers also have an obligation to ensure that claimants get access to benefits to which they might be entitled. Insurers are not permitted to prevent claims from crystallizing and should provide sufficient information to ensure a claimant is aware of the nature and extent of his or her entitlement to benefits. If not diligent, when an insurer takes an inconsistent position at the outset of an applicant’s claim for benefits, the insurer can find itself in conflict with its duty to provide information to an applicant.¹⁸

Mr. Hayward’s Application for Accident Benefits appears to have been faxed on February 18, 2009. Royal obtained the police report concerning the accident and discovered that the police alleged that at the time of the motor vehicle accident Mr. Hayward was driving with a suspended licence. Royal promptly informed Mr. Hayward, by Explanation of Benefits dated February 20, 2009, of its position and advised him that he was not entitled to certain accident benefits, including income replacement benefits. Mr. Hayward then applied to the WSIB for workplace benefits on March 3, 2009.

I find that Royal was entitled to assert the defense that Mr. Hayward was not entitled to benefits based on its belief that Mr. Hayward was driving with a suspended licence at the time of the accident. I do not find that Royal’s raising of the defense was a misrepresentation. Royal merely advanced, and properly advised, Mr. Hayward of its position. I also do not find that Mr. Hayward relied on Royal’s position to his detriment. Mr. Hayward’s application for benefits in another forum is not an action that can be deemed detrimental to him in this case. The statutory accident benefits scheme and the workers’ compensation scheme operate as mutually exclusive benefit systems. Where a motor vehicle accident occurs in the course of one’s employment, the default benefit scheme is the workers’ compensation scheme. Where a worker believes that it would be prudent to pursue a legal action, then that worker can opt out of the workers’ compensation scheme and collect accident benefits while prosecuting his or her tort claim. The interplay between the two systems is not meant to create an election based on the amount or types of benefits a claimant could collect under one system as opposed to the other. The decision to elect workplace benefits or accident benefits is not based on the relative advantages or detriment of one system versus another, but rather on an individual’s entitlement to workplace benefits or accident benefits. Mr. Hayward chose to pursue workers’ compensation benefits because he believed he was entitled to them, and he was, in fact, determined to be entitled to workplace benefits. Royal’s defense to his claims was not a misrepresentation and did not compel him to act to his detriment. Royal’s defense only prompted Mr. Hayward to apply for benefits to which he was entitled.

Mr. Hayward asserts that Royal was in breach of its duty of good faith in adjusting his claim because it took an adversarial position towards him and did not provide him with the information he required to properly make his claim. Mr. Hayward argues that if Royal had given him an election form at the outset of the claim, he would have chosen to collect accident benefits and eschewed any claims for workers’ compensation benefits.

Mr. Hayward never specifically clarified the nature and scope of Royal’s duty of good faith. Even so, I agree that Royal had an obligation to ensure that Mr. Hayward got access to benefits to which he might have been entitled and to provide sufficient information to ensure that Mr. Hayward was aware of the nature and extent of his entitlement to benefits. In this case, I find that Royal was not in breach of its obligations to provide information to Mr. Hayward in adjusting his claim. I find that Royal did not engage in any actions that prevented Mr. Hayward’s claims from crystallizing. Mr. Hayward clearly communicated to Royal in his February 19, 2009 statement that he had not made a WSIB claim. Mr. Hayward also stated on his Application for Accident Benefits that the accident did not occur while he was at work.¹⁹ Royal had no reason to believe that Mr. Hayward required an election and assignment form because Mr. Hayward, in effect, told Royal that he did not require the forms.

Mr. Hayward does not dispute Royal’s allegations that it received his employment file on November 30, 2010. It is at this point that Royal became aware of the WSIB issue. Prior to this point Royal had asked Mr. Hayward to indicate whether he was in the course of employment when the accident took place and Mr. Hayward had responded that the accident was not work- related. At the point Royal became aware of the WSIB issue, Mr. Hayward had already applied for and been deemed entitled to workplace benefits. Royal’s raising a section 59 defense in response to Mr. Hayward’s claim is not an indication of Royal’s continued adversarial position towards Mr. Hayward from the commencement of his claim. Rather, it is Royal’s response to Mr. Hayward’s misrepresentation at the outset of his claim that he was not in the course of his employment when the motor vehicle accident took place. Royal raised the defense because it was appropriate to do so.

Section 59 application to Mr. Hayward’s claims

When considering the interaction between workplace benefits and accident benefits, the general rule is that automobile insurers are not required to pay benefits if the insured person is entitled to workers’ compensation benefits.²⁰ I find that subsection 59(1) of the Schedule clearly applies to Mr. Hayward because he applied for and was found to be entitled to workplace benefits. Mr. Hayward even decided to access the WSIB’s reconsideration and appeals process when he contested the WSIB’s position that he was entitled to health benefits only. In addition, Mr. Hayward has not argued that he is not entitled to workplace benefits and appears to accept the WSIB’s determination.

Since subsection 59(1) of the Schedule applies to Mr. Hayward, I now turn to whether he falls under the subsection 59(2) exception. Mr. Hayward has the onus to prove that his legal action was not commenced primarily for the purpose of claiming accident benefits under the Schedule. I find that Mr. Hayward has not proven that his legal action was not commenced primarily for the purpose of claiming accident benefits under the Schedule.

Mr. Hayward commenced his legal action some sixteen months after the January 15, 2009 motor vehicle accident. He claims that his Application for Accident Benefits was his signal to Royal that he intended to claim accident benefits and commence a legal action. Mr. Hayward also entered into evidence a report by a Dr. Prutis, dated July 2, 2009,²¹ that Mr. Hayward states supports the fact that his legal action is well founded. Other than Mr. Hayward’s statement, Dr. Prutis’ report and the statement of claim, Mr. Hayward presented no other evidence to support his position that his legal action was not commenced primarily for the purpose of claiming accident benefits under the Schedule. Mr. Hayward did not enter into evidence the statement of defense in the legal action. I also note that Mr. Hayward presented no evidence about the WSIB’s position concerning the legal action even though he had signed a WSIB election form on March 25, 2009,²² which states that he had not started a legal action and that he understood that by choosing workers’ benefits he transferred his right to sue an allegedly at-fault person to the WSIB. Mr. Hayward presented no other evidence about the relative merits of his legal action and did not appear at this preliminary issue hearing to give any oral evidence supporting his position on the legal action.

Determining Mr. Hayward’s motivation in commencing a legal action requires considering both objective and subjective factors.²³ The objective evidence that Mr. Hayward presents here is merely a statement of claim and no other evidence that his legal claim is being pursued. Dr. Prutis’ report, standing on its own, does not assist me in weighing the merits of the alleged legal action. Objectively, Mr. Hayward has presented very little evidence. In considering the subjective factors surrounding Mr. Hayward’s claim, I note that he allegedly filed the statement of claim about sixteen months after the motor vehicle accident. In addition, he only abandoned all claims for workplace benefits on April 14, 2011, which is approximately four days before I commenced the main hearing in this case. Based on these factors, I find that Mr. Hayward commenced the legal action primarily for the purpose of claiming accident benefits under the Schedule. Therefore, he cannot rely on the exception in subsection 59(2) of the Schedule.

Re-election

Mr. Hayward’s position is that he should be free to re-elect to accept accident benefits under the Schedule by assigning any workplace benefits to Royal under subsections 59(5) (a) and (b) of the Schedule from the date of his application for benefits.

Mr. Hayward pointed me to no authority either under the Schedule or the WSIA that would allow him to re-elect to pursue accident benefits once he has already pursued and been deemed entitled to workplace benefits. Subsection 59(5) of the Schedule allows an assignment of benefits to an accident benefits insurer if there is a dispute about whether subsection 59(1) of the Schedule applies to a person. There is no such dispute in this case. I find that subsection 59(1) clearly applies to Mr. Hayward. Therefore, subsection 59(5) has no application in this case.

EXPENSES:

The parties made no submissions on expenses. They are encouraged to resolve the issue. If they are unable to do so, they may schedule an expense hearing before me according to the provisions of Rule 79 of the Dispute Resolution Practice Code.

October 6, 2011

Lloyd (J. R.) Richards Arbitrator

ARBITRATION ORDER

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

1. Mr. Hayward is precluded from receiving accident benefits pursuant to subsection 59(1) of the Schedule.

October 6, 2011

Lloyd (J. R.) Richards Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Exhibit A (Royal’s Submissions), Tab 1
3. 3Exhibit A, Tab 2
4. 4Exhibit A, Tab 4
5. 5Exhibit A, Tab 3
6. 6Exhibit A, Tab 6
7. 7Exhibit B (Mr. Hayward’s submissions), Tab 6
8. 8Exhibit B, Tab 8
9. 9Exhibit A, Tab 11
10. 10Exhibit B, Tab 9
11. 11Exhibit A, Tab 12
12. 12Exhibit A, Tab 14
13. 13Exhibit B, Tab 10
14. 14Exhibit A, 15
15. 15Exhibit b, Tab 11
16. 16Exhibit A, Tab 16
17. 17Veldhuizen and Coseco Insurance Company, (FSCO A-015540, October 12, 1995), page 9
18. 18Michalski and Wawanesa Mutual Insurance Company, (FSCO A03-001363, December 13, 2005), pages 10 and 29, (conf’d on appeal).
19. 19The Application for Accident Benefits (OCF-1) asks the question “Did the accident occur while you were at work?” However, the WSIA refers to injury or accidents occurring in the course of one’s employment.
20. 20Gebru and Coseco Insurance Co., (FSCO P01-00043, January 7, 2002), page 2
21. 21Exhibit B, Tab 1
22. 22Exhibit B, Tab 9
23. 23Sumal and American Home Assurance Company, (FSCO P07-00029, June 25, 2008)```