Financial Services Commission of Ontario

Neutral Citation: 2012 ONFSCDRS 149 FSCO A11-000718

BETWEEN:

DONG DO Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Suesan Alves Heard: By telephone conference call on December 16, 2011; further submissions were received by June 29, 2012 Appearances: Samia Alam for Mr. Do Alexander Neaves for Guarantee Company of North America

Issues:

Mr. Do was injured in a motor vehicle accident on October 9, 2005. He applied for arbitration for a determination that he sustained a catastrophic assessment under the Schedule.¹

Guarantee submits that Mr. Do’s arbitration application should be dismissed because his applications for mediation and arbitration were out of time. Mr. Do disagrees. He submits that his applications were timely and his claims should be determined on the merits. Both parties claim their arbitration expenses.

The preliminary issues are:

1. Is Mr. Do precluded from proceeding to arbitration because his applications for mediation and arbitration were filed beyond the limitation period set out in subsection 281.1 of the Act?

2. Which party is liable to pay the other’s arbitration expenses?

Result:

1. Mr. Do’s mediation and arbitration applications were timely. He may proceed with his arbitration application. Guarantee’s motion to dismiss the arbitration is dismissed.

2. If the parties are unable to agree on entitlement to or the amount of expenses, they should follow the procedure set out in Rule 79 of the Dispute Resolution Practice Code—Fourth Edition, Updated August 2011.

On September 21, 2012, I issued an Order with reasons to follow. The Order stated:

1. Mr. Do’s applications for mediation and arbitration were timely. His arbitration application may proceed to a hearing scheduled for December 3-6 and 10-13, 2012.

2. The motion by Guarantee Company of North America to dismiss Mr. Do’s arbitration application is dismissed.

3. If the parties are unable to agree on expenses, they should follow the procedure set out in Rule 79 of the Dispute Resolution Practice Code—Fourth Edition, Updated August 2011.

These are my reasons.

EVIDENCE AND ANALYSIS:

Background

Mr. Do was injured in a motor vehicle accident on October 9, 2005. In December 2006, he submitted an application to Guarantee for a determination that he sustained a catastrophic impairment.

Guarantee arranged a series of multidisciplinary insurer examinations. On May 2, 2007, Guarantee determined that Mr. Do did not sustain a catastrophic impairment and sent him an Explanation of Benefits form, as well as information about his right to obtain a rebuttal report.

Mr. Do obtained a rebuttal report, and sent it to Guarantee. In that report the assessors opined that Mr. Do met the criteria for catastrophic impairment under ss. 2(1.2) (g) of the Schedule.

Guarantee then sent Mr. Do’s rebuttal assessment and other documents to Dr. Ozersky, who had earlier assessed Mr. Do on behalf of Guarantee. Dr. Ozersky conducted a paper review and authored a further report.

On April 10, 2008, Guarantee issued a further Explanation of Benefits form, in which Guarantee stated: “You have not sustained a catastrophic impairment as a result of the accident for the following reasons: Please review attached letter.” The letter stated in part, “Dr. Ozersky stated nothing in the totality of the documentation would cause him to change his original IME report. Based on the above your insurer’s opinion remains unchanged in that the injuries that you sustained in the accident of October 9, 2005 were not catastrophic injuries.”

Counsel agree that the sole issue for me to determine is whether the Explanation of Benefit form in May 2007, or that in April 2008, triggered the limitation period.² If the limitation period was triggered in May 2007, as Guarantee alleges, Mr. Do’s applications for mediation and arbitration are time barred. If it was triggered in April 2008, on the later date, as Mr. Do alleges, both applications were timely.

For the following reasons I conclude that neither the May 2007 nor the April 2008 Explanation of Benefit forms triggered the commencement of the limitation period. In the event that analysis is incorrect, I go on to determine, in the alternative, that if Guarantee triggered the limitation period, it did so with the April 2008 form.

Was a benefit refused?

Section 281.1 of the Insurance Act, R.S.O. 1990, c.I.8, prescribes a two-year limitation period for commencing a mediation or arbitration application from the refusal of a benefit.³ That period is extended by a further 90 days from the date of the Report of Mediator, if the mediation is commenced within the two-year period.⁴

In Wry and Aviva,⁵ Arbitrator Richards held that the limitation provisions in the Insurance Act apply to determinations of entitlement to catastrophic impairment, and that the triggering event for the running of a limitation period is the insurer’s determination that the insured person did not sustain a catastrophic impairment.⁶ At the appeal, Mr. Wry withdrew that issue, as it had been resolved between the parties.⁷

I respectfully disagree with Arbitrator Richard’s conclusion that the triggering event for the running of a limitation period is the insurer’s determination that the insured person did not sustain a catastrophic impairment. In my view, the triggering event is the refusal of a benefit, as provided in the Insurance Act.⁸

In many cases, the distinction will be of no consequence, because the insurer refuses benefits at the same time as it communicates its opinion that the insured person did not sustain a catastrophic impairment. However, in this case, while the documents filed with respect to both the 2007 and 2008 refusals make it clear that Guarantee disagreed that Mr. Do sustained a catastrophic impairment, none of the documentation sent to Mr. Do and filed in this proceeding, reflects the refusal of a benefit.

In my view, in the absence of the refusal of a benefit, the limitation period under the Insurance Act is not triggered. For these reasons, I conclude that neither the 2007 nor the 2008 Explanation of Benefit form and the accompanying documents which were filed triggered a limitation period.

I agree that disputes concerning catastrophic impairment are subject to the dispute resolution process. Disputes concerning catastrophic impairment come before an arbitrator or a court like many other disputes concerning an insured person’s status — such as whether a person is insured, a dependant, or a spouse — as a preliminary question, which must be determined before the question of entitlement to or the amount of benefits can be determined.

Section 20 of the Insurance Act gives an arbitrator exclusive original jurisdiction to determine all questions of law and fact arising in proceedings before him or her.⁹ In Abdulbaki and Royal Insurance Company of Canada,¹⁰ the dispute which was brought to arbitration was the question of whether the parties settled their dispute. In that case, counsel for the insurer submitted that an arbitrator’s jurisdiction under the Insurance Act was confined to determining questions of entitlement to and the amount of accident benefits as provided under section 279 of the Act. He submitted that the arbitrator therefore had no authority to determine the question of whether the parties arrived at a settlement. Arbitrator Palmer considered these submissions in the context of section 20 of the Act. She held that an arbitrator had the requisite authority to determine the question “as a matter of jurisdiction by necessary implication.” I agree with her reasons.

In the event the above analysis is incorrect, and the refusal of catastrophic impairment itself triggers a limitation period, I will now go on to determine whether there was a clear and unequivocal refusal of that impairment.

Was Mr. Do given sufficient information about the dispute resolution process?

In order to trigger the running of a limitation period, refusals of benefits are required to be clear and unequivocal.¹¹ Insurance legislation is consumer protection legislation and refusals must also communicate information about the dispute resolution process in a clear manner.¹² In my view, it follows that the information about the dispute resolution process must relate in a meaningful way to the refusal.

I find that neither Explanation of Benefit form clearly communicated to Mr. Do that the two year limitation period ran from the date of the refusal of catastrophic impairment. The Explanation of Benefit form, the OCF-9, is the form insurers are required to use when benefits are refused.

The form states that it is used to address refusals of benefits and reductions of benefits. It states that there is a two-year limitation period from the date of the insurer’s refusal to pay or reduction of a benefit. However, it states nothing about a limitation period from a refusal of a determination of catastrophic impairment. It does not specifically tell Mr. Do that he has two years from the date Guarantee refused to agree that he was catastrophically impaired, to commence mediation or arbitration.

I find the information provided was insufficient to provide Mr. Do with meaningful information regarding the dispute resolution process in relation to the determination that he did not sustain a catastrophic impairment. For that reason, neither refusal triggered the limitation period. If this analysis is incorrect, I now determine whether either refusal was unequivocal.

Was the refusal unequivocal?

I find that Guarantee’s 2007 refusal was equivocal and therefore the limitation period did not begin to run at that time for the following reasons.

Sections 40 to 42.1 of the Schedule govern the process for determining catastrophic impairment. The first step is the application by the insured to the insurer. The insurer then has three options: it may agree that the insured person sustained a catastrophic impairment; disagree that the person sustained a catastrophic impairment; or decide that it requires insurer examination(s) to assist it in making the determination. If the insurer determines that the insured person did not sustain a catastrophic impairment, the insured person has a right to obtain a rebuttal assessment, for which the insurer will pay, provided certain criteria are met. I agree with the submissions of counsel for the Applicant that the right to a rebuttal is a substantive right.

When Guarantee determined in 2007 that based on its assessments Mr. Do did not sustain a catastrophic impairment, it invited Mr. Do to obtain his own assessment, to rebut that determination. Guarantee stated it would pay for that assessment, if certain criteria were met. Since it is called a rebuttal assessment, it is at least implicit that the insurer would consider the rebuttal assessment and defer its final determination if he chose to exercise that right.¹³ I agree with the submission of counsel for the Applicant that such a determination is equivocal, and it is only after the insurer provides its “final” determination that the limitation period could begin to run.

Guarantee arranged a further assessment of Mr. Do’s rebuttal report. In doing so, it re-evaluated its own evidence in light of the rebuttal reports. It sent the rebuttal report and other documents to Dr. Ozersksy, who had earlier assessed Mr. Do on Guarantee’s behalf, in 2007, in relation to his claim that he sustained a catastrophic impairment.

Dr. Ozersky did a paper review and opined that “Nothing in the totality of the documentation would cause me to change my original IME report.” Ss. 40(4) and (5) of the Schedule oblige an insurer to give the insured a copy of the report, of the insurer’s determination of whether the impairment is catastrophic and the reasons for the insurer’s determination, when an insurer does an insurer examination to determine the question of catastrophic impairment. Thus, Guarantee was obliged to issue a further Explanation of Benefit form to Mr. Do in 2008, following Dr. Ozersky’s further assessment, and did so.

Dr. Ozersky called his second report a “Psychiatric Addendum Report (Response to Rebuttal Report).” His use of the “addendum” label does not alter the fact that it was a fresh section 42 assessment. I am not persuaded by the submission of counsel for the Insurer, that Guarantee’s statement to Mr. Do, in 2008, that its opinion, that Mr. Do did not sustain a catastrophic impairment “remains unchanged,” permits Guarantee to use the earlier 2007 refusal as the point of reference for triggering the limitation period.

For these reasons, I conclude that if the limitation period was triggered by the refusal of catastrophic impairment, as the 2007 refusal was equivocal, only the “final” refusal of that status, communicated in 2008, could have done so.

Conclusion in the alternative

On February 19, 2010, Mr. Do’s mediation application was filed with the Financial Services Commission of Ontario, approximately a year and ten months following Guarantee’s April 10, 2008 refusal, and was therefore timely.

Mr. Do’s arbitration application was received by the Financial Services Commission of Ontario on March 7, 2011, within the further 90 day period after the Report of Mediator, dated December 10, 2008. Mr. Do’s arbitration application was therefore timely.

Mr. Do’s arbitration application may proceed to a hearing scheduled for December 3-6 and 10-13, 2012. Guarantee’s motion to dismiss Mr. Do’s arbitration application is dismissed.

Expenses

If the parties are unable to agree on expenses, they should follow the procedure set out in Rule 79 of the Dispute Resolution Practice Code—Fourth Edition, Updated August 2011.

November 6, 2012

Suesan Alves Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2012 ONFSCDRS 149 FSCO A11-000718

BETWEEN:

DONG DO Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA Insurer

ARBITRATION ORDER

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

1. Mr. Do’s applications for mediation and arbitration were timely. His arbitration application may proceed.

2. The motion by Guarantee Company of North America to dismiss Mr. Do’s arbitration application is dismissed.

3. If the parties are unable to agree on expenses, they should follow the procedure set out in Rule 79 of the Dispute Resolution Practice Code—Fourth Edition, Updated August 2011.

November 6, 2012

Suesan Alves Arbitrator

Date

(2)Despite subsection (1), a proceeding or arbitration under clause 281 (1) (a) or (b) may be commenced, (a) if there is an evaluation under section 280.1, within 30 days after the person performing the evaluation reports to the parties under clause 280.1 (4) (b); (b) if mediation fails but there is no evaluation under section 280.1, within 90 days after the mediator reports to the parties under subsection 280 (8). 2002, c. 24, Sched. B, s. 39 (6).

(2) A person referred to in subsection (1) has exclusive jurisdiction to exercise the powers conferred upon him or her under this Act and to determine all questions of fact or law that arise in any proceeding before him or her and, unless an appeal is provided under this Act, his or her decision thereon is final and conclusive for all purposes.

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Counsel agree that this case does not involve the issues raised in Haldenby v. Dominion of Canada General Insurance Co., 2001 CanLII 16603 (ON CA)
3. 3S. 281.1 A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed. 2002, c. 24, Sched. B, s. 39 (6).
4. 4Exception
5. 5(FSCO A07-001774 April 17, 2009)
6. 6“Even though the words ‘entitlement to benefits’ do not appear in the limitation provisions in the Insurance Act and the Schedule, when read together, sections 40 of the Schedule and 279 and 280 of the Insurance Act make it clear that entitlement tests are to be subject to the dispute resolution process.”
7. 7Wry and Aviva Canada Inc.; Aviva Canada Inc. and Wry, (FSCO P09-00016 and P09-00016C, March 12, 2010)
8. 8A limitation defence must be strictly construed since it denies the Applicant the opportunity to have her claims adjudicated. Wiggan and Simcoe and Erie General Insurance Company, (OIC P-004204 June 12, 1996 )
9. 920. (1) This section applies with respect to proceedings under this Act before the Tribunal, the Superintendent and the Director and before an arbitrator. R.S.O. 1990, c. I.8, s. 20 (1); 1997, c. 28, s. 77. Idem
10. 10(OIC A-010205, December 12, 1995)
11. 11The refusal relied on must be clear and unequivocal, and must be communicated to the applicant. Zeppieri and Royal Insurance Company of Canada (OIC A-005237, February 17, 1994).
12. 12Smith v. Co-operators Insurance Co. 2002 SCC 30, [2002] 2 S.C.R. 129
13. 13Arbitral case law also requires an insurer to consider all assessments; not just those prepared by insurer examiners.