Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 67

Appeal P09-00035

OFFICE OF THE DIRECTOR OF ARBITRATIONS

HARMESH LADHAR

Appellant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Respondent

BEFORE:

David Evans

REPRESENTATIVES:

Douglas O'Toole for Mr. Ladhar

Helen D. K. Friedman for Economical Mutual Insurance Company

HEARING DATE:

August 11, 2010 Additional submissions were received by June 20, 2011

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal of the arbitration order, dated October 19, 2009, is hereby dismissed.

2. If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated - August 2011), an expense hearing shall be requested, as set out below, within sixty days of the date of this decision.

April 24, 2012

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Mr. Ladhar appeals Arbitrator Ashby’s decision that his application for arbitration was outside the time limits set in the SABS.¹ The arbitration turned on the issue of whether Mr. Ladhar, who was injured in a motor vehicle accident on January 15, 2002, could apply a second time for income replacement benefits (IRBs) more than two years after his insurer, Economical Mutual Insurance Company, had terminated payment of IRBs arising from his first application for benefits.

II. BACKGROUND

Immediately after the accident, Mr. Ladhar notified Economical of his claims and started receiving IRBs, subject to deductions for post-accident income he received during work trial programs and collateral benefits received from Great-West Life. On February 16, 2004, Economical advised him it was terminating benefits on the basis he did not meet the stricter post-104 week “any suitable employment” test for IRBs. No actual benefits were paid beyond March 31, 2004, as Mr. Ladhar had returned to work March 23, 2004, and his income exceeded the benefit. A post‑104 week Disability Designated Assessment Centre report confirmed that Mr. Ladhar did not meet the post-104 week test. Economical ultimately terminated IRBs as of May 18, 2004, based on the DAC assessment.

Mr. Ladhar does not dispute that the limitation period arising out of this termination began to run on or before May 17, 2004. Subsection 51(1) of the SABS required him to commence a mediation proceeding “within two years after the insurer’s refusal to pay the amount claimed.”

Mr. Ladhar’s second application for IRBs arose because on August 15, 2005, he underwent shoulder surgery, allegedly needed due to accident-related impairments, and did not return to work. He received short-term and then long-term disability (LTD) benefits from Great-West Life. After these expired in November 2007, he submitted a second application for IRBs under the post-104 week test, which was denied. He applied for mediation on April 17, 2008, almost four years after termination.

Mr. Ladhar submitted that nothing prevented him from applying a second time for IRBs due to the change in his circumstances after the operation, relying on the notice provisions in the SABS. Subsection 32(1.1) provides that he had to give notice of his intention to apply for a benefit no later than “the 30th day after the circumstances arose that gave rise to the entitlement to the benefit … if those circumstances arose as a result of [the] accident…” He argued that the changed circumstances around his shoulder surgery allowed him to reapply for IRBs.

However, the Arbitrator found that the requirement to give notice within 30 days after the “circumstances arose that gave rise to the entitlement” related to the initial requirement under s. 4(1)1 that the insured person suffer a substantial inability to perform the essential tasks of his or her employment “as a result of and within 104 weeks after the accident.” In other words, the circumstances giving rise to the entitlement must occur within 104 weeks of the accident. Accordingly, the notice provision had no bearing in this case, as he had already given notice at the time of the initial application for benefits. Rather, Mr. Ladhar should have disputed the termination of benefits before May 18, 2006, or two years after termination. Since he did not dispute the termination until April 2008, he was out of time.

III. ANALYSIS

At the arbitration hearing, Mr. Ladhar conceded that in May 2004 he did not meet the stricter post-104 week test under s. 5(2)(b). He also conceded that the limitation period for the initial denial of benefits began to run by May 18, 2004, when Economical issued its refusal.

On appeal, Mr. Ladhar raises two arguments, only one of which – the first one discussed here – was pursued before the Arbitrator. First, he submits that the Arbitrator erred in finding he may not make a second application for IRBs. Second, he raises a new argument relying on s. 11 of the SABS, the temporary return to work provision.

Mr. Ladhar concedes that his first argument is difficult in light of the case law and the fact that the Arbitrator followed it in her decision. The starting point of her analysis was the Court of Appeal decision in Haldenby v. Dominion of Canada General Insurance Co., 2001 CanLII 16603 (ON CA), [2001] O.J. No. 3317, which related to a claim pursuant to the Statutory Accident Benefits Schedule – Accidents before January 1, 1994 (OMPP). As noted by the Court, the OMPP provided in s. 12(5)(b) that an insurer was not required to pay IRBs for any period in excess of 156 weeks after the accident unless it had been established that the injury continuously prevented insureds from engaging in any occupation or employment for which they were reasonably suited by education, training or experience. The decision turned in part on the phrase “continuously prevents,” with the court finding that it would contradict the scheme if a person could receive benefits for 156 weeks, continue to work at a job after the 156 weeks, and then reapply for further benefits.

However, the Arbitrator noted that this was not the only ground for the decision in Haldenby, as

the Court also based its decision on the absence of any right to reapply for benefits once terminated by the insurer and the impact of Mrs. Haldenby’s interpretation on the limitation period. It held that Mrs. Haldenby’s interpretation would essentially “extend a claimant’s entitlement to benefits for an indeterminate period of time.” In the Court’s opinion, this would be inconsistent with the Supreme Court of Canada’s approval of limitation periods as being essential to finality, certainty and the principle of diligence. [Footnote omitted.]

She further noted that, although the phrase “continuously prevents” is not part of the post-104 week limitation in the SABS, Haldenby had been applied to it in Grosicki and Non-Marine Underwriters, (FSCO A08-000248, November 21, 2008), and West and Aviva Canada Inc., (FSCO A08-000170, December 18, 2008).

The Arbitrator then cited a passage from Haldenby, which considered OMPP s. 12(5)(b). She stated that the provisions of s. 5(2)(b) of the present SABS could be inserted into that quote. She concluded that the circumstances giving rise to the entitlement must occur within 104 weeks of the accident. Therefore, the limitation provision did apply, notwithstanding Mr. Ladhar’s change in circumstances.

Mr. Ladhar takes exception to this manner of interpreting the legislation. He submits that the key sentence in Labrosse J.A.’s reasoning in Haldenby is “Clearly, if a person was working after the 156 weeks, the person was not continuously prevented beyond that period from working.” In the Arbitrator’s version, this becomes “Clearly, if a person was working after the 104 weeks, the person was not suffering a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience beyond that period” [emphasis in the original]. Mr. Ladhar submits that this passage shows why the language of the SABS cannot be simply inserted into the reasoning in Haldenby. For instance, he submits, these are two different tests, in that the current one deals with the degree of impairment (complete inability) without any temporal requirement, unlike the test at issue in Haldenby. He submits that it also follows from the Arbitrator’s analysis that a person, once working, could not suffer a complete inability to engage in the prescribed activities at a later time, or conversely, that a person having experienced a complete inability to engage in the prescribed activities would always suffer from a complete inability to do so.

These submissions are not persuasive. I find the Arbitrator reached a fundamental insight that simplifies understanding the time limits for making claims under the SABS. One of Mr. Ladhar’s chief submissions is that as the notice provision in s. 32 applies equally to medical and rehabilitation benefits, and since multiple applications for med/rehab are commonplace, the same should apply to IRBs. However, the Arbitrator’s conclusion sets out a fundamental contrast between the weekly benefits in Parts II, III and IV of the SABS, and the medical, rehabilitation and attendant care benefits in Part V. Weekly benefits have a built-in time limit, namely that the circumstances for making the claims have to arise within 104 weeks of the accident. As noted above, insured persons seeking IRBs have to suffer a substantial inability to perform the essential tasks of their ongoing, past, or future employment “as a result of and within 104 weeks after the accident” [ss. 4(1)1, 2 and 3]. Those seeking non-earner benefits under Part III have to have suffered “a complete inability to carry on a normal life as a result of and within 104 weeks after the accident” [ss. 12(1)1, 2 and 3]. And those seeking caregiver benefits under Part IV also have to have suffered a substantial inability to engage in the caregiving activities in which they engaged at the time of the accident “[a]s a result of and within 104 weeks after the accident.”

Unlike the weekly benefits, the benefits in Part V do not have an internal time limit. Rather, an external time limit is imposed in s. 18 of the benefits being payable only up to 10 years after the accident (or two years in the case of attendant care, and with exceptions for catastrophic injuries or optional benefits). So it is a false analogy to state that, since there can be multiple applications for med/rehab benefits, there can likewise be multiple applications for IRBs.

To paraphrase what was stated in the appeal decision in Allstate Insurance Company of Canada and Wright, (FSCO P98-00051, January 18, 1999), a claim for IRBs can arise up to two years following the accident. However, once the claim arises, the clock starts running. The clock ran out regarding Mr. Ladhar’s initial application for benefits and the change in circumstances he relies on occurred more than 104 weeks after the accident, so he cannot make a second application for benefits.

Furthermore, one of the fundamental principles from Haldenby applies regardless of the differences in language between the relevant SABS. As in this case, Haldenby dealt with the issue of a claim made after a return to work. The claimant in that case argued that an insured could return to work “and, if at some time thereafter the person is entirely unable to continue to work due to accident-related injuries, can reassert a claim for further benefits at any time, and the limitation period does not begin to run until the insurer refuses to pay the further benefits claimed.” The Court noted that this interpretation “was properly rejected by David Evans, the arbitrator in Shirani v. Wellington Insurance Co., [1997] O.I.C.D. No. 2, (F.S.C.O. File No. A96-000114, January 7, 1997) since it suggests that, in effect, there would be no limitation period… [T]he appellant’s approach would extend a claimant’s entitlement to benefits for an indeterminate period of time and is ‘inconsistent with the Supreme Court of Canada’s rationale which underlined the common sense of, and the need for limitation periods.’”

Accordingly, I am not persuaded that Mr. Ladhar can apply a second time for IRBs. This is one single claim, since effectively he is claiming that an operation necessitated by injuries arising out of the accident prevent him from working. The insurer had already terminated benefits based on that claim. As the Arbitrator noted, Mr. Ladhar had the opportunity to claim against the insurer after the surgery, as it occurred in August 2005 and the limitation period only expired on May 18, 2006.

I agree with her conclusion that “Mr. Ladhar chose to wait until after his disability benefits were terminated by Great-West Life. One of the reasons for a limitation period, approved by the Supreme Court, is to encourage litigants to be diligent. Mr. Ladhar’s conduct exemplifies what a limitation period seeks to discourage.”

With respect to his second argument, Mr. Ladhar relies on s. 11 of the SABS, entitled Temporary Return to Employment, but submits that additional words have to be read into it. The provision reads as follows:

A person receiving an income replacement benefit may return to or start an employment at any time during the 104 weeks following the onset of the disability in respect of which the benefit is paid without affecting his or her entitlement to resume receiving benefits under this Part if, as a result of the accident, he or she is unable to continue in the employment. [Emphasis added.]

Mr. Ladhar submits that if his return to employment in March 2004 was within “104 weeks following the onset of disability”, he would be eligible to resume receiving benefits. However, he then posits an alleged ambiguity between this provision and s. 5(2)(b) of the SABS, which sets the stricter “any employment” test “for any period longer than 104 weeks of disability.” Mr. Ladhar submits that the alleged ambiguity arises this way: if a person temporarily returns to work during the 104 weeks, then temporarily returns to work after the 104 weeks, the person may not have suffered 104 weeks of disability after the second stoppage, yet s. 11 does not assist, as it is now more than 104 weeks following the onset of disability. Mr. Ladhar submits that the only way to resolve this alleged ambiguity is to read into s. 11 the words “of disability,” so that a person “may return to or start an employment at any time during the 104 weeks of disability following the onset of the disability.” Then, Economical would bear the burden of proving that Mr. Ladhar’s application for reinstatement of benefits occurred after 104 weeks of disability following the onset of disability. Mr. Ladhar therefore seeks a further hearing, wherein Economical would have to prove that he had been disabled for 104 weeks following the onset of disability.

I see no support for this in the case law. In Galati and Aviva Canada Inc., (FSCO P07‑00004, January 5, 2011), Director’s Delegate Blackman considered s. 11 when he wrote that “[t]he Appellant submits that his disability commenced May 13, 1997. The Appellant does not argue, nor does he provide any case law or statutory support that an insured person may return to work for several years after the end of the prescribed 104 weeks [in s. 11], but then later reapply after not meeting the requisite disability tests for many years.” In the same vein, Arbitrator Rogers in Blier and Royal & SunAlliance Insurance Co. of Canada, (FSCO A09-002092, June 29, 2010) stated that “the 2‑year period for all claims commences when the insurer gives Notice of Stoppage, despite the application of section 11.” And most fundamentally, in Haldenby the court stated that temporary return to work provisions do not prevail over the limitation period.

Furthermore, in Beattie v. National Frontier Insurance Co., 2003 CanLII 2715, the Court of Appeal discussed a clause that excluded the insurer “from its obligation to pay SABS to a person convicted of a criminal offence only for the period from when the person is charged until he or she is convicted, with the result that such person is entitled to the payment of SABS subsequent to conviction, and for whatever period he or she qualifies to receive payments.”² The Court held that while this erroneously drafted exclusion clause did not conform to its purpose, it was clear and unambiguous and gave rise to but one meaning.

Here, the drafters of the SABS carefully differentiated time lines throughout. Subsection 4(1) consistently uses the terminology “as a result of and within 104 weeks after the accident.” Subsection 5(2) uses the terminology “104 weeks of disability,” whereas ss. 5(2)(d) and (e) respectively use 12 and 16 weeks after the accident. Section 6 references benefit quantum for each of “the first 104 weeks of disability” and “after the first 104 weeks of disability.” Finally, s. 22(3) provides that no payment is required “for [housekeeping] expenses incurred more than 104 weeks after the onset of the disability.”

I conclude that s. 11 requires no additional terms because it contains no apparent error and, more importantly, it is clear. Therefore, Economical is not required to prove that Mr. Ladhar was disabled for 104 weeks since the onset of disability.

Mr. Ladhar had the opportunity to present a claim after the surgery and failed to do so until years later. Accordingly, as the Arbitrator found, his claim for further benefits is out of time.

For that reason, the appeal is dismissed.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79.2 of the Dispute Resolution Practice Code, Fourth Edition (Updated August 2011), an expense hearing shall be requested within sixty days of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as written submissions regarding entitlement to or the quantum of these expenses, or both, as are in dispute.

April 24, 2012

David Evans Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2See also McDonald and Guarantee Company of North America, (FSCO A01‑000399, October 30, 2001), where I reached the same conclusion but was overturned on appeal: (FSCO P01–00047, July 5, 2002).