Neutral Citation: 2013 ONFSCDRS 135 FSCO A12-006193

BETWEEN:

MIKHAIL GARMIDER Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY Insurer

DECISION ON PRELIMINARY ISSUES

Before: Arbitrator Maggy Murray Heard: July 30, 2013, at the offices of the Financial Services Commission of Ontario in Toronto Appearances: Mr. Garmider appeared on his own behalf Bruce A. Keay for Co-operators General Insurance Company

Issues:

Mikhail Garmider was injured in a motor vehicle accident on June 8, 2009. He applied for statutory accident benefits from Co-operators General Insurance Company (“Co-operators”), payable under the Schedule.¹ Co-Operators refused to pay various benefits. The parties were unable to resolve their disputes through mediation, and Mr. Garmider 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 issues are:

Is Mr. Garmider precluded from proceeding to arbitration on the issues of non-earner and housekeeping benefits because he failed to commence a mediation or arbitration proceeding within two years of the insurer’s denial of these benefits?
Is Mr. Garmider precluded from proceeding to a mediation with respect to the treatment plan of Dr. Wilderman pursuant to section 50 of the Schedule because he failed to attend and cooperate with Insurer’s Examinations pursuant to section 42 of the Schedule?

Result:

Mr. Garmider is not precluded from proceeding to arbitration for non-earner and housekeeping benefits.
Mr. Garmider is not precluded from proceeding to mediation with respect to the treatment plan of Dr. Wilderman.
Expenses were not addressed at the hearing. If the parties are unable to agree on the issue of entitlement to or amount of the expenses, they may make submissions on both issues in accordance with Rule 79 of the Dispute Resolution Practice Code - Fourth Edition within sixty days of the date of this decision.

EVIDENCE AND ANALYSIS:

These proceedings were interpreted in Russian by Ms. Mary Jakovceva of Able Translations.

Witnesses:

I heard testimony on behalf of Mr. Garmider from himself. Co-Operators did not call any witnesses but filed the Affidavits of Maria Keramaros-Siomis and Jenny Volpentasta, both of whom are accident benefits claims representatives with Co-Operators and who handled Mr. Garmider’s file.

Parties Positions:

According to Mr. Garmider, he applied for all benefits on time and submitted all documents on time. He also testified that he cooperated fully with all examinations.

Co-Operators’s position is that Mr. Garmider applied for mediation more than two years after it denied non-earner and housekeeping benefits and that he therefore missed the limitation period. In addition, Mr. Garmider has shown a pattern of refusing to cooperate with insurer’s examiners and he cannot proceed to mediation, and consequently arbitration, with respect to the treatment plan that was prepared by Dr. Wilderman for chronic pain treatment.

Background:

The onus is on the insurer to establish that an applicant has received the proper notice of termination.

Mr. Garmider claims entitlement to non-earner and housekeeping benefits from June 8, 2009 and ongoing. He applied for accident benefits with Co-Operators on June 19, 2009. On June 24, 2009, he signed a sign back letter that said he did not want to apply for non-earner benefits.² Co‑Operators wrote back to Mr. Garmider on July 10, 2009 and confirmed that he did not wish to apply for the non-earner benefits.³ Mr. Garmider sent in Disability Certificates to Co‑Operators dated June 15, 2009,⁴ August 27, 2009⁵ and October 23, 2009⁶ that indicated that non-earner benefits were not required.

On February 3, 2010, a Disability Certificate was submitted to Co-Operators that indicated Mr. Garmider qualified for non-earner benefits.⁷ Co-Operators wrote to Mr. Garmider by letter dated February 11, 2010 and advised that he’d previously informed Co-Operators that he was not applying for non-earner benefits and asked for clarification.⁸ Co-Operators did not hear back from Mr. Garmider and wrote to him on March 11, 2010 and advised that it wanted another Disability Certificate and a second opinion.⁹

On March 18, 2010,¹⁰ Co-Operators wrote to Mr. Garmider and notified him of the insurer’s examinations regarding non-earner benefits and housekeeping benefits. According to Co‑Operators, it enclosed two Notices of Examination in the same envelope. The Notices of Examination explained to Mr. Garmider that he had to attend insurer’s examinations with a psychiatrist on April 1, 2010 and a physiatrist on April 7, 2010.

On April 1, 2010,¹¹ Mr. Garmider attended the insurer’s examination with the psychiatrist but did not participate in it because he wanted to record the assessment and the medical facility did not allow that. Mr. Garmider felt there was a “conspiracy” between the assessment facility and Co-Operators. On April 7, 2010, Mr. Garmider did not attend the appointment with the physiatrist.¹²

On April 14, 2010,¹³ Co-Operators wrote to Mr. Garmider and advised him that because of his failure to cooperate in the assessment on April 1, 2010, and his failure to attend the assessment on April 7, 2010, he was “not entitled to the non-earner and housekeeping benefit effective April 1, 2010.” Enclosed with that letter was an Explanation of Benefits form which advised him that a mediation, as well as an arbitration proceeding, must be commenced within two years from the insurer’s refusal to pay the benefit claimed and that the time limit for commencing an arbitration proceeding can be extended by 90 days after the mediator reports to the parties on the outcome of the mediation.

Mr. Garmider received Co-Operators’s letter of April 14, 2010. According to him, he wanted to tape record the assessment with the psychiatrist and did not receive the notification of the physiatric appointment on April 7, 2010.¹⁴

Co-Operators wrote to Mr. Garmider on June 8, 2010 and advised him that it would give him another chance to attend the insurer’s examinations regarding his non-earner and housekeeping benefits.¹⁵ That letter also referred to Co-Operators’s letter of April 14, 2010 which denied Mr. Garmider’s entitlement to non-earner and housekeeping benefits. Mr. Garmider signed consent forms for these examinations and returned them to Co-Operators.¹⁶

Co-Operators then received a treatment plan for chronic pain treatment in the amount of $9,611.11. By letter dated July 26, 2010,¹⁷ Co-Operators advised Mr. Garmider that it would not pay for this treatment and required him to attend an insurer’s examination regarding the chronic pain treatment plan.

By letter dated July 27, 2010,¹⁸ Co-Operators advised Mr. Garmider that his entitlement to non-earner and housekeeping benefits would be assessed. It enclosed with that letter a Notice of Examination that advised him that the examinations would take place on September 1, 2010 with an occupational therapist and on September 7, 2010 with a psychiatrist. This letter went on to state that a failure to attend an examination, or to co-operate with the examination “may result in your entitlement to the Housekeeping and Home Maintenance and Non-Earner benefits being stopped.” This letter did not refer to Co-Operators’s letter of April 14, 2010 which advised Mr. Garmider that he was not entitled to non-earner and housekeeping benefits, as its letter of June 8, 2010 did.

To reduce the number of insurer’s examinations Mr. Garmider had to attend, Co-Operators combined the examinations regarding non-earner and housekeeping benefits with the examination for the chronic pain treatment and notified him of the examinations by letter dated August 3, 2010.¹⁹ This letter also stated “At this time also, we would like to review your entitlement to the Housekeeping and Home Maintenance Benefit and Non Earner Benefit.” This letter also went on to state that a failure to attend an examination, or to co-operate with the examination “may result in your entitlement to the Medical/Rehabilitation, Non-Earner and Housekeeping and Home Maintenance benefits being stopped.” This letter did not refer to Co-Operators’s letter of April 14, 2010 which advised Mr. Garmider that he was not entitled to non-earner and housekeeping benefits, as its letter of June 8, 2010 did.

The Notice of Examination enclosed with its August 3, 2010 letter stated that Co-Operators wanted “To determine (Mr. Garmider’s) entitlement to the Housekeeping and Home Maintenance Benefit and Non Earner Benefit.” It also notified Mr. Garmider that he was to see a psychologist and a chiropractor on August 11, 2010.²⁰

On August 11, 2010, Co-Operators received an e-mail²¹ from Dr. Makos, the Clinical Coordinator where the insurer’s examinations were scheduled. Dr. Makos advised that Mr. Garmider did not complete either the psychological assessment or the chiropractic assessment. In addition, Dr. Makos received a phone call from Mr. Garmider who admitted that he was tape recording the psychological examination. Mr. Garmider also felt that the psychologist was lying to him about the purpose of the examination.

On August 18, 2010,²² Co-Operators wrote to Mr. Garmider and advised him that because he did not cooperate with the assessors on August 11, 2010, it was maintaining its denial that he was not entitled to non-earner and housekeeping benefits and he was not entitled to receive funding for the chronic pain treatment plan by Dr. Wilderman. This letter also referred to Co-Operators’s letter of April 14, 2010 which advised Mr. Garmider that he was not entitled to non-earner and housekeeping benefits.

At Mr. Garmider’s request, Co-Operators cancelled the two appointments that were scheduled with the occupational therapist and the psychiatrist for September 1 and 7, 2010 regarding his claims for non-earner and housekeeping benefits.²³

Mr. Garmider filed an Application for Mediation on July 16, 2012.²⁴

Issue One: Is Mr. Garmider precluded from proceeding to arbitration on the issues of non-earner and housekeeping benefits because his Application for Mediation was filed beyond the two-year limitation period set out in subsection 281(5) of the Act and subsection 51(1) of the Schedule?

Law:

Subsection 281(2) of the Insurance Act limits an insured's right to proceed to arbitration as follows:

No person may bring a proceeding in any Court, refer the issues in dispute to an arbitration under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought (and) mediation failed ...

Subsection 281(5) of the Insurance Act sets out the following limitation period:

A step authorized by subsection (1) must be taken within two years after the insurer’s refusal to pay the benefit claimed or within such longer period as may be provided in the Statutory Accident Benefits Schedule.

Section 51 of the Schedule²⁵ further particularizes the time limit for proceedings. It provides that a mediation, court or arbitration proceeding must be commenced within two years after the insurer’s refusal to pay the amount claimed.

In Kirkham v. State Farm Mutual Automobile Insurance Co.,²⁶ it was found that the insurer’s refusal is the “triggering event” and an insured who wants to pursue a claim must commence a proceeding within two years of the insurer’s refusal to pay, or the claim is statute barred.

In Zeppieri v. Royal Insurance Co. of Canada,²⁷ it was determined that a two-step approach must be used to determine whether the limitation period applies. 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.

Findings:

Co-Operators clearly and unequivocally denied in writing Mr. Garmider’s entitlement to non-earner and housekeeping benefits on April 14, 2010 when it advised him that he was “not entitled to non-earner and housekeeping benefits effective April 1, 2010.” ²⁸ Co-Operators gave Mr. Garmider an Explanation of Benefits form which advised him that a mediation, as well as an arbitration proceeding, must be commenced within two years from the insurer’s refusal to pay the benefit claimed and that the time limit for commencing an arbitration proceeding can be extended by 90 days after the mediator reports to the parties on the outcome of the mediation. Mr. Garmider received this letter on April 16, 2010.²⁹ Co-Operators therefore informed Mr. Garmider of the dispute resolution process contained in ss. 279 to 283 of the Insurance Act.

Using the two-step approach discussed in Zeppieri, there was a clear and unequivocal refusal to pay non-earner and housekeeping benefits on April 14, 2010. However, Co-Operators cannot rely on a limitation period that runs from April 14, 2010 because on August 3, 2010,³⁰ Co-Operators sent Mr. Garmider a letter that stated “At this time also, we would like to review your entitlement to the Housekeeping and Home Maintenance Benefit and Non Earner Benefit.” As set out above, that letter did not refer to Co-Operators’s letter of April 14, 2010 which denied Mr. Garmider’s entitlement to non-earner and housekeeping benefits. Co-Operators’s letter of August 3, 2013 rendered its April 14, 2010 refusal invalid because it indicates that it is “review(ing) (his) entitlement to the Housekeeping and Home Maintenance Benefits and Non-Earner Benefit.”

I find that Co-Operators, by the words it used in its August 3, 2010 letter, made a representation to Mr. Garmider which would induce a reasonable person to believe that it was reconsidering its position and was not relying on its April 14, 2010 refusal. That is because: (a) Co-Operators stated it was “review(ing) (his) entitlement to the Housekeeping and Home Maintenance Benefits and Non-Earner Benefit”; (b) Co-operators’s April 14, 2010 denial letter was not referred to in its August 3, 2010 letter; and (c) Co-Operators did not indicate in its August 3, 2010 letter that they would maintain the denial of non-earner and housekeeping benefits. Co-Operators’s letter of August 3, 2010 would lead a reasonable person to believe that it was not relying on its refusal of April 14, 2010. Co-Operators is then estopped from arguing a position at odds with its August 3, 2010 letter.

Co-Operators, in its letter of August 3, 2010, took the active step of initiating the review of Mr. Garmider’s entitlement to the non-earner and housekeeping benefits. It was not Mr. Garmider who asked Co-Operators to reconsider his entitlement to those benefits. In my view, this distinguishes Mr. Garmider’s case from other cases in which the insured requested that the insurer consider additional information. For example, in Zeppieri, it is the Applicant that asked the insurance company to “kindly reconsider”³¹ paying further disability benefits. And, “The solicitors (for the Applicant) continued to press (the insurer) to change its mind and then to re-confirm its position. This communication was almost entirely at the initiative of (the Applicant’s solicitors).”³²

I find that Co-Operators misled Mr. Garmider regarding the status of his claim for non-earner and housekeeping benefits. Co-Operators’s letter of August 3, 2010 would induce in a reasonable person “a false sense of security”³³ about its previous denial on April 14, 2010.

On August 18, 2010, Co-Operators wrote to Mr. Garmider and advised him that because he did not cooperate with the assessors on August 11, 2010, it was maintaining its denial that he was not entitled to non-earner benefits and housekeeping benefits. That letter is deemed to have been received five business days after it was sent,³⁴ which is August 25, 2010.

Mr. Garmider filed an Application for Mediation on July 16, 2012. This was less than two years after Co-Operators’s denial of the non-earner and housekeeping benefits on August 18, 2010. Therefore, Mr. Garmider is not precluded from proceeding to arbitration on the issues of non-earner and housekeeping benefits.

In addition, Co-Operators’s letter of August 18, 2010 did not inform Mr. Garmider of the dispute resolution process contained in ss. 279 to 283 of the Insurance Act. “Without this basic information, it cannot be said that a valid refusal has been given.”³⁵ Therefore, the limitation period for Mr. Garmider to claim non-earner and housekeeping benefits has not started.

Issue Two: Is Mr. Garmider precluded from proceeding to a mediation with respect to the treatment plan of Dr. Wilderman pursuant to section 50 of the Schedule because he failed to attend and cooperate with the insurer’s examinations pursuant to section 42 of the Schedule?

Co-Operators submits that when it received the treatment plan of Dr. Wilderman, section 42 of the Schedule requires that Mr. Garmider go to insurer’s examinations if Co-Operators requests. According to Co-Operators, Mr. Garmider refused to cooperate with the insurer’s examinations that were scheduled for August 11, 2010 with the psychologist and the chiropractor. According to Co-Operators, pursuant to section 50 of the Schedule, Mr. Garmider cannot proceed to arbitration for Dr. Wilderman’s treatment plan for chronic pain treatment because of his failure to cooperate with the insurer’s examiners.

Law:

Section 50 of the Schedule states:

An insured person shall not commence a mediation proceeding under section 280 of the Act unless,

(b) the insured person, if he or she was required to undergo a designated assessment under section 43, has undergone the designated assessment and has complied with that section (emphasis added).

Finding:

Although Mr. Garmider attended the insurer’s examinations on August 11, 2010, he discontinued them.³⁶ It is unclear why he did so.

The evidence establishes that Mr. Garmider failed to cooperate with the insurer’s examiners on August 11, 2010. Co-Operators relied upon section 50 of the Schedule,³⁷ which refers to failure to undergo an assessment pursuant to s.43 of the Schedule which deals with designated assessments, not insurer’s examinations. Therefore, Mr. Garmider is not precluded from proceeding to mediation with respect to the treatment plan of Dr. Wilderman pursuant to section 50 of the Schedule.

Ruling:

At the outset of the hearing, the insurer requested that the limitation period in reference to a treatment plan by Evident Diagnostics be addressed in this hearing. I ruled that because the pre-hearing letter did not refer to a limitation period issue in reference to the treatment plan by Evident Diagnostics, it would not be dealt with in this hearing because the Applicant did not have sufficient notice that this issue would be raised at the hearing. I further ruled that this Ruling is without prejudice to the insurer’s right to renew its request to the hearing arbitrator. Because the treatment plan by Evident Diagnostics was not addressed in this hearing, Exhibits I, J, K, L, M, P, R and W, and paragraphs 11-15, 18-20, 25, 30 and 31 were excluded from the Affidavit of Ms. Siomis.

EXPENSES:

Expenses were not addressed at the hearing. If the parties are unable to agree on the issue of entitlement to or amount of the expenses, they may make submissions on both issues in accordance with Rule 79 of the Dispute Resolution Practice Code — Fourth Edition within sixty days of the date of this decision.

October 22, 2013

Maggy Murray Arbitrator

Date

Financial Services Commission of Ontario