State Farm Mutual Automobile Insurance Company v. Federico, 2013 ONFSCDRS 40

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

Neutral Citation: 2013 ONFSCDRS 40

Appeal P12-00022

OFFICE OF THE DIRECTOR OF ARBITRATIONS

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Appellant

and

NICOLA FEDERICO Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. Ian D. Kirby for the Appellant, State Farm Mutual Automobile Insurance Company Mr. David S. Wilson for the Respondent, Mr. Nicola Federico

HEARING DATE: December 7, 2012

APPEAL ORDER

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

1. Paragraph 5 of the Arbitrator’s March 23, 2012 decision is rescinded and replaced with an order that the Appellant is not responsible for paying $995 for an MRI as outlined in an OCF-22 from MedCentra dated January 30, 2007.

2. The Arbitrator’s decision is otherwise confirmed.

3. If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested, as set out below, within forty-five days of the date of this decision.

March 25, 2013

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

The Respondent, Mr. Nicola Federico, was injured in a motor vehicle accident on December 20, 2006. As a result, he sought statutory accident benefits under the Old Regulation¹ from his first-party automobile insurer, the Appellant, State Farm Mutual Automobile Insurance Company.

The parties came before Arbitrator Murray (the “Arbitrator”) to determine the Respondent’s entitlement to disputed statutory benefits. The Arbitrator’s March 23, 2012 decision found the Respondent entitled to the benefits claimed.

The Appellant appeals two of the Arbitrator’s findings, namely that it pay:

1. Under section 24 of the Old Regulation, $995 for an MRI as outlined in an OCF-22 from MedCentra dated January 30, 2007.

2. Interest on overdue payment of benefits under subsection 46(2) of the Old Regulation in the amount of 2% per month, compounded monthly.

The Arbitrator found that while the MRI was paid for by OHIP, it was still payable by the Appellant as the MRI was reasonable and necessary and there was no evidence its cost was not reasonable. To deny the claim would undermine the statutory goal of prompt and timely payment of expenses and allow an insurer to reject a claim in the hope that OHIP would pay for it.

The Arbitrator held that Bulletin No A-04/10, Transition to the New Statutory Accidents Benefits Schedule - Effective September 1, 2010 (the “Superintendent’s Bulletin”), as it pertained to interest under the Old Regulation and the New Regulation,² was confusing.

The Arbitrator found that paragraph 3(1.4)(a) of the Old Regulation supported the interpretation that after August 31, 2010 interest was payable under the New Regulation, but in the amount determined under the Old Regulation. Further, subparagraph 2(2)2.i. of the New Regulation did not contain a clear legislative intent to rebut the presumption against interference with vested rights, in this case, interest under subsection 46(2) of the Old Regulation.

Accordingly, the Arbitrator held that the applicable interest on overdue benefits, including income replacement benefits (“IRBs”) payable both before and after September 1, 2010 (regardless of whether the weekly IRB became overdue before or after that date), was 2% per month, compounded monthly, rather than 1% per month, compounded monthly, under the New Regulation.

I will address the two appeal issues in turn.

II. The MRI

The Appellant submits that it is not liable for the January 30, 2007, $995 MRI examination as the MRI was conducted on March 7, 2007 and was paid for by OHIP. There is no dispute that this issue comes under the Old Regulation.

Subsection 60(2) of the Old Regulation provides:

60. (2) Payment of a medical, rehabilitation or attendant care benefit or a benefit under Part VI is not required for that portion of an expense for which payment is reasonably available to the insured person under any insurance plan or law or under any other plan or law.

The Appellant submits³ that if a section 24 examination expense is reasonably available under another insurance plan or law such as OHIP, the automobile insurer, as insurer of last resort, is relieved under the plain meaning of subsection 60(2) of responsibility for payment as section 24 comes within Part VI of the Schedule. In this case, the evidence was that payment was reasonably available as the moment the MRI expense was submitted to OHIP it was paid.

Citing Tang and Coachman Insurance Company, (FSCO A01-000956, November 22, 2006), the Appellant submits that once the existence of a collateral carrier, including OHIP, is established, the insured bears the burden of proving how much is available under the collateral benefits plan before submitting it to the automobile insurer for payment. Interest and the risk of a special award are deterrents to automobile insurers improperly or unreasonably denying payment.

The Respondent submits that whether the OHIP payment was ultimately reasonably available is not the issue, as the MRI was done and was paid for by OHIP. Rather, the question is whether payment was reasonably available at the time of the Appellant’s denial. In this case, there is no evidence that when the Appellant denied the claim the OHIP payment was reasonably available, nor was that the reason payment was denied. Rather, the Appellant relied on its medical opinion that the Respondent did not need an MRI of the lumbar spine for his WAD-2 injuries.

The Respondent states that he is not arguing that an insurer can only rely on the specific reason it gave for its denial. Rather, he submits that the Appellant’s medical examiner’s silence on whether OHIP funding was reasonably available is evidence that such funding was not reasonably available, and there is no evidence to the contrary.

The Respondent argues that an adjudicator is entitled to judicially note that obtaining an OHIP funded MRI in Ontario cannot be done in a timely manner. It is irrelevant that the Respondent in this case was able to have an MRI within five weeks of the Appellant’s February 2, 2007 denial.

The Respondent argues that to allow this aspect of the appeal would (1) permit an insurer to deny payment for any treatment that might potentially ever be paid by OHIP; (2) overturn Kennelly and Wawanesa Mutual Insurance Company, (FSCO A99-000139, January 21, 2000) and allow insurers to delay payment until the service can no longer be provided; and, (3) as found by the Arbitrator, allow insurers to delay services with impunity until the treatment will no longer benefit the insured person.

The MRI expense was claimed under section 24 of the Old Regulation as a cost of an examination. Section 24 comes within Part VI of the Old Regulation. Subsection 60(2) of the Old Regulation states, in part, that it applies to a benefit under Part VI.

The applicability of subsection 60(2) and whether payment of the MRI was “reasonably available” to the Respondent “under any insurance plan or law or under any other plan or law” was in issue. The Arbitrator’s decision does not mention subsection 60(2) or the statutory test of whether the OHIP payment was “reasonably available” to the Respondent.

The Respondent asks that the actual facts of this case be largely ignored and, rather, potential fact situations more supportive of his argument be addressed. I am not persuaded that the facts of this case can be excluded in applying the “reasonably available” test under subsection 60(2).

The Arbitrator found that the MRI of the lumbar spine was conducted on March 7, 2007 and paid for by OHIP. The parties agree that OHIP paid for the MRI five weeks after the recommendation and the account were submitted to the Appellant (and three and a half years before the arbitration hearing). Prima facie, five weeks in this case, barring extenuating circumstances, would support a finding that payment from another plan or law was reasonably available. I was not referred to any evidence that in this case five weeks constituted unreasonable availability. I am unable to see how, on the facts of this case, the OHIP payment was not “reasonably available.”

Accordingly, respectfully, I find that the Arbitrator erred in law in not applying the requisite test under subsection 60(2) of the Old Regulation. The Arbitrator’s MRI order is rescinded and replaced with an order that the Appellant is not responsible for paying the $995 account.

III. INTEREST

The Appellant submits that the Arbitrator erred in law in finding that the Respondent had, specifically regarding IRBs, a vested right to interest on overdue payments after August 31, 2010 of 2% per month, compounded monthly.

The Appellant argues that the applicable interest rate legislatively decreased to 1%, compounded monthly, under subsection 51(2) of the New Regulation on (1) interest after August 31, 2010 on IRBs that were overdue prior to that date, and (2) all interest on IRBs that became overdue after August 31, 2010.

The Appellant agrees that the applicable interest on IRBs overdue before September 1, 2010 remained at 2% per month from the date the IRB became overdue until August 31, 2010.

The Legislative Framework

Section 3 of the Old Regulation provides, in part:

3. …

(1.1) Subject to subsection (1.3), the benefits set out in this Regulation shall be provided under every contract evidenced by a motor vehicle liability policy in respect of accidents that occur on or after November 1, 1996 and before September 1, 2010.

(1.2) Section 24 and Parts X, XI, XII, XIII and XV do not apply after August 31, 2010.

(1.3) No amount referred to in this Regulation shall be paid after August 31, 2010.

(1.4) An amount that would, but for subsection (1.3), be paid under this Regulation after August 31, 2010 shall be paid under the New Regulation, but in the amount determined,

(a) under this Regulation, other than section 24; or

(b) under subsections 25 (1), (3), (4) and (5) of the New Regulation.

Part X of the Old Regulation includes the section 46 interest provision. Section 2 of the New Regulation provides, in part:

Application and transition rules

2. (1) Except as otherwise provided in section 68, the benefits set out in this Regulation shall be provided under every contract evidenced by a motor vehicle liability policy in respect of accidents occurring on or after September 1, 2010.

(2) Subsections 25 (1), (3), (4) and (5), Parts VIII and IX, other than subsections 50 (2) to (5) … apply with such modifications as are necessary in respect of benefits provided under the Old Regulation with respect to accidents that occurred on or after November 1, 1996 and before September 1, 2010 and, for that purpose, the following rules apply:

2. An amount that would, but for subsection 3 (1.3) of the Old Regulation, be paid under the Old Regulation after August 31, 2010 shall be paid under this Regulation in the amount determined,

i. under the Old Regulation, other than under section 24 of that Regulation, or

ii. under subsections 25 (1), (3), (4) and (5).

3. An amount described in paragraph 2 that is paid under this Regulation shall not include any amount previously paid under the Old Regulation.

Section 51, found in Part IX of the New Regulation, pertains to overdue payments:

51. (1) An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Regulation.

(2) If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue until it is paid, at the rate of 1 per cent per month, compounded monthly.

Regarding interest, the Superintendent’s Bulletin states:

Interest on amounts that become overdue on or after September 1, 2010, in respect to old accidents will accrue at the New SABS rate of one percent per month and be compounded monthly (Old Sabs s.3(1.2), New SABS s.2(2)).

Interest on amounts that become overdue before September 1, 2010, in respect to old accidents, will accrue at the Old SABS rate of two per cent per month and be compounded monthly both before and after September 1, 2010 (Old SABS s.3(1.4); New SABS s.2(2) 2).

[emphasis added]

The Appellant’s Submissions

The Appellant submits:

1. Gustavson Drilling (1964) Ltd. v. Canada (Minister of National Revenue – M.N.R., 1975 CanLII 4 (SCC), [1977] 1 S.C.R. 271, states that the “presumption that vested rights are not affected unless the intention of the legislature is clear applies whether the legislation is retrospective or prospective in operation.” The Supreme Court also held that no one “has a vested right to the continuance of the law as it stood in the past.”

The Appellant argues that the presumption against interference with vested rights only applies when the legislation is ambiguous. It submits that there is no ambiguity in the transition provisions as they are plain and clear, and have immediate application.

2. The Respondent had no tangible and concrete, or vested right to interest at 2% per month, compounded monthly, when the New Regulation came into force, as his claims were disputed. Thus, the Respondent’s IRB entitlement was neither inevitable nor had it crystallized as required by Dikranian v. Quebec (Attorney General), 2005 SCC 73, [2005] 3 S.C.R. 530.

3. It is not by a contract of insurance, but by a public law right that benefits were available under the Old Regulation. Such public rights are distinguishable from the contractual rights in Dikranian held to have been vested.

4. Cost control outweighs compensation in interpreting the New Regulation. To meet the objective of cost control, the rights available to insured persons under the Old Regulation must yield to the provisions of the New Regulation. As held in State Farm Mutual Automobile Insurance Company and Kristensen, (FSCO P99-00051, July 6, 2000), changes in legislative wording are purposeful.

5. “Overdue” is a continuing fact. Once a benefit is overdue, it continues to retain its status as overdue until the benefit is paid. Accordingly, any new legislation that applied to this continuing fact would be of immediate and general application.

The New Regulation is prospective as it applies to interest after August 31, 2010. As the New Regulation is not retrospective, there is no presumption against it having immediate application both on weekly IRBs that became overdue after August 31, 2010 and on post-August 31, 2010 interest on weekly IRBs that were overdue prior to September 1, 2010.

6. Interest is not a “stand alone” benefit. Rather, it depends on and arises only if another benefit is owed. The first step in determining under which Schedule interest is payable is determining what benefit is payable and when. The timing of post-August 31, 2010 IRBs is governed by subsection 36(9) of the New Regulation, with payments being required at least once every second week, even if the IRB quantum is determined by the Old Regulation.

Since post-August 31, 2010 IRBs must be paid under the New Regulation, it follows that overdue benefits would be overdue pursuant to the New Regulation as well.

7. Subsection 3(1.2) of the Old Regulation provides that Part X (that includes the interest provision) does not apply after August 31, 2010. The New Regulation brings interest back under section 51 at 1% per month, compounded monthly, both on continuing interest subsequent to August 31, 2010 on IRBs already overdue and on IRBs that become overdue subsequently. While the Superintendent’s Bulletin distinguishes between these situations, it does not have the force and effect of legislation. Rather, it is intended to be assistive.

8. Subsection 3(1.3) of the Old Regulation says only that no amount paid under the Old Regulation shall be paid after August 31, 2010. Subsection 3(1.4) states that any amount that, but for subsection 3(1.3) would be paid under the Old Regulation, shall be paid under the New Regulation. To encompass subsection 3(1.2) under subsection 3(1.4) is to render subsection 3(1.2) redundant.

The Respondent’s Submissions

The Respondent agrees that the Superintendent’s Bulletin is simply a guide. He submits that there is nothing in the New Regulation that detracts from the Old Regulation’s provision of interest at 2% per month, compounded monthly. While subsection 3(1.4) of the Old Regulation refers to amounts that “but for subsection (1.3)” would be paid under the Old Regulation, subsection 1.3 includes subsection 1.2 to the extent that subsection 1.2 references amounts to be paid. Subsection 2(2) of the New Regulation states that Part IX of the regulation (that includes the interest provision in section 51) applies with such modifications as are necessary.

Accordingly, there is no ambiguity and no need to address the issue of vested rights. Rather, the issue can be decided simply by looking at the legislation, as was done in Subramaniam and Wawanesa Mutual Insurance Company, (FSCO A09-002594, July 13, 2012) (Notice of Variation filed), where Arbitrator Rogers found that the transitional provisions did not support the interpretation in the Superintendent’s Bulletin. Rather, the insured was entitled to interest under the Old Regulation whether the IRB became overdue before or after September 1, 2010. The Respondent disagrees, however, with Arbitrator Rogers’ finding that the right to interest vested when the IRB payment became due, rather than at the time of the accident.

In the alternative, the Respondent relies on T.N. and The Personal Insurance Company of Canada, (FSCO A06-000399, July 3, 2012) (under appeal), where Arbitrator Alves agreed with the Arbitrator’s analysis.

In the further alternative, the Respondent submits, as held by the Court of Appeal in Somers v. Fornier, 2002 CanLII 45001 (ON CA), [2002] O.J. No. 2543, that interest is a substantive right. As held in Gustavson Drilling, there is a presumption against interference with vested rights that requires clear legislative intent to rebut. The legislation, it is argued, contains no such clear intent. Rather, clause 3(1.4)(a) of the Old Regulation supports the interpretation that interest would be paid under the New Regulation in the amount determined under the Old Regulation.

The Respondent further argues that Dikranian held that the rights and obligations of a contract are fixed and crystallized as soon as the contract is entered into. The Respondent’s rights thus crystallized when he entered into the contract of insurance, including purchase of the right to interest on overdue benefits at 2% per month, compounded monthly.

In the alternative, the Respondent argues that his rights crystallized on December 20, 2006 when he sustained his injuries or, at the latest, before September 1, 2010 as he had, prior to that date, disputed the Appellant’s denial of IRBs and overdue interest.

Accordingly, the Respondent submits that interest on all arrears, whether accruing before or on and after September 1, 2010, on all benefits, whether overdue before or on and after September 1, 2010, continues to accrue at 2% per month, compounded monthly.

Analysis

The parties agree that the Superintendent’s Bulletin is non-binding. They further agree that the Superintendent’s Bulletin is incorrect regarding the transitional rules applying to interest, but for different reasons. The Appellant submits that the New Regulation applies equally to all interest payments after August 31, 2010 regardless of whether the weekly IRB was overdue at that date. The Respondent submits that the Old Regulation applies equally to all interest payments after August 31, 2010 regardless of whether the weekly IRBs were overdue at that date.

Subsection 268.3(1) of the Insurance Act, R.S.O. 1990, c.I.8, states that the “Superintendent may issue guidelines on the interpretation and operation of the Statutory Accident Benefits Schedule or any provision of that Schedule.” Subsection 268.3(2) addresses the effect of a guideline:

(2) Subject to section 268.2, a guideline shall be considered in any determination involving the interpretation of the Statutory Accident Benefits Schedule.

Section 268.2 pertains to rules made under paragraph 121(1)(10.2) of the Insurance Act. The latter addresses regulations made by the Lieutenant Governor in Council prescribing rules for interpreting specific provisions, not bulletins issued by the Superintendent.

The Superintendent’s Bulletin distinguishes between benefits overdue prior to September 1, 2010 and benefits that became overdue afterwards, relying on, in the Old Regulation, subsection 3(1.2) versus subsection 3(1.4). Subsection 3(1.4) addresses the amounts that shall be paid after August 31, 2010. Subsection 3(1.2) addresses provisions that do not apply after August 31, 2010.

Having considered the Superintendent’s Bulletin, I find that it does not assist in explaining how subsection 3(1.2) of the Old Regulation, which the Appellant says abolished Part X of the Old Regulation as of August 31, 2010, still allows that same Part X to continue to apply to interest payable after that date on previously overdue IRBs.

Equally, the Superintendent’s Bulletin does not explain, if interest at 2% continues to apply on previously overdue IRBs pursuant to subsection 3(1.4) of the Old Regulation, why that provision would not equally apply to the continuing stream of post-August 31, 2010 overdue IRBs. The Arbitrator thus held that the Superintendent’s Bulletin was confusing. In other words, the Bulletin highlighted the ambiguity in the transition provisions as they related to interest.

As noted above, the Ontario Court of Appeal in Somers, in the context of subsection 128(1) of the Courts of Justice Act, R.S.O. 1990, Chap. C.43, held that “in Ontario pre-judgment interest is a matter of substantive law.” The Ontario Court of Appeal, in Attavar v. Allstate Insurance Co. of Company (2003), 2003 CanLII 7430 (ON CA), 63 O.R. (3d) 199, held that interest under the Schedule was compensatory, not punitive, “designed to compensate insureds for the time value of money and to encourage insurers to pay accident benefits promptly.”

The essence of this appeal is that the Legislature saw a problem that automobile insurance premiums were not properly covering insurer expenditures. To remedy this problem, it is argued that the Legislature, in part, unilaterally changed existing, paid for, protective policies of insurance not simply in procedure but also in certain ongoing, substantive coverage.

In other words, notwithstanding whatever protective coverage policyholders had held before September 1, 2010, as of September 1, 2010 certain substantive protective policy coverage for existing, paid policies was decreased. This included cases where accidents had already taken place and insured persons could not simply go out and purchase retroactive additional substantive protection for automobile related injuries that had already occurred.

Adjudicators have noted the judicial concern regarding interference in established substantive rights. Arbitrator Renahan, in Qin and Perth Insurance Company, (FSCO A10-000812, January 26, 2012) (which the Arbitrator references) cited Sullivan and Driedger on the Construction of Statutes, 4th Edition, (Toronto: Butterworths, 2002), at page 553: “[it] is obvious that reaching into the past and declaring the law to be different from what it was is a serious violation of rule of law.”

Driedger continues: “No matter how reasonable or benevolent retroactive legislation may be, it is inherently arbitrary for those who could not know its content when acting or making their plans.”

In Qin, Arbitrator Renahan held:

However, the presumption against the retroactive application of law does not apply to procedural legislation. Therefore, the retroactive application of the law in subsection 3(1) must refer to procedure and the meaning of the word “paid” in “shall be paid under the New Regulation” in section 3(1)(1.4) of the 1996 Regulation must be limited to mean “shall be paid according to the procedures set out in the New Regulation.” This interpretation is consistent with section 2(2) of the New Regulation, which, except for costs of examination, deals with changes to the procedure for claiming benefits and the payment of benefits, not with changes to substantive rights ...

In the present case, the Arbitrator held that subsection 3(1.2) of Old Regulation did not authorize an interference with vested interest rights under the Old Regulation notwithstanding its statement that Part X (that included the interest provision) did not apply after August 31, 2010.

Arbitrator Rogers, in Subramaniam, noted that in the New Regulation Part IX (that now includes the interest provision) applies, with necessary modifications, to old benefits. Hence the New Regulation was not to be strictly applied to old benefits. Further, the amounts to be paid under the Old Regulation did not exclude subsection 46(2) interest. Arbitrator Rogers concluded the Legislature did not intend to erode the right to interest at the old rate.

In Khamo and Economical Mutual Insurance Company, (FSCO A10-001218, January 18, 2013) interest was awarded at 1% per month, compounded monthly, on benefits overdue both before and after September 1, 2010, for the entire period the benefit was overdue. No explanation is provided for that conclusion other than simply applying subsection 51(1) of the New Regulation.

The transitional provisions in the Old Regulation and the New Regulation are, at first glance, contradictory. Subsection 3(1.2) of the Old Regulation specifically states that section 24 does not apply after August 31, 2010. According to the Appellant’s submissions, that would be sufficient. Section 24 no longer exists. Therefore, there is no need to mention it further.

Nonetheless, section 24 is specifically noted in subsection 3(1.4). It will be remembered that subsection 3(1.4) applies to amounts that would, “but for subsection (1.3),” be paid under the Old Regulation. In such cases, the amount will be paid under the New Regulation, but in an amount determined under the Old Regulation, with the specific exception of section 24. In the case of section 24, the amount is now determined under section 25 of the New Regulation.

Driedger states, at page 557, that according to Gustavson Drilling, a provision should be given immediate effect unless to do so would change the past (a retroactive application) or interfere with vested rights. To rebut the presumption against retroactive legislation, Driedger states, at page 562, that all that is required is some sufficient indication that the legislation is meant to apply not only to ongoing and future facts but also to facts that are past.

In Dikranian, the Supreme Court held, at paragraph 39, that a court cannot find that a vested right exists if the juridical situation under consideration is not tangible, concrete and distinctive. The mere possibility of availing oneself of a specific statute is not a basis for arguing that a vested right exists. In the present case, the Respondent did not have simply the possibility as of August 31, 2010 of entering into a contract of insurance that included specific amounts. Rather, it is not disputed that there was a binding contract of insurance prior to August 31, 2010.

The Supreme Court continued, at paragraph 40, that there is more. “The situation must also have materialized.” When a right becomes sufficiently concrete will vary depending on the juridical situation in question. The Court gave as examples that “a tort or delict instantaneously gives rise to the right to compensation” and that “rights and obligations resulting from a contract are usually created at the same time as the contract itself.”

Dikranian held that in the case before it, “a contract was signed and entered into before new provisions came into force. The contract continued to produce its effects notwithstanding those provisions. The rights and obligations resulting from the contract were fixed and crystallized as soon as the contract was entered into.” The Court held that although the right (regarding repayment of student loans) was provided for in legislation, it was incorporated into a private contract (between the student and the financial institution) in which the parties, freely, and on an informed basis, defined their rights and obligations. The Court concluded:

It was the contract (not the legislation) that created rights and obligations for the parties as soon as it was formed … The right not to pay more interest than the contract specified was also acquired at that time.

In the present case, the contract of insurance between the Appellant insurer and the Respondent insured created rights and obligations as soon as the contract was formed, including interest under subsection 46(2) of the Old Regulation, at 2% per month, compounded monthly. In any event, the situation would have materialized or become sufficiently concrete as of the December 20, 2006 accident date, some four years before the legislative changes in question.

With regard to the apparent conflict between subsection 3(1.2) and subsections 3(1.3) and (1.4), Driedger, at page 273, notes the principle of generalia specialibus non derogant:

When two provisions are in conflict and one of them deals specifically with the matter in question while the other is of more general application, the conflict may be avoided by applying the specific provision to the exclusion of the more general one.

As noted at page 274 in Driedger, a key consideration in any implied exception analysis is determining which provision states the general and which provision is the specific exception.

Applying Driedger’s analysis, subsections 3.1(1.3) and (1.4) specifically address the matter in question, the amount of interest payable, in a detailed and comprehensive way. Accordingly, I find them to be the specific provisions.

Against the specific application of subsections 3(1.3) and (1.4) to “amounts,” there is the more general application of subsection (1.2) of the Old Regulation. The Parts of the Old Regulation noted in subsection 3(1.2) are largely procedural. So is section 24, in significant measure.

I agree with Arbitrator Renahan in Qin that subsections 3(1.2) and 3(1.3) of the Old Regulation reflect differences between procedural changes and substantive amounts. I further agree with Arbitrator Renahan that this interpretation is consistent with subsection 2(2) of the New Regulation that deals with changes to the procedure for claiming benefits and the payment of benefits, not with changes to substantive rights, other than costs of examinations and, I add as a further substantive right, the amount of interest.

Accordingly, I find:

• Having, considered the Superintendent’s Bulletin, I find that it is not of assistance in interpreting the transitional provisions as they pertain to interest.
• There is ambiguity and conflict in the transitional provisions in the Old Regulation and the New Regulation. There is insufficient indication that the reduced substantive rate of interest is to apply not only in respect of accidents that occur on or after September 1, 2010, but also in respect of accidents that occurred prior to that date.
• The Respondent, certainly as of August 31, 2010, had tangible, concrete, vested and materialized rights to interest at 2% per month, compounded monthly.
• This was not simply a potential public law right, but a crystalized private contractual right.
• Subsection 3(1.2) of the Old Regulation pertains to the general application of procedural provisions. Subsection 3(1.3) of the Old Regulation specifically addresses the amounts of payments. Subsection 3(1.3) states that no “amount” referred to in the Old Regulation shall be paid after August 31, 2010. In issue in this case is the amount of interest payable.
• Subsection 3(1.4) states that an amount that would, “but for subsection (1.3),” be paid under the Old Regulation after August 31, 2010, shall be paid under the New Regulation in the amount determined under the Old Regulation, with the specific exception of section 24.
• “But for subsection (1.3)” of the Old Regulation, the amount of interest of 2% per month, compounded monthly, would be paid to the Respondent regarding IRBs overdue both before and after September 1, 2010.
• There is no explicit exception for the amount of subsection 46(2) interest at 2% per month, compounded monthly, in subsection 3(1.4) of the Old Regulation.
• This is consistent with subsection 2(2) of the New Regulation that Part IX (that includes the section 51 interest provision) applies “with such modifications as are necessary in respect of benefits provided under the Old Regulation” for accidents between November 1, 1996 and September 1, 2010. The modification is the amount of interest, amounts being singled out in subsection 3(1.3) of the Old Regulation, which paragraph 2(2)2 of the New Regulation incorporates.

Accordingly, I am not persuaded that it is an error of law that the amount of interest payable throughout is determined under the Old Regulation, specifically subsection 46(2), being 2% per month, compounded monthly. Accordingly, the Arbitrator’s interest order is confirmed and the balance of this appeal is dismissed.

IV. EXPENSES

The Appellant advises that as this appeal has broad application it is not seeking its legal expenses. The Respondent requests forty-five days to ask for an expense hearing, if it is required.

If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested within forty-five days of the date 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 submissions on entitlement to and/or the quantum of legal expenses, as are in issue.

March 25, 2013

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, O. Reg. 403/96, as amended up to and including O. Reg. 35/10.
2. 2Statutory Accident Benefits Schedule — Effective September 1, 2010, O. Reg. 34/10.
3. 3The Appellant relies, in part, on Allstate Insurance Company of Canada and Putter, (FSCO P00-00068, December 21, 2001) and Lane and Economical Mutual Insurance Company, (FSCO A06-000972, June 18, 2008).