Gerald Somerville v. State Farm Mutual Automobile Insurance Company, 2014 ONFSCDRS 145

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

Neutral Citation: 2014 ONFSCDRS 145

FSCO A12-006767

BETWEEN:

GERALD SOMERVILLE

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUES

Before: Arbitrator Jeffrey Rogers

Heard: By written submissions, completed on August 8, 2014.

Appearances: Ms. Sumitra Lagoo, solicitor for Mr. Somerville Ms. Ashleigh Martin, solicitor for State Farm Mutual Automobile Insurance Company

Issues:

The preliminary issues are:

1. Is payment to Mr. Somerville for attendant care services to be made at the minimum wage set pursuant to the Employment Standards Act¹, where the Schedule² provides for a rate that is less than the minimum wage?

2. Is Mr. Somerville precluded from arbitrating entitlement to housekeeping and home maintenance benefits, because he did not apply for arbitration within 2 years of State Farm’s refusal to pay?

Result:

Payment to Mr. Somerville for attendant care services is to be made at the rates provided in the prevailing Form 1.
Mr. Somerville is precluded from arbitrating entitlement to housekeeping and home maintenance benefits.

Background

The Applicant, Gerald Somerville, was injured in a motor vehicle accident on June 8, 2005. He applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule. Disputes arose regarding Mr. Somerville’s entitlement to further claimed benefits. The parties were unable to resolve their disputes through mediation, and Mr. Somerville applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The benefits in dispute in the arbitration include attendant care benefits and housekeeping and home maintenance benefits. Around five years after the accident, it was determined that Mr. Somerville sustained a catastrophic impairment as a result of the accident. That determination qualifies Mr. Somerville for housekeeping benefits and attendant care benefits beyond the two-year anniversary of the accident.

The parties disagree on the hourly rates for payment for attendant care benefits. The parties also disagree on whether the denial of housekeeping and home maintenance benefits that State Farm gave around November 23, 2005, foreclosed Mr. Somerville’s right to post-104 housekeeping and home maintenance benefits.

A pre-hearing discussion was held on October 23, 2013. It was decided at the pre-hearing that this preliminary issues hearing was the most cost-effective way to resolve the disputes about hourly rates and preclusion from entitlement to housekeeping.

ANALYSIS:

Payment Rate for Attendant Care:

As noted above, the parties disagree on the hourly rates payable for attendant care services. Mr. Somerville argues that the minimum wage set pursuant to the Employment Standards Act prevails, although it conflicts with the Schedule.

Section 16(4) of the Schedule provides that the “monthly amount payable by the attendant care benefit shall be determined in accordance with Form 1”. Form 1 is a detailed worksheet published by the Superintendent of Insurance under the authority to issue guidelines on the interpretation and operation of the Schedule, conferred by section 268.3(1) of the Insurance Act. There are three categories of care. Routine personal care is assessed under Level 1, basic supervisory functions under Level 2, and complex health/care and hygiene functions under Level 3.

The hourly rate set for Level 1 and Level 3 care has always been higher than the minimum wage. The hourly rate for Level 2 care has sometimes lagged behind the minimum wage. Mr. Somerville’s position that the minimum wage applies to payment for Level 2 care is based on the language of the Schedule in force immediately before the one governing his accident (the old Schedule).³

Section 47(9) of the old Schedule provided for payment of attendant care benefits “determined in accordance with Form 1 and subsection 50(10).” Subsection 50(10) of the old Schedule required payment for Level 2 care at “the minimum hourly wage for the period to which the payment relates…” In contrast, s. 16(4) of the governing Schedule simply requires that the amount payable be “determined in accordance with Form 1”.

There is no reference to the minimum wage in the governing Schedule. The Superintendent sets the rate in the published Form 1.⁴ There have been incremental increases in the minimum wage since the accident. While lagging a bit behind, the published rate for Level 2 care has generally mirrored those increases.⁵ Mr. Somerville argues that, despite its silence on the issue, the Schedule evidences the intention that Level 2 care be compensated at the minimum wage.

Mr. Somerville’s argument must fail because there is no reference at all to the minimum wage in the Schedule. Statutory evolution may be a useful tool in interpreting the Schedule,⁶ but one must first find language capable of supporting the proposed interpretation.

Jurisprudence has confirmed that adherence to the prescribed hourly rates is mandatory.⁷ The Employment Standards Act is a general statute on the issue or rate of payment. It does not assert paramountcy over conflicting legislation. Statutory interpretation therefore requires that the Schedule which is the specific statute dealing with the issue of payment for attendant care services, takes precedence over the general legislation. I therefore conclude that the rate payable to Mr. Somerville for attendant care benefits is to be determined in accordance with the prevailing Form 1, and not by reference to the Employment Standards Act.

ANALYSIS:

Preclusion from Housekeeping and Home Maintenance:

Subject to exceptions not relevant to this case, s. 281.1(1) of the Insurance Act⁸ requires an insured person to apply for mediation within two years after the insurer’s refusal to pay the amount claimed. Section 51(1) of the Schedule reiterates that requirement.

State Farm refused to pay Mr. Somerville housekeeping and home maintenance benefits on or around November 23, 2005. Mr. Somerville applied for mediation of the issue after the determination that he sustained a catastrophic impairment. That was more than five years after the denial.

In its decision in Smith v. Co-operators General Insurance Co.,⁹ the Supreme Court of Canada established the principle that, in order to trigger the limitation period, a denial must be clear and unequivocal and must inform the insured person of the dispute resolution process in clear and straightforward language. Mr. Somerville does not argue that State Farm’s denial was unclear or that it did not otherwise comply with the requirements specifically established by Smith. He seeks to expand the specific requirements.

The findings in Smith were based in part on interpretation mandated by the consumer protection objective of the Schedule. Mr. Somerville argues that the consumer protection objective of the Schedule is served by finding that State Farm cannot rely on a denial that failed to inform him that his failure to dispute would affect future rights, should deterioration occur and/or the insured become catastrophically impaired. I reject Mr. Somerville’s argument.

The consumer protection objective dictates an approach to interpreting the Schedule. Where ambiguity exists, a broad and liberal interpretation of the Schedule in favour of the insured person is required. The consumer protection objective does not create rights not found in the Schedule. Mr. Somerville identified no provision in the Schedule potentially imposing the obligation for which he argues. I find none.

In my view, Mr. Somerville’s argument is resolved by the jurisprudence establishing that an insured person does not have the right to make multiple applications for weekly benefits. The leading case on the issue is Haldenby v. Dominion of Canada General Insurance Co.¹⁰ In that case, the plaintiff’s position was that she could make a new application for post-156 week income replacement benefits. The Court found no right to do so. It stated as follows in addressing this argument:

The problem with this submission is that there is no provision in the Act or the SABS which allows a claimant to reapply for further benefits after an insured person's benefits have been terminated by the insurer. The only remedy for the insured person is to appeal the termination of benefits within the two-year period.¹¹

Mr. Somerville faces the same problem. There no provision that allows him to make a further application for housekeeping and home maintenance benefits after termination. Post-104 housekeeping is not a different benefit, as Mr. Somerville argued. Had he qualified, State Farm would have been required to continue to pay the same benefit.

I find that Mr. Somerville was required to apply for mediation within two years of State Farm’s denial of November 2005. That is when State Farm refused to “pay the amount claimed” as described in s. 281.1(1) of the Act and s.51 (1) of the Schedule. Since Mr. Somerville did not apply for mediation within two years of State Farm’s denial of housekeeping and home maintenance benefits, he is precluded from arbitrating this issue.

EXPENSES:

I reserve the issue of expenses to the hearing arbitrator. If the parties resolve this matter without a further hearing, but are unable to agree on the issue of expenses of this hearing, either party may request that I reconvene the hearing to resolve the issue, no later than 30 days after all other issues have been resolved.

September 11, 2014

Jeffrey Rogers Arbitrator

Date

APPENDIX A

Minimum Wage

Effective Date

$11.00

June 1, 2014

$10.25

March 31, 2010

$9.50

March 31, 2009

$8.75

March 31, 2008

$8.00

February 1, 2007

$7.75

February 1, 2006

$7.45

February 1, 2005

Level 2 Rate