Neil Williams v. State Farm Mutual Automobile Insurance Company, 2014 ONFSCDRS 184

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

Neutral Citation: 2014 ONFSCDRS 184

FSCO A14-001463

BETWEEN:

NEIL WILLIAMS

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Maggy Murray

Heard: July 3, 2014, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions completed September 15, 2014

Appearances: Alex Voudouris for Mr. Williams

Paul Omeziri for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Neil Williams, was injured in a motor vehicle accident on August 6, 2008. He applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ Disputes arose concerning the Applicant’s entitlement to weekly income replacement benefits and the parties were unable to resolve their disputes through mediation. Mr. Williams then 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 State Farm precluded from conducting an examination under oath pursuant to s. 36(4)(c) of the Schedule² with respect to income replacement and housekeeping benefits?
If State Farm is not precluded from conducting an examination under oath pursuant to s. 36(4)(c) of the Schedule with respect to income replacement and housekeeping benefits, has Mr. Williams already submitted to an examination under oath pursuant to s. 33(2)(a)?
Was State Farm entitled to rely on s. 33(6) of the Schedule to suspend income replacement benefits?
Is State Farm obliged to resume payment of income replacement benefits and pay all income replacement benefit amounts that were withheld pursuant to s. 33(8)(a) and (b) of the Schedule?
Is either party entitled to its expenses of this preliminary issue hearing?

Result:

State Farm is precluded from conducting an examination under oath pursuant to s. 36(4)(c) of the Schedule with respect to income replacement and housekeeping benefits.
State Farm is precluded from conducting an examination under oath pursuant to s. 36(4)(c) of the Schedule.
State Farm was not entitled to rely on s. 33(6) of the Schedule to suspend income replacement benefits.
Section 33(8) is not applicable to this case.
Mr. Williams is entitled to his expenses in this preliminary issue hearing. If the parties cannot agree on the amount of the expenses, they may make submissions on the issue of quantum 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:

The parties filed an Agreed Statement of Facts. It states, in part:

Mr. Williams applied for income replacement benefits pursuant to an OCF-1 dated August 18, 2008. On September 11, 2008, State Farm received Mr. Williams’ OCF-1, OCF-2 and an OCF-33. State Farm began paying Mr. Williams weekly income replacement benefits on October 7, 2008. State Farm also paid Mr. Williams housekeeping and home maintenance for two years totalling $10,400.
By letter dated July 9, 2013, counsel for State Farm confirmed that an examination under oath was scheduled for November 29, 2013. The Notice of Examination confirmed that the scope of the examination was restricted to Mr. Williams’ entitlement to accident benefits.
On November 29, 2013, Mr. Williams attended a court reporter’s office for the examination under oath.

According to the transcript of the examination under oath,³ Mr. Williams refused to answer any questions dealing with income replacement or housekeeping benefits. The examination under oath concluded 10 minutes after it began and the insurer’s counsel stated “The examination is done. That’s it.”

State Farm then terminated Mr. Williams’ income replacement benefits pursuant to s. 33(6) of the Schedule based on Mr. Williams’ alleged refusal to submit to an examination under oath.

Parties’ Positions:

According to the Applicant, if State Farm wanted him to undergo an examination under oath, it was required to ask him to do so within 10 business days of receiving an application for accident benefits and completed disability certificate, pursuant to s.36(4)(c) of the Schedule. By September 11, 2008, State Farm received both the application for accident benefits and completed disability certificate.

According to the Insurer, an Applicant shall submit to an examination under oath and there is no time limit on when it can be requested.

State Farm submitted that the Applicant alleged that according to s. 36(4) of the Schedule, an insurer is required to conduct an examination under oath within 10 days of receiving an application for a specified benefit and completed disability certificate.⁴ However, Mr. Williams’ position is that State Farm is required to request, not conduct, an examination under oath within 10 business days of receiving an application for a specified benefit and completed disability certificate.

Is State Farm precluded from conducting an examination under oath pursuant to s. 36(4)(c) of the Schedule with respect to income replacement and housekeeping benefits?

Section 33(2) of the Schedule⁵ states:

If requested by the insurer, an applicant shall submit to an examination under oath, but is not required,

(a) to submit to more than one examination under oath in respect of matters relating to the same accident; or

Section 36(1) of the Schedule states:

(1) “specified benefit” means an income replacement benefit, … or a payment for housekeeping or home maintenance services …

Section 36(4)(c) of the Schedule states:

Within 10 business days after the insurer receives the application and completed disability certificate, the insurer shall,

(a) pay the specified benefit;

(b) give the applicant a notice explaining the medical and any other reasons why the insurer does not believe the applicant is entitled to the specified benefit and, if the insurer requires an examination under section 44 relating to the specified benefit, advising the applicant of the requirement for an examination; or

According to the Supreme Court of Canada, “there is only one principle or approach, namely words of an Act are to read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament.”⁶

State Farm relied on Deol and Gore Mutual Insurance Co.,⁷ Aviva Insurance Co. of Canada v. Balvers,⁸ and Echelon General Insurance Co. v. Henry.⁹ However, I do not find any of the aforementioned cases persuasive in this proceeding because they did not consider the application of s.36 of the Schedule on s.33 and that s.36 of the Schedule modifies s.33.

Singh and State Farm Mutual Automobile Insurance Co.,¹⁰ dealt with a similar issue but considered s. 35(3) of the former Schedule.¹¹

Section 35(3) of the former Schedule states:

Within 10 business days after the insurer receives the application and completed disability certificate, the insurer shall,

(a) pay the specified benefit;

(b) send a request to the insured person under subsection 33 (1) or (1.1); or

Although s. 35(3) of the former Schedule¹² is similar to s. 36(4) of the current Schedule,¹³ the two sections are not identical. An insurer could, under s. 35(3) of the former Schedule carry out all three responses simultaneously within 10 business days. However, under s. 36(4) of the current Schedule, an insurer cannot, for example, simultaneously pay income replacement benefits¹⁴ while denying their payment.¹⁵ Therefore, “or,” in s. 36(4) of the current Schedule, must be read disjunctively.¹⁶

State Farm was approximately 1,707 days too late to request an examination under oath for a specified benefit, namely, income replacement and housekeeping benefits. Therefore, State Farm is precluded from conducting an examination under oath pursuant to s. 36(4)(c) of the Schedule with respect to income replacement and housekeeping benefits.

If State Farm is not precluded from conducting an examination under oath pursuant to s. 36(4)(c) of the Schedule with respect to income replacement and housekeeping benefits, has Mr. Williams already submitted to an examination under oath pursuant to s. 33(2)(a)?

Was State Farm entitled to rely on s. 33(6) of the Schedule to suspend income replacement benefits?

State Farm was not entitled to rely on s. 33(6) of the Schedule to suspend income replacement benefits. Mr. Williams refused to answer questions about income replacement benefits and housekeeping benefits because State Farm was “out of time”.¹⁷ State Farm failed to request the examination under oath within 10 days of receiving an application for a specified benefit and completed disability certificate. Therefore, Mr. Williams’ refusal to answer questions regarding specified benefits, namely, income replacement and housekeeping benefits, was proper and in keeping with the plain and ordinary reading of s. 36(4)(c) of the Schedule.

Is State Farm obliged to resume payment of income replacement benefits and pay all income replacement benefit amounts that were withheld pursuant to s. 33(8)(a) and (b) of the Schedule?

Section 33(8) of the Schedule states:

If an applicant who failed to comply with subsection (1) or (2) subsequently complies with that subsection, the insurer,

(a) shall resume payment of the benefit, if a benefit was being paid; and

(b) shall pay all amounts that were withheld during the period of non-compliance, if the applicant provides a reasonable explanation for the delay in complying with the subsection.)

Section 33(8) of the Schedule is not applicable to this case. There was no valid request for an examination under oath because State Farm was “out of time” in requesting it. If there was no valid request for an examination under oath, the Applicant could not fail to comply with s. 33(2) of the Schedule, as modified by s. 36(4).

EXPENSES:

I exercise my discretion to award Mr. Williams his expenses in this preliminary issue hearing. If the parties cannot agree on the amount of the expenses, they may make submissions on the issue of quantum in accordance with Rule 79 of the Dispute Resolution Practice Code — Fourth Edition within sixty days of the date of this decision.

December 5, 2014

Maggy Murray

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario