Jonathan Leduc-Moreau v. Echelon General Insurance Company, 2014 ONFSCDRS 90

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2014 ONFSCDRS 90

FSCO A13-004919

BETWEEN:

JONATHAN LEDUC-MOREAU

Applicant

and

ECHELON GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Susan Sapin

Heard: By written submissions

Appearances: Andrew Kerr for Mr. Leduc-Moreau

Jamie Pollack for Echelon General Insurance Company

The Applicant, Jonathan Leduc-Moreau, was injured in a motor vehicle accident on March 8, 2009. He applied for and received statutory accident benefits from Echelon General Insurance Company (“Echelon”), payable under the Schedule.¹ Echelon informed Mr. Leduc-Moreau he did not qualify for income replacement (IRBs) or non-earner benefits (NEBs). The parties were unable to resolve their disputes through mediation, and Mr. Leduc-Moreau applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Scope of this preliminary issue hearing:

At the pre-hearing, the preliminary issues were identified as:

1. Is Mr. Leduc-Moreau precluded from entitlement to IRBs 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?

2. If Mr. Leduc-Moreau is precluded from entitlement to IRBs, is he as a result also precluded from entitlement to NEBs?

These issues were to be determined by way of written submissions due November 8, 2013, by the arbitrator to be appointed to conduct both a preliminary issue hearing to determine catastrophic impairment, scheduled to begin September 9, 2013, and a subsequent hearing to determine entitlement to the remaining issues which included, among others, entitlement to IRBs and/or NEBs, if Mr. Leduc-Moreau were successful on the preliminary issues noted above. The hearing on the merits of the IRB/NEB claim was to begin June 16, 2014. That date is now reserved for the continuing catastrophic impairment preliminary issue, and dates have been added during the week of June 23, 2014 so that all remaining issues can be heard.

The intent at the pre-hearing appears to have been that the arbitrator appointed to conduct the preliminary hearing on catastrophic impairment and the main hearing on entitlement, would render a decision on the two preliminary issues regarding time limits and NEB entitlement listed above, before the June 16, 2014 hearing date.

However, the preliminary hearing on catastrophic impairment was adjourned at the request of the parties, from September 9, 2013 to May 12, 2014, and no arbitrator was appointed until that date to determine the preliminary issues. I am now seized of all matters as of May 12, 2014.

In the meantime, in its September 13, 2013 Factum on the time-limits issue, Echelon raised two additional issues, not identified by Arbitrator Rogers in his July 10, 2013 pre-hearing letter, that it wished to add to the written preliminary issues hearing (paraphrased):

1. If the Claimant is not precluded from claiming entitlement to IRBs because he failed to apply for mediation within two years after Echelon’s refusal of benefits, is he ineligible to receive IRBs because he does not qualify for the benefit as he did not work 26 weeks in the 52 weeks before the accident, which is required by s. 4(1) 2. (ii) of the Schedule; and;

2. If not, is the Claimant’s entitlement to IRBs suspended for non-compliance, pursuant to section 33(2) of the Schedule, for failure to provide information reasonably required to assist Echelon in determining the Claimant’s entitlement to IRBs?

In his written submissions, Mr. Leduc-Moreau objected to the addition of these two issues because they were not identified in the pre-hearing letter. In this decision, I have found that Mr. Leduc-Moreau is precluded from proceeding to arbitration regarding his entitlement to IRBs. Consequently, it is not necessary for me to deal with these two additional preliminary issues.

Result:

1. Mr. Leduc-Moreau is precluded from proceeding to arbitration on his IRB claim.

2. Mr. Leduc-Moreau is not precluded from proceeding with his claim for NEBs.

FACTS AND FINDINGS

The following facts are not in dispute.

Mr. Leduc-Moreau was seriously injured while a passenger in a single motor vehicle accident, on March 8, 2009, in a vehicle driven by a friend. He was 19 years old at the time.

He submitted an Application for Accident Benefits (OCF-1) to Echelon on March 12, 2009. The form indicated he was unemployed at the time of the accident, but had worked as a seasonal general labourer from approximately April 8 to November 8, 2008 at Severn Boat Haven, a marina.

In support of his application, Mr. Leduc-Moreau submitted a Disability Certificate (OCF-3) from Dr. Willis and an Employer’s Confirmation of Income form (OCF-2) from Severn Boat Haven.²

The disability certificate indicated Mr. Leduc-Moreau met the disability test for an IRB on the basis that he was substantially unable to perform the essential tasks of his employment. As well, Dr. Willis checked off the box indicating Mr. Leduc-Moreau met the test for an NEB, which requires a complete inability to carry on a normal life. However, he did not explain the activity limitations in the space provided.³

The employer`s confirmation of income form indicated that Mr. Leduc-Moreau worked at Severn Boat Haven as a dock attendant from April 26 to July 11, 2008, a period of 23 weeks.

Under s. 4(1)2. ii of the Schedule, an insured person must be employed for 26 of the 52 weeks preceding the accident to be eligible for an IRB.

On April 13, 2009, Echelon sent Mr. Leduc-Moreau an Explanation of Benefits (OCF-9), advising him that, based on his employer’s OCF-2, Mr. Leduc-Moreau did not qualify for an IRB because he had only worked 23 out of the 52 weeks. Echelon went on to state: “If you have worked elsewhere in the last 52 weeks prior to the accident, please provide us with an Employer’s Confirmation of Income form. We enclose two blank forms.” The OCF-9 also advised Mr. Leduc that he might qualify for an NEB if he suffered a complete inability to carry on a normal life as a result of the accident, but that Dr. Willis had not answered that question in the disability certificate, other than checking off the box, and Echelon would be asking him to clarify it.⁴

This April 13, 2009 OCF-9 is the refusal to pay an IRB which Echelon claims marks the beginning of the two-year time limit. Mr. Leduc-Moreau maintains this is not a proper refusal according to the principles set out in Smith v. Co-Operators General Insurance Company⁵, on the basis that it is not a clear and unequivocal refusal to pay an IRB. Mr. Leduc-Moreau maintains that there has never been a denial that meets the criteria in Smith, and so no time limit can begin to run. I disagree, for the reasons set out below.

Mr. Leduc-Moreau complied with Echelon’s request to provide more information in support of his IRB claim by submitting a second OCF-2 May 22, 2009 indicating he worked 3 weeks in January, February and March 2009 as a carpentry assistant at Dave Leduc Construction.⁶ Dave Leduc is Mr. Leduc-Moreau’s uncle.

Echelon responded with a May 29, 2009 OCF-9 advising that it had received the Employer’s Confirmation of Income form from Dave Leduc Construction and had arranged for the accounting firm of McCully & Associates (“McCully”) to determine if Mr. Leduc-Moreau was entitled to receive an IRB, and the amount of any benefit payable. Echelon also advised it was “awaiting your election of benefit form.” ⁷

On June 4, 2009, Mr. Leduc-Moreau sent in a third OCF-2 from Greg King Construction, for seven weeks of construction work from September 16 to November 8, 2008.⁸ I note these dates coincide with the period Mr. Leduc-Moreau worked at Severn Boat Haven.

Echelon responded on June 26, 2009, with an OCF-9 acknowledging receipt of the OCF-2 and saying it had sent it to McNully for review. Echelon further stated that it “continue[d] to await [Mr. Leduc-Moreau’s] Election of Benefit form that was previously provided.”⁹

At that point, four months after the accident, I find Mr. Leduc-Moreau had not established that he had worked 23 of the 26 weeks required to qualify for an IRB as required by the Schedule, and the March 30, 2009 Disability Certificate was insufficient to establish that he qualified for an NEB. At that time, therefore, he was potentially eligible for more than one benefit. As noted, when that is the case, according to s. 36 of the Schedule, the insured person is required to elect which benefit he wishes to receive. Mr. Leduc-Moreau eventually elected to receive an IRB by submitting the required form to Echelon on July 21, 2009.¹⁰

On the evidence provided, I find Mr. Leduc-Moreau had still not established that he qualified for an IRB by April 7, 2010, over a year after the accident, when McCully issued a report containing the results of its investigation. McCully confirmed that Mr. Leduc-Moreau had worked for Severn Boat Haven and Greg King during the same 23-week period, and advised that Dave Leduc did not provide any documentation to verify that Mr. Leduc-Moreau had worked there for 3 weeks between January and March 2009, as he had claimed. Furthermore, Mr. Leduc-Moreau’s 2008 tax return showed only income from Severn Boat Haven. On that basis, McCully concluded that Mr. Leduc did not work 26 weeks in the year before the accident, and so did not qualify for an IRB.¹¹

ANALYSIS:

Time limit regarding IRBs:

It is well-established law, since the Supreme Court’s decision in Smith, that an Insurer’s refusal to pay a benefit must be clear and unequivocal before the two-year time limit to dispute the denial can begin to run.

Mr. Leduc-Moreau submits that, “not only is the OCF-9 of April 13, 2009, equivocal as to whether it is a clear denial of income replacement benefits, it is not intended as a denial at all, rather, the insurer is simply pointing out that, as in the case of failure to submit a disability certificate, the information the claimant has submitted is lacking and inviting the claimant to submit further information. It is part of a long chain of requests for information and responses between the insurer and the claimant.”

He argues that this is similar to the situation articulated in Smith, where the insurer’s refusal was found to be invalid because Gonthier, J. found there was an “equivocal sense of indeterminacy in the decision of the insurer giving the reader the impression that the insurer may very well change its stance if it is contacted for a discussion of the matter.”

I disagree. Mr. Leduc-Moreau’s situation is very different. Echelon’s April 13, 2009 OCF-9 was not inviting him to “discuss” his situation, nor was it a simple stand-alone request for more information. It was a clear explanation that Echelon had determined that he did not qualify for an IRB based on the information provided by his employer, which was that he had worked only 23 weeks in the year before the accident:

We received your Employer`s Confirmation of Income form. You were employed by Severn Boat Haven from April 26, 2008 to July 11, 2008. This is 11 weeks. You quit this position. You were employed again with Severn Boat Haven from August 23, 2008 to November 14, 2008. This is 13 weeks. You worked 23 out of the last 52 weeks prior to the accident.

In accordance with Section 4 of the [Schedule], you do not qualify for an income replacement benefit as you were not employed and working or self-employed at the time of the accident, you were not in receipt of Employment Insurance and you had not worked 26 of the last 52 weeks prior to the accident. If you have worked elsewhere in the last 52 weeks prior to the accident, please provide us with an Employer’s Confirmation of Income form. We enclose two blank forms.

This explanation is contained in Part 2 of the OCF-9 form, which contains the pre-printed statement: “We have reviewed your application for income replacement benefits and have determined you are: Not Eligible.”¹²

The language used is straightforward and not ambiguous in any way. It is difficult to see how this refusal, and the explanation for it, could be any clearer, even to an unsophisticated person.¹³ Echelon reviewed the information provided on behalf of Mr. Leduc-Moreau and determined, correctly, that he did not qualify for an IRB, and clearly explained to him the reasons for its decision. Echelon’s invitation to Mr. Leduc-Moreau to provide further information to support his claim does not suggest that the issue of entitlement was up for “discussion,” or that Echelon would, could, or might change its mind after any “discussion.” Entitlement to an IRB under s. 4 is not negotiable, one either qualifies on the facts, or does not. The only thing that could change Echelon’s decision would be factual information to establish Mr. Leduc-Moreau’s entitlement, which I find was never provided. That Echelon’s offer to consider additional employment information, if there were any, may have been, as Mr. Leduc-Moreau suggests, “part of a long chain of requests for information and responses between the insurer and the claimant,” does not detract from Echelon’s clear and unequivocal refusal to pay a benefit for which Mr. Leduc-Moreau did not qualify.

Rather, Echelon’s offer to consider additional information is consistent with its obligation to continue to review and adjust Mr. Leduc-Moreau’s claim in good faith with an open mind, even after denying it. There is ample case law to that effect.¹⁴ In Mohammed-Amin v. RBC General Insurance Co.¹⁵ Arbitrator Muzzi confirmed the well-established principle that ongoing negotiations or requests for further information between an insured and the insurer do not extend the time limits for disputing an otherwise clear and unequivocal refusal.

In support of his claim that Echelon’s April 13, 2009 refusal was equivocal, Mr. Leduc-Moreau relied on Adami, where Arbitrator Rogers held a refusal to pay IRBs was equivocal because it was not in response to a claim for IRBs, and to accept the refusal as valid “would lead to the perverse result of engaging the limitation period before the insured person has made a claim.”¹⁶ That is not the case here. Mr. Leduc-Moreau made a claim for an IRB but was unable to establish that he qualified for it.

Mr. Leduc-Moreau further relied on the decision of Arbitrator Bayefsky in T.N. and Personal Insurance Company of Canada, where he held that the insurer’s refusal to pay IRBs on the basis of a post-104 week Disability DAC report that found the applicant did not meet the disability test, was not a clear and unequivocal refusal because it also advised that the insurer was reviewing self-employment documentation the applicant had submitted, without explaining why. Arbitrator Bayefsky found that: “ . . . at the same time as it was attempting to deny benefits, the Insurer was also signalling to the Applicant that it was considering information relevant to the payment of IRBs and, therefore, that the payment of IRBs was still a possibility.”¹⁷

Again, the facts before me are distinguishable from those in T.N. Unlike the insurer in T.N., Echelon, in its April 13, 2009 OCF-9, clearly explained the one specific reason why no IRB was payable: 23 weeks was not enough to qualify for the benefit under the Schedule. That was a constant variable and not something about which Echelon could change its mind, even if it wanted to, without further evidence from Mr. Leduc-Moreau. The further evidence provided by Mr. Leduc-Moreau and investigated by Echelon did not establish that he worked the 26 weeks required to qualify for the benefit, so the basis for the refusal to pay IRBs never changed.

Mr. Leduc-Moreau further argued that the April 13, 2009 OCF-9 was premature at only a little more than a month after the accident, in light of the “whole history” of the communications between the parties, and under the particular circumstances: i.e. in the case of a young man with serious injuries and a casual employment situation. Mr. Leduc-Moreau points out that the refusal constitutes a quick decision by an insurer before it has carried out any of the substantial investigation it later undertook, which included an Examination under Oath on July 22, 2010.¹⁸

I fail to see how this changes anything. The investigation undertaken on behalf of Echelon by McCully of information provided by Mr. Leduc-Moreau was fairly straightforward and was unable to verify that he worked any more than 23 weeks in the year before the accident. Again, the original basis for the refusal never changed. The fact that Echelon issued further OCF-9’s¹⁹ explaining that it was continuing to review Mr. Leduc-Moreau’s claim, or had referred it to an accountant, is not, as he suggests, merely a continuation of the decision-making process. As noted above, this is no more than Echelon continuing to adjust the claim in good faith as it is required to do. In any event, the later OCF-9’s advise that, despite ongoing investigation and review, “there is no change in your entitlement to benefits.”

Mr. Leduc-Moreau had ample opportunity to dispute Echelon’s refusal or to challenge the results of the investigation undertaken by McCully before the two-year time limit to do so expired on April 13, 2011. S. 51(1) is not a provision to which the principles of “reasonable excuse” apply.

For these reasons, I find that Echelon’s April 13, 2009 OCF-9 was a valid refusal and Echelon is entitled to rely on it for the purpose of the two-year time limit. As Mr. Leduc-Moreau did not file his Application for Mediation of his IRB claim until April 24, 2012, more than two years after Echelon’s refusal, he is precluded from proceeding to arbitration under s. 51(1) of the Schedule and s. 281(5) of the Act.

If Mr. Leduc-Moreau is precluded from entitlement to IRBs, is he as a result also precluded from entitlement to NEBs?

I agree with Mr. Leduc-Moreau’s argument that if Echelon has taken the position that he did not qualify for an IRB as of April 13, 2009, then the only benefit he could have qualified for was the NEB, and the election it repeatedly sought from him was not required. Consequently, I find the election of IRBs Mr. Leduc-Moreau did submit in July 2009 cannot be used to defeat his claim for an NEB. Echelon properly, promptly and thoroughly investigated Mr. Leduc-Moreau’s entitlements to both IRBs and NEBs as it was required to under the Schedule, and suffers no prejudice from not being able to rely on his July 2009 election. Echelon sent Mr. Leduc-Moreau an Explanation of Benefits, dated January 13, 2011, denying his entitlement to an NEB on the basis that he did not meet the disability test.²⁰ Mr. Leduc-Moreau’s application for mediation of this refusal to pay an NEB was registered on March 8, 2012, within the two-year time limit. Mr. Leduc-Moreau is not precluded from disputing this refusal on the merits.

EXPENSES:

I exercise my discretion to defer the issue of expenses incurred in this preliminary issue hearing pending the outcome of all the issues in dispute.

June 3, 2014

Susan Sapin

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2014 ONFSCDRS 90

FSCO A13-004919

BETWEEN:

JONATHAN LEDUC-MOREAU

Applicant

and

ECHELON GENERAL INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Leduc-Moreau is precluded from proceeding to arbitration on his claim for IRBs.

2. Mr. Leduc-Moreau is entitled to proceed to arbitraton on his claim for NEBs.

June 3, 2014

Susan Sapin

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Dated March 30, 2009 and March 22, 2009 respectively.
3. 3The standardized statutory accident benefits forms approved for use by the Financial Services Commission elicit information from applicants, employers and health practitioners by way of narrative answers to standard questions, as well as boxes that are to be checked off as “yes,” “no,” or “N/A” (“not applicable”) in response to certain questions.
4. 4S. 36(2) of the Schedule provides that where an insured person may qualify for more than one weekly benefit, the Insurer must advise the person, and the person must elect which benefit he wishes to receive within 30 days after receiving the notice.
5. 52002 SCC 30, [2002] 2 S.C.R. 129
6. 6Tab 18
7. 7Tab 19
8. 8Tab 20
9. 9I was not provided with any evidence about when or how Mr. Leduc-Moreau was provided with the Election of Income Replacement, Non-Earner or Caregiver Benefit form (OCF-10). Under s. 36 of the Schedule, if a person’s application indicates that he may qualify for one or more weekly benefits, the insurer is required to notify him, within 10 business days of receiving the application, that the insured person must elect which benefit he wishes to receive within 30 days of receiving the insurer’s notice.
10. 10Tab 4
11. 11Tab 25
12. 12I reject Mr. Leduc-Moreau’s submission that the denial was somehow unclear because “Box B - Not Eligible/ Stoppage of Benefits” was not checked off, as Echelon’s entire explanation is actually contained in Box B.
13. 13I reject Mr. Leduc-Moreau’s submission that the refusal is somehow unclear because it is “buried in a lengthy sentence that explains the law,” rather than standing on its own, as without merit. The refusal and reasons for it are no less clear for their position in the OCF-9.
14. 14See for example West and Aviva Canada Inc. (FSCO A08-000170, December 18, 2008), Macera and Royal & SunAlliance Insurance Company of Canada (FSCO A07-000775, November 7, 2008), Hayes and State Farm Mutual Automobile Insurance Company (FSCO A10-000968, November 26, 2012), Ponnampalam and State Farm Mutual Automobile Insurance Company (FSCO A11-004759, July 25, 2012), Kalpakis and TD Home and Auto Insurance Company (FSCO A08-002563, July 22, 2011)
15. 15(FSCO A06-002188, June 25, 2007)
16. 16Adami and Wawanesa Mutual Insurance Co. (FSCO A08-000172, October 8, 2008), at p. 5
17. 17T.N. and Personal Insurance Company of Canada (FSCO A06-000399, July 26, 2012) at p 7
18. 18Tab 23
19. 19May 29, 2009; February 5, 2010; August 24, 2010
20. 20Tab 10