Financial Services Commission of Ontario

Neutral Citation: 2014 ONFSCDRS 97 FSCO A11-001492

BETWEEN:

MAN FONG NG Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: James Robinson Heard: February 28, 2014, at the offices of the Financial Services Commission of Ontario in Toronto Appearances: Darryl Singer for Mr. Ng Paul Omeziri for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Man Fong Ng, was injured in a motor vehicle accident on December 22, 2006. He applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ The applicant then claimed a medical benefit in the amount of $25,000.00 with respect to a surgical procedure undergone in the United States. State Farm has denied this claim. The parties were unable to resolve their disputes through mediation, and Mr. Ng applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

State Farm raised the issue of whether the Applicant’s claim for a medical benefit is statute-barred on the basis that the Application for Arbitration was issued more than two years after the benefits were denied and more than ninety (90) days after a mediator issued a report confirming that mediation had failed. The issue of whether the Applicant’s claim can ultimately succeed on the merits is not before me. The preliminary issue to be determined is:

1. Whether the applicant’s claim for medical and rehabilitation benefits is statute-barred as the Application for Arbitration was issued more than two years after the benefits were denied and more than ninety (90) days after the mediator issued the report noting the mediation had failed?

Result:

1. Mr. Ng’s claim for medical and rehabilitation benefits is statute-barred pursuant to section 281.1 of the Insurance Act.

EVIDENCE AND ANALYSIS:

Section 281.1 of the Insurance Act provides as follows:

(1) A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.

(2) Despite subsection (1), a proceeding or arbitration under clause 281(1)(a) or (b) of the Insurance Act may be commenced,

(a) if there is an evaluation under section 280.1, within 30 days after the person performing the evaluation reports to the parties under clause 280.1(4)(b);

(b) if mediation fails but there is no evaluation under section 280.1, within 90 days after the mediator reports to the parties under subsection 280(8).

At the hearing the parties stipulated that the OCF-9 form dated February 19, 2009 and delivered by State Farm to Mr. Ng represented sufficient notice to him of the refusal of his claim in conformity with the customary practice and the relevant case authorities.

State Farm submitted that insofar as an OCF-9 was delivered to the applicant on February 19, 2009, the two-year limitation period for the present application for arbitration expired on February 19, 2011.

On the available evidence I agree. The OCF-9 delivered to the applicant was adequate notice of the denial of his claims. There was no intervening mediation which might serve to extend the two-year limitation period. On the plain wording of section 281.1 of the Act, the limitation period expired on February 19, 2011.

The applicant’s position is that the limitation period was either waived or met in the special circumstances of this case.

The applicant originally commenced an application with reference to his motor vehicle accident on September 18, 2009 (the “First Arbitration Application”) after mediation (the “First Mediation) failed on August 25, 2009. The issues in the First Arbitration Application encompassed claims for attendant care, housekeeping and home maintenance, damage to clothing, glasses, etc., the cost of examinations, interest, and expenses.

By letter dated July 26, 2010 (the “Yeung Letter”) delivered by telecopier to the Commission Mr. Philip Yeung, counsel for the applicant, wrote as follows:

Mr. Ng claimed entitlement to Medical Benefit, pursuant to s. 14 of the SABS, in the amount of $25,000.00USD for lumbar discectomy surgery provided by Dr. David Ditsworth as submitted to State Farm in an Application for Expenses (OCF 6) dated February 3, 2009

Moreover, Mr. Ng also claimed entitled to examination expenses, pursuant to s. 24 of the SABS in the amount of $450.00USD for a CT of the lumbar/pelvis …

In order to resolve the above issue, we request that the Medical Benefits issue be added to his Application for Arbitration under Part III, Section 12 of “SABS”.

It is apparent from the context that in the latter paragraph Mr. Yeung was referring to the First Arbitration Application since there was no other application before the Commission at that date.

The First Arbitration Application was duly settled by agreement between the parties in late March or early April, 2011. Although it was not produced in evidence before me, I am satisfied on the basis of the submissions made by Mr. Singer, applicant’s counsel at the hearing of this matter, that the mutual release specifically excluded the matters in issue in the present application as referenced in the Yeung Letter.

The Commission did not respond to the Yeung Letter (ostensibly because, as will be discussed below, a Mediator’s Report had not yet issued with respect to the issues referred to therein.) Mr. Yeung took no further steps with respect to it. Respondent insurer and its counsel, although copied with the Yeung Letter, took no further steps with respect to it either. The Respondent did not at any time expressly consent to the applicant’s request that this matter be added as an issue to the applicant’s then-ongoing application for arbitration.

Nothing further occurred until the applicant subsequently attempted to advance the issues raised in the Yeung Letter. He was then met by the objection of the respondent that the issues were being raised out of time pursuant to section 281.1 of the Act as hereinbefore set forth.

The applicant accordingly issued an application for mediation with respect to these outstanding issues (the “Second Mediation.”) The Second Mediation was unsuccessful and a report was issued by the mediator on April 28, 2010. Thereafter, the applicant issued the present application for arbitration (the”Second Arbiration”) on April 15, 2011.

The essential matter for decision is whether there is any legal basis upon which the issues set forth in the Yeung Letter can be held to have been preserved from the consequences of the limitation period set forth in section 281.1 of the Act.

Counsel for the applicant advanced three main grounds for that position, stated in the form of interrogatives. I will deal with each in turn, as follows:

(1) Is the Letter of July 26, 2010 analogous to a formal application for arbitration for the purposes of satisfying the limitation period which would otherwise expire on July 28, 2010?

Given that I have already found that the limitation period expired on February 19, 2011, the first essential question posed by applicant’s counsel is whether the Yeung Letter is “analogous to a formal application for arbitration.”

Counsel submitted that, if the applicant had failed in his intention to add the outstanding issue to arbitration, he had surely succeeded in commencing a new application for arbitration on July 26, 2010 by virtue of delivering the Yeung Letter to the Commission. He pointed out that the Act contemplated the “commencement” of an application rather than filing of one. He suggested that such language supported the issuance of a letter for such purpose, rather than the use of the prescribed form of application for arbitration.

The answer to this argument is found within the Dispute Resolution Practice Code (“DRPC”) itself. Section 25.1 expressly states as follows: “An insured person applying for arbitration (the “applicant”) must file a completed Application for Arbitration in FORM C, which includes…”

The provision is mandatory and does not admit of exceptions. The Yeung Letter does not meet the requirements of the DRPC for an application for arbitration because it is not in FORM C, as required. If it were necessary for to me to decide, I am also satisfied that the Yeung Letter does not substantively meet the requirements of section 25.1 with respect to its content nor, of course, was it tendered with the requisite filing fee.

Insofar as it was not an Application for Arbitration in Form C, the Yeung Letter does not qualify for the curative provisions of subsection 25.4.

Moreover, the Yeung Letter does not, on the face of it, purport to apply for anything. On a plain reading of its content, it is intended only to add issues to an existing application for arbitration (the “First Arbitration.”)

This is not a case where the applicant made any effort to comply with the formal application process and failed through error and inadvertence. In the present case, the applicant failed to institute proceedings and therefore failed to comply with the Act.

Finally, and fatally, the Yeung Letter was delivered on July 26, 2010. The Mediator’s Report for the issues set forth in the Yeung Letter was delivered two days later on July 28, 2010. Therefore, the applicant had no standing to commence an application for arbitration when the Yeung Letter was delivered. This is manifest from the provisions of Rule 25.1(a) of the DRPC.

(2) Even if not, does the Insurer’s failure to raise an objection prevent the Insurer from relying on this limitation period?

In his argument before me applicant’s counsel denied that Respondent’s consent was necessary to add an issue for arbitration and alleged that it was a practice before the Commission to add issues by way of correspondence as was purported to be done by the Yeung Letter. On this theory, the issues referred to in the Yeung Letter were engrafted into the First Arbitration and were not statute-barred.

Again, the fact that the Mediator’s Report of July 28, 2010 had not been issued at the time of delivery of the Yeung Letter is fatal to this argument. Moreover, I agree with the position of the respondent that no issue could be added without the consent of the respondent. There was no evidence of consent on the part of the respondent insurer. It was not open to the applicant unilaterally to add issues to an arbitration, had one been properly instituted, without the consent of the respondent and the Commission.

The Applicant argued that if the respondent’s consent were required, there was implied consent on the part of the Respondent evidenced by its course of conduct, in three ways.

First, applicant’s counsel submitted that it was incumbent upon the respondent to have replied or disputed the contents of the Yeung Letter, copied but not addressed to the respondent, purporting to add issues, failing which it must be deemed to have acquiesced to its contents.

I do not accept that argument. The respondent’s silence did not represent consent or assent. It was not incumbent upon the respondent to correct applicant’s counsel. Moreover, had the respondent actually consented, it remained within the discretion of the Commission, in the course of controlling its own process, to order the new issues added. This did not occur.

Secondly, applicant’s counsel indicated that the respondent insurer signed a release dated March 31, 2011 with respect to the Application for Arbitration. In that release, the issues now in dispute were expressly excepted. Applicant’s counsel submits that this represented an implied consent to waive the limitation period. I do not agree.

The submission of respondent’s counsel, which was not disputed by applicant’s counsel, was that the release in question was executed in late March or early April, 2011, which was some five weeks after the February 19, 2011 date upon which I have found that the limitation period expired. Therefore it cannot be construed as consent to an extension of that limitation period.

If the submission of the applicant is that the limitation period was re-opened by virtue of the execution of the qualified release, then the applicant has failed to meet his burden of proof. The release itself was not placed in evidence nor was there any compelling evidence with respect to the course of dealings between the parties that satisfies me on the balance of probabilities that there was any intention on the part of the respondent insurer to waive the limitation period. Such evidence as there was suggests the contrary.

Thirdly, applicant’s counsel submitted that by virtue of Rule 30.2 of the DRPC it was incumbent upon the respondent to reply to the Yeung Letter.

Section 30 of the DRPC provides as follows:

30.1 Where two or more Applications for Arbitration have been filed and it appears that:

(a) they have an issue or question of law, fact, or policy in common; or

(b) the application of this Rule will result in the most just, quickest, and least expensive means to deal with the Applications

The Dispute Resolution Group will notify the parties in writing of the intention to:

(c) combine the proceedings;

(d) schedule the proceedings to be heard at the same time;

(e) schedule one or more proceedings to be heard one immediately after the other by the same arbitrator; or

(f) suspend the scheduling of a proceeding or proceedings until the determination of any one of them

30.2 Where a party object to a notice made under Rule 30.1, the party must promptly notify the Dispute Resolution Group and the other parties involved, in writing, of the objection.

The applicant’s submission under this head is that upon delivery of the Yeung Letter to the Commission the requirements of Rule 30.1 were met, insofar as the First Arbitration was still an ongoing matter, at that point, and the Yeung Letter was “analogous to” another application.

The submission is that the Commission failed or neglected to issue the requisite Rule 30.1 notice of its intention to combine or deal otherwise with the two applications. That said, applicant’s counsel failed in its obligation to object to the proposed consolidation as it was required to do under subsection 30.2.

The Commission itself was not required as a matter of procedure or on any other material ground to respond to the letter or, as was implied in argument, to correct any assumption or misapprehension of applicant’s counsel which it may have contained.

Applicant’s counsel suggested that the wording of the mutual release and the failure of the respondent insurer to object to the Yeung Letter (pursuant to Rule 30.2) must be taken together as evidence that the respondent had consented to waive the limitation period set forth in section 280.1 of the Act.

In my opinion this argument must fail. Rule 30.2 on its face requires that a notice be issued pursuant to Rule 30.1. There was no obligation upon the Commission to issue such a notice where, as here, no Application for Arbitration in Form C had been issued. Therefore the respondent insurer had no obligation to object. If it had objected, one might speculate, applicant’s counsel would now be arguing that such an objection might be taken as evidence of consent. That would have been a more credible argument than the one on offer. But it did not happen.

Whether taken individually or as a “bundle” the arguments of applicant’s counsel do not succeed. No critical mass is achieved to defeat the limitation period by uniting a number of arguments, each of which is on its own unpersuasive.

I am satisfied that the limitation period for the commencement of the applicant’s claim expired on February 19, 2011 which was that date two years after the delivery of the OCF-9 to the respondent, and that the applicant did nothing by act or omission to waive strict compliance with the requirements of section 280.1 of the Act.

(3) Does the March 23, 2011 settlement conference reset the 90 day limitation clock?

This point was not argued by counsel at the hearing. If, indeed, there had been a settlement conference on March 23, 2011 (with reference to the First Arbitration) the wording of section 281.1 would be totally determinative of the case. Only a mediation could serve to extend the two-year limitation period. A settlement conference could not do so upon the strict wording of the section.

EXPENSES:

If the parties are unable to agree on the legal expenses of this motion, an expense hearing shall be requested within sixty days 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 written submission regarding entitlement to or the quantum of these expenses, or both, as are in dispute.

June 11, 2014

James Robinson Arbitrator

ARBITRATION ORDER

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

1. Mr. Ng’s claim for medical and rehabilitation benefits is statute-barred pursuant to section 281.1 of the Insurance Act.

2. Mr. Ng’s application for arbitration is dismissed.

3. If the parties are unable to agree on the legal expenses of this motion, an expense hearing shall be requested within sixty days 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 written submission regarding entitlement to or the quantum of these expenses, or both, as are in dispute.

June 11, 2014

James Robinson Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.