Theodore Galarneau v. Allstate Insurance Company of Canada, 2015 ONFSCDRS 111

Financial Services Commission of Ontario

Neutral Citation: 2015 ONFSCDRS 111 Appeal: P13-00031 Office of the Director of Arbitrations

Theodore Galarneau, Appellant and Allstate Insurance Company of Canada, Respondent

Before: David Evans Representatives: Brian Arthur Odo Gualazzi for Mr. Galarneau Ian D. Kirby for Allstate Insurance Company of Canada

Hearing Date: January 28, 2015 by teleconference

Appeal Order

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

1. The Arbitrator’s order of September 18, 2013 is confirmed and this appeal is dismissed.
2. If the parties cannot agree on the legal expenses of this appeal, an expense hearing shall be requested, as set out below, within forty-five days of this decision.

May 27, 2015

David Evans Director’s Delegate

Reasons for Decision

I. Nature of the Appeal

Mr. Galarneau appeals the Arbitrator’s order that he is not entitled to non-earner benefits (NEBs) under s. 12 of the SABS–1996.¹

II. Background

On November 27, 1999, when he was a ten-year-old grade 4 student, Mr. Galarneau was injured in a motor vehicle accident. He suffered significant oral injuries that required surgery. He missed about three months of school, but continued in school thereafter until he left at age 16. He was then eligible to claim payment for NEBs.

NEBs can be claimed by students like Mr. Galarneau but are not payable until they turn 16 [s. 12(7)(b)]. Such students face a two-part test. The first part is whether as a result of and within 104 weeks of the accident they suffered “a complete inability to carry on a normal life” [s. 12(1)3], namely an accident-related impairment that “continuously prevents the person from engaging in substantially all of the activities in which the person ordinarily engaged before the accident” [s. 2(4)]. The second part is when they turn 16 to see if they still meet the complete inability test, since NEBs are only payable during the period that the insured person suffers a complete inability to carry on a normal life [s. 12(6)].

The Arbitrator found that Mr. Galarneau did not meet the first part of the test. He noted that Mr. Galarneau was able to continue in school until he voluntarily left. The Arbitrator found that Mr. Galarneau had been a poor-to-average student before the accident. He found that his initial three-month absence from school did not amount to a continuous inability to engage in substantially all of his activities because Mr. Galarneau was able to do most, if not all, of his usual pre-accident activities, did not appear to suffer a material decline thereafter, and was able to function at least at his pre-accident level. Although Mr. Galarneau was later described as a “loner,” the Arbitrator noted that his initial social problems had improved after the first year, and Mr. Galarneau testified that he developed friends roughly as before, continued his social interaction with sister, played various sports and swam.

Accordingly, the Arbitrator concluded that Mr. Galarneau did not meet the first part of the test and was not entitled to NEBs. That effectively concluded the matter, since only those students who meet the first part of the two-part test can possibly claim NEBs when they turn 16.

Nonetheless, the Arbitrator then considered the second part of the test, and found that Mr. Galarneau failed it as well. The Arbitrator looked at Mr. Galarneau’s school, work and social/recreational activities. Mr. Galarneau dropped out of school at age 16 and had an intermittent work record due to a bad back. But the Arbitrator noted that the back pain started one year post-accident for unknown reasons. As there was nothing to connect the back pain to the accident, the Arbitrator found the back pain was not related to the accident.

The Arbitrator found that Mr. Galarneau’s limited education was not due to the accident either. He noted that Mr. Galarneau’s expert did not have the records showing there was immediate post-accident improvement and was also unaware of his pre-accident disciplinary problems or of the extra assistance he had received at that time. The Arbitrator found the expert also failed to address Mr. Galarneau’s natural intellectual ability, his parent’s academic attainment, and other socioeconomic conditions, all of which pointed away from the accident. While Mr. Galarneau’s academic record did decline after a few years, the Arbitrator found there was no indication of any accident-related change in his life to explain this decline. The Arbitrator inferred that the curriculum was more demanding and that Mr. Galarneau was expected to do more on his own.

The Arbitrator therefore concluded that Mr. Galarneau was not entitled to NEBs on substantive grounds under either part of the test.

The Arbitrator then dealt with Mr. Galarneau’s argument that he was entitled to NEBs on procedural grounds, which the Arbitrator described as follows:

Mr. Galarneau also maintains that, even if he has not established his substantive entitlement to NEBs, Allstate is required to pay those benefits on the basis that it failed to deny him the benefits in accordance with the procedures set out in the Schedule. Finally, Mr. Galarneau submits that, regardless of his substantive or procedural entitlement to NEBs, as a matter of justice and fairness, he should receive those benefits, since he has been put in the position of having to establish his entitlement several years after he first became eligible.

The Arbitrator found that, even if there were procedural breaches, such as failing to provide adequate denials of benefits, the case of Stranges v. Allstate Insurance Company of Canada, 2010 ONCA 457, [2010] 103 O.R. (3d) 73 (Ont. C.A.) (leave to appeal to the Supreme Court of Canada dismissed, without reasons, [2010] S.C.C.A. No. 334) held that even where there is inadequate notice, insureds still have to prove their claims. The Arbitrator also found that the “justice and fairness argument” was simply a variation of the argument regarding procedural breaches and rejected it.

III. Analysis

Little of Mr. Galarneau’s submissions relate to any substantive basis for overturning the Arbitrator’s decision. The Arbitrator considered and applied the relevant criteria for determining entitlement to NEBs set out by the Court of Appeal in Heath v. Economical Mutual Insurance Company, 2009 ONCA 391, [2009] 95 O.R. (3d) 785. Most of the Arbitrator’s decision then consists of discussing the evidence and making findings of fact, none of which are reviewable.

Mr. Galarneau’s sole submission relating to the substantive law regarding NEBs is that the Arbitrator “erred in law in finding that an insured must show a continuous disability throughout at least the initial 26 week period in which the insurer is not required to pay in order to establish entitlement to a non-earner benefit.” Indeed, the Arbitrator did discuss the meaning of s. 12(7)(a) of the SABS, which provides that the insurer “is not required to pay a non-earner benefit for the first 26 weeks after the onset of the complete inability to carry on a normal life.” After considering the case law, the Arbitrator took a broad approach, finding that while “absolutely continuous” disability for two years following an accident is not required to meet the first part of the test of entitlement, neither is a brief period of disability immediately following the accident sufficient to meet the test. However, Mr. Galarneau’s submission is irrelevant because the Arbitrator found that Mr. Galarneau never met the continuous disability test in the 104 weeks after the accident, so he made no finding that Mr. Galarneau had to have been continuously disabled for 26 weeks straight to be eligible. In any event, he did consider Mr. Galarneau’s condition when he turned 16 as if he had passed the first part of the test and still found he was not entitled to NEBs. I find there was thus no error of law on the substance of the claim.

Mr. Galarneau submits that the Arbitrator erred in law in not shifting the onus to Allstate once Mr. Galarneau submitted medical evidence supporting his entitlement to NEBs. However, the ultimate onus always lies with the applicant to prove his claim. There is no basis for me to reverse the Arbitrator’s findings.

The heart of Mr. Galarneau’s submission is that the Arbitrator misapplied the Stranges decision and that he erred in not finding that the Explanations of Benefits Payable (EOBs) dated December 15, 1999 and February 2, 2000 were not proper refusals or explanations. Mr. Galarneau submits that these EOBs simply stated that he was not entitled to NEBs without further explanation. In 2007, Mr. Galarneau requested payment of NEBs from his 16th birthday forward, which was on November 30, 2005, but Allstate did not respond. A further EOB dated June 30, 2009 was left blank under the portion for NEB payable. Mr. Galarneau submits that the first proper response that complied with the SABS was provided on March 16, 2011. Mr. Galarneau submits that, among other things, Allstate failed to provide him information to assist him in applying for benefits (s. 32(2)(c)) and failed to follow the procedures set out in s. 35, such as paying the benefit unless it requested a medical examination (s. 35(3)).

However, if Stranges applies, then any inadequacies of the EOBs are irrelevant.

I find that the Arbitrator did correctly apply Stranges, which was considered by Delegate Blackman in State Farm Mutual Automobile Insurance Company and Yogesvaran, (FSCO P09‑00042, October 28, 2010). Mr. Galarneau incorrectly submits that the Delegate found an egregious procedural breach may entitle an applicant to benefits, regardless of a claim’s merits. However, what Mr. Galarneau cites are submissions that were made to the Delegate, not his specific findings. Rather, the Delegate found he was bound by Stranges. The issue in Stranges was that the insurer had failed to provide a proper notice of termination and a proper Designated Assessment Centre (DAC) assessment. However, the Court of Appeal stated that “The inadequacy of the refusal notice did not entitle the respondent to payment of benefits in perpetuity until proper notice was given or a proper DAC assessment was carried out.” The issue in Yogesvaran was that the insurer had failed to request a further disability certificate under s. 37 to see if the insured was still entitled to benefits. However, the Delegate stated that, notwithstanding the far more explicit statutory consequences in Stranges where benefits should not have been stopped than in the case before him, “the Court of Appeal held that the insured person was still required to prove her entitlement.”

Similarly, in this case, the failure of Allstate to provide adequate notice or to request an assessment did not automatically entitle Mr. Galarneau to NEBs.

In this case, there has been an extensive review on the merits by the Arbitrator, and there is no procedural basis for overturning his decision. Since Stranges applies, there was no need for the Arbitrator to make findings about the merits of the EOBs, nor to go into a detailed discussion about any other procedural breaches. Accordingly, I find there was no error by the Arbitrator.

As for the “justice and fairness” argument, Mr. Galarneau submits that he would have presented his case sooner if the insurer had done what it was supposed to, so he was forced into an untenable position of trying to prove his case years after the fact. However, I agree with the Arbitrator that this is simply a variation of the procedural breaches argument. While there may be some justice in Mr. Galarneau’s comments, it is not clear to me that the remedy would be an automatic granting of benefits, in light of Stranges. Perhaps these circumstances would go towards the weight an arbitrator might give to the evidence, and if benefits were awarded, then a special award would also be possible. However, Mr. Galarneau also conceded that there was no evidence that became unavailable because of the passage of time, like a doctor who saw him and had died, for example. He was simply seeking judicial notice that whenever you testify about an event from 6 or 12 years ago, your ability to do so is impaired.

I would like to take a moment to comment on this argument. Imagine a student like Mr. Galarneau proves they meet the second part of the complete inability test at age 16. If the record showed no intervening event, this would strongly suggest that the person met the first part of the test at the time of the accident. Conversely, in this case, the Arbitrator found that Mr. Galarneau did not meet the test at the time of the hearing, nor did he meet it when he turned 16. There was nothing to suggest a sudden improvement in his health after he turned 16: Mr. Galarneau was of course trying to prove the opposite, that he met the disability test at the time of the hearing and had met it since he turned 16. Also, there had been an intervening health event before he turned 16, namely the back injury that the Arbitrator found was unrelated to the accident, breaking the linkage between Mr. Galarneau’s current health state and his state during the 104 weeks after the accident. The Arbitrator also had the school records showing Mr. Galarneau returned to school within three months of the accident, and he heard evidence about that period. While that evidence might have involved memories from a dozen years before, there was no specific evidence that was lacking simply because of the passage of time. So even assuming I had some relief power beyond the limits imposed by Stranges, in these circumstances I do not find the argument compelling that Mr. Galarneau should be entitled to benefits because the insurer did not act in accordance with the SABS.

I find there is no basis for reversing the Arbitrator’s decision.

Mr. Galarneau submits that the Arbitrator did not order the transcript, and he took a long time to write the decision and so may have forgotten things. However, it is up to the parties to provide a transcript if they want to be certain an arbitrator has all the evidence, and as far as the delay goes, Mr. Galarneau did not point to any substantive error by the Arbitrator in making his findings.

Finally, Mr. Galarneau submits that the Arbitrator erred in dismissing his claim for a special award. However, as the Arbitrator stated, given his conclusion that Mr. Galarneau was not entitled to NEBs, there was no basis upon which to grant a special award.

Accordingly, the appeal is dismissed.

IV. Expenses

If the parties cannot agree on the legal expenses of this appeal, the time for either party to request an appeal expense hearing under the Dispute Resolution Practice Code is extended to forty-five days from the date of this decision. The request shall be accompanied by a Bill of Costs and submissions on any disputed entitlement or quantum issues.

May 27, 2015

David Evans Director’s Delegate

Footnotes

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