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

Neutral Citation: 2015 ONFSCDRS 171

FSCO A14-003948

BETWEEN:

ANDREW CZAJKOWSKI

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Susan Sapin

Heard: April 20 and June 1, 2015, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mr. Czajkowski represented himself, assisted by his son.

Samantha Mason for Wawanesa Mutual Insurance Company.

Issues:

The Applicant, Andrew Czajkowski, was injured when he was struck by a motor vehicle while riding his bike on May 15, 1998. Four days later he submitted an Application for Accident Benefits to Wawanesa Mutual Insurance Company (“Wawanesa”) for statutory benefits payable under the Schedule.¹ Disputes arose about Mr. Czajkowski’s entitlement to certain benefits. On February 5, 2014, Mr. Czajkowski submitted an Application for Mediation to the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended. The disputed claims were not resolved through mediation, and on May 5, 2014, Mr. Czajkowski applied to the Commission for arbitration.

Preliminary Issues in Dispute:

Based on the pre-hearing letter of Arbitrator Bujold dated December 9, 2014, submissions filed by Wawanesa and those made orally by the parties on April 20 and June 1, 2015, I have determined that the preliminary issues are as follows:

1. Is Mr. Czajkowski precluded from proceeding to arbitration of his claims for accident benefits by s. 51(1) of the Schedule² because he did not commence a mediation proceeding under s. 281.1(1) of the Insurance Act regarding the issues in dispute identified in his Application for Arbitration, within two years after the insurer’s refusal to pay the benefits claimed?

2. Is Mr. Czajkowski precluded from proceeding to arbitration of his claims for accident benefits by s. 51(2) of the Schedule because he failed to commence an arbitration proceeding within 90 days after a mediator’s report to the parties under s. 280(8)?

Result:

1. Mr. Czajkowski is precluded from proceeding to arbitration of his claims for accident benefits by s. 51(1) of the Schedule and s.281.1(1) of the Insurance Act because, despite a defective refusal, Wawanesa is entitled to rely on the two year time limit due to the extraordinary delay in this case.

EVIDENCE AND ANALYSIS:

Overview:

In his Application for Arbitration, Mr. Czajkowski identified the issues in dispute between himself and Wawanesa as:

• Income replacement benefits (IRB’s) from May 15, 1998 to May 3, 2014;

• A non-earner benefit (NEB);

• Attendant care benefits of $200 per week from May 15, 1998 to May 15, 2000;

• $2,000 for orthopaedic shoes;

• $150 a visit for physiotherapy;

• Medical prescriptions;

• Housekeeping and home maintenance expenses of $200 per week from May 15, 1998 to May 15, 2000.

Mr. Czajkowski applied for mediation of these issues on February 5, 2014. At the mediation which took place on March 4, 2014, Wawanesa raised the preliminary issue that Mr. Czajkowski had missed the two-year time limit to mediate or arbitrate his claims as prescribed in the Insurance Act and Schedule.

The Law:

Mediation is a time-limited mandatory first step in the dispute resolution process. Subsection 281(2) of the Insurance Act stipulates that no person may bring a proceeding in any court or refer the issues in dispute to an arbitrator unless mediation was sought and mediation failed.

The time limit to commence a mediation is two years after the insurer’s refusal to pay the benefits claimed.³ Under the Schedule the insured person has an additional 90 days after the mediator’s report to commence an arbitration or court proceeding.⁴

The two-year time limit will not begin to run until the insurer provides the insured person with a valid refusal to pay benefits; i.e., a refusal that is clear and unequivocal and which explains the dispute resolution process in “straightforward and clear language, directed towards an unsophisticated person.” ⁵

However, the inquiry into whether the two-year time limit will operate does not in all cases simply end with a finding that there has been an invalid refusal to pay a benefit. It is a two-step process, and the further question that needs to be answered, is whether the insurer may nevertheless be entitled to rely on the two-year time limit, despite a defective refusal.⁶

Based on the evidence before me in this proceeding, I have found that, despite invalid refusals on the part of Wawanesa, it is entitled to rely on the time limit in this case for two reasons: one, I find Mr. Czajkowski was aware there was a two-year time limit for disputing a denial of benefits; and two, it would be highly prejudicial to Wawanesa and would defeat the purpose of time limits in the first place, to allow him to rely on Wawanesa’s defective refusals as a reason to pursue his claim almost 16 years after Wawanesa determined he was not eligible for the benefits.

As the circumstances surrounding each individual claim in Mr. Czajkowski’s Application for Arbitration differ somewhat, I will deal with each claim separately.

Invalid Refusals: NEB and IRB

Wawanesa’s response to Mr. Czajkowski’s Application for Accident Benefits (OCF-1), although clear and unequivocal as regards its refusal to pay an NEB, is not a valid refusal to pay either an NEB or an IRB, because it did not include an explanation of the dispute resolution process as per the criteria in Smith. In addition, as Wawanesa’s response did not address the IRB at all, it cannot be said to be a clear and unequivocal refusal to pay that benefit.

Mr. Czajkowski submitted an Application for Accident Benefits (OCF-1) to Wawanesa dated May 19, 1998, and a Disability Questionnaire dated May 27, 1998. ⁷ On his OCF-1, Mr. Czajkowski indicated he was a full time student, with a 17-year old dependent. He left blank the part of the form that asked for details of employment within the “past 52 weeks.” On the Disability Questionnaire, he indicated he had not been employed in the 52 weeks before the accident, and had been laid off from his employment as a tool and die maker in March 1996, more than two years before the accident. Under the Schedule, an insured person must have worked for 26 of the 52 weeks before the accident, or received EI benefits, to be eligible for IRBs.

The OCF-1 consists of several numbered sections and check boxes where an insured person is asked to provide information about his or her status that will allow an insurer to determine which, if any, of three different types of weekly benefits the insured person may be entitled to: IRB, caregiver, or NEB. In Western Assurance Company and Cejvan⁸ the Director’s Delegate reviewed a number of Superior and Court of Appeal decisions and confirmed that an OCF-1, therefore, constitutes a claim for all possible weekly benefits.⁹ That being the case, I find Mr. Czajkowski applied for all three benefits.

It follows from the reasoning in Cejvan that once an insurer receives an OCF-1, it must consider all of the information submitted in the OCF-1 and accompanying Disability Questionnaire; determine which, if any, of the three weekly benefits the insured person may be eligible for; and must provide a response for each benefit, even if the response is that the person does not qualify for the benefit. Such a response would qualify as a refusal that, if otherwise valid, would trigger the two-year time limit to apply for mediation.

Based on the information he provided, Mr. Czajkowski very clearly did not qualify for an IRB. As his son was 17 years old at the time, Mr. Czajkowski also did not qualify for a caregiver benefit.

Wawanesa responded to Mr. Czajkowski’s application for benefits by way of a letter and an Explanation of Benefits Payable (“EOB”) dated May 28, 1998,¹⁰ advising only that he did not qualify for an NEB – a clear and unequivocal refusal of that benefit.¹¹ Neither the letter nor the EOB addresses entitlement to an IRB or a caregiver benefit, as ought to have been done, so there was no clear and unequivocal refusal to pay an IRB.

Regardless, Wawanesa’s letter and EOB are invalid because neither inform Mr. Czajkowski about the dispute resolution process under the Insurance Act and the Schedule – information the Supreme Court of Canada in Smith found essential to the consumer protection goals of the no-fault automobile insurance regime, and which insurers were required to communicate “in straightforward and clear language, directed towards an unsophisticated person.”¹² The Court set out the minimum requirements a refusal must include to be considered valid:

. . . a description of the most important points of the process, such as the right to seek mediation, the right to arbitrate or litigate if mediation fails, that mediation must be attempted before resorting to arbitration or litigation and the relevant time limits that govern the entire process. Without this basic information, it cannot be said that a valid refusal has been given.

Wawanesa May Rely on the Time Limit:

Despite Wawanesa’s invalid refusal to pay the NEB and IRB, I find Mr. Czajkowski cannot rely on these defects to prevent the running of the two-year time limit, for a number of reasons.

The first reason is that the evidence indicates Mr. Czajkowski was in fact aware of the two-year time limit to mediate or arbitrate any disputes he had with Wawanesa, and acted on this knowledge. On November 3, 1998, Mr. Czajkowski filed an Application for Mediation with the Commission, disputing the denial of a Treatment Plan.¹³ A January 27, 1999 letter from a FSCO mediator to Mr. Czajkowski and his legal representative at the time, however, indicated no mediation took place, and warned him of the time limit:

You have recently indicated there are currently no issues in dispute between yourselves and the insurer. Accordingly, I am closing the file. Should you have an issue in dispute in the future, you may apply for mediation again.

Please be aware, however, of the time limitation noted in Section 26(1) of the Statutory Accident Benefits Schedule . . . [which] states that:

“A mediation proceeding under section 280 of the Insurance Act . . . must be commenced within two years from the insurer’s refusal to pay the amount claimed. .”¹⁴

A May 2, 2000 handwritten Statement of Claim Mr. Czajkowski filed with the Ontario Superior Court also indicates he was aware of the two-year limitation period: “After the mediation failure between the plaintiff and the Insurance Company on January 21, 1999. . . . Before the expiry of limitation period I would like take action [sic] for damages as follows: . . .” The claims are for a) lost earning capacity; b) lost income; c) general damages for pain and suffering; and d) permanent and serious disfigurement.

In light of the above documentary evidence I find Mr. Czajkowski’s assertion in the Statement of Claim that there was a failed mediation of a dispute about IRBs, an assertion he continued to make in this hearing, to be unconvincing and disingenuous, as was his continued insistence that he was unaware of the time limit.¹⁵

The second, and more important, reason to uphold the time limit in this case is that Mr. Czajkowski’s almost-15-year delay in advancing his claims against Wawanesa is highly prejudicial to Wawanesa. I accept Wawanesa’s submissions that to allow Mr. Czajkowski to mediate and arbitrate any of his claims (some of which do not appear even to have been submitted) almost fifteen years after the two-year time limit to mediate would have expired – a delay for which no explanation was provided, other than that Mr. Czajkowski felt one or more of his lawyers were responsible at the time¹⁶- would be an abuse of the consumer protection principles on which the decision in Smith and the law and jurisprudence regarding the purpose of limitation periods are based.

Allowing Mr. Czajkowski to take advantage of the consumer protection principles articulated in Smith, while ignoring the significant prejudice to Wawanesa in defending against claims it has had no meaningful opportunity to investigate in the intervening years, would, in this case, amount to an abuse of process. This is particularly so as regards Mr. Czajkowski’s claim for an IRB, when, as noted above, the only evidence provided to Wawanesa, and before me, is that he did not qualify for the benefit in the first place.

I find the consumer protection concerns addressed by the reasoning in Smith do not apply in this case, and that important legal principles underlying the purpose of limitation periods cannot be ignored.

It is well-established law that “limitation periods play an important role in the administration of justice by achieving a balance between every individual’s right to justice on one hand and the systemic need for finality on the other.”¹⁷ In Haldenby v. Dominion of Canada General Insurance Company, the Court of Appeal reviewed the three rationales underlying limitation periods set out by the Supreme Court in K.M v. H.M.¹⁸ certainty: i.e., “a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancient obligations”; preservation of evidence; and diligence – the expectation that plaintiffs will not “sleep on their rights,” and will pursue their claims in a timely fashion.

In this case, I find these principles, and the prejudice to Wawanesa, outweigh the consumer protection principles articulated in Smith.

In a recent Superior Court decision, Golic v. ING Insurance Co. of Canada, upheld by the Court of Appeal, the judge at first instance refused to allow Mr. Golic to amend his pleadings to include a claim for IRBs, more than seven years after the denial of the benefit by the insurer and five years after the two-year limitation period would have expired. In accepting the insurer’s argument in that case, that it had no opportunity in the intervening years to assess the applicant’s medical condition, the judge explained why the reasoning in Smith should not apply:¹⁹

P 7: para 34 The majority decision of the Supreme Court in Smith v. Co-operators reflects the need as a public policy objective to ensure as a matter of consumer protection that a claimant whose insurance benefits have been terminated would be fully informed and have a clear layman’s understanding of exactly what were his or her procedural options. I agree fully with that majority opinion. However, nothing in that opinion suggests to my mind that the Supreme Court . . . would have been willing to afford the same consumer protection to a litigant like the plaintiff in the circumstances of this case, to permit such a plaintiff to feign ignorance and use the consumer protection objectives of the legislation to mask the obvious knowledge he would have acquired through the course of three or four mediations of essentially the same claim. To permit Mr. Golic in the circumstances of this case to now make an amendment to his pleadings, using the laudable principles of that decision to mask his own failure to prosecute this new claim on a timely basis, would be an abuse of the consumer protection objectives reflected in the legislation, and that were upheld in Smith. In my opinion the facts of this case are totally distinguishable from those in Smith.

I agree with this reasoning. The facts in Mr. Czajkowski’s case are similarly distinguishable from those in Smith, where the insured person had missed the deadline to apply for mediation by only a few months, as opposed to the lengthy delay in the case before me. I would say the facts in this case are quite unique. Mr. Czajkowski is not a consumer in need of protection from his insurer, he is a litigant who feigns ignorance of the law and refuses to play by the rules. I find it reasonable to infer, from the fact that he has had several legal representatives over the years and blames them for handling his case poorly, that Mr. Czajkowski is not open to accepting legal advice and has his own ideas about what he is entitled to and how to get it.

Mr. Czajkowski faces an additional hurdle regarding his claim for an NEB, because, although he included it in his Application for Arbitration, it is clear from the Report of Mediator dated March 4, 2014 that this issue was not mediated. There is no evidence to suggest that this was due to error or omission. Mr. Czajkowski is therefore not entitled to arbitrate this issue.

Regarding his IRB claim, I accept Wawanesa’s alternate submission that Mr. Czajkowski is precluded from arbitrating this claim because he previously commenced an action for lost past and future income and damages in the Superior Court of Ontario in May 2000. Although there is no evidence before me of any refusal by Wawanesa to pay an IRB, the existence of the court action suggests the benefit was in dispute at some point. However, I am persuaded on the evidence before me that Mr. Czajkowski did not mediate this dispute before commencing legal proceedings, nor at any time until he applied for mediation of these issues on February 5, 2014. There is no evidence before me about the outcome of the court action, or that Mr. Czajkowski took any steps to pursue his claims in the nine years between February 25, 2005 (see footnote #16) and February 5, 2014.

Attendant Care:

At some point, Mr. Czajkowski submitted attendant care expenses of $990.00 to Wawanesa. In an EOB dated June 24, 1998,²⁰ Wawanesa replied: “Please have your family physician complete the attached Form 1 in order that we may determine your eligibility for attendant care benefits.” There is no evidence before me about whether Wawanesa paid the $990.00 claimed. If it did not, then Mr. Czajkowski was not provided with a valid refusal. There is no evidence that Mr. Czajkowski followed up with his claim for attendant care benefits until he included it in his February 5, 2014 Application for Mediation.

I find whether or not Wawanesa’s EOB for this benefit is a valid refusal or not is beside the point. Wawanesa gave Mr. Czajkowski clear and specific instructions about what he was to do to complete his application for an attendant care benefit: have his doctor complete and submit the attached Form 1. There is no evidence that Mr. Czajkowski did so. I find he did not properly apply for the benefit and it is far too late now, given the obvious point that Wawanesa had no opportunity at the relevant time to assess Mr. Czajkowski’s medical condition to determine his entitlement to the benefit, and it is nonsensical to suggest it could do so 15 years later. In that respect the same reasoning regarding delay set out above applies to this benefit as well.

Claim for Orthopaedic Shoes, Physiotherapy Treatments, Prescription Medications:

Part X of the Schedule in effect at the time of Mr. Czajkowski’s accident sets out the procedures required to claim benefits from an insurer, including the requirement to submit the claims in a timely manner. Mr. Czajkowski provided no evidence that he ever submitted claims for orthopaedic shoes, physiotherapy treatments or prescription medicines to Wawanesa as required by the Schedule, timely or otherwise, nor was I provided with any evidence that Wawanesa received or denied the claims. An insured person cannot claim a benefit from an insurer simply by including it in an Application for Mediation. Without evidence the specific claim was submitted for consideration to an insurer, and refused, there is no issue in dispute that can form the subject of a mediation or arbitration proceeding.²¹

In conclusion, I find the statutory time limits for mediating and arbitrating claims for benefits must be upheld in this case, and Mr. Czajkowski is precluded from proceeding to arbitration on the claims including in his Application for Arbitration. Accordingly, his Application is dismissed.

EXPENSES:

As Wawanesa has been entirely successful in this proceeding, it is entitled to its expenses incurred. If the parties cannot agree on the amount of expenses of this preliminary issue hearing, either party may request, in writing, within 30 days of the date of this decision, that I determine the amount of expenses payable, in accordance with Rule 79 of the Dispute Resolution Practice Code. I will issue written reasons for my determination after reviewing the expenses claimed and the written submissions of the parties.

August 24, 2015

Susan Sapin Arbitrator

Date

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

Neutral Citation: 2015 ONFSCDRS 171

FSCO A14-003948

BETWEEN:

ANDREW CZAJKOWSKI

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

ARBITRATION ORDER

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

1. Mr. Czajkowski’s Application for Arbitration is dismissed.

August 24, 2015

Susan Sapin Arbitrator

Date

Mr. Czajkowski’s assertion, that a September 1, 2004 endorsement by Master Sedwick dismissing Wawanesa’s motion for summary judgment “proves” IRBs were mediated, in fact proves nothing of the sort. The endorsement reads: “ . . . it is not possible to determine that there was a failure of mediation or the mediation was withdrawn by the plaintiff there is a genuine issue for trial in my view . . .” The evidence before me clearly indicates IRBs were never mediated. As noted, neither party was able to inform me about the outcome of the court action.

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2The Old Regulation— Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
3. 3Subsection 281.1(5), the version of the Act in place at the time of Mr. Czajkowski’s accident. The current version, s. 281.1(1), imposes the same two-year time limit.
4. 4Subsection 51(2) of the Schedule in place at the time of the accident; currently s.56(2).
5. 5Smith and Co-Operators General Insurance Company 2002 SCC 30, [2002] 2 S.C.R. 129
6. 6Zeppieri and Royal Insurance Company of Canada (OIC A-005237, February 17, 1994)
7. 7Affidavit of Stephen B. Macaulay dated April 9, 2015, (“Affidavit #1”), Tab A. Affidavit #2, Tab A.
8. 8(FSCO P14-00007, December 4, 2014), Appeal
9. 9Ibid.,, p. 5.
10. 10Affidavit #1, Tab B.
11. 11Because, as a full time student returning to school, he did not meet the disability test for that benefit, which requires a complete inability to lead a normal life.
12. 12Smith para 14. In fact, Wawanesa’s EOB form is identical to the form found wanting in Smith.
13. 13The evidence before me indicates this was the only Application for Mediation Mr. Czajkowski ever submitted to the Commission, apart from the February 5, 2014 Application and it related only to Wawanesa’s denial of a $2,100 Treatment Plan for physiotherapy from Promed Rehabilitation Centre (Affidavit #1, Tab C.)
14. 14Affidavit #1, Tab D.
15. 15I note that Wawanesa has consistently maintained to Mr. Czajkowski that no dispute about IRBs was ever mediated (Letter to Mr. Czajkowski from Wawanesa dated May 16, 2000, in response to his Statement of Claim, Affidavit #2; Letter from Wawanesa’s counsel to Mr. Czajkowksi’s counsel dated February 25, 2005, confirming mutual withdrawal of appeals related to preliminary decisions in the court case, but reiterating that “Although we are no longer pursuing the appeal we will still be raising the arguments in the appeal as a defence to the action; namely that Mr. Czajkowski is statute-barred from bringing this action as he failed to mediate the claim in accordance with the SABS and the Insurance Act.”[Emphasis added]. Affidavit #2, Tab D.
16. 16I note for the benefit of Mr. Czajkowski that I have no jurisdiction to set aside the time limits in the Insurance Act and the Schedule because he feels his lawyers may have failed to take any necessary steps to preserve the limits. That is an issue Mr. Czajkowski must take up with the Law Society of Upper Canada.
17. 172001 CanLII 16603 (ON CA), 55 O.R. (3d) 470
18. 181992 CanLII 31 (SCC), [1992] 3 S.C.R. 6.
19. 192008 CanLII 69502 (ON SC), [2008] O.J. No. 5408. In that case the plaintiff attempted to amend a statement of claim under the Rules of Civil Procedure to include an application for income replacement benefits thirteen years after the accident and almost nine years after he was advised by the insurer that he was not eligible to receive IRBs. In the courts, the general principle is that amendments to pleadings which have the general effect of relieving against the operation of a limitation period are not to be allowed, unless the moving party can establish that there are special circumstances and there will be no irreparable prejudice to the defendant.
20. 20Affidavit 1, Tab B.
21. 21I note that on the first day of this preliminary issue hearing, Monday April 20, 2015, Mr. Czajkowski had not submitted any documents on which he intended to rely, stating that Wawanesa had all the necessary documents. I adjourned the preliminary issue hearing to June 1, 2005, in part so that Mr. Czajkowski could obtain, serve and file any documents required to prove his case. Mr. Czajkowski did not provide any documents other than those admitted as Exhibits 1 and 2.