Jonathan Leduc-Moreau v. Echelon General Insurance Company, 2016 ONFSCDRS 270

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2016 ONFSCDRS 270

Appeal P14-00024

Appellant

and

Respondent

BEFORE:

David Evans

Andrew Kerr for Mr. Leduc-Moreau

Jamie Pollack for Echelon General Insurance Company

April 8, 2016

Under section 283 of the Insurance Act, R.S.O. 1990 c. I.8 as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Regulation 664, R.R.O. 1990, as amended, it is ordered that:

The Arbitrator’s order of June 3, 2014, is confirmed and this appeal is dismissed.
If the parties cannot agree on the legal expenses of this appeal, a determination of them may be requested within 30 days of this decision.

October 13, 2016

David Evans

Director’s Delegate

Date

I. NATURE OF THE APPEAL

Mr. Leduc-Moreau was in an automobile accident on March 8, 2009. He claimed statutory accident benefits from his automobile insurer, Echelon General Insurance Company.

The employment information Mr. Leduc-Moreau provided Echelon showed that he was unemployed and that he had not been employed long enough in the year prior to the accident to be entitled to income replacement benefits (IRBs). Echelon therefore informed Mr. Leduc-Moreau that it was refusing his IRB claim.

It also informed him he might be entitled to non-earner benefits (NEBs). Echelon later refused the NEB claim as well.

Mr. Leduc-Moreau filed for mediation of both claims, on different dates. Issues arose about whether Mr. Leduc-Moreau met the two-year limit for applying for mediation following a refusal of a benefit.

Regarding the IRBs, Mr. Leduc-Moreau claimed the initial refusal to pay IRBs was not clear and unequivocal and therefore was not valid, so the limitation period had not expired before he applied for mediation of that issue. The Arbitrator found that it was a valid refusal. Since the application for mediation of the IRB claim was filed more than two years after the initial refusal, she dismissed the IRB claim based on the limitation period.

By way of contrast, the Arbitrator found that the mediation application for the NEB claim was filed in time.

Mr. Leduc-Moreau appeals the Arbitrator’s finding that the limitation period applied to his IRB claim.

II. BACKGROUND

Mr. Leduc-Moreau was in an accident on March 8, 2009. He was unemployed. Unemployed insureds can only receive IRBs if they worked 26 of the 52 weeks prior to the accident pursuant to s. 4(1)2 of the SABS–1996.¹ On March 12, 2009, he submitted to Echelon an Application for Accident Benefits and an Employer’s Confirmation of Income form (OCF‑2) from Severn Boat Haven showing that he had only worked 23 of the 52 weeks prior to the accident.

On April 13, 2009, Echelon sent Mr. Leduc-Moreau an Explanation of Benefits (OCF-9 or EOB) indicating he did not qualify for IRBs since he was not employed and working or self-employed at the time of the accident, was not in receipt of Employment Insurance, and “had not worked 26 of the last 52 weeks prior to the accident.” Echelon enclosed blank OCF-2s for him to fill in and forward if he had “worked elsewhere in the last 52 weeks prior to the accident.” It also asked for further information regarding a possible non-earner benefit (NEB) claim.

Regarding the IRBs, Mr. Leduc-Moreau sent in further OCF-2s after the EOB of April 13, 2009 in an attempt to show he had worked the minimum 26 weeks. Echelon conducted further investigations, including obtaining a report and an examination under oath. These showed that some of the employment dates overlapped, other dates could not be confirmed, and the tax returns only showed income from Severn Boat Haven, the employer shown in the first OCF-2. Later EOBs therefore advised Mr. Leduc-Moreau that there was no change in his entitlement to benefits. The Arbitrator found that by a year after the accident Mr. Leduc-Moreau still had not shown he had worked the 26-week minimum.

Regarding the NEBs, Echelon investigated Mr. Leduc-Moreau’s entitlement to them during the same period. At various points it sent him election forms to choose between NEBs and IRBs. He eventually elected IRBs on July 21, 2009.

Time limit issues arose after Mr. Leduc-Moreau filed applications for mediation of his NEB claim on March 8, 2012, and his IRB claim on April 24, 2012.

The issue of whether these applications were filed out of time, namely more than two years after a valid refusal,² came before the Arbitrator by way of written submissions.

Regarding the NEBs, the Arbitrator rejected Echelon’s position that the limitation period started with the election of IRBs in July 2009. She found the limitation period started with Echelon’s denial of NEBs dated January 13, 2011, so the application for mediation was timely.

Regarding the IRBs, the issue was whether the EOB of April 13, 2009, sent about three years before Mr. Leduc-Moreau filed for mediation of his IRB claim, was a valid refusal. Mr. Leduc-Moreau maintained that the EOB was not such, according to the principles set out in Smith v. Co-Operators General Insurance Company, 2002 SCC 30, [2002] 2 S.C.R. 129. As the Arbitrator noted, Smith requires an Insurer’s refusal to pay a benefit be clear and unequivocal before the two-year time limit to dispute the refusal can begin to run.

Mr. Leduc-Moreau submitted that, like the notice in Smith, the EOB of April 13, 2009 simply invited further discussion and, indeed, was not intended as a denial at all. He also submitted that it was equivocal – by suggesting both denial and possible payment of IRBs – and premature.

However, the Arbitrator found that, unlike the notice in Smith, the notice did not suggest a further discussion might change Echelon’s mind. Rather, only different facts – never established – could have changed the situation. She found that the April 13, 2009 EOB was a clear and unequivocal denial as it explained the one specific reason why no IRB was payable: 23 weeks were not enough to qualify for IRBs under the SABS. She found that the notice was not premature, even though it was delivered early in the process. Rather, the later investigations were simply Economical adjusting the file after a refusal and not a continuation of the decision-making process. She pointed out that the later EOBs advised Mr. Leduc-Moreau that, despite ongoing investigation and review, “there is no change in your entitlement to benefits.”

Accordingly, the Arbitrator found that Mr. Leduc-Moreau was precluded from claiming IRBs.

II. ANALYSIS

Mr. Leduc-Moreau submits that Arbitrator Sapin failed to properly consider:

Gonthier J.’s comments in Smith by focusing on the word “discussion”
the entirety of the EOB dated April 13, 2009
the “surrounding circumstances” in determining the validity of the refusal in the EOB
the alleged “overarching test” when reviewing the EOB

Misinterpretation of Gonthier J.’s comments in Smith and the word “discussion”

This submission relates to how the Arbitrator contrasted the EOB in this case with the termination notice discussed in Smith. In Part 2 of the April 13, 2009 EOB, paragraph 2 explains how the weeks of work identified by Mr. Leduc-Moreau add up only to 23, so paragraph 3 shows how 23 was not enough:

In accordance with Section 4 of the Statutory Accident Benefits Schedule (SABS), 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.

Mr. Leduc-Moreau submitted paragraph 3 was similar to the equivocal refusal in Smith, which was found by Gonthier J. in para. 20 of Smith to give the impression the insurer might very well change its stance if contacted for a discussion of the matter:

There is some doubt in my mind as to whether the notice given by the respondent in this case would even be considered a refusal in a non-technical sense, absent the refusal letter sent to the appellant’s solicitor. The notice says, inter alia, “If you disagree with our assessment, please contact us immediately. If we cannot settle the application to your satisfaction, you have the right to ask for mediation…” There is 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.

The Arbitrator disagreed, finding “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.’” She found that the only thing that could have changed Echelon’s decision would have been factual information to establish Mr. Leduc-Moreau’s entitlement, which she found was never provided.

Mr. Leduc-Moreau submits that the Arbitrator took too narrow a view of the term “discussion” as used in Smith and that the more significant part of the statement is the insurer giving the insured the impression it might change its mind. However, I agree with the Arbitrator’s conclusion that the situations are distinguishable. The information provided by Mr. Leduc-Moreau was insufficient to qualify him for IRBs, so as the Arbitrator put it, there was nothing further to discuss until more information was provided. Further, I find compelling her explanation that any offer to consider additional information was simply consistent with Echelon’s obligation to continue to review and adjust Mr. Leduc-Moreau’s claim in good faith with an open mind, even after denying it. I find no error of law in the Arbitrator’s view of the term “discussion.”

Failure to consider the entire document

Regarding the form itself, the denial was set out in the box in Part 2 dealing with weekly benefits like IRBs under checkbox “B. Not Eligible/Stoppage of Benefit.” The Arbitrator found nothing turned on the fact checkbox B was unchecked, which Mr. Leduc-Moreau concedes on appeal. For instance, the EOB dated January 13, 2011 that denied the NEB claim also does not have that checkbox checked, but there was no dispute that this EOB was a valid denial.

Beyond that, the essence of Mr. Leduc-Moreau’s submission is that an unequivocal denial can be rendered equivocal by later statements. However, the Arbitrator considered that point and found that the statement “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” did not render the denial equivocal. I agree with her that the cases cited by Mr. Leduc-Moreau are distinguishable.

For instance, in Adami and Wawanesa Mutual Insurance Company, (FSCO A08-000172, October 8, 2008), a number of refusals were found deficient. Mr. Leduc-Moreau submits the Arbitrator focused on the wrong refusal, as there was one in Adami which, he submits, is similar to the one at issue here, and which the arbitrator in that case found left the impression that a final decision on entitlement to IRBs had not yet been made. It read:

Based on the evidence on file, you do not qualify for an Income Replacement Benefit. We are investigating the subsequent information received regarding the purported job offer.

I note that in Adami the denial just cited had already been found deficient for not setting out the full dispute resolution process, so this finding is to that extent obiter. Further, of course, the Arbitrator was not bound by Adami. Ultimately, this was really a finding of fact, or at best mixed fact and law. In any event, what the Arbitrator said about the EOB in T.N. and Personal Insurance Company of Canada (FSCO A06-000399, July 26, 2012) could apply equally to Adami. In T.N., the Insurer was considering information received about self-employment income, just like the insurer in Adami was considering information received about a purported job offer. But in this case, as the Arbitrator stated, the April 13, 2009 EOB

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.

In other words, unlike in Adami and T.N., there was no further information that Echelon was considering when it sent the refusal, so the Arbitrator was within her jurisdiction to find that the refusal was valid. I find no error of law in the Arbitrator’s conclusion.

Failure to consider the “surrounding circumstances”

Mr. Leduc-Moreau submitted to the Arbitrator that the EOB 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 constituted “a quick decision by an insurer before it has carried out any of the substantial investigation it later undertook.” The Arbitrator failed to see how that changed anything, considering that the investigation itself was fairly straightforward, did not identify more than 23 weeks worked of the 52 weeks pre-accident, and was simply a continuation of adjusting the file, not of decision-making.

Again, Mr. Leduc-Moreau is really disputing a finding of fact or a mixed question of fact and law. He repeats essentially the same submissions made to the Arbitrator, stating that it is rather unusual and contrary to expectations for the denial to take place before the investigation. He also submits that the fact Echelon kept asking for an election between IRBs and NEBs showed that it had not made up its mind regarding IRBs, since if he could qualify for only one type of benefit, there would be no need for an election form to choose between IRBs and NEBs.

However, as I stated in Western Assurance Company and Cejvan, (FSCO P14-00007, December 4, 2014),

where multiple types of weekly benefit claims are denied based on information in an OCF-1, those denials will not be premature and will be sufficient to start the limitation period running… A completed OCF-1 is, therefore, a basis upon which an insurer can refuse to pay an amount claimed as described in s. 281(5) of the Act and s. 51(1) of the SABS. A denial based upon such an OCF-1 will not be premature and will constitute a “refusal to pay the amount claimed.”

Whether subsequent events somehow detract from the initial denial is a matter of fact for the Arbitrator to determine. In this case, the Arbitrator had the right to find that the EOB was not premature, even though it was early in the process, and I see no basis to intervene. As for the election forms to choose between IRBs and NEBs, the Arbitrator agreed that they were not required if the IRB claim was already denied. However, she was not persuaded that this showed a decision had not already been made. At best, it meant that the time limit for the NEBs did not start to run when Mr. Leduc-Moreau sent in his election form. I am not persuaded there was any error of law by the Arbitrator in her conclusion that Echelon had made a decision and not that its further investigation showed a decision on entitlement was still forthcoming.

Failure to properly apply the “overarching test” of considering the EOB

Without reference to any case law on point, Mr. Leduc-Moreau submits there is some sort of “overarching test” of whether a reasonable person in the shoes of the claimant would conclude that he or she ought to engage the dispute resolution process. He refers to various “accepted legal tests” and “established legal principles” which the Arbitrator supposedly “failed to follow” and/ or “failed to consider” in her decision. Since these alleged principles and tests were never put to the Arbitrator, it is difficult to fault her for not following them.

In any event, I find this submission is more or less a rationalization for the Smith test. Accordingly, I find no error of law, as the Arbitrator applied Smith.

The appeal is therefore dismissed, and the Arbitrator’s decision is affirmed.

III. EXPENSES

If the parties are unable to agree about expenses of this appeal, an expense hearing may be requested within 30 days of this decision, in accordance with Rule 79 of the Dispute Resolution Practice Code.

When a request is received, I usually suggest a shortened procedure, assuming there is no dispute about entitlement. The party requesting expenses should set out what is sought, preferably in round figures, then the other party should respond with what that party thinks reasonable and why. I then arrange a short teleconference for the appeal expense hearing.

However, my preference is for the parties to speak to expenses at the appeal hearing itself.

October 13, 2016

David Evans

Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as it read immediately prior to April 1, 2016. For the purposes of this decision, I will use the present tense regarding the relevant pre-transition legislation, including the Insurance Act.
Per s. 281(5) of the Act and s. 51(1) of the SABS.