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

Neutral Citation: 2016 ONFSCDRS 6

FSCO A14-006546

BETWEEN:

ASHA WARSAME Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

Before: Richard Quan, Arbitrator

Heard: By telephone conference call on October 13, 2015.

Appearances: Diana Colangelo for Ms. Warsame David Raposo for State Farm Mutual Automobile Insurance Company

The Applicant, Asha Warsame, was injured in a motor vehicle accident on June 17, 2010. She applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ In the course of the claim period, Ms. Warsame had applied for and was denied non-earner benefits and caregiver benefits.

State Farm claimed that Ms. Warsame was precluded from entitlement to both non-earner and caregiver benefits because she did not comply with the limitation periods set out in Section 56(1), (previously section 51(1)), of the Schedule.

Issue:

Is Ms. Warsame precluded from proceeding to arbitration because her applications for mediation and for arbitration were filed beyond the two-year limitation period set out in subsection 281.1(1) of the Act and subsection 56(1) of the Schedule?

Result:

Ms. Warsame is precluded from proceeding to arbitration because her Applications for Mediation and for Arbitration were filed beyond the two-year limitation period. The Application for Arbitration is dismissed.

Background:

This preliminary issue hearing proceeded by tele-conference. Ms. Colangelo and Mr. Raposo made submissions at the hearing without their clients present. The Applicant, Ms. Warsame, did not file any material. The Insurer, State Farm, filed the following:

A Factum of the Insurer;
A Brief of Authorities;
An Affidavit of Philippa G. Samworth sworn on September 9, 2015.

Ms. Warsame completed an Application for Mediation which was received by the Financial Services Commission of Ontario stamped April 7, 2014 disputing the denials of non-earner benefits, caregiver benefits along with the issue of interest on overdue payments. Ms. Warsame and State Farm could not resolve their differences at mediation and the Mediator issued a report reflecting this outcome dated July 15, 2014. On August 18, 2014, Ms. Warsame applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended, seeking the following:

Non-earner benefits at the rate of $185.00 per week from June 17, 2012 ongoing;
Caregiver benefits at the rate of $300.00 per week from June 17, 2010 to June 17, 2012;
Interest on overdue payments;
Expenses of the hearing.

At the hearing, the parties agreed that the non-earner benefit claim was no longer being advanced as a stand-alone issue but was, in essence, a continuation of the claim for entitlement to caregiver benefits by operation of the provisions of the Schedule.

The Facts:

The facts are not in dispute. They have been outlined in the Affidavit of Phillippa G. Samworth and can be summarized as follows:²

The law firm of Berlingieri, Barrafato, Fortino LLP advised State Farm that it represented Ms. Warsame by letter dated November 15, 2010 and enclosed a completed OCF-1 Application for Accident Benefits signed and dated August 5, 2010 in which Ms. Warsame was identified as a primary caregiver. ³
On December 22, 2010, State Farm received a completed OCF-10 election form dated August 5, 2010 in which Ms. Warsame elected to receive caregiver benefits.⁴
On January 29, 2011, State Farm advised Ms. Warsame that insurer examinations would be arranged to assess entitlement to caregiver benefits.⁵
Two insurer examinations were conducted resulting in reports by Dr. Walters dated March 10, 2011 and by Dr. Koepfler dated March 16, 2011.⁶
On April 1, 2011, State Farm purportedly denied initial entitlement to caregiver benefits by way of an OCF-9 Explanation of Benefits.⁷
Ms. Warsame applied for mediation by way of an Application for Mediation received and stamped by the Financial Services Commission dated April 7, 2014 seeking caregiver and non-earner benefits.⁸
Subsequently, counsel for Ms. Warsame filed an Application for Arbitration dated August 7, 2014 on the issue of caregiver benefits up to the 104 week mark and non-earner benefits beyond that date.⁹

EVIDENCE AND ANALYSIS:

Section 281.1 of the Insurance Act and section 56(1) of the Schedule provide that mediation and arbitration proceedings must be commenced within two years of the insurer’s refusal to pay a benefit. State Farm raised the preliminary issue that Ms. Warsame was statute barred from proceeding to mediation and is similarly prevented from proceeding to arbitration on a claim for caregiver benefits, pursuant to section 281.1 of the Insurance Act and section 56(1) of the Schedule.

State Farm takes the position that on April 1, 2011, the insurer provided to Ms. Warsame written notice of a denial of caregiver benefits, pursuant to section 54 of the Schedule. Since Ms. Warsame did not access the dispute resolution process by applying for mediation until April 7, 2014, Ms. Warsame did not meet the timing of the limitation period and that this matter ought to be dismissed. In support of this argument, State Farm filed an OCF-9 Explanation of Benefits dated April 1, 2011.¹⁰

Section 54 of the Schedule sets out two requirements that must be met: that written notice was provided to Ms. Warsame and that proper notice of her right to dispute was included. In order to trigger the limitation period, State Farm must show that, on the balance of probabilities, it delivered notice of the termination of caregiver benefits to Ms. Warsame or that a copy was provided to her representative. If notice was provided, State Farm then has the burden of proving that Ms. Warsame was properly informed of the stoppage and of her right to dispute it.

Counsel for Ms. Warsame suggested at the hearing that perhaps not all of the pages of the OCF-9 Explanation of Benefits dated April 1, 2011 found their way to her client. I am unable to place any weight on this assertion. As Ms. Warsame was represented throughout the claim period by the same law firm, other than evidence from Ms. Warsame directly, the law firm would be in the best position to call evidence in support of this submission. No such evidence was adduced.

With the understanding that the facts in this matter have been previously agreed to by the parties and in the absence of any evidence to the contrary filed prior to or adduced by Ms. Warsame or by her counsel at the hearing, I find that, on the balance of probabilities, State Farm did provide Ms. Warsame with proper written notice of the stoppage of benefits. Upon a finding that proper notice was provided to Ms. Warsame, the two-year limitation period set out in section 281.1(1) of the Insurance Act and section 56(1) of the Schedule would be triggered.

In terms of the adequacy of the stoppage, I am guided by the principles set out in the leading case in this area of law, Smith and Co-Operators General Insurance Company.¹¹ The Supreme Court in that case held that consumer protection was one of the main objectives of insurance law; an important goal to this end is making sure that insured persons are informed in a clear and unequivocal manner about decisions relating to their claims in the automobile accident industry. In considering what were some of the elements of a valid stoppage, at paragraph 14 of Smith, the court stated:

“In my opinion, the insurer is required under s. 71 to inform the person of the dispute resolution process contained in s. 279 to 283 of the Insurance Act in straightforward and clear language, directed towards an unsophisticated person. At a minimum, this should include 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.”¹²

Part 2B of the OCF-9 Explanation of Benefits dated April 1, 2011 clearly identified the benefit to be denied and provided reasons for its refusal. As well, the remedy for disputing the stoppage was given. Part 6 of the same form expanded on the options available to Ms. Warsame by including some informal suggestions as well as directing insured persons how to access mediation and arbitration at the Financial Services Commission of Ontario while reiterating the two year limitation period.¹³

I find that the OCF-9 Explanation of Benefits dated April 1, 2011 fulfills the requirements of section 54 of the Schedule, has triggered the limitation period in section 56 of the Schedule and has met those principles enunciated in Smith v. Co-Operators. It is written in a clear and unequivocal manner. Therefore, I find that the denial of caregiver benefits triggered the limitation period on April 1, 2011. As the Application for Mediation was not received and stamped by the Financial Services Commission of Ontario until April 7, 2014, (more than three years after the denial), the claim for initial entitlement to caregiver benefits is time-barred by Statute. As this is the only issue in arbitration, the Application for Arbitration is dismissed.

EXPENSES:

The parties have made no submissions with respect to the expenses of this preliminary issue hearing. If the parties cannot agree on the issue of entitlement or amount, they may make written submissions on both issues within 30 days of the date of this order.

January 6, 2016

Richard Quan Arbitrator

Date