Neutral Citation: 2017 ONFSCDRS 107 FSCO A15-005867

BETWEEN:

KAYAPARAN ARUMUGAN Applicant

and

PERSONAL INSURANCE COMPANY OF CANADA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Thérèse Reilly

Heard: By written submissions completed January 30, 2017

Appearances: Mr. Kayaparan Arumugam did not participate Ms. Pamela Vlasic participated for Personal Insurance Company of Canada

Issues:

The Applicant, Mr. Kayaparan Arumugan, was injured in a motor vehicle accident on March 11, 2014, and sought accident benefits from the Personal Insurance Company of Canada (“Personal”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, through his representative at that time, applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issues in this Preliminary Issue Hearing (“PIH”) are:

Is the Applicant barred from proceeding to Arbitration as he did not notify the Insurer of the circumstances giving rise to a claim for a benefit in accordance with section 55(1) of the Schedule?
Is the Applicant entitled to the cost of the Great Oaks Vocational Forensic Accounting Report?
Is either party entitled to its expenses in respect of this Application for Arbitration?

Result:

The Applicant is barred from proceeding to Arbitration as he did not notify the Insurer of the circumstances giving rise to a claim for a benefit in accordance with section 55(1) of the Schedule.
In light of the decision on Issue 1, it is not necessary to address the second issue dealing with the payment of the Great Oaks Vocational Forensic Accounting Report.
The Insurer is entitled to its expenses of $2,728.25, inclusive of all fees, disbursements and HST, payable forthwith.

EVIDENCE AND ANALYSIS:

The PIH was scheduled to be heard on October 26, 2016. The Insurer served the Applicant with its submissions for the PIH on August 5, 2016.

On August 30, 2016, the Applicant’s representative filed a Motion to be removed from the record due to a breakdown in the solicitor-client relationship. A resumption of the Pre-Hearing was scheduled to hear the Motion. At the resumption held by telephone conference on September 9, 2016, I granted the Order to remove Mr. Yasar Saffie, legal counsel, and the law firm of D’Angelo Fox Vanounou LLP, from the record. As a result, the Applicant became self-represented. In my letter of September 9, 2016, the October 26, 2016 date for the PIH was vacated to allow the Applicant time to obtain new legal representation.

By letter dated September 23, 2016, sent to all parties and the Applicant, I requested confirmation from the Applicant that he advise ADR Chambers (“ADR”) of the name of his new legal representative by no later than October 28, 2016, and if ADR did not receive a reply, we would proceed to set the schedule for the PIH. No reply was received.

By letter, dated December 13, 2016, sent to the parties, and to the Applicant by regular and registered mail, a schedule was set to hear a PIH on the following issue:

Is the Applicant barred from proceeding to Arbitration as he did not notify the Insurer of the circumstances giving rise to the claim for accident benefits in accordance with section 55(1) of the Schedule?

The following schedule was set to file and serve materials:

The Insurer had initially served its materials in August 2016. But with the change in the representation of the Applicant, I requested the Insurer re-serve and file its materials and provide an Affidavit of Service by December 30, 2016.
The Applicant was to file and serve a response by no later than January 30, 2017. The Applicant was advised that “if ADR did not receive any written materials from the Applicant by January 30, 2017, the PIH would proceed in writing and the Application for Arbitration may be dismissed without further notice to the Applicant with or without costs”.
The Insurer was to serve and file its reply materials, if any, by February 14, 2017.

The Insurer, by letter dated December 21, 2016, re-served and filed its materials for the PIH.

No reply was received from the Applicant. The Applicant did not serve any responding materials, and made no submissions on the issues raised in the PIH.

Notice to the Applicant

I am satisfied that the Notices of Hearing complied with the requirements set out in Rule 9.1(c) of the Dispute Resolution Practice Code (“DRPC”) and section 6 of the Statutory Powers Procedure Act.² All correspondence, including the notices of Hearing, was sent to the address in FSCO’s records.

Rule 37.9 of the DRPC states:

Where notice of hearing has been sent to a party and a party does not attend at an oral or electronic hearing, or participate in a written hearing, the arbitrator may proceed with the hearing in the party’s absence or without the party's participation, as the case may be, and the party is not entitled to any further notice in the proceeding.

Notwithstanding the notices and my letters, the Applicant did not attend nor provide any submissions on the PIH, which proceeded in the Applicant’s absence.

Background Information

The Applicant submitted his Application for Accident Benefits to the Insurer claiming an Income Replacement Benefit (“IRB”) and indicating “IRB documents will follow” on March 23, 2014.³

The Insurer wrote to the Applicant on numerous occasions requesting information as follows:

On April 11, 2014, the Insurer sent the Applicant a complete Application for Accident Benefits package, including an Employer’s Confirmation Form (OCF-2), Disability Certificate (OCF-3), and a Job Analysis Form. The package also included instructions on how to complete each form.⁴
The Insurer wrote a letter to the Applicant on April 11, 2014, including an Explanation of Benefits, requesting a completed OCF-2, OCF-3, and pay stubs for 4 weeks or 52 weeks prior to the subject accident. The Applicant was advised that the information was necessary in order to determine his eligibility for IRBs. Additional letters were sent to the Applicant requesting an executed Permission to Disclose Health Information (OCF-5) and releases for the OHIP summary and authorizations, the police report, and the accident benefits file for a previous accident. The information was requested under section 33 of the Schedule. The Applicant was cautioned that failure to comply within 10 business days would result in non-payment of benefits until such time the information was provided. A copy of section 33 of the Schedule was included with the correspondence.⁵
On July 4, 2014 and on August 9, 2014, the Insurer asked the Applicant to provide a copy of the clinical notes and records from Reddy Physiotherapy and the clinical notes and records from his family physician as per section 33 of the Schedule. The Insurer reiterated that these requests were being made under section 33 of the Schedule.⁶
On August 13, 2014, the Insurer sent a letter to the Applicant. The Insurer advised the Applicant that his OCF-2 was still outstanding. The Insurer reiterated that the OCF-2 was required to determine his initial entitlement to IRBs, which could not be determined until the form was received. The Insurer also wrote to the Applicant requesting his Employment Insurance Statement of Benefits and benefit stubs. The Insurer advised the Applicant that if he failed to provide the requested documents and information, his benefits would be suspended, effective September 2, 2014.⁷
On August 15, 2014, the Insurer wrote to the Applicant and requested a completed copy of the Job Analysis Form that had been previously sent to him.
The Insurer wrote to the Applicant on September 11, 2014 and advised him that he was non-compliant for failure to provide all of the documents requested on August 13, 2014 and August 15, 2014. IRBs were deemed not payable, effective September 2, 2014.⁸
The Insurer wrote to the Applicant on December 30, 2014 and advised him that he did not suffer a substantial inability to complete the essential tasks of his employment, therefore no IRB was payable and there was no initial entitlement to IRB.

The Insurer states the Applicant filed for Mediation on May 8, 2015, placing the issue of IRBs and the payment of a Vocational Forensic Accounting Report in dispute.

The Insurer states that it filed a Response to the Application for Mediation, dated May 26, 2015. In its Response, the Insurer pleaded that the Applicant was barred from proceeding to Mediation by way of section 55 of the Schedule.

Statutory Provisions

Section 32 of the Schedule states, in part, that:

(1) A person who intends to apply for one or more benefits described in this Regulation shall notify the insurer of his or her intention no later than the seventh day after the circumstances arose that give rise to the entitlement to the benefit, or as soon as practicable after that day.

Section 33 of the Schedule states, in part, that:

(1) An applicant shall, within 10 business days after receiving a request from the insurer, provide the insurer with the following:

Any information reasonably required to assist the insurer in determining the applicant’s entitlement to a benefit.
The insurer is not liable to pay a benefit in respect of any period during which the insured person fails to comply with subsection (1) or (2)
If an applicant who failed to comply with subsection (1) or (2) subsequently complies with that section, the insurer,

(a) shall resume payment of the benefit, if the benefit was being paid; and (b) shall pay amounts that were withheld during the period of non-compliance, if the applicant provides a reasonable explanation for the delay in complying with the subsections.

Section 36 of the Schedule states, in part, that:

(2) An applicant for a specified benefit shall submit a completed disability certificate with his or her application under section 32.

(3) An applicant who fails to submit a completed disability certificate is not entitled to a specified benefit for any period of time before the completed disability certificate is submitted.

Section 34 of the Schedule states that:

A person’s failure to comply with the time limits set out in this Part does not disentitle the person to a benefit if the person has a reasonable explanation.

Section 55(1) of the Schedule states, in part, that:

(1) Subject to subsection (2), an insured person shall not apply to the Licence Appeal Tribunal under subsection 280 (2) of the Act if any of the following circumstances exist:
The insured person has not notified the insurer of the circumstances giving rise to a claim for a benefit or has not submitted an application for the benefit within the times prescribed by this Regulation.

Insurer Submissions

The Insurer submits that the Applicant failed to provide the information that he was statutorily obligated to provide in support of a claim for IRBs and the Applicant is thus barred from proceeding to Arbitration by virtue of section 55(1) of the Schedule.

The Insurer submits that:

Despite several requests for a Disability Certificate (OCF-3) by the Insurer, the Applicant failed to submit an OCF-3 in accordance with section 32 and section 36 of the Schedule.
Despite multiple requests from the Insurer as per section 33 of the Schedule, the Applicant failed to provide relevant income documentation, including an Employer’s Confirmation Form (OCF-2), pay stubs from either 4 weeks or 52 weeks prior to the subject loss, his EI Benefit statements, complete EI file, records of post-accident earnings and a completed Job Analysis Form.
The Insurer cautioned the Applicant that he would be deemed non-compliant, and payment of benefits would stop, if he failed to submit the requested documentation. He was further advised that an Applicant who fails to submit an OCF-3 is not entitled to a specified benefit for any period before the completed Disability Certificate is submitted. The Applicant has never provided a Disability Certificate to the Insurer.
The Applicant has failed to provide the Insurer with reasonable information it has requested in order to determine if he was making a claim for IRBs. The Insurer submits that the Applicant has failed to provide a reasonable explanation for not providing a response to the Insurer’s request.
The Insurer deemed the Applicant non-compliant as per section 33 effective September 2, 2014.

The Insurer states that the information requested from the Applicant was reasonably required to assist in determining whether a claim for IRBs was being made, and refers to its various correspondence, dated April 11, 2014, July 4, 2014, August 9, 2014, August 13, 2014, August 15, 2014, September 11, 2014 and December 30, 2014, in which it identified the required information.

The Insurer submits that the Applicant failed to meet the minimal standard of information to be provided by the Applicant to the Insurer in support of his claim for IRBs. The Insurer has repeatedly followed up with the Applicant and made various requests for information that it reasonably required to allow the Insurer to assess and determine entitlement for a claim for a specified benefit.

The Insurer submits that the Applicant has never established his eligibility for IRBs. He has never provided the information requested of him for the specified benefit, therefore, his Application for Arbitration is barred by virtue of section 55 of the Schedule.

The Insurer relies on the case of Mary Anthonipillai and Security National Insurance Co./Monnex Insurance Mgmt. Inc., in which Arbitrator Bujold dismissed the Applicant’s claim for Housekeeping and Home Maintenance Benefits due to her failure to submit an OCF-3 in support of her claim.⁹ The Insurer also relies on the case of Farzaneh Kashefi and TD Home and Auto Insurance Company,¹⁰ where Arbitrator Mongeon confirmed the proposition that a supportive and timely OCF-3 is a necessary component of a claim for a specified benefit. In the Appeal decision of Fadia Khalil and Royal & SunAlliance Insurance Company of Canada, Director’s Delegate Evans upheld Arbitrator Kowalski’s Order that the Applicant was precluded from proceeding with her claim for IRBs because she was outside the time limits to do so, and that she was precluded from proceeding with her claim for IRBs because of her failure to comply with her notice and disclosure obligations as set out in section 32 and 33 of the Schedule¹¹ As confirmed in Khalil, the Applicant has a statutory obligation to provide information in support of his or her clam. Arbitrator Kowalski dismissed Ms. Khalil’s claim for benefits because she “wholly ignored” the Insurer’s reasonable requests for information.

Decision

I find the Applicant has failed to meet the minimal standard of information to be provided to the Insurer in support of his claim for IRBs. I concur with the Insurer and find the Insurer repeatedly made requests for information from the Applicant which was necessary for the Insurer to assess and determine the IRB claim. The Applicant failed to provide the information and failed to provide a reasonable explanation for not providing the requested information.

The Applicant failed to comply with his notice and disclosure obligations as set out in sections 32, 33, 34, and 36 of the Schedule.

The Applicant is barred from proceeding to Arbitration as he did not notify the Insurer of the circumstances giving rise to his claim for IRBs in accordance with section 55(1) of the Schedule.

In light of my decision, it is not necessary to address the second issue dealing with the payment of the Great Oaks Vocational Forensic Accounting Report.

EXPENSES:

The Insurer requests its expenses in relation to the defence of the within Arbitration including preparation for the PIH. The Insurer is the successful party and is entitled to its expenses.

The quantum of expenses that may be ordered must be reasonable. It is generally accepted that a line-by-line assessment of the expenses is not appropriate; rather, the Arbitrator should make a global assessment of reasonable expenses.

In considering a request for an award of expenses, an Arbitrator must consider the criteria set out in the DRPC, Rule 75.2 and the provisions of the Expense Regulation, Regulation 664.¹² I have considered the various relevant criteria from the DPRC as set out below:

Criteria 4: The conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including the failure to comply with undertakings and orders.

Criteria 5: Whether any aspect of the proceeding was improper, vexatious or unnecessary.

The Insurer states that the Applicant prolonged this proceeding at various stages from the Pre-Hearing stage to present. Accident benefit documentation was withheld despite multiple requests for these by the Insurer.

At the Pre-Hearing, the Applicant was also presented with 20 days of surveillance demonstrating that he was in fact gainfully employed, which would lend support for the position that his claim was improper, vexatious or unnecessary.

At the Pre-Hearing, the Applicant was reminded that he had failed to submit the proper documentation giving notice of/and support to any claim for IRBs.

The Insurer maintains the Applicant could have withdrawn his claim for the IRB but failed to do so. After the removal from the record of his representative, the Applicant ceased to participate in these proceedings, forcing the Insurer to incur further costs.

The Insurer states the total number of hours spent on this file is 51 hours (19 hours prior to the Pre-Hearing and 32 hours after the Pre-Hearing). Counsel’s hourly rate is $190.00 and call to the Bar year is 2012.

The Insurer states that in applying Legal Aid Services Act hourly rates, the rate payable for civil matters for legal aid certificates after April 1, 2015 is $109.13 per hour. The Insurer requests 51 hours at the rates as per the Legal Aid Services Act which totals $5,565.63, and with HST, totals $6,289.16.

While I accept that a line-by-line analysis of the docket is not appropriate, an Arbitrator must ensure that the expense claim reflects the Expense Regulation. I find that the claim for 51 hours is high. The Insurer’s expenses should reflect the hours for the preparation for and attendance at the Pre-Hearing. The Insurer filed its materials for a PIH in August 2016. The Applicant failed to participate in the PIH and in the Arbitration after his representative was removed from the record. The issues in the Arbitration are not complex and are fairly simple. The Insurer maintained its desire to proceed with the PIH notwithstanding the lack of participation by the Applicant. No Arbitration Hearing was held.

In considering all these factors in this matter and applying the Legal Aid Services Act hourly rate of $109.13 per hour, I find that the reasonable amount of expenses that the Insurer is entitled to is $2,728.25 (representing 25 hours), inclusive of HST. The Insurer did not include an amount for disbursements.

Therefore, the Applicant is liable for the expenses of the Insurer in this matter in the amount of $2,728.25, inclusive of all fees, disbursements and HST.

April 10, 2017

Thérèse Reilly Arbitrator

Financial Services Commission of Ontario