Ioan Nagy v. Jevco Insurance Company, 2017 ONFSCDRS 158

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2017 ONFSCDRS 158

Appeal P16-00005

OFFICE OF THE DIRECTOR OF ARBITRATIONS

IOAN NAGY

Appellant

and

JEVCO INSURANCE COMPANY

Respondent

BEFORE:

Deborah Pressman

REPRESENTATIVES:

Samia Alam for Mr. Nagy

Jeff Goit for Jevco Insurance Company

HEARING DATE:

By written submissions and teleconference on April 13, 2017

APPEAL ORDER

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:

1. The Arbitrator’s order of November 30, 2015 is confirmed and this appeal is dismissed.

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

June 9, 2017

Deborah Pressman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE AND BACKGROUND OF THE APPEAL

This appeal stems from a decision dated November 30, 2015 in which the Arbitrator found that Mr. Nagy is precluded from proceeding to arbitration on any issues arising out of this accident due to a settlement of his accident benefits claim.

Mr. Nagy was injured in a motor vehicle accident on June 10, 2005 when his car hit a moose on the way to a camping trip. He applied for statutory accident benefits¹ from Jevco Insurance Company (“Jevco”) and eventually settled his accident benefits claim during a private mediation on October 25, 2010, on an all-inclusive basis for $25,000.

Mr. Nagy was represented by Mr. Barrafato when he executed a Settlement Disclosure Notice and a Full and Final Release for all issues arising out of the accident.

This appeal centers on the outstanding account of AssessNet Inc. (AssessNet). AssessNet is a service provider that completed a catastrophic rebuttal report (CAT report) on behalf of Mr. Nagy after Jevco denied his catastrophic impairment determination. AssessNet’s CAT report was sent to Jevco on September 3, 2008 but its cost of $12,653.19 remained unpaid.

For a period of approximately one and half years after the settlement (December 16, 2010 to May 7, 2012) AssessNet continued to discuss and negotiate its outstanding account directly with Jevco. AssessNet relied on the ‘deemed approved’ provision in section 38.2(9) of the Schedule insisting that Jevco pay its outstanding account together with interest because Jevco did not reply within the required 3 business days to the OCF-22 dated December 19, 2007 that proposed the CAT report. Jevco assumed the OCF-22 was withdrawn after it sent AssessNet Inc. and Mr. Nagy’s representative an OCF-9 on January 8, 2008 advising that the OCF-22 was incomplete.

At one point in the negotiation between Jevco and AssessNet Inc., Mr. Nagy’s representative, Mr. Barrafato became involved. On May 7, 2012, Jevco’s representative attended at the offices of Mr. Barrafato and made an offer to settle AssessNet’s outstanding account. That offer was rejected by AssessNet because it did not include interest.

Unable to collect on its outstanding account as it related to the CAT report, AssessNet retained Mr. Barrafato and commenced an Application for Mediation on May 28, 2012 and a subsequent Application for Arbitration on August 8, 2012.

Mr. Nagy did not sign these Applications. He did not participate in the mediation or the arbitration pre-hearing process. The matter proceeded to a hearing. Mr. Nagy participated at the hearing and testified that he had no benefit from attending the hearing except to assist AssessNet in collecting money. He also admitted that he did not wish to rescind his settlement and that he did not wish to return the settlement funds. He submitted, through his representative, that his settlement did not include AssessNet’s outstanding account.

The Arbitrator dismissed the Application for Arbitration.

The appellant submits that the Arbitrator erred by:

• finding that Applications for Mediation and Arbitration commenced in AssessNet’s name were void ab initio and could not be corrected at a later date.

• finding that the prior 2010 settlement included the CAT report and AssessNet’s outstanding account.

• failing to consider the deemed approval provisions in the Schedule as they relate to the CAT report.

• failing to consider whether misapprehension of material facts surrounding the settlement was sufficient to allow Mr. Nagy to mediate and arbitrate post settlement.

• finding that Jevco did not violate its common law duty of honest performance.

For the reasons that follow I reject the appeal.

II. ANALYSIS

The real issues that determine this appeal are whether Mr. Nagy has standing and whether he can commence this dispute given his refusal to rescind his settlement as required by legislation.

I find that the arbitrator’s decision was correct and that he did not err in his findings or in his application and interpretation of the law in the context of the evidence presented.

On the issue of standing the arbitrator correctly found, on the evidence before him, that the true claimant in this matter was not Mr. Nagy but instead, it was AssessNet, his service provider, attempting to collect on their outstanding account. The arbitrator relied on the following evidence:

• Mr. Nagy was unaware that AssessNet continued to negotiate the outstanding invoice directly with Jevco between 2010 and 2012.

• Mr. Nagy has not been involved in settlement discussions and was not advised of any offers to settle AssessNet’s account.²

• AssessNet retained Mr. Barrafato to pursue the outstanding account after rejecting Jevco’s offer to settle.³

• The Application for Mediation dated May 28, 2012 was commenced in the name of AssessNet Inc.⁴

• The cover letter attached to the Application for Mediation stated “AssessNet Inc. is claiming for the Costs of Examinations completed for Nagy Ioan’s [sic] injuries…”⁵

• Nagy was unaware of the Application for Mediation.⁶

• Mr. Nagy did not sign the Application for Mediation and did not attend the mediation.⁷

• Mr. Nagy was unaware of the Application for Arbitration. He did not sign this Application,⁸ and did not participate in the pre-hearing on November 13, 2014 or the resumption of pre-hearing on January 9, 2015. He did not read the letter from FSCO dated September 19, 2012.⁹

• Mr. Nagy testified that he has no benefit from attending the hearing other than getting AssessNet money.¹⁰

There is no provision in the legislation that allows a service provider to commence a mediation or arbitration on behalf of a claimant. In fact, the Insurance Act, the Schedule and the Dispute Resolution Practice Code expressly exclude such an assignment¹¹ and the case law has supported this exclusion as it relates to third party assessment facilities.¹²

In Tanzos and State Farm Mutual Automobile Insurance Co, Director’s Delegate Draper states, “the dispute resolution process is for disputes between insured persons and insurers. It is not meant to serve the needs of creditors, including service providers, who want to collect their accounts”.¹³

In Wawanesa Mutual Insurance Company and D’Angelo,¹⁴ Director’s Delegate Makepeace writes, “third party assessment facilities do not have standing to commence mediation or arbitration proceedings at the Commission in their own names or in the name of an insured person.”

In Akbulut and RBC General Insurance Company, Arbitrator Kowalski found that the applicant had no standing to bring his claim because the Application for Arbitration amounted to no more than an effort by a third party service provider, AssessNet Inc., to collect payment from the insurer of an outstanding account after the matter was settled on a full and final basis.¹⁵

Even if Mr. Nagy authorized AssessNet to bring an Application for Arbitration in his name for payment of the outstanding account, section 62 of the Schedule prohibits such as assignment.

Therefore, I agree that the arbitrator reached the correct conclusion on the issue of standing given the ample evidence of AssessNet’s role in initiating and driving this dispute, and the lack of evidence that Mr. Nagy had any control or responsibility for the proceedings. This finding effectively disposes of the appeal.

In any event, the arbitrator was also correct in finding that there is no basis to proceed with any claims related to accident benefits that already settled.

The Arbitrator correctly found that the Settlement Disclosure Notice and Full and Final Release executed by Mr. Nagy on November 8, 2010 represented a full and final settlement for all expenses incurred for the goods and services in his accident benefits claim including the CAT report.

Also, the Arbitrator correctly addressed Mr. Nagy’s untenable submissions that a CAT report is not covered by any Settlement Disclosure Notice or Full and Final Release because it is not a ‘benefit’. There is no logical basis to expand the jurisprudence on catastrophic determinations not being a benefit (for purpose of time limitations) to settlements of accident benefits. He also correctly determined the issue of contractual duty of honesty and good faith in that Mr. Nagy failed to prove a misapprehension of facts surrounding the settlement.

Where a Full and Final Release has been signed and an insurer has complied with the settlement regulations, an insured has no further cause of action against its insurer except in accordance with section 9.1 of Ontario Regulation 664.¹⁶

There was no compliance with the Settlement Regulation. Mr. Nagy did not return the monies paid as a result of a settlement which is a condition precedent to accessing the dispute resolution process after accident benefits claims have settled.

In fact, Mr. Nagy admitted that he was happy with his settlement¹⁷and that he was not seeking to rescind it.¹⁸

I find no error in the Arbitrator’s decision and therefore reject this appeal.

IV. EXPENSES

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

June 9, 2017

Deborah Pressman Director’s Delegate

Date

Footnotes

1. 1Under the Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Transcripts at lines 150 and 523
3. 3Transcripts at lines 401-404
4. 4Applicant’s Preliminary Issue Document Brief, Tab 22
5. 5Ibid.
6. 6Transcripts at lines 142, 143 and 145
7. 7Ibid.
8. 8Transcripts at line 146
9. 9Transcripts at lines 38 to 39, 147, 148 and 156
10. 10Transcripts at line 151
11. 11Section 281(1) of the Insurance Act, Section 62(1) of the Schedule, and Rule 25.1 of the DRPC specifically states that it is an “insured person” who may apply to arbitration and that the assignment of the right to pursue a mediation or arbitration (including appeal or variation) are void.
12. 12Wawanesa Mutual Insurance Company and D’Angelo (FSCO P01-00010, April 23, 2003), at para 27. Also MedCentra Inc. v. Economical Mutual Insurance Company 2009 CanLII 92129 (ON SC), 98 O.R. (3d) 624 at paragraph 10.
13. 13(FSCO P01-00017, October 22, 2002)
14. 14(FSCO P01-00010A, April 23, 2003)
15. 15(FSCO A13-002858, April 17, 2015)
16. 16See also Lindsay and Allstate Insurance Company of Canada (FSCO A04-001050, March 27, 2006) and Aboufarah and Allstate Insurance Company of Canada (FSCO A02-001076, September 30, 2003).
17. 17Transcripts at line 129
18. 18Transcripts at lines 61-62