Neutral Citation: 2017 ONFSCDRS 185

FSCO A15-006347

BETWEEN:

EUGENE BOTEZATU

Applicant

and

CERTAS HOME AND AUTO INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Alan Mervin

Heard: By written submissions received from Certas on February 19, 2016, and from Mr. Botezatu on April 4, 2016 , and by telephone conference call on August 22, 2016

Appearances: Georgina Masgras for Mr. Botezatu Jonathan Schrieder for Certas Home and Auto Insurance Company

Issues:

The Applicant, Eugene Botezatu, was injured in a motor vehicle accident on July 24, 2013. He applied for and received statutory accident benefits from Certas Home and Auto Insurance Company (“Certas”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Botezatu applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. At the pre-hearing in this matter, Certas raised two preliminary issues.

The issues in this preliminary issue hearing are:

Did Mr. Botezatu fail to attend an Examination Under Oath (EUO), and if so, what are the consequences?
Is Mr. Botezatu precluded from arbitrating his claim for a non-earner benefit (NEB) because he previously elected to receive an income replacement benefit (IRBs)?

Result:

Mr. Botezatu has attended a rescheduled Examination Under Oath, (EUO) and the parties have agreed that this issue is now moot.
Mr. Botezatu is not precluded from arbitrating his claim for non earner benefits because he previously elected to receive an income replacement benefit.

BACKGROUND

The Applicant seeks a NEB at a rate of $185.00 weekly, from January 24, 2014 and ongoing. He submitted an application for accident benefits to the Insurer. The Insurer issued an initial OCF 9 Explanation of Benefits, dated August 7, 2013,² which advised that the Insurer was unable to consider eligibility to receive IRB’s as they had not yet received a completed OCF-3 Disability Certificate, and that he did not qualify to receive a NEB as he was employed on the date of the accident.

The Applicant then obtained a Disability Certificate dated August 10, 2013, from Dr. Alan Koskie³ which found him to be entitled to both IRBs and NEBs. The OCF-3 was submitted to the Insurer. According to entries on the disability certificate, it indicated that he was working at the time of the accident, and had been currently working as a construction worker, renovator, lifting 40-50 kilograms. According to the Insurer’s written submissions, the Applicant was self-employed.

The Insurer then denied the benefits by way of an OCF- 9, dated December 9, 2013.⁴

The OCF-9 denied the NEB on the basis that the Applicant was working at the time of the accident, and contained a statement that he was not eligible for IRBs because he was “not off work greater than 7 days as per Section 5 of the SABS.”

He mediated this denial on April 28, 2015, and a report of mediator was issued dated July 10, 2015, which indicated that NEBs and several medical benefits and examination costs were mediated. It does not appear from that report that IRBs were mediated.

The Applicant had previously submitted an Election of Income Replacement, Non-Earner or Caregiver Benefit form (OCF-10) which, according to the Applicant’s written submissions, was dated October 15, 2014. The date on both copies submitted by the parties was illegible.

The signed OCF 10 indicated that the Applicant elected IRB’s in the benefit election portion of the form. The signed OCF 10 was then submitted to the Insurer.

At the pre-hearing in this matter, which took place on January 26, 2016 before Arbitrator Susan Sapin, the Insurer raised the above two preliminary issues, seeking to preclude the Applicant from proceeding to arbitration on the NEB’s because he had elected to receive IRBs. The Insurer also requested that a determination be made regarding the consequences of the Applicant’s failure to attend to attend an EUO. As indicated above, as the Applicant has since attended the EUO that issue is no longer in dispute.

Is Mr. Botezatu precluded from arbitrating his claim for a non-earner benefit because he previously elected to receive an income replacement benefit?

The Law:

According to section 35 of the Schedule if an insured qualifies for more than one weekly benefit (income replacement, non-earner or caregiver), they must make an irreversible election as to which benefit to receive, which can only be changed if a person later qualifies as catastrophically impaired. Prior to August 31, 2010, under the old Schedule,⁵ an insured’s election was not final, and could be changed if there was a change in the insured’s circumstances.

Section 35 of the Schedule currently reads as follows:

Election of income replacement, non-earner or caregiver benefit

35(1) If an application indicates that the applicant may qualify for two or more of the income replacement benefit, the non-earner benefit and the caregiver benefit under Part II, the insurer shall, within 10 business days after receiving the application, give a notice to the applicant advising the applicant that he or she must elect, within 30 days after receiving the notice, the benefit he or she wishes to receive. O. Reg. 34/10, s. 35 (1).

35(2) If an applicant is determined to have sustained a catastrophic impairment as a result of an accident, the insurer shall, within 10 business days of the date of the determination, give a notice to the applicant advising the applicant that, despite any election previously made under subsection (1), he or she may elect, within 30 days after receiving the notice, to receive a caregiver benefit if the applicant would otherwise qualify for a caregiver benefit. O. Reg. 34/10, s. 35 (2).

35(3) The applicant’s election under subsection (1) is final, regardless of any change in circumstances, and can be subsequently changed only if permitted under subsection (2). O. Reg. 34/10, s. 35 (3); O. Reg. 347/13, s. 3.

It is therefore clear that once an eligible insured makes his or her election for one of the benefits that the disability certificate supports, that election cannot be changed.

Position of the Parties:

The Insurer has submitted that as the Applicant was working at the time of the accident, he is therefore not entitled to a NEB.

Alternatively, if the Applicant does qualify for a NEB, nevertheless he is bound by his initial election of IRBs. The Insurer has submitted that the initial election of a specified benefit in situations where the Applicant may be entitled to more than one of NEB, IRB, or caregiver benefit in the OCF-10 is final and cannot be changed, and has cited section 35 of the Schedule as authority for this argument.

The Insurer has submitted that the changes in the Schedule from the previous regime, or Old SABS, in which an Applicant could change his election upon a change in circumstances, to the current regime, or New SABS, in which the election is final, (except where an Applicant is found to be catastrophically impaired), shows that the legislature intended to make the decision final.

The Applicant has submitted that he never made a valid election, as the Insurer did not comply with the notice provisions of section 35 of the Schedule. That section requires the Insurer to give a notice to the Applicant within 10 business days after receiving the application, advising the Applicant that he or she must elect, within 30 days after receiving the notice, the benefit he or she wishes to receive.

The Applicant has further submitted that a review of the complete accident benefits file, which was received from the Insurer on March 21, 2016 indicates that there has never been any correspondence or communication from the Insurer in relation to the OCF-10, and that the Insurer has never provided notice to the Applicant as required by subsection 35(1) of the Schedule.

Alternatively, if it is found that the Applicant has made a valid election under section 35 of the Schedule, the Applicant argues that he is still entitled to arbitrate the initial entitlement to a NEB further to the denial contained in the OCF-9 of August 7, 2013.

Did The Applicant Make A Valid Election Under Section 35 Of The Schedule?

The written submissions by both parties contain what appears to be on its face a valid OCF 10 election form electing receipt of IRBs. What complicates this matter, is an assertion by the Applicant that the election is not valid, as the Insurer did not fulfil its obligations under section 35 with respect to a mandatory notice to be given to the Applicant within 10 days of an application showing entitlement to two or more benefits. The Applicant raised this in its written submissions after receipt of the Insurer’s submissions. The Insurer had an opportunity to reply to this submission, but chose not to submit a reply. As a result, I have nothing to rely upon save and except an assertion that the Insurer did not comply.

Before I preclude this Applicant from arbitrating his claim to a NEB, I must be satisfied that the Insurer has complied with its obligation to provide the required notice, and the explanations that should be contained therein, in order to allow the Applicant to make an informed decision with respect to the election.

The Insurer has raised this issue and is solely relying on section 35 of the Schedule and the signed OCF-10 election form, which indicates the Applicant elected to receive IRBs. Nothing in the Insurer’s written submissions or accompanying documents indicate that the Insurer complied with its notice obligations, and the Insurer has not chosen to answer the allegation contained in the Applicant’s written submissions that the mandatory notice required by subsection 35 (1) was never given.

Arbitrators have considered the importance of the notice provisions when determining if an election is valid.

In Antony v. RBC General Insurance Company,⁶ the applicant argued that the initial election was invalid because the Insurer failed to provide the information required by Section 32, which required the Insurer to promptly provide the Applicant with information on any possible elections. The Arbitrator found the information provided to the Applicant before she made her election was incomplete, and as a result, the election was invalid. While Insurers are not required to recommend an election, their role is to explain the rules well enough to allow an unsophisticated Applicant to decide which benefit is best.

In Prosser v. Progressive Casualty Insurance Company⁷ the Applicant elected to receive caregiver benefits and relied on incorrect misrepresentations made by the Insurer, to her detriment. The arbitrator concluded that the Insurer failed to provide the Applicant with any written information about her accident claim and found that as a result, the Insurer could not limit the Applicant’s claim to caregiver benefits.

Based on the materials before me, I am not satisfied that the Applicant made an informed election, and is therefore not precluded to proceed to arbitration on that basis.

The alternative argument advanced by the Insurer is that, as the Applicant was working at the time of the accident, he is ineligible to receive a NEB. Whether the Applicant was working requires a factual determination, and in my view, that is a matter that should be determined on the facts by the hearing arbitrator after hearing evidence on the issue.

I am not prepared to preclude the Applicant from proceeding to arbitration on that basis.

Mr. Botezatu is therefore not precluded from arbitrating his claim for a NEB because he previously elected to receive an income replacement benefit.

EXPENSES:

I leave the issue of expenses of this preliminary issue hearing to be determined by the hearing Arbitrator.

June 26, 2017

Alan Mervin Arbitrator

Date

Financial Services Commission of Ontario