Marvin Contreras v. State Farm Mutual Automobile Insurance Company, 2017 ONFSCDRS 28

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

Neutral Citation: 2017 ONFSCDRS 28

FSCO A15-007496

BETWEEN:

MARVIN CONTRERAS

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Barry S. Arbus, Q.C.

Heard: In person at ADR Chambers on November 25, 2016

Appearances: Ms. Kaity Yang for Mr. Marvin Contreras

Mr. Cary Schneider for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mr. Marvin Contreras, was injured in a motor vehicle accident on July 21, 2013. He applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company (the “Insurer” or “State Farm”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation and Mr. Contreras applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The Insurer raised the following issues to be dealt with at this at this Preliminary Issue Hearing:

Is the Applicant’s claim for a Non-Earner Benefit (“NEB”) barred by virtue of an actual or statutory election, pursuant to Section 35(3) of the Schedule?
Is the Applicant’s claim for a NEB barred for failure to give notice of intention to apply for the benefit pursuant to Section 32 of the Schedule?
Is either party entitled to expenses respecting this Preliminary Issue Hearing?

Result:

The Applicant’s claim for a NEB is barred by virtue of an actual or statutory election pursuant to Section 35(3) of the Schedule.
The Applicant’s claim for a NEB is barred for failure to give notice of his intention to apply for the benefit pursuant to Section 32 of the Schedule.
No expenses were requested with respect to this Preliminary Issue Hearing. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, within 30 days of this Order, they may schedule an Expense Hearing before me according to the provisions of Rules 75 to 79 of the Dispute Resolution Practice Code.

EVIDENCE AND ANALYSIS:

Background

The Applicant was involved in a motor vehicle accident on July 21, 2013. He applied thereafter for payment of accident benefits by State Farm. As part of the Applicant’s application for benefits, a claim was made for IRBs. IRBs were paid to the Applicant until he returned to work, approximately nine months after the date of the accident. IRBs were only denied to the Applicant once he returned to work. Approximately 1½ years after he returned to work, the Applicant made a claim for NEBs.

On June 11, 2015 (approximately 23 months after the accident), the Applicant applied for Mediation respecting the disputed NEBs.

The Applicant’s Position

The Applicant takes the position that the intention of the Schedule is to limit an insured person who is not catastrophically impaired to pursuing only one of Caregiver Benefits, NEBs and IRBs if and only if an Election Form has been provided and an election has been made in accordance with Section 35 of the Schedule.

Section 5 of the Schedule sets out the qualifications for entitlement to IRBs; Section 12 sets out the qualifications for entitlement to NEBs; and Section 35(1) states that where an Applicant may qualify for two or more of IRBs, NEBs or Caregiver Benefits, the Insurer shall within 10 business days after receiving the application, give notice to the Applicant advising them that they must elect within 30 days after receiving the notice the benefit that they wish to receive.

AABS v. Dominion² stated that “because the Applicant did not elect either the IRB or NEB, because the election was not provided to her, the Applicant can apply for both.”

Toresho v. Primmum³ stated, “the Applicant is permitted to maintain her action for both IRBs, NEBs relating to the same time period, while acknowledging the Applicant could not collect both for the same time frame.”

The Applicant is pursuing NEBs for the time frame only after he ceased to qualify for IRBs. The Applicant claims that the provisions of Section 35 required him to elect within 30 business days after receiving the notice from the Insurer which states the Applicant must elect which benefit he is claiming. The Applicant’s position is since he never elected which benefit to receive, it is still open for him to pursue the NEB claim since an election was never filed.

The Applicant’s position with respect to Section 32(1) which requires an Applicant to notify the Insurer of his intention no later than seven days after circumstances arose, or as soon as practical thereafter, is that any limits on an Insured’s right to pursue a specific benefit ought to be explicit and the language should support a broad view of entitlement. The Applicant’s counsel states that the insurance contract should be construed, in the absence of ambiguities, so that the Applicant is not penalized for claiming NEBs 23 months post-accident.

The Insurer’s Position

The Insurer’s position is that the Applicant received and cashed his cheques for IRBs for nine months following the accident because he clearly qualified for IRBs. The Applicant, through counsel, submitted information in various forms in pursuit of his claim for IRBs.

The Insurer points out Section 12(3) of the Schedule, which states that the Insurer is not required to pay a NEB if the Insured has received and elected under Section 35 to receive either IRB or Caregiver Benefits.

The Insurer further submits that if it is determined that the Applicant had the right to elect between IRBs and NEBs, then under Section 32(1), the Applicant did not pursue a claim for NEBs in a timely fashion.

Finally, the Insurer claims that the Applicant’s election to receive IRBs was final and Toresho v. Primmum could be distinguished as the old Schedule did not prevent a re-election as is alleged here.

Analysis and The Law

The Insurance Act, R.S.O. 1990, c. I.8 and the Schedule spell out the procedure to be followed in claims by Insureds against insurance companies. Part 2 of the Schedule defines IRBs, NEBs, Caregiver Benefits and the criteria for each benefit.

Section 32 of the Schedule sets out the procedure for an Applicant to notify the Insurer of their intention of which benefit they seek and sets the time limits for application.

Section 34 of the Schedule specifically points out that a person’s failure to comply with the time limit does not disentitle them to a benefit if the person has a reasonable explanation.

Section 35(1) of the Schedule provides that if the Applicant qualifies for two or more of IRBs, NEBs and Caregiver Benefits, “the Insurer shall, within ten (10) business days, give the Applicant notice that the Applicant must elect, within thirty (30) days after receiving the notice, on the benefit he or she wishes to receive.”

Section 35(3) of the Schedule states that “the Applicant’s election under subsection 35(1) is final regardless of any change in circumstance” (unless the Applicant has sustained a catastrophic impairment).

Conclusion

The Applicant’s position is that until an election has formally been filed, an Applicant can pursue a claim for NEBs once their claim for IRBs has been exhausted. I do not believe that is the intention of the legislation, nor do I believe the cases quoted by the Applicant support this position. The Galdamez v. Allstate⁴ citation was one where “the claimant returned to work within four (4) days after the incident. Since there is no entitlement for IRBs for the first week after an accident, the claimant was never entitled to pursue a claim for IRBs. Accordingly the claimant was allowed to pursue a claim for Non-Earner Benefits since she did not qualify for IRBs.”

In our current case, the Applicant qualified for IRBs and, in fact, was paid for them. That clearly distinguishes the current case from Galdamez v. Allstate.

In the alternative, if I was to determine that the Applicant has the right to elect between IRBs and NEBs, I must refer specifically to Sections 32 and 35 of the Schedule.

Section 32 of the Schedule provides that no later than seven (7) days after the circumstances arose, or as soon as practicable after that day, the Insurer must provide the appropriate forms to the Applicant. The Applicant thereupon completed the IRB forms and IRBs were paid. It was only one and half years after the Applicant returned to work and the IRBs were stopped, that the Applicant then applied for NEBs. There was no explanation as to why the Applicant waited 23 months after the accident to claim NEBs.

In Garcia v. State Farm,⁵ the Arbitrator found that the Applicant could not pursue a claim for NEBs for two reasons: first, he had been employed at the time of the accident, which rendered him ineligible to claim NEBs; and, secondly, he failed, without reasonable explanation, to pursue a claim for NEBs in a timely fashion.

The Insurer has clearly been prejudiced because of the delay in the Applicant putting forward his claim for NEBs in that it did not have a timely opportunity to have a medical practitioner assess the Applicant, and it paid out almost $9,000.00 in IRBs to the Applicant.

I also agree that the Applicant effectively elected to receive IRBs, notwithstanding that a formal election was never filed, and in accordance with Section 35(3) of the Schedule, the Applicant’s election is final regardless of any change in circumstances. I do not believe that relying on a mere technicality (i.e., that the Applicant never formally filed an election form) is sufficient to keep the door open to allow the Applicant to pursue a claim for NEBs.

Accordingly, for all the reasons set out above, any claim by the Applicant for NEBs is dismissed.

EXPENSES:

No expenses were requested with respect to this Preliminary Issue Hearing. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, within 30 days of this Order, they may schedule an Expense Hearing before me according to the provisions of Rules 75 to 79 of the Dispute Resolution Practice Code.

February 3, 2017

Barry S. Arbus, Q.C.

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario