Jennifer Raffa v. Personal Insurance Company of Canada, 2017 ONFSCDRS 60

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 60

FSCO A15-000637

BETWEEN:

JENNIFER RAFFA

Applicant

and

PERSONAL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Arbitrator Louise Barrington

Heard:

In person at ADR Chambers on February 2, 2017

Appearances:

Mr. Andrew Kerr for Ms. Jennifer Raffa

Ms. Shawna Van Doorslaer for Personal Insurance Company of Canada

Issues:

The Applicant, Ms. Jennifer Raffa, was injured in a motor vehicle accident on June 12, 2012 and sought accident benefits from Personal Insurance Company of Canada (“PICC”), payable under the Schedule.¹ The parties were unable to resolve their disputes through Mediation, and Ms. Raffa, through her representative, 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 has applied for an order that the Applicant’s claim for Non-Earner Benefits is statute-barred on the basis that she failed to apply for Arbitration within the timeframe stipulated by section 281.1(2) of the Insurance Act and section 56(2) of the Schedule.

The issues to be determined in this Preliminary Issue Hearing are:

Is the Applicant’s claim for Non-Earner Benefits statute-barred?
Is either party entitled to its expenses of the Preliminary Issue Hearing?

Result:

The Applicant’s claim is not statute-barred and may proceed.
The issue of expenses of this Preliminary Issue Hearing is deferred to the Hearing Arbitrator.

EVIDENCE AND ANALYSIS:

PRELIMINARY OBJECTION BY COUNSEL FOR THE APPLICANT

At the opening of the Preliminary Issue Hearing, counsel for the Applicant objected to my hearing the preliminary issue, on the basis that I had already made certain procedural decisions regarding the admissibility of his written submissions which were delivered after two missed deadlines. He also cited strong language by the Insurer in requesting that his submissions should not be admitted, and my comment that these were “persuasive and understandable”. He argued that a reasonable person in his position would fear that his submissions would not be taken with confidence. Counsel for the Insurer opposed the preliminary issue on the basis that our communications did not give rise to any reasonable apprehension of bias, and that in fact, my decision to allow the Applicant’s late filing had given the Applicant’s counsel the advantage of reviewing the Insurer’s arguments before filing his own. I declined to recuse myself, confident that there could be no reasonable apprehension of bias, and that I would be evaluating the facts and merits of the application, not judging the counsel presenting them.

CHRONOLOGY

The facts underlying this preliminary issue are uncontested. Because of the importance of the sequence and dates to this preliminary issue, I set them out below:

June 12, 2012: The Applicant suffered injuries in a motor vehicle accident.
July 10, 2012: Kahler Law, her counsel at the time, submitted an OCF-1 Application for Accident Benefits signed by Ms. Raffa on July 3, 2012 to initiate her accident benefits claim.
July 14, 2012: PICC received the OCF-1 and on the same day, issued an OCF-9 Explanation of Benefits (“the first OCF-9”) to Ms. Raffa.
July 16, 2012: Johnson Health Centre faxed an OCF-3 Disability Certificate, dated July 15, 2012 (“the first Disability Certificate”), to the Insurer.
July 19, 2012: PICC issued an OCF-9 Explanation of Benefits (“the second OCF-9”) to Ms. Raffa.
August 16, 2012: Kahler Law requested from PICC a copy of the first OCF-3.
August 20, 2012: PICC faxed a copy of the first OCF-3 to Kahler Law.
November 23, 2012: PICC issued an OCF-9 Explanation of Benefits (“the third OCF-9”) to Ms. Raffa.
December 27, 2012: Johnson Health Centre faxed a second OCF-3 Disability Certificate, dated July 15, 2012 (“the second Disability Certificate”), to PICC.
January 26, 2012: PICC issued an OCF-9 Explanation of Benefits (“the fourth OCF-9”) to Ms. Raffa.
July 18, 2012: Ms. Raffa, through a paralegal with Kahler Law, applied to FSCO for Mediation.
August 26, 2014: FSCO issued the Mediator’s Report to the Parties.
January 26, 2015: The paralegal from Kahler Law signed the Form C, Application for Arbitration, on behalf of Ms. Raffa. FSCO’s date stamp indicates “RECEIVED Jan 03 2015”, which was presumably an error as this date pre-dates the date the Form C was signed.
January 30, 2015: FSCO registered the Application for Arbitration, which PICC submits is statute-barred.

LAW

Subsection 281(1) of the Insurance Act limits an Insured’s right to proceed to Arbitration: “A mediation proceeding, evaluation…or a court proceeding or arbitration under section 281 shall be commenced within two years after the Insurer’s refusal to pay the benefit claimed.”

Subsection 281(5) continues: “A step authorized by subsection (1) must be taken within two years after the insurer’s refusal to pay the benefit claimed or within such longer period as may be provided by the Statutory Accident Benefits Schedule.”

Section 51 of the Schedule also provides that proceedings must be commenced within two years after the Insurer’s refusal to pay the amount claimed.

The reasons for having a specific limitation date, as set out by the Supreme Court of Canada,² are certainty, avoiding stale evidence, and to ensure claims are brought in a timely fashion. On the other hand, the over-arching purpose of the Schedule is to compensate injured parties who need care and treatment in a timely and efficient fashion.

The case law is clear that for the limitation period to start to run, there must be a clear and unequivocal denial of a benefit by the Insurer which acts as the “triggering event”,³ and an Insured who wants to pursue a claim must initiate an action within two years of that denial. An Insurer wishing to rely on the expiry of a limitation period must have provided a clear and unequivocal denial of the benefit and must not be estopped from relying on the expiry of the limitation period.⁴

ARGUMENT

PICC relies on the second OCF-9 as the “triggering event”. PICC’s claims advisor, in the Disability section, had marked Box B – “not eligible/stoppage of benefit”, explaining, “OCF 3 received on 2012-07-17 dated 2012-07-15 indicates that you do not suffer from a complete inability to carry on your normal life and do not meet the test of disability for the above benefit”.

PICC argues that Ms. Raffa’s entitlement to Non-Earner Benefits was clearly and unequivocally denied on July 19, 2012 in the second OCF-9, and the two-year period provided by section 281.1(1) of the Insurance Act began to run on that date. According to PICC’s counsel, “…the language used is straightforward and not ambiguous in any way and does not suggest that entitlement was up for discussion.” The commencement of the Mediation having extended the time to 90 days after the Mediator’s Report in accordance with section 281.2 of the Insurance Act and section 56(2) of the Schedule, the limitation period thus would have expired on November 23, 2014. Thus, according to the Insurer, the Application for Arbitration, filed on January 30, 2015, is statute-barred and cannot proceed.

The Applicant disagrees, arguing that in the circumstances, despite the apparently clear wording, this second OCF-9 does not constitute a clear and unequivocal denial. Counsel for the Applicant sets out the circumstances which he maintains are crucial in assessing the value of the OCF-9 of July 19, 2012 on which the Insurer relies.

First, the “denial” must be considered in the context of the rules regarding the benefit claimed. A Non-Earner Benefit does not become payable until at least 26 weeks after an accident, where there is a complete inability to carry on a normal life. The entitlement to Non-Earner Benefits therefore cannot be assessed until 26 weeks post-accident—a claim cannot crystallize until 26 weeks after the accident, that is, on December 26, 2012. The second OCF-9 was issued only three weeks post-accident, so PICC was not in a position to issue a denial of a claim before Ms. Raffa even had the right to assert it. Thus, the second OCF-9 denial, despite the wording on its face, could not be interpreted out of context, and being inoperative because it was premature, could not trigger the running of the limitation period.

The Insurer cited the cases of Saini and Allstate Insurance Company of Canada⁵ and Katanic v. State Farm Mutual Automobile Insurance Company.⁶ In both cases, a denial, even premature, where the Applicant had counsel who should have known it was premature, was held to start the limitation period running. The fact that the claim was not yet crystallized is not in itself sufficient to prevent the statute from running.

The second branch of the Applicant’s argument concerns other documents, stating that their cumulative effect was to render the July 19, 2012 OCF-9 “denial” ambiguous, so that the Insurer could not rely upon it as a trigger event to start the statute running.

PICC, just a few days prior, on Saturday July 14, 2012, had issued the first OCF-9.⁷ In that document, PICC’s claims advisor had checked off Box B -- “not eligible / stoppage of benefit,” adding, “Non-Earner Benefit. You may be eligible for a Non-Earner benefit. To qualify, you must suffer a complete inability to carry on a normal life 26 weeks after the onset of disability. Please submit medical documentation at that time.” (emphasis added)

The Applicant’s counsel pointed out that the second OCF-9, just five days later, made no reference to the first. The Applicant argues that a reasonable person, looking at these two OCF-9 forms, would form the impression that even if she was ineligible today, that might change 26 weeks after the accident, and that she should provide medical documentation once the 26 weeks had run. Thus, the denial was not clear and unequivocal.

Counsel for the Applicant maintains that this ambiguity was magnified on November 23, 2012, a month before the 26-week period would be completed, when the PICC claims advisor spontaneously issued a third OCF-9⁸ to Ms. Raffa. Once again, the Disability Section had Box B checked: “Not Eligible / Stoppage of Benefit”, with the notation below: “Non-Earner Benefit. To determine if you are eligible for Non-Earner Benefits, we require a completed Disability Certificate (OCF-3) in accordance with Section 36 of the SABS.” (emphasis added).

In response to this third OCF-9, Ms. Raffa’s legal representative provided a new OCF-3 from Dr. Johnston, dated December 27, 2012.

On January 26, 2013, PIC’s claims advisor issued the fourth OCF-9, again with Box B checked, and with the notation, “Non-Earner Benefit. You do not suffer a complete inability to carry on a normal life as per OCF 3 dated Dec 27, 2012 which was requested under section 36 of SABS. You are not entitled to Non-Earner Benefit and Non-Earner Benefit is not payable.”⁹

Ms. Raffa argues the operative OCF-9 was the fourth, dated January 26, 2013, so that the statute of limitations began to run not on July 19, 2012, but on the date Ms. Raffa was deemed to have received the fourth OCF-9 by ordinary mail, that is February 1, 2013. (The parties agree that without other evidence as to delivery and receipt, the statutory 5-day postal rule applies.¹⁰)

I note that nowhere in the second OCF-9 was there any reference to the first, either to confirm that the Applicant should still send in medical documentation in the future, or on the contrary, to explain that this denial was final and absolute. That in itself might cause a reasonable person to believe that the door was still open. Then came the spontaneous request initiated by the Insurer in November, shortly before the 26-week mark. PIC’s counsel referred to the case of Leduc-Moreau and Echelon General Insurance Company,¹¹ where Arbitrator Sapin found that an Insurer’s request for further information regarding Mr. Leduc’s pre-accident work history did not render its denial equivocal.¹²

The Applicant cites a decision of Arbitrator Murray, Garmider and Co-Operators General Insurance Company.¹³ She found that “Co-Operators, by the words it used in its August 3, 2010 letter, made a representation to Mr. Garmider which would induce a reasonable person to believe that it was reconsidering its position and was not relying on its April 14, 2010 refusal….Co-Operators…took the active step of initiating the review of Mr. Garmider’s entitlement.” Arbitrator Murray went on to note that it was not the Applicant who had requested a review, nor were there ongoing negotiations, as in the Zeppieri and Royal Insurance Company of Canada¹⁴ case. She said, “I find that Co-Operators misled Mr. Garmider regarding the status of his claim… [inducing] a false sense of security about its previous denial…”

If there had been a clear and definitive denial in the present case in July, why was the PICC claims advisor asking in November for new medical evidence? Counsel for the Insurer suggested that the November OCF-9 was simply the Insurer continuing to review and adjust the file in good faith. But Applicant’s counsel counters that the third OCF-9 was not in response to a request from the Applicant for reconsideration, nor were there any negotiations in progress. There was therefore no reason to review and adjust, nor for the third OCF-9, unless it was to “determine if you are eligible for Non-Earner Benefits…” as it said on its face. Thus, says the Applicant, there was a reasonable doubt in the Applicant’s mind as to whether the question was closed. In response, she filed the second Disability Certificate which led to the fourth and final OCF-9, no longer requesting information but denying the benefit.

FINDINGS AND CONCLUSION

I find that the first two inconsistent OCF-9 forms, with no comment or explanation, were sufficient to create at least some doubt in the mind of a reasonable person. Following established case law, this doubt alone would not be sufficient to be “reasonable”, so as to defeat the running of the limitation statute. However, the addition of the spontaneous “reminder” in November, in combination with those two inconsistent and unexplained forms, followed by the fourth OCF-9 on January 26, 2013, further muddied the waters. There had been no negotiations in progress. The third OCF-9 was not prompted by a request for reconsideration by the Applicant. A logical conclusion for the Applicant to form was that the Insurer would be re-examining the claim at the time it crystallized, that is, 26 weeks post-accident.

Irrespective of the Insurer’s intent, the Applicant’s conduct in submitting the new OCF-3 as requested in November by PICC indicates that she did not believe the Insurer was relying on its denial in the second OCF-9. The PICC claims advisor’s conduct had created an impression which was at best equivocal.

Considered together, the premature denial, the contradictory OCF-9 forms, and the spontaneous request for new information four months later, form a constellation of which the cumulative effect was to create reasonable doubt. The second OCF-9, taken in this context, cannot be said to be unequivocal or clear. Thus, the Insurer is estopped from relying on the second OCF-9 to trigger the running of the two-year time period.

Conversely, I find that the fourth OCF-9, referring to the most recent medical report filed by the Applicant, was indeed a clear and unequivocal denial. Thus, the statute of limitations began to run on February 1, 2013, the date when the Applicant is deemed to have received it, by ordinary mail. Consequently, the Application for Arbitration, dated January 30, 2015, was not statute-barred and may proceed.

I commend counsel for both parties on their excellent arguments and presentations at the Hearing of this preliminary issue.

EXPENSES:

The issue of expenses of this Preliminary Issue Hearing is deferred to the Hearing Arbitrator.

February 21, 2017

Louise Barrington Arbitrator

Date