Neutral Citation: 2017 ONFSCDRS 65 FSCO A15-007741

BETWEEN:

MAHMOOD KHAN Applicant

and

CERTAS HOME AND AUTO INSURANCE COMPANY Insurer

Before: Arbitrator Irvin H. Sherman Heard: By written submissions due December 12, 2016 Appearances: Dr. Jordan Palmer for Mr. Mahmood Khan Ms. Mouna Hanna for Certas Home and Auto Insurance Company

Issues:

The Applicant, Mr. Mahmood Khan, was injured in a motor vehicle accident on October 25, 2011. He applied for statutory accident benefits from Certas Home and Auto Insurance Company (“Certas”), payable under the Schedule,¹ which Certas refused to pay. The parties were unable to resolve their disputes through mediation, and Mr. Khan 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 Motion are:

Is Mr. Khan prohibited from proceeding to Arbitration with respect to his entitlement to a non-earner benefit on the basis that it is statute-barred?
Is Mr. Khan entitled to his expenses for this Motion?
Is Certas entitled to its expenses for this Motion?

Result:

Mr. Khan is not prohibited from proceeding to arbitration with respect to his entitlement to the non-earner benefit. His entitlement to that benefit is not barred by statute.
The issue of expenses is deferred to the Hearing Arbitrator for decision.

EVIDENCE AND ANALYSIS:

INSURER’S SUBMISSIONS

Certas submits that Mr. Khan was employed as a truck driver at the time of the accident. The Applicant recorded on the Application for Accident Benefits (OCF-1) Form, dated August 13, 2013, that he returned to work on October 27, 2011, or two days post-accident. The Applicant did not file a Disability Certificate (OCF-3) Form. The OCF-3 had been filed 20 months post-accident.

When the Applicant completed the OCF-1, he was represented by counsel Ms. Georgiana Sirbu, now known as Ms. Georgiana Masgras, and since August 2016, has been represented by Dr. Jordan Palmer.

Mr. Khan filed an OCF-3, dated August 13, 2015, that was completed by his chiropractor, Dr. Alex Rovos, who wrote that Mr. Khan was unable to perform the essential tasks of his employment, effective at the date of the accident, and “as a result of, and within 104 weeks of the accident he suffered a complete inability to carry on a normal life.”

The Insurer sent Mr. Khan an Explanation of Benefits (OCF-9) dated September 3, 2015, informing the Applicant that he did not qualify for the non-earner benefit under paragraph 12(1)(1) of the Schedule. The Applicant was informed of his right to disagree with the Insurer’s determination with respect to the non-earner benefit and his right to seek and apply for Mediation through FSCO. He was also advised that he must apply for mediation within two years of the Insurer’s refusal to pay or reduce any benefit. The OCF-9 was sent by regular mail to the Applicant’s home address. A courtesy copy was sent to his then counsel.

The Applicant applied for Mediation on June 10, 2015. The Report of Mediator was issued on August 12, 2015. The Applicant did not claim non-earner benefits in his Application for Mediation. The Report of Mediator does not refer to non-earner benefits being claimed. The Applicant then applied for Arbitration. He did not seek to add his entitlement to the non-earner benefit in his Application for Arbitration.

The Pre-Hearing discussion took place on March 30, 2016 at which time the Applicant sought to add his entitlement to the non-earner benefit as an issue on his Application for Arbitration.

The Insurer submits that under section 56 of the Schedule, Mr. Khan has two years to commence a proceeding with respect to a benefit that the Insurer refused to pay. The two-year limitation period begins when an Insurer gives the Insured a valid refusal to pay a benefit. A valid refusal must be in writing and must provide clear and unequivocal notice of the Insurer’s refusal to pay a benefit. The purpose of the notice is to ensure that the Insured has been provided with enough information to decide whether to dispute or accept the Insurer’s refusal to pay a benefit.

The Insurer submits that the limitation period with respect to the non-earner benefit expired on August 23, 2015, by which time the Applicant had not applied for Mediation. He did not provide any correspondence to the Insurer disputing his entitlement to this benefit. He did not list his entitlement to the non-earner benefit when he applied for Arbitration. He only raised his entitlement to the non-earner benefit at the Pre-Hearing discussion that occurred seven months after the limitation period had expired. The Applicant had ample opportunity to dispute the denial of his claim for the non-earner benefit, but did not do so. His entitlement to such benefit is therefore statute-barred.

APPLICANT’S SUBMISSIONS

Mr. Khan submitted that Certas did not check off one of the two boxes on the OCF-9, dated August 26, 2013, relating to an Insured’s entitlement or non-entitlement to the non-earner benefit. In the box referring to additional information, the Insurer informed the Applicant with respect to the non-earner benefit: “As you were employed on the date of the accident, you do not qualify for this benefit.”

In an Affidavit, sworn on November 29, 2016, the Applicant deposed that the OCF-9, dated August 23, 2013, did not form part of his counsel’s file relating to his claim for accident benefits. He did not remember receiving the OCF-9, he has trouble reading English, and he forwarded all correspondence relating to his claim for accident benefits to his former counsel, Ms. Masgras.

Ms. Masgras, in an Affidavit sworn November 29, 2016, deposed that during the time that she represented Mr. Khan, the Insurer’s counsel never discussed the limitation period relating to the non-earner benefit with her. The Insurer’s counsel consented to adding the issue of the non-earner benefit to the Arbitration.

Ms. Catherine Raver is a paralegal in the law office of Ms. Masgras, who had carriage of the Applicant’s file. In her Affidavit, dated November 30, 2016, Ms. Raver deposed that her office did not receive the OCF-9, dated August 26, 2013, and that it was the Applicant’s intention to substitute the non-earner benefit for the income replacement benefit that the Applicant claimed, mediated and for which he sought Arbitration, and which was claimed in a timely manner.

In the OCF-9, dated September 3, 2015, that was issued by the Insurer following its receipt of the OCF-3, the Insurer checked off the “Non Eligible” box with respect to the Applicant’s entitlement to the non-earner benefit. This form does not refer to the OCF-9 issued on August 26, 2013 and refers to completely different issues with respect to the Applicant’s entitlement to the non-earner benefit.

The Applicant submits that the Insurer bears the burden of establishing (a) that the OCF-9 was written in clear and unequivocal terms and of proving delivery of this form and (b) that this form was delivered to the Applicant, which it did not conclusively establish.

The Applicant submits that the OCF-9, dated August 26, 2013 was not written in clear and unequivocal language because the wording is not “jurisprudentially sufficient” and because the Insurer did not check off the box that indicated non-entitlement to the non-earner benefit. The Insurer informed Mr. Khan in the OCF-9: “… as you were employed at the date of the accident you do not qualify for this benefit.” Mr. Khan referred to the recent case of M.R. and Aviva Canada Inc.,² where Adjudicator J.R. Richards of the Licence Appeal Tribunal held at paragraph 27 of the reasons for decision: “Advising someone that you do not qualify for a benefit as there is ‘no coverage’ is not the same as refusing to pay a benefit that has been claimed.”

The Applicant acknowledged that the Insurer checked off the appropriate box in the OCF-9 issued on September 3, 2015 notwithstanding the Insurer’s earlier denial of the non-earner benefit which would thereby obviate the need to check off the “Non-Eligible” box in this form.

It was submitted that an Insured’s status as an employed person does not mean that the Insured is ineligible for the non-earner benefit.³ The requirement that an Insurer provide legally sufficient reasons when denying an Insured a benefit must be strictly construed such that an Insurer cannot provide reasons that are demonstrably incorrect and then rely on the doctrine of caveat emptor.⁴

Because the Insurer failed to provide clear and unequivocal reasons by reason of its failure to check off the Eligible-Non Eligible box with respect to the non-earner benefit and because the Applicant did not receive the OCF-9 dated August 26, 2013, the limitation period does not apply and this Motion ought to be dismissed.

REPLY SUBMISSIONS

In reply, the Insurer submits that the OCF-9, dated August 26, 2013, was sent by the Insurer to the Applicant by regular mail and to his counsel by fax. The letter sent to the Applicant by the Insurer was never returned to the Insurer as undelivered. The fax transmission was verified by the fax confirmation sheet received by the Insurer. The OCF-9 was included in the CD of the Applicant’s accident benefit file that was sent by the Insurer to his former counsel, Ms. Masgras.

The Insurer repeats that the OCF-9 forms sent to the Applicant were clear and unequivocal. The fact that the Eligible-Non Eligible box was not checked off was a procedural error of no significant consequence. The facts of this case are distinguishable from the Kehoe and Allstate Insurance Company of Canada⁵ case relied on by the Applicant’s Counsel. The unchecked box in the Kehoe case was accompanied by “a total absence of reasons”.

In Turner and State Farm Mutual Automobile Insurance Company,⁶ the Ontario Court of Appeal held that reasons need not be legally correct in order for the notice to be clear and unequivocal. The purpose of the reasons is to give the Insured the opportunity to decide whether to challenge the refusal. In this case, the OCF-9 was written in a manner such that an unsophisticated person could understand why the benefit in question was denied.

ANALYSIS

Mr. Khan filed the Application for Accident Benefits (OCF-1) on August 13, 2013. Part 9 of that form refers to Income Replacement Determination under which Mr. Khan recorded that he had been employed as a driver from 2003 to date. He did not claim entitlement to an employment-related benefit, which reasonably explains why Certas did not check off the box referring to Eligibility or Non-Eligibility for the income replacement or non-earner benefit. In a statutory declaration, dated September 31, 2013 (sic),⁷ Mr. Khan deposed that while he had returned to his employment two days following the accident, he had not returned to his normal activities of daily living, indicating that he was not as active as he was before the accident. He did not then file any Treatment or Assessment Plans (OCF-18s) or any Treatment Confirmations (OCF-23s).

I find that Mr. Khan did not apply for the non-earner benefit when he submitted the OCF-1 in August 2013. Certas cannot deny a benefit for which an Applicant did not apply. It is thus not necessary to consider the sufficiency of the reasons relating to the denial of a benefit, whether Mr. Khan or his counsel received the OCF-9, dated August 26, 2013, or the legal significance of Mr. Khan’s limited fluency in the English language.

Mr. Khan applied to mediate his entitlement to two medical benefits on June 10, 2015. The Report of Mediator, dated August 12, 2015, indicated that his entitlement to one of the medical benefits was settled at the Mediation.

On August 3, 2015, Dr. Alex Rovos, a chiropractor, completed a Disability Certificate (OCF-3) form in which he indicated that Mr. Khan suffers from a complete inability to carry on a normal life, was unable to perform the essential duties of his employment and could not return to modified duties or hours of work.

Mr. Khan sought Mediation with respect to his entitlement to the income replacement benefit in an Application for Mediation, dated October 23, 2015. The Report of Mediator, dated March 7, 2016, indicated that Mr. Khan’s entitlement to an income replacement benefit was an issue no longer in dispute. The issues that remained in dispute were stated as being Mr. Khan’s entitlement to a non-earner benefit and four cost of examinations.

Mr. Khan applied for Arbitration on October 23, 2015 in which the only issue was his entitlement to one medical benefit. Mr. Khan’s counsel by letter, dated October 26, 2015, sought to add four costs of examinations as issues to his Application for Arbitration.

The Pre-Hearing discussion was held on March 30, 2016 before Arbitrator Drory, whose letter revealed that Mr. Khan’s entitlement to one medical benefit, three costs of examinations and the non-earner benefit were at issue at the Arbitration. Arbitrator Drory wrote that Certas’ counsel was bringing a Motion wherein it submitted that Mr. Khan’s entitlement to the non-earner benefit was “time barred”. He then set dates for the parties to file their submissions on the Motion.

The question of Mr. Khan’s entitlement to an employment-related benefit arose for the first time when Mr. Khan raised the issue of an income replacement benefit in his Application for Mediation, dated October 23, 2015. The limitation period under section 51(1) of the Schedule is two years from the date the Insurer refused to pay a benefit which, in this case, is two years from the date of the OCF-9, which is dated September 3, 2015. The Application for Mediation was filed in a timely manner on October 23, 2015.

The explanation for the denial of benefits found in the OCF-9, dated September 3, 2015, is not clear or convincing. Certas referred to the fact that Mr. Khan had never previously filed a OCF-3 form and that he did not qualify for the non-earner benefit under paragraphs 12(1)(1) of the Schedule. Mr. Khan never applied for the non-earner benefit in 2013, when Certas issued its first OCF-9 on August 26, 2013. An Insurer cannot refuse to approve that for which an Insured has never applied.

Mr. Khan is not prohibited from proceeding to Arbitration with respect to his entitlement to the non-earner benefit. His entitlement to that benefit is not barred by statute.

EXPENSES:

The issue of expenses is deferred to the Hearing Arbitrator for decision.

February 27, 2017

Irvin H. Sherman Arbitrator

Date

ARBITRATION ORDER

Under section 282 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 Ontario Regulation 664, as amended, it is ordered that:

Mr. Khan is not prohibited from proceeding to Arbitration with respect to his entitlement to the non-earner benefit. His entitlement to that benefit is not barred by statute.
The issue of expenses is deferred to the Hearing Arbitrator for decision.