Kamaljit Gill v. Certas Direct Insurance Company, 2017 ONFSCDRS 94

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 94

FSCO A15-006179

BETWEEN:

KAMALJIT GILL

Applicant

and

CERTAS DIRECT INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Irvin H. Sherman

Heard: By written submissions due January 23, 2017

Appearances: Ms. Salina Chagpar participated on behalf of Ms. Kamaljit Gill

Mr. Joe Bowcock participated on behalf of Certas Direct Insurance Company

Issues:

The Applicant, Ms. Kamaljit Gill, was injured in a motor vehicle accident on June 1, 2013 and sought accident benefits from Certas Direct Insurance Company (“Certas”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Gill, through her representative, 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 Preliminary Issue Hearing are:

Should the Applicant’s Application for Arbitration be dismissed?
Is either party entitled to its expenses with respect to this arbitration?

Result:

The Applicant’s Application for Arbitration is dismissed.
If the parties are unable to agree on the entitlement to, or quantum of the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

EVIDENCE AND ANALYSIS:

BACKGROUND

The Applicant applied for accident benefits from Certas on July 2, 2013. Certas responded to this application by sending an Explanation of Benefits (“EOB”) to the Applicant stating that she did not qualify for the Income Replacement Benefit (“IRB”) because she was not employed at the date of the accident. Certas requested that the Applicant submit to it a completed Disability Certificate (OCF-3) in order to determine her eligibility for the Non-Earner Benefit (“NEB”). The Applicant was then unrepresented by counsel. She subsequently retained counsel on September 8, 2014.

The Applicant applied to the FSCO for mediation on June 1, 2015 wherein she sought mediation of her entitlement to the NEB. This issue was not resolved at mediation. On August 28, 2015, the Applicant applied to arbitrate her entitlement to the NEB. The Applicant’s counsel sent a completed OCF-3, dated July 30, 2015, to Certas by letter, dated September 18, 2015.

Mr. Michael Ferrante, a licensed paralegal at the law firm retained by the Applicant, sent Certas a letter on November 11, 2015, stating that the Applicant qualified for the IRB and not the NEB because when the Applicant applied for accident benefits on July 2, 2013, she was in receipt of Employment Insurance which made her eligible to receive the IRB. Mr. Ferrante enclosed a copy of the OCF-10 indicating that the Applicant elected to receive the IRB.

The Applicant filed an Application by an Injured Person for Auto Insurance Dispute Resolution with the Licence Appeal Tribunal on October 26, 2016 wherein she disputed the denial of her entitlement to the IRB.

INSURER’S SUBMISSIONS

Certas submitted that the Applicant’s claim for the NEB has never been denied. The denial of a benefit by an Insurer is a necessary prerequisite for mediation and then arbitration. Under subsection 280(1) of the Insurance Act, an insured person may refer any issue in dispute to mediation. Practice Note 11 contained within the Dispute Resolution Practice Code (“the Code”) provides that: “Claimants may use the services of mediations when an accident benefit has been claimed from an automobile Insurer and denied.”

On July 25, 2013, Certas requested that the Applicant submit an OCF-3 in order for it to evaluate her claim for the NEB. It was submitted that this act constituted a request for information and cannot be characterized as a denial of a benefit. The Applicant’s claim to entitlement to the NEB is not properly the subject of an arbitration because the Applicant was never denied the NEB.

When the Applicant applied for accident benefits she indicated on her application that she was unemployed, was in receipt of Employment Insurance at the date of her accident, and that she was unable to return to her normal activities following the accident.

Two and one-half years later, on November 11, 2015, the Applicant sent an OCF-10 to Certas, claiming that in 2013 she correctly qualified for the IRB and not the NEB. Certas submitted that the Applicant’s election to receive the IRB was an informed choice made by the Applicant who had the benefit of counsel and accordingly was valid in law. Under subsection 35(2) of the Schedule, an Applicant cannot re-elect from an IRB to a NEB because she has not been catastrophically impaired.

Under the Schedule an insured person may apply for both the IRB and the NEB. Once the insured person elects to take one benefit, she becomes ineligible to receive the other benefit. The Applicant has clearly elected to receive the IRB. She cannot now claim entitlement to the NEB.

APPLICANT’S SUBMISSIONS

The Applicant submits that by reason of FSCO “accepting jurisdiction of her claim for accident benefits because it completed a valid mediation and allowed the Application for Arbitration made by the Applicant to proceed,” FSCO thereby accepted that the Applicant’s entitlement to the NEB was deemed to be denied. In support of this submission, the Applicant relied on subsection 280(1) of the Insurance Act, Practice Note 11 and Rule 1.3 of the Code, and the cases of Salihi & Salihi and ING Insurance Company of Canada² and Hunt and Co-Operators General Insurance Company.³

Practice Note 11 indicates that Mediation Services will accept the Application for Mediation on the basis of the Insurer’s denial of a statutory benefit.

Subsection 280(1) of the Insurance Act provides that either the insured person or the Insurer may refer to a mediator any issue in dispute in respect of the insured person’s entitlement to statutory accident benefits.

Rule 1.3 of the Code provides that a defect in form or other technical breach will not make a proceeding invalid.

In the Salihi case, supra, the Insurer did not deny the Applicants’ claim for certain benefits until 10 weeks after the date of the mediation. The Insurer sought an Order at a Preliminary Issue Hearing precluding the Applicants from proceeding to arbitration under section 50 of the Statutory Accidents Benefit Schedule - Accidents on or after November 1, 1996 (the former Schedule, now section 55 of the Schedule). Arbitrator Miller held that the applicants were not precluded from proceeding to arbitration because at the date of the mediation, the preconditions for arbitration as set out in section 50 of the former Schedule had been met. In this case, certain claims for accident benefits had been denied by the Insurer and remained at issue following the failed mediation.

In the Hunt case, supra, Arbitrator Wacyk allowed an Application for Arbitration to proceed despite the fact that specific benefits in dispute had not been claimed and denied prior to the mediation.

It was also submitted that Certas has acted in bad faith because (a) of its failure to a conduct a reasonable investigation of the information presented to it; (b) by failing to approach the claim for benefits with an open mind; (c) by failing to assess the claim fairly; (d) by failing to identify additional information that may exist which would assist it in adjusting the Applicant’s claim for accident benefits; (e) by failing to re-assess the validity of this claim as being a new claim; and (f) by failing to notify the Applicant of any information that it may reasonably require. This submission is “especially true because the Applicant was initially unrepresented by counsel and thereby had to rely on the sophistication of the Insurer.”

It was submitted that no election was made by the Applicant at the time FSCO took jurisdiction of this matter because no election was made prior thereto. Specifically, the OCF-10 was submitted by the Applicant after Certas had disqualified the Applicant from receiving IRBs. Because Certas failed to rectify its errors, the Applicant was de facto eligible to receive NEBs. The OCF-10 was submitted by the Applicant following the Applicant’s applying for mediation

and arbitration. The OCF-10 ought not to have retroactive effect because Certas refused to accept the election made by the Applicant and pay the IRBs that were requested in the election.

It was submitted that Certas failed to properly terminate the Applicant’s claim for the IRB and the NEB because it “simply said ‘no’ to either benefit”.

The Applicant’s claim ought to proceed to arbitration.

REPLY SUBMISSIONS

Certas, by way of reply, submitted that bad faith conduct and a Special Award are not at issue in this matter. In any event, Certas denies these issues that remain unproven.

There was no deemed denial of a benefit in this case before mediation. The Salihi case relied on by the Applicant is distinguishable on its facts from the within case because, in Salihi, the Arbitrator found that a required precondition to mediation had been met (namely, a denial of a benefit by the Insurer prior to the date of the mediation), thereby permitting the Application for Mediation to proceed. In this case, the Applicant failed to submit the OCF-3 and her physician’s clinical notes and records either within 104 weeks from the date of the accident or at the time of the mediation despite being requested to do so by Certas’ counsel. The OCF-3, dated July 30, 2015, was sent to Certas’ counsel on September 18, 2015, which was more than one month after the date of the Application for Arbitration.

The Ontario Superior Court in the case of Volpe v. Co-operators General Insurance Company⁴ held that the NEB is not payable prior to the submission of a completed OCF-3 which indicates that the insured person meets the statutory requirements for the payment of the benefit. The Court held that the provisions in subsection 55(1) and section 12 of the Schedule and subsection 281(2) of the Insurance Act apply procedurally where the insured person failed to notify the Insurer of the circumstances giving rise to a claim for a NEB within 104 weeks of the accident. The mediation in that case was held to be invalid and void, and the action was dismissed.

The Applicant’s counsel, at paragraph 20 of his Affidavit filed in support of her response, referred to a letter sent by the Applicant’s counsel to Certas’s counsel. The letter offered a withdrawal of the Application for Arbitration and this Preliminary Issue Hearing if Certas agreed to pay to the Applicant the arrears of the IRBs owing to the Applicant. Certas submitted that the Applicant’s entitlement to the IRB is not at issue in this Preliminary Issue Hearing. The offer to withdraw together with the Applicant’s election to receive IRBs makes it clear that the Applicant’s true intention is to receive IRBs.

It was submitted that the Application for Arbitration brought by the Applicant is frivolous because the Applicant has acknowledged that she does not want to receive the NEB. Consequently, the Application for Arbitration ought to be dismissed.

ANALYSIS

Certas asserts it has never denied the Applicant’s claim to the NEB. Following the submission of her Application for Accident Benefits, Certas sent the Applicant an EOB indicating that in order for Certas to determine the Applicant’s entitlement to the NEB, the Applicant should submit to it a completed OCF-3 as referred to in paragraph 37(1)(a) of the Schedule within 15 days after the Applicant received the EOB. Certas has not deemed the Applicant entitled to receive the NEB. It simply requested information from the Applicant should she seek entitlement to an accident benefit. It cannot be said that there has been a deemed denial of a statutory accident benefit especially since the Applicant has failed to submit the OCF-3 to the Insurer in the manner prescribed by law.

The Applicant did not file the OCF-3 until one month after she submitted the Application for Arbitration. Under section 36 of the Schedule, an Applicant shall, with respect to a claim for an IRB or a NEB, submit a completed OCF-3 with her Application for Accident Benefits. In the case of Volpe, supra, Mr. Justice Lofchik held, at paragraph 55 and 56 of his reasons for decision, that the Plaintiff (who was a claimant for accident benefits) was statutorily barred from receiving the NEB because of the provisions contained within section 36 of the Schedule. The Plaintiff was statutorily barred from mediating and litigating her claim because she failed to notify the Insurer of the circumstances giving rise to her claim for NEB under section 12 of the Schedule and because she failed to submit her Application for Accident Benefits in a timely manner.

Section 1.3 of the Code provides that a defect in form or other technical breach will not make a proceeding invalid. I agree with Arbitrator Miller who, in the Salihi case, supra, stated at page 11 of her reasons for decision that:

It is clear that the jurisdiction to proceed to mediation and arbitration is derived from the Insurance Act and the Schedule and not from the Dispute Resolution Practice Code. The purpose of the Dispute Resolution Practice Code is to guide the parties through the Commission’s dispute resolution process in a timely and orderly fashion.

The Applicant’s failure to submit to Certas a completed OCF-3 cannot be classified as a defect in form or a technical breach. It constitutes a total failure to adhere to the mandatory provisions found in section 36 of the Schedule.

Allegations of bad faith conduct and a claim for a special award are not statutory accident benefits and thus do not have to be submitted to mediation. They may be issues for an arbitrator to consider at an Arbitration Hearing. This Preliminary Issue Hearing related solely to the Applicant’s entitlement to the NEB and to no other matter.

The Applicant has filed an OCF-10 whereby she now elects to receive the IRB in lieu of the NEB. Her intention to seek the IRB is clear. It is now for the Licence Appeal Tribunal to adjudicate her entitlement to that benefit.

The cases of Salihi and Hunt are distinguishable on their facts from the facts of this case.

The Applicant is statute-barred from proceeding to arbitration with respect to her claim for the NEB. The Application for Arbitration made by the Applicant is dismissed.

EXPENSES:

If the parties are unable to agree on the entitlement to, or quantum of the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

March 27, 2017

Irvin H. Sherman

Arbitrator

Date