Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 4
FSCO A13-003320
BETWEEN:
SIED-MEHDI MAJIDI-DORCHE
Applicant
and
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Jessica Kowalski
Heard: June 13, 2017, in Hamilton, Ontario
Appearances: Adam Huff for Mr. Majidi-Dorche
Danielle Le Cours for State Farm Mutual Automobile Insurance Company
Issues:
The Applicant, Sied-Mehdi Majidi-Dorche, was injured in a motor vehicle accident on April 24, 2007. He applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.1 After State Farm terminated certain benefits, the parties attempted mediation. When mediation failed, Mr. Majidi-Dorche applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Preliminary Issue
Mr. Majidi-Dorche has commenced an application for, among other things, a determination that he suffered a catastrophic impairment as a result of the accident. He is also claiming non-earner benefits, as well as attendant care (AC) and housekeeping and home maintenance (HK) benefits beyond non-catastrophic limits.
Before the main arbitration hearing, State Farm raised a preliminary issue, namely whether or not Mr. Majidi-Dorche is precluded from claiming post-104 week AC and HK benefits in the event that he is found to be catastrophically impaired.
Background
After completing insurer examinations (IEs), State Farm agreed to pay to Mr. Majidi-Dorche AC and HK benefits following the accident. Eventually, after further applicant and insurer assessments, State Farm reduced the amount of AC and HK benefits, until it finally terminated AC benefits on February 29, 2008 and HK benefits on April 23, 2009.
As noted, Mr. Majidi-Dorche disputed State Farm’s termination of benefits and he applied for mediation. A FSCO mediation took place in April 2009. The mediation resolved on the basis that State Farm paid to Mr. Majidi-Dorche an amount for each of AC and HK benefits in exchange for a Release and Settlement Disclosure Notice (“SDN”).
The settlement documents were not executed until June 19, 2009.2 The delay is owed at least in part to the parties’ continued negotiation regarding what they now call the “Without Prejudice Clause”.
State Farm prepared a draft of the Release that contained the following sentence on page 3 of the SDN, under the heading “Provide any other details”:
This release pertains only to Mr. Majidi-Dorche’s Housekeeping/Home Maintenance and Attendant Care Benefits, considered to the 104 week post accident date.
By letter dated June 9, 2009, Mr. Majidi-Dorche’s lawyer responded with a request that this provision be further amended as follows, to include the Without Prejudice Clause:
This release pertains only to Mr. Majidi-Dorche’s Housekeeping/Home Maintenance and Attendant Care Benefits, considered to the 104 week post accident date, without prejudice to his right to claim for benefits post-104 weeks following the accident in the event that he is found to be catastrophically impaired. [italics mine]
State Farm agreed to add the clause and sent the settlement documents, amended to contain the Without Prejudice Clause, to Mr. Majidi-Dorche’s lawyer for signature.
Application for Determination of Catastrophic Impairment
On October 6, 2009, Mr. Majidi-Dorche submitted an application for determination of catastrophic impairment (OCF-19) to State Farm. On March 9, 2010 and again on August 17, 2010, State Farm sent an Explanation of Benefits to Mr. Majidi-Dorche denying that he suffered a catastrophic impairment as a result of the accident, per State Farm’s multidisciplinary catastrophic assessment reports.
On September 30, 2011, Mr. Majidi-Dorche filed for mediation with FSCO disputing State Farm’s determination that he was not catastrophically impaired. He also advanced claims for NEBs, as well as AC and HK benefits beyond non-catastrophic limits.
The mediation was held on March 1, 2013 and all of the disputed issues failed at mediation. Approximately two weeks later, on March 14, 2013, Mr. Majidi-Dorche commenced his application for arbitration. In addition to NEBs, Mr. Majidi-Dorche is claiming entitlement to AC benefits of $354.13 per month from April 24, 2009 to date and ongoing, as well as HK benefits of $70.00 per week from April 29, 2009 to date and ongoing.
While there is no dispute that there is no limitation argument on the question of catastrophic impairment, State Farm argues that the 2-year limitation period applies to the AC and HK benefits which were denied in 2009 and which were the subject of the Without Prejudice Clause in the 2009 settlement documents. State Farm now argues that Mr. Majidi-Dorche is barred from proceeding with his Application for Arbitration for post-104 week AC and HK benefits, raising the parties’ 2009 settlement as a defence to the claim.
Parties’ Positions
Applicant’s Position
Mr. Majidi-Dorche submits that, because of the Without Prejudice Clause, there is no bar for him to seek AC and HK benefits beyond 104 weeks after the accident. He submits that the Without Prejudice Clause is clear, objective and unequivocal and should be interpreted that way.
In the alternative, Mr. Majidi-Dorche submits that the Without Prejudice Clause renders State Farm’s previous denials (of AC and HK benefits) unclear: that, even though State Farm’s denials may have been clear, the Without Prejudice Clause subsequently created ambiguity and uncertainty as to whether or not Mr. Majidi-Dorche can claim post-104 week AC and HK benefits in the event that he is determined to be catastrophically impaired.
In the further alternative, he argues that there is no limitation period preventing him from claiming AC and HK benefits beyond 104 weeks because there was never a denial of post-104 week benefits and there has been no catastrophic determination beyond the insurer’s denial based on their multidisciplinary IEs. Finally, Mr. Majidi-Dorche relies on waiver to argue that, by agreeing to the Without Prejudice Clause, State Farm has communicated its intent not to rely on its previous denials regarding the limitation period for post-104 week benefits.
Insurer’s Position
State Farm submits that Mr. Majidi-Dorche’s claims for AC and HK benefits are barred because they are made outside the two-year limitation period governing accident benefits claims.
State Farm also submits that there was no conscious intention on its part to abandon a right, especially when it did not request or draft the final amendment to the Without Prejudice Clause and submits that, as a primary principle of contractual interpretation, any ambiguities are to be resolved against the drafter.
EVIDENCE AND ANALYSIS:
State Farm relies on the Director’s Delegate’s decision in Branchaud and Co-operators General Insurance Co.,3 in which Delegate Naylor found that the key question in determining the parameters of an arbitrator’s jurisdiction is to consider the tasks required of an arbitrator under the legislation. She concluded that the language and objectives of the Insurance Act support the proposition that an arbitrator has implicit power to apply equitable principles in the ordinary exercise of his or her statutory jurisdiction but that, while arbitrators have power to apply equitable principles, they do not have jurisdiction to order an equitable remedy.
As in Branchaud, I must determine Mr. Majidi-Dorche’s entitlement to make a claim for benefits and State Farm has raised the parties’ settlement as a defence to the claim. Also, similarly to Branchaud, Mr. Majidi-Dorche argues that the settlement does not preclude his right to further benefits because not only of the circumstances surrounding its creation but also because of what Mr. Majidi-Dorche argues is clear and plain language that should be interpreted accordingly.
Based on the materials and submissions before me, I find no reason to go behind the clear and ordinary wording of the Release. I find the Release to be clear and straightforward. It simply states that:
the AC and HK benefits were considered “only” to the “104 week post accident date”; and,
is “without prejudice” to Mr. Majidi-Dorche’s right to claim benefits beyond that date in the event of a finding that he is catastrophically impaired.
I find that, in coming to a settlement of pre-104 week benefits, the parties agreed to a clause in the Release that did not preclude a future claim of catastrophic determination and further that AC and HK benefits could be revisited in that event.
State Farm’s position that the Without Prejudice Clause should be interpreted against Mr. Majidi-Dorche relies on a finding that the clause is ambiguous. I find, however, that the clause is not ambiguous. It clearly and unambiguously states that the Release pertains to pre-104 week AC and HK benefits only. Equally clear is the statement that pre-104 AC and HK benefits were resolved without detriment to Mr. Majidi-Dorche’s right to claim beyond 104 weeks in the event of catastrophic determination. I find that a determination of catastrophic impairment is condition precedent to Mr. Majidi-Dorche’s right to claim benefits that may arise from such a determination, and that the Release did not foreclose Mr. Majidi-Dorche’s right to do so; on the contrary, the Without Prejudice Clause clearly preserved that right.
This is not a situation where State Farm had unequal bargaining power that resulted in an imbalance in negotiation. In fact, the first part of the Release – that it pertains only to AC and HK benefits that were considered to the 104-week mark –was drafted by State Farm. The second part of that paragraph – that the Release is without prejudice to Mr. Majidi-Dorche’s right to claim post-104 week benefits in the event of a catastrophic determination – merely clarifies the first part of the clause that was drafted by State Farm. The second part of the paragraph, the Without Prejudice Clause, serves only to reinforce the point made in State Farm’s original draft. The Without Prejudice Clause may have been an attempt to resolve any ambiguity, had the first part of the Release been ambiguous in the first place.
I disagree with State Farm’s submission that Mr. Majidi-Dorche is requesting that an arbitrator go behind the settlement, review the adequacy of the agreement, consider its fairness and make a binding declaration of rights based on the express and inferred intentions of the parties when the settlement was reached. The question before me is not whether there was a settlement, but whether the settlement acts as a bar to Mr. Majidi-Dorche’s future claims. I find that it does not.
I find nothing in the language of the Release, and specifically in the Without Prejudice Clause, that suggests any intention to foreclose Mr. Majidi-Dorche’s access to post-104 week benefits in the event that he is found to be catastrophically impaired. The clause clearly and unambiguously states the opposite: that the Release is without prejudice to his rights to do so.
Based on what I find to be the plain and unequivocal language of the Release, I find the parties’ arguments regarding waiver and estoppel to be moot. For the reasons set out above, I find that the June 2009 Release is clear and unambiguous, and resolved Mr. Majidi-Dorche’s AC and HK claims only to the 104-week post-accident mark.
EXPENSES:
The parties made no submissions on expenses and I therefore make no order regarding expenses.
January 5, 2018
Jessica Kowalski
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 4
FSCO A13-003320
BETWEEN:
SIED-MEHDI MAJIDI-DORCHE
Applicant
and
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
Insurer
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 Regulation 664, as amended, it is ordered that:
- Mr. Majidi-Dorche may proceed with his application for arbitration for attendant care and housekeeping and home maintenance benefits.
January 5, 2018
Jessica Kowlaski
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- The Release was signed by a representative from State Farm on June 17, 2009, and by Mr. Majidi-Dorche on June 19, 2009.
- (OIC P96-00048, May 2, 1997), at pages 7 and 8