Allstate Insurance Company of Canada v. Abouzinni, 2019 ONFSCDRS 17

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2019 ONFSCDRS 17

Appeal P17-00072A and P18-00040A

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALLSTATE INSURANCE COMPANY OF CANADA

Appellant

and

KIFAH ABOUZINNI

Respondent

BEFORE:

Edward Lee

REPRESENTATIVES:

Eric Grossman and Sharla Bandoquillo for Allstate Insurance Company of Canada

Robert Van Praet for Mrs. Abouzinni

HEARING DATE:

January 22, 2019

APPEAL ORDER

Under section 283 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, R.R.O. 1990, as amended, it is ordered that:

1. The appeal is dismissed. The order of the Arbitrator is confirmed.

2. If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

April 30, 2019

Edward Lee Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This matter involves the SABS–2010.¹

Allstate Insurance Company (“the Appellant”) appeals a decision of Arbitrator Drury (“the Arbitrator”) wherein the Arbitrator determined that a denial of Kifah Abouzinni’s (“the Respondent”) caregiver benefit (“CGB”) was invalid, and she was thus entitled to elect either a caregiver benefit, a non-earner benefit (“NEB”), or an income replacement benefit (“IRB”).

For reasons that follow, I am dismissing the appeal.

II. BACKGROUND

Mrs. Kifah Abouzinni was injured in a motor vehicle accident on October 8, 2008. She sought accident benefits from Allstate Insurance Company, payable under the Schedule.² The parties were unable to resolve their disputes through mediation, and Mrs. Abouzinni, 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.

At the arbitration hearing, the main issue was whether the OCF-1 (application for accident benefits form) submitted by the Respondent constituted the application form for all weekly benefits (thereby permitting the Appellant to deny all her possible weekly benefits), or whether the Appellant had been required to allow the Respondent to first elect the benefit she wished to claim before that benefit could be denied.

The Arbitrator’s decision hinged on his interpretation of section 36 of the SABS, which read as follows:

Election of Income Replacement, Non-earner or Caregiver Benefit

36(1) Only one of the following benefits may be paid to a person in respect of a period of time:

1. An income replacement benefit.

2. A non-earner benefit.

3. A caregiver benefit. O. Reg. 403/96, s. 36 (1).

36(2) If a person’s application indicates that he or she may qualify for more than one of the benefits referred to in subsection (1), the insurer shall notify the person that he or she must elect within 30 days after receiving the notice which benefit he or she wishes to receive. O. Reg. 403/96, s. 36 (2).

36(3) The insurer shall deliver the notice under subsection (2) within 10 business days after receiving the person’s application. O. Reg. 403/96, s. 36 (3); O. Reg. 546/05, s. 10. [Italics mine]

According to the Arbitrator, section 36 was the only meaningful line of argument in resolving this case.³ He held section 36 entitled the Respondent to an opportunity to elect which benefit she wished to claim. He also determined that the Respondent, through no fault of her own, had been denied an opportunity to make this election because the notice required under section 36(3) had never been delivered to her.

The Arbitrator then considered the two apparently contradictory decisions of Director’s Delegate Evans in Grewal⁴ and Cejvan⁵, and various Court of Appeal and Superior Court decisions presented by the parties. He distinguished the Court decisions and found them inapplicable to the facts of his case.⁶ He found the Delegate’s decision in Grewal⁷ to have been the most persuasive, and held that because the Respondent never made an election, the denial of her weekly benefits could not be held against her. Further, the corresponding limitation period had never commenced, and she could still elect the benefit she wished to claim at this time.⁸

This is the issue under appeal.

III. ANALYSIS

A. Did the Arbitrator err in law by applying the Grewal decision, and in not applying the more current case law arising from Court decisions in Sietzema, Katanic, Sagan, Straus et al and others such as Cejvan, which hold that the OCF-1 is the application for all weekly benefits?

The Appellant now argues the Arbitrator erred in applying Grewal and in failing to recognize the new legal precedents of Cejvan, Sietzema, Katanic, Sagan, and Straus et al; erred in failing to recognize the OCF-1 as the sole basis to approve or deny a claim; or erred in failing to recognize the validity of a denial issued before a claim.

Before examining the Arbitrator’s application of Grewal, I will first consider whether the Arbitrator erred in failing to recognize and apply Cejvan, Sietzema,⁹ Katanic,¹⁰ Sagan,¹¹ and Straus et al.

a. The Decisions of Sietzema, Katanic, Sagan and Cejvan

This argument was raised before the Arbitrator and he dealt with them in the “Analysis” portion of his decision.¹² He examined the jurisprudence cited, and held the cases submitted by the Appellant were not determinative of the issue in his case.¹³ He recognized the more recent case law in Cejvan, Sietzema, Katanic, Sagan, and Straus et al, and understood the binding nature of the decisions of the Court of Appeal and the Director’s Delegates. Nonetheless, he concluded those cases did not apply to his facts.

Instead, the Arbitrator held section 36 was the operative provision in this case:

The text of s. 36(2) is clear that where a person indicates that he or she may qualify for more than one of the weekly benefits, the insurer must notify the person that he or she must elect which benefit he or she wishes to receive, and the “notice” in s. 36(3) must be delivered after receiving the person’s application. If the “application” is presumed to be the OCF-1, then it must be the case that the “notice” contemplated in s. 36(3) is distinct from the OCF-1 itself—otherwise it would not be required as a separate step following the application.¹⁴ [Italics mine]

I find no error of law in the Arbitrator’s analysis of these cases. In none of these cases did the application form submitted suggest the applicant might have qualified for more than one weekly benefit.

In Sietzema, the insured submitted an OCF-1 which indicated she was employed at the time of her accident and gave details of her employment and income. She also provided a disability certificate which said she was unable to perform essential tasks of her employment. Further, the same disability certificate indicated a “no” for the non-earner benefit. Thus, neither the OCF-1 application for accident benefits, nor the disability certificate suggested the insured might qualify for more than one weekly benefit, and section 36(2) of the SABS was never triggered. The insurer could validly deny all possible weekly benefits based on the information in the OCF-1.

In Katanic, the insured submitted an OCF-1 which indicated he had been employed at the time of the accident. There is no suggestion in the decision that the insurer had any information that the insured might have qualified for any weekly benefit other than the IRB, and accordingly, the insurer sent the insured a denial of the non-earner benefit. Almost three-and-a half-years after this denial, the insured filed for mediation on the NEB denial, taking the position that the insurer’s denial was legally wrong,¹⁵ and that he had never been given the option to elect which benefit he wished to claim.

The Court refused the appeal and applied the decision in Turner,¹⁶ which held that Section 24(8) of the SABS obliges the insurer to give the insured the reasons for the refusal. It does not provide that the reasons must be “legally correct.”

Nonetheless, in Katanic, as in Sietzema, the election requirement of section 36(2) was never triggered. Nothing in the OCF-1 or supporting information suggested the insured might qualify for “more than one benefit”. Once again, Katanic is distinguishable from the instant case.

In Sagan, the insured claimed the NEB on his application form (OCF-1), but did not include a completed disability certificate with his application. The insurer denied the NEB based on the OCF-1, and the Court held the following:

A plain reading of section 35(2) provides that the disability certificate is to be filed with the application for benefits. It is not the application. In addition, section 35(6) provides for claims to be considered in cases where there is no disability certificate filed at all. [Emphasis mine]

This case stands for the proposition that the OCF-1 is the application for accident benefits, but it is also another case where section 36(2) was never engaged. The Court focused solely on the issue of whether a disability certificate (OCF-3) had to accompany the OCF-1 before the benefit claimed could be denied. Sagan, too, is thus entirely distinguishable from the instant case, although it is noteworthy that unlike the disability certificate situation, the SABS contain no corresponding provision that specifically allows a claim to be considered in the absence of an election form, when such a form has been requested.

In Cejvan (decided in October 2014), the insured was recently retired at the time of her accident, but might still have been eligible for the IRB, because an insured may qualify for the IRB if they had worked twenty-six of the previous fifty-two weeks before the accident.

Nevertheless, the insured did not provide this information on her OCF-1.

In Part 5 of the OCF-1 which dealt with employment status, she ticked the box marked “Retired” under the “Not Employed” heading, but filled in nothing in Part 8, which deals with Income Replacement determination. Later she filled in a second OCF-1. In the second form, she marked “retired” under Part 5 of the application and crossed out Part 8. A disability certificate marked “N/A, retired” for IRBs, and “No” for non-earner benefits was also provided.

The insurer then sent the insured an Explanation of Benefits form (EOB) refusing both NEBs and IRBs. Director’s Delegate Evans applied the decisions in Sietzema and Katanic. He held the following:

Accordingly, where multiple types of weekly benefit claims are denied based on information in an OCF-1, those denials will not be premature and will be sufficient to start the limitation period running. There are no separate OCF-1 forms for the different possible weekly benefits, nor are there any check boxes on the form to indicate that one is applying for any particular benefit. An OCF-1 therefore constitutes a claim for all possible weekly benefits, whether IRBs or NEBs. [underlining mine]

Nonetheless, once again, Cejvan was not a case where the section 36(2) election requirement was triggered. There was no obligation on the insurer to send the insured an election form or information in regard to the possible elections available. In fact, the information provided in the two OCF-1’s and the disability certificate did not suggest the insured might qualify for more than one weekly benefit. Rather, it suggested the opposite conclusion: that the insured could only qualify for the NEB.

Therefore, I find no error of law in the Arbitrator’s determination that none of the cases cited by the Appellant were applicable to his facts. Sietzema, Katanic, Sagan, and Cejvan all involved situations where the applicants provided no information on their OCF-1’s that they might qualify for more than one weekly benefit. There was no need to engage section 36(2) and the provisions regarding an election.

b. The Straus et al Decision

The only case presented by the Appellant where the section 36(2) election provision was triggered is the Straus et al decision. That case dealt with six different applicants and the specific claimant whose case was highlighted by the Appellant was that of Mrs. Dexter.

After Mrs. Dexter filed an application for accident benefits, the insurer informed her that although she was not entitled to the IRB, she was eligible to claim the NEB and the CGB. The insurer provided her with information regarding those benefits, informed her she must make an election between the two, and provided her with a blank election form.

Mrs. Dexter completed the election form, choosing the CGB. She was then paid the CGB for approximately six months, until she was deemed able to perform her pre-accident caregiver tasks after an in-home assessment. The termination of the CGB was communicated in an Explanation of Benefits which also stated that she was “not eligible” for the IRB and NEB. Several months after the refusal, Dexter prepared an application for mediation wherein she disputed the denial of IRB. Seven years after that, Dexter sent a letter to the insurer stating that her letter should be considered an application for the NEB.

The Court noted it was absolutely clear that the EOB sent from the insurer “stemmed from her election of Caregiver Benefits over Non-Earner Benefits.”¹⁷ The court also noted Dexter had been “… provided with a very detailed description of both NEB and Caregiver Benefits. She was asked to elect between Caregiver and Non-Earner benefits. She was advised that once she made her election, she would not be able to change it. Dexter elected to receive, and did receive $3,110.00 in Caregiver Benefits. As a result of that election, Aviva subsequently stated Dexter was ineligible for Non-Earner benefits.”¹⁸ [Emphasis mine]

The Court then considered how Dexter’s election affected the limitation period:

[89] Section 36 of the Statutory Accident Benefits Schedule requires insured persons to elect between Income Replacement Benefits, Caregiver Benefits and Non-Earner Benefits. A re-election of benefits can only occur in narrow circumstances. The factors include the time that has passed since the initial election, the reasons for the delay, the reasons for seeking re-election and the effect of the re-election and potential prejudice to the insurer. (Grewal v. AIG Commercial Insurance Co. of Canada, 2014 CarswellOnt 11362 (F.S.C.O.).

[90] Dexter had made an election to receive Caregiver Benefits rather than Non-Earner Benefits, and was therefore not entitled to receive Non-Earner Benefits at the same time. Dexter took seven years to assert her re-election and there was no reasonable explanation provided for the delay or for the re-election. The limitation period was triggered once the Notice of Refusal was sent to Dexter and expired well before the Statement of Claim was issued. [emphasis mine]

Thus, even in a case where a denial has been issued, the Court held the following factors were relevant in determining whether a re-election might be permitted:

1. the time that has passed since the initial election,

2. the reasons for the delay,

3. the reasons for seeking re-election, and

4. the effect of the re-election and potential prejudice to the insurer.

The Court’s consideration of whether the insured had a “reasonable explanation” for the delay or for the re-election,¹⁹ is a reference to section 31(1) of the SABS, which reads as follows:

Failure to Comply with Time Limits

31(1) A person’s failure to comply with a time limit set out in this Part does not disentitle the person to a benefit if the person has a reasonable explanation.

Thus, even in Mrs. Dexter’s case, where an insurer has fulfilled all the informational requirements set out in the SABS, and the insured has been given every opportunity to make an election, the Court explicitly recognized that the issuance of a denial (valid or otherwise) by the insurer was not the sole factor to consider when deciding if the two-year limitation period had commenced. In fact, section 33(2) of the SABS sets out the consequence of an insured’s breach of its duty to provide information (such as a completed election form):

33(2) The insurer is not liable to pay a benefit in respect of any period during which the insured person failed to comply with subsection (1) or (1.1).

Further, Straus (and Dexter) were rendered after the Court of Appeal decision in Sietzema. The Straus Court referred to the Sietzema decision, but did not read that case to have rendered all of the relevant provisions in Part X of the SABS (including the informational and election requirements) meaningless. Importantly, the Court in Straus applied Delegate Evans’ decision in Grewal,²⁰ a decision the Appellant argued vociferously was outdated and no longer good law.

Therefore, I find no error of law in the Arbitrator’s analysis of the Kraus et al and Sietzema cases. If nothing else, the Arbitrator’s reading of the case law is consistent with the general rules of statutory interpretation and construction set out in the Legislation Act.

General Rules of Construction

Law always speaking

63 The law is always speaking, and the present tense shall be applied to circumstances as they arise. 2006, c. 21, Sched. F, s. 63.²¹

According to the old legal maxim, “Parliament does not speak in vain”, and section 36 would be rendered meaningless if the Sietzema cases were applied as suggested by the Appellant.

I will turn now to the Arbitrator’s examination of the Director Delegate’s decision in Grewal and section 36(2) of the SABS.

B. Did the Arbitrator err in law by applying the Director’s Delegate’s decision in Grewal to the facts of his case?

Before proceeding to my examination of Grewal, I will first address the Appellant’s argument that the facts of this case did not involve or trigger section 36 of the SABS at all.

The Appellant’s argument is based on the assertion that the OCF-1 filed by the Respondent did not suggest she might qualify for more than one benefit. Thus, there was never an obligation on the Appellant to provide information about other possible weekly benefits, or to provide the election form. The Appellant could validly deny all possible weekly benefits, based on the OCF‑1 alone and the Sietzema line of cases.

This argument stems from section 36(2), which reads as follows:

36(2) If a person’s application indicates that he or she may qualify for more than one of the benefits referred to in subsection (1), the insurer shall notify the person that he or she must elect within 30 days after receiving the notice which benefit he or she wishes to receive. [Emphasis mine]

It is correct that the Respondent’s OCF-1 did not indicate she might qualify for more than one weekly benefit; it only set out facts regarding her status as a caregiver. Although her disability certificate suggested she might also qualify for the NEB, the case law has held that the OCF-1 is “the application for accident benefits” and not the disability certificate.²²

Nevertheless, despite the OCF-1, the Arbitrator determined the Appellant had (at a very early stage during the adjustment of the file) actual knowledge (gained through telephone communications between the Respondent and the Appellant’s adjuster, Lynn Smith) that the Respondent might indeed qualify for more than one weekly benefit.²³

The Arbitrator referred to the testimony and cited log notes made by Ms. Lynn Smith, who discussed the claim with the Respondent.²⁴

Kifah is suffering pain to her neck and shoulder, and back. She is unable to provide any caregiving our [sic] housekeeping duties. She is unemployed, and has been off work for over a year. [emphasis mine]

The same adjuster testified that “… an applicant could be unemployed and get non-earner benefits. [and] also confirmed that the test for caregiver benefits isn’t merely whether you have children or not, nor does having children eliminate a non-earner claim.”²⁵

Further, Lynn Smith sent the Respondent the following letter, also adduced at the arbitration hearing:

Our information indicates that you may qualify for Caregiver Benefit (CGB) or Non-Earner Benefit (NEB). Only one of these benefits may be payable and you must therefore choose which one you wish to be considered for.

I am attaching to this letter a form entitled Election of Income Replacement, Non-Earner or Caregiver Benefit (OCF-10/59) on which you must make your choice.

You must complete and return this form to me within 30 days. No benefit can be paid until this form is returned.²⁶ [emphasis mine]

Therefore, the Appellant’s argument that the election provisions were not triggered is contradicted by the actions of the Appellant’s adjuster from the very start of the file. These letters and testimony conclusively and irrefutably demonstrate the Appellant knew of the possibility that the Respondent might qualify for more than one benefit.²⁷

In fact, the same adjuster informed the Respondent she had to make an election, and purported to include a blank election form (OCF-10) for the Respondent to complete and return.²⁸

Further, the Arbitrator determined that through no fault of the Respondent, the election form was never received by the Respondent and never returned to the Appellant. This fact was not challenged in the Appellant’s appeal and I have no reason to examine it.

Accordingly, I find no error in law in the Arbitrator’s determination that section 36 had been triggered.

I turn now to the Arbitrator’s decision to apply the Grewal decision to this case.

In Grewal, an applicant provided information on her OCF-1 that she was both a primary caregiver and a full-time employee, demonstrating she was potentially eligible for a CGB or an IRB. The Insurer informed the applicant that she was not eligible for the CGB, and provided neither information regarding possible elections, nor the election of benefits notice form (as required by section 36 of the SABS).

The insurer denied the IRB through an Explanation of Benefits form. Long after the two-year limitation period had expired, the applicant applied for arbitration on the issue of the IRB, and the insurer argued the applicant was out of time to commence an arbitration proceeding.

In appeal, Director Delegate Evans considered whether the arbitrator erred in his consideration of the principles relating to elections and denials of benefits based on OCF-1’s.

However, the arbitrator carefully drew the links in the chain between Certas’s failure to advise Mrs. Grewal of the election and the law regarding refusals. The starting point, of course, is Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, which held that an invalid refusal – even if the applicant is represented and the insurer relied on an approved form – does not start the two-year time limit running. As discussed in RBC General Insurance and Antony, (FSCO P03-00023, July 22, 2004), the requirements of s. 32 to provide an applicant with “a written explanation of the benefits available” [s. 32(2)(b)] and especially “information to assist the person in applying for benefits” [s. 32(2)(c)] have been held to mean that the insurer must provide information on the 30-day time limit for applying for benefits. Antony then considered the requirement to provide “information on any possible elections relating to income replacement, non-earner and caregiver benefits” [s. 32(2)(d)]. Antony held that, if the information required by s. 32(2)(d) was not provided, then the insured person could not be held to any election between benefits made under s. 36. The logical extension, as stated by the arbitrator, is that if the insured person is not even provided with an election when it was required, then she cannot be held to a refusal of the benefit she had no choice in seeking.²⁹ [Underlining mine]

Delegate Evans held that the arbitrator made no error of law when he determined the insurer had an obligation to provide both the OCF-10 election form and information to assist the applicant regarding the possible weekly benefits to which he might have been entitled. Further, as set out in the Smith case, “… an invalid refusal - even if an applicant is represented and the insurer relied on an approved form - does not start the two-year time limit running.”

Delegate Evans then applied the Antony case which held that “… if the information required by s. 32(2)(d) was not provided, then the insured person could not be held to any election between benefits made under section 36. The logical extension, as stated by the arbitrator, is that if the insured person is not even provided with an election when it was required, then she cannot be held to a refusal of the benefit she had no choice in seeking.”³⁰

In the instant case, the Arbitrator determined that through no fault of her own, the Respondent never received a written election from the Appellant. He held an election had to have been made by the Respondent. Given the Appellant knew the Respondent might have qualified for more than one benefit, the Appellant could not simply deny the Respondent’s benefits based on the OCF-1 application form. The Arbitrator then applied the decisions in Grewal and in Kanagalingam, where Director’s Delegate Rogers held the following:

Antony means that, in the event of an invalid election, the 30-day time limit in 36(2) does not apply. As is the case with an invalid denial, the time limit is negated and time is infinitely extended.”³¹ [underlining mine]

In the instant case, the Arbitrator directed himself to the law and applied it to the facts in this case. I find no error of law in his analysis. Accordingly, I have no reason to interfere.

Nor do I find the Appellant’s submissions in regard to legal representation convincing. I agree with Delegate Evans’ comments in Grewal that an invalid refusal, even if the insured is legally represented, will not start the limitation period.³²

The appeal is dismissed.

IV. EXPENSES

If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

April 30, 2019

Edward Lee Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Effective September 1, 2010 (the “New Schedule”) came into force. The transition rules in the New Schedule provide that, subject to certain exceptions, benefits that would have been available pursuant to the Statutory Accident Benefits Schedule—Accidents on or after November 1, 1996 (the “Old Schedule”) shall be paid under the New Schedule, but in amounts determined under the Old Schedule. As a result, both the Old Schedule and New Schedule are applicable to accidents that occurred on or after November 1, 1996 and before September 1, 2010 and both should be considered.
2. 2Ibid.
3. 3Pages 26, 28
4. 4Grewal and Certas Direct Insurance Co., (FSCO P09-00001, July 10, 2009)
5. 5Western Assurance Company and Cejvan (FSCO P14-00007, December 4, 2014)
6. 6Page 28
7. 7Supra, at note 4
8. 8Also applying the Director’s Delegates’ decisions in Kanagalingam and Economical Mutual Insurance Co., (FSCO P16-00049, November 30, 2016); and Antony and RBC General Insurance Co., (FSCO P03-00023, July 22, 2004)
9. 9Sietzema v. Economical Mutual Insurance Company, 2014 ONCA 111
10. 10Katanic v. State Farm Mutual Insurance Company, 2013 ONSC 5103, 2014 ONCA 298
11. 11Sagan v. Dominion of Canada General Insurance Company, 2014 ONCA 720
12. 12Pages 26-36
13. 13Page 26
14. 14Page 32
15. 15Due to a change in the jurisprudence that took place after the denial was sent out. See Galdamez v. Allstate Insurance Co. of Canada 2012 ONCA 508 (Ont. C.A.)
16. 16Turner v State Farm Mutual Insurance Automobile Insurance Co. [2005 Carswell Ont 381 (Ont. C.A.)], 2005 CanLII 24551
17. 17Paragraph 70 of decision
18. 18Paragraph 80(iii)
19. 19Paragraph 90 of Straus et al
20. 20Paragraph 89 of decision
21. 21Legislation Act, 2006, S.O. 2006, c. 21, Sched. F
22. 22Supra, at notes 5 and 11
23. 23Page 27 of decision
24. 24Page 16 of decision
25. 25Page 18 of decision
26. 26Page 5 of decisions (letter dated October 20, 2008)
27. 27See Sanmugarajah and Nordic Insurance Company of Canada (FSCO P17-00076A/C and P18-00014, March 4, 2019), State Farm Mutual Automobile Insurance Company and L.F. (FSCO P02-00026, June 3, 2004) and T.N. and Personal Insurance Company of Canada (FSCO A06-000399, July 26, 2012)
28. 28Page 6 of decision.
29. 29Supra, at note 4, Page 5 of decision
30. 30Paragraph 18 of Grewal decision
31. 31Paragraph 24 of decision
32. 32op cit