ACCIDENT BENEFITS NEWSLETTER - JUNE 2002

- Catherine Zingg

In Ross and TTC Insurance Company Limited, A01-000064, April 5, 2002, the applicant was permitted to proceed to arbitration despite the insurer’s assertion that her claims for IRBS and supplementary medical expenses were time barred.  The parties agreed that Ms. Ross had been injured in a streetcar accident on August 15, 1996.  The TTC submitted that it had refused Ms. Ross’ claim for IRBS on two occasions, once on January 30, 1997 and again on April 7, 1997 (p.6).  The arbitrator accepted that the TTC had denied Ms. Ross’ claim in January 1997 on the grounds that she was not involved in an accident.  However, the arbitrator found that once the TTC accepted that there had been an accident, the basis of that refusal was at an end.  Accordingly, the TTC was not permitted to rely on the January 1997 refusal. 

With respect to the April 1997 Explanation of Assessment form, Ms. Ross testified that she had made an inquiry in an addendum and argued that the TTC could not gratuitously deny a claim which she never made (p.8).  The arbitrator accepted her submission that she completed the OCF1, 2 and 3 because she was required to and rejected the TTC’s assertion that an application for IRBS had been made in January 1997.  The arbitrator found that the TTC’s words and conduct did not indicate that it viewed Ms. Ross’ query as a claim for IRBS in April 1997 (p.12).  The arbitrator further commented:

The claims and denial process contemplates that a claim is crystallized, submitted by the insured person, and that only after there has been a clear and unequivocal denial does the limitation period begin to run.  I find that an insurer cannot gratuitously deny a claim which has not been submitted.  I find no evidence that Ms. Ross claimed an amount which would cause the limitation period to begin to run.  It would be invidious if the TTC were allowed to characterize it as a refusal which triggers the running of a limitation period (p.13).  

With respect to the claim for supplementary medical and rehabilitation benefits the arbitrator found that an insurer cannot deny a claim in advance in order to “cap” its claim (p.15).  It was found that this approach is inappropriate in a statutory benefit scheme which provides for ongoing entitlement to benefits (p.15).  Furthermore, the arbitrator found that this approach is not sanctioned by the Schedule (p.15).  With respect to the insurer’s obligation, the arbitrator stated:

Thus, a DAC’s opinion regarding future treatment may be of persuasive value; however it is not binding on either party, pending resolution of the dispute.  I find that an insurer cannot shelter under the opinion of a medical and rehabilitation DAC, by seeking its opinion on the question of ‘whether further rehabilitation treatments were reasonable and necessary’.  I find that under the Schedule, an insurer remains obliged to respond to ongoing claims which may be presented for supplementary medical and rehabilitation benefits even after it seeks and receives an opinion from a DAC that no further treatment is reasonable and necessary (p.17).   

In Pereira and Allstate Insurance Company of Canada, A01-000231, May 10, 2002, the insurer was ordered to pay the applicant $993.00 for services rendered by Integrated Health Recovery and a $250.00 special award under s. 282(10) of the Insurance Act.  The arbitrator found that the treatments received by the applicant at Integrated Health Recovery were necessary because of the accident.  The arbitrator allowed $75.00 for completing a treatment plan, $250.00 for the initial assessment and $125.00 for each active treatment session or active-passive combination treatment session (p.21).  The block fee included

approximately one hour and supervised exercise program, passive treatment such as moist heat or interferential current and an interactive assessment adjustment by Dr. Levitin on each occasion (p.21).  With respect to the special award, the arbitrator found that the amount was appropriate as none of the parties had been diligent in making sure that Allstate had the correct information as to what Clarica (the primary insurer) had paid (p.24).  In addition, it was found that the DAC Report should have indicated to Allstate that it should pay the outstanding amounts pending the dispute in accordance with s. 38(14).  The arbitrator also discussed the burden of proof with respect to the issue of collateral benefits.  Mr. Pereira asserted that the insurer bore the burden of proving that collateral insurance benefits were reasonably available to him (p.3).  The arbitrator rejected this argument, stating:

My opinion is that in this arbitration, the legal onus is on Mr. Pereira to prove, on a preponderance of probabilities, that any amount is owing from Allstate in order to satisfy IHR’s accounts.  As the court put it in the case of Whelan Estate v. Mutual Life (1989) N.J. No. 16 (Nfld.. S.C.T.D), ‘the burden of proof is upon the assured to show that the loss was proximately caused by a peril insured against’.  The onus is not on Allstate to show how much was reasonably available from the collateral insurance policy (p.7). 

In Gurevich and Royal Sunalliance Insurance Company of Canada, A01-000936, a motion was made for the withdrawal of the application for arbitration.  The insurer objected and sought its expenses and a return of its assessment on the basis that the application for arbitration was without merit (p.3).  The arbitrator allowed Mr. Gurevich to withdraw the application for arbitration without personal liability for expenses, subject to the insurer’s option to claim its expenses from either or all of Mr. Volfson, Mr. Malyshev, or Mr. Pignelosa.  The application for arbitration in the name of Ms. Gurevich was dismissed, subject to any claims or expenses against the party who brought the arbitration.  Mr. Malyshev, an agent who represented Mr. Gurevich admitted in his letter in which he requested to withdraw the application that all the issues had been previously mediated and resolved.  The arbitrator found that this was an omission that the proceeding was manifestly unfounded under Rule 75.2(c).  Furthermore, the arbitrator found that the act of referring a patently groundless claim to arbitration was an abuse of process (p.8).                                                                                

It was found that it would be unjust to hold Mr. Gurevich personally responsible for the insurer’s expenses, given the history of the case.  The application for arbitration did not have the signatures of the applicants on them.  They were completed by Mr. Roman Volfson, the manager of the Universal Injury Rehabilitation Centre.  Mr. Malyshev was ordered under 9.2 of the Code to obtain within two weeks, an authorization, legibly signed, witnessed and dated, containing an acknowledgment that he (Mr. Malyshev) was not a lawyer nor subject to any discipline and that Ms. Gurevich, as the named applicant, could be responsible for paying expenses made against her at the hearing (p.3).  Mr. Malyshev was unable to obtain such an authorization and thereafter requested that the application be withdrawn.  In deciding who should pay the expenses the arbitrator stated:

The appropriate remedy for an abuse of process is to sanction the person responsible.  The application for arbitration which triggered the cost consequence is signed only by Mr. Volfson as treatment provider.  I find that the application itself is uncontradicted prima facie evidence that Mr. Volfson instigated this improper application (p.12).

The arbitrator then reviewed the case law with respect to agency and champerty.  The arbitrator also found that the “retainer letter” in which Pignelosa/IMC were described as “agents” was, in fact, an assignment of Mr. Gurevich’s rights to claim compensation for treatment from his insurers (p.14).  Section 65 of the SABS-1996 specifically prohibits the assignment of benefits.  In Smith v. Co-operators General Insurance Company (2002) S.C.C. 30, it was stated that consumer protection is one of the main objectives of insurance law, particularly in the field of automobile and home insurance (p.18).  The arbitrator found that it would be contrary to this aim if the consequence of an insured seeking legitimate treatment is to be penalized for subsequent actions of the treatment provider, vis-a-vis the insurer (p.18).  Accordingly, the arbitrator found that the insurer was free to file a motion requesting its expenses from either or all of Mr. Volfson, Mr. Malyshev or Mr. Pignelosa, as the case might be, as the active mind or minds behind the abuse of process that had occurred (p.18).