Indexed as: Veldhuizen v. Coseco Insurance Co. Between: Ingrid Veldhuizen, Applicant, and Coseco Insurance Company, Insurer. [1995] O.I.C.D. No.

Transcription

1 Page 1 Indexed as: Veldhuizen v. Coseco Insurance Co. Between: Ingrid Veldhuizen, Applicant, and Coseco Insurance Company, Insurer [1995] O.I.C.D. No. 158 File No.: A Ontario Insurance Commission Eban Bayefsky, Arbitrator October 12, 1995 (19 pp.) Appearances: Meredith J. Donohue, for the applicant. Ted Charney, for the insurer. Issues: DECISION ON PRELIMINARY ISSUE The Applicant, Ingrid Veldhuizen, was injured in a motor vehicle accident on May 9, She applied for and received statutory accident benefits from the Insurer, payable under Ontario Regulation Weekly benefits were terminated by the Insurer on August 20, The parties were unable to resolve their disputes through mediation and the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c. I.8, as amended (the "Act"). The preliminary issue to be decided in this hearing is: 1. Did Mrs. Veldhuizen apply for mediation in a timely manner?

2 Page 2 Result: 1. Mrs. Veldhuizen did not apply for mediation on the issue of weekly disability benefits within the time limits prescribed in the Act and Schedule. Therefore, she cannot proceed to arbitration on that issue. She may, however, proceed to arbitration on the issue of her entitlement to benefits for a whirlpool. Hearing: The hearing on the preliminary issue was held in Hamilton, Ontario, on August 30, Present at the hearing: Applicant: Ingrid Veldhuizen Applicant's Representative: Meredith J. Donohue Barrister and Solicitor Insurer's Representative: Ted Charney Barrister and Solicitor Insurer's Officer: Vinti Sansanwal Witnesses: Ingrid Veldhuizen, the Applicant John Veldhuizen, the Applicant's husband Vinti Sansanwal, the Insurer's officer Maryanne Truax, the Insurer's adjuster Exhibits introduced into evidence and authorities referred to are listed in separate appendices to this decision. Facts: The Applicant, Mrs. Ingrid Veldhuizen, was injured in a motor vehicle accident on May 9, She was a homemaker and expecting her fourth child at the time of the accident. She received weekly benefits under section 13 of the Schedule until August 20, The benefits consisted of

3 Page 3 $ per week in basic benefits for Mrs. Veldhuizen and $50.00 per week in respect of each of Mrs. Veldhuizen's three children. She also received supplementary medical and rehabilitation benefits for various items including babysitting, housekeeping and chiropractic and physiotherapy treatments. The Insurer clearly set out the benefits available to Mrs. Veldhuizen and the differences between the benefits in correspondence to Mrs. Veldhuizen and in telephone contact with both Mrs. Veldhuizen and her husband, John. On August 27, 1992, the Insurer sent a letter and Assessment of Claim form to Mrs. Veldhuizen. The letter stated as follows: Disability Benefits are paid when a person is substaintially [sic] unable to perform the essential tasks in which they normally engage in. We understand from Diana Kangas, at Rehabilitation Services of Canada that you are no longer disabled. We are therefore, closing the disability portion of your claim. In the Assessment of Claim form under the categories "Weekly Income Benefits" and "Weekly Childcare Benefits", respectively, the following explanations are written: Benefits paid to August 20, No further benefits will be issued as you are no longer disabled according to Section 2.29 of the policy. Benefits paid to August 20, Both counsel indicated that there was no issue as to whether Mrs. Veldhuizen received this correspondence. The evidence and submissions of both parties were, in fact, that Mrs. Veldhuizen understood and accepted that weekly disability benefits were being terminated as of August 20, The parties disagree, however, about whether there was a request for additional weekly disability benefits in January Following August 1992, Mrs. Veldhuizen continued to apply for and receive supplementary medical and rehabilitation benefits for various items such as physiotherapy and chiropractic treatments, housekeeping services, a treadmill and a fitness club membership. On December 13, 1993, at the request of the Insurer, an updated medical report was prepared by Mrs. Veldhuizen's family physician. Mrs. Veldhuizen testified that as a result of this report, she wanted her husband to speak to the adjuster on the file, Maryanne Truax, about entitlement to babysitting expenses. Her main concern at that point was that her children be taken care of, since she was again experiencing difficulties with her tasks as a homemaker. She also stated that she and her husband thought the $ per week they had earlier been receiving was to cover babysitting expenses. At his wife's request, John Veldhuizen called Ms. Truax on January 10, Mr. Veldhuizen's testimony varied regarding the reason he called Ms. Truax. At first, he said it was only to ask about housekeeping; he then said it was partly to ask about babysitting. Mr. Veldhuizen testified that he asked Ms. Truax about entitlement to housekeeping as well as to weekly disability

4 Page 4 benefits, given his wife's continuing medical difficulties. He also testified that the purpose for the $ per week originally received by his wife had never been explained to him and that he never understood why she was receiving it. Mr. Veldhuizen called his wife shortly after speaking to Ms. Truax and (according to Mrs. Veldhuizen) said that he had asked Ms. Truax about the $ in benefits. Ms. Truax is to have responded that they were not entitled to that, but that they would be entitled to $ for babysitting. Mrs. Veldhuizen did not understand why the Insurer would be willing to pay more than the $ a week she and her husband were requesting for babysitting. Ms. Truax testified that there was no discussion between herself and Mr. Veldhuizen concerning reinstatement of section 13 disability benefits. She stated that if there had been, she would have made a note of it, sent out another application to Mrs. Veldhuizen and sought additional medical information to justify such an expense. She referred to a computer printout of activity on the file (a "claim file notepad") consisting of notes made contemporaneously with phone calls, file reviews and other work done on the file, and noted the following record of the call between herself and Mr. Veldhuizen: Mr i/s [the insured's husband] called- advised that we will continue to pay for housekeeping to do vaccuuming [sic] only and allowance for childcare is $50/child. i/s [insured] has 4 childred [sic]: ages 7, 5, 3 & 1. TO DO: i/s to cb [call back] with est. [estimate] for vaccuuming [sic] & babysitting assistance. - chiro duration: till Feb/March/94 (2-3 months) Ms. Truax testified that the reference to "childcare" in these notes meant babysitting, not disability benefits with respect to each child under the age of 16. Ms. Truax testified that there was no request to reinstate weekly disability benefits from August 1992 to October 1994 (a period in excess of two years); all of her contact with Mr. and Mrs. Veldhuizen and additional medical and rehabilitation inquiries concerned the need for further treatment and assistance with housekeeping and babysitting. Mr. and Mrs. Veldhuizen, on the other hand, maintained that a request for reinstatement of weekly disability benefits was made on January 10, Mr. Veldhuizen testified that they did not follow up on the apparent refusal of Ms. Truax to reinstate such benefits because they believed her when she said they were not entitled to them. Mrs. Veldhuizen testified that the matter was not raised again following January 1994 because they believed they were receiving what they were entitled to based on what the Insurer had told them. On October 12, 1994, Mrs. Veldhuizen called Ms. Truax to say that a "medical friend" (Ruth Volpato, the rehabilitation consultant) felt Mrs. Veldhuizen should still be receiving disability benefits given her current medical condition. Ms. Truax confirmed this request for disability benefits in the claim file notepad, but indicated to Mrs. Veldhuizen that the two year time limit for

5 Page 5 requesting such benefits and for disputing the termination of such benefits had passed. Ms. Truax asked for Mrs. Veldhuizen to provide medical information substantiating the claim for disability benefits as well as for a whirlpool bath which Mrs. Veldhuizen was now also requesting. Mrs. Veldhuizen became very upset during the call and accused the Insurer of misleading her. Ms. Truax testified that Mr. Veldhuizen spoke to her by phone a few days later. He told her that she should have assumed that disability benefits were also being requested when he spoke to her back in January However, he did not say that he had asked for section 13 benefits to be reinstated in January This phone call was not recorded in the claim file notepad; Ms. Truax could not explain the reason for this. Ms. Truax's supervisor, Vinti Sansanwal, spoke by phone with Mr. and Mrs. Veldhuizen a week or so later concerning the situation. The Veldhuizens told Mr. Sansanwal that a medical friend had advised them to request the reinstatement of disability benefits and that they felt the Insurer should have known about Mrs. Veldhuizen's continuing entitlement and should have reinstated benefits automatically. Mr. Sansanwal advised the Veldhuizens about the limitation period. No entry was made in the claim file notepad concerning this call. A few days later, the Veldhuizens, Ms. Truax, Mr. Sansanwal and Ms. Monica Agius (a representative of Mr. Veldhuizen's employer, where a group insurance plan was in effect), participated in a conference call concerning this problem. According to both Ms. Truax and Mr. Sansanwal, Mr. Veldhuizen for the first time said that he had requested the reinstatement of disability benefits back in January The Insurer maintained its position that the claim was out of time and the Veldhuizens were advised to seek legal advice. No entry was made in the claim file notepad concerning this conference call. Following this, the Veldhuizens retained Ms. Donohue as counsel and filed an Application for Appointment of a Mediator dated December 19, The Report of Mediator was issued on March 24, The Application for Appointment of an Arbitrator was filed April 10, Law: Section 281(5) of the Insurance Act states: Section 26 of the Schedule states: (5) A proceeding in a court or an arbitration proceeding in respect of statutory accident benefits must be commenced within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Statutory Accident Benefits Schedule. (1) A mediation proceeding under section 280 of the Insurance Act or an arbitration or court proceeding under section 281 of the Act in respect of

6 Page 6 benefits under this Regulation must be commenced within two years from the insurer's refusal to pay the amount claimed in the application for statutory accident benefits or, if the person has attended school or accepted, or returned to, an occupation or employment, as permitted by section 16, within two years of the insurer's refusal to pay further benefits. (2) Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within 90 days after the mediator reports to the parties under subsection 280(8) of the Act. These provisions have been the subject of interpretation in a number of arbitration decisions. The principles emerging from these decisions (with which I concur) may be summarized as follows: (1) An arbitrator does not have a general discretion to extend the time limits prescribed in the Act and Schedule. 2 (2) To determine if the limitation period applies in a particular case, it must first be determined whether, and when, there was a refusal to pay benefits, and then whether the insurer is estopped from relying on the limitation period that runs from the date of the refusal. 3 (3) The insurer must show that the refusal was clear and unequivocal, and was communicated to the applicant in writing, with supporting reasons. 4 (4) An insurer may be estopped from relying on the limitation period if the applicant relied to his or her detriment on the insurer's conduct or if the Insurer unreasonably delayed the applicant in processing the claim. 5 (5) The limitation period runs continuously from the time of the refusal unless the applicant has been misled or deceived by the insurer in subsequent dealings on the claim or the applicant has returned to work or school within the meaning of sections 16 and 26 of the Schedule. 6 Ms. Donohue made two key submissions regarding the legal principles to be applied in this case. First, she argued that a termination of benefits to which an Applicant consents does not amount to a "refusal" within the meaning of section 26 so as to trigger the limitation period. Secondly, she submitted that the Schedule as a whole, and sections 16 and 26 in particular, evince a legislative intent to encourage accident victims to return to their pre-accident activities without restricting their ability to apply for benefits on an ongoing basis; the Zeppieri and Zere cases referred to by Mr. Charney (in which the limitation period was found to run continuously from the time of the first refusal) are, therefore, distinguishable since the Applicants in those cases had not returned to their pre-accident activities as Mrs. Veldhuizen had. Ms. Donohue also appeared to suggest that an insurer is estopped from relying on the limitation period if it has failed to advise the applicant of the time limit and of the applicant's rights to mediate

7 Page 7 a refusal of benefits; an insurer misdirects an applicant by refusing benefits without also indicating that the refusal cannot be challenged beyond two years. I am unable to accept these arguments. First, the legislation clearly indicates that the limitation period begins to run when the insurer refuses to pay the benefits claimed, not when the applicant rejects the insurer's refusal. In my view, the focus of the analysis is intended to be the actions of the insurer in refusing benefits, not the actions of the applicant in accepting or rejecting the insurer's refusal. The commencement of the limitation period could be indefinitely postponed if an applicant could say that he or she only now rejects the insurer's refusal of benefits. This would subvert the three principles underlying limitation periods: (1) certainty - the need for a finite process; (2) evidentiary considerations - avoiding reliance on stale evidence; and (3) diligence - bringing claims in a timely fashion. 7 The consent or otherwise of the applicant to the insurer's refusal of benefits is, therefore, irrelevant to the point at which the limitation period commences. Secondly, although rehabilitation is an important aspect of the no-fault scheme, section 26 of the Schedule only permits an extension of the limitation period where there has been a further refusal to pay benefits following a section 16 return to work or school. The limitation period is not interrupted by an applicant returning to his or her normal activities within the meaning of section 13 of the Schedule, even if there has been a further refusal of benefits. Nor does an application for reinstatement nullify the insurer's initial refusal of benefits (and the subsequent running of the limitation period). Section 26 would only allow the clock to begin running again where an applicant's benefits are actually reinstated and then terminated a second time; a mediation could then be brought in respect of the second period of benefits. However, where an applicant receives section 13 disability benefits, resumes his or her normal activities, and then suffers a relapse, an arbitration can only proceed if mediation has been applied for within two years of the insurer's initial refusal of those benefits. Just as disabilities arising more than two years after the accident will not be compensated, so too will relapses mediated more than two years from the initial refusal not be arbitrated. Whether a section 13 applicant returns to pre-accident activities, suffers a relapse and applies for and is refused a reinstatement of benefits is, therefore, irrelevant for the purposes of the section 26 limitation period. The mediation process must be commenced within two years of the initial refusal in order to preserve the applicant's rights to further benefits. Finally, I reject the suggestion that an insurer can only assert the limitation period if it has first advised the applicant of the time limit. The legislation is clear that the two year period begins to run when benefits have been refused, not when the insurer advises the applicant of his or her rights to mediation and of the existence of the time limit. An insurer would only be estopped from asserting the limitation period if it had actively led the applicant to believe that the time limit did not apply or had been waived. In light of a clear and unequivocal refusal of benefits, a direct misrepresentation by the insurer would be required to preclude it from invoking what is otherwise a clear statutory restriction on the right to mediation.

8 Page 8 Findings: As indicated earlier, Mrs. Veldhuizen understood and accepted that weekly disability benefits were terminated as of August 20, However, her consent or otherwise to the termination of benefits is irrelevant. And although Mrs. Veldhuizen may have been ready to resume her pre-accident activities, the termination was based on the view of the rehabilitation caseworker (which was, in turn, based on a variety of medical and rehabilitation information), not on the consent of Mrs. Veldhuizen. I, therefore, find that a clear and unequivocal refusal of benefits was communicated to Mrs. Veldhuizen in writing, with supporting reasons. Ms. Donohue maintains that the first refusal of weekly disability benefits actually occurred on January 10, 1994 when Mr. Veldhuizen spoke by phone with Ms. Truax. In the initial stages of the claim, the Insurer made it clear that Mrs. Veldhuizen was entitled to disability benefits (for herself and for each of her children) as well as to supplementary medical and rehabilitation benefits (chiropractic treatment, housekeeping and babysitting expenses, etc.). When benefits were provided to Mrs. Veldhuizen, the Insurer made it clear whether they were for the disability portion or the expenses portion of the claim. When benefits were terminated in August 1992, the Insurer made it clear that it was the disability portion of the claim that was being closed. Following this and until January 1994, Mrs. Veldhuizen continued to apply for and receive supplementary benefits to cover expenses for babysitting, housekeeping, etc. On January 10, 1994, Mr. Veldhuizen claims to have asked Ms. Truax to reinstate the weekly disability benefits. Mrs. Veldhuizen testified that her husband said he asked Ms. Truax about the $ in benefits, but it is not clear whether that referred to weekly disability benefits or benefits to cover babysitting. Mr. and Mrs. Veldhuizen differed as to why Ms. Truax was contacted at this point: Mrs. Veldhuizen said it was to discuss babysitting; Mr. Veldhuizen said it was to discuss housekeeping and possibly also babysitting. Neither testified that the purpose of the call was to have weekly disability benefits reinstated. Ms. Truax, on the other hand, denies that Mr. Veldhuizen requested the reinstatement of section 13 disability benefits. Her notepad entry of the call does not mention weekly disability benefits and the items to be addressed following the call were noted to be vacuuming, babysitting and chiropractic treatments. The medical inquiries made by Ms. Truax following the call were not intended to address the reinstatement of weekly disability benefits. Although the reference in the notepad to "childcare" seems to refer to section 13(4) benefits, both Mr. Veldhuizen and Ms. Truax confirm that benefits were discussed in relation to babysitting. Benefits to cover babysitting expenses were, in fact, reinstated following this phone call, but it is not suggested that this was a reinstatement of benefits under section 13(4) of the Schedule. Mrs. Veldhuizen's position is that there was a clear request for reinstatement of disability benefits and that it was refused (for the first time) during this phone call. I am unable to find that a request for reinstatement of weekly disability benefits was made by Mr.

9 Page 9 Veldhuizen on January 10, This finding is supported by the consistent testimony regarding the discussion of benefits for babysitting, the focus on further babysitting, housekeeping and rehabilitative assistance following the call and the contemporaneous notes of the call. I prefer this evidence to the recollection of Mr. Veldhuizen, the indirect testimony of Mrs. Veldhuizen concerning what her husband is supposed to have said in the call, and the somewhat confused evidence the Veldhuizens gave about the reason for calling Ms. Truax in the first instance. No further discussion of weekly disability benefits occurred until October 1994, when the matter was squarely raised by Mrs. Veldhuizen and duly noted by Ms. Truax. The Veldhuizens said they had not pursued the matter earlier because they believed Ms. Truax when she rejected their request in January Even assuming that a request and denial had occurred then, the Veldhuizens were perfectly capable of challenging the denial at that time. Nothing was done by Ms. Truax to mislead or delay the Veldhuizens and, in fact, she continued to investigate and respond to numerous other claims submitted by them. The first time the Veldhuizens took the matter seriously was in October 1994 when their "medical friend" (the rehabilitation caseworker at the time) suggested they should be receiving weekly disability benefits from the Insurer. There is no reason that the Veldhuizens could not have sought out this advice earlier, and particularly in January 1994, when they claim Ms. Truax denied their request for such benefits. Counsel for Mrs. Veldhuizen submitted that Ms. Truax should not have given an "off the cuff" response to the request for additional weekly disability benefits and should have sent out the appropriate forms for Mrs. Veldhuizen to complete. Assuming, however, that the Insurer breached its obligations under the Insurance Act to send out application forms pursuant to a request (section 135(1) - a provision not specifically raised by Ms. Donohue), no evidence was led to suggest that the Insurer's conduct in this regard resulted in Mrs. Veldhuizen delaying a potential challenge to the denial of further weekly disability benefits. 8 The Insurer has, therefore, not engaged in any conduct which would estop it from relying on the limitation period. The Insurer asserted the limitation period in October 1994 and Mrs. Veldhuizen retained counsel and filed for mediation in December 1994, well in excess of two years from the date of the first refusal of benefits. On the clear terms of section 26 of the Schedule, therefore, the subsequent application for arbitration is barred. This would be the result even if there had been a request and denial of benefits in January 1994 since, as noted earlier, the section 26 limitation period runs continuously from the date of the first refusal unless the applicant has been misled in subsequent dealings with the insurer, the applicant has been refused benefits following a section 16 return to work or school, or the applicant's benefits have in fact been reinstated. None of these factors were present in this case. Time, therefore, continued to run from the first refusal until December 1994, well beyond the two year limit for applying for mediation. Mrs. Veldhuizen, therefore, cannot proceed with her arbitration in respect of weekly disability benefits. However, given that she made a claim for a whirlpool in October 1994 and given that this issue proceeded to arbitration in a timely fashion, the hearing may continue in respect of that

10 Page 10 benefit. Expenses: No submissions were received regarding expenses for the preliminary hearing. This matter can be addressed at the conclusion of the main hearing. Order: 1. Mrs. Veldhuizen is not entitled to proceed with the arbitration of her entitlement to section 13 weekly disability benefits. 2. The arbitration will proceed before me in respect of Mrs. Veldhuizen's entitlement to benefits for a whirlpool. 3. The matter of expenses for the preliminary hearing will be addressed at the conclusion of the main hearing. APPENDIX "A" - EXHIBITS 1. Handwritten claim file records 2. Computer claim file notepad 3. Letter from Coseco to Mrs. Veldhuizen, dated May 14, Application for Accident Benefits, dated May 20, Letter from Coseco to Mrs. Veldhuizen, dated June 16, Assessment of Claim by Insurer, dated June 16, Letter from Coseco to Mrs. Veldhuizen with attachments, dated June 29, Letter from Coseco to Mrs. Veldhuizen with attachments, dated July 8, Letter from Coseco to Mrs. Veldhuizen with attachments, dated July 16, Letter from Coseco to Mrs. Veldhuizen with attachments, dated July 22, Letter from Coseco to Mrs. Veldhuizen with attachments, dated July 29, Letter from Coseco to Mrs. Veldhuizen with attachments, dated August 14, Rehabilitation Closure Report, dated September 14, Letter from Coseco to Mrs. Veldhuizen, dated August 26, Assessment of Claim by Insurer, dated August 26, Application for Additional Accident Benefits with attachments, dated August 5, Medical or Psychological Report, dated August 25, Letter from Krista-Lynn Masterson to Coseco, dated February 23, Application for Additional Accident Benefits with attachments, dated April 22, Application for Additional Accident Benefits, dated April 13, Letter from Ms. Truax to Dr. Fung, dated November 10, Medical or Psychological Report, dated December 13, Letter from Ms. Truax to Dr. Flores, dated January 11, Report of Dr. Flores, dated April 21, Letter from Ms. Truax to Dr. Flores, dated May 2, 1994

11 Page Letter from Ms. Truax to Dr. Flores, dated June 20, Letter from Ms. Truax to Mrs. Veldhuizen, dated June 20, Letter from Dr. Flores to Ms. Truax, dated July 13, Letter from Voc-Care to Ms. Truax, dated July 22, Voc-Care Assessment and Tasks Analysis, dated August 11 and 10, 1994, respectively 31. Letter from Ms. Truax to Mr. Veldhuizen, dated November 23, Group of documents relating to whirlpool 33. Application for Additional Accident Benefits with attachments, dated March 4, Letter from Mr. Veldhuizen to Mr. Sansanwal, dated May 17, 1995 APPENDIX "B" - Referred to by the Insurer: Emilia Zeppieri and Royal Insurance Company of Canada, February 17, 1994, OIC File No. A Tibletz Zere and Royal Insurance Company of Canada, April 22, 1994, OIC File No. A Referred to by the Applicant: No authorities in addition to those referred to by Insurer d/mop 1 Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule Accidents Before January 1, In this decision, the term "Schedule" will be used to refer to Regulation Nazrur Rahman and Co-operators General Insurance Company, December 21, 1993, OIC File No. A ; Emilia Zeppieri and Royal Insurance Company of Canada, February 17, 1994, OIC File No. A , upheld on appeal, December 22, 1994, OIC File No. P ; Tibletz Zere and Royal Insurance Company of Canada, April 22, 1994, OIC File No. A ; Joanne Foster and Royal Insurance Company of Canada, April 19, 1995, OIC File No. A Zeppieri, Zere, supra; see also Lily Steele and Zurich Insurance Company, December 3,

12 Page , OIC File No. A ; Luke Offeh and Allstate Insurance Company, October 25, 1994, OIC File No. A (under appeal); Alireza Fakhri and Coachman Insurance Company, March 17, 1994, OIC File No. A Zeppieri, Zere, supra 5 Zeppieri, Zere, Fakhri, supra; see also Steele, Offeh, supra 6 Zeppieri, Zere, Foster, supra; sections 16 and 26 of the Schedule; see also Fakhri, supra 7 Zeppieri, supra, citing M. (K.) v. M. (H.) (1992), 3 S.C.R A similar conclusion was reached in the case of Offeh, supra