Elliott & McCarthy
Barristers and Solicitors
ACCIDENT BENEFITS NEWSLETTER - APRIL 2002
- Catherine
ZinggS.A.B.S. -
1994
Insurance Act - s.281(5) - Limitation
Period The decision of the Supreme Court of Canada in
Smith v. Co-Operators General Insurance Company [2002] S.C.J. No. 34; 183
D.L.R. (4th) 385, O.A.C.; 1999 O.J. 2484, S.C.J.
was released on March 28, 2002. On April 14, 1994, Ms. Smith had been injured in
a motor vehicle accident. Her income replacement benefits were terminated on May
8, 1996. Following a failed mediation she filed a Statement of Claim for ongoing
statutory benefits on September 8, 1998. The insurer was granted a motion for
summary judgment by the Superior Court of Justice. The decision was upheld by
the Court of Appeal in a 2:1 decision. The Supreme Court of Canada, however,
overturned the decisions of the lower courts and allowed Ms. Smith*s appeal. The
Supreme Court agreed with the observation of Mr. Justice Borins that s.71 is
clear and unambiguous and sets out an obligation for the insurer to inform the
claimant of the dispute resolution process under ss.279-283 of the Insurance
Act. The Court stated:
Borins J.A. provided a list of the basic
elements of ss.279 to 283 of the Insurance Act that he thought must be
conveyed, and I generally agree with his identification of the most important
aspect of those sections. I would caution however, that it is not the role of
this Court to set out the specific contents of insurance refusal forms. This
task is better left to the legislature. However, it is appropriate for this
Court to interpret in general terms what the legislature intended the insurer to
convey under s.71. In my opinion, the insurer is required under s.71 to inform
the person of the dispute resolution process contained in ss.279 to 283 of the
Insurance Act in straightforward and clear language, directed towards an
unsophisticated person. At a minimum, this should include a description of the
most important points of the process, such as the right to arbitrate or litigate
if mediation fails. Mediation must be attempted before resorting to arbitration
or litigation and the relevant time limits that govern the entire process.
Without this basic information, it cannot be said that a valid refusal has been
given (p.6).
The Court went on to say that the insurer*s use of a form approved by the Commissioner of Insurance did not relieve it from its obligations under s.71. It observed that insurers are not legally prevented from adding to the prescribed form so that it is in conformity with the legal requirements (p.6). In his dissent, Justice Bastarache found that there would be no injustice in applying s.281(5) of the Insurance Act and s.72(1) of the SABS to bar the appellant*s action (p.8). He noted that the cover letter which came with the Report of Mediator, informed Ms. Smith of the right to proceed with arbitration or to initiate a court action (p.8).
s.20 - LEC Offer and s.47 Attendant
Care Benefits
In Fehringer v. Zurich Insurance Company, A99-000699, February 28, 2002, the applicant was injured in two motor vehicle accidents. In each of the accidents the vehicle in which she was traveling was struck from behind. In December 1997, Ms. Fehringer signed a Full and Final Release with respect to her entitlement for income replacement benefits for both accidents in the amount of $9,400.00. At the hearing, however, Ms. Fehringer advanced a claim for loss of earning capacity benefits, arguing that she had not released her entitlement to them. Arbitrator Alves found in the applicant*s favour on this point, observing that the release stated that it applied to benefits under parts II, III and V of the Schedule, but did not mention LECB benefits under part VI.
Zurich argued that the applicant*s post
accident earnings probably exceeded her earnings at the time of the accident and
therefore she should not be entitled to a LECB offer (p.9). This argument was
rejected, with the arbitrator commenting:
I do not view Ms. Fehringer*s
establishment of her entitlement to an offer as an academic or moot point. The
Schedule provides lifetime entitlement to loss of earning capacity
benefits, mandatory periodic reviews and further reviews in the event of a
significant deterioration in condition. In the opinion of Dr. D. J.
Ogilvie-Harris, one of the orthopaedic surgeons Ms. Fehringer has seen, it is
more likely than not that her condition will deteriorate (p.9).
Upon hearing the evidence, the arbitrator
found that at the 104 week mark the applicant was entitled to a LECB offer for
her work at a hair salon and at a sales position. Her live-in boyfriend was
awarded $200.00 a month for 37 months for assisting Ms. Fehringer with
housekeeping, homemaking services and attendant care. Neither party had
requested an attendant care DAC.
S.A.B.S. -1996 s.4 - Income
Replacement Benefits - Payments in Kind
In Healey v. Pafco Insurance
Company, A00-000493, March 5, 2002, the applicant worked full
time at a chicken processing plant and also part-time at Black*s Equine Centre.
In exchange for her work at the stables she was permitted to board two horses
free of charge. Normally, the board would be $500.00 a month per horse. She
supplied approximately $100.00 worth of hay and grain for her horses.
Accordingly, she claimed $400.00 a month in income replacement benefits for this
work. The claim was allowed, with Arbitrator Sone finding that the payments in
kind provided by Black*s, (namely the boarding of Ms. Healey*s horses) should be
included as income for the purposes of the SABS-1996. The arbitrator reasoned
that income included "other remuneration" such as items and services that are
worth money (p.16). Therefore, it was found that the board which Ms. Healey
received should be included in her income. Previous caselaw has adopted this
approach (See Alobic v. Maplex General Insurance Company, A97-001365,
February 9, 2000 and Bress v. State Farm Insurance Companies, A-000191
and A-000192, March 23, 1992).
S.A.B.S. * 1996 - s.60 Other
Collateral Benefits/Deductions
In Simpson v. Allstate, A01-000215, February 6, 2002, it was held that the insurer was entitled to deduct from the applicant*s income replacement benefits, a benefit that she received from the Trafalgar Insurance Company of Canada, in respect of a motor vehicle accident on November 1, 1995. Under s.47 of the SABS Allstate was permitted to deduct 20% from each payment of the applicant*s income replacement benefits in order to recover an amount with respect to the benefits she received from Trafalgar. Allstate was also ordered to pay a special award in the amount of $2,060.67 under s.282(10) of the Insurance Act. The special award was made in part because Allstate had relied upon a psychological opinion from an orthopaedic surgeon, despite objections from Ms. Simpson*s lawyer, and also because it was not entitled to deduct the s.32 supplement from the applicant*s income replacement benefits, under s.60(11), until she actually received it from Trafalgar (p.18).
Note to Readers: Due to the OPSEU
strike the release of FSCO decisions is being delayed.
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