New Regulations

The SABS - 1996 and the Settlement Regulation (O. Reg. 664/90) have been changed by (O. Regs. 482/01 and 483/01).

Section 2 of the SABS - 1996, the section which deals with definitions and interpretation, will have a new subsection added to it. The new subsection clarifies that payments for loss of income will include payments of disability pension benefits under the Canada Pension Plan. Periodic payments of insurance will also be found to be payments for loss of income where the insurance is offered by the insurer only to persons who are employed at the time that the contract for the insurance is entered into and is offered by the insurer only on the basis that the maximum benefit payable is limited to an amount calculated with reference to the insured person’s income from employment. The amendment will only apply to accidents that occur on or after January 1, 2002, which is when this regulation will take effect.

The Settlement Regulation will be amended by O. Reg. 483/01, effective March 1, 2002. Insurers will no longer be required to provide a commuted value calculation. There will also be a standard disclosure statement. If an insured person wishes to commence a mediation proceeding under s. 280 of the Act with respect to benefits that were the subject of the settlement or a purported settlement, the person will have to return the money received as consideration for the settlement, before being permitted to commence the mediation.

In a recent decision, the Divisional Court found that the decision of the Director’s Delegate in Movahedi and State Farm, September 1, 1999, P96-00050 was patently unreasonable. The Delegate had criticized the arbitrator’s findings of credibility on the basis that some of the findings were based on factual errors or failed to consider all the evidence. The Divisional Court stated that not reciting all the evidence does not mean that the arbitrator failed to consider it. It further found that the findings of credibility were supportable and therefore the challenge to the arbitrator’s finding on causation could not stand. It was noted that the situation was similar to that in General Accident Indemnity Company v. Barrick and the Ontario Insurance Commission [unreported, Ontario Court (General Division) Div. Court, March 1998, Court File No. 0384/97].

In Palmer and State Farm, A00-001286, December 20, 2001, the insurer was ordered to pay $800.00 for five sessions of nerve block injections, together with interest pursuant to s. 46 of the Schedule. In making the award, the arbitrator found that the Schedule does not impose the test of success. It was found that the applicant should not be made to bear a financial burden for undergoing treatment that in retrospect was not as successful as he might have hoped. By extension, in determining the insurer’s obligation to pay, the arbitrator found that a distinction should not be made between the more and less successful injections and accordingly State Farm was ordered to pay for all five secessions (p.2). The claim for botox injections was denied as it was found to be an experimental treatment for chronic pain. Therefore, the insurer was not required to pay for them pursuant to s. 14(3) of the Schedule. The arbitrator also rejected the applicant’s family physician’s recommendation for combined botox and massage treatments. The view of Dr. Devlin, a physiatrist, was accepted on this point, namely that it made no medical sense to paralyse or weaken a muscle with a botox injection and then to perform a form of physiotherapy on that muscle that is traditionally used to strengthen (p.15). State Farm was also ordered to pay a special award of $1,170.00 as it breached the provisions of the Schedule with regard to declining to pay for additional psychological treatment. It had failed to notify the applicant of his right to a DAC assessment.

In Vidinopulos and Liberty Mutual Insurance Company, A00-000977, December 5, 2001 it was found that an insurer’s examination of the applicant by a rheumatologist was reasonably necessary. The arbitrator disagreed with the applicant’s submission that her injuries were essentially orthopaedic in nature. Given that the medical evidence stated that she suffered from a soft tissue condition, as well as disc herniations, the arbitrator found that she suffered from rheumatological and orthopaedic conditions.

In Certas Direct Insurance and Rudnicki (appeal) P01-00024, December 12, 2001 an appeal by the insurer was dismissed. The Director’s Delegate found that there was little question that Ms. Rudnicki had clear and unequivocal notice of Certas’s refusal to pay IRBs beyond August 2, 1997. (Ms. Rudnicki had been injured in an accident on August 29, 1995). However, the Director’s Delegate agreed with the arbitrator that Certas could not rely on its earlier, August 2, 1997 termination as Certas has subsequently commenced the LECB process. The Director’s Delegate concluded that the situation had left sufficient uncertainty about the status of Ms. Rudnicki’s post-104-week benefits that the claim could not be viewed as statute-barred.

In Castaneda and CGU Insurance Group of Canada, (Bias Application) P01-00053, December 18, 2001, the application for the appointment of a new arbitrator on the grounds of bias was dismissed. The Director’s Delegate found that it was entirely appropriate for Arbitrator Renahan to express concerns about a four day hearing in the case, particularly as his pre-hearing letter had urged both parties, not just Ms. Castaneda, to control the length of the hearing. The Director’s Delegate noted that everyone involved in the dispute resolution process deserves to be treated with respect. The insured had complained that Arbitrator Renahan had spoken to her representatives, Mr. Hare and Mr. Rowe, who were proprietors of Profile, in a loud and condescending manner. The Director’s Delegate found that even if the arbitrator’s conduct indicated that he had lost his temper, he had not crossed the line of appropriate decorum. Moreover, he had granted a four day hearing as the applicant had requested, which indicated that he did not have a closed mind. The Director’s Delegate followed the test for bias that was set out in Mavis Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, in which it is stated:

...the apprehension of bias must be a reasonable one, held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information. According to the Court of Appeal, that test is ‘what would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude. Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly’ (p. 18).

In the Estate of the late Jack Bittan and CGU Insurance Company of Canada, A00-001005, November 27, 2001 it was found that the estate trustee could proceed to arbitration on behalf of the late Mr. Bittan. The insurer had argued that the application for arbitration was a nullity. It was found however that the doctrine of relation back applied. The arbitrator found that an arbitration proceeding, as an adjudication of legal rights, is a "proceeding" as contemplated in Rule 9.03 of the Rules of Civil Procedure (p.7). He also found that the application of the Rules of Civil Procedure is contemplated in Rule 10, specifically in subrule 10.7 of the FSCO Dispute Resolution Practice Code. The insurer had questioned whether the arbitrator had authority to apply equitable jurisdiction.

It was found that an arbitrator has the power to employ equitable principles in the ordinary exercise of his or her statutory jurisdiction, pursuant to the reasons in Branchaund and Co-operators General Insurance Company, P96-00048, February 2, 1997.