In Allstate v. Simpson, P01-00057, June 6, 2003, the insurer appealed from an arbitration order which held that the applicant’s accrued vacation credit of $3,124.42, must be included in her pre-accident income for the purpose of calculating her income replacement benefit under s. 8. In addition, Allstate submitted that the Arbitrator exceeded his jurisdiction in making an order that Ms. Simpson "continued to be entitled to" IRBS as of the last day of the arbitration hearing (p.2).  Director’s Delegate Makepeace allowed the appeal and revoked the Arbitrator’s order.

Prior to the arbitration hearing, Allstate had agreed that Ms. Simpson was entitled to benefits, but it did not waive its right to contest entitlement at some later date (p.7). The Arbitrator relied on s. 279 and s. 283 of the Insurance Act and its inherent authority to control the process in making the order that Ms. Simpson continued to be entitled to IRBs as of the last day of the hearing. Director’s Delegate Makepeace agreed that the order was an error in law, stating:

The effect of s. 287 is clear: it protects an insured person’s benefits after an order of the Director or an Arbitrator. Contrary to the Arbitrator’s reasons, the order made a significant change in the parties’ relationship. Without the order, Allstate could terminate Ms. Simpson’s benefits by following the procedure set out in the SABS - 1996. The Arbitrator’s order prevented it from doing so, without obtaining a further order or the insured person’s consent (p.5).

With respect to the vacation pay issue, the Arbitrator had accepted that Ms. Simpson took no vacation between November 1995 and January 1999 (p.9). The insurer disputed this finding. The Director’s Delegate, however, stated that her finding that the Arbitrator erred, did not depend on his factual assessment of Ms. Simpson’s earnings picture. He had erred in law by finding that Ms. Simpson’s accrued vacation credits were "income" before they were paid (p.10). In considering the issue, the Director’s Delegate stated:

On the other hand, if Ms. Simpson had terminated her employment before the accident, and cashed out her accrued vacation pay, that payment would count as income, though the parties might disagree as to whether the amount should count as a lump sum payment or be averaged over four weeks or 52 weeks or some other period. But Ms. Simpson did not terminate her employment at the Hilton. As a result, she retained the right to receive her accrued vacation pay at some future date. In that event, her vacation pay would be counted as post-accident income, not pre-accident income (p.10).

Section 30 - Exclusions

In Manzanares v. Pembridge Insurance Company (Pafco Insurance Company), A02-000401, May 27, 2003,  the applicant had a valid G1 permit to operate a motor vehicle at the time of the accident. However, he had violated the terms of his novice licence as he did not have another qualified driver with him at the time of the accident. Accordingly, it was held that Mr. Manzanares was excluded by subsection 30(1)(b) of the SABS - 1996 from receiving further income replacement benefits under Part II of the Schedule.

Section 32 - Notice and Application for Benefits

In Horvath v. Allstate, A02-000482, June 9, 2003, the applicant testified that she was struck by a "Jimmy truck" on June 15, 1999. It was not until she spoke to a friend who was a police officer in the spring of 2000 that she realized that she could make a claim to her insurer. On June 12, 2000, Allstate sent Ms. Horvath an accident benefits application package. On June 14, 2000, she was sent a non-waiver letter, which made no reference to s. 32 or s. 31 of the Schedule or to any specific reason why Allstate might deny coverage of her claim (p.11). Finally, on October 19, 2000, Allstate received an application for accident benefits from Ms. Horvath. Arbitrator Leitch found that Ms. Horvath provided a reasonable explanation for her failure to notify Allstate of the accident within 30 days. He remarked that an insured person is not legally entitled to be ignorant of the laws governing conduct because, like all citizens, he/she is required to know and obey such laws (p.7). However, an insured person is not required to know anything about laws governing liability. He further found that the reasonableness of an explanation is to be assessed on the basis of both subjective personal characteristics and objective "reasonable person" standards (p.8). He concluded that it would be inequitable, in the circumstances of the case, not to relieve against the consequences of Ms. Horvath’s failure to comply with the time-limit imposed by s. 32(1) (p.9).

With respect to the late application for benefits, the Arbitrator found that he was to apply the principles enunciated by the Supreme Court of Canada in Smith v. Co-Operators in a context of the insurer’s obligation under s. 32(2)(c) to provide "information to assist the person in applying for benefits" (p.15). He found that the section should be interpreted in a way which protects consumers by requiring insurers to inform insured persons of the far more serious potential consequences of their failure to comply with s. 32(3). He recommended that the following text, in bold or capital letters, be added to the cover page of the package which is sent to applicants who apply for benefits:

Your failure to return the application forms within 30 days of receiving them from the insurer may result in the rejection of all your claims to statutory accident benefits unless you provide a reasonable explanation of your delay. A determination as to whether you returned the application forms within 30 days or as to whether your explanation for not doing so was reasonable can be the subject of mediation and arbitration. In the event it is determined that you failed to return the application forms within 30 days without reasonable explanation, you will not be entitled to any statutory accident benefits as a result of your accident and may be required to repay benefits already made by the insurer to you or to your service providers.

Section 42 - Independent Examinations

In Sidhu v. Security National Insurance Company/Monnex Insurance Management Inc., A02-000763, June 11, 2003, the applicant was injured in a motor vehicle accident on December 23, 1999. Counsel for the applicant served a psycho-vocational report prepared by Dr. Neville Doxey and G.L. Mitson on the insurer on May 13, 2003. The assessment had been conducted on April 15 and 24, 2003. The arbitration was scheduled to begin on June 2, 2003, and therefore the report had been served outside the time-lines set out in Rule 39.1 of the Dispute Resolution Practice Code.

Security took the position that it should be entitled to respond to the report by having Ms. Sidhu examined by an expert of its own. Counsel for the applicant argued that the insurer ought to have known  that psychological issues were part of the claim and it was too late to seek an assessment of Ms. Sidhu in response to the Doxey report (p.5). Arbitrator Muir found that the issue was "fairness between the parties and an Arbitrator’s duty to control the hearing process" (p.5). He found that if Ms. Sidhu continued to seek to introduce the Doxey report, then fairness required that she be assessed by Dr. Keith Travis as requested. He stated that his decision did not require a consideration of s. 42, but agreed with Arbitrators who have concluded that s. 42, in addition to its evident purpose of facilitating the adjustment of an insured person’s claims file, can also be utilized "to serve the ends of fairness" (p.6).