ACCIDENT BENEFITS NEWSLETTER - MAY 2005

Catherine Zingg

Manzanares and Pembridge Insurance Company (Pafco Ins. Co.), P03-00025, April 11, 2005 - The insured appealed from an arbitration decision which dismissed his claim for income replacement benefits because he did not have another licenced driver in the car, as his G1 licence required. Director Draper allowed the appeal. He compared s.58 of the SABS /94 and s.30 of the SABS /96 and noted the different wording of the exclusion sections, in particular the change from the phrase “if the driver was not authorized by law to drive the automobile” used in s.58 and the phrase “if the driver was driving the automobile without a valid driver’s licence” used in s.30. Following the reasons of Judge Belch in Gipson v. Pilot Insurance (2005) O.J. No.: 239 O.S.C., Director Draper stated:

Belch J. was also influenced by the connection between the words used under s.30(1)(b) of the SABS-1996 and the definition section in the Driver’ Licences regulation. Unlike the arbitrators, he found that the definition of the “valid driver’s licence” in the Driver’s Licences regulation applies to the exclusion. In his view, the Insurance Act, the SABS, the Highway Traffic Act and its regulations all deal with similar subject matters. They ‘regulate highways, persons who drive upon them, and provide no fault benefits for those using the highways who have the misfortune to be injured’ (p.8).

Director Draper noted that exclusionary clauses are to be interpreted narrowly and in favour of an insured, especially as the SABS /96 is remedial, consumer protection legislation that is to be interpreted broadly and liberally (p.10).

Karpenko and ING Insurance Company of Canada, A04-002404, April 1, 2005 - Arbitrator Miller ordered ING to pay $150.00 to the insured in any event of the cause. A pre-hearing was scheduled for March 24, 2005 in order to deal with issues arising from a motor vehicle accident which occurred on November 9, 2002. Ms. Karpenko had also been involved in a second motor vehicle accident on March 5, 2003. At the pre-hearing, the insurer refused to have any settlement talks on the issues for arbitration unless Ms. Karpenko was willing to discuss settlement regarding her second accident. The arbitrator found that the tone and attitude taken by ING was inappropriate. The arbitrator found that ING had wasted the applicant’s time at the pre-hearing and after submissions awarded Ms. Karpenko the amount of $150.00 pursuant to the expense Rules regarding conduct of a party to prolong or hinder a proceeding (p.4).

Royal and Sunalliance Insurance Company of Canada and Jiwa, P04-00024, January 13, 2005 - Royal issued a cheque for $15,000.00 in settlement of Mr. Jiwa’s claims in December 1999. The cheque was sent to SM Insurance Claims. In November 2003, Mr. Jiwa passed away. His widow commenced an arbitration on the basis that her late husband had “never received the money he was entitled to”. Mr. Jiwa had received two cheques from SM Insurance Claims each in the amount of $2,947.50, but both were returned NSF. A criminal complaint was filed against SM Insurance Claims. Mr. Mendez pleaded guilty to 19 counts of theft and was ordered to pay restitution to many victims in the amount of $135,000.00. Arbitrator Leitch found that it would be contrary to the objective of consumer protection to allow insured persons to contract out of s.44(1)(a). Royal would not be liable for portions of the settlement funds which Mr. Jiwa had recovered from Mr. Mendez as that would amount to double recovery. Director’s Delegate Makepeace allowed Riyal’s appeal, finding that s.44 governs the payments of benefits and does not apply to settlement payments. On behalf of the estate, it was submitted that sections 44 and 65 of the SABS were intended to void the misappropriation of insurance proceeds by an unscrupulous third party (p.6). This argument was rejected, with the Director’s Delegate finding that s.44 (1) applies to “a benefit under this regulation”. It was further held that Royal had complied with s.65(2) by making its cheque payable to Mr. Jiwa personally. The Director’s Delegate was not persuaded that Royal was required to take the further precaution of delivering the cheque to Mr. Jiwa rather then SM. It was found that Royal had satisfied its obligations and therefore the Director’s Delegate had no authority to order it to pay any additional funds (p.9). It was found that Royal had satisfied its obligations toward Mr. Jiwa and it was entitled to expect that the dispute was at an end (p.13).

The Director’s Delegate acknowledged that the Commission would have jurisdiction to hold an arbitration or a settlement is raised as a defence. However, in this case Mr. Jiwa’s estate was not asserting a claim for accident benefits or challenging the validity of his settlement agreement with Royal (p.11).

Thangarasa and Gore Mutual Insurance Company, A02-00136, April 1, 2005 - On March 31, 1998, Mr. Thangarasa was seriously injured while a passenger in a motor vehicle accident. He suffered a ruptured right globe of his eye, multiple liver lacerations, fractured ribs and a closed head injury. Mr. Thangarasa’s claim for income replacement benefits was successful. Arbitrator Wilson noted that Mr. Thangarasa’s ongoing involvement in the video store had been seen by the insurer as an indication that he was not only ready to work in an occupation, but had already found a niche in the employment world. However, it was found that the insured was unable to effectively perform the basic tasks of a video store clerk, but was kept on and provided an activity by his brother as an act of familial loyalty (p.4). In considering the claim for a special award, Arbitrator Wilson extensively reviewed the file notes of the adjuster. Arbitrator Wilson remarked that, “while it is difficult to speak of a state of mind of a corporation, the records, potentially, shed some light on the evaluation process, and Gore Mutual’s approach to its obligations toward Mr. Thangarasa” (p.27). The Arbitrator commented:

An insurer owes certain obligations to its shareholders. It should not payout money that it is not obliged to pay. On the other hand, it has an obligation to its policyholders, and those who claim under the insurance policies to settle their claims reasonably, fairly, and promptly. Neither obligation trumps the other. However, if an insurer lets its obligation to account to its shareholders drive its relations with its policyholders, it will be in breach of its obligation to deal fairly with its policyholders (p.36).

A DAC report had endorsed Gore’s position on disability. The arbitrator, however, accepted that there were procedural problems with the DAC assessment. It was also found that deficiencies in the report should have been evident to the reader. Apart from “some very generalized comments on restrictions by Dr. English, there was no discussion of whether Mr. Thangarasa could meet the actual physical demands of the listed occupations” (p.39). It was further found that the decision to rely on the apparent conclusions of the DAC report itself, in the face of the consistent, contrary, evidence on disability given by treatment providers and the internal inconsistencies in the DAC report itself was both “beyond the limits of what is reasonable or equitable” and “not guided by or listening to reason” (p.40). The amount of the award was to be determined at a later date.