December 04, 2017, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
Contreras and State Farm
Decision Date: October 12, 2017
Heard Before: Adjudicator David Evans
ELECTION BETWEEN NEBs AND IRBs: cannot be filed for at the same time; time period for filing second claim after first; notice was given by applicant of intent to file for NEBs when filing for IRBs; OCF-1 constitutes a claim for all possible weekly benefits, whether IRBs, caregiver benefits or NEBS
- The appeal of the Arbitrator’s order dated February 3, 2017 is allowed. Paragraphs 1 and 2 thereof are rescinded and replaced with the following:
- Mr. Contreras is not precluded from proceeding to arbitration on his non-earner benefit claims.
REASONS FOR DECISION
Mr. Contreras appeals the decision dated February 3, 2017 by Arbitrator Arbus that he is precluded from proceeding with his claim for non-earner benefits after having received income replacement benefits. The two branches of the decision were that
1. Mr. Contreras had effectively elected to receive IRBs, so s. 35 of the SABS-2010 prevented him from re-electing to claim NEBs, and 2. Mr. Contreras had waited too long to notify State Farm of his NEB claim without a reasonable explanation.
However, at no point was Mr. Contreras required to make an election between IRBs and NEBs, since he never was entitled to claim them at the same time. Further, he gave notice of his NEB claim in his initial application for benefits, so he was not precluded from renewing his NEB claim after he returned to work and was no longer eligible for IRBs.
Mr. Conteras was in a car accident on July 21, 2013. He applied for SABs from State Farm, specifically a claim was made for IRBs. IRBs were paid to Mr. Conteras until he returned to work, approximately nine months after the date of the accident. IRBs were only denied to Mr. Conteras once he returned to work. Approximately 1½ years after he returned to work, Mr. Conteras made a claim for NEBs. On June 11, 2015 (approximately 23 months after the accident), Mr. Conteras applied for Mediation respecting the disputed NEBs.
Adjudicator Evans noted that the Arbitrator’s narrative was incomplete because he does not note that State Farm replied to a possible NEB claim at the very start of the adjusting process. Mr. Contreras submitted his OCF-1 Application for Accident Benefits on August 15, 2013. As discussed in Western Assurance Company and Cejvan, (FSCO P14-00007, December 4, 2014), an OCF-1 constitutes a claim for all possible weekly benefits, whether IRBs, caregiver benefits or NEBS. State Farm’s Explanation of Benefits (OCF-9) dated August 22, 2013 addressed all those benefits. It accepted Mr. Contreras was entitled to IRBs. Further, it stated that there was no coverage under the policy for caregiver benefits (presumably because Mr. Contreras was not catastrophically impaired, and he had not obtained the optional coverage for those benefits). Most significantly, State Farm’s response to any possible NEB claim was: “As you were employed on the date of the accident you do not qualify for this benefit.”
Second, State Farm’s reason for denial was incorrect because the real reason for denial was the mutual exclusivity of IRB and NEB claims. In Galdamez v. Allstate Insurance Company of Canada, 2012 ONCA 508, the Court of Appeal found that applicants may qualify for NEBs even if they were working at the time they were injured in an accident. (In that case, it was uncertain whether the insured qualified for either benefit and could therefore sue for both.) This was further addressed by the Court of Appeal in Sietzema v. Economical Mutual Insurance Company, 2014 ONCA 111, where, as in this case, the OCF-9 also indicated incorrectly that Ms. Sietzema was not eligible for NEBs because she was employed at the time of the accident. Rather, the Court held, she was not eligible for NEBs because she qualified for IRBs and the 1996 SABS did not permit her to receive both benefits. The same mutual exclusivity of IRBs and NEBs applies to the 2010 SABS, as discussed below.
The timing of a weekly benefit claim and the mutual exclusivity of IRB and NEB claims are important to keep in mind regarding the notice and election issues upon which this case turned.
To continue with the arbitration decision, the Arbitrator briefly set out the parties’ positions, adverted to the law, and reached his conclusion.
The first issue was whether Mr. Contreras’ claim for NEBs was barred by virtue of an actual or statutory election pursuant to s. 35(3) of the SABS. In this regard, the Arbitrator wrote:
Section 5 of the Schedule sets out the qualifications for entitlement to IRBs; Section 12 sets out the qualifications for entitlement to NEBs; and Section 35(1) states that where an Applicant may qualify for two or more of IRBs, NEBs or Caregiver Benefits, the Insurer shall within 10 business days after receiving the application, give notice to Mr. Conteras advising them that they must elect within 30 days after receiving the notice the benefit that they wish to receive.
He noted that s. 35(3) states that an election under s. 35(1) is final. He also wrote:
The Insurer points out Section 12(3) of the Schedule, which states that the Insurer is not required to pay a NEB if the Insured has received and elected under Section 35 to receive either IRB or Caregiver Benefits.
The Arbitrator found that, while Mr. Contreras had sent in no election form under s. 35, he effectively elected to receive IRBs, and in accordance with s. 35(3) of the SABS, his election was final, so he could not now claim NEBs.
The second issue was whether, even if Mr. Contreras could claim NEBs after he returned to work, his claim for NEBs was barred for failure to give notice of his intention to apply for the benefit pursuant to s. 32 of the SABS.
The Arbitrator wrote:
Section 32 of the Schedule sets out the procedure for an Applicant to notify the Insurer of their intention of which benefit they seek and sets the time limits for application. Section 34 of the Schedule specifically points out that a person’s failure to comply with the time limit does not disentitle them to a benefit if the person has a reasonable explanation.
The Arbitrator relied on Garcia and State Farm Mutual Automobile Insurance Company, (FSCO A06-002625, March 7, 2008), where it was found that the insured failed, without a reasonable explanation, to give timely notice of an NEB claim. He found the same applied here, and the late notice prejudiced State Farm, so he dismissed the claim on this ground as well.
For the reasons set out below, Adjudicator Evans found Arbitrator erred on both issues.
Regarding the election among weekly benefits under s. 35, it is only necessary to be made if an application indicates that Mr. Conteras may qualify for two or more of the income replacement benefit, the non-earner benefit and the caregiver benefit under Part II. However, at no point did Mr. Contreras so qualify. He never qualified for a caregiver benefit. And precisely because he initially qualified for IRBs, he did not initially qualify for NEBs, as under s. 12(1)1, an NEB is only payable if “The insured person ... does not qualify for an income replacement benefit.” Because he qualified for IRBs, he was not eligible for NEBs, and thus the 2010 SABS did not permit him to receive both benefits.
When Mr. Contreras returned to work, he no longer qualified for IRBs, so the only weekly benefit he possibly qualified for was NEBs.
Therefore, at no point did State Farm have to provide him with notice to make an election, nor did he have to make an election. Adjudicator Evans found the Arbitrator therefore erred in finding that Mr. Contreras effectively elected IRBs. At the beginning of the claim, he never had an option to claim anything other than IRBs, so there was no election to be made and there is no basis for deeming him to have made such an election. After he returned to work, he was no longer entitled to IRBs, so again there could be no election as the only claim he could make was for NEBs. Beyond that, the Adjudicator doubts that there can be such a thing as an effective election: s. 35 is plain that any election must be made pursuant to it.
Absent an election under s. 35, there was nothing to prevent Mr. Contreras from renewing a claim for NEBs. Indeed, one of the provisions in s. 12 relied upon by State Farm supports this statement. Subsection 12(4) provides a number of bases on which an insurer may not be required to pay NEBs, and para. (c) is the relevant one here: “The insurer is not required to pay a non-earner benefit ... (c) if the insured person is eligible to receive and has elected under section 35 to receive either an income replacement benefit or a caregiver benefit under this Part.” The mere fact of being eligible to receive IRBs is not enough; the insured must have been put to the s. 35 election and have elected to receive IRBs to be prohibited from later claiming and receiving NEBs. Mr. Contreras was never put to the s. 35 election, nor could he have been, and accordingly he never made such an election, so s. 12(4)(c) does not prevent him from now claiming NEBs.
Therefore, the Arbitrator erred in concluding that Mr. Contreras was precluded under s. 35 from claiming NEBs.
As to the notice issue, the Arbitrator erred in relying on an old case that is no longer good law: Garcia was decided before Cejvan. As stated in Cejvan, there are no separate OCF-1 forms for the different possible weekly benefits, nor are there any check boxes on the form to indicate that one is applying for any particular weekly benefit. An OCF-1 therefore constitutes a claim for all possible weekly benefits, whether IRBs or NEBS or caregiver benefits. The insurer then assesses the possible weekly benefit claims based on the information provided, and thereafter accepts or denies them. In this case, State Farm accepted the IRB claim and rejected the NEB claim. So Mr. Contreras did notify State Farm of a possible NEB claim in his initial application.
Further, as the Court of Appeal stated in Sietzema: T
There is nothing in the Insurance Act or the comprehensive SABS regime to require an insurer, on termination of benefits, to give the claimant a further notice advising that he or she may have a right to renew a claim for a benefit that had previously been denied.
So while State Farm did not have to advise Mr. Contreras he could renew his NEB claim, nothing prevented him from renewing his NEB claim either. The clear implication throughout Sietzema is that a claim for NEBs could be renewed after IRBs were no longer payable, except that in Ms. Sietzema’s case she waited too long to renew it. Mr. Contreras renewed his claim within the limitation period, and there is nothing in the SABS to prevent him from doing so because he never made an irreversible election, having never been required to make one at all.
Therefore, the Arbitrator erred on this issue as well.
The appeal is therefore allowed, and Mr. Contreras may proceed to arbitration on the NEB issue.