Arbitration determines Insured's Accident Benefits must be Reassessed

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To address the backlog of cases and disputes needing to be resolved by Ontario courts, the Ontario legal system has established alternative dispute resolution methods that eliminate the longer and more expensive trial process. Two of these methods include mediation and arbitration.

The most significant difference between mediation and arbitration is that no ruling is made in the former, as opposed to the latter. Mediation simply seeks to guide parties to a mutual agreement, as opposed to arbitration, which involves a neutral third party, the arbitrator, who listens to testimony from both sides and makes a ruling that is legally binding by the Courts.

Sometimes, parties end up going through both processes when they are simply unable to resolve their issues. Such was the case of Ms. Jessica Arruda and her insurer, Western Assurance Company, FSCO.

Case example

A key issue in this case was Ms. Arruda's request for a reassessment of her accident disability benefits which were initially defined by the MIG designation, but more than 1 year later, her insurer failed to consider medical evidence that indicated that her suffering was more serious and long-term.

After a failure to resolve their issues through mediation, Ms. Arruda's counsel applied for arbitration through the Financial Services Commission of Ontario. The case was heard by arbitrator Jeffrey Shapiro.

The facts of the case are as follows.

On May 5, 2012, Ms. Arruda was involved in a car accident while riding in the back seat of her boyfriend's car. Ms. Arruda's injuries consisted of soft tissue damage and psychological trauma, and as such, were considered minor, so she received benefits from her insurer under Ontario's Minor Injury Guideline (MIG) which is in accordance with section 268.3 of the Insurance Act.

However, when the payments under MIG (a maximum of $3,500) expired, Ms. Arruda sought benefits under the Statutory Accident Benefits Schedule (SABS), but these were denied by her insurer as they were outside the scope of the Minor Injury Guideline. (SABS, under the Insurance Act, is a regulation which provides a standard of no-fault insurance benefits for all accidents arising from the operation of a motor vehicle.)

In the action of Arruda v Western Assurance, the arbitrator, Mr. Shapiro, was faced with and expected to resolve the following issues.

  1. Did Ms. Arruda's injuries fall outside the Minor Injury Guideline?
  2. Was Ms. Arruda entitled to Income Replacement Benefits (IRB) up to the 104-week mark (period from a week after the accident to 104 weeks later), as well as post 104-week mark?
  3. If Ms. " Arruda was entitled to IRB up to the 104-week mark, at how much?
  4. Was Ms. Arruda entitled to receive Medical/Cost of Examination Benefits for a series of assessments, as well as the ambulance bill?
  5. Was Ms. Arruda owed any interest on any outstanding benefits?
  6. Was Western Assurance liable to pay a special award to Ms. Arruda?
  7. Was Western Assurance required to pay Ms. Arruda's expenses for the arbitration hearing?

Mr. Shapiro ruled that while he agreed that Ms. Arruda's initial injuries fell within the Minor Injury Guideline, they no longer met this criteria. Based on a finding in Cowans v Motor Insurance Company, Mr. Shapiro stated that as the insurer, Western Assurance had an obligation to assess and reassess Ms. Arruda's claim as new information came to light.

While all of Ms. Arruda's medical examinations and reports in the 5-7 months period after her accident classified her in the MIG category, her injuries did not fully go away and more than a year later, she was diagnosed as having Chronic Pain Syndrome, a condition that distinctly places her outside the MIG category. However, Western ignored that medical report and failed to do any follow up. That said, Mr. Shapiro noted that Ms. Arruda was disputing her treatment plan for the 5-7 month period after her accident and during that time, she did not prove that her injuries were outside the MIG designation.

For the second issue, it was ruled that Ms. Arruda was entitled to income replacement benefits up to the 104-week mark, but not entitled to these benefits after the 104-week mark. Mr. Shapiro acknowledged that Ms. Arruda met the burden of proof in showing that her employment prior to the accident was far too strenuous for her to immediately return to after the accident. And therefore she was entitled to the income she lost by being unable to work during that time.

Mr. Shapiro decided that Ms. Arruda did not meet her burden of proof with regards to income replacement benefits post the 104-week. Prior to the accident, Ms. Arruda held two jobs, one as a cleaner for a cleaning service company and another as a part-time administrative assistant at a recruiting company.

Mr. Shapiro believes that there was no evidence that Ms. Arruda was unable to return to her office job, even if the job of cleaner was still too strenuous for her. Coupled with this, Mr. Shapiro noted that Ms. Arruda gave no indication that she tried to find more suitable employment.

In terms of the amount Ms. Arruda was owed for income replacement benefits, the dispute was the result of a simple error on the part of Western's legal team, which failed to include Ms. Arruda's earnings from the cleaning company in 2012, as well as a failure to calculate the gross earnings from her office job versus the net earnings. The firm acknowledged its error and so Mr. Shapiro approved the amount of $103.86 submitted by her lawyer.

With regard to Medical/Cost of Examination Benefits, Mr. Shapiro ruled that Ms. Arruda was only entitled to reimbursement for the ambulance fee. He ruled that all the other examinations and treatments Ms. Arruda sought during this period were unnecessary and outside the Minor Injury Guideline category which her injuries still fell under. Consequently, Western Assurance was not liable to reimburse her for the payments of these examinations.

As for interest on outstanding benefits, Mr. Shapiro ruled that Ms. Arruda was entitled to interest on any overdue benefits, owed to her by Western. Referring to The Insurance Act, Mr. Shapiro also ruled that Western Assurance was liable to pay Ms. Arruda a special award, due to the fact that there was an unreasonable delay in the withholding of her payment.

Ms. Arruda testified that despite submitting all necessary tax returns to Western, she did not receive any income replacement benefits payments until two months later. Mr. Shapiro agreed with Ms. Arruda's testimony and challenged Western for this delay in processing her return and sending her a cheque for IRB benefits. Mr. Shapiro calculated Ms. Arruda's special award at 10% of the delayed amount Western eventually delivered to her.

Finally, while Mr. Shapiro ruled that Western Assurance was liable to pay Ms. Arruda's expenses for the arbitration hearing, he noted that neither party had delivered any written submissions on expenses. He encouraged the two parties to resolve the issues on their own but informed them that if they could not reach a resolution, they should seek an expense hearing before him.

The victim of personal injury often finds the post-accident period to be a painful and emotionally challenging experience. Although accident victims frequently relate that expert and empathetic legal counsel greatly reduced the pressures for them during this process, there is undeniably additional stress for individuals having to go through a lengthy trial.

The use of arbitration can significantly reduce that stress and costs, and is a valuable course of action when a positive outcome can be obtained for victims.

For Ms. Arruda, a key conclusion in this decision, is that injuries originally designated under the MIG guidelines can and should be re-evaluated when new medical evidence indicates a change in condition.

In Arruda v Western Assurance, Chronic Pain Syndrome was held to fall outside the realm of MIG. Although the onus is on the injured person to prove any changes in their condition or eligibility for benefits, every insurer has a duty to reevaluate their policyholder's benefits based on new medical evidence.

The experienced staff at Gluckstein Personal Injury Lawyers will always seek the most efficient and effective means to achieve a good settlement for our clients. If you or someone you love has been the victim of a personal injury, do not hesitate to give us a call

Our experienced personal injury team will advise you of your rights and can answer the many questions which you will naturally have, after being injured in an accident or when your claim for disability benefits is rejected by your insurer.

Call Gluckstein Lawyers today or visit us for a free consultationYou are under no obligation, but will leave our office with a clear idea of  your options and the steps involved in settling your case and making a successful claim for benefits.


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