FSCO Arbitrator Suesan Alves has ruled that the (FSCO) prescribed Settlement Disclosure Notice might be inadequate to effect settlement.
In Parveen v. Aviva, a preliminary issue was whether Ms. Parveen had rescinded her accident benefits settlement and was entitled to move to arbitration. The chronology of events are as follows:
- At a pre-hearing held at FSCO on May 30, 2011, Ms. Parveen agreed to resolve her accident benefits claims arising from a November 2008 accident on a full and final basis. She signed a settlement disclosure notice at this time.
- On June 1, 2011, counsel for the Insurer sent counsel for the Applicant a release for his client’s signature by fax.
- On June 10, 2011, counsel for the Applicant sent counsel for the Insurer an e-mail in which he stated that his client “will not execute the release provided ”and asked: “Please advise if settlement will be in effect without it.” Counsel for the Insurer replied that “As she signed the Settlement Disclosure Notice and the cooling off period has expired, the settlement is in effect. We require however that the Release is signed …”
- On July 4, 2011, Ms. Parveen signed a release after 5:00 p.m.
- On July 5, 2011, counsel for the Applicant sent a letter to counsel for Aviva by courier advising that his client was rescinding the settlement. He enclosed the original executed release and a copy of a letter to the Financial Services Commission of Ontario in which he asked for a hearing to be scheduled to determine Ms. Parveen’s entitlement to her claims for statutory accident benefits, interest and expenses.
- On July 8, 2011, counsel for Aviva received the letter rescinding the settlement.
- On July 13, 2011, counsel for Aviva sent the settlement funds to counsel for the Applicant.
- On July 18, 2011, counsel for Ms. Parveen returned the settlement funds to counsel for Aviva.
Arbitrator Alves found that important information in the Settlement Regulation was not conveyed by the text of the prescribed Settlement Disclosure Notice. Specifically, she noted that Paragraph 3 of subsection 9.1(3) of the Settlement Regulation sets out the information that must be included in the disclosure notice with respect to the right to rescind a settlement. It requires:
A statement that the insured person may, within two business days after the later of the day the insured person signs the disclosure notice and the day the insured person signs the release, rescind the settlement by delivering a written notice to the office of the insurer or its representative and returning any money received by the insured person as consideration for the settlement.
Meanwhile, the prescribed Settlement Disclosure Notice that Aviva gave Ms. Parveen contained the following statements with respect to her right to rescind:
- At page one: “…Your insurer will probably also give you a release to sign. . .
- IF YOU SIGN THIS SETTLEMENT DISCLOSURE NOTICE AND A RELEASE, YOU WILL BE GIVING UP RIGHTS YOU MAY HAVE NOW OR IN FUTURE, EVEN IF YOUR CONDITION CHANGES. IF YOU DO SIGN THIS NOTICE AND A RELEASE YOU HAVE 2 BUSINESS DAYS TO CHANGE YOUR MIND.
- At page six, in a text box immediately below the line for the signature of the insured:
- IF YOU CHANGE YOUR MIND
IF YOU CHANGE YOUR MIND AFTER AGREEING TO SETTLE YOUR CLAIM BY SIGNING A RELEASE, YOU MUST:
NOTIFY THE INSURER IN WRITING AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED WITHIN 2 BUSINESS DAYS AFTER YOU SIGNED THE RELEASE
IF YOU SIGNED A RELEASE AND LATER SIGNED THIS DISCLOSURE NOTICE, YOU HAVE 2 BUSINESS DAYS FROM WHEN YOU SIGNED THE DISCLOSURE NOTICE IN WHICH TO NOTIFY THE INSURER AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED.
The Arbitrator found that the prescribed disclosure notice did not contain a statement that the insured person may:
“within two business days after the later of the day the insured person signs the disclosure notice and the day the insured person signs the release, rescind the settlement.”
She found that the missing information was required by paragraph 3 of subsection 9.1(3) of the Settlement Regulation.
Accordingly, she held that the Applicant was entitled to rescind the settlement even beyond the two day cooling off period as provided by subsection 9.1(5) of the Settlement Regulation.
It is important to remember that the Settlement Disclosure Notice is an approved form, prescribed by the Superintendent of Insurance (FSCO). Insurers are required to use this form as a disclosure notice. Nevertheless, the arbitrator held that the onus lay on the insurer to ensure that the form contains all of the information necessary to comply with the settlement regulation and that there was nothing preventing the insurer from amending the form and seeking the Superintendant’s approval.
So now again it seems that one branch of FSCO has determined that insurers cannot rely upon a form prescribed by their Regulator, which happens to be another branch of FSCO.