Neutral Citation: 1994 ONICDRG 110
File No. A-009110
ONTARIO INSURANCE COMMISSION
BETWEEN:
NADINE OSBOURNE
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
File No. A-009111
AND:
NADINE OSBOURNE
Applicant
and
YORK FIRE & CASUALTY INSURANCE COMPANY
Insurer
DECISION ON PRELIMINARY ISSUE
Issues:
The Applicant, Nadine Osbourne, was injured in a motor vehicle accident on December 1, 1993. She applied for statutory accident benefits from both Allstate Insurance Company of Canada ("Allstate") and York Fire & Casualty Insurance Company ("York Fire"), payable under Ontario Regulation 6721. Allstate has paid statutory accident benefits to the Applicant to the date of this hearing on a preliminary issue. York Fire paid no statutory accident benefits to the Applicant and maintains that it is not liable for these benefits. The parties will proceed to a hearing before another arbitrator to determine which Insurer should pay statutory accident benefits to the Applicant.
The issues in this hearing on a preliminary issue are:
Should more than one insurer share in the payment of statutory accident benefits to the Applicant, pending the outcome of the arbitration?
Are all the payments which have been paid by Allstate to date reasonable and necessary expenses which have been incurred by the Applicant as a result of the accident?
The Applicant's counsel sought to add additional issues to the hearing on the preliminary issue. These were issues concerning accommodation needs for Nadine Osbourne and her family and concerning prospective transportation expenses and other care and nursing services which have been provided. I declined to add these issues to this hearing, since this was not agreed to at the pre-hearing discussion on August 4, 1994.
The Applicant also claims interest on any outstanding amounts owing, and her expenses incurred in the hearing.
Result:
The Applicant is entitled to interim benefits, to be shared equally between the Insurers, from this date forward, pending the outcome of the arbitration.
The issue of an accounting of benefits already paid is reserved to the hearing arbitrator, if necessary.
The expenses of this hearing on a preliminary issue are reserved to the hearing arbitrator.
Hearing:
The hearing on the preliminary issue was held in North York, Ontario, on November 7, 1994, before me, K. Julaine Palmer, arbitrator.
Present at the Hearing:
For the Applicant: Dorna Osbourne Winston Smart Maureen Palmer
Applicant's Representatives: Leonard H. Kunka, Barrister and Solicitor Joseph Pileggi
Allstate's Representative: James Flaherty, Barrister and Solicitor
Allstate's Officer: Phil Langford
York Fire's Representative: Raymond Watt, Barrister and Solicitor
No witnesses testified at the hearing on the preliminary issue. The Applicant filed an affidavit of Joseph Flam, legal assistant, and five exhibits.
Background
Nadine Osbourne, who was born December 28, 1979, was not yet 15 years old when she was struck by a motor vehicle after alighting from a schoolbus on December 1, 1993. As a result of the accident, Ms. Osbourne suffered severe head injuries, internal injuries, and a fractured right femur. She spent more than 70 days in a coma. After emergency treatment in Pickering, she was transferred to the Hospital for Sick Children until January 25, 1994, when she moved to Bloorview Rehabilitation Hospital. It was not until February 7, 1994, that she began to speak. On April 8, 1994, Ms. Osbourne was transferred to the Hugh MacMillan Rehabilitation Centre where she remains a resident to this day. Ms. Osbourne has come a long way in her rehabilitation since the accident and began to walk during the week of May 13, 1994. However, Ms. Osbourne suffered severe injuries in the accident of December 1, 1993, and will require a great deal of assistance for some time to come.
In general, the Insurers are aware of the seriousness of the injuries suffered by Nadine Osbourne in the motor vehicle accident. Allstate has paid supplementary medical and rehabilitation benefits until this hearing on the preliminary issue. However, York Fire has contributed nothing to the statutory accident benefits being received by the Applicant until this time. It disputes that it is liable for those benefits, based upon the definition of "spouse" and "dependant" contained in the Schedule.
Evidence and Findings:
I am considering this preliminary issue because of the provisions of section 279(4.1) of the Insurance Act, R.S.O. 1990, c.I.8, as amended by the Insurance Statute Law Amendment Act, 1993.
The Director and every arbitrator may make interim orders pending the final order in any matter before the Director or arbitrator.
This section came into force on January 1, 1994. Ms. Osbourne's accident occurred in 1993. However, for the reasons expressed by Arbitrator Manji in her decision in the case of George Bernicky and Guardian Insurance Company of Canada, July 6, 1994, OIC File No. A-006268, with respect to the amendments to section 282(11.1) of the Act, I find that section 279(4.1) of the Insurance Act, as amended, applies to this proceeding.
Jurisdiction to order two insurers to share benefits on an interim basis
York Fire's counsel submitted that an arbitrator has no jurisdiction to order York Fire to share in the statutory benefits paid to Ms. Osbourne pending the outcome of the arbitration. His argument, put simply, is that an arbitrator cannot, on an interim basis, make any award that she could not make in the final analysis. No one argued that an arbitrator could, in the end, order two insurers to share the statutory payments. It is implicit in the scheme outlined in section 268 of the Act that only one insurer will ultimately pay benefits.
I do not agree with this submission. Section 279(4.1) clearly sets out an arbitrator's authority to grant interim orders. I view my authority in this sphere as ancillary to my jurisdiction as an arbitrator to determine which Insurer is liable to pay statutory benefits. Further, as has been expressed many times by arbitrators, the present scheme of statutory accident benefits was initiated in June 1990 to provide a more expeditious and efficient method of compensating injured victims of motor vehicle accidents. It would not be in the best interest of the operation of the scheme to reject out of hand the notion that benefits be divided, on an interim basis, with right of repayment, between two (or more) insurers, each of which is potentially the liable payor. Indeed, the rejection of such a notion might have the unfortunate result of impeding the operation of the Schedule, by encouraging no Insurer in such circumstances to accept responsibility for payment of benefits on an interim basis, fearful that it might have to bear the whole responsibility for a considerable time through arbitration and, potentially, an appeal.
Criteria for an Interim Award of Benefits
Only counsel for Allstate made submissions with respect to the criteria which should be used by an arbitrator to decide whether an application for interim benefits should be granted. No counsel referred to case law, rules of court or other tribunals, or other legal doctrine for my consideration. No submissions were received relating to the criteria used in other areas of the law, for example, family law, where interim orders are routinely sought.
Counsel referred only to the recent case of George Bernicky, cited above, where Arbitrator Manji set out the criteria she thought appropriate to the consideration of an Applicant's request for an award of certain interim expenses, under section 282(11.1) of the Act. Arbitrator Manji wrote:
I believe that an interim award of expenses incurred in respect of an arbitration proceeding for medical documents is appropriate in the following circumstances: (i) where the Application for Appointment of an Arbitrator raises a bona fide issue; (ii) where the expenses claimed are reasonable and necessary for the conduct of the arbitration; and, (iii) where the applicant is unable to carry the expenses claimed until the arbitration hearing.
It was submitted that the first criterion, a bona fide issue, is appropriate also in considering criteria for determining an interim application for benefits. In the context of this hearing, there is evidence before me in Exhibit "C" to the affidavit, which, in my view, establishes a prima facie case that Winston Smart could be considered to be a spouse of Dorna Osborne. (Exhibit "C" is a transcript of a discussion between adjusters for York Fire and Allstate and Winston Smart and Dorna Osbourne held on February 28, 1994.) From this evidence, it would also appear that Nadine Osbourne was living with her mother and dependent on her at the time of the accident. York Fire is the insurer of Winston Smart. Accordingly, in my view, there is sufficient evidence to establish that the inclusion of York Fire as a potential insurer in this application is made in good faith.
The second and third criteria set out in the decision concerning interim expenses are not as applicable to the situation before me. Applicants, in the circumstances of Nadine Osbourne, are entitled to benefits under the Schedule from whichever Insurer is liable, as long as they meet the requirements specified by the Schedule. Perhaps the second criterion in this case should be: Are the injuries suffered by the Applicant in the accident, prima facie, sufficiently serious that medical and other health care services are required? In addition, one might ask whether, prima facie, the Applicant has been unable to perform either the essential tasks of her employment or the essential tasks in which she would normally engage since the accident? An affirmative answer to both these questions conveys a sense of urgency, which may also be seen as a criterion to solicit an interim award of benefits. In the present case, the evidence before me is that the injuries have been very serious and Ms. Osbourne has been in hospital since the accident. Plans for her release from hospital are underway and immediate steps need to be taken to provide safe and appropriate housing for her.
I do not believe that financial need should necessarily be demonstrated as a criterion to award interim benefits, but in this case, it would appear to be accepted that the Applicant is unable to carry the expenses.
On these criteria, then, Nadine Osbourne should be granted accident benefits on an interim basis and those benefits should be paid, from this date forward, by both Insurers.
Payments Made to Date
I appreciate the concern of the Applicant's counsel, and of the Insurer which has made the payments to date, that an accounting of the benefits paid to this point should be made and those accounts "passed", to borrow language from the law of estates. In my view, it would not be fair for those accounts to remain open, potentially for years to come, allowing York Fire, if it is ultimately held liable to pay, to question payments made in late 1993 and early 1994, when it had entirely rejected the notion that it should pay benefits.
However, that being said, what evidence do I have about the payments made to date? The affidavit contains a single, bald statement: "Hereto and attached to my Affidavit and marked as Exhibit "D" is a computer printout of the expenses that have been submitted to date." Exhibit "D" is a 12 page list to July 9, 1994, totalling $42,334.33 in "Outstanding Recoveries", and $22,341.67 in "Paid Recoveries", whatever those headings mean. One line of the printout is expressed as follows:
Mar 10, 1994 Total expenses to date $16,385.21
In addition, the heading at the top of the printout lists an extended health insurer and its contract number, as well as the particulars of the Allstate claim number. Clearly, the material provided is entirely inadequate for me to express any opinion on whether the amounts are reasonable, necessary and incurred as a result of the accident.
I would encourage York Fire's representatives to audit the claims which have been paid to date and satisfy themselves as to their correctness. If necessary, this issue will be added to the issues to be addressed at the hearing, now scheduled for January 30 and 31, 1995.
Order:
The Applicant is entitled to interim benefits, to be shared equally between the Insurers, from this date forward, pending the outcome of the arbitration.
The issue of an accounting of expenses already incurred or paid is reserved to the hearing arbitrator, if necessary.
The expenses of this hearing on a preliminary issue are reserved to the hearing arbitrator.
November 18, 1994
K. Julaine Palmer Arbitrator
Date