Frank Donohue v. State Farm Mutual Automobile Insurance Company, 1995 ONICDRG 9

Ontario Insurance Commission

Neutral Citation: 1995 ONICDRG 9

File No. A-006756

Between:

Frank Donohue, Applicant

and

State Farm Mutual Automobile Insurance Company, Insurer

Assessment of Expenses

Issues:

An arbitration hearing was held in this matter on June 6 and 7, 1994. In the decision, dated August 31, 1994, Frank Donohue was awarded his expenses related to the arbitration. The parties were able to agree on the expenses, with the exception of the account of Dr. Mark Baily. The issue in this assessment is the extent to which State Farm is obliged to pay Dr. Baily's account.

Result:

State Farm is required to pay $112.50 to Mr. Donohue for his expenses related to the expert testimony of Dr. Baily.

Assessment Hearing:

The assessment hearing was held in North York, Ontario, on January 18, 1995, before me, David R. Draper, arbitrator.

Present at the Hearing:

Applicant's Representative: Michael Gillen, Barrister and Solicitor

Insurer's Representative: Eric Grossman, Barrister and Solicitor

Exhibits:

The exhibits introduced in this assessment hearing are listed in Appendix A to this decision.

Cases considered:

Vito Luigi Calogero and The Co-operators General Insurance Company, February 13, 1992, OIC File No. P-000251.

Tha Huu Dinh and Pafco Insurance Company Limited, October 5, 1994, OIC File No. A-007053.

Glenn MJ. Epps and Co-operators General Insurance Company, September 3, 1993, OIC File No. A-002340, upheld on appeal, December 14, 1994, OIC File No. P-002340.

Kevin Hanna and Royal Insurance Company of Canada, December 2, 1994, OIC File No. A-005409.

Ernesto Ieritano and Security National Insurance Company, May 10, 1994, OIC File No. A-003552.

Chuong Vo and Maplex General Insurance Company, October 4, 1993, OIC File No. A-002777, upheld on appeal, March 14, 1994, OIC File No. P-002777.

Reasons for Decision:

Mr. Donohue's family doctor, Dr. Mark Baily, testified at the arbitration hearing. Although he was called as Mr. Donohue's witness, State Farm served him with a Summons to Witness in order to ensure his attendance. The Summons to Witness form states: "You are entitled to be paid the same personal allowances for your attendance at the hearing as are paid for the attendance of a witness summoned to attend before the Supreme Court of Ontario." The calculation of attendance money for the Supreme Court of Ontario is set out in Tariff A to the Rules of Civil Procedure, as follows:

21. Attendance money actually paid to a witness who is entitled to attendance money, to be calculated as follows:

22. Attendance allowance for each day of necessary attendance $50

23. Travel allowance, where the hearing or examination is held,

(a) in a city or town in which the witness resides, $3.00 for each day of necessary attendance;

(b) within 300 kilometres of where the witness resides, 244 a kilometre each way between his or her residence and the place of hearing or examination;

(c) more than 300 kilometres from where the witness resides, the minimum return air fare plus 244 a kilometre each way from his or her residence to the airport and from the airport to the place of hearing or examination.

3. Overnight accommodation and meal allowance, where the witness resides elsewhere than the place of hearing or examination and is required to remain overnight, for each overnight stay $75

State Farm provided Dr. Baily with $53 attendance money for his attendance at the arbitration hearing in North York. I heard no evidence about the location of Dr. Baily's residence, although his medical practice is located in the City of Toronto. Dr. Baily has not been asked to return the attendance money.

Following the arbitration hearing, Dr. Baily presented his account, as follows:

My account for acting as an Expert Witness on behalf of the above-named patient is as follows:

1. Time spent reviewing ten years of past medical history as well as review of the medical literature concerning compression fracture...one hour.

2. Travelling time from Main and Danforth to North York Centre, 45 minutes each way for a total of 1.5 hours.

3. Time spent giving expert testimony...45 minutes.

Total time spent on case: 3 1/4 hours, hourly rate as set out by the Medical Legal Society of Ontario - $250 per hour. Total amount due: $812.50.

In my decision, dated August 31, 1994, I awarded Mr. Donohue his expenses related to the arbitration. According to section 282(11) of the Insurance Act, arbitrators are limited to awarding the expenses set out in the regulations to the maximum set out in the regulations. Ontario Regulation 664, R.R.O. 1990, specifies the allowable expenses. These are substantially restated in Schedule 1 to the Dispute Resolution Practice Code. Section 5(1) of Ontario Regulation 664 provides:

5-(1) The amount of the following witness fees paid by or on behalf of the insured person may be awarded:

2. For the attendance of an expert witness who gives opinion evidence at an arbitration or hearing or whose attendance is necessary, in accordance with subsection (3).

(3) The maximum amount that may be awarded for the attendance of an expert witness is $200 per hour of attendance, up to a maximum of $1600 per day.

The parties agree that the appropriate hourly rate for Dr. Baily is $150 per hour, not $250 as he claimed in his account. The disagreement is whether State Farm is obligated to pay for his preparation and travel time.

I would summarize Mr. Gillen's submissions on behalf of Mr. Donohue as follows. The dispute resolution process was established to give applicants access to a relatively inexpensive, speedy and informal means of resolving disputes about accident benefits. Arbitrators have recognized this by granting expenses to applicants, regardless of the outcome of the arbitration, as long as the application was not manifestly frivolous or vexatious, or the applicant did not unreasonably prolong the proceedings. The assessment of expenses should be approached in a similar manner. Because arbitrators expect doctors to be reasonably prepared, and because travelling to and from the hearing site is a necessary part of "attendance", denying these expenses would make it difficult for applicants to present medical evidence in support of their claims. Therefore, section 5 of Regulation 664 should be broadly interpreted to include reasonable preparation and travel time.

Mr. Gillen cited my recent decision in Kevin Hanna and Royal Insurance Company of Canada, December 2, 1994, OIC File No. A-005409, as an example of an arbitrator adopting a broad interpretation to avoid frustrating the interests of one of the parties. In Hanna, I rejected the applicant's narrow interpretation of sections 23(2) and 25 of the Schedule, and concluded that the insurer could require a medical examination in order to evaluate the applicant's ongoing claim, even though the insurer was no longer paying weekly income benefits and the insured person had already applied for arbitration.

Mr. Grossman submitted, on behalf of State Farm, that Regulation 664 simply does not include an hourly rate for either transportation or preparation by an expert witness. He relied on the arbitration decision in Glenn M.J. Epps and Co-operators General Insurance Company, September 3, 1993, OIC File No. A-002340. In Epps, Arbitrator Mackintosh allowed four hours for the time that the doctor was in attendance at the hearing location, but refused to award any further amount specifically related to the doctor's travel or preparation time, or for the cancellation of his appointments.

I note that the decision in Epps was upheld on appeal (December 14, 1994, OIC File No. P-002340). The Director of Arbitrations concluded:

As to charges for medical reports and witness expenses, the arbitrator applied the appropriate criteria in determining which expenses were allowable and reasonable, and in what amount.

Mr. Gillen attempted to distinguish Epps based on the fact that the doctor in that case wanted to be compensated for his lost income. Mr. Gillen also submitted that the decision in Epps suggests some expenses were allowed for the doctors' preparation and travel time.

In this case, Dr. Baily billed an hourly rate for one hour preparation, one hour and 15 minutes travel, and 45 minutes at the hearing. There is nothing unreasonable about the time Dr. Baily spent. Expert witnesses are expected to be reasonably prepared, and it obviously takes time to travel to and from the hearing site. The issue is whether Dr. Baily's time for preparation and travel may be compensated under Regulation 664.

In my view, the interpretation in Epps, with which I agree, is that section 5(1)2 covers the reasonable time that the expert witness was in attendance at the hearing site, even if he or she is not actually testifying. An hourly rate is allowed for the expert's hours "of attendance". The section may be broad enought to cover an expert who arrives somewhat early for a hearing and uses the time to prepare or meet with counsel, but it does not cover the expert's time for pre-arbitration preparation, or travel.

I am significantly influenced in this decision by the fact that Regulation 664 has specific provisions dealing with both preparation and travel. Expenses are allowed at an hourly rate for lawyers and agents for "preparation for an arbitration", in addition to their "attendance at an arbitration" (sections 2 and 3). It is significant that there is no similar provision for expert witnesses. One possible explanation is that the special hourly rate for expert witnesses was intended to include some preparation time.

Section 6 of Regulation 664 sets out the travel expenses allowed for the applicant and his or her lawyer, agent or attendant. It allows certain travel expenses, not an hourly rate for travel time. In my opinion, when sections 2 and 3 are read in conjunction with section 6, it reinforces the interpretation that travel is distinct from "attendance at an arbitration". I also conclude that a fair reading of the Regulation, particularly section 5 and the Summons to Witness form, is that the travel expenses of witnesses are to be dealt with according to Tariff A to the Rules of Civil Procedure. If an applicant issues a Summons to Witness to an expert witness and pays the appropriate attendance money, I would expect that the attendance money could be recovered as "out-of-pocket expenses incurred in furtherance of the arbitration, appeal or variation hearing" (section 4, paragraph 4, of Regulation 664).

Any limit on the expenses that an applicant may recover could affect his or her ability to obtain and present evidence at an arbitration hearing. However, the purpose of expense provisions in Regulation 664 is to define what expenses may be recovered. Although I accept that the legislation should be given a large and liberal interpretation, I do not believe that it reasonably bears the interpretation urged by Mr. Gillen.

I note that an applicant may recover up to $800 for an expert's report, as long as it is "necessary for the conduct of the arbitration" (section 5(1)3 of Regulation 664). Where the expert must spend a significant amount of time prior to the hearing, it may be appropriate to have this work reflected in a report. A detailed report might even relieve the need for the expert to testify at the arbitration hearing.

For all of these reasons, I conclude that the expenses related to Dr. Baily are limited to his 45 minute attendance at the hearing. This means that Mr. Donohue is entitled to $112.50 for his expenses related to Dr. Baily's testimony as an expert witness: $150/hour x 0.75 hours = $112.50.

Order:

State Farm is required to pay Mr. Donohue $112.50 for his expenses related to the expert testimony of Dr. Baily.

February 7, 1995

David R. Draper Arbitrator

APPENDIX A

Exhibit 1 A photocopy of a letter, dated June 13, 1994, from Mr. Gillen to Mr. Grossman.

Exhibit 2 A photocopy of a letter, dated June 10, 1994, from Dr. Baily to Mr. Gillen.

Exhibit 3 A photocopy of a letter, dated September 23, 1994, from Mr. Gillen to Mr. Grossman.

Exhibit 4 A photocopy of a letter, dated July 7, 1994, from Mr. Grossman to Mr. Gillen.