Neutral Citation: 1996 ONICDRG 41

File No.: A-009880

ONTARIO INSURANCE COMMISSION

BETWEEN:

RACHELA COLUSSI

Applicant

and

GENERAL ACCIDENT ASSURANCE COMPANY OF CANADA

Insurer

DECISION

Issues and Result:

The Applicant, Rachela Colussi, was injured in a motor vehicle accident on July 13, 1992. She applied for and received statutory accident benefits from the Insurer, General Accident Assurance Company of Canada ("General Accident") payable under Ontario Regulation 672.¹ Ms. Colussi received benefits from July 20, 1992 to March 19, 1994. After her benefits were terminated, Ms. Colussi sought reinstatement of weekly income benefits from March 20, 1994 to July 25, 1994 and payment of babysitting and housekeeping expenses from February 28, 1994 to July 25, 1994.

At the pre-hearing discussion on November 7, 1994 the parties agreed that the issues of Ms. Colussi's ongoing entitlement to weekly income benefits after March 19, 1994 and babysitting and housekeeping expenses after February 27, 1994, would be determined in the arbitration. General Accident did not raise any issue in respect of Ms. Colussi’s right to the benefits that had been paid to her up to the time they were terminated, and made no claim for repayment.

The arbitration hearing took place on March 20 and March 21, 1995. The hearing did not conclude on March 21, 1995, and was scheduled to resume on August 2, 1995.

After the hearing in March and before its resumption in August, General Accident applied for mediation, seeking repayment of weekly income benefits and medical, babysitting, housekeeping and other expenses paid to Ms. Colussi after August 31, 1992, on the basis that these benefits were paid to her in error. The parties were unable to resolve these issues through mediation and on the day of the resumption of the hearing on August 2, 1995, General Accident moved to include its claims for repayment in the ongoing arbitration.

Ms. Colussi objected to the inclusion of General Accident’s claims for repayment in the arbitration, and on August 2, 1995, I heard submissions from the parties on this issue.

On August 3, 1995, I communicated to the parties my decision that General Accident was entitled to a determination of its claim for repayment of weekly income benefits paid to Ms. Colussi from September 1, 1992 to March 19, 1994 and babysitting and housekeeping expenses paid to

Ms. Colussi from September 1, 1992 to February 28, 1994 in the ongoing arbitration. I also informed the parties that Ms. Colussi was entitled to an adjournment to enable her to respond to General Accident's claims for repayment in respect of these benefits.

Shortly following my decision, Ms. Colussi withdrew her application for arbitration and moved for an order awarding her her expenses incurred in respect of the arbitration proceeding. General Accident opposed Ms. Colussi's motion for expenses. I determined that Ms. Colussi was entitled to her expenses.

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on March 20 and 21, 1995 and at the offices of Paul W. Rosenberger (Official Examiner) in Toronto on August 2 and 3 , 1995, before me, Shemin Manji, Arbitrator.

Present at the Hearing:

Applicant:

Rachela Colussi

Applicant's Representatives:

Ross G.C. Wonnick

Barrister and Solicitor

Michael G Kovacevic

Barrister and Solicitor

Insurer's Representative:

Alan L. Rachlin

Barrister and Solicitor

Witnesses:

Ms. Rachela Colussi

Dr. Shane Fainman

Mr. Luciano Colussi

The proceedings were recorded by Karen West from the offices of Paul W. Rosenberger (Official Examiner).

A list of exhibits and other documents on the record are attached as Schedule "A."

Reasons for Decision:

(A) Is General Accident entitled to a determination of its claims for repayment in the ongoing arbitration?

In order to decide whether General Accident is entitled to a determination of its claims for repayment in the ongoing arbitration, I must consider, in the first instance, whether I have the authority to determine these claims. If I do, I must consider, secondly, whether I can permit these claims to be included in the arbitration when they are raised for the first time in the middle of the hearing.

(i) My authority to determine General Accident’s claims for repayment

An arbitrator conducting an arbitration hearing under the Insurance Act, R.S.O. 1990, Chap. I.8, as amended ("the Act"), exercises purely statutory powers. Unlike a court, an arbitrator has no inherent powers and his or her arbitral authority must derive - either expressly or by implication - from the Act. An arbitrator’s jurisdiction to determine issues between parties is limited by sections 281(1), 281(2) and 282(3) of the Act which provide:

281.- (1) If mediation fails, the insured person may bring a proceeding in a court of competent jurisdiction or may refer the matter to an arbitrator.

(2) No person may bring a proceeding in any court or refer a matter to arbitration unless mediation has first been sought and has failed.

282.- (3) The arbitrator shall determine all issues in dispute and such other issues as the parties may agree. [emphasis added]

Under the Act, only an insured person may refer "the matter" to arbitration. Whether or not an arbitrator can deal with issues other than those raised by the insured person depends on the scope of "the matter" that the insured person has referred to arbitration, and in the absence of agreement between the parties, the scope of the "issues in dispute" in the case.

General Accident relied on my decision in Peter Kotsiakos and State Farm Mutual Automobile Insurance Company, July 26, 1994, OIC File No. A-002354 (under appeal), in support of its position that I had authority to determine its claims. In Kotsiakos, I considered the meaning that should be given to the words "matter" and "issues in dispute," and I followed the reasoning of the Director of Arbitrations in Rosa DeCicco and State Farm Mutual Automobile Insurance Company, February 21, 1992, OIC File No. P-000277 (appeal decision). In DeCicco, the Director of Arbitrations did not define "matter." Rather, she stated that it was up to the arbitrator called upon to determine "the matter" to define that matter and, in each case, determine the scope of the arbitration. The Director suggested, however, that once "the matter" is defined by the arbitrator, any questions or concerns that naturally or consequentially flow from "the matter" comprise the "issues in dispute."

Based on my reading of sections 281 and 282 of the Act and the Director's decision in DeCicco, I concluded in Kotsiakos that an arbitrator cannot expand the scope of the arbitration to include a question or concern unrelated to the matter referred by the insured person to arbitration. If the question or concern is directly related to the matter or naturally or consequentially flows from the matter, then it is properly an "issue in dispute." In making this determination, I considered the nature of the inquiry and the type of evidence to be led by the parties.

Nothing in this case persuades me to depart from the reasoning and approach that I adopted in Kotsiakos.²

In this case, I find that the matter referred to arbitration by Ms. Colussi was her entitlement to weekly income benefits from March 20, 1994 to July 25, 1994 and her entitlement to babysitting and housekeeping expenses from February 28, 1994 to July 25, 1994.

General Accident sought to include the issues of whether it was entitled to repayment, under section 27(1) of the Schedule, of weekly income benefits paid to Ms. Colussi from September 1, 1992 to March 19, 1994 and all medical, babysitting, housekeeping and "other" expenses paid to Ms. Colussi from September 1, 1992 to February 27, 1994 ( "the repayment issues "). General Accident submitted that I had authority to determine these issues. It submitted that mediation had been sought in respect of these issues but had failed, and the issues were directly related to the issues referred to arbitration by Ms. Colussi.

Ms. Colussi disagreed. She submitted that the issues that she had referred to arbitration were narrower and that, if General Accident were allowed to raise the repayment issues, the scope of the arbitration would be significantly expanded. The parties would be required to file additional medical briefs and call additional witnesses.

Ms. Colussi also submitted that the nature of inquiry and evidence in respect of the issues which she had referred to arbitration was different from that in the repayment issues. She submitted that a determination of the repayment issues would include an inquiry into the relationship between her accident of July 13, 1992 and her disability after the accident ("the causation issue"). It would also require an inquiry into the relationship between her accident and the medical, babysitting and housekeeping expenses incurred by her after the accident ("the causation issue"). In addition, a determination of the repayment issues would also require an inquiry into whether any overpayment she received was paid through error or fraud. Ms. Colussi submitted that the issues she had referred to arbitration did not require such inquiries.

I am not satisfied that General Accident's claim for repayment of medical and "other" expenses paid to Ms. Colussi from September 1, 1992 to February 27, 1994, is directly related and naturally or consequentially flows from the matter that Ms. Colussi referred to arbitration. Ms. Colussi is not disputing the termination of medical and "other" expenses and General Accident has provided me with very little information about the nature of the medical and "other" expenses paid to Ms. Colussi from September 1, 1992 to February 27, 1994. Accordingly, I conclude that I do not have the authority to determine General Accident's claims for repayment of these benefits.

I conclude, on the other hand, that I have the authority to determine General Accident's claims for repayment of weekly income benefits and babysitting and housekeeping expenses.

I do not agree with Ms. Colussi that the repayment issue that General Accident has raised in respect of weekly income benefits will involve a different kind of inquiry and evidence from the inquiry and evidence necessary in determining the matter of her ongoing entitlement to weekly income benefits from March 20, 1994 to July 25, 1994. While the periods in issue are different, there is overlap between the issues and in the evidence.

General Accident's claim for repayment under section 27 of the Schedule of weekly income benefits paid to Ms. Colussi relates directly to Ms. Colussi's entitlement to weekly income benefits paid to her by General Accident. In its claim for repayment, General Accident is, in effect, asserting that Ms. Colussi was not entitled to receive weekly income benefits from September 1, 1992 to March 19, 1994, when they were terminated.

The test for Ms. Colussi's entitlement to weekly income benefits for the period of March 20, 1994 to July 25, 1994 is the same as the test for her entitlement to weekly income benefits for the period September 1, 1992 to March 19, 1994, i.e., she must establish that she suffered substantial inability to perform the essential tasks of her employment during the period, as a result of the accident.³ In order to determine whether Ms. Colussi is entitled to weekly income benefits for the period of March 20, 1994 to July 25, 1994, I must inquire into her physical condition during this period to determine whether she was disabled and whether her disability, if any, was related to the motor vehicle accident of July 13, 1992. The inquiry into the causal relationship between Ms. Colussi's disability for the period of March 20, 1994 to July 25, 1994 and her accident of July 13, 1992 necessarily includes an examination of her disability, if any, from September 1, 1992 to March 19, 1994 (the period in issue in General Accident's claim for repayment of weekly income benefits). Further, in determining Ms. Colussi's entitlement to weekly income benefits from March 20, 1994 to July 25, 1994 and her entitlement to weekly income benefits from September 1, 1992 to March 19, 1994, I must inquire into and determine the essential tasks of her pre-accident employment.

Because there is overlap between the issues, much of the evidence to be led by the parties will be similar. In this case, at the hearing on March 20 and 21 and August 2, 1995, much of the documentary⁴ and viva voce evidence adduced by Ms. Colussi herself focused on her physical condition from the date of the accident to the date when weekly income benefits were terminated. Ms. Colussi also provided detailed evidence in respect of the essential tasks of her pre-accident employment as a receptionist/bookkeeper in a hair salon. While this evidence was adduced regarding Ms. Colussi's entitlement to weekly income benefits from March 20, 1994 to July 25, 1994, it is also relevant to the repayment issue in respect of weekly income benefits raised by General Accident.

I find that a determination of General Accident's entitlement to repayment of weekly income benefits paid to Ms. Colussi from September 1, 1992 to March 19, 1994 naturally or consequentially flows from the matter of Ms. Colussi's entitlement to weekly income benefits from March 20, 1994 to July 25, 1994. I also find that a determination of Ms. Colussi's liability to repay any weekly income benefits found to have been overpaid through error or fraud would not significantly change the nature or expand the scope of my inquiry.

Similarly, I do not agree with Ms. Colussi that the repayment issue in respect of babysitting and housekeeping expenses will involve a different kind of inquiry and evidence from the inquiry and evidence necessary in determining the matter of her ongoing entitlement to babysitting and housekeeping expenses from February 28, 1994 to July 25, 1994. Again, while the periods in issue are different, there is overlap between the issues and in the evidence.

The test for Ms. Colussi's entitlement to babysitting and housekeeping expenses from February 28, 1994 to July 25, 1994 is the same as for her entitlement to these expenses from September 1, 1992 to February 27, 1994. In order to determine whether Ms. Colussi is entitled to babysitting and housekeeping expenses from February 28, 1994 to July 25, 1994, I must inquire into whether these services fall within the scope of section 6(1)(f) of the Schedule, i.e., whether they were required because of the accident.

At the hearing Ms. Colussi testified that she was entitled to be paid for babysitting and housekeeping expenses from February 28, 1994 to July 25, 1994 because "her condition had not changed." Thus, the inquiry into the causal relationship between Ms. Colussi's need for babysitting and housekeeping expenses from February 28, 1994 to July 25, 1994 and the accident necessarily includes an examination of her physical condition and the necessity for babysitting and household services if any, from September 1, 1992 to March 19, 1994 (the period in issue in General Accident's claim for repayment of babysitting and housekeeping expenses).

Again, because there is overlap between the issues, much of the evidence to be led by the parties will be similar.

I find that a determination of General Accident's entitlement to repayment of babysitting and housekeeping expenses paid to Ms. Colussi from September 1, 1992 to February 27, 1994 naturally or consequentially flows from the matter of Ms. Colussi's entitlement to babysitting and housekeeping expenses from February 28, 1994 to July 25, 1994. I also find that a determination of Ms. Colussi's liability to repay any babysitting and housekeeping expenses found to have been overpaid through error or fraud would not significantly change the nature or expand the scope of my inquiry.

(ii) Can I permit these claims to be included in the arbitration when they were raised for the first time in the middle of the hearing?

Ms. Colussi submitted that General Accident's attempt, in the middle of the hearing, to include the repayment issues in the arbitration was an abuse of the process, and that General Accident should not be permitted to raise these issues at this late date, i.e., after the commencement of the hearing.

Ms. Colussi also submitted that it would be unfair to her, in the extreme, to include these issues in the middle of the arbitration hearing. Ms. Colussi submitted, first of all, that the inclusion of these issues would greatly increase her exposure. She submitted that if she had known at the outset that General Accident would be questioning the relationship between her accident and her disability from the end of August 1992 to March 19, 1994, she would have assessed her options and likely instructed her solicitors not to proceed with the arbitration. Ms. Colussi submitted, secondly, that she has already given her evidence. Ms. Colussi indicated that her viva voce evidence may have been different if she had known that the repayment issues would be included in the arbitration. She also submitted that the documentary evidence that she would have tendered at the hearing would have been different. She would have filed a different medical brief. She would have called different witnesses. She would have called more witnesses on the causation issues. She would have also called witnesses on the issue of whether she had been overpaid through error or fraud.

General Accident submitted that it did not raise the repayment issues at the pre-hearing discussion or at the commencement of the arbitration hearing in March because these issues had not been mediated.

I believe that I have the discretion to permit a new issue which is properly before me to be raised at any time during the course of an arbitration hearing. I believe that I derive this discretion from my authority to control the process. Before exercising my discretion in this case, I considered various factors:

First, I considered whether, if the evidence before me shows that Ms. Colussi has received weekly income benefits and babysitting and housekeeping expenses for a longer period than she is entitled, it made sense to require General Accident to re-litigate the entire question in Court in order to effect a statutory right of repayment. I determined that it made no sense. If General Accident were compelled to proceed to Court, the parties would be exposed to duplicate proceedings in different forums and would run the risk of inconsistent decisions on essentially the same issues and the same evidence. It would not advance the interest of any party, in any justifiable sense, to follow such a procedure.

Second, I considered whether the issues raised by General Accident are legitimate issues for determination. Based on both the documentary and viva voce evidence adduced at the hearing, I was satisfied that the repayment issues in respect of weekly income benefits and babysitting and housekeeping expenses were legitimate issues for determination.

Third, I considered whether it be more expeditious and cheaper for the parties to deal with the repayment issues in respect of weekly income benefits and babysitting and housekeeping expenses and the matter referred to arbitration by Ms. Colussi in one hearing. I determined that it would be more expeditious and cheaper for the parties.

Last, I considered whether Ms. Colussi would be unduly prejudiced by the inclusion, in the ongoing arbitration, of the repayment issues in respect of weekly income benefits and babysitting and housekeeping expenses. I determined that she would be unduly prejudiced if she were required to respond to these issues on the August hearing dates. Ms. Colussi did not, at the outset of the hearing, have notice that her entitlement to the weekly income benefits and babysitting and housekeeping expenses which she had received for a significant length of time would be in issue in the arbitration. Having heard her testimony at the hearing, I did not accept her submission that her testimony may have been different had she known that the repayment issues were going to be determined in the arbitration. However, I accepted her submission that she would have adduced more evidence on the causation issues.

General Accident must establish that any overpayment of benefits received by Ms. Colussi during the periods in question was paid through error or fraud. I also accepted Ms. Colussi's submission that she would have adduced evidence in response to that issue.

In this case, after considering these factors, I decided to exercise my discretion to permit General Accident's claims for repayment of weekly income benefits and babysitting and housekeeping expenses paid to Ms. Colussi to be included in the ongoing arbitration, even though these claims were raised in the middle of the hearing. Because I determined that Ms. Colussi would be unduly prejudiced if she were required to respond to these claims on the August hearing dates, I offered her an adjournment to give her an opportunity to prepare, by way of further documentary or viva voce evidence, her response to these claims. I note that section 21 of the Statutory Powers Procedure Act, R.S.O. 1990, Chap. S.22, as amended, gives me the power to adjourn a hearing on my own motion.

(B) Is Ms. Colussi entitled to her expenses incurred in respect of the arbitration?

In its response to Ms. Colussi's objections to the inclusion of the repayment issues, General Accident stated that if Ms. Colussi decided to withdraw her application for arbitration, it would be prepared to consent to the withdrawal. In my oral decision in this matter, I advised Ms. Colussi that I would be prepared to allow her to withdraw her application for arbitration, in accordance with section 66.2 of the Dispute Resolution Practice Code (August 1995). Shortly following my decision, Ms. Colussi withdrew her application for arbitration and moved for an order awarding her her expenses incurred in respect of the arbitration proceeding.

General Accident opposed Ms. Colussi's motion for expenses. It submitted that Ms. Colussi should not be awarded expenses because as a result of her decision to withdraw her application for arbitration, time and money has been expended in this proceeding for naught. Further, General Accident submitted that it will potentially be exposed to further costs in the future in an arbitration or in court. General Accident requested that I make no award of expenses.

An award of expenses in favour of an applicant may be made under section 282(11) of the Act which states:

The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.

The prescribed expenses and amounts are set out in Ontario Regulation 664.

I am satisfied that the repayment claims raised by General Accident in respect of weekly income benefits and babysitting and housekeeping expenses paid to Ms. Colussi are legitimate issues for determination in this arbitration. However, the withdrawal of the application for arbitration occurred because General Accident failed, prior to the hearing, first, to refer these issues to mediation and then, subsequently, to move to include them in the arbitration. I was not given a good reason why these issues were raised so late in the day. I find, therefore, that General Accident failed to take steps that would have minimized the expenses incurred by both parties in this arbitration. In these circumstances, Ms. Colussi is entitled to her expenses in respect of the arbitration proceeding in accordance with Ontario Regulation 664. If the parties are unable to agree on the amount owing, either of them may apply for an assessment of expenses.

Order:

1. General Accident shall pay Ms. Colussi her expenses incurred in respect of the arbitration in accordance with Ontario Regulation 664.

March 11, 1996

Shemin Manji Arbitrator

Date

SCHEDULE "A" - THE RECORD

Exhibits:

Exhibit 1:

Medical Brief of Rachela Colussi

Tab 1

Crawford & Company Job Analysis Form Worksheet

Tab 2

Letter dated December 7, 1992 from Crawford & Company to Dr. Mary Nadalini

Tab 3

Letter dated March 9, 1993 from Crawford & Company to Dr. Nadalini

Tab 4

Letter dated July 8, 1993 from Crawford & Company to Dr. Nadalini

Tab 5

Letter dated October 14, 1993 from Crawford & Company to Ms. Colussi

Tab 6

Letter dated October 21, 1993 from Ms. Colussi to Crawford & Company

Tab 7

Rehabilitation Assessment Report from Canadian Back Institute dated July 21, 1993

Tab 8

Consultation Report from Dr. Stephen W. McKenzie to Dr. Nadilini dated November 23, 1993

Tab 9

Report from Dr. Shane Fainman dated June 20, 1994 & Curriculum Vitae of Dr. Fainman

Tab 10

Clinical note and records of Dr. Nadilini

Tab 11

Report from Dr. G. Moddel dated November 8, 1993

Tab 12

Report from Dr. Frank D. Csik dated October 20, 1994

Tab 13

Clinical notes and records of Dr. Ernest J. White, Riverfront Medical Services, Ltd.

Tab 14

Clinical notes and records of Dr. Moddel

Tab 15

Clinical notes and records of Dr. Fainman

Tab 16

Letter dated July 14, 1994 from Dr. J.H. Schneiderman to Dr. Fainman

Tab 17

Letter dated August 4, 1994 from Dr. Fainman to Dr. Nadalini

Tab 18

Memorandum, undated, from Crawford & Company to General Accident (Paul Gorjup )

Exhibit 2:

Medical Brief of General Accident

Tab 1

Queensway General Hospital Emergency Record dated July 13, 1992

Tab 2

The Mississauga Hospital E.E.G. Report dated July 23, 1993

Tab 36

Report from Dr. Robert S. Yufe dated January 19, 1993

Tab 4

Reports from O. Dunin-Bell dated March 4, 1993 and September 23, 1993

Tab 5

Letter dated January 14, 1994 from Crawford & Company to Dr. Nadalini

Tab 6

Rehabilitation Assessment Report from Canadian Back Institute dated January 14, 1993

Tab 7

Reports from Dr. White dated November 23, 1992 and November 8, 1993

Exhibit 3:

Motor Vehicle Accident report

Exhibit 4:

Letter dated October 18, 1994 from Mr. Rachlin to Mr. Kovacevic

Exhibit 5:

Statement made by Ms. Colussi dated February 17, 1993

Exhibit 6:

Employer's Confirmation of Income from Philip Folino dated July 29, 1992

Exhibit 7:

Report from Dr. O. Dunin-Bell dated May 19, 1994

Other documents before the Arbitrator, but not marked as exhibits:

Report of Mediator dated July 6, 1994

Report of Mediator dated May 23, 1995

Application for Appointment of an Arbitrator dated August 23, 1994

Response by Insurer dated September 27, 1994

Reply by Insured Person dated October 14, 1994

Letter dated November 23, 1994 from Arbitrator Janice Mackintosh to the parties, confirming pre-hearing discussions held on November 7, 1994

Letter dated August 16, 1995 from Arbitrator Shemin Manji to the parties (decision on Ms. Colussi's motion for expenses)

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule — Accidents Before January 1, 1994. In this decision, the term "Schedule'"will be used to refer to Regulation 672.
2. 2Since my oral decision in this matter, Arbitrator Eban Bayefsky has issued his decision in Lendell Carby and Co-operators General Insurance Company, January 12, 1996, OIC File No. A-950220. In Carby, Arbitrator Bayefsky, disagrees with the reasoning and approach adopted in Kotsiakos and lists criteria he considers relevant to an arbitrator's determination of whether to add an issue raised by an insurer. In my view, these criteria significantly expand the circumstances under which an insurer may be permitted to add an issue to an arbitration. In this case my decision would be the same, therefore, even if I were to agree that the criteria identified by Arbitrator Bayefsky are relevant criteria and should be applied in this case.
3. 3Section 12(1) of the Schedule.
4. 4See Schedule "A" attached.