Neutral Citation: 1996 ONICDRG 7

OIC A-950220

BETWEEN:

LENDELL CARBY

Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

The Applicant, Lendell Carby, was injured in a motor vehicle accident on October 28, 1991. He applied for and received statutory accident benefits from the Insurer, payable under Ontario Regulation 672.¹ Weekly income benefits were terminated by the Insurer on October 24, 1994. The parties were unable to resolve their disputes through mediation and the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended. Pre-hearing discussions took place on September 14, 1995 and October 19, 1995. A question arose as to the issues to be included in this arbitration. Submissions on this matter were completed October 27, 1995.

The preliminary issues to be addressed are:

Is the Insurer entitled to raise the issue of quantum of benefits at the arbitration?
Is the Insurer entitled to raise the issue of repayment of benefits at the arbitration?

The Insurer is entitled to raise the issue of quantum of benefits at the arbitration.
The Insurer is entitled to raise the issue of repayment of benefits at the arbitration.

Brief pre-hearing discussions took place on September 14 and October 19, 1995. Mr. Carby attended on both occasions, represented by Mr. Antonio Azevedo. Ms. Philippa Samworth appeared on behalf of the Insurer. Oral submissions were to be heard on the preliminary issues at the October 19th reconvening. However, Mr. Azevedo indicated he was not prepared to argue the matter at that time. He suggested the matter be completed through written submissions. Ms. Samworth consented to this. Written submissions were completed on October 27, 1995.

Process to Date.

The Applicant was injured in a motor vehicle accident on October 28, 1991. He received weekly income benefits pursuant to section 12 of the Schedule until October 24, 1994, at a rate of $384.62 per week. The Insurer terminated benefits on the basis that the Applicant is not continuously prevented from engaging in any occupation or employment for which he is reasonably suited by education, training or experience. The Applicant applied for mediation of three issues: (1) section 12 benefits from October 25, 1994 ongoing at a rate of $384.62 per week (post-156 weeks); (2) section 6 benefits to cover the expense of a pain clinic; and (3) section 6 benefits to cover the expense of vocational retraining. A Report of Mediator was released on April 24, 1995 indicating that these three issues remained in dispute.

The Applicant filed an Application for Arbitration on June 1, 1995 which identified weekly income benefits and interest as the matters to be arbitrated. The Insurer filed a Response to an Application for Arbitration on June 23, 1995. The Insurer challenged the Applicant's entitlement to weekly income benefits beyond October 24, 1994 on the grounds noted above. The Insurer also indicated that it would apply for mediation of the issue of the quantum of benefits to which the Applicant may be entitled beyond 156 weeks, as well as the issue of the repayment of some of the benefits already paid to the Applicant. The Insurer indicated that, upon the completion of the mediation, it would be asking that these matters be joined with the other issues raised in the Application for Arbitration.

On July 10, 1995, the Insurer applied for mediation of the issues of quantum and repayment. A Report of Mediator was released on August 14, 1995 indicating that the issue of repayment remained in dispute. The matter of quantum was not specifically addressed (although the matter was clearly before the mediator and the Applicant does not dispute the Insurer's assertion that both quantum and repayment were mediated). By letter dated September 11, 1995 (just prior to the first pre-hearing date), the Insurer indicated that it wished to have the issue of repayment added to the arbitration; the Application for Mediation and Report of Mediator were provided as background material.

At the pre-hearing, the Insurer raised the issues of quantum and repayment and requested that these be added to the arbitration. The Applicant indicated that he simply wished to have the issue of entitlement post-156 weeks arbitrated and that the Insurer was not entitled to raise additional issues without the Applicant's consent, regardless of whether the matters had been mediated. The Applicant did not consent to the addition of the Insurer's issues.

Submissions

The Insurer submitted that the issues of quantum and repayment "fall within the context" of post-156 week issues and that, since the matters have been duly mediated, they can properly be made part of this arbitration. The Insurer also indicated that it had previously made numerous attempts to clarify the matter of quantum with the Applicant, but that the Applicant was not forthcoming. The Insurer stated that further information has now been obtained and that the issues of quantum and repayment could likely be addressed very quickly at arbitration on the basis of an agreed statement of fact. The Insurer has indicated that if these matters are not included, it will proceed to court on them, resulting in unnecessary expense and duplication to both the Insurer and the Applicant. The Insurer submitted that Rules 32 and 33 of the Dispute Resolution Practice Code - 1995 give an arbitrator the jurisdiction to add issues to the arbitration irrespective of the consent of the parties. Finally, as a general consideration, the Insurer argued that by including issues of quantum and repayment, parties will be better able to assess the appropriateness of settling matters prior to the hearing, fostering the goal of a fair, expeditious and inexpensive dispute resolution process.

The Applicant submitted that the issue of quantum has no bearing on the question of entitlement to benefits beyond 156 weeks and should, therefore, not be included in the arbitration. The Applicant argued that the Insurer has, in any event, not established that quantum is, in fact, an issue at this point, and that there is no jurisdiction to arbitrate a 'potential issue." The Applicant indicated that he seeks an expeditious determination of the issue of entitlement and to include the issue of quantum would only serve to lengthen the proceedings. The Applicant did not appear to address the matter of repayment in his submissions.

Findings:

Legislation

An arbitrator has a broad jurisdiction to determine the issues to be addressed in an arbitration. This jurisdiction has two main sources: (1) the Insurance Act (the "Act") and jurisprudence arising thereunder, and (2) the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended (the "SPPA"), in conjunction with the Dispute Resolution Practice Code - 1995 (the "Practice Code").

Section 282(3) of the Act states that, upon being appointed in an arbitration, an arbitrator "shall determine all issues in dispute and such other issues as the parties may agree." This provision is mirrored in Rule 33.3 of the Practice Code. Section 20(2) of the Act states that an arbitrator has the "exclusive jurisdiction to exercise the powers conferred upon him or her under this Act and to determine all questions of fact or law that arise in any proceeding before him or her and, unless an appeal is provided under this Act, his or her decision thereon is final and conclusive for all purposes." The decision of the Director of Arbitrations in DeCicco² states that "where an arbitrator is called upon to determine 'the matter' referred to him or her, the arbitrator must define that matter and, in each case, determine the scope of the arbitration" (at p. 10).

Although section 281(1) of the Act only permits an insured person to refer a matter to arbitration, arbitrations are not said to be confined to only those issues raised by the applicant. Pursuant to section 280(8), where a mediation has failed, the mediator is to prepare a report setting out the issues remaining in dispute. Pursuant to section 282(3), the arbitrator is to determine all issues in dispute. In my view, the legislation is not designed to preclude an insurer from raising any issue in addition to those raised by the applicant. A fundamental, residual jurisdiction remains with an arbitrator to determine which matters ought to be considered in the course of an arbitration, notwithstanding the position of the applicant.

Section 5.3 of the recently amended SPPA, the legislation prescribing minimum procedural rules for administrative tribunals, sets out the authority of a tribunal in the context of a pre-hearing conference. As long as a tribunal has adopted rules governing pre-hearings (in the Commission's case, the Practice Code), the tribunal can conduct a pre-hearing to consider the "simplification of the issues" and "any other matter that may assist in the just and most expeditious disposition of any proceeding." Pursuant to section 5.3(3) of the SPPA, any tribunal member presiding at a pre-hearing conference "may make such orders as he or she considers necessary or advisable with respect to the conduct of the proceeding...." Rule 1.1 of the Practice Code states that "these Rules will be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute." Rule 32.1 states that a pre-hearing arbitrator will assist the parties to prepare for an arbitration by "(a) identifying and obtaining agreement as to the issues for arbitration" and "(g) dealing with any other matters that the arbitrator considers appropriate."

The noted provisions do not grant an arbitrator jurisdiction to consider matters not otherwise within the purview of an arbitration. They do, however, affirm the basic jurisdiction of an arbitrator to decide which issues are to be determined in the course of an arbitration and to structure the proceeding so as to achieve the most just and expeditious disposition of the matter.

Caselaw

The arbitration decisions to date are consistent in holding that the fact that only an insured can refer a matter to arbitration does not restrict the issues in the proceeding to only those raised, or agreed to, by the applicant. The cases also hold that an arbitrator does not have an unlimited jurisdiction to add issues which have not been mediated and to which an applicant has not consented. However, within these two extremes, the cases have taken different approaches to determining the proper limits of an arbitration. The arbitration decision of DeCicco held that "the authority of the arbitrator extends to anything that reasonably and consequentially flows from the issues that are before her" and that this can include the matter of repayment.³ This approach was affirmed on appeal.⁴ The case of Ayertey notes the legitimate desire of an applicant "to have some control over the scope of the arbitration hearing" and holds that an insurer "cannot raise a matter (benefit category) that is not included in the Applicant's Application for Appointment of an Arbitrator, even if that matter was included in the mediation, unless the Applicant consents."⁵The cases of Kotsiakos, Rescigno, Alexander and Slivecka⁶ find that an arbitrator can only consider those issues that 'directly affect" or 'naturally or consequentially flow" from the matter that has been referred to arbitration by the applicant, not those issues unrelated to or involving a different type of inquiry and evidence than the applicant's issues. The cases find that issues of quantum and repayment do not flow from questions of entitlement.

Regarding Kotsiakos, however, the arbitrator (at p. 13) emphasized that the applicant was not disputing the insurer's refusal of benefits or seeking a determination of the duration of benefits, and the insurer was not seeking a repayment of benefits on the basis of an error in calculation. In Rescigno (at p. 6), the arbitrator emphasized that the matter of quantum had not been mediated and in Slivecka (at pp. 17-18), the arbitrator appeared to be concerned that the matter of quantum had been raised for the first time at the very end of the arbitration hearing. These facts render these decisions of questionable application to the present case.

Finally, the case of Francis⁷ found that the issues of quantum and repayment do flow from a request that benefits be reinstated at a particular level (namely, the level at which the benefits were being paid at the time of termination). The arbitrator stated that the addition of the issue of repayment would not "significantly expand" the scope of the arbitrator's inquiry (at pp. 7-8). In the present case, the Applicant appears to have shifted the focus from entitlement at a particular level to the simple question of entitlement in response to the Insurer's request to add quantum and repayment as issues. The Report of Mediator and Application for Arbitration, on their face, would appear to suggest that the Applicant originally sought the reinstatement of benefits at a particular level, although this is now less clear. If he were seeking a determination of entitlement to benefits at a particular level, then Francis would suggest that it is quite reasonable to consider the Insurer's issues of quantum and repayment.

As indicated, the cases have taken different approaches to defining an arbitrator's jurisdiction in this area. The cases also identify various policy concerns in resolving the matter. The arbitration decision in DeCicco (at p. 10) states that the scope of the issues before an arbitrator should not be defined in a narrow and technical manner, and should be done in such a way as to avoid multiple proceedings, inconsistent decisions and unnecessary and costly litigation in the courts. The two decisions in DeCicco are also consistent with Ayertey in holding that the applicant must have some control over the arbitration process and that insurers are, consequently, not entitled to raise disputes regarding entitlement to or the amount of a different benefit. The case of Aladejebi⁸ (in which it was held that the insurer could not raise the issue of repayment following the withdrawal of the applicant's claim for reinstatement of weekly income benefits) stated that an applicant's control over the issues to be determined in an arbitration is not absolute and (citing the appeal decision in DeCicco) that justice must be done "between the parties no matter who may bring the arbitral process into play" (at p. 16).

Two additional considerations are identified in the cases of Slivecka and Alexander. The arbitrator in Slivecka held that where the issue of quantum is not added, an insurer is free to set the rate at which benefits will be paid once entitlement has been established (at pp. 22-23).

However, although the particular circumstances may have justified the result in Slivecka, it would simply not make sense (as a general proposition) to narrow the scope of an arbitration allowing an insurer to unilaterally determine an issue on which the insurer itself is seeking an objective determination by the Commission. The applicant would also likely be required to return to mediation on the issue of the benefit level subsequently imposed by the insurer. This cumbersome process could not have been intended as being in the best interests of applicants and insurers.

In Alexander, the arbitrator found that the issue of quantum raised by the insurer did not consequentially flow from the matters raised by the applicant because the quantum of benefits did not need to be determined in order to determine the question of entitlement raised by the applicant (at p. 7). In my view, this approach could have the effect of excluding a whole range of issues reasonably considered in conjunction with matters raised by the applicant. For example, it would not be necessary to determine if a person had returned to work or school for more than 90 days under section 16 of the Schedule in order to determine if that person was substantially disabled under section 12. An arbitration could be requested and medical evidence could be called on the simple question of entitlement under section 12, whereas the insurer may (on the basis of recently obtained information) wish to argue that the applicant was disqualified from receiving benefits under the terms of section 16. Although it would be reasonable to determine the applicant's employment or education status post-accident, the principle enunciated in Alexander would not require this approach, resulting in an artificial and potentially counter-productive separation of issues addressed in the arbitration. As in Slivecka, the arbitrator could issue a general declaration on entitlement under section 12, leaving it to the insurer to unilaterally impose a solution under section 16 or to seek a (potentially inconsistent) determination of the issue in court.

Governing Principles

In my view, therefore, the following criteria emerge as relevant to an arbitrator's determination of whether to add an issue raised by an insurer:

(1) Has the insurer's issue been mediated?

(2) Does the issue involve a different benefit category from that raised by the applicant?

(3) Is the issue reasonably incidental to the issues raised by the applicant?

(4) Will the inclusion of the issue unduly expand the scope of the inquiry and essentially deprive the applicant of control of the proceeding?

(5) Will the inclusion of the issue benefit both parties by avoiding multiple proceedings?

Adoption of these criteria will not allow an insurer to add any issue to an arbitration. Nor will they result in an overly narrow or formalistic approach to the identification of issues in a proceeding. They recognize the interest both parties have in participating in a full, fair and effective arbitration process.

Regarding the first criterion, Rescigno suggests that a matter should be mediated to ensure that it is in fact in dispute, and Slivecka suggests that the matter should be raised as early as possible in the proceeding to avoid undue delay or prejudice to the applicant. Therefore, as a minimum, the issue the insurer wishes to add to the arbitration should first be mediated.

The criterion of "benefit category" is also listed as a way to regulate the types of issues raised by an insurer in an arbitration. The application of this principle, however, should likely be tempered by the "reasonably incidental" test. For example, the matter of rehabilitation benefits under section 6 of the Schedule may be in a different benefit category than weekly income benefits under section 12, but the medical inquiries in a proceeding may reasonably lend themselves to a consideration of entitlement under both provisions. It is, therefore, important to determine whether the insurer's issue can be said to be reasonably incidental to the matters raised by the applicant.

The term "reasonably incidental" is used to distinguish the recommended approach from that taken in the cases of Kotsiakos, Rescigno, Alexander and Slivecka. The specific terminology (whether "reasonably incidental" or "consequentially flows") is not critical. The key (as stated above) is that to exclude issues on the basis that they will involve a different type of inquiry or different evidence is potentially to exclude a whole range of issues reasonably considered in conjunction with matters raised by the applicant. Different issues will, by their very nature, require different inquiries and the calling of different evidence. This, however, could lead to an infinite splitting of issues under the Schedule to the detriment of both the parties and the process as a whole. For example, the issue of entitlement under section 13 could be separated from the question of whether an applicant was disqualified under section 17 due to an impaired driving conviction; these issues require different inquiries and different evidence, and yet, because they are reasonably incidental to each other, should be considered together in one proceeding. The recommended approach, therefore, does not significantly expand the previous test; it merely provides for greater flexibility in determining which issues to consider in combination with matters raised by the applicant.

The fourth criterion recognizes the applicant's special right of access to the arbitration process. The insurer's issue should not require a response from the applicant involving extensive technical or expert evidence. An applicant should retain essential control of what is intended to be an expeditious and inexpensive administrative proceeding.

Finally, addition of the insurer's issue should promote the goal of speedy and effective dispute resolution. The arbitrator should be satisfied that there is a legitimate issue for determination, and that the matter has not been raised late in the day for tactical reasons. Any abuse by an insurer in this regard could be addressed in the awarding of costs or a special award at the conclusion of a hearing.

Quantum and Repayment in the Present Case

Applying the five criteria listed above, I find that the issues of quantum and repayment are properly added to this arbitration, notwithstanding that the Applicant has withheld his consent.

First, as indicated earlier, although the August 14, 1995 Report of Mediator does not specifically refer to the issue of quantum, the matter was clearly before the mediator and the Applicant does not dispute the Insurer's assertion that both quantum and repayment were mediated. Secondly, neither of the issues involves a different benefit category from that raised by the Applicant. They are both related to weekly income benefits under section 12 of the Schedule.

Thirdly, the issues of quantum and repayment are reasonably incidental to the issue of entitlement beyond 156 weeks under section 12(5)(b) of the Schedule. Section 12(5)(b) states, in part, that an insurer is not required to pay a weekly income benefit under subsection (1) for any period in excess of 156 weeks, unless the applicant has met the requisite test of disability. Section 12(4) sets out the limits of the weekly benefit available under section 12(1), subject to section 12(5). The calculation of "gross weekly income" under section 12(4) is set out in section 12(7). In my view, the legislation itself establishes an intimate connection between the issues of entitlement and quantum under section 12 of the Schedule. It may be possible to divide and sub-divide these matters into separate proceedings, but, as stated above, that is not the test. The legislation itself contemplates that issues of quantum will be addressed in conjunction with issues of entitlement. To use the previous terminology, quantum clearly "flows" from entitlement. This would be reinforced if (as in Francis) the Applicant were found to be seeking the reinstatement of benefits at a particular level. In either case, quantum is reasonably incidental to the issue of entitlement. Further, repayment (as suggested in the arbitration decision in DeCicco) is also reasonably incidental to the issue of entitlement and (as suggested in Francis), if quantum is found to be an issue, then repayment follows easily as an additional issue.

Fourthly, I am satisfied that quantum is an issue in this proceeding (although it may be resolved at some point prior to the hearing) and that adding quantum and repayment to the arbitration will not unduly expand the scope of the inquiry. I am similarly persuaded that the issues of quantum and repayment are discrete matters requiring limited evidence and that the Applicant will retain essential control of the proceeding.

Finally, addition of these issues to the hearing will, in my view, greatly simplify the resolution of the dispute between the Applicant and the Insurer. They are legitimate matters for determination which have been outstanding between the Insurer and Applicant for some time. No useful purpose would be served by excluding the issues of quantum and repayment, dealing generally with the issue of entitlement and potentially requiring the Insurer and Applicant to seek redress in further court and/or dispute resolution proceedings. This would simply not foster the legislative goal of speedy and effective arbitration of no-fault disputes.

I, therefore, exercise my jurisdiction under the Insurance Act and the Statutory Powers Procedure Act as a pre-hearing arbitrator to add the issues of quantum and repayment to this arbitration. In my view, this will achieve the most just and expeditious disposition of the matter.

Order:

The issues of quantum and repayment are added as issues to this arbitration.

January 12, 1996

Eban Bayefsky

Arbitrator

Date

Footnotes

Prior 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.
Rosa DeCicco and State Farm Mutual Automobile Insurance Company, February 21, 1992, OIC File No. P-000277.
Rosa DeCicco and State Farm Mutual Automobile Insurance Company, December 18, 1991, OIC File No. A-000277, at p. 9
Supra, note 2
Comfort Ayertey and Toronto Transit Commission (Markel Insurance Company of Canada), April 5, 1994, OIC File No. A-004077, at pp. 11-12.
Peter Kotsiakos and State Farm Mutual Automobile Insurance Company, July 26, 1994, OIC File No. A-002354,(under appeal); Lorenzo Rescigno and State Farm Mutual Automobile Insurance Company, September 26, 1994, OIC File No. A-008268; Francine E. Alexander and Constitution Insurance Company of Canada, November 25, 1994,OIC File No. A-007573; Marica Slivecka and Canadian General Insurance Company, September 27, 1995,OIC File No. A-008342.
Walter Francis and Halifax Insurance Company, October 28, 1994, OIC File No. A-003987.
Elizabeth Aladejebi and State Farm Mutual Automobile Insurance Company, September 27, 1994, OIC File No. A-005933.

Lendell Carby v. Co-operators General Insurance Company, 1996 ONICDRG 7

Case Summary