Neutral Citation: 1996 ONICDRG 98
OIC A-006854
ONTARIO INSURANCE COMMISSION
BETWEEN:
ISABELLA QUATTROCCHI
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
DECISION
Issues:
The Applicant, Isabella Quattrocchi, was injured in a motor vehicle accident on January 29, 1991. She applied for and received statutory accident benefits from the State Farm Mutual Automobile Insurance ("State Farm"), payable under Ontario Regulation 672-Statutory Accident Benefits Schedule —Accidents Before January 1, 1994 (the "Schedule).1 Weekly income benefits were terminated by State Farm on November 27, 1992. 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.
The hearing in this case, initially set for May 1 and 2, 1995, was rescheduled at State Farm's request and with the Applicant's consent, for August 22 and 23, 1995. A second adjournment, requested by the Applicant, was granted on the basis that a new hearing date would be set, forthwith. The Applicant and her counsel neglected to set a new date and failed to respond to numerous communications from the Ontario Insurance Commission (the "OIC"). State Farm then sought an order for the dismissal of the arbitration and the payment by the Applicant of its assessment, incurred as a result of the filing of the application for arbitration.
The issues in this hearing are:
Did Ms. Quattrocchi commence an application for arbitration that, in the opinion of the arbitrator, is an abuse of process? If so, should the application be dismissed?
Is the Insurer entitled to a payment by the Applicant of all or a portion of its assessment?
Result:
In the opinion of the arbitrator, Ms. Quattrocchi has abused the arbitration process. However, Ms. Quattrocchi's application is not dismissed.
Ms. Quattrocchi shall pay State Farm $1,000, being the amount that State Farm was asssesed in respect of the arbitration. Ms. Quattrocchi shall pay this sum, whether or not she decides to proceed in the arbitration. She is required to pay this sum prior to the rescheduled hearing date, as a condition to her proceeding in the arbitration.
Hearing:
The Insurer's motion in this case was heard by me, Asfaw Seife, Arbitrator, by a telephone conference held on April 3, 1996. The Applicant did not participate; however, she was represented by her counsel, Mr. Louis Crowley. Ms. Shelley Hopkins acted for State Farm. I heard submissions from both counsel on the motion. My decision was communicated to the parties verbally on the same day, with reasons to follow. These are my reasons:
REASONS FOR DECISION:
Background:
There is no substantial dispute regarding the facts in this case. Following a pre-hearing conference, the arbitration hearing in this case was initially scheduled for May 1 and 2, 1995. However, the hearing was adjourned at the request of Mr. Nigel Gilby, counsel for State Farm, and with Mr. Crowley's consent. Mr. Gilby outlined his reasons for the request in his letter to the OIC, dated April 20, 1995. He indicated that the Applicant did not attend the Insurer's medical examination that had been scheduled for April 17, 1995. The letter also indicated that subsequent to the date of the pre-hearing, the Applicant was involved in a second motor vehicle accident, about which neither counsel had any information. The hearing was rescheduled for August 22 and 23, 1995, dates which were acceptable to both counsel.
On August 18, 1995, the OIC received a letter from Mr. Crowley requesting an adjournment of the rescheduled hearing. His reasons were provided in a separate letter dated August 21, 1995, faxed to the OIC the day before the commencement of the hearing. In this letter, Mr. Crowley stated that he had not received documentation from the Insurer regarding the second accident. Mr. Crowley indicated that counsel for State Farm had agreed to the adjournment request. The adjournment was granted by the OIC on Mr. Crowley undertaking that he would be responsible for coordinating a new hearing date and contacting the OIC. Mr. Crowley agreed to do this within 24 hours of the granting of the adjournment.
By a letter dated August 23, 1995, Mr. Crowley requested the OIC to provide him with dates available for booking a hearing. The file indicates that on August 29, 1995, the Manager-Arbitration Co-ordination, of the OIC responded to Mr. Crowley's letter by telephoning his office and advising that Mr. Crowley should coordinate the hearing date with the Insurer's counsel and notify the OIC.
Neither Mr. Crowley nor anyone from his office contacted the OIC or the Insurer after August 23, 1995. The file shows that considerable efforts were made by the staff of the OIC as well as by the State Farm's counsel to obtain Mr. Crowley's response to set a new date. The following is a brief, chronological account of the actions taken by the OIC with respect to this case, after August 29, 1995:
On October 26, 1995, the OIC Case Administrator telephoned Mr. Crowley's office to ascertain the Applicant's intention. Mr. Crowley's secretary advised that the Applicant still wanted a hearing on the case, and that they would coordinate the hearing date with State Farm's counsel and would inform the OIC shortly.
More than ten days passed and no one from Mr. Crowley's office had called the OIC. The Case Administrator telephoned Mr. Crowley's office on November 7, 1995 and left a message. No response was received. The file shows that the Case Administrator telephoned Mr. Crowley's office once a month, for the next three months: December 5, 1995, January 8, 1996 and February 8, 1996. However, no response was received from Mr. Crowley's office.
On February 26, 1996, the Case Administrator wrote to Mr. Crowley, copy to the Applicant and the Insurer. The letter stated, in part:
The Ontario Insurance Commission received an Application for Arbitration in this matter on April 28, 1994. On August 21, 1995, at Mr. Crowley's request, the Arbitration Hearing scheduled for August 22 & 23, 1995 was adjourned.
Since that date, this office had phoned your office numerous times to reschedule the Hearing. There has been no response from your office to determine new hearing dates. If we do not hear from you by March 11, 1996, we will proceed to close our file in this case. (emphasis added)
On March 7, 1996, Mr. Gilby wrote to the Commission advising that "on numerous times since August, 1995 we have written to Mr. Crowley, seeking his input on rescheduling the arbitration in this matter. Despite our repeated requests, Mr. Crowley has ignored our letters ..." Mr. Gilby provided the dates when he would be available for a rescheduled hearing. This letter was copied to Mr. Crowley.
The March 11, 1996 deadline came and went, without any response from Mr. Crowley or anyone representing the Applicant. On March 12, 1996, a letter addressed to Mr. Crowley and Mr. Gilby, was sent by the Executive Coordinator/Registrar of the OIC. It stated:
Further to ...[the Case Administrator's] letter of February 26, 1996, we have not heard from Mr. Crowley. Accordingly, it is assumed Mr. Crowley's intent is to withdraw his client's application.
I am advised by Ms. Hopkins of Lerner and Associates that her client has instructed her to seek expenses pursuant to Section 66.3 of the Practice Code. Accordingly, the insurer's motion has been scheduled to be heard by conference call on April 03, 1996 at 10:00 a.m.
As Mr. Crowley has not responded to the Commission's correspondence, this date was set without consultation with Mr. Crowley's office as is the usual practice of this Commission. The date noted above is peremptory to Mr. Crowley.
A copy of this letter was sent to the Applicant and to State Farm's representative. Mr. Crowley did not call or write after receiving this letter. The hearing of April 3, 1996 was initiated by a telephone call made to the parties by the arbitrator, pursuant to the letter.
Does the Applicant's Conduct Constitute an Abuse of Process?
At the motion's hearing on April 3, 1996, Ms. Hopkins sought an order to dismiss the application because the Applicant has done nothing to pursue her case since the adjournment was granted on August 21, 1995. Ms. Hopkins submitted that the Applicant's conduct amounted to an abuse of the arbitration process. Ms. Hopkins also sought an order for the payment by the Applicant of State Farm's assessment of $1,000.
Mr. Crowley agreed that the facts outlined above are substantially correct.2 At the outset of the hearing, Mr. Crowley confirmed that the Applicant had no intention of withdrawing her claim, and that she would ask for a new date for the arbitration hearing to be set. Mr. Crowley conceded it was totally his fault that the hearing was not rescheduled after the second adjournment. He admitted, quite candidly, that he had failed to respond to the messages and letters of the OIC and those of the Insurer. Mr. Crowley offered no explanation for his conduct, other than saying that he was "too busy to deal with this matter," and "did not have time to review the case." Mr Crowley said he was embarrassed by the situation and apologized for any inconvenience he caused to State Farm and the OIC.
While Mr. Crowley took complete responsibility for his "tardiness" in setting a date and agreed that some form of financial penalty against him might be appropriate, he adamantly objected to the dismissal of the arbitration. He submitted that the Applicant should not be punished for what is essentially her lawyer's fault; and that the prejudice to the Applicant far outweighs any prejudice to the Insurer.
Analysis and Conclusion:
Section 282(11.2) of the Act provides that if an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration.
In this case, State Farm paid an assessment of $1,000.00 in respect of the arbitration.
The Dispute Resolution Practice Code (the "Code") of the OIC is a user's guide that contains the Rules of Procedure of the Dispute Resolution Group of the OIC, the Commissioner's Guidelines on the interpretation of the Schedule and the Practice Notes, which inform participants about the policies, administrative procedures and key elements of the dispute resolution process.
The OIC policy on adjournments is set out in Practice Note No.7. A copy of this policy is one of the documents sent out to the parties routinely after a hearing date has been set at a pre-hearing conference. It was enclosed in the pre-hearing discussion summary letter that was sent in this case.
The adjournment policy reflects the OIC's obligation to conduct arbitrations efficiently, speedily and inexpensively. In order to minimize adjournments due to conflicting schedules, the parties are contacted by the OIC staff, and pre-hearing and hearing dates are set well in advance, on dates that the parties agree to. Therefore, once a hearing date has been set, adjournment requests are granted only sparingly, on the restricted grounds set out in the policy. The procedure for requesting an adjournment is outlined in the policy. Unless extenuating circumstances exist, an adjournment request is required to be made in writing, at least seven days before the scheduled hearing, and must provide reasons. The request must also provide alternative hearing dates that are acceptable to both sides.
In the circumstances of this case, as outlined above, Mr. Crowley's written request for adjournment (containing the reasons for an adjournment), was not received by the OIC until the day before the scheduled hearing. The letter did not provide alternative dates to reschedule the hearing. The adjournment was granted by the OIC on Mr. Crowley's specific undertaking that he would contact counsel for State Farm and notify the OIC of the agreed-upon dates, within 24 hours.
Mr. Crowley readily admits that not only did he fail to observe the adjournment policies and procedures of the OIC, he also did nothing to move the case along for over a period of six months. He did not respond to the numerous attempts by the OIC staff and the Insurer to set a new date for the hearing. He has provided no extenuating circumstances for his actions or lack thereof.
The Code does not directly address situations where, as in this case, the Applicant appears to have abandoned his/her application. Section 1 of the Code requires an arbitrator to interpret the Rules of Procedure broadly, and by analogy, to produce the quickest, most just and least expensive resolution of the dispute.
Section 66 of the Code, which came into force on August 1, 1995, provides the circumstances in which an applicant may seek permission to withdraw all or part of an application. The section provides the procedure to be followed when withdrawing an application. The section provides that the adjudicator may permit an applicant to withdraw if the insurer agrees; however, if the insurer does not agree and if the adjudicator decides that the withdrawal is an abuse of process, the adjudicator may require the applicant to pay the insurer an amount not more than the amount the insurer is required to pay OIC to participate in the hearing, In the circumstances of this case, the Applicant did not actively seek permission to withdraw her application, as contemplated in section 66 (1) of the Code. However, in my view, there is sufficient evidence to warrant the conclusion that, for all intents and purposes, after March 11, 1996, the Applicant had abandoned her application. In my view, for an application to be considered withdrawn, it is not necessary that the applicant expressly make a request to that effect. An application may be "constructively" withdrawn when the applicant has abandoned the claim through lack of due diligence or interest in pursuing his/her application.
In this case, considerable time and resources were expended by both the OIC and State Farm to obtain Mr. Crowley's compliance with the arbitration procedures, without any success. Normally, the file would have been closed through the routine course of the administrative process, but for State Farm's motion. This hearing was held at the instance of State Farm. I conclude, therefore, that by March 11, 1996, the Applicant had abandoned, and, in effect, withdrawn her claim. I conclude this is a case of constructive withdrawal.
I also find that, despite his sincere apologies, the unexplained and unmitigated conduct of the Applicant's counsel in failing to respect the policies and procedures of the OIC, and to respond to the numerous inquiries from the OIC and the Insurer's counsel, constitute an abuse of the arbitration process.
The requisite authority of an arbitrator to dismiss an application for arbitration on grounds of an abuse of process by the applicant is discussed in many arbitration decisions.3 In this case, it is open for me to dismiss Ms. Quattrocchi's application and award State Farm a payment of its assessment by the Applicant. However, having considered the entire circumstances of the case, and in particular the relative prejudice to the parties of the consequences of my decision, and the role of the Applicant's counsel in the process, I decline to adopt the extreme measure of dismissing the arbitration, as sought by State Farm's counsel. However, in my view, it would be appropriate to grant State Farm's motion for the payment of its assessment by the Applicant.
Accordingly, I order that the Applicant be allowed to proceed in her arbitration by setting a new hearing date, peremptory to her, provided that she pay State Farm its assessment of $1,000.00, prior to the date set for the hearing.
The arbitration hearing is set for October 7, 8, 9 and 10, 1996, peremptory to the Applicant. The application for arbitration will be dismissed if the Applicant fails to pay the $1,000 prior to October 7, 1996.
Order:
In the opinion of the arbitrator, Ms. Quattrocchi has abused the arbitration process. However, Ms. Quattrocchi's application is not dismissed.
Ms. Quattrocchi shall pay State Farm $1,000, being the amount that State Farm was asssesed in respect of the arbitration. Ms. Quattrocchi shall pay this sum, whether or not she decides to proceed in the arbitration. She is required to pay this sum prior to the rescheduled hearing date, as a condition to her proceeding in the arbitration.
June 11, 1996
Asfaw Seife Arbitrator
Date
Footnotes
- Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule.
- Mr. Crowley stated he did not see the February 26, 1996 letter from the OIC. He was unable to confirm whether or not a copy of this letter had been received by his office or by the Applicant. The OIC records show that the letter was sent to the parties and their representatives on the same day. Ms. Hopkins confirmed that the Insurer has received its copy.
- For a detailed discussion and historical analysis of the power of the arbitrator to preclude an applicant from refiling a withdrawn application, see Bilusack and Co-operators Insurance Company (February 13, 1996) OIC A-006369.