Neutral Citation: 1997 ONICDRG 105

OIC A96-000992 and OIC A96-001598

ONTARIO INSURANCE COMMISSION

BETWEEN:

ROCIO SIERRA and JORGE SIERRA

Applicants

and

GENERAL ACCIDENT ASSURANCE CO. OF CANADA

Insurer

DECISION on PRELIMINARY ISSUE

The Applicants, Rocio Sierra and Jorge Sierra, were injured in a motor vehicle accident on October 12, 1994. They applied for statutory accident benefits from General Accident Assurance Co. of Canada ("General Accident"), payable under the Schedule.¹ Certain benefits were refused. In June 1996, after mediation failed to resolve the parties' disputes, the Applicants applied for arbitration² with respect to their claims for ongoing weekly benefits. In response, the Insurer disputed the amount of benefits payable. On July 3, 1996, the Applicants commenced a civil proceeding against the Insurer with respect to its refusal to pay their expenses of about $40,000 for treatment at the Cranio-Cervical Rehabilitation Institute ("CCRI"). At the arbitration pre-hearing conference on December 10, 1996, the Applicants sought to add another issue to the issues to be decided at the arbitration hearing: they claim their expenses of about $600 pertaining to travel to and from CCRI.

On behalf of the Insurer, Mr. Mazurek submitted that the Applicants should not be permitted to pursue their claims for statutory accident benefits both in court and in arbitration. He submitted that the Applicants should be required to discontinue their civil proceeding and refer the matter of their CCRI treatment costs to an Arbitrator along with the other issues raised in their applications for arbitration.

Mr. Zwiebel, who represents the Applicants in the civil proceeding, did not participate in the pre-hearing conference.

I gave all three representatives until January 8, 1997, later extended to January 30, 1997, to make written submissions on the issue. Mr. Juda indicated by letter of January 29, 1997 that he would make no submissions. Mr. Zwiebel filed submissions dated January 15, 1997 and Mr. Mazurek filed submissions dated January 30, 1997. On May 2, 1997, I invited the parties to file further written submissions with respect to some recent arbitration decisions by May 16, 1997, later extended to May 20, 1997. Mr. Mazurek filed supplementary submissions on behalf of the Insurer.

The parties' positions:

On behalf of the Insurer, Mr. Mazurek submitted that the recent amendments to sections 281(1) and 282(3) of the Insurance Act allow an insurer, in responding to an insured person's application for arbitration, to raise additional issues for determination in an arbitration. The Insurer submitted that in this case it is more appropriate for all the issues in dispute between the parties to be determined in the arbitration proceeding. Alternatively, even if the amendments effective November 1, 1996, do not affect this proceeding, the Insurer relied on the Carby³ decision interpreting sections 281(1) and 282(3) as they stood before November 1, 1996, in submitting that it is appropriate for all the issues in dispute between the parties to be determined in the arbitration proceeding.

On behalf of the Applicants, Mr. Zwiebel submitted that nothing in the Act or Regulations requires all issues to be decided in the same forum. He submitted that the Applicants are entitled to choose the more appropriate forum for the category of benefits in dispute, and that the Applicants want their claims for treatment expenses decided in court because there the primary focus will be on the treatment issue, about which there is voluminous evidence.

Reasons:

Section 281(1) of the Insurance Act - prior to its amendment on November 1, 1996 - was as follows:

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

The Insurance Act amendments proclaimed on November 1, 1996 ("Bill 59") replaced this provision with the following:

Subject to subsection (2) [which sets out the limitation period],

(a) the insured person may bring a proceeding in a court of competent jurisdiction;

(b) the insured person may refer the issues in dispute to an arbitrator under section 282; or

(c) the insurer and the insured person may agree to submit any issue in dispute to any person for arbitration in accordance with the Arbitration Act, 1991.

This amendment created a private arbitration alternative to court proceedings or arbitration proceedings at the Ontario Insurance Commission. I do not find it necessary to determine whether the amended section 281(1) applies retrospectively to this proceeding, which was commenced in June 1996, about five months before the amendment was proclaimed, because neither of the parties suggested that the amendment would make any difference to my disposition of the preliminary issue.

It is undisputed that section 281(1) - both before and after its amendment - prevents an insured person from initiating a civil proceeding and an arbitration proceeding against the same insurer with respect to the same dispute about statutory accident benefits. In this case, section 281(1) would clearly prevent the Applicants from pursuing their claims for CCRI treatment expenses in both forums. That is not what the Applicants want to do. Rather, they want to "split their case" and recover some benefits (their CCRI treatment expenses) through a court proceeding and others (including weekly benefits) through arbitration.

The Insurer relied on the amendment to section 282(3) which took effect on November 1, 1996. On that date, section 282(3) was repealed and replaced with the following:

The arbitrator shall determine all issues in dispute, whether the issues are raised by the insured person or the insurer.

The Insurer submitted that this proceeding is governed by section 282(3) as amended, and that the new provision allows the Insurer to raise an issue for determination at arbitration in response to the Applicant's application. In Harris and Royal Insurance Company,⁴ Arbitrator Renahan concluded that this amendment is procedural in nature and therefore, pursuant to the rules of statutory interpretation, it is presumed to apply to applications commenced before November 1, 1996, but heard afterwards.

I do not agree that the amendment is merely procedural. What the Insurer seeks in the instant case is a ruling that the application for arbitration is stayed or dismissed unless the Applicants discontinue their civil action and add the issue of their CCRI treatment expenses to arbitration. If the Applicants discontinue their civil proceeding, they are likely to be liable for the Insurer's costs in that proceeding.⁵ If, on the other hand, the Applicants withdraw their applications for arbitration, they may be denied reimbursement for their arbitration expenses and they may be ordered to reimburse the Insurer for its arbitration assessment fee. If they then lose in their civil action, they are likely to be ordered to pay the Insurer's costs in that action, which may be greater than they would be otherwise because of the expanded scope of the action. In either event, the order requested by the Insurer would have substantive consequences for the Applicants.

In my view, the amendment to section 282(3) is substantive in nature and therefore, in the absence of language to the contrary, it is presumed to apply only to proceedings commenced after it came into effect. My finding is consistent with the conclusions reached by other Arbitrators with respect to the retrospective applicability of the amended expenses provisions empowering arbitrators to order an applicant to pay the insurer's expenses⁶ and the regulation establishing a private arbitration process for insurer priority disputes.⁷

Accordingly, I find that this matter is governed by section 282(3) as it stood before its amendment on November 1, 1996.

The Insurer submitted that even if the "old" section 282(3) applied to this matter, as I have found, the Applicants are required to have all their issues decided in one forum because of the Applicants' "apparent indifference" to the forum issue. However, although Mr. Juda, the Applicants' representative in the arbitration, took no position in this matter, the Applicants' position concerning the preliminary issue was put forward by Mr. Zwiebel, who represents them in the civil proceeding.

The Insurer also submitted that the Applicants' claims in court and arbitration are "reasonably incidental" to each other. The Insurer relied on Arbitrator Bayefsky's decision, Carby.⁸ In that case, the applicant applied for arbitration with respect to his claim for ongoing weekly benefits after 156 weeks, when benefits were terminated. As well as disputing that claim, the insurer disputed the amount of benefits payable and sought repayment of benefits paid. Arbitrator Bayefsky adopted the following criteria:

(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?

To test the application of these criteria, I considered what the result would be if the Applicants had never commenced a civil proceeding, but had simply referred the issue of weekly benefits and travel expenses to arbitration. I would have dismissed the Insurer's motion to add the treatment expenses issue to the arbitration issues, on the ground that it is not reasonably incidental to the Applicants' issues and that allowing the Insurer to add that issue would essentially deprive the Applicants of the control of the proceeding granted them under the Insurance Act. I do not accept that Carby assists the Insurer.

In any event, I do not find the Carby decision relevant to the issue before me. In this case, the Insurer does not seek to add to the issues raised by the Applicants, but rather seeks to force the Applicants to add to the arbitration an issue they have already elected to refer to a civil proceeding. I can find no legislative authority for making the order sought by the Insurer.

I prefer the analysis adopted by Arbitrator Manji in Andreeski and Pilot Insurance Company.⁹ Arbitrator Manji rejected the submission of the insurer in that case that an insured person "must choose one forum to deal with all her claims for statutory accident benefits." She held that section 281(1) allows an insured person "to proceed before a court and an arbitrator in respect of a different matter or unrelated issues in dispute." She concluded that the applicant could proceed with her arbitration with respect to her claim for medical and rehabilitation benefits, which she did not seek in her court proceeding. However, if the applicant wanted to pursue her claim for weekly benefits through arbitration, she must discontinue her civil action, in which she sought a declaration of entitlement to disability benefits, as well as damages for breach of contract, exemplary damages, solicitor-client costs, and pre-judgment interest, all of which Arbitrator Manji found were secondary to the applicant's disability claim.

Arbitrator Manji noted that Arbitrator Seife had reached a similar conclusion in Oliveira and Markel Insurance Company.¹⁰ In that case, the applicant applied for arbitration with respect to her claims for weekly benefits and certain medical and rehabilitation benefits (housekeeping, prescription and travel expenses); she commenced a civil action for certain other benefits, including her clinic treatment costs. Arbitrator Seife rejected the Insurer's submission that the applicant was precluded from proceeding to arbitration. His conclusion was as follows:

The dispute resolution scheme of the Act was designed to provide insured persons with easy access to relatively inexpensive, speedy and informal adjudication of disputes. However, arbitration is not the exclusive mechanism for adjudicating disputes between an insured person and an insurer.

I find no support, either in legislation or in case law, for the Insurer's position that an insured person ought to be compelled to refer all of her or his disputes with the insurer, present or future, to one forum only. In my view, had the Legislature intended to limit an insured person's choice of forum in the manner proposed by the Insurer, it would have worded section 281(1) of the Act quite differently. Given the wording of this section and the general scheme of the Act, to interpret the word "matter" as meaning "all existing and future disputes between an insured person and an insurer arising from the same accident" would be, in my view, a clear misconstruction of the intent of the legislation.

It seems clear to me that the only limitations imposed by the Act on the insured person's right to refer a matter in dispute to a court or an arbitrator are: 1) the matter must first have been referred to mediation, 2) mediation must have failed, and 3) by necessary implication, the insured person must not have commenced a proceeding in the other forum with respect to the same matter. In the circumstances of this case, I find that the requirements of section 281(1) and 281(2) have been satisfied, and the issues in the application for arbitration are properly in the arbitrator's jurisdiction.

In DeCicco, addressing the concerns regarding multiplicity of proceedings, the Director of Arbitration stated:

Whether or not it may be more expeditious for the parties to deal with all of these items in one hearing is not a relevant consideration given the structure and scheme of the Act as a whole and given the necessity of having each section, general or specific, carry with it a coherent and logical meaning.

The above comments were made in the context of arbitration proceedings; however, I find that they are equally applicable to the circumstances of this case. It may be less expensive and more expeditious for the parties to deal with all of their disputes, together and in one forum; and in this regard, I share the concerns Arbitrator Draper expressed in Ayertey. However, where the matters in the two forums are distinct, this concern is not a relevant consideration in deciding whether the applicant may proceed in the forum of her or his choice.

In this case, Ms. Oliveira is seeking arbitration of certain specific matters. Their adjudication is not dependent on the outcome of the court matter; and the issues in arbitration are wholly capable of being resolved on their own. While there may be duplication of evidence in the two forums, and perhaps a potential for inconsistent findings of fact, in my view, this is not sufficient grounds to stay or dismiss the arbitration.

I agree with the reasoning of Arbitrators Manji and Seife. I reached a similar conclusion in Harris.¹¹

In my view, the reasons in Andreeski and Oliveira apply directly to the instant case. Although there will likely be considerable duplication of evidence in the two proceedings, each is capable of being determined independently, and there is no risk of contradictory findings because the test for entitlement to weekly benefits is different from the test for entitlement to treatment benefits.¹² Accordingly, I find that the matters raised by the Applicants in court are distinct from the matters raised in arbitration, and the Applicants are entitled to choose to refer them to different forums.

I heard no submissions as to the expenses for this proceeding. I leave that issue for the Arbitrator who ultimately decides the matter, who will have the benefit of knowing whether the Applicants' persisted in their current choice of forum.

Order:

The arbitration may proceed as scheduled.

June 18, 1997

Nancy Makepeace Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993, and before November 1, 1996, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 635/94.
2. 2Under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
3. 3Carby and Cooperators Insurance Company (January 12, 1996), OIC A-950220
4. 4(March 7, 1997), OIC A95-000267
5. 5Rule 23.05, Rules of Civil Procedure
6. 6Worthman and AXA Insurance Company (January 30, 1997), OIC 96-000486, and Pinto and General Accident Insurance Company (April 10, 1997), OIC A96-001246
7. 7Smith and General Accident Insurance Company (January 30, 1997), OIC A-012681 and A-013811. The Insurer relied on Soordhar and Citadel Insurance Company (December 5, 1995), OIC A-006428, in which Arbitrator MacMahon stated that the new settlement regulation was not made retroactive by the fact that the accident pre-dated it, because the settlement at issue in that case occurred after the regulation's effective date. In any event, Arbitrator MacMahon's comments were obiter dicta since he was not willing to reopen the proceeding to consider this argument, which had not been raised at the hearing.
8. 8Supra, see footnote # 3
9. 9(March 26, 1997), OIC A96-000714
10. 10(February 9, 1995), OIC A-006434
11. 11Harris and Royal Insurance Company (January 23, 1997), OIC A95-000267
12. 12I heard nothing about the Insurer's reasons for disputing the Applicants' claims for treatment and travel expenses. There would be no incompatibility in a finding that the Applicants are entitled to weekly benefits because they are disabled but not entitled to CCRI treatment benefits because the treatment is unreasonably expensive or ineffective. Conversely, there would be no incompatibility in a finding that the Applicants are not disabled but that they need CCRI treatment as a result of residual accident-related impairment. Similarly, a finding that the Applicants are entitled to CCRI treatment but not to travel (because they took taxis when they could have used their own car or public transit, for example) would present no problems of inconsistency. Conversely, an adjudicator could find that although the Applicants are not entitled to CCRI treatment, they are entitled to their travel expenses because those expenses were reasonable and they had no reason to believe the claim would be denied.