Neutral Citation: 1997 ONICDRG 182

OIC A96-001602

ONTARIO INSURANCE COMMISSION

BETWEEN:

JENNY STRACHAN

Applicant

and

JEVCO INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUE

Issues:

The Applicant, Jenny Strachan, was injured in a motor vehicle accident on July 27, 1994. She applied for and received statutory accident benefits from Jevco Insurance Company ("Jevco"), payable under the Schedule.¹ A dispute arose concerning the account of Trauma Services, which had provided rehabilitation assistance to Ms. Strachan. The parties were unable to resolve their dispute through mediation, and Ms. Strachan applied for arbitration under the Insurance Act, R.S.O. 1990, c.i.8, as amended. Jevco responded that the Commission was without jurisdiction to hear the matter as it had, in fact, been brought by Trauma Services, and not Ms. Strachan. Jevco maintained that only an insured person was entitled to apply for arbitration. A preliminary hearing on this issue was conducted on June 17, 1997. Final submissions were made in writing, and were completed on July 11, 1997.

The issues in this hearing are:

1. Has Trauma Services, as opposed to Ms. Strachan, applied for arbitration, thus depriving the Commission of jurisdiction over this matter?

Ms. Strachan also claims her expenses incurred in the preliminary hearing.

Result:

1. This arbitration has been properly instituted by Ms. Strachan, and the Commission therefore has jurisdiction to hear the matter.

2. The matter of Ms. Strachan's expenses in the preliminary hearing is reserved to the hearing arbitrator.

Present at the Hearing:

Applicant:

Jenny Strachan

Ms. Strachan's Representative:

Michael Henry Barrister and Solicitor

Jevco's Representative:

Chris Blom Barrister and Solicitor

Jevco's Officer:

Lynn Carson

Witnesses:

Jenny Strachan Lou Ferro

Exhibits:

The parties filed nine exhibits.

Evidence and Findings:

Background

Ms. Strachan was seriously injured in a motor vehicle accident on July 27, 1994, while she was vacationing in southern Louisiana. She received extensive medical care and treatment, both in the United States and Canada. Part of the treatment was received at Trauma Services in Hamilton. Ms. Strachan testified that the assistance provided by Trauma Services was very helpful in her recovery.

Ms. Strachan retained Mr. David Share, Barrister and Solicitor, in connection with both her civil action and her claim for statutory accident benefits. Jevco agreed to be billed directly by Trauma Services for Ms. Strachans rehabilitation expenses. Jevco paid a portion of these expenses. A dispute arose concerning the outstanding amounts. On June 6, 1996, Ms. Strachan signed a document entitled, "Permission to allow Trauma Services to help me access the mediation/arbitration services of the Ontario Insurance Commission." An Application for Mediation, dated June 18, 1996, was filed with the Commission, identifying Ms. Strachan as the Insured Person and Ms. Stephanie VJannell, a case facilitator at Trauma Services, as the Insured Persons Representative and the Applicant. Ms. VJannell signed and certified the Application for Mediation.

The mediation was conducted on September 12, 1996 on the issue of Trauma Services outstanding account for rehabilitation assistance. Mr. Share represented Ms. Strachan. Mr. Clae Willis participated from Trauma Services. The matter was not resolved at that time.

An Application for Arbitration was subsequently filed on October 3, 1996. Ms. Strachan was identified as the Applicant, and Mr. Lou Ferro, Barrister and Solicitor, was identified as Ms. Strachan's representative. Mr. Ferro signed the Application.

Jevco maintains that the arbitration has, in fact, been brought by Trauma Services, and not Ms. Strachan, and, therefore, pursuant to the provisions of the Insurance Act, the Commission is without jurisdiction to proceed to hear the matter. Section 2.80(1) (as it read at the time the mediation was filed) states that "either the insured person or the insurer may refer to a mediator any matter in dispute in respect of the insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which the insured person is entitled." Section 281(1) states that "if mediation fails, the insured person may...refer the matter to an arbitrator." The insurer's position is two-fold: (1) The mediation was commenced by Trauma Services without the authority of Ms. Strachan. The mediation can, therefore, not support the application for arbitration; (2) Mr. Ferro was not properly retained by Ms. Strachan to proceed to arbitration. Mr. Ferro, therefore, acted for Trauma Services, which is not entitled to commence an arbitration.

The Mediation

Ms. Strachan maintains that Jevco is estopped from questioning the legitimacy of the mediation since the mediator, by issuing a concluding report, indicated that she had jurisdiction over the matter and, therefore, "that issue is now functus." In my view, it is irrelevant that the Mediator issued a concluding report. She did not have the authority to issue legally binding rulings on the propriety of the mediation process, including whether she had jurisdiction to proceed with the matter. However, there is no evidence that Jevco challenged the authority of the mediator at the mediation itself. I, therefore, find that Jevco waived any objection it may have had to that process. Assuming, however, that no waiver occurred, I nevertheless find that the mediation in this case was properly instituted and completed.

Prior to the filing of the mediation, Ms. Strachan signed the "Permission" form in relation to Trauma Services and the Commission’s mediation/arbitration process. The form stated as follows:

I, Jenny Strachan, understand Trauma Services will be providing medical care services to me as a result of my car accident. I understand if my insurance company feels they want a mediator to help reach an agreement on the service provided by Trauma Services then i would like Trauma Services to apply for mediation on my behalf to work with the mediator to try to resolve any request my insurance company may have regarding Trauma Services. if the mediator cannot help fix the problem, i would like Trauma Services to ask an arbitrator to help my insurance company and i reach a compromise.

i understand Trauma Services will deal with my insurer about their accounts and will not ask me directly to pay for the cost of the service as long as i am willing to have Trauma Services, on my behalf, ask the mediator/arbitrator to help settle any questions my insurance company doesn't understand.

in addition, i also give permission to Trauma Services to prepare expense forms on my behalf and submit them to my insurance company as may be necessary. I understand any time I want to I can have free access to any information I feel I may need from Trauma Services in relation to the mediation/arbitration process and I can speak to my Nurse or Case Facilitator about any issue relating to the amount or payment of the accounts by my insurance company.

Ms. Strachan signed this form prior to the Application for Mediation being filed. She had also been sent a letter in February 1996 which explained that Trauma Services could access the mediation process for her, but that they needed her permission to do so. In my view, the Permission form clearly authorizes Trauma Services to proceed to mediation on Ms. Strachan's behalf, should a dispute arise concerning Trauma Services account. I do not find that the introductory phrase, "if my insurance company feels they want a mediator," alters the essence of the agreement, namely, that Trauma Services would deal directly with Jevco concerning its account, as long as Ms. Strachan allowed Trauma Services to proceed to mediation on her behalf in the event of a dispute. Ms. Strachan, in fact, co-operated in bringing the matter to mediation, although on issues other than Trauma Services account. In a letter following the mediation, Mr. Share sought reimbursement from Trauma Services for his costs in taking the matter to mediation. Ms. Strachan also testified that she clearly understood that, by signing the form, she was assisting Trauma Services in recovering its account for the rehabilitation services she had received, services from which she had benefitted greatly. In this regard, I do not find it relevant that Ms. Strachan’s treatment had ended before the mediation was filed. She had an interest in seeing that Trauma Services was paid for the services it had provided. The Permission was not restricted to only those disputes arising in the course of her treatment.

Ms. Strachan testified that the procedures to be followed in the mediation process were not explained to her and that she did not understand the ramifications of the matter not being settled there. She did not anticipate that a mediation would be filed. However, she was represented by David Share at that time, and at no time objected to Trauma Services proceeding to mediation on her behalf on the matter of its outstanding account. The intent of the Permission was also to allow Trauma Services to deal directly with Jevco on Ms. Strachan’s behalf with as little inconvenience to Ms. Strachan as possible. In these circumstances, I find little merit in Jevco's submission that there was insufficient communication between Ms. Strachan and Trauma Services prior to the mediation. I see no reason to interfere with the arrangement entered into between the two parties, as expressed in the Permission.

Similarly, although the Application for Mediation was not filled out with Ms. Strachan's input, and identifies Stephanie VJannell from Trauma Services as the Applicant, Ms. Strachan and her counsel participated in the mediation and at no time objected to the participation of Trauma Services. Further, Mr. Ferro testified that Mr. Share handled both Ms. Strachan's benefits and Trauma Services account at the mediation. Ms. Strachan indicated that Mr. Share appeared as her lawyer and that Mr. Clae Willis simply answered Jevco's questions at the mediation. Finally, although the Report of Mediator notes the "Insured's Representative" as the Applicant (which the Application for Mediation identifies as Ms. Wannell), the Mediator notes Mr. Share as Ms. Strachan’s representative for the mediation and indicates that "Ms. Strachan applied for mediation of...her claim for coverage of the outstanding account for rehabilitation treatments with Trauma Services...." in all of the circumstances, i find that Trauma Services proceeded to mediation on the issue of its outstanding account on Ms. Strachan’s behalf, and with her co-operation and authority. Contrary to Jevco’s submission, the mediation was not a nullity and could support the subsequent Application for Arbitration.

The Arbitration

The insurer maintains that, when Mr. Ferro filed the Application for Arbitration, he had not been retained by Ms. Strachan. He, therefore, acted for Trauma Services, which was not entitled to commence an arbitration.

As with the mediation, the Permission form provided Ms. Strachan’s consent to Trauma Services to access the Commission’s arbitration process on her behalf in the event of a dispute concerning the rehabilitation account. in addition, on September 26, 1996, Mr. Ferro wrote Mr. Share, confirming his understanding that he had been authorized by Mr. Share to proceed with the arbitration on Ms. Strachan's behalf. On October 3, 1996, Mr. Ferro filed the Application for Arbitration. He noted Ms. Strachan as the Applicant, and himself as Ms. Strachan’s representative. However, on October 8, 1996, Mr. Share indicated to Mr. Ferro that he had not, in fact, authorized Trauma Services to proceed to arbitration on behalf of Ms. Strachan. Discussions ensued between Mr. Share and Mr. Ferro, and by letter dated March 19, 1997 (approximately three weeks following the pre-hearing), Mr. Share confirmed in writing that Mr. Ferro was authorized to represent Ms. Strachan in her claim against Jevco regarding Trauma Services' outstanding rehabilitation account. Mr. Share's letter is as follows:

I acknowledge receipt of your letter of March 12, 1997, with thanks.

This will confirm, as we have previously confirmed that you are authorized to represent Ms. Strachan in her claim against Jevco with respect to charges which are outstanding with Trauma Services for services performed on Ms. Strachan’s behalf, and that you have authority to bind Ms. Strachan with respect to the disposition of the specific accounts of Trauma Services, but not with respect to any other entitlement which she may have to Statutory Accident Benefits.

This authorization is conditional upon the acknowledgement from Trauma Services, which you have already provided, that Trauma Services will completely indemnify Ms. Strachan with respect to these outstanding charges as at all times it was intended that Ms. Strachan would not be personally liable for same and that Trauma Services would rely solely on insurance coverage for payment of their "reasonable" expenses pursuant to the Statutory Accident Benefit Schedule in force at the time of this accident.

This letter confirms that the claim regarding Trauma Services account was Ms. Strachan s, and that Mr. Share and Mr. Ferro had previously communicated and confirmed that Mr. Ferro would represent Ms. Strachan in that claim. It also confirms that Ms. Strachan's co-operation in proceeding with the claim was conditional on her not being liable for Trauma Services' account and/or expenses. Ms. Strachan testified that she was aware that Mr. Ferro would replace Mr. Share as her lawyer for the arbitration, and that she had retained Mr. Ferro to pursue Trauma Services outstanding rehabilitation account. Mr. Ferro testified that Mr. Share suggested he file for arbitration, as the issues pertaining to Trauma Services account were quite technical in nature. Mr. Ferro also said that Ms. Strachan did not object to his proceeding on her behalf and that she was, in fact, glad he was there to help.

Jevco maintains that there was inadequate communication between Mr. Ferro and Ms. Strachan prior to his filing the Application for Arbitration, that the risks of proceeding with arbitration had not been explained to Ms. Strachan, and that Mr. Ferro had not been properly retained by Ms. Strachan. Jevco, therefore, submits that Mr. Ferro acted for Trauma Services when the arbitration was commenced, and that Trauma Services was not entitled to bring such an application.

As with the mediation, Ms. Strachan was represented by Mr. Share at the time the arbitration was filed, discussions had occurred between Mr. Share and Mr. Ferro, and Mr. Ferro was given permission to proceed to arbitration on Ms. Strachan’s behalf, as long as her personal liability was protected. This latter proviso was consistent with the Permission, which permitted Trauma Services to deal directly with Jevco and to access the Commission’s processes on Ms. Strachan’s behalf, with as little inconvenience to Ms. Strachan as possible. in my view, the apparent misunderstanding between Mr. Share and Mr. Ferro as to who would proceed to arbitration on Ms. Strachan’s behalf does not mean that Trauma Services had commenced the arbitration, particularly in light of Mr. Share’s later correspondence confirming that Mr. Ferro was authorized to represent Ms. Strachan in her claim for the outstanding rehabilitation account. There was also no objection to Ms. Strachan being noted as the Applicant on the Application for Arbitration. I, therefore, find that the application was Ms. Strachan's, while her representative and potential liability required further clarification.

I further find that Mr. Ferro and Ms. Strachan communicated adequately (although it was initially through Mr. Share), and that Ms. Strachan had properly retained Mr. Ferro to proceed with her application (although it was not clarified until after the arbitration had been filed). A lawyer is not obligated to reduce his or her retainer to writing. Mr. Ferro has held himself out as Ms. Strachan’s counsel for the purposes of this arbitration, and he is presumed to comply with his obligations as a solicitor. Ms. Strachan has stated that Mr. Ferro is her lawyer for this arbitration. I see no reason to interfere with this arrangement, as expressed in the Permission, confirmed by Mr. Share, and declared by both Mr. Ferro and Ms. Strachan.

Policy Considerations

Both parties addressed the policy concerns underlying this issue. In my view, the technical approach suggested by Jevco to the issue of "retainer" has the potential to restrict the access of accident victims to the Commission's processes on legitimate issues of rehabilitation treatment and benefits. Although it is advisable that parties clarify their professional relationships prior to commencing mediation or arbitration proceedings, it is not fatal to the application if this is not done until afterwards.

This is particularly true where, as here, an agreement has been entered into allowing the rehabilitation clinic to access the Commission’s processes on behalf of the insured; the insured has been represented by counsel throughout; discussions have occurred between the insured and her representatives as to how the application will be pursued; the insured has not objected to (and has, in fact, co-operated in) bringing the matter forward to mediation and arbitration; the insured has through her counsel acknowledged the claim to be hers; and (in ample time for the arbitration) both the insured and her representative have declared who will be representing her at the hearing.

In my view, dismissing these indicia (that the application is Ms. Strachan's, and that she has freely participated in the process with the representative of her choice) in favour of a narrow approach to the issue of "retainer" would thwart a determination on an otherwise legitimate question of outstanding rehabilitation benefits.

In addition, requiring the issue of "retainer' to be crystallized prior to the commencement of the proceedings, or prohibiting rehabilitation clinics from seeking arbitration with the consent, and on behalf, of insureds, would be inconsistent with the Schedule's provision for the "prior approval of expenses." Section 69 permits arrangements in which insurers are billed directly for rehabilitation services performed. It would be anomalous if such arrangements could not be enforced in the name, and with the consent, of the insureds for whose benefit the arrangements were entered into. In this regard, I disagree with Jevco’s submission that Ms. Strachan’s interest in the dispute ended upon the termination of treatments from Trauma Services. She sought their help and benefitted from it. She was relieved of the burden of paying directly for the treatment. Although the treatment ended, she still had an interest in seeing that Trauma Services was paid for the services she had received. Section 69 of the Schedule recognizes the interests insureds have in direct billing arrangements. A flexible approach to the issue of "retainer" and the manner in which proceedings are brought before the Commission would further those interests. This is consistent with the recent arbitration decision of Pereira and State Farm Insurance Company (June 19, 1997), OIC A96-000996, in which it was stated that direct billing arrangements "allow insured persons, many of whom are impecunious, to receive treatment they would otherwise not receive were they required to pay the treatment provider in advance."

The approach suggested by Jevco would also have the potential to shift control of proceedings from insureds to insurers. Instead of a matter proceeding to arbitration with the consent and co-operation of the insured, an insurer (after having entered into a direct billing arrangement) would have the discretion to block an arbitration on the basis of the details of the professional relationship between the insured and her representative, and on the basis of the extent of their communication prior to the filing of the relevant documents. In my view, this result is inconsistent with the informal nature of the Commission’s dispute resolution process and the insured’s right to have issues of entitlement mediated and arbitrated, pursuant to sections 280(1) and 281(1) of the Insurance Act

Finally, I agree with Ms. Strachan’s counsel that this case is distinguishable from Adusei' and Royyal Insurance Company of Canada (March 3, 1994), OIC A-004404 and International Managed Healthcare Inc. and Dich Quang Le v. Toronto Transit Commi'ssfon, unreported, April 19, 1995, Ont. Ct. (Gen. Div.), in that Ms. Strachan has not assigned her rights to institute this proceeding to Trauma Services. As indicated earlier, Ms. Strachan allowed Trauma Services to proceed on her behalf, retaining to herself the right to prosecute and compromise the claim. In any event, Jevco did not argue that an assignment had occurred. The concern about multiple proceedings in the two cases is also not determinative of the matter. Unlike international Managed Healthcare inc., Ms. Strachan did not choose to forego her rights to arbitrate rehabilitation benefits in favour of an assignment which led Trauma Services to bring the matter in court. And there is no evidence that permitting these types of arrangements will result in a large number of proceedings being split, and brought before the Commission by various treatment providers at different times (as suggested in Adusei).

I, therefore, find that the policy considerations underlying this issue favour a flexible approach to the matter of "retainer" and to the manner in which disputes are brought forward to the Commission.

Expenses:

Ms. Strachan claims her expenses incurred in the preliminary hearing. This matter is reserved to the hearing arbitrator.

Order:

1. Ms. Strachan is entitled to proceed to arbitration on the issue of Trauma Services' outstanding rehabilitation account.

2. The matter of Ms. Strachan's expenses in the preliminary hearing is reserved to the hearing arbitrator.

September 30, 1997

Eban Bayefsky Arbitrator

Date

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.