Financial Services Commission of Ontario
Neutral Citation: 1999 ONFSCDRS 72
FSCO A98-000708
Between:
Barbara Miller Applicant
and
Allstate Insurance Company of Canada Insurer
Decision on a Preliminary Issue
Before: Asfaw Seife
Heard: April 6, 1999, in Hamilton, Ontario.
Appearances:
Lou A. Ferro for Mrs. Miller Meredith Donahue for Allstate Insurance Company of Canada
Issues:
Barbara Miller was injured in a motor vehicle accident on January 18, 1995. She applied for and received statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.1 Allstate refused to pay Mrs. Miller the cost of a psycho-vocational assessment and functional capacities evaluation conducted by the Ontario March of Dimes (the "March of Dimes Expense"). The parties were unable to resolve their disputes through mediation and Mrs. Miller applied for arbitration at the Financial Services Commission of Ontario ("the Commission") under the Insurance Act, R.S.O. 1990, c.I.8, as amended ("the Act").
The preliminary issue is:
Is Allstate entitled to have the arbitration dismissed pursuant to subsection 281(1) of the Act on the basis that Mrs. Miller has brought concurrent litigation in the courts on the same issue she referred to arbitration?
If the issue is resolved in its favour, Allstate seeks an order against Mrs. Miller for the payment of the $3,000 filing fee it was assessed by the Commission in respect of the arbitration. Allstate alleges that Mrs. Miller's commencement of the arbitration is an abuse of process, and that subsection 282(11.2) of the Act applies.
Allstate also claims its arbitration expenses pursuant to section 282(11) of the Act?
Result:
Mrs. Miller may proceed with the arbitration provided she withdraws the related court action forthwith.
Mrs. Miller shall file with the Commission and serve on Allstate a written confirmation that she has withdrawn the court action or has filed with the court an amended Statement of Claim that specifically excludes the claim for the March of Dimes expense, no later than four weeks after the issuance of this decision. If Mrs. Miller fails to comply with this order, she shall be deemed to have elected to pursue the court action and will be precluded from proceeding with the arbitration.
The issue of whether Mrs. Miller commenced an arbitration that is an abuse of process is deferred.
Allstate is entitled to its expenses in respect of this motion, fixed at $250.
Evidence and Analysis:
Background:
There is no dispute regarding the following facts and I find:
Ms. Miller applied for and received various statutory accident benefits as a result of injuries she sustained in the accident of January 18, 1995. On February 25, 1997, she underwent a psycho-vocational assessment and a functional capacities evaluation at the Ontario March of Dimes, arranged by Mr. Lou Ferro, her present counsel. Mrs. Miller submitted the bill for the assessment, $1,750, to Allstate, who refused to pay it.
On February 26, 1998, Mrs. Miller filed an Application for Mediation through her counsel Mr. Ferro, claiming payment of the cost of the March of Dimes assessment. The Application for Mediation and the Report of Mediator show that the expense was claimed and mediated as a rehabilitation benefit under paragraph 40(5)(e) of the Schedule. It was the sole issue in the mediation that took place between March 11 and May 5, 1998. Mediation failed.
On May 15, 1998, Mrs. Miller referred the dispute to arbitration through her counsel, Mr. Ferro. The Application for Arbitration shows that the March of Dimes expense was claimed as a rehabilitation expense and was the only issue referred to arbitration. Mrs. Miller claimed interest and a special award against Allstate for unreasonably withholding the benefit.
By a letter dated May 19, 1998, the Commission notified Allstate of the filing of the arbitration and that it would be assessed $3,000 in respect of the arbitration. It also advised that the Response by the Insurer was due by June 15, 1998. A copy of this letter and a separate letter acknowledging the receipt of the Application for Arbitration and explaining the process was sent to Mr. Ferro and Mrs. Miller.
Allstate's Response to the Application for Arbitration was served on Mr. Ferro and filed with the Commission on June 15, 1998. On the same day, Allstate was assessed the filing fee of $3,000. A pre-hearing was subsequently scheduled for September 17, 1998.
On June 30, 1998, Mrs. Miller, through Mr. Ferro, issued a Statement of Claim in the Ontario Court (General Division) against Allstate and two of its employees. The claim is for damages (general, special, aggravated, exemplary and punitive) and statutory accident benefits, including medical and rehabilitation benefits with respect to the accident of January 18, 1995. Paragraph 14 of the Statement of Claim claims, the "reimbursement for the cost of mediated medical rehabilitation [sic] expenses incurred" by Mrs. Miller.
On July 10, 1998, Mr. Harry Daniel, counsel for Allstate in the arbitration, wrote to Mr. Ferro as follows:
I understand that you have filed for arbitration following mediation of the January 18, 1995 accident.
It is my understanding that you cannot sue and arbitrate, you must elect to do one or the other.
In addition, because you have filed for arbitration we have had to pay a $3,000 arbitration fee, therefore, if you decide to sue rather [than] arbitrate we want re-payment of the $3,000 arbitration fee, or alternatively, you can try to arrange for the OIC to return it. In the past they have refused to do so in circumstances such as this.
- On July 23, 1998, Mr. Ferro replied to Mr. Daniel's letter as follows:
The issuance of the Arbitration is inadvertent and I know it has happened on a couple of other files and we have now corrected our system within the offices to avoid it happening again.
I would prefer to sue.
By a letter dated September 1, 1998, Mr. Daniel requested the Commission to reimburse Allstate's filing fee as it was Mrs. Miller's intention to proceed by litigation with respect to the same issues she referred to arbitration. Mr. Daniel enclosed in his correspondence the Statement of Claim and a copy of Mr. Ferro's July 23, 1998 letter.
On September 16, 1998, the Commission received a letter from Mr. Ferro, which stated:
I am the solicitor for Barbara Miller.
An arbitration was filed on behalf of my client before June 15, 1998.
As my client has chosen to proceed by litigation, I am in agreement that the [Commission] close its arbitration file and credit the $3,000 arbitration levy fee to Allstate Insurance Company.
There is no evidence that this or any other letter of withdrawal was served on Allstate in accordance with the withdrawal provisions of Rule 67.1 of the Dispute Resolution Practice Code (the "Code").2
On September 17, 1998, an arbitrator contacted Mr. Ferro's office to conduct the pre-hearing discussions previously scheduled. The arbitrator was advised that the matter had settled.
On October 15, 1998, the Commission advised Mr. Ferro that arbitration assessments may only be refunded to an insurer before the response due date or when an arbitrator has determined that there is no jurisdiction to hear the case. In this case, as neither situation applied, the Commission declined to refund the assessment. The Commission drew Mr. Ferro's attention to Rule 67 of the Code.
By letter dated October 19, 1998, Mr. Ferro replied to the Commission's letter of October 15, 1998 stating as follows:
I find your letter punitive against the insurer.
I need to know whether you have discretionary power to make this decision.
It is obvious that the Arbitrator doesn't have jurisdiction in this case because there is a court application already in existence.
I would ask that you revisit your logic and provide us with something more compelling.
A copy of this letter was sent to Allstate and its counsel.
On October 29, 1998, the Commission responded to Mr. Ferro's letter of October 19, 1998 stating that sections 281 and 282 of the Act give an arbitrator the jurisdiction to deal with issues that are in dispute when an application for arbitration has been filed and that arbitrators of the Commission have concurrent jurisdiction with the courts. A pre-hearing was scheduled for December 9, 1998 to consider Mrs. Miller's "request to withdraw from the arbitration process and under what conditions, if any, the applicant's request may be granted."
A pre-hearing discussion was held on December 9, 1998, by telephone. Mrs. Miller participated, represented by Mr. Ferro. Mr. Grant Black acted for Allstate. It appears from the pre-hearing letter that Mr. Ferro did not make a request to withdraw the Application for Arbitration; however Mr. Black brought a motion that the application be dismissed pursuant to subsection 282(1) of the Act, due to multiplicity of actions in respect of the same claim. The substantive issue was identified in the pre-hearing letter as entitlement to "rehabilitation benefits for the cost of a rehabilitation assessment conducted by March of Dimes claimed pursuant to paragraph 40(5) of the Schedule." An attempt to settle the matter having failed, separate hearings dates were set for the preliminary motion and substantive issue.
Submissions:
Ms. Donahue, counsel for Allstate, submitted that Mrs. Miller's arbitration should be dismissed because she has commenced a court action with respect to the same issue that she had referred to arbitration and has sought permission to withdraw from the arbitration in favour of pursuing the court action. Ms. Donahue submitted that the arbitration proceeding was unnecessary and was commenced by Mrs. Miller without carefully considering her options and the consequences of her action and, as a result, Allstate has incurred the $3,000 filing fee and other arbitration expenses. Ms. Donahue argued that Mrs. Miller's commencement of the arbitration amounts to an abuse of process and that Allstate is entitled to its expenses and an award for the payment of its filing fee under subsection 282(11.2) of the Act and Rule 67.3 of the Code.
Ms. Donahue cited the appeal decision Gawronski and Allstate Insurance Company of Canada (OIC P98-0004, May 13, 1998). In that case, Mr. Gawronski, also represented by Mr. Ferro, requested to withdraw the Application for Arbitration less than four weeks after filing it because he decided to go to court on all outstanding issues, including the issue he referred to arbitration. The Insurer, also Allstate, withheld consent. Mr. Gawronski subsequently issued a Statement of Claim in the Ontario Court (General Division) against Allstate and others for damages and accident benefits, including the issue in arbitration. The Director's Delegate upheld the arbitrator's finding that Mr. Gawronski's failure to consider his actions carefully before commencing the arbitration resulted in an unnecessary proceeding and expense and this conduct was an abuse of process under section 282(11.2) of the Act and Rule 67.3 of the Code.
In his submissions, Mr. Ferro took the position that the issue in arbitration is distinct and separate from the issue in the court action. He argued that the issue in arbitration is the cost of examination under subsection 57(1) of the Schedule, whereas the Statement of Claim seeks the payment of medical and rehabilitation expenses. He stated that the March of Dimes expense is not a rehabilitation benefit and is not part of the Statement of Claim. Mr. Ferro did not indicate the nature of the medical and rehabilitation dispute that is the subject of the court action. However, he conceded that no medical or rehabilitation expenses were mediated and remained in dispute at the time of the filing of the court action. He agreed with Allstate's counsel that the only expense that failed mediation at the time Mrs. Miller commenced the court action was the March of Dimes expense.
Mr. Ferro also argued that Mrs. Miller has never formally sought permission to withdraw the dispute in arbitration pursuant to Rule 67 of the Code. He stated that the letters he wrote to the Commission advising that Mrs. Miller has issued a Statement of Claim with respect to the expense in question and preferred to pursue the matter in court were intended to help the Insurer recover its filing fee. However, he made no submission as to why he took the contrary position at the hearing.
Mr. Ferro submitted that the facts in Gawronski are different from those in the present case because here there is no request to withdraw the arbitration, and Mrs. Miller did not commence a court action with respect to the same matter.
Analysis and Conclusion:
Section 281(1) of the Act provides that if mediation fails, the insured person may bring a proceeding in a court of competent jurisdiction or may refer the issues in dispute to an arbitrator. This means that an insured person may not proceed before a court and an arbitrator in respect of the same issue(s) in dispute. However, he or she is allowed to decide between court and arbitration after mediation has failed. The question now is whether the issue in arbitration and the court action are the same, and if so, whether Mrs. Miller is precluded from proceeding with the arbitration because she has elected to go to court.
I do not accept the distinction that Mr. Ferro drew between the claim in the arbitration and the court action, namely that the March of Dimes Expense is a cost of examination that falls under subsection 57(1) of the Schedule while the Statement of Claim seeks the payment of medical and rehabilitation benefits.
The Statement of Claim alleges, among other things, that Mrs. Miller was injured in an accident on January 15, 1995 while insured by Allstate. Paragraphs 12 to 16 of the Statement of Claim state:
Medical and Rehabilitation Expenses:
The Policy provides for the payment by the Insurance company for the cost of reasonable measures reasonably necessary for medical and rehabilitation services required as a result of the impairments sustained as a result of the accident.
The Defendants have refused to pay for medical rehabilitation [sic] expenses submitted.
The Policyholder claims reimbursement for the cost of mediated medical rehabilitation [sic] expenses incurred as aforesaid.
Other Pecuniary Losses:
The Policy provides the Policyholder with reimbursement of certain other mediated expenses incurred as a result of the accident and the Policyholder claims same.
The details of those expenses are well within the knowledge of the Defendants.
I heard no evidence as to what the claim for medical and rehabilitation benefits in the Statement of Claim refers to. No medical or rehabilitation expenses were mediated and remained in dispute at the time of the filing of the court action. The only expense that failed mediation was the March of Dimes expense. The expense in question was claimed as a rehabilitation benefit both in mediation and the arbitration. (In the Application for Arbitration, there is a specific heading to claim cost of examination; however, Mr. Ferro did not check this box). Prior to this hearing, the expense was never claimed or characterized by Mr. Ferro as a claim for the cost of examination.
In any case, even though the March of Dimes expense is not specifically mentioned in the Statement of Claim, Mr. Ferro agreed, and I find, that the language of the Statement of Claim is broad enough to permit Mrs. Miller to advance the claim. I conclude, therefore, that the claim in the Statement of Claim for "medical rehabilitation expense" is the same as the claim in the Application for Arbitration for "rehabilitation benefits" and that they both refer to the March of Dimes expense.
My conclusion is strengthened when one reads the Statement of Claim in conjunction with Mr. Ferro's correspondence with the Commission and Allstate. Mr. Ferro has indicated unequivocally that Mrs. Miller commenced a court action in respect of the same issue she referred to arbitration by stating variously; "the issuance of the Arbitration is inadvertent"; "I would prefer to sue"; "a Statement of Claim in this matter was issued on June 30, 1998"; "my client has chosen to proceed by litigation, I am in agreement that the [Commission] close its file"; "it is obvious the arbitrator does not have jurisdiction in this case because there is a court application already in existence."
Therefore, having regard to all of the circumstances, I find that Mrs. Miller has commenced a proceeding in court in respect of the same issue that she had already referred to arbitration.
Mr. Ferro may be technically correct that Mrs. Miller did not request to withdraw the arbitration because she did not explicitly invoke Rule 67. However, at this point this issue is largely academic because Mrs. Miller has, in effect, rescinded any previous withdrawal request by indicating at the hearing that she intends to pursue the arbitration.
Since Mrs. Miller cannot proceed with her dispute in two forums, the question now is whether the arbitration proceeding should be dismissed on the basis that she has elected to go to court, as Ms. Donahue submitted, or whether Mrs. Miller should be given an opportunity to withdraw her court action and pursue the arbitration. By virtue of filing an Application for Arbitration Mrs. Miller first elected the arbitration process for the resolution of her dispute. By subsequently commencing the court action, she apparently changed her election and decided to pursue the matter in court. However, at the hearing, Mr. Ferro indicated that Mrs. Miller intends to proceed with the arbitration.
Is Mrs. Miller precluded from pursuing the arbitration merely because she subsequently commenced a court action about the same issue? While the court action was commenced subsequent to the filing of the Application for Arbitration, I heard no evidence or submissions that the action has proceeded to discoveries or progressed to a point where Allstate would be seriously prejudiced by having the matter dealt with in arbitration rather than court. I also note that the insured person's choice of forum, provided in section 281 of the Act does not preclude the insurer from pursuing its rights in court. In cases in which the two parties wish to proceed in different forums, the appropriate forum will need to be determined; however, this is not the case here. The arbitration hearing is scheduled to begin on August 11, 1999. In my view, if Mrs. Miller wishes to proceed with this arbitration, it would be appropriate to give her the opportunity to do so, provided she withdraws forthwith from the related court action in the Ontario Court (General Division), Court File No. 4626/98.
Therefore, I order Mrs. Miller to file with the Commission and serve on Allstate a written confirmation that she has withdrawn the court action or has filed an amended Statement of Claim that specifically excludes the claim for the March of Dimes expense, within four weeks of the issuance of this decision.
If Mrs. Miller fails to comply with this order, she shall be deemed to have elected to pursue the court case and will be precluded from proceeding with the arbitration.
Did Ms. Miller commence an arbitration that is an abuse of process, pursuant to section 282(11.2) of the Act?
I defer the determination of Allstate's request for payment of its filing fee until such time that Mrs. Miller fails to make an election to proceed with the arbitration, as outlined above.
Expenses:
Subsection 282(11) of the Act gives an arbitrator discretion to award expenses to a party if the arbitrator is satisfied that the award is justified having regard to the criteria set out in the Expense Regulation. Subsection 282(11.1) of the Act gives an arbitrator discretion to make an interim award of expenses at any time during an arbitration process, subject to such terms and conditions as may be established by the arbitrator
Having considered the criteria listed the Schedule to the Expense Regulation and Rule 73 of the Code, I exercise my discretion to award Allstate its expenses incurred in respect of this motion. I heard submissions regarding Allstate's entitlement to expenses; however, Allstate's counsel did not provide me with the details of those expenses. The motion took two hours. Under the circumstances, I consider $250 to be a reasonable assessment of Allstate's expenses. Therefore, Mrs. Miller shall pay Allstate this amount.
April 29, 1999
Asfaw Seife Arbitrator
Neutral Citation: 1999 ONFSCDRS 72
FSCO A98-000708
Financial Services Commission of Ontario
Between:
Barbara Miller Applicant
and
Allstate Insurance Company of Canada Insurer
Arbitration Order
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Mrs. Miller may proceed with the arbitration provided she withdraws the related court action forthwith.
Mrs. Miller shall file with the Commission and serve on Allstate a written confirmation that she has withdrawn the court action or has filed with the court an amended Statement of Claim that specifically excludes the claim for the March of Dimes expense, no later than four weeks after the issuance of this decision. If Mrs. Miller fails to comply with this order, she shall be deemed to have elected to pursue the court case and will be precluded from proceeding with the arbitration.
Mrs. Miller shall pay Allstate its expenses in respect of this motion, fixed at $250.
April 29, 1999
Asfaw Seife Arbitrator
Footnotes
- The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94 and 463/96.
- Rule 67 "Withdrawal" states: 67.1 A party may seek permission to withdraw all or part of a dispute: (a) in writing by serving on the parties a request to withdraw and by filing the request together with a Statement of Service in FORM E; OR (b) orally during a neutral evaluation, pre-hearing discussion, a preliminary conference or at a hearing. 67.2 The Commission or an adjudicator, as the case may be, will permit a party to withdraw if the other parties agree. 67.3 Where a party does not agree to the withdrawal, an adjudicator may: (a) permit the withdrawal on such terms and conditions as the adjudicator considers appropriate; (b) award expenses to either party as permitted by Rule 73 and following, and the Expense Regulation under Section F of the Code; (c) award an amount to the insurer, up to the amount the insurer is required to pay to participate in the hearing, if the adjudicator decides an abuse of process has occurred or the proceeding is frivolous or vexatious.