Neutral Citation: 2000 ONFSCDRS 187
FSCO A00-000358
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
PATRICIA SLATER
Applicant
and
LOYALIST INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before:
M. Kaye Joachim
Heard:
September 20, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto
Appearances:
David S. Wilson for Mrs. Slater
Albert M. Conforzi for Loyalist Insurance Company
Issues:
The Applicant, Patricia Slater, was injured in a motor vehicle accident on December 21, 1998. She applied for and received statutory accident benefits from Loyalist Insurance Company ("Loyalist"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mrs. Slater applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. By interim decision dated August 31, 2000, Arbitrator Novick held that Loyalist is liable to pay a special award of $6,500.
The issue in this hearing is:
Do I have the jurisdiction to vary the amount of the special award previously ordered?
If so, what is the amount of the special award, if any, that Loyalist is liable to pay?
Result:
I do not have the jurisdiction to vary the amount of the special award.
Even if I had the jurisdiction, I would not vary the amount of the special award.
EVIDENCE AND ANALYSIS:
At the time of the accident, Mrs. Slater was employed as a part-time sales representative with The Llewellyn Group Inc., a company providing security services to various businesses. In June 1999, she advised Loyalist that she was claiming entitlement to income replacement benefits ("IRBs") on the basis that she had contracted to begin full-time employment with that company as of January 1, 1999, approximately 10 days following the accident, but was not able to do so as a result of the injuries she sustained in the accident. Loyalist did not pay any IRBs and Mrs. Slater applied for mediation. Following a mediation session held on January 5, 2000, Loyalist agreed to pay $7,787.10, covering the period from January 1, 1999 to July 29, 1999.
In May 2000, Mrs. Slater filed an application for arbitration. In late June 2000, Mrs. Slater brought a motion for interim benefits to be paid pending the resolution of her dispute with Loyalist. That motion was heard at the pre-hearing conducted by Arbitrator Novick on July 25, 2000.
At the commencement of the motion, after some negotiation, Loyalist agreed to pay the amount of $21,241.32 to Mrs. Slater on account of IRBs owing, inclusive of interest. This amount was arrived at by multiplying the number of weeks from the beginning of her entitlement to the date scheduled for the hearing on the merits by the rate of $300 per week, and by deducting the earlier payment of $7,727.10. Mrs. Slater maintained that she was entitled to a benefit of $400 per week, less 20% of any post-accident income earned. Loyalist took the position that the appropriate weekly figure was somewhat less. The parties agreed that the issue of the appropriate quantum of IRBs would be decided at a hearing scheduled to commence on September 20, 2000.
On August 16, 2000, Arbitrator Novick issued a pre-hearing letter in which she identified the issues at the Arbitration hearing as:
What is the amount of weekly income replacement benefit that Mrs. Slater is entitled to receive pursuant to section 6 of the Schedule?
Is Loyalist liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payment to Mrs. Slater?
Is Loyalist liable to pay Mrs. Slater's expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. 1.8
On August 31, 2000, Arbitrator Novick issued a "Decision on a Motion for Interim Benefits" in which she identified the issues before her as:
Is Mrs. Slater entitled to interim benefits pursuant to section 279(4.1) of the Insurance Act?
Is Loyalist liable to pay a special award pursuant to section 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Mrs. Slater?
Mrs. Slater also claims interest on any amounts owing and her expenses incurred on this motion.
As mentioned above, the first issue was resolved at the commencement of the motion by Loyalist agreeing to pay $21,841.32 and a further $300 per week to Mrs. Slater from the date of the hearing until the date the arbitration award is issued.
On the second issue, Arbitrator Novick held that Loyalist was liable to pay a special award in the amount of $6,500, inclusive of interest. Her decision on that issue is reproduced below:
The Applicant claimed that Loyalist should be ordered to pay a special award on $17,641, the amount of IRBs (less the applicable interest) that were owing as of the date of the motion. Counsel contended that an award of 50% of this figure was warranted, in light of the Insurer’s continued refusal to acknowledge Mrs. Slater’s rights under the Schedule. Counsel argued that it was appropriate to order a special award at this stage of the proceedings, and relied on the decision in Simpson and Trafalgar Insurance Company of Canada (FSCO A92-000215, July 16, 1992) in which the arbitrator ordered that a special award be paid after finding in favour of the insured on a motion for interim benefits.
The Insurer submitted that a special award was not merited at this stage, given that it had agreed to make a lump sum payment at the commencement of the motion, which resulted in the matter being resolved on an interim basis. Counsel contended that the issue should be left to the hearing arbitrator’s discretion after a full hearing on the merits, citing the comments of Arbitrator Killoran in Boniface and Liberty Mutual Insurance Company (FSCO A97-002106, July 6, 2000) to this effect on a motion for interim benefits. Finally, counsel argued that interim orders of this nature should only be made in cases of serious financial hardship. He pointed to the fact that Mrs. Slater had earned approximately $20,000 in post-accident income during 1999 and claimed that she consequently did not exhibit the requisite hardship.
I find that a special award is warranted at this stage of the proceedings. Section 282(10) of the Insurance Act mandates an arbitrator to order a special award in cases where an insurer has unreasonably withheld or delayed payments to the Applicant. In my view, the question of whether to consider this question at an interim stage or to defer the inquiry until the hearing on the merits has been completed should depend upon the circumstances of each case. If the basis for the interim benefits order is an insurer’s contravention of the procedural provisions of the Schedule, it may make sense to decide the issue at that stage of the proceeding. I do not agree with the Insurer's contention that a lack of evidence of financial hardship on an applicant’s part is enough to postpone the consideration of whether a special award is warranted until the completion of the hearing on the merits. The focus of the special award analysis is the insurer's conduct, and unlike the analysis required when determining whether interim benefits should be awarded, an applicant’s financial circumstances need not be taken into account.
The documentation filed by the Applicant in this case is replete with examples of unreasonable behaviour on the part of the Insurer. While it took some six months for the Applicant to retain counsel and gather the necessary information to support her IRB claim, once she did so she pursued her rights actively and consistently. In contrast, the material filed suggests that the Insurer took the opposite approach. It initially did not respond to inquiries made by Applicants counsel, and then took a series of steps that substantially delayed the process. Loyalist did not pay any benefits until six months after the information was provided by Mrs. Slater, and then only after the parties attendance at a mediation at the Commission. The Insurer also agreed at the mediation to arrange for a DAC assessment, but paid no benefits to Mrs. Slater pending the assessment. This refusal contravenes the requirements of section 37 of the Schedule, and constitutes an unreasonable withholding of benefits on its own.
As noted above, the DAC assessors determined that Mrs. Slater remained substantially disabled from performing the essential tasks of her employment in June 2000. Their report is dated June 2, 2000 but it was not until the motion for interim benefits on July 25, 2000, some seven weeks later, that Loyalist offered to pay a lump sum amount to bring Mrs. Slater’s income replacement benefits up to date. The Schedule mandates the payment of IRBs on a periodic basis: while the Insurer's offer to pay the amount owing did lead to a resolution of the motion for interim benefits, these actions do not make up for the unreasonable manner in which it conducted itself over the prior 12 months.
I note that other arbitrators, in addition to Arbitrator Palmer in the Simpson case, have ordered that special awards be paid in the face of an insurer’s contention that it would be inappropriate to do so prior to the completion of a hearing on the merits2, or in the case where a payment had been made prior to the commencement of the hearing.3
As stated above, the hearing on the proper quantum of IRBs, payable to Mrs. Slater is scheduled to take place in approximately four weeks. While I can appreciate the practicality of deferring consideration of the special award issue until then, the basis of the claim for a special award is the actions, or inaction, of the Insurer during the period prior to the motion for interim benefits. The upcoming hearing on the merits will likely focus on the evidence that both parties will marshall relating to Mrs. Slater's pre-accident and post-accident earnings, and the validity of the employer’s prediction that she would have earned between $40,000 and $60,000 in 1999. In my view, it is more appropriate to order the Insurer to pay a special award at this stage, at the point where its actions leading up to the motion have been closely examined, as opposed to putting it off for consideration after the evidence on quantum is considered.[emphasis added]
I find that the Insurer’s unreasonable withholding of benefits and disregard for Mrs. Slater’s rights under the Schedule warrants a special award amounting to $6,500, inclusive of interest.
EXPENSES:
The issue of Mrs. Slater’s entitlement to her expenses of this motion are left to the hearing arbitrator, to be determined at the completion of the hearing on the merits.
The parties subsequently resolved the quantum issue. The parties agreed that Mrs. Slater is entitled to her expenses, to be assessed. Mrs. Slater does not claim a special award arising out of any further unreasonable behaviour of the insurer relating to the quantum issue or its actions subsequent to the interim motion. Rather, Mrs. Slater seeks to revisit the issue of the amount of special award based on the unreasonable withholding and delay in the payment of the $21,841.32. Mrs. Slater did not seek to introduce any further evidence. The same materials and only those materials that were before Arbitrator Novick are now before me. The basis for the claim for a special award is Loyalist’s unreasonable delay in dealing with Mrs. Slater's claim for IRBs prior to the motion.
Mrs. Slater submits that Arbitrator Novick’s decision was an interim one, and that as the hearing arbitrator, I have the jurisdiction, and indeed the duty, to determine the issue on a final basis. Mrs. Slater submits that I should exercise my discretion to increase the special award to 50% of the $21,841.32 which Loyalist unreasonably withholds.
Loyalist submits that Arbitrator Novick’s decision is final and that the only proper forum to vary her order is by way of appeal.
Jurisdiction:
In my view, Arbitrator Novicks determination that Mrs. Slater was entitled to a special award of $6,500, inclusive of interest, in respect of Loyalist's actions leading up to the motion for interim benefits, is final.
The fact that the special award was ordered in the context of a motion for interim benefits does not necessarily mean that it was an interim special award.
There is nothing in Arbitrator Novicks decision or in the supporting materials to indicate that an interim special award was requested or granted. On the contrary, Arbitrator Novick made a considered decision to hear the request for a special award at that stage, and proceeded to carefully consider the events leading up to the motion. She concluded that Loyalist had behaved unreasonably and exercised her discretion to order a special award, inclusive of interest. I do not have the jurisdiction to rescind that order nor vary the amount, at least in respect of the Insurer’s conduct which Arbitrator Novick already considered.
Had Mrs. Slater requested a further special award in respect of Loyalist’s determination of quantum, or in respect of unreasonable conduct by Loyalist since the motion, I would have the jurisdiction to hear and determine that issue. However, this is not the issue before me. Mrs. Slater requests that I consider the same facts leading up to the interim motion previously considered by Arbitrator Novick, and determine the same issue already determined by Arbitrator Novick.
Mrs. Slater relied on the case of Simpson and Trafalgar Insurance (A98-000215, February 4, 2000) in which Arbitrator Killoran considered whether to alter the interim special award previously awarded by Arbitrator Palmer in an earlier interim decision. In that case, neither party disputed that the special award issued by Arbitrator Palmer was an interim award and the case is distinguishable on that basis.
I conclude that I do not have the jurisdiction to hear Mrs. Slater's request to vary the special award.
Amount of the Special Award
In the event that I am wrong, and I do have the jurisdiction to revisit the amount of the special award, I have addressed that issue below.
The issue before me is whether Loyalist unreasonably withheld or delayed payments in dealing with Mrs. Slater's claim for IRBs from June 1999 until the date of the motion. That was precisely the issue considered by Arbitrator Novick.
The evidence before me on this issue consisted of the affidavit of Patricia Slater, sworn July 4, 2000 and the attached exhibits. This was precisely the same evidence before Arbitrator Novick.
Loyalist did not dispute that it had behaved unreasonably and that its actions should attract some special award.
It is a trite principle that like cases should be treated alike. This is equally true of the exercise of discretion by arbitrators under section 222(10) of the Insurance Act, with respect to the amount of special awards. Parties reasonably expect that the amount of a special award will be determined by the facts of the case and that similar facts will attract similar awards. No two cases could be more alike that the one before Arbitrator Novick and the one before me. I have reviewed Arbitrator Novick’s decision and I agree with her findings with respect to the unreasonableness of the Insurer’s actions. Accordingly, assuming I have the jurisdiction to revisit the issue of the special award, I would exercise my discretion to confirm a special award of $6,500, inclusive of interest.
October 5, 2000
M. Kaye Joachim
Arbitrator
Date
Neutral Citation: 2000 ONFSCDRS 187
FSCO A00-000358
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
PATRICIA SLATER
Applicant
and
LOYALIST INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- The special award of $6,500, inclusive of interest, is confirmed.
October 5, 2000
M. Kaye Joachim
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.
- Shadd and Prudential of America (FSCO A97-000364, October 2, 1998)
- Rocca and AKXA Insurance(Canada) (FSCO A97-000903, March 10, 1999)