Neutral Citation: 2000 ONFSCDRS 210
FSCO A99-001169
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
BRIAN K. MCCALLUM
Applicant
and
ECONOMICAL MUTUAL INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before: K. Julaine Palmer
Heard: October 12, 2000, in London, Ontario
Appearances: Maia L. Bent for Mr. McCallum Brian McCall for Economical Mutual Insurance Company
Issues:
Brian McCallum was injured in a motor vehicle accident on January 17, 1999. He applied for and received statutory accident benefits from Economical Mutual Insurance Company ("Economical"), payable under the Schedule.1 This arbitration is about $668.64 in mileage and meal expenses. The parties mediated their dispute in the spring of 1999 and the mediator issued a Report of Mediator that indicated all the issues in dispute had been resolved. In December 1999, Mr. McCallum applied for arbitration, under the Insurance Act, R.S.O. 1990, c.I.8, as amended, claiming that there was a "time frame dispute" between Economical and him regarding these expenses.
The preliminary issue in this hearing is:
- Is Mr. McCallum precluded from commencing an arbitration proceeding with respect to certain benefits, because the dispute between the parties was settled at a mediation?
The substantive issues in this hearing are:
Is Mr. McCallum entitled to $668.64 in benefits pursuant to section 16 of the Schedule?
Is Mr. McCallum liable to pay Economical an amount pursuant to subsection 282(11.2) of the Insurance Act, because he commenced an arbitration that is frivolous, vexatious or an abuse of process?
Is either party liable to pay the expenses of the other in respect of the arbitration under subsection 282(11) of the Insurance Act?
Result:
This arbitration is dismissed. The issue in dispute between the parties was settled at a mediation on June 7, 1999. Since mediation did not fail, this issue cannot be referred to an arbitrator, according to subsection 281(2) of the Insurance Act.
The issue of expenses is not yet determined.
EVIDENCE AND ANALYSIS:
This dispute is complicated, although it involves a relatively small amount of money.
Timeliness of Application for Arbitration:
Economical's counsel argued that the Application for Arbitration was out of time, by his reading of section 11.2 of the Dispute Resolution Practice Code, (the "Code"), as it was filed more than 90 days after the mediator's report.
Subsection 281(5) of the Act allows Applications for Arbitration to be filed up to two years after the insurer's refusal to pay the benefit claimed or within a longer period that may be provided in the Schedule. The provision at section 11.2 of the Code merely restates the provisions of subsection 281(5) of the Act and subsection 51(2) of the Schedule, that extend the time for filing an application for arbitration, where a mediation has been held near the end of that two-year period, by 90 days after the mediator reports. I find that this application has been brought in time, because it was filed within two years of the Insurer's refusal to pay the benefits claimed.
Jurisdiction: Did the Mediation Fail?
I heard testimony from only two witnesses, Brian McCallum and his father, Douglas McCallum. Both men were present at a mediation which took place in June 1999. In Commission arbitrations, oral testimony regarding what took place at a mediation is restricted to statements by the participants as to what they personally said and understood. Mediators are not permitted to testify in subsequent proceedings, and discussions held during mediation are generally agreed to be confidential.
Both Brian and Douglas McCallum testified that their understanding of the outcome of the mediation was that certain expenses incurred by Brian's fiancée would be paid by Economical. These expenses were her wages lost while visiting Brian in hospital, mileage travelled to the hospital, and meal expenses. Douglas McCallum testified that his family dropped claims by Brian's sister-in-law in order to achieve a resolution of Brian's fiancée's claims. He testified that he had no understanding that a particular period of time was all that Economical would pay. Brian McCallum testified that he was present at the mediation and understood his fiancée's claims were being accepted as if she were a family member.
No one from Economical who participated at the mediation testified. Economical's counsel submitted that the responsible person no longer was employed by the company. He further submitted that the Report of Mediator speaks for itself as to the resolution of the dispute and its terms. Counsel submitted that he would have to serve a summons to witness on the former employee if the arbitration was to hear testimony as to what various parties understood took place. I ruled that the hearing would continue as scheduled. It was up to the parties to have the necessary witnesses in place on the day scheduled for hearing.
Brian McCallum's former fiancée did not testify. Their relationship ended in January 2000. In February 2000 she wrote to the Commission and the parties and indicated that she did not wish to make any further claims in this regard.
Brian McCallum's counsel at the mediation did not testify. To my understanding, Economical was not represented by counsel at the mediation, but by the accident benefit claims specialist, who was no longer employed by the company.
The Report of Mediator was mailed from the Commission on June 7, 1999. The covering letter, addressed to both Brian McCallum and his lawyer states, that all the issues in dispute were resolved. In the letter, the mediator invites the parties to call him if they have any questions. The Report of Mediator states that $534.41 was to be paid as a rehabilitation benefit, representing Brian McCalhim's fiancée's wage losses.
After noting that in an effort to "encourage the insurer to give fair and liberal consideration to the remaining issues in dispute, the claim of Cheryl McCallum for $569.40 in lost wages was abandoned by the insured parties," the Report of Mediator continues:
[M.R.] had incurred wage losses totalling $534.41 which had not been re-imbursed by the insurer. This item was originally submitted as a visiting expense under Section 21 of the SABS. On further consideration it was argued to be a reasonable claim under either Section 16(2)(a), 15 (5) (1) of the SABS. Ms. [R's] companionship while Brian McCallum was comatose was understood to have been useful in his recovery and, as such, could reasonably be seen as an expense incurred to speed Mr. McCallum's rehabilitation. On that basis the insurer agreed to re-imburse Ms. [R] in the amount of $534.41.
The cost of her meals while assisting Mr. McCallum in this way formed part of the claims of $542.24 earlier submitted. At mediation the insurer agreed to pay whatever part of that total expense applied to meals for Ms. [R]. The applicant's representative will correspond with the insurer's claims representative to establish that amount.
It appeared not to be in dispute between the parties at the arbitration that the mediation also dealt with mileage claims, although this was not referred to in the Application for Mediation or the Report of Mediator. It was also agreed that the period during which Brian McCallum was comatose ended on February 11, 1999.
Several letters to Economical from Brian McCallum's lawyer's office prior to the mediation and responses from Economical were filed. Economical refused to pay expenses for visitors except those close relatives prescribed in section 21 of the Schedule. On March 25, 1999 Mr. McCallum's lawyer forwarded to the Insurer a copy of this Application for Mediation. The dispute was set out as follows:
Other expenses:
Expenses of visitors:
What is in dispute?
To date, meal expenses totalling $542.24. To date, income loss of [M.R.]- $534.41. To date, income loss of Cheryl McCallum - $569.40
Interest: ✔
Interest owing on any overdue expenses.
Four days later another letter from Mr. McCallum's lawyer to Economical, this time from the clerk handling special damages and no-fault claims, sets out further claims by family members and Ms. R for lost wages, parking, mileage, meals, and a claim for the cost of television and project costs while Mr. McCallum was at Parkwood Hospital.
Both sides in this arbitration seek to uphold the Report of Mediator. They just disagree about what it really means. The Applicant's counsel submitted that Economical failed to honour its agreement, forcing her client into arbitration. Economical's counsel submitted that the company had paid Ms. R as it had agreed. In support of its contention it filed copies of its letter of July 13, 1999 enclosing four cheques and setting out the accident benefits representative's understanding of the time frame involved—mileage, meal expenses and lost wages from January 17 to February 11, 1999.
No response subsequent to Economical's letter of July 13 was filed suggesting Economical's interpretation of what happened at mediation was erroneous. Nor was any correspondence to the mediator filed, nor any clarification requested as provided in section 23 of the Dispute Resolution Practice Code:
23.1 If a party believes that the Report of Mediator is not accurate, the party should notify the mediator and the other parties in writing, with reasons, within 10 days of receiving the Report.
23.2 After considering the reasons and the comments of the parties, the mediator may issue an amended Report of Mediator, if the mediator considers it appropriate.
Conclusion:
A mediation necessarily deals with claims over a discrete time period. When the Application for Mediation was filed at the end of March 1999, the Applicant implicitly acknowledged this by listing claims as "to date." Even so, it would appear that the claims pre-dated the Application for Mediation by some time, for example Ms. R's claim for reimbursement of lost wages was current only to February 11, 1999 even then.
Parties to mediations, like insured persons who are newcomers to the system, are not so attuned to this question of time periods and continuing claims as are mediators, counsel and insurer's representatives who are more familiar with the process. In my view, this accounts for the testimony of Brian McCallum and Douglas McCallum and some of the subsequent confusion.
I find at the mediation in June 1999, the mediator dealt with the claim as it was framed by the Applicant and used his skills to help the parties reach a consensus. I find the Insurer was entirely reluctant to pay claims for visitors not covered under section 21 of the Schedule. I find the Report of Mediator indicates an agreement was reached that dealt with the time up to February 11, 1999 when Brian McCallum was comatose. I find that the Insurer was prepared to accept the claim at that time as a rehabilitation benefit or attendant care benefit. If there was any doubt about that, then Economical's letter of July 13, 1999 that enclosed the cheques should have set off alarm bells for the solicitors for the Applicant that would have provoked an immediate response from them to Economical and the Commission.
The letter from Economical to the Applicant's solicitors is completely clear about Economical's understanding of the agreement reached at mediation. However, as I understand the evidence, the McCallums and Ms. R may never have seen this letter.
I believe that, perhaps over-optimistically, the Applicant intuitively believed that having considered Ms. R as "one of the family" for the purposes of her claims up to February 11, 1999 Economical would continue this practice. That, however, is not how the Insurer decided to proceed. Over time, the McCallum's memories and understanding of what exactly was the subject of the mediation faded.
In summary, then, I find that the issues in dispute between the parties to the mediation in June 1999 were settled and the mediation did not fail. Accordingly, the Applicant cannot refer those issues to an arbitrator under section 282 of the Insurance Act, because the provisions of subsection 281(2) have not been fulfilled; that is, mediation has not been sought and failed.
If the parties have unresolved claims for the period after February 11, 1999, those claims may be referred to mediation.
EXPENSES:
Abuse of Process:
Economical complains that this Application for Arbitration was "frivolous, vexatious and an abuse of process." It seeks to recover its arbitration expenses under subsection 282(11) of the Act and also its assessment fee of $3,000 under subsection 282(11.2). Economical submits that the Application for Arbitration was filed even though the mediation did not fail and that the claimant had more reasonable options to resolve the dispute with respect to "time frame," such as applying for another mediation or seeking clarification of the mediator's report, under section 23 of the Code. Economical also objects to the Application's recharacterization of these expenses as attendant care benefits rather than visitors' expenses or supplementary medical or rehabilitation expenses.
However, the parties also informed me at the end of the hearing, as provided in Rule 75.2 that they wish an Offer to Settle or a Response to an Offer to Settle to be considered in connection with an award of expenses. Accordingly, they should comply with the provisions of Rule 75.2(b) and (c), as by this decision I confirm that all the issues in dispute have been decided, except expenses.
Despite the existence of these formal Offers to Settle and Responses, I would urge the parties to attempt to resolve the expense issue themselves amicably. If the Commission can be of any assistance in facilitating such an attempt, a party should contact the case administrator or the senior arbitrator.
November 21, 2000
K. Julaine Palmer Arbitrator
Date
Neutral Citation: 2000 ONFSCDRS 210
FSCO A99-001169
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
BRIAN K. MCCALLUM
Applicant
and
ECONOMICAL MUTUAL 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:
This arbitration is dismissed. The issue in dispute between the parties was settled at a mediation on June 7, 1999. Since mediation did not fail, this issue cannot be referred to an arbitrator, according to subsection 281(2) of the Insurance Act.
The issue of expenses is not yet determined.
November 21, 2000
K. Julaine Palmer 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.