FINANCIAL SERVICES COMMISSION OF ONTARIO
Neutral Citation: 2001 ONFSCDRS 1
FSCO A99-000690
BETWEEN:
M D
Applicant
and
HALIFAX INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before: William J. Renahan
Heard: Written submissions received from Halifax on September 25, 2000.
Appearances:
Roland Spiegel for M D
Theodore P. Charney for Halifax Insurance Company
Issues:
The Applicant, M D, was injured in a motor vehicle accident on May 25, 1998. In a decision dated July 27, 2000, I dealt with her claims for statutory accident benefits under the Schedule.1 I dismissed her application for arbitration, while reserving on the issue of expenses:
The issues in this further hearing are:
Is either party entitled to its expenses of the arbitration proceeding?
Is Halifax entitled to $3,000 pursuant to subsection 282(11.2) of the Insurance Act on the grounds that M D commenced an arbitration that was frivolous, vexatious or an abuse of process?
Result:
Halifax is entitled to its expenses of the arbitration proceeding.
M D shall pay Halifax $3,000 pursuant to subsection 282(11.2) of the Insurance Act.
EVIDENCE AND ANALYSIS:
Preliminary issue:
In response to my request for a written response to Halifax's claim for expenses and the return of its filing fee, M D's representative wrote:
Furthermore, I have formally declared you as a bias Arbitrator [sic], before the Director's Delegate Draper, in accordance with Section 282(12) of the Insurance Act.
This is a formal request to you, to exclude yourself from any and all future matters/proceedings, in which I am the representative for the insured person/s.
I wrote to the representative that I found no evidence of actual bias or of a reasonable apprehension of bias. I advised him that an application to the Director for a declaration that I was biased did not operate to stay the hearing of the issue of expenses and again asked him to make written submissions on the issues of this expense hearing before December 21, 2000. By letter dated December 22, 2000, the representative expressed his disagreement with my ruling. He made no submissions on the issue of expenses.
Entitlement to expenses of the arbitration proceeding:
The criteria I should consider in determining entitlement to expenses of the arbitration proceeding are set out in Ontario Regulation 664, R.R.O. 1990 as amended by Ontario Regulation 464/94. I consider the issue of entitlement under each of the six prescribed criteria.
- Each party's degree of success in the outcome of the proceeding.
The case was about the collection of an account of a medical facility which examined and assessed M. D. She was completely unsuccessful in her claim.
- Conduct of the insurer or the insured person that tended to shorten or facilitate the proceeding or that tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders.
Neither M. D. or her counsel appeared at the pre-hearing. The pre-hearing arbitrator could not contact either one by telephone. The pre-hearing arbitrator ordered M. D. to produce a number of documents to Halifax. The arbitrator mailed terms of the order to M. D. and her representative. Most of the documents directly related to proof of entitlement to and the amount of the service provider's account. Although M. D.'s representative should have had little difficulty in obtaining the documents, he did not produce them. I heard no rational explanation for M. D's failure to produce the documents. M. D.'s failure to comply with an order of this tribunal tended to hinder this proceeding.
- Whether the proceeding or any position taken by the insurer or the insured person during the proceeding was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process.
M. D. did not appear at the hearing. The only witness was her family doctor who made the referral for the assessments at issue. The only evidence I heard to explain the referral was the doctor's testimony that M. D. asked for it. In my decision I found that the medical facility did not provide treatment and that the family would not have made the referral if he knew the medical facility did not offer treatment. The family doctor made very little use of the assessments. I also examined each assessment and determined that each was unreasonable and unnecessary when the assessment was made. I find that the proceeding was manifestly unfounded, frivolous and an abuse of process.
- The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.
The factual or legal issues raised were not complex, novel or significant.
- If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.
I heard no evidence of an offer to settle.
- Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.
Halifax argued that the real applicant in this proceeding was a service provider which used the arbitration process in an attempt to collect its account. It argued that the principles that have evolved at this tribunal towards awarding some unsuccessful applicant's a portion of their legal expenses so that individuals will have legal representation in this system should not apply to a service provider. I do not agree. An insured should feel that if she undergoes an insured service which appears to have merit, she will recover some of her legal expenses if she has to go to arbitration to recover her expenses. The insured should not be deterred from undergoing insured services which appear to have some merit out of fear that none of her legal expenses will be covered if she has to proceed with an arbitration to recover payment and ultimately fails.
Although served with notice of this expense hearing, I did not hear from M. D. However, she retained an agent who is under a duty to represent her interests and speak on her behalf. He did not make representations other than claim that I was a "bias arbitrator." Having regard to the expense regulation criteria and my findings set out above, I order that M. D. pay Halifax its expenses of the arbitration proceeding. If the parties cannot agree on the amount of expenses, they may make written submissions on or before January 31, 2001.
Subsection 282(11.2) of the Insurance Act:
Subsection 282(11.2) of the Insurance Act provides:
(11.2) If an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration under section 14.
I heard no evidence to explain the referral to DEAHY. In fact, the referring doctor testified that he would not have made the referral if he knew that DEAHY did not provide treatment. The claim for the account had no chance of succeeding without some evidence to justify the referral. I find that M. D. commenced an arbitration which was frivolous and an abuse of process. Pursuant to subsection 282(11.2) of the Insurance Act, I order her to pay to Halifax the $3,000 assessed by the Commission against Halifax so that it could participate in this proceeding.
January 4, 2001
William J. Renahan
Arbitrator
Date
ARBITRATION ORDER
Neutral Citation: 2001 ONFSCDRS 1
FSCO A99-000690
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
M.D.
Applicant
and
HALIFAX INSURANCE COMPANY
Insurer
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
M. D. shall pay Halifax Insurance Company its expenses of the arbitration proceeding pursuant to subsection 282(11) of the Insurance Act, to be assessed by an arbitrator if the parties cannot agree on the amount.
M. D. shall pay Halifax Insurance Company $3,000 pursuant to subsection 282(11.2) of the Insurance Act.
January 4, 2001
William J. Renahan
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.