Ronald Warwick v. Liberty Mutual Insurance Company, 2001 ONFSCDRS 108

Financial Services Commission of Ontario

Neutral Citation: 2001 ONFSCDRS 108 FSCO A99-000153

Between: Ronald Warwick, Applicant and Liberty Mutual Insurance Company, Insurer

Decision on Expenses

Before: David J. Evans Heard: By telephone conference call on June 8, 2001.

Appearances: Margaret A. Hoy for Mr. Warwick (minor) Pamela Brownlee for Liberty Mutual Insurance Company

Issues:

The Applicant, Ronald Warwick, a minor, was injured in a motor vehicle accident on September 2, 1994. In a decision dated October 20, 1999, Arbitrator M. Kaye Joachim dealt with his claims for statutory accident benefits under the Schedule.¹ She made the following orders, while reserving on the issue of expenses:

1. Mr. Warwick is entitled to $5,316.05 (plus GST) for case management services provided by Willis Health Services.
2. Mr. Warwick is entitled to interest on this amount in accordance with section 68 of the Schedule.
3. Mr. Warwick is entitled to ongoing case management services by Willis Health Services.
4. Liberty Mutual shall pay Ron Warwick a special award in the amount of $2,500, inclusive of interest.

The issue in this further hearing is:

1. What is the amount of expenses to which Mr. Warwick is entitled?

Liberty Mutual does not dispute Mr. Warwick's entitlement to expenses.

Result:

1. Liberty Mutual Insurance Company shall pay Mr. Warwick expenses and disbursements of $18,061.15, inclusive of GST, less the amount of $14,098.76 it has already paid, for a total of $3,962.39.

Evidence and Analysis:

Background:

Ronald Warwick, who lives in the rural area of Holstein, was eight years old when he was involved in a serious motor vehicle accident. His injuries included a depressed skull fracture. As discussed below, it was eventually determined that the resultant brain injury required the assistance of a case manager.

The dispute before Arbitrator Joachim was the issue of the payment of case management services provided by Willis Health Services (WHS) since October 1997 and the appropriateness of its providing services in the future. Mr. Warwick was largely successful in the hearing, although Arbitrator Joachim reduced the amount that WHS could reasonably have charged for its services by more than half.

Liberty Mutual does not dispute Mr. Warwick's entitlement to expenses incurred in respect of this arbitration hearing and has forwarded $14,098.76 towards them. However, Liberty Mutual disputes a portion of the $19,662.62 claimed in the Bill of Costs by Ms. Hoy, counsel for Mr. Warwick.

Liberty Mutual disputes the expenses related to mediation, the $150 hourly rate claimed by Ms. Hoy, and the amounts charged for the experts' attendances at the hearing. (The parties did agree that the Bill should not have included the Civil Transaction Levy)

Regarding the expenses related to mediation, Section F of the Dispute Resolution Practice Code — Third Edition (the Expenses Schedule) prescribes the expenses a party may recover.² Subsection 3(1) of the Expenses Schedule provides for payment of legal fees but makes no reference to mediation proceedings. Many cases have held that mediation expenses are not recoverable.³ Liberty Mutual has only deducted items which refer directly to mediation. Accordingly, I find that the total hours should be reduced from the 79.8 hours by the 6.6 hours connected to mediation to 73.2 hours. It follows that the two courier items related to mediation totalling $28.90 should also be deducted.

Regarding the hourly rate, Rule 76.1 of the Dispute Resolution Practice Code Third Edition provides that the maximum for legal fees is calculated using the hourly rates established under the Legal Aid Act for professional services in civil matters, adjusted to include any experience allowance. However, "where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150 may be awarded"

Ms. Hoy claims the higher rate. She indicated that she was called to the Bar in 1987 and since November 1999 is allowed the maximum experience allowance under the Legal Aid Act in Legal Aid matters. Ms. Brownlee, counsel for Liberty Mutual, indicated that she had taken those factors into account (which would mean an hourly rate of about $85) and then increased the hourly rate up to $100. Ms. Hoy is seeking the maximum of $150 under Rule 76.1.

Occasionally, insurers do not dispute the maximum hourly rate for experienced counsel.⁴ In other cases, arbitrators have sometimes awarded the maximum amount. In the view of Arbitrator Palmer:

[T]he $150 hourly rate can be awarded equally in circumstances where the claim is complex and requires superior skills of representation or in circumstances where an experienced advocate has attended on a hearing, leaving a sizeable gap between his or her fees per hour and the hour rates accorded under the Legal Aid Act. This provision facilitates access to justice for all applicants and their access to experienced counsel.⁵

Arbitrator Killoran allowed the maximum in a case that "required a good deal of preparation and analysis by a lawyer who "provided excellent representation for his client, has considerable expertise in this area and many years of experience as counsel" since his call in 1975.⁶ In Slater,⁷ she found that the maximum is not restricted to the most senior members of the Bar and noted that counsel was called to the Bar in 1972 and had considerable expertise in the area of accident benefits.

Compared with these counsel, Ms. Hoy is more junior. In Matichuk⁸ Arbitrator Baltman awarded $110 to counsel with roughly the same experience in a case where the issues were not complex.

Liberty Mutual submitted that the claim was not complex, being more in the nature of an assessment of Mr. Willis' account, that the hearing was completed in three days, and that Mr. Warwick was not entirely successful.

Ms. Hoy disputed this characterization, noting that a good portion of the hearing and the decision related to the suitability of Mr. Willis as a case manager (only about 8 of the 25 pages in the decision are devoted to the straight account analysis), that the length of time of the hearing did not reflect all the circumstances around the arbitration, and that the reduction of Mr. Willis' account did not affect the ultimate success achieved by Mr. Warwick.

Even if Liberty Mutual's characterization of the hearing is correct, I find that a consideration of the skills of a representative is not necessarily limited to what happened immediately before or at arbitration for the purposes of setting the hourly rate. I also consider the skill and expertise Ms. Hoy brought in selecting experts to assist her client's claim. In that regard, I will briefly review her involvement in the file that led to the arbitration and then the arbitration itself.

Initially, little happened regarding Mr. Warwick's treatment. Arbitrator Joachim noted that, in November 1994, a therapist retained by Liberty Mutual "recommended follow-up contact with Ron in his home and school, as symptoms often present themselves as the demands of home and school increase." However, there was no follow-up, not even when a new claims specialist, Ms. Veronica Alexander, took over the file in January 1997.

Steps regarding the assessment and treatment only occurred after Ron Warwick's family retained Ms. Hoy. Arbitrator Joachim noted that she "initiated investigations in light of behavioural and cognitive problems noticed by his family." Ms. Hoy advised that at her expense she retained Dr. W. M. Franks. Arbitrator Joachim noted that Dr. Franks was "a physiatrist with considerable expertise in acquired brain injury and neurological rehabilitation," who assessed Ron Warwick in December 1996: "He predicted that Ron Warwick would require cognitive remediation therapy as well as supportive psychotherapy to deal with his limitations, especially as he entered the teenage years."

After receiving Dr. Franks' report, Ms. Alexander wished Mr. Warwick to be examined by a neuropsychologist of her choice; as noted by Arbitrator Joachim, it was Ms. Hoy who insisted that the neuropsychologist be one suggested by Dr. Franks, namely Dr. M. Dennis, "a neuropsychologist with expertise in brain-injured children." She examined him on December 4 and 5, 1997 and concluded that he was experiencing cognitive and behavioural difficulties consistent with the head injury sustained in the accident.

Meanwhile, Ronald Warwick's family had engaged the case management services of Willis Health Services (WHS) in October 1997. On February 23, 1998, WHS advised Liberty Mutual that it had been retained to provide case management services. Veronica Alexander advised WHS that Liberty Mutual was awaiting Dr. Dennis' report and upon receipt it would proceed to act on the recommendations therein.

Unfortunately, Dr. Dennis did not deliver her report until January 1999:

Veronica Alexander felt that the report was outdated (the assessment having taken place in December 1997) and refused to authorize Willis Health Services to go ahead with its recommendations. Willis Health Services was unable to proceed much further with its case management, as Liberty Mutual was not paying its account and was not willing to fund its rehabilitation plan.

Regarding Liberty Mutual's position to this point, Arbitrator Joachim found that the services of a case manager were required when WHS was retained:

It is self-evident that a minor with a brain injury cannot co-ordinate his own rehabilitation. Ron Warwick's frontal lobe injuries are subtle and he requires complex rehabilitation services. He lives in a rural area where such complex services are not readily available...The necessity for a case manager ought to have been obvious to Liberty Mutual when it was first advised of Willis Health Services' involvement in this matter.

After receiving Dr. Dennis' report, Ms. Alexander arranged a further examination, this time by an educational psychologist with expertise in acquired brain injury, who "confirmed that Ron Warwick's learning potential had been significantly compromised by his head injury and that he was emotionally at risk." The psychologist also recommended the appointment of a case manager, which Liberty Mutual agreed to — except that it wished to choose its own case manager and not pay for the services rendered by WHS, leading to the arbitration.

The hearing itself was closely fought. Liberty Mutual submitted that it was neither required to pay expenses for past services nor accept further case management expenses from WHS because WHS lacked proper qualifications, provided services that did not fulfill the purposes of the Schedule, and charged unreasonably high amounts in unreasonably vague invoices.

Arbitrator Joachim found that WHS was suitably qualified to provide those services and that it provided appropriate case management services. She rejected Liberty Mutual's argument that the invoices' vagueness excused the company from paying for them.

Arbitrator Joachim did find that the fees charged were unreasonably high and reduced them from $12,698.85 to $5,316.05, partly by reducing the overall hourly rate. However, she did not further reduce Mr. Willis' hourly rate for his travel time to see Mr. Warwick, despite Liberty Mutual's submission that an unreduced rate was unreasonable, as "any case manager would need to travel to the area for essential client contact...given the lack of local case management services."

Arbitrator Joachim concluded that Liberty Mutual's refusal to pay for the case management services of WHS was unreasonable. She found that Liberty Mutual's desire to select a case manager of its own choice was unreasonable and unsupportable under the legislation. She found that the delay in paying for case management services impeded the ability of WHS to effectively co-ordinate rehabilitation for Ron Warwick and that, as a result, he had not received necessary rehabilitation at the earliest opportunity. She imposed a special award of $2,500.

I find that Ms. Hoy's skills in recognizing Mr. Warwick's likely needs and in doggedly pursuing her client's interests from 1996 through to the hearing is evidence of the expertise she brought to the hearing and should be reflected in her hourly rate. In light of all the circumstances of this case, I award the highest hourly rate of $150.

Liberty Mutual disputed the attendance fees for two experts. Dr. Franks billed $1,200 for his attendance at the arbitration and $100 for travel expenses. Mr. Willis billed $2,400. Subsection 5(3) of the Expenses Schedule provides as follows for the attendance of expert witnesses: "The maximum amount that may be awarded for the attendance of an expert witness is $200 per hour of attendance, up to a maximum of $1,600 per day."

I do not have the benefit of Arbitrator Joachim's notes, so I rely on the submissions of the parties. Regarding Dr. Franks, I was advised that his testimony took about half the day but that he was waiting and present the whole day. "Attendance" is not necessarily strictly limited to the time an expert spends testifying. The Canadian Oxford Dictionary notes that the relevant meaning of "attendance" is "the act of attending or being present." Dr. Franks was present at the hearing for most of the day. In Chafe-Moote and Prudential of America General Insurance Company (Canada)⁹ Arbitrator Killoran allowed for five hours of attendance where the expert only testified for two hours. Accordingly, I allow the $1,200 for the attendance of Dr. Franks. However, the Expense Schedule does not allow for his travel time.

Regarding Mr. Willis, I understand that he testified for one day and then for another half day. Ms. Brownlee allowed the full $1,600 for the first day and then added an additional three hours for the following half day at the maximum of $200 for an additional $600. This seems to be a reasonable approach, and I reduce the account of Mr. Willis accordingly to $2,200. I calculate the expenses as follows (I understand that there may be a dispute regarding interest owed on Dr. Dennis' report, on which I was not asked to rule):

Total time allowed: 73.2 hours Fee per hour: $ 150.00 Total fees: $ 10,980.00 Expert fees for attendance: $ 3,400.00 Taxable disbursements: $ 536.96 Exempt disbursements: $ 100.00 GST on lawyer's fees: $ 768.60 GST on experts' fees: $ 238.00 GST on disbursements: $ 37.59 Total fees, disbursements and GST: $ 16,061.15 Dr. Dennis' report: $ 2,000.00 TOTAL: $ 18,061.15 Amount already paid: $ 14,098.76 Amount still owing: $ 3,962.39

July 18, 2001 David J. Evans Arbitrator

Arbitration Order

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Liberty Mutual Insurance Company shall pay Mr. Warwick's expenses and disbursements of $18,061.15, inclusive of GST, less the amount of $14,098.76 it has already paid, for a total of $3,962.39

July 18, 2001 David J. Evans Arbitrator

Footnotes

1. 1Statutory 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, 463/96 and 304/98. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule" refers to the original O.R. 776/93, and "1995 Schedule" refers to O.R. 776/93 as amended.
2. 2Excerpt from Ontario Regulation 664, 1990, as amended by Ontario Regulation 464/96.
3. 3Ajzenstadt et al. and CAA Insurance Company (Ontario) et al., (OIC A-000185 et al., February 6, 1992), confirmed on appeal (OIC P-000185, July 13, 1992); Chamale and Wellington Insurance Company (OIC A-000849, September 25, 1992) confirmed on appeal on another point (OIC P-00084, July 9, 1996); Edwards and State Farm Mutual Automobile Insurance Company (OIC A-001707, July 12, 1993), confirmed on appeal on another point (OIC P-001707, February 26, 1996); Caputo and Allstate Insurance Company (FSCO A-950212, July 12, 1999); Olszynko and Dominion of Canada General Insurance Company, (FSCO A97-001495), August 27, 1999).
4. 4Garad and Traders General Insurance Company (FSCO A98-000336, May 4, 2001)
5. 5Tustin and Canadian General Insurance Group (FSCO A97-001209, February 21, 2000)
6. 6Oppedisano and Zurich Insurance Company (FSCO A-99-001137, February 11, 2000)
7. 7Slater and Loyalist Insurance Company (FSCO A99-000358, January 29, 2001). A counsel called in 1977 has also received the maximum : The Estate of Edna Simcoe and CGU Insurance Company of Canada (FSCO A00-000148, March 21, 2001)
8. 8Matichuk and Commercial Union Assurance Company (FSCO A98-000318, February 17, 2000)
9. 9(FSCO A99-000016, June 15, 2000)