Neutral Citation: 2001 ONFSCDRS 126

FSCO A00-000543

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ANDREW L. LUKACHKO

Applicant

and

ALLIANZ INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

David Muir

Heard:

August 8, 2001, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were received on August 13, 15 and 21, 2001

Appearances:

Mr. Lukachko Andrew T. Graham for Allianz Insurance Company of Canada

Issues:

The Applicant, Andrew L. Lukachko, was injured in a motor vehicle accident on December 7, 1998. He applied for and received certain statutory accident benefits from Allianz Insurance Company of Canada ("Allianz"), payable under the Schedule.¹ Other benefits claimed by Mr. Lukachko were refused by Allianz. The parties were unable to resolve their disputes through mediation, and Mr. Lukachko applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Should the issue of Mr. Lukachko's entitlement to payment of a $5,000 treatment plan be added as an issue in dispute in this arbitration.

Result:

The issue of Mr. Lukachko's entitlement to payment of a $5,000 treatment plan should not be added as an issue in dispute in this arbitration.

Background:

Two documents were filed in evidence. An application for mediation dated January 11, 2001 and the corresponding Report of Mediator dated April 5, 2001. I heard no other evidence from the parties — the following narrative is based on the record as contained in the file and the submissions of the parties.

Mr. Lukachko has claimed a number of benefits under the Schedule. For the most part, Allianz has denied these claims. Mr. Lukachko applied for mediation in respect of several of the issues in dispute between the parties. A Report of Mediator dated May 10, 2000 indicates that mediation failed in respect of these issues and Mr. Lukachko referred them to arbitration. There has never been an application for mediation of the treatment plan issue.

The substance of the dispute respecting the treatment plan arose in the first four or five months after the motor vehicle accident in December 1998. On or about December 28, 1998, Bayview North Rehabilitation Inc. (Bayview) provided Mr. Lukachko a treatment plan which recommended a course of 40 sessions. Mr. Lukachko apparently attended for two treatments. He has suggested he stopped the treatments because of a letter dated December 11, 1998 from Allianz advising that he should undertake no treatment before he submitted a treatment plan for its approval.

The treatment plan was provided to Allianz on January 5, 1999 and on the following day Allianz approved 16 treatments and not the 40 recommended by Bayview. The issue of the balance of the treatment recommended by Bayview was referred to a Med-Rehab DAC. The results of the DAC are not before me at this point, however, there appears to be a dispute about what the conclusions of the DAC were. In any event Mr. Lukachko attended no further treatment sessions at Bayview.

The dispute between the parties regarding the treatment plan ought to have crystallized in March 1999 with the release of the DAC report. There was no application for mediation in respect of the treatment plan dispute. Mr. Lukachko denies ever being informed by Allianz that they would not fund the treatment plan on the basis of the DAC report.

A pre-hearing was held on September 5, 2000. In a pre-hearing letter dated September 6, 2000, Arbitrator Allen recorded the parties' agreement about what issues were in dispute at that time:

Is Mr. Lukachko entitled to receive a non-earner benefit pursuant to section 12 of the Schedule?
Is Mr. Lukachko entitled to payments for housekeeping and home maintenance services, pursuant to section 22 of the Schedule in the amounts of $696 (for roofing), $4,415 (for general maintenance of his properties) and $986.08 (for a bill from Homestead Home Improvements)?
Is Mr. Lukachko entitled to payments for the cost of examinations by Dr. Charendorff, pursuant to section 24 of the Schedule?
Is Allianz liable to pay Mr. Lukachko's expenses in respect of this arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?

Mr. Lukachko also claims interest on any amounts owing.

The pre-hearing was resumed on December 8, 2000. At that time a tentative settlement was reached in respect of at least some of the issues in dispute. This settlement was subsequently rescinded.

In a letter dated December 15, 2000 Arbitrator Allen advised the parties that as a consequence of the rescission of a settlement arrived at on December 8, the arbitration hearing previously set for January 3 and 4, 2001 would proceed. The arbitrator advised the parties that the issues in dispute remained as set out above.

Mr. Lukachko shortly thereafter withdrew his claim for non-earner benefits, believing that he was instead entitled to income replacement benefits (IRBs). The hearing dates of January 3 and 4 were adjourned to April 9 and 10, 2001 in order that Mr. Lukachko could make an application for mediation of his claim for IRBs. On January 11, 2001, Mr. Lukachko made an application for mediation of the income replacement benefit dispute. The issue was mediated and failed, as recorded in a Report of Mediator dated April 5, 2001.

In advance of the April 9 and 10 hearing dates, the Commission arranged a settlement discussion which took place on March 30, 2001. At that time there was some discussion of the addition of the issue of the treatment plan. Arbitrator Palmer, in an oral ruling, denied Mr. Lukachko's request to add this issue to the pending arbitration.

Mr. Lukachko raised the issue again before the hearing arbitrator on April 9. Arbitrator Blackman made an oral ruling, which was later reduced to writing:

In confirming the issues before me in this arbitration hearing, the following questions arose:

Shall the question of Mr. Lukachko's entitlement to payment of a $5,000 treatment plan be included as an issue in this arbitration proceeding?

The Applicant sought to include as an issue in this proceeding the question of whether he was entitled to payment of a $5,000 treatment plan. The Applicant submitted that this treatment plan was discussed ten days ago in what he termed a pre-hearing/settlement discussion.

The Insurer objected to including this issue in this hearing.

ORDER: This issue has not been mediated. Accordingly, I find that I have no jurisdiction to add this issue at this time to this proceeding, This order is without prejudice to the Applicant proceeding to mediate this issue, and should mediation fail to resolve this issue, having this issue arbitrated.

Arbitrator Blackman appears to have been aware of the Report of Mediator relied upon by Mr. Lukachko as it is referred to in a second order denying Mr. Lukachko's request that the issue of his IRB claim be added to the arbitration. This written order is reproduced here:

The Applicant sought to have the question of his entitlement to income replacement benefits included in this proceeding, but required an adjournment to retain a lawyer with regard to this issue. The Insurer did not agree to adjourn this matter. The Insurer wished the Applicant to abandon his claim for income replacement benefits or to ensure that this claim could not be brought again.

The question of entitlement to income replacement benefits was mediated, as noted in the Report of Mediator, issued April 5, 2001. By letter received by facsimile transmission on April 2, 2001 by the Commission, Mr. Lukachko, however, had indicated that because of his difficulty in obtaining a lawyer, he was withdrawing his claim for income replacement benefits and withdrawing his request for an adjournment of the April 9 and 10, 2001 arbitration.

ORDER: The issue of income replacement benefits has been mediated. However, I see no indication in the arbitration file that an arbitrator has ever added this issue to this arbitration proceeding. Accordingly, as the issue was never properly added to this proceeding, I decline to add it as an issue for the hearing starting April 9, 2001. However, I see no basis for "ensuring that Mr. Lukachko may not bring this claim again."

At the April 9th hearing, the parties entered into another tentative settlement of many of the issues in dispute between them. This settlement agreement was not finalized.

On April 16, Mr. Lukachko wrote to the Commission and asserted a claim for the benefit of the treatment plan recommended by Bayview and by implication sought the addition of the issue to this arbitration. Mr. Lukachko relied on the Report of Mediator, dated April 5, 2001, which refers to the treatment plan. It was Mr. Lukachko's position that the dispute concerning the treatment plan was mediated. The reference in the Report of Mediator is as follows:

The following issues have been resolved:

Issue: Other

Details:

Bayview North Therapy & Rehabilitation Inc. billed the insurer for treatment which they indicated they had provided to the insured. The insurer indicated that they would provide a copy of that bill to the insured.

At the hearing before me on August 8, some time was spent clarifying the issues in dispute between the parties. The following issues were identified as being properly before me to hear and decide:

Is Mr. Lukachko entitled to payments for housekeeping and home maintenance services pursuant to section 22 of the Schedule in the amounts of $646 (for roofing), $5,025 (for general maintenance of his properties), $96 (general maintenance - invoice from George Lukachko), $250.00 (invoice from Bobcaygeon Carpenter) and $986.05 (for a bill from Homestead Home Improvements)?

Mr. Lukachko also claims interest on any unpaid amounts found owing. Both parties are seeking their expenses of the arbitration.

There was also a discussion regarding the addition of the dispute concerning weekly income replacement benefits claimed by Mr. Lukachko. After hearing the submissions of the parties and there being no objection from Allianz, I ordered that the dispute respecting income replacement benefits be added to this arbitration subject to the issue being heard at a later date in order to allow the parties some period of time to prepare for the arbitration of the issue.

Mr. Lukachko again requested the addition of the treatment plan to this arbitration. The parties were unable to agree on its addition. My authority to add this issue became the subject matter of this Preliminary Issue determination.

The parties subsequently advised that they entered into a tentative settlement of the issues set out in paragraph 1 above.

The Submissions of the Parties:

Allianz submits the issue of the treatment plan has never been the subject of an application for mediation and the issue has not been mediated. Allianz relies upon the decisions of Arbitrators Palmer and Blackman, both of whom, it was submitted, have accepted the Insurer's submission on these points. Allianz submits that the rule res judicata ought to be applied and, accordingly, I need not make any further ruling on the issue.

Mr. Lukachko made few submissions regarding the effect of the orders of Arbitrators Palmer and Blackman.

Mr. Lukachko submits that to allow the rule res judicata to determine this issue, would amount to a "gag order disallowing the right to appeal." He also submits that as there is nothing in the Schedule requiring an application for a medical benefit, the insurer must pay the benefit under section 14(2)(b) of the Schedule. Mr. Lukachko submits that having provided an OCF-18 to the Insurer in December 1998 claiming the benefit in December 1998 he need not have done anything further. Mr. Lukachko further submits that in the first two years of his claim he "was never asked either by the Commission or the Insurer to file an application for mediation if I wished to claim the treatment plan." Mr. Lukachko also submits that the Insurer failed to advise him of his right to apply for mediation pursuant to section 49(3) of the Schedule.

Mr. Lukachko also says that having agreed at one point to pay for 16 of the proposed 40 sessions of the Bayview treatment plan they are contractually bound by that agreement and, accordingly, res judicata cannot be applied in this situation.

ANALYSIS:

In order to determine whether or not I have authority to add the issue to this arbitration, I must first determine whether the issue in dispute has been mediated. This requires that I consider Allianz's submission that this question has already been determined by Arbitrators Palmer and Blackman and, accordingly, the rule res judicata ought to be applied here to prevent the re-litigation of the issue.

Res judicata is a rule of evidence.² An arbitrator at the Commission is not bound to apply the rules of evidence. Accordingly, I have a discretion to apply, or not, the rule of res judicata, an exclusionary rule of evidence.

In the circumstances of this case, I find that I am required to apply the rule. I come to this conclusion because I find that it is contrary to the purposes of the dispute resolution process to allow parties to re-litigate issues that have already been finally determined.

The ultimate purpose of the dispute resolution process is the resolution of disputes between the parties. The process is intended to do so in a way that is expeditious, and consistent with ensuring fairness for the participants. To that end the process encourages the parties to clarify and resolve issues where they are able to, as soon as possible. These purposes are compromised if parties are able to re-litigate questions that have already been decided.

The requirements of the rule are:³

That the same question or issue has been decided;
That the decision relied upon is final;
That the parties to the earlier decision are the same as in the instant matter.

In my view, the requirements for the application of the rule are met. I find that the question or issue is the same one as has been previously determined; the decision of the arbitrator was final, subject to an appeal; and the parties are the same.

Mr. Lukachko has requested the addition of the treatment plan dispute on two prior occasions and has raised it again before me. The request has been denied by two arbitrators and should not be revisited again.

In coming to this conclusion I have not placed great weight on Arbitrator Palmer's determination. That order was made in the context of a pre-hearing settlement conference shortly before the commencement of the arbitration hearing. It is not clear what the basis of the order might have been. For example, it may be that the arbitrator thought that it would be inappropriate to add a substantial new issue to an arbitration that was about to commence in little over a week and for that reason made the determination that she did.

Arbitrator Blackman's order is another matter. It appears on the face of the decision that the combination of issues that I am being asked to consider here are precisely the ones that were before the arbitrator. Arbitrator Blackman first considered whether the dispute had been mediated and concluded that it had not. Having made this determination, Arbitrator Blackman concluded that he had no jurisdiction to add the issue to the arbitration at that time.

The arbitrator's decision does not elaborate the arguments of the parties in detail, however, it is clear from the submissions Mr. Lukachko has made to me, that he was then in possession of all the material facts respecting the mediation upon which he is now relying. For example, he submits that he told Arbitrator Palmer on March 30 that the treatment plan dispute had been mediated and further advises in submissions to me that he received a copy of the Report of Mediator on April 5, several days before his appearance before Arbitrator Blackman. I note that Arbitrator Blackman refers to the Report of Mediator in his decision. The point is that nothing new has occurred in this matter as it relates to the dispute concerning the treatment plan since at least the April 9 arbitration hearing before Arbitrator Blackman.

Mr. Lukachko is asking me, in effect, to reconsider Arbitrator Blackman's determination that the issue has not been mediated. I decline to do so. There is simply no basis for my revisiting his determination.

To be clear, this decision does not preclude Mr. Lukachko from making an application for mediation of the treatment plan. There may be an issue of the timeliness of such an application, however, that is for another arbitrator to consider at the appropriate time.

Mr. Lukachko says that Allianz's position deprives him of a right to appeal. This is not so — Mr. Lukachko is perfectly entitled to appeal Arbitrator Blackman's decision as he is entitled to appeal my decision on this issue at the appropriate time.

The remainder of Mr. Lukachko's submissions relate to whether or not the treatment plan dispute has been mediated; to whether or not an application for mediation would be out of time; or to the merits of his claim regarding the treatment plan. I have concluded that Arbitrator Blackman has made a final determination that the treatment plan dispute has not been mediated, accordingly, I am unable to consider those further submissions.

EXPENSES:

The question of expenses of this preliminary issue hearing will be considered at the conclusion of the arbitration.

August 31, 2001

David Muir Arbitrator

Date