Neutral Citation: 2001 ONFSCDRS 136

FSCO A00-000027

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOSE DOCOUTE

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Beth Allen

Heard:

August 13, 2001, at the offices of the Financial Services Commission of Ontario in Toronto

Appearances:

Roland Spiegel for Mr. Docoute

Alex Feldbloom for Zurich Insurance Company

Issues:

The Applicant, Jose Docoute, was injured in a motor vehicle accident on August 20, 1997. He applied for and received statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under the Schedule.¹ The Applicant claims the cost of a medical assessment and a functional abilities evaluation conducted by DEAHY Medical Assessments Inc. ("DEAHY"). The Insurer disputes the Applicant's claim. The parties were unable to resolve their disputes through mediation, and the Applicant applied for arbitration at the Financial Services Commission of Ontario ("FSCO") under the Insurance Act, R.S.O. 1990, c. I-8, as amended. The preliminary issues in this matter are:

1. Is the Applicant entitled to an adjournment pending the outcome of the appeal decision, Liberty Mutual Insurance Company and Persofsky, (FSCO P00-00041, July 3, 2001) and other matters involving bias allegations.

2. Does institutional and/or a reasonable apprehension of bias exist in FSCO's dispute resolution process in relation to the Applicant's claims?

3. Is FSCO authorized to appoint a private arbitrator to conduct an arbitration hearing of this matter pursuant to the Arbitration Act, 1991, S.O. 1991, c. 17?

4. Is there a reasonable apprehension of personal bias on the part of the arbitrator appointed by the Director to hear this matter?

The substantive issues in this matter are:

1. Is the Applicant entitled to the cost of a medical assessment and a functional abilities evaluation claimed pursuant to section 24 of the Schedule?

2. Is the Applicant entitled to a special award pursuant to subsection 282(10) of the Insurance Act on the basis that the Insurer unreasonably withheld or delayed benefit payment?

3. Are the Applicant and the Insurer entitled, pursuant to subsection 282(11) of the Insurance Act, to their respective expenses incurred in respect of the arbitration hearing?

4. Is the Applicant liable to pay the Insurer an amount not exceeding its $3,000 assessment fee pursuant to subsection 282(11.2) of the Insurance Act on the basis that the Applicant's claims are frivolous, vexatious or an abuse of process?

The Applicant also claims interest on unpaid amounts pursuant to section 46 of the Schedule.

Result:

Preliminary issues:

1. The matter is not adjourned pending the outcome of the appeal decision, Liberty Mutual Insurance Company and Persofsky, (FSCO P00-00041, July 3, 2001) and other matters involving bias allegations.

2. The Applicant has not established that institutional and/or a reasonable apprehension of bias exists with respect to FSCO and the dispute resolution process.

3. FSCO does not have the authority to appoint a private arbitrator pursuant to the Arbitration Act, 1991, S.O. 1991, c.17 to hear statutory accident benefit claims.

4. The Applicant has not established his claim of personal bias against the arbitrator in this matter.

Substantive issues:

1. I dismiss the Applicant's claim under section 24 of the Schedule for want of evidence to establish his claim.

2. I dismiss the Applicant's claim for a special award under subsection 282(10) of the Insurance Act. This award is based on a finding of entitlement and I made no such finding.

3. The Insurer is not liable to pay any part of the Applicant's arbitration expenses pursuant to subsection 282(11) of the Insurance Act.

4. The Applicant is liable to pay $500 of the Insurer's arbitration expenses pursuant to subsection 282(11) of the Insurance Act.

5. The Applicant is liable to pay the Insurer $500 pursuant to subsection 282(11.2) of the Insurance Act.

Background:

The Applicant was involved in a motor vehicle accident on August 20, 1997. Following the accident, he received a brief period of treatment and was discharged in November 1997. The Insurer refused his application for non-earner benefits in October 1997. The Applicant has not disputed this.

In his application for arbitration received by FSCO on January 4, 2000, the Applicant claims $2,568 for the cost of the medical assessment and functional abilities evaluation conducted by DEAHY, interest, a special award and his arbitration expenses.

A pre-hearing discussion took place at the offices of FSCO on July 27, 2000. The pre-hearing letter, dated July 28, 2000, lists the issues for arbitration as the cost of the assessment/functional abilities evaluation, arbitration expenses and interest.

On behalf of the Applicant, Mr. Spiegel faxed to FSCO a copy of an "Application for a Motion" ("the motion application"), dated July 24, 2001 which FSCO received on July 30, 2001. The motion makes allegations of institutional bias against FSCO and requests, among other remedies, a stay or adjournment of the proceedings. The Insurer confirmed that it had also received this document on the same date. Mr. Spiegel also faxed to FSCO an "Addendum to Application for a Motion dated July 24, 2001 (the "addendum") which FSCO received on August 9, 2001. The Insurer confirmed it had received a copy of this document by fax on August 9, 2001. The Insurer did not file or serve a written response to the motion application.

Preliminary Issues:

The Applicant's motion alleging institutional bias and/or a reasonable apprehension of bias:

Should the motion proceed?

Rule 65 of the Dispute Resolution Practice Code (Third Edition, April 15, 1997, the "Code )² sets out the procedure for parties bringing preliminary and interim motions. This Rule permits a party to bring a motion at any stage within a proceeding pending a final order and requires parties proceeding by written submissions, to serve on the other party and file with FSCO, written submissions and any supporting documents. The responding party must file a response within ten days of being served. The adjudicator has some latitude to deal with the motion by written or oral submissions or in such a manner as he or she considers appropriate.

Mr. Spiegel faxed his original motion application to FSCO and to the Insurer ten days before the commencement of the hearing, and the addendum two days in advance of the hearing. The Insurer filed no written response to the motion.

At the commencement of the motion, I raised a concern about the parties' non-compliance with Rule 65 – namely, that the Insurer did not respond in writing to the Applicants motion application and the Applicant did not allow a fair opportunity before the hearing for the Insurer to respond to the addendum to the motion application.

Mr. Spiegel raised no objection to the Insurers failure to file a written response. He submitted that in deciding whether to proceed with the motion, I ought not to rely on the formalities of the Rule to deny him an opportunity to bring his motion. Mr. Feldbloom likewise did not object to the Applicant filing the addendum two days before the hearing.

An important objective of codified procedural rules is to provide guidelines to promote fairness, transparency, consistency and predictability in judicial and quasi-judicial processes. This can best be achieved when parties observe the rules. However, the rules provide for some flexibility in their interpretation and application. Rule 1.1 of the Code sets out the overriding principle that the rules should be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute. Rule 78 provides that an adjudicator has the discretion to waive procedural requirements such as time limitations and service and filing formalities.

Neither party objected to proceeding nor raised concerns about any prejudice nor unfairness that would result from hearing the motion application. I can find no prejudice or unfairness that would come to either party if I hear the motion. I concluded that any delay would contribute to the expense of the proceeding. I therefore relied on my authority under Rule 78 to waive the procedural requirements to allow the motion to proceed.

The Applicant's arguments on the motion:

The motion application raises an allegation of institutional bias and/or a reasonable apprehension of bias in relation to FSCO 's structure and dispute resolution process. Mr. Spiegel quotes substantially from the discussion on institutional bias in the Persofsky³ appeal decision. The preamble to the motion application states in part on page 1:

"This 'MOTION' is pursued as a consequence and as an extension on/to the Director of Arbitration David Drapre's [sic] 'APPEAL ORDER ON MOTION TO ADMIT EVIDENCE', in Liberty Mutual Insurance Company and Molly R. Persofsky, (FSCO Appeal P00-00041, July 3, 2001). The 'MOTION' arises on grounds of 'institutional bias or reasonable apprehension of bias', as it raises a jurisdictional question of law with reference to 'institutional independence'." [Quotation marks in the body of the text, underlining, parenthesis and bolding are in the original.]

The motion application seeks two alternative remedies and states in part on pages 2 and 3:

1. "... to have the Arbitration proceedings "stayed", until such time that it is (firstly) so determined, whether or not the cases where there are issues relating to (and/or dealing with) DACs, DAC’s reports, DACs Guidelines, Orders and Directives (of Superintendent of the FSCO), and/or any other matters relating to FSCO and/or under the control, management, and/or under the umbrella of the FSCO, including all Appeal Proceedings, should/could be in fact held under FSCO's authority/jurisdiction, arising out of such 'institutional bias and/or reasonable apprehension of bias' ."

And in the alternative,

2. "... the proceedings are to be conducted before/by ("a proper body") an 'outside (third party) neutral Arbitrator/Adjudicator', to be mutually selected (agreed upon) and appointed by the Applicant (Insured Person) and the Insurer (in accordance with the Arbitration Act)." [Quotation marks in the body of the text, underlining, parentheses and bolding are in the original.]

The addendum also quotes substantially from Persofsky and states in part at pages 1, 2 and 3:

1. "In fact the issue of 'institutional bias and/or reasonable apprehension of bias', was adequately delineated by Director Draper's recent preliminary issue decision in Persofsky and Liberty Mutual Insurance Company, (FSCO P00-000441, July 3, 2001). As I have clearly indicated in my submission, I have expended [sic] and have raised additional parameters/elements with reference to the same issue of 'institutional bias and/or reasonable apprehension of bias'.

2. Furthermore, similarly to the Persofsky's [sic] case the Applicant is not putting forth any allegation of an 'actual bias' (personally directed toward [sic] any specific Arbitrator and or [sic] Director's Delegate) the Applicant is however raising as 'systemic problem' which places the FSCO in a predicament of a 'potential institutional bias' namely, a 'reasonable apprehension of bias'.

3. In addition and in contrast to Liberty Mutual's assertions, the Applicant does contend however that the 'institutional bias and/or reasonable appreciation of bias' arises out of the institutional/organizational and structural 'interwoven' relationship between the FSCO, the Superintendent, the Director of Arbitration [sic], Director's Delegates, Arbitration unit, and the DACs, which leads to the concern that decisions could be influenced by self-interest.

4. This argument fits most comfortably within the concept of 'reasonable apprehension' of institutional impartiality..." [Quotation marks in the body of the text, underlining, parentheses and bolding are in the original.]

The addendum reiterates the assertion that the matter be heard before a private arbitrator pursuant to the [Arbitration Act, 1991]⁴, but does not request a stay of the proceedings. However, in oral submissions, Mr. Spiegel indicated that he was seeking a stay or adjournment of the proceedings.

I had a great deal of difficulty following both Mr. Spiegel’s written and oral submissions, despite my many calls for clarity throughout the proceedings. Mr. Spiegel quoted large tracts from the Persofsky appeal decision in his written submissions without explaining clearly how the excerpts pertain to or otherwise assist the Applicant's motion. Mr. Spiegel's disruptive and uncooperative conduct throughout the hearing greatly hindered the process of understanding the submissions. I will return to this problem later in the decision.

I will attempt to set out my best understanding of the Applicant’s position.

The Applicant is alleging institutional and/or a reasonable apprehension of bias in relation to FSCO's structure and dispute resolution system. In the addendum, Mr. Spiegel states that he is not making an allegation of "actual bias" directed personally at any particular arbitrator or director's delegate. Mr. Spiegel did not provide a definition for "institutional and/or a reasonable apprehension of bias, but rather indicated that he is relying on the definition set out in the Persofsky appeal. As I read Persofsky, it does not provide a definition of, or any findings on, institutional bias, but rather reviews and summarizes principles enunciated in several judicial decisions on this issue and attempts to lay out Liberty Mutual's position.⁵ Mr. Spiegel quotes this portion of the Persofsky appeal decision in both the motion application and addendum, but fails to establish how, if at all, these principles affect the Applicant's case.

As I understand Mr. Spiegel's position, his submissions purport to expand upon Persofsky's discussion of institutional bias by asserting that certain aspects of FSCO's system and structure also reflect "a direct conflict of interest." In support of this, Mr. Spiegel argues that the structural relationships between various sectors of FSCO are "interwoven" and not sufficiently independent and that this consequently leads to relationships that are organizationally "too incestuous." In particular, in his oral submissions, Mr Spiegel argues:

1. There is not sufficient separation between the arbitration and mediation units since they are structurally under the "same umbrella." According to this submission, this is problematic in circumstances where arbitrators are required to make decisions with respect to inappropriate conduct by mediators.

2. The Superintendent of Insurance is organizationally superior to all employees at FSCO and as such is the "boss" of the arbitrators. The submission points to the Superintendent’s authority to make guidelines that are reviewable by arbitrators and argues that this puts arbitrators in a self-interest and conflict situation in relation to the Superintendent.

3. The DAC system is flawed by the fact that FSCO appoints the DACs and the same medical practitioners who do assessments as DAC assessors are frequently the same persons who conduct independent medical examinations on behalf of insurers. According to the Applicant's position, this lack of independence among FSCO, the DACs and the insurance companies amounts to conflicts of interest.

Mr. Spiegel noted the fact that the Persofsky appeal involves an insurer, not an insured person, alleging institutional bias. He argues however that the Persofsky appeal assists the Applicant. As I understand this submission, any attempts by arbitrators to overcome allegations of bias by insurers could potentially lead arbitrators to a "reverse interest" in favour of insurers. According to Mr. Spiegel, this would be unfair to insured persons and would "taint" the whole arbitration process with unfairness.

Mr. Spiegel further argues that if insurers' counsel generally perceive arbitrators as biased, then this has the potential of leading to numerous appeals and judicial review applications by insurers on the bias issue, consequently making the process very expensive.

Mr. Spiegel filed no evidence to support the motion. He submitted that he relies mainly on the Persofsky decision. He argues that I should consider a letter, referred to in the Persofsky appeal decision, from the Superintendent to Liberty Mutual dated September 24, 1999. In this letter the Superintendent invites certain officials at Liberty Mutual to meet with the Director of Mediations and the Acting Registrar and Executive Co-ordinator of FSCO. Mr. Spiegel did not file this letter into evidence and failed to explain its value to the Applicant's case. He also requests that I take judicial notice of the above-listed factors that he identifies as indicators of conflict of interest and self-interest.

Mr. Spiegel seeks two alternative remedies. I also had considerable difficulty comprehending the relief he is seeking.

Mr. Spiegel requests a stay of the proceedings. What I gather from his submissions is that he seeks an adjournment of the proceedings until such time that Persofsky and other cases dealing with allegations of bias and conflicts of interest in relation to FSCO "go through the pipes" and are heard (in Mr. Spiegel's words) "at a more intelligent" level of adjudication. Mr. Spiegel explained that he would like to see this matter adjourned to allow the other cases to go through FSCO's appeal process and on through the courts for a determination, after which time this case can be reconvened and heard.

Mr. Spiegel argued that a stay of the proceedings would result in cost savings. I am not certain I understand this submission. But I gather Mr. Spiegel is saying that all arbitration applications at FSCO involving bias and conflict allegations should be held in abeyance until this issue is determined on appeal and judicial review. Arbitrators would then, in his view, be bound by higher judicial authority on this matter. Mr. Spiegel asserts that if Mr. Docoute, and other applicants, fail in their stay applications, he will appeal this and other cases and take the matters to judicial review, which would in his view, result in unnecessary and avoidable expense.

Mr. Spiegel also advances the unusual remedy that the Applicant's claim be heard by a private arbitrator appointed by the Insured and Insurer under the Arbitration Act, 1991.

Mr. Spiegel argues that because of the institutional bias interwoven through FSCO's structure, FSCO arbitrators should not adjudicate bias matters relating to FSCO. As I understand the Applicant's position on this point, the alleged institutional bias, reasonable apprehension of bias and conflicts of interest alleged to be associated with FSCO's system would be removed if the Applicant's case were placed before a "proper body." As Mr. Spiegel explained, a private arbitrator, at arm's length from FSCO, would have to be appointed pursuant to the Arbitration Act, 1991 to conduct the arbitration and to decide the case.

I requested clarity on how he envisions FSCO being able to effect this remedy. His explanation was, at best, vague and confused. He suggested that FSCO should make provision for the private arbitrator who would hear the case. Mr. Spiegel indicated that he relied on the Persofsky appeal in arriving at this remedy, but failed to explain how Persofsky assists with this argument. The addendum quotes in part from that portion of the Persofsky decision where Acting Director Draper reviews judicial developments on institutional or structural bias. The addendum simply follows this quotation with a request for this remedy.

The Insurer's position on the motion:

The Insurer's counsel declined to respond orally to the motion, asserting that the Insurer is prepared to proceed today with the case on the merits. The Insurer's counsel requested that, in awarding expenses, I consider the Insurer’s expenses and its assessment fee incurred to bring this matter to arbitration.

Ruling on institutional bias and/or reasonable apprehension of bias motion:

Do arbitrators at FSCO qualify to hear the bias issue?

I will deal first with the Applicant's request that I disqualify myself from hearing this matter on the grounds of institutional bias and/or a reasonable apprehension of bias.

Arbitration decisions have dealt with matters where a party has made actual or reasonable apprehension of bias allegations against particular arbitrators and FSCO.⁶

Haripersaud involves an allegation of bias by the applicant's counsel against the arbitrator. The Applicant argued that the arbitrator lacked the jurisdiction to hear the bias issue and that only the Director, pursuant to subsection 282(12) of the [Insurance Act]⁷, has the authority to determine this matter. The arbitrator in Haripersaud found that she had the authority to address the issue of bias, rejecting the notion that "only" the Director can determine this issue. She states and I agree:

"Although section 282(12) states that a party "may apply to the Director for a determination of bias, this does not, in my view, preclude the arbitrator from concluding this herself. Otherwise, she could not withdraw from a case even where she agreed that she was biased or there was a reasonable apprehension of bias, a result which the legislators surely did not intend." [The quotation marks internal to the text are in the original.]

Rennie involves the reasonableness of the treatment rendered by a certain rehabilitation facility. The Applicant's counsel in the Rennie case (who also represented the Applicant in Pereira⁸) alleged bias against both FSCO and the arbitrator in the Pereira case who made a decision in relation to the same treatment provider. The arbitrator in Pereira decided that the treatment was not reasonable or necessary. The Applicant appealed the Pereira decision and the appeal was pending at the time of the Rennie arbitration. The Applicant's counsel in Rennie asserted that FSCO should disqualify itself from determining the Rennie case on the grounds of bias or a reasonable apprehension of bias.

After considering the bias allegations, the arbitrator in Rennie found no merit in the Applicant’s arguments and dismissed the Applicant’s counsel’s request that she disqualify herself.

I agree with, and adopt, the approach in the arbitration decisions that have held that arbitrators are qualified and have the authority to determine matters where there are allegations of bias against particular arbitrators or FSCO as an institution. I see nothing in the legislation or regulations governing the dispute resolution process at FSCO to prohibit an arbitrator from hearing these matters. Mr. Spiegel provided me with no evidence or authorities to support his submissions. Although he indicated that he is relying on the Persofsky appeal, this case makes no findings and comes to no determination on the bias issue. It is merely a motion to admit new evidence and is of no assistance to the Applicant's case.

I therefore find that I have the authority to hear the bias application.

Is the Applicant entitled to a stay of the proceedings?

I will now deal with the Applicant's request that I stay the proceedings pending the final determination of Persofsky and other cases under appeal on matters of bias and conflict of interest.

I also deny this request. Subsection 283(6) of the Act provides:

An appeal does not stay the order of the arbitrator unless the Director decides otherwise.

The arbitrator in the MD and Halifax⁹ case dealt with this issue and held that an application to the Director for a declaration of bias does not operate to stay the arbitration proceedings. The Applicant's counsel in Rennie also requested that the matter be stayed pending the outcome of the Pereira appeal. The arbitrator in Rennie held and I agree:

"... section 283(6) contemplates that hearings will proceed expeditiously, uninterrupted by interlocutory proceedings. Otherwise hearings would grind to a halt every time a party disagreed with an arbitrator's ruling. For these reasons, I denied Mr. ...'s request for an adjournment.

At the time of the hearing, the Applicant in the case before me had not sought a declaration of institutional bias from the Director, but I think it follows that a mere allegation of bias does not operate to stay the proceedings.

The appeal decision in Peterson¹⁰ discusses arbitrators' discretion to control their own processes, holding that:

An adjournment is a matter of discretion, not of right. Arbitrators have the authority to control their own processes within the Commission’s rules of procedure, including the right to determine whether an adjournment should be granted.

I exercise my discretion to deny Mr. Spiegel's request for an adjournment. In arriving at this decision, I took into account that I see no prejudice or unfairness that would result to either party from going ahead to hear the substance of the motion and the merits of the section 24 claim. I also considered the matter of delay. Rule 1.1 of the Code, as noted above, and subsection 282(2) of the Insurance Act which states, "The Director shall ensure that an arbitrator is appointed promptly," contemplate that arbitration hearings should proceed expeditiously. I am of the view that, subject to concerns about fairness and prejudice, delays in proceedings should be discouraged.

Mr. Spiegel submitted that expenses would mount in this case if I were to proceed because the Applicant would incur the cost of an appeal and judicial review of my decision. I reject this argument. Further proceedings would not be prevented if I were to grant an adjournment. There is no guarantee that a decision in Persofsky would solve the issue for the Applicant or prevent further proceedings. The Applicant is not without recourse since he has a right to launch an appeal of my rulings at the appropriate time.

The request for a private arbitrator.

I find Mr. Spiegel's request for a private arbitrator to be appointed by FSCO pursuant to the Arbitration Actj 1991 to be unfounded. He pointed to no statutory or other authority for this relief.

I am at a loss to understand why Mr. Spiegel brought the issue of the appointment of a private arbitrator to an arbitration hearing at FSCO. The Applicant had an opportunity, at an earlier stage, to bring the matter before a private arbitrator or to court. Under the Insurance Act, if mediation fails, an insured person has the option to bring the matter to court or before an arbitrator.¹¹ The insured person can commence an arbitration at FSCO or, by agreement, the parties can have the matter heard before an arbitrator pursuant to the Arbitration Act, 1991.

The appointment and selection of arbitrators for the FSCO dispute resolution process are governed by the Insurance Act No provision exists for arbitrators to be appointed under the auspices of FSCO other than pursuant to the process set out under the Insurance Act. That is, the Minister of Finance appoints a committee with the function of recommending persons to conduct arbitrations.¹² The Superintendent is authorized to establish and maintain a roster of arbitrators from among candidates recommended by the committee.¹³ The Director appoints an arbitrator from the roster maintained by the Superintendent.¹⁴

In response to the insurer's request in the Persofsky appeal for the matter to be heard before a "proper body," Acting Director Draper states, "I am only authorized to appoint arbitrators from the roster maintained by the Superintendent."

I orally dismissed the Applicant’s request for an adjournment with brief reasons and indicated that full written reasons would follow. I went on to hear the bias issue.

Did the Applicant establish the existence of institutional baas and/or a reasonable apprehension of bias?

I find the Applicant’s allegations of institutional bias and/or a reasonable apprehension of bias to be unsubstantiated. Mr. Spiegel made groundless assertions. He called neither witnesses nor documentary evidence and relied on no statutory or legal authorities to support his allegations. I have already discussed the inappropriateness of relying on the Persofsky appeal. He requested that I take judicial notice of what he has described as factors reflecting bias and conflict of interest within the structure of FSCO. I am not able to do this.

Taking judicial notice would require me to take note of the existence and truth of the factors Mr. Spiegel has identified, and his interpretation of these factors, as indicia of bias and conflict of interest. This demonstrates little understanding of the concept of judicial notice. The act of taking judicial notice permits an adjudicator to recognize the truth of certain types of facts that do not require evidentiary proof. Judicial notice permits facts to be accepted which are self-evident. This is not the nature of the factors Mr. Spiegel has identified as indicators of bias and conflict of interest in FSCOs structure and dispute resolution process. It is not evident, without proof, that the relationships between the arbitration and mediation units, arbitrators and the Superintendent, FSCO, the DACs and insurers independent medical assessors reflect the institutional bias and/or reasonable apprehension of bias or conflict of interest alleged by the Applicant. I reject Mr. Spiegel’s argument.

I delivered an oral order dismissing the Applicant’s motion with brief reasons, stating that full written reasons will follow.

The Applicant's allegation of personal bias against me as an arbitrator:

After I dismissed the motion, Mr. Spiegel stood and asserted: "I declare you biased." He then requested the matter be adjourned to allow him to apply to the Director under subsection 282(12) of the Insurance Act for a declaration of bias against me.

The Insurer did not respond to this motion.

I also denied this request for an adjournment. Mr. Spiegel provided no grounds for his allegation of bias against me, aside from the fact that I ruled against the Applicant on the previous motion. I repeat the concern of the arbitrator in Rennie that the smooth and expeditious flow of the procedure would be jeopardized if hearings were to "grind to a halt every time a party disagreed with an arbitrator’s ruling." In any event, the Applicant is not prevented by this ruling from appealing the ruling and bringing a bias application before the Director.

I moved forward to hear the merits of the case and I ordered the Applicant to proceed with his case. The Applicant, his son and an interpreter were in attendance.

The Applicant's Accident Benefits Claims:

The Section 24 Claim:

Over my order to proceed, Mr. Spiegel stated that he would not be proceeding on the section 24 claim because he had made a bias claim against me. I reminded him that he is bound by my order and pointed out to him that he was not displaying the appropriate deference and respect for my rulings or the arbitration process. I indicated that there was every likelihood that if the Applicant were not to present his case, I would decide against him.

At this point, I called a recess to allow Mr. Spiegel time to consider his position. Upon return from the recess, despite my warning, Mr. Spiegel repeated that he would not proceed and would not be calling evidence.

The Insurer stated that it had intended to call witnesses and to file documentary evidence were the Applicant to have advanced a case. However, under the circumstances, the Insurer indicated that it had no case to meet from the Applicant and would not be calling evidence. Counsel for the Insurer filed affidavits of service for the witnesses he had intended to call as well as a book of authorities.

I dismissed the Applicant's claim under section 24 of the Schedule for benefits to cover the cost of a functional abilities evaluation and a medical assessment by DEAHY on the basis that the Applicant failed to satisfy the burden to prove his case.

The Special Award Claim:

A special award under subsection 282(10) of the Insurance Act is predicated upon a finding of entitlement to benefits. Since I made no such finding, I cannot consider this claim.

Expenses:

The Insurer requests its arbitration expenses pursuant to subsection 282(11) of the Insurance Act. It also requests, pursuant to subsection 282(11.2), that the Applicant be ordered pay to the Insurer the amount of the assessment fee it paid to respond to the application for arbitration. The Applicant refused to proceed with his case and did not speak to expenses, although he brought this issue to arbitration.

As an arbitrator I have the discretionary authority under subsection 282(11) to award an insured person or an insurer such arbitration expenses as are prescribed in the regulations. Under subsection 282(11.2) of the Insurance Act, I may also order the insured person to pay the insurer an amount not exceeding the assessment fee the insurer was required to pay, if I find that the insured person commenced an arbitration that is frivolous, vexatious or an abuse of process.

This authority is also reflected in the Code. Rule 73 sets out the criteria an arbitrator may consider when determining whether an award of expenses to a party is justified. Among these factors are: each party’s success in the outcome of the proceeding; the conduct of the insurer or the insured person that tended to shorten or prolong the proceeding; whether the proceeding or a position taken by the insurer or insured person during the proceeding was manifestly unfounded, frivolous, vexatious or an abuse of process; and any other matter related to the proceeding that the arbitrator considers relevant to whether an award of expenses is justified.

The Applicant’s substantive claim under section 24 of the Schedule is on its face a bona fide and justiciable claim and, as such, I do not find it to be frivolous or vexatious. However, I do find the Applicant's allegations of bias and his request for a private arbitrator manifestly unfounded and devoid of merit. As noted above, he made the allegations and requested this relief without providing any evidentiary support or legal authority.

I am also very concerned about Mr. Spiegel’s conduct in the hearing, which I found to be abusive and very disruptive. The conduct of the Applicant is clearly not at issue here. Throughout the hearing, I was struck by Mr. Spiegel’s blatant disrespect for the arbitration process and his reckless disregard for his client’s interests. He frequently spoke in an unnecessarily loud voice and ignored my calls for order. I was required to call several recesses to bring order to the proceeding. In spite of my admonishments, his inappropriate behaviour persisted. Mr. Spiegel did not seem in the least concerned about the effect on the Applicant’s interests of his disregarding my order to proceed with the hearing. His incorrigible and high-handed manner and his undue repetitiveness in advancing his arguments disrupted and unnecessarily prolonged the proceeding.

However, my authority under the Act and the Code is restricted to ordering, where warranted, expenses under subsection 282(11) against the insured person or the insurer, and against the insured person under subsection 282(11.2), taking the parties' conduct and other factors into consideration. I have no authority to make such orders against a lawyer or a representative.¹⁵

Unlike the Rules of Civil Procedure, the rules that govern FSCO's arbitration process do not provide for the imposition of expenses payable by a lawyer or a representative. I find however that a client must bear some responsibility to retain a representative who will provide proper representation and conduct himself or herself appropriately in an arbitration hearing.

Taking all of the circumstances into account, I will not allow the Applicant to recover his expenses from the Insurer. The Insurer is entitled to recover a portion of its expenses from the Applicant. I fix the amount of arbitration expenses under subsection 282(11) of the Insurance Act at $500 and the amount under subsection 282(11.2) at $500.

September 19, 2001

Beth Allen Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 136

FSCO A00-000027

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOSE DOCOUTE

Applicant

and

ZURICH 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:

Preliminary Issues:

1. I decline to allow an adjournment pending the disposition of the appeal decision, Liberty Mutual Insurance Company and Persofsky, (FSCO P00-00041, July 3, 2001) and other matters alleging bias against FSCO.

2. I dismiss the Applicant's motion to have the matter brought before a private arbitrator under the Arbitration Act, 1991, S.O. 1991, c. 17.

3. I dismiss the Applicant's motion alleging institutional and/or a reasonable apprehension of bias against FSCO and the dispute resolution process.

4. I dismiss the Applicant's motion alleging bias against the arbitrator in this matter.

Substantive issues:

1. I dismiss the Applicant's claim under section 24 of the Schedule for want of evidence to establish his claim.

2. I dismiss the Applicant's claim for a special award under subsection 282(10) of the Insurance Act. This award is based on a finding of entitlement and I made no such finding.

3. The Insurer is not liable to pay any part of the Applicant's arbitration expenses pursuant to subsection 282(11) of the Insurance Act.

4. I order the Applicant to pay $500 of the Insurer's arbitration expenses pursuant to subsection 282(11) of the Insurance Act.

5. I order the Applicant to pay the Insurer $500 pursuant to subsection 282(11.2) of the Insurance Act.

September 19, 2001

Beth Allen Arbitrator

Date

Footnotes

1. 1The 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.
2. 2The Dispute Resolution Practice Code, (Fourth Edition, May 31, 2001,) at Rule 6.1(b) provides that the Fourth Edition of the Code does not apply to an arbitration proceeding in which a pre-hearing was held before May 31, 2001, unless the parties agree or the arbitrator rules that the Fourth Edition rules apply. No such agreement or ruling was made. Therefore, the Third Edition of the Code applies to this case.
3. 3The Liberty Mutual Insurance Company and Persofsky, (FSCO P00-00041, July 3, 2001). Without deciding the merits of the institutional bias issue, Acting Director of Arbitration Draper considers a motion by Liberty Mutual seeking to admit new evidence on appeal in support of its allegation of institutional bias on the part of FSCO.
4. 4Arbitration Act, 1991, S.O. 1991, c.17
5. 5Persofsky, supra, note #2, pp. 7 and 8
6. 6See Haripersaud and State Farm Mutual Automobile Insurance Company, (OIC A96-000174, March 16, 1998); Rennie and State Farm Mutual Automobile Insurance Company, (OIC 97-001227, January 7, 1999); K.N. and Coachman Insurance Company, (OIC A-015215, June 10, 1999); and MD and Halifax Insurance Company, (A99-000690, January 4, 2001).
7. 7Subsection 282(12) of the Insurance Act states: "A party may apply to the Director for the appointment of a new arbitrator if the party believes that the arbitrator is biased and the Director shall determine the issue."
8. 8Pereira and State Farm Mutual Automobile Insurance Company of Canada, (OIC A96-000996, April 24, 1998)
9. 9MD and Halifax Insurance Company, (FSCO A99-000690, January 4, 2001)
10. 10Peterson and Royal Insurance Company of Canada, (OIC P-006241, February 6, 1996)
11. 11Insurance Act, subsection 281(1)
12. 12Insurance Act, section 7(4)
13. 13Insurance Act, section 8(1)
14. 14Insurance Act, section 8(2)
15. 15Tallis and Royal Insurance Company of Canada (OIC A-007109, May 1, 1995); Armstrong and Personal Insurance Company of Canada (FSCO A97-001844, May 14, 1999); Lopez and Commercial Union Assurance Company (FSCO A98-001223, April 13, 1999); Farella and Security National Insurance Company (FSCO A98-001162, June 25, 1999); the appeal decision in Sabti and AXA Insurance Company ( FSCO P00-00015, February 5, 2001) confirming Sabti and AXA Insurance Company, (FSCO A98-001267, November 10, 1999).