Seth and Ama Amoa-Williams v. Allstate Insurance Company of Canada, 2001 ONFSCDRS 19

Neutral Citation: 2001 ONFSCDRS 19

FSCO A97–001864

BETWEEN:

SETH AND AMA AMOA-WILLIAMS

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON EXPENSES

Before:

Susan Sapin

Heard:

Written submissions received by November 4, 2000 and a telephone conference call on November 4, 2000.

Appearances:

Theodore P. Charney for Mr. and Mrs. Amoa-Williams

Ian D. Kirby for Allstate Insurance Company of Canada

The Applicants, Ama and Seth Amoa-Williams, were injured in a motor vehicle accident on January 18, 1997. In a decision dated June 5, 2000, I dealt with their claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

Allstate shall pay to Mr. Amoa-Williams chiropractic expenses of $453.80. Allstate shall pay to Mrs. Amoa-Williams chiropractic expenses of $1,323.52.
Allstate shall pay to Mr. Amoa-Williams rehabilitation expenses of $215. Allstate shall pay to Mrs. Amoa-Williams rehabilitation expenses of $1,295.
Mr. and Mrs. Amoa-Williams are entitled to interest on overdue payments in accordance with section 46 of the Schedule.

The issues in this further hearing, therefore, are:

Are Mr. or Mrs. Amoa-Williams, or the Insurer, entitled to their expenses incurred in respect of this arbitration?
If so, what amount of expenses must be paid?

Mr. and Mrs. Amoa-Williams are entitled to their arbitration expenses.
If the parties are unable to agree upon the amount of expenses that should be paid, I will assess the amounts after hearing submissions.

Criteria for awarding expenses:

Subsection 282(11) of the Insurance Act, R..S.O. 1990, c. I.8, allows expenses to be awarded to either the insured person or the insurer:

282.—(11) The arbitrator may award, according to the criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

The criteria for awarding expenses are found in subsection 12(2) of Regulation 664, as amended by Ontario Regulation 464/96, under the Insurance Act, which states as follows:²

12.- (2) An arbitrator may award expenses to an insurer or insured person under subsection 282(11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:

Each party's degree of success in the outcome of the proceeding.
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.
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.
The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.
If the insurer or 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.
Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

Arbitrators must consider these legislated criteria and apply them to both parties, having regard to the intent and purpose of the overall statutory scheme. I accept the general principle, set out by Arbitrator Alves in her expense decision in Gray and Zurich Insurance Company³ and upheld on appeal, that arbitrators must balance the applicant's need for access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits with a "relatively mild deterrent to undeserving claims or undesirable behaviour."

Applying the criteria:

The factual and legal issues raised in the proceeding were complex, novel and significant (Criterion 4):

This arbitration was originally scheduled for June 28, 1999. It did not proceed because Allstate brought a motion under Rule 30 of the Dispute Resolution Practice Code to have it and eight other arbitration cases heard by a single arbitrator because of three common issues, which were: 1) whether the treatment providers, who were the same in each case, overcharged for their services; 2) whether interest was payable; and 3) whether treatment providers who own treatment facilities or facilities designated as Designated Assessment Centres are in a conflict of interest.

Arbitrator Baltman heard the motion on July 12, 1999. She decided that, despite the common factual and legal issues, each of the eleven Applicants would require a significant portion of hearing time to properly present his or her claims, and few economies would be achieved by combining the cases or having them heard consecutively by the same arbitrator. She ordered that the Amoa-Williams' case proceed to a full hearing first, as soon as possible, because it was the only case fully prepared and ready to go. She reasoned that an arbitrator's decision in the matter might provide guidance for the remaining eight cases, and allow the parties to reconsider their positions and explore settlement options on the basis of the arbitrator's findings.

The result of this decision was that the case before me became, in effect, a "test case," into which the parties poured considerable resources. The Applicants, in particular, were required to do so, in order to meet the burden of proof. The case was thoroughly and ably presented and argued by experienced counsel for both sides over the course of seven days.

The factor which most influenced my decision to award expenses to the Applicants was the fact that the issues at the hearing, the reasonableness and necessity of treatment and of the fees charged for chiropractic and rehabilitation services, were significant and complex. The outcome was important not only to the parties and the treatment providers directly involved, but also to the nine remaining applicants, health professionals such as kinesiologists, chiropractors and physiotherapists, as well as to treatment providers and the insurance industry in general, a point conceded by the Insurer. Some issues, such as the conflict of interest provisions under section 38 and the application of various professional fee guidelines, had not been considered before.

This is precisely the type of case where access to timely and cost-effective dispute resolution services is an important consideration. This was confirmed by Director's Delegate Draper in his appeal decision in Gray⁴, where he stated:

...the criteria do not reflect a move to the kind of results-based approach used by the courts.....the criteria, specifically clause 6, leave room for concerns about the access to the dispute resolution system. One aspect of accessibility is that insured persons should have a reasonable opportunity to raise...novel issues of interpretation, particularly those of general importance. (p.16)

I also took other factors into account in arriving at my decision, including the Insurer's submission that it was not the Applicants who were personally responsible for bringing the application. Rather, the "real applicants" were the treatment providers themselves, the Sheppard-Leslie Clinic (the "Clinic") and Target Rehabilitation ("Target"), owned and operated by Dr. Esmail Shahidi. Dr. Shahidi and his business manager, Brian Leila, testified at length about the difficulties they experienced in "educating" insurers about treatment issues, collecting accounts from this particular Insurer, and operating the facilities at a profit. I also heard evidence that Target billed Allstate directly for treatment, rather than the Applicants. Consequently, I have no hesitation in concluding that the Sheppard-Leslie Clinic and Target Rehabilitation had a significant financial interest in the outcome of the arbitration proceeding, and were no doubt in the "driver's seat" with respect to the evidence presented on behalf of the Applicants at the hearing. They may even have funded the arbitration either in whole or in part, although I heard no evidence on this particular point. I find that the Clinic and Target are as much litigants in this proceeding as are Mr. and Mrs. Amoa-Williams.

Having made this finding, the question becomes whether, as a result, the Applicants should be treated any differently for the purpose of determining entitlement to expenses.

The Applicants argued that they should not be treated any differently. In support of this argument they relied on the expense decision of Arbitrator Baltman in Haripersaud and State Farm Mutual Automobile Insurance Company⁵, a case similar to this one in that at issue were chiropractic fees for services performed at Metro Orthopaedic Clinics. The arbitrator held that, "Even if Metro agreed to fund the expenses of the arbitration, Ms. Haripersaud remains the applicant. The expenses were incurred on her behalf, and consequently she is liable for them. Any decision by Metro to waive collection of those expenses is voluntary, and does not, in my view, enure to State Farm's benefit."

I heard no argument from the Insurer about why or how the fact that the real litigant is a treatment provider should influence a decision about who is entitled to arbitration expenses, or why the criteria set out in subsection 282(11) of the Act should not apply.

Subsections 282(3) and 282(11) of the Insurance Act, respectively, clearly state that the parties to an arbitration proceeding are the insured person and the insurer, and that an arbitrator has jurisdiction to award expenses to the insured person or the insurer. In addition, there is no provision in either the Insurance Act or the Schedule that allows treatment providers access to the dispute resolution process at the Commission in their own right, for the purpose of collecting unpaid accounts from an insurance company. Finally, arbitrators have held that they do not have authority to award expenses against persons who are not a party to the arbitration proceeding.

The result is that, although a treatment provider may in fact be a litigant, it is not a party to the proceeding and an arbitrator has no statutory authority to make an award of expenses against it. This leaves the risk of exposure to an award of expenses squarely upon the Applicant, regardless of any arrangements he or she may have made with a treatment provider with respect to arbitration expenses.

Arbitrator Renahan considered this dilemma in a recent expense decision, D'Angelo and Wawanesa Mutual Insurance Company⁶, FSCO A99-000797, January 5, 2001, where the insured person was represented at arbitration by the service provider. Arbitrator Renahan made a finding that the service provider was the real litigant, but held that,

So long as an insured person understands the procedures and risk, and wishes to cooperate with the service provider, I see nothing wrong in a service provider using this forum to collect an account for reasonable and necessary services. The expectation that it can claim its account in a cost-effective and expeditious manner before a tribunal that has expertise in the area, may result in an injured insured receiving necessary treatment or other services he or she would not otherwise receive.

I agree with this view. I find that, under the current legislation as it is written, the question of who is the real litigant is not relevant to a decision about who is entitled to arbitration expenses. An arbitrator must consider and apply the criteria set out in subsection 282(11) of the Act in determining expenses, regardless of whether the real litigant is the insured person or a treatment provider. Although I believe the criteria are broad enough to admit exceptions,⁷ there were none in the case before me.

I also considered the following criteria in arriving at my decision.

1. Each party's degree of success in the outcome of the proceeding

The Applicants argued that this was a complex case and that, overall, success was divided. It is true that the Applicants were partially successful in those aspects of the case most personal to them, in that they were able to demonstrate that the reasonable duration and frequency of treatment to which they were entitled exceeded what the Insurer was willing to pay for, although it was less than what the treating facilities actually provided.

The significant issue in this case, and one which took up considerable time, was whether or not the fees charged by the treatment providers for chiropractic treatment and rehabilitation services were reasonable, an issue larger than the concerns of these particular Applicants. With respect to rates, success was again divided. The Applicants were awarded chiropractic fees significantly higher than proposed by the Insurer, although slightly less than what they were charged, whereas the fees charged for rehabilitation services were found to be excessive.

The end result was that the Applicants were awarded monetary amounts significantly smaller than their claims. This, however, is not necessarily a reason to deny expenses. As Arbitrator Renahan concluded in a similar case⁸, the applicant was nevertheless successful and was required to commence and carry through with the arbitration to recover what she was entitled to.

As pointed out by Director’s Delegate Draper, success is only one criterion and must be weighed against other relevant considerations.⁹ As noted above, this case raised issues of significance to more than just the parties involved. In such cases, arbitrators have held that applicants are entitled to their expenses.¹⁰

2. 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...

The Applicants submitted that the conduct of both parties was reasonable in this case. The Insurer provided no submissions on this point. In my decision to award the Applicants their expenses, I considered other criteria to be more important.

3. 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.

This was not the case in this proceeding. As noted above, the parties issues were legitimate and important, and the parties went to considerable effort to present evidence in support of their positions.

4. The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.

Discussed at pages 4 and 5, above.

5. Written offer to settle

The purpose of this criterion is to promote the resolution of disputes without the need for a hearing by encouraging the parties to offer and accept reasonable proposals for settlement. It requires an arbitrator to consider whether to penalize a party who rejects a reasonable offer by denying it its arbitration expenses, or by requiring it to pay the expenses of the other party. An offer to settle must comply with the requirements set out in Sections 74 and 75 of the Dispute Resolution Practice Code.

A reasonable or "successful" offer would be one that is as favourable as or more favourable than the award obtained. The party relying on an offer to settle, in this case the Insurer, bears the onus of proving that its offer meets this test.

The Insurer submitted that it should either be entitled to its expenses of the arbitration, or that neither side be awarded expenses, because, on June 23, 1999, five days prior to the hearing that was adjourned because of the Insurer's motion to combine proceedings, it delivered to the Applicants an offer to settle in accordance with Rules 74 and 75 of the Dispute Resolution Practice Code, which was more favourable than the amount I awarded to the Applicants. The terms of this offer are as follows:

THE INSURER offers to settle the Applicant's extant claims for statutory accident benefits arising out of the motor vehicle accident of January 18, 1997, on the following basis:

Payment to the applicants of the further sum (in addition to those monies already paid to the Applicants under Statutory Accident Benefits Schedule) of the sum of six thousand two hundred and fifty dollars ($6,250.00) for all statutory accident benefits, including interest thereon;
This offer to settle is made pursuant to Section 74 of the Dispute Resolution Practice Code, Third Edition (April 15, 1997).

I awarded Mrs. Amoa-Williams $2,618.52 and Mr. Amoa-Williams $668.80, for a total of $3,287.32 between them. The Insurer argues that its offer of $6,250 is more favourable, and that this factor should influence me to deny the Applicants their expenses.

In order to be able to compare the offer to the award, the first thing to be determined is the value of the award on the day the offer was made. This requires calculating the interest on the amount awarded, at the 2% per month rate set out in the Schedule,¹¹ from an appropriate point in time up until June 23, 1999. The parties proposed various starting points and means to calculate the interest, the end result being that, regardless, the award, including interest, was worth less on June 23 than was the offer.

The next thing to be determined is what the money representing the difference between the award and the offer is supposed to be for. This, however, is not possible, because the terms of the offer are not clear in several respects.

Firstly, the offer purports to settle "the Applicant's [sic] extant claims for statutory accident benefits arising out of the motor vehicle accident..." I do not know what those claims might be. It is not clear whether the offer was made to settle the issues in dispute at the arbitration only, or if it included something else.

Secondly, in paragraph 1, the Insurer purports to pay "...to the Applicants...the further sum (in addition to those monies already paid to the Applicants under Statutory Accident Benefits Schedule) of...$6,250.00 for all statutory accident benefits..." [emphasis added]. Again, it is not clear whether "all" statutory benefits means only those in dispute in the arbitration proceeding, or whether potential future claims were meant to be included.¹²

Thirdly, the offer does not allocate any amount specifically to one or the other of the Applicants, although each advanced separate substantive claims. Although it is true, as the Insurer argued, that these claims were treated as a single matter by the Commission from the beginning, this was for reasons of practicality and administrative efficiency. Despite the fact that at the hearing itself a great deal of the evidence about the reasonableness and cost of treatment was common to both Applicants, Mr. and Mrs. Amoa-Williams were nevertheless each required to prove their separate claims.

Lastly, the offer does not refer to any amount to compensate for arbitration expenses, and so it is not clear whether it includes such an amount. As pointed out by the Applicants, the offer does not provide for the usual terms, which would be "expenses to be agreed upon or assessed."

For these reasons alone, I would not take this offer into consideration in an award of expense in this case.

However, I would have given little weight to this offer in any event, even if it had been valid in every respect, that is to say, even if it had been confined to the issues in dispute, had included expenses, and had exceeded the award, for one important reason. It was the parties wish, reflected in the decision of Arbitrator Baltman, to proceed to arbitration to obtain an authoritative decision that might provide, if not finality, at least some guidance for the remaining eight cases, and "allow the parties to reconsider their positions and explore settlement options on the basis of the arbitrator's findings."¹³ It would have defeated that purpose to settle this particular case, and the case was unlikely to settle, which the Insurer well knew. I find that the offer was made solely for the purpose of securing a tactical advantage under the Dispute Resolution Practice Code, and in that respect was not a genuine offer to settle the matters in dispute.

I have outlined all of the matters I considered relevant to my award of expenses and have explained my reasons in this decision.

What amount of expenses should be paid?

In the event that the parties are unable to agree on the amount of expenses to which the Applicants are entitled, the matter may be submitted to me to determine.

February 14, 2001

Susan Sapin Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 19

FSCO A97–001864

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

AMA AMOA-WILLIAMS

and

SETH AMOA-WILLIAMS

Applicants

and