Neutral Citation: 2001 ONFSCDRS 94

FSCO A00-000940

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ALVIN SANCHEZ

Applicant

and

CGU INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before:

David Leitch

Heard:

May 7 to 9, 2001, at the Offices of the Financial Services Commission of Ontario in Toronto

Appearances:

Mr. Alvin Sanchez

Mr. Robert H. Rogers for CGU Insurance Company of Canada

Issues:

The Applicant, Alvin Sanchez, was involved in a motor vehicle accident on March 8, 1999. He applied for and received statutory accident benefits from CGU Insurance Company of Canada ("CGU"), payable under the Schedule.¹ Disputes arose between the parties which they were unable to resolve through mediation and Mr. Sanchez 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 issues in this hearing are:

1. Is Mr. Sanchez entitled to weekly income replacement benefits as a result of the accident of March 8, 1999?

2. Is Mr. Sanchez entitled to treatment-related transportation expenses as claimed?

3. Is Mr. Sanchez entitled to medical expenses in respect of medication as claimed?

4. Is Mr. Sanchez entitled to medical expenses in respect of aqua therapy as claimed?

5. Is CGU liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Mr. Sanchez?

6. Is Mr. Sanchez liable to pay an amount to CGU that does not exceed the amount assessed against CGU in respect of the arbitration, pursuant to subsection 282(11.2) of the Insurance Act, because he commenced an arbitration that is frivolous, vexatious or an abuse of process?

7. Is either party liable to pay the other's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?

Result:

1. Mr. Sanchez is not entitled to receive income replacement benefits as a result of the accident of March 8, 1999.

2. Mr. Sanchez is not entitled to treatment-related transportation expenses as claimed.

3. Mr. Sanchez is not entitled to medical expenses for medication as claimed.

4. Mr. Sanchez is not entitled to medical expenses for aqua therapy as claimed.

5. CGU is not liable to pay Mr. Sanchez a special award pursuant to subsection 282(10) of the Insurance Act.

6. Mr. Sanchez is not liable to pay CGU an amount pursuant to subsection 282(11.2) of the Insurance Act.

7. Neither party is liable to pay the other's expenses in respect of the arbitration pursuant to subsection 282(11) of the Insurance Act.

Preliminary Issue:

At the pre-hearing on December 12, 2000, the Arbitrator ordered Mr. Sanchez to produce documents with respect to his pre-accident income from self-employment and his pre-accident health.² The income-related documents consisted of Mr. Sanchez's 1998 income tax return and Notice of Assessment, the financial statements for his business for the last fiscal year prior to the accident and a detailed list of the revenue and expenses of this business for one year prior to the accident. The health-related records consisted of an OHIP summary for the period July 1997 to March 8, 1999 and the clinical notes and records of Mr. Sanchez's family doctor for the period commencing two years prior to the accident.

Mr. Sanchez did not comply with these orders and, after the pre-hearing, he took the position that they contravened his constitutional rights under the Canadian Charter of Rights and Freedoms. Prior to the hearing, Mr. Sanchez served copies of a document entitled "Notice of Constitutional Question"³ on the Insurer, FSCO, the Department of Justice of Canada and the Constitutional Law Branch of the Ontario Ministry of the Attorney General. At the hearing, the parties and I agreed to deal with the constitutional questions raised by Mr. Sanchez as a preliminary issue.⁴

I, therefore, proceeded to hear argument from both parties on these questions and to give an oral ruling, rejecting Mr. Sanchez's arguments. In my oral ruling, I indicated that written reasons would follow in this decision.

The closest Mr. Sanchez came to formulating a specific constitutional question was the following: "Refer to my Charter, to consider the following, did breach and/or, is breach occurring?" Mr. Sanchez posed this question twice, once at page 5 of his written submission and once at page 6. After posing it the first time, Mr. Sanchez listed five sections of the Canadian Charter of Rights and Freedoms; after posing it the second time, he listed the same five sections plus two additional sections. The seven sections were: 1, 15(1), 7, 8, 9, 10(b) and 6(1). Insofar as I was able to follow Mr. Sanchez's argument, he sought to persuade me that these Charter provisions gave him the right to withhold or, in his words, "to keep secure," documents he had been ordered to produce. The constitutional question, therefore, appears to be whether the Arbitrator's order somehow violated Mr. Sanchez's rights to security of the person or privacy as protected by the Charter. In addition, Mr. Sanchez alleged that he had been "arbitrarily detained or imprisoned" when he was examined at the offices of the Insurer on September 30, 1999.

For its part, the Insurer submitted that the Charter does not apply to private disputes of the type between the parties in this case.

Dealing first with the Insurer's submission, it is incorrect that the Charter does not apply to this dispute because it is between private parties. While Mr. Sanchez and the Insurer are private parties, both the terms of the automobile insurance contract between them and the system which governs the resolution of the dispute between them are stipulated by the Insurance Act, a provincial statute, and by regulations thereunder. In accordance with section 32(1)(b), the Charter applies to "all matters within the authority of the legislature of each province." The Charter has thus been held to apply to an automobile insurance policy that excluded common-law spouses from spousal accident benefits.⁵ Moreover, when, as in this case, a citizen is ordered to do something by an arbitrator exercising a power conferred by statute, the coercive authority of the state clearly comes into play. It is the exercise of this kind of authority which gives the citizen the right to seek the protection of the Charter. The Charter has thus been held to apply to an arbitrator who, exercising a power conferred by statute, ordered an employer to provide a dismissed employee with a letter of reference.⁶

Conversely, the Charter has no application to Mr. Sanchez's allegation that he was "arbitrarily detained or imprisoned" when he was examined at the offices of the Insurer on September 30, 1999. This examination was not conducted under the authority of any statute, regulation or FSCO-sanctioned procedure. In any event, the transcript of this examination⁷ leaves no doubt that it was conducted with Mr. Sanchez's consent. He was certainly not detained against his will or imprisoned.

Of the seven provisions of the Charter referred to, only sections 7 and 8 provide any potential foundation for the rights asserted by Mr. Sanchez.

Section 7 reads as follows:

7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.

The production orders at issue in this case clearly did not deprive Mr. Sanchez of his "life" or "liberty." Nor, in my view, did they deprive him of his "security of the person." At its widest, this expression may be interpreted to include the right to satisfy basic human needs⁸ or the right to access medical treatment⁹ and hence may, in some circumstances, affect the handling of claims for statutory accident benefits. Nonetheless, there is no authority that the expression "security of the person" creates a right to privacy of the type advanced by Mr. Sanchez in this case.¹⁰

Even if there were such authority and the production orders deprived Mr. Sanchez of his privacy, he was present at the pre-hearing and was given the opportunity to persuade the Arbitrator that the orders should not be issued. While neither party may have referred to it at the pre-hearing, the arbitral case law recognizes the need to balance the claimant's right to privacy with the Insurer's right to obtain pertinent information.¹¹ The Arbitrator would have been aware of this case law, and, in my view, the pre-hearing procedure provided Mr. Sanchez with a fair hearing and an unbiased adjudication on the issue of productions. I, therefore, find that the production orders were issued "in accordance with the principles of fundamental justice."

Furthermore, even if the expression "fundamental justice" reaches questions of substantive as well as procedural justice,¹² the production orders did not, in my opinion, lead to any substantive injustice. On the contrary, the production orders were clearly intended to avoid the substantive injustice that might result from basing determinations regarding Mr. Sanchez's entitlement to statutory accident benefits on incomplete information, in particular, on only the information Mr. Sanchez decided, unilaterally, to produce.

Finally, I acknowledge that the principles of fundamental justice have sometimes been interpreted to include protection against the compulsion to give self-incriminating evidence.¹³However, it has been held that this interpretation of section 7 has no application to the discovery or production procedures in a civil case, even when there is a possibility of criminal proceedings arising out the same facts.¹⁴ The present case is a civil proceeding and I was not made aware of any possible criminal proceedings arising out of the same facts. It follows that section 7 did not protect Mr. Sanchez against compulsion to produce documents, notwithstanding their potential to compromise his claims for statutory accident benefits.

On the other hand, section 8 of the Charter does create a constitutional right to privacy. It reads as follows:

8. Everyone has the right to be secure against reasonable search or seizure.

Since there is "little difference between taking a thing and forcing a person to give it up,"¹⁵ I am prepared to assume, without deciding, that the production orders at issue in this case constituted a seizure. However, that seizure only violated Mr. Sanchez's constitutional right to privacy if it was effected without prior judicial authorization, where such authorization was feasible and required by the nature of the privacy interest, or if it constituted an invasion of a "reasonable expectation of privacy."¹⁶

The first requirement of prior authorization was clearly satisfied. The orders were issued by a neutral Arbitrator after affording both parties the opportunity to be heard.

The second requirement is an objective one, that is, it is not based on whatever Mr. Sanchez, himself, regarded as private but on what a person in his situation could reasonably regard as private. In my view, a person who initiates a claim for income replacement and medical benefits under the Schedule is only entitled to a diminished expectation of privacy with respect to information about his or her pre-accident income and health. Such a claimant should reasonably expect that, having made a claim to the Insurer or having put his or her entitlement in issue before an arbitrator or a court, the normal production or discovery procedures will be employed to ensure that all parties obtain access to all relevant information, including perhaps information about his or her pre-accident income and health. At the same time, a claimant can reasonably expect the legal process to impose and supervise limits on access to information which would otherwise be regarded as private or confidential. Measured against these reasonable expectations of privacy, I find that the production orders at issue in this case did not constitute unreasonable seizures within the meaning of section 8 of the Charter.

After I gave my oral ruling rejecting Mr. Sanchez's constitutional arguments, he stated that he had not filed an income tax return for 1998 and that there were no additional business documents of the types or for the periods specified in the production order beyond those documents he had already produced. He produced the OHIP summary for the period specified in the production order.¹⁷ Both parties then indicated that they were prepared to proceed with the hearing without production, as ordered, of the clinical notes and records of Mr. Sanchez's family doctor for the period commencing two years prior to the accident.

Issue 1: is Mr. Sanchez entitled to income replacement benefits?

In order to qualify for income replacement benefits during the first 104 weeks of disability, Mr. Sanchez must establish that, as a result of the accident of March 8, 1999, he suffered "a substantial inability to perform the essential tasks" of his pre-accident employment¹⁸ and that his pre-accident employment generated an income.¹⁹ The Insurer's principal argument with respect to this period was that Mr. Sanchez did not establish that his pre-accident employment generated any income. I will deal with this issue first.

After the first 104 weeks of disability, Mr. Sanchez may qualify for income replacement benefits in the amount of $185 per week even if his income from pre-accident employment was zero²⁰but only if he establishes that his disability as a result of the accident had/has become, for this extended period, "a complete inability to engage in any employment for which he ... is reasonably suited by education, training or experience."²¹ I will deal with this issue second.

(a) did Mr. Sanchez's pre-accident employment generate any income?

Mr. Sanchez testified that prior to the accident of March 8, 1999, he was a courier-broker. He agreed that he considered himself self-employed, that he had marked "self" as the name of his employer on his Application for Accident Benefits²² and that on March 24, 1999 he had signed a document supplied to the Insurer in which he made, among others, the following statements:

I am self-employed. The name of my company is Alvin Sanchez Inc. I have been incorporated since November 1, 1997.

I do not have any partners, I have no employees. I work alone.

My business expenses include vehicle rentals, gas and insurance. I have a business account with the Royal Bank. My account number is²³

As a person who identified himself as self-employed,²⁴ Mr. Sanchez was obliged by the Schedule to calculate his income by reference to either the 52 week-period prior to the accident or the last fiscal year completed before the accident.²⁵ At the hearing, it became clear that Mr. Sanchez had chosen the first of these options by relying upon documents pertaining to the 52 week-period prior to the accident. To prove his business revenues for the period March 8 to June 3, 1998, Mr. Sanchez entered into evidence copies of six cheques deposited during this period together with a covering letter dated December 2, 1999 from the Royal Bank.²⁶ These cheques, which came from a variety of courier companies and one school board, totalled $1,550.30. To prove his business revenues for the balance of the 52 week-period prior to the accident, Mr. Sanchez entered into evidence a letter dated October 1, 1999 from a company called Starlite Courier Express Inc. which reads as follows:

This letter is stating that Alvin Sanchez was a owner operator on contract with Starlite Courier Express from June 1998 - December 1998, he was paid a 65% percentage of sales his total earnings in that period was $11905.84.²⁷

During the course of the hearing, Mr. Sanchez produced a partial copy of the Commissioner's Guideline No. 4/96, Guideline for Identifying Self-employed Individuals, which sets out indicators of self-employment, and testified that he was covered by the second, "Contract of Service," situation. But while Mr. Sanchez thus conceded, again, that he was self-employed, the issue of whether or not he was self-employed is an issue of combined fact and law which is not necessarily governed by the parties' admissions or agreement. I have, therefore, examined the entire Guideline and note that it contains the following introductory paragraph:

For purposes of the SABS, an individual is considered to be self-employed if the business he or she derives his or her remuneration from is not incorporated under any law. For example, sole proprietorships and partnerships are considered to be self-employment situations. If the individual derives his or her remuneration from an incorporated business, then he or she is considered to be an employee of the corporation.

The Guideline is not binding upon me²⁸ and I do not regard this introductory paragraph as an impediment to my finding that Mr. Sanchez was self-employed. For the period March to June, 1998, Mr. Sanchez's enterprise was a one-man operation for which he drummed up all the business. For the period June to December, 1998, Mr. Sanchez's customers came through his association with Starlite Courier Express. However, for both periods, the only way to determine Mr. Sanchez's income from employment is to deduct his business's expenses from his business's revenues in order to arrive at his business's profits. It was these profits which constituted Mr. Sanchez's income from employment and, as observed by a Director's Delegate, section 62 of the Schedule "links profits and self-employed status."²⁹ In my view, neither the formality of incorporation, if observed,³⁰ nor Mr. Sanchez's association with Starlite severed the link between his profit-based income and his self-employed status.

Based on the documents already referred to, I find that Mr. Sanchez's business revenues in the 52 week-period prior to the accident were $13,456.14 (the total of $1,550.30 and $11,905.84). I acknowledge that Mr. Sanchez supplied the Insurer with higher figures³¹ but, unlike the $13,456.14 figure, these higher figures were not supported by any documentation at the hearing and I am not prepared to rely upon them.

The next question is, what were Mr. Sanchez's business expenses? In his signed statement to the Insurer on March 24, 1999, quoted above, Mr. Sanchez acknowledged incurring business expenses with respect to "vehicle rentals, gas and insurance." Soon after signing that statement, Mr. Sanchez supplied the Insurer with copies of Account Statements for the bank account he had referred to.³² These Account Statements covered the period December 22, 1997 to December 21, 1998. At the hearing, Mr. Sanchez produced a further bank Account Statement for the period February 22 to March 19, 1999.³³ He also produced a copy of his hand-written letter dated April 20, 1999 to KPMG, the financial advisory company hired by the Insurer to determine Mr. Sanchez's business income.³⁴ This letter contained a list of expenses and a concluding sentence, as follows:

Transportation

$3,999.12

Insurance

$2,183.13

Rent

$6,000.00

Fuel

$3,000.00

Transportation and Insurance estimated by Bank Account No. above [the same bank account referred to in Mr. Sanchez's statement to the Insurer]. Some for fuel and rent.

In May 1999, Mr. Sanchez informed KPMG that his business maintained no records other than the Royal Bank Account Statements and that no invoices were generated when he performed work for customers.³⁵ Mr. Sanchez testified to the same effect at the hearing. He also acknowledged at the hearing that he only had one bank account during the relevant period and that, for income calculation purposes, it would be necessary to distinguish between business and personal transactions handled through this account.

By letter dated May 26, 1999, KPMG informed Mr. Sanchez of the potential consequence of the lack of business documentation:

It is quite clear that bank statements by themselves do not provide any explanation of the underlying transactions. Therefore, we have requested information in addition to that contained in the bank statements in order to accurately calculate your income replacement benefits.

We note that, if we used only the face amounts of the debits and credits in the bank statements to calculate your benefits, (i.e., accepting all debits to be expenses, and all credits to be revenues), then it would appear that your business operated at a loss in the year ended December 31, 1998. Thus, the calculated benefit, prior to consideration of post-accident income or losses, would be $nil.³⁶

Despite this warning, and despite the pre-hearing production order that he produce a detailed list of revenue and expenses for his business for one year prior to the accident, the only additional information Mr. Sanchez produced at the hearing was contained in the four documents I have previously referred to: the Royal Bank letter of December 2, 1999 and attached cheques, the Starlite letter of October 1, 1999, a further bank Account Statement for the period February 19 to March 19, 1999 and his April 20, 1999 letter to KPMG.³⁷

I agree with KPMG's observation that "bank statements by themselves do not provide any explanation of the underlying transactions." Given that the bank account was not used by Mr. Sanchez solely for business purposes, proof of the underlying transactions was essential. Mr. Sanchez only supplied proof of underlying transactions as they related to his business revenues for the period March 8 to June 3, 1998. He supplied no of proof of the underlying transactions as they may have related to his business expenses during the relevant period. If I were to accept Mr. Sanchez's letter of April 20, 1999 as proof of his business expenses for the 52 week-period prior to the accident and deduct these expenses from business revenues for the same period, I would conclude that Mr. Sanchez's business profits were less than zero ($13,456.14 -$15,182.25 = less than zero).

I conclude that Mr. Sanchez did not establish, on the balance of probabilities, that his pre-accident employment generated any income. His claim for income replacement benefits during the first 104 weeks of disability is, therefore, dismissed.

(b) did Mr. Sanchez suffer a complete inability to engage in any employment?

As previously mentioned, this question is only relevant "for any period longer than 104 weeks of disability,"³⁸ that is, for the period commencing sometime in March, 2001. Of the three Disability Certificates entered into evidence, the first two were based on examinations by Dr. R.S. Hyles in March 1999³⁹ and January 2000,⁴⁰ and the third was based on an examination on January 31, 2001⁴¹ by Dr. B. C. Leong-Poi. The two treatment plans entered into evidence are dated January 11, 2000⁴² and June 29, 2000.⁴³

At the Insurer's request, Mr. Sanchez was examined by an orthopaedic surgeon, a physiotherapist and kinesiologist in May 1999.⁴⁴ He was also examined at a Medical/Rehabilitation Designated Assessment Centre in June 2000.⁴⁵

At Dr. Leong-Poi's request, Mr. Sanchez was examined by Dr. Gyl Midroni, a neurologist, on August 15, 2000. Dr. Midroni's consultation note back to Dr. Leong-Poi contains the following opinion:

Mr. Sanchez describes rather diffuse and nonspecific symptoms which are mostly suggestive of mechanical back problems. One could reasonably consider lumbar and/or cervical radiculopathy given his tingling, but this too is rather diffuse and I suspect it is a functional overlay on top of his pain. There are no findings on physical exam or EMG to suggest a significant neurological injury at either the cervical or lumbar levels. Of course, mild root irritation cannot be excluded.

He is improving. He seems to be on a good physio regime, and I have nothing to add in terms of management at this point. Normally I would not take matters further. However, given his anxiety about the problem, and in light of his more unusual symptom of testicular tingling, it would be reasonable to do an MRI of the lumber region to make sure there is no nerve root or conus compression going on.

I assume this study will be unremarkable, and I will forward the results to your office.⁴⁶

Dr. Midroni forwarded the results of the MRI to Dr. Leong-Poi, together with the handwritten note "no significant neurological involvement, no further Ix/Rx for now."

Despite Mr. Sanchez's complaints of ongoing restrictions, none of the medical evidence noted above covers the period in question and none indicates that Mr. Sanchez has suffered any disability which lasted 104 weeks or more.

During a break at the hearing, Mr. Sanchez underwent a "MyoVision WinScan 98 Exam" and brought back a one-page document purporting to show the "sEMG QuickScreen" results.⁴⁷ The medical significance of these results remained completely unexplained.

Based on this evidence, I conclude that Mr. Sanchez did not establish, on the balance of probabilities, that he suffered a complete inability to engage in any employment after March 2001. His claim for income replacement benefits after 104 weeks of disability is, therefore, dismissed.

Issue 2: is Mr. Sanchez entitled to treatment-related transportation expenses?

By letter dated August 9, 1999,⁴⁸ the Insurer supplied Mr. Sanchez with a form to claim treatment-related transportation expenses. Mr. Sanchez completed and returned the form,⁴⁹claiming that in order to obtain treatment from various sources, he had travelled a total of 2,471.8 kilometres between March and August 24, 1999. The Insurer provided Mr. Sanchez with the following response by letter dated October 21, 1999:

Please note that the insurer is not required to pay for expenses related to the first 50 kilometers of transportation in the insured person's vehicle to and from a treatment session, counselling sessions, training sessions or assessment in accordance with Section 14(6) and 15(12) of the SABS. Unfortunately, we cannot pay for visits to Dr. Hyles, Clarkson Sports & Physiotherapy Clinic or Health Recovery Clinic as the distance per trip was less than 50 kilometres. For visits to The Rehab Centre located at 1911 Kennedy Road, Scarborough, the gross distance per visit is 102.8 kilometers. Accordingly, we have paid the sum of 22 cents per kilometer for 52.8 kilometers per trip from July 29, 1999 to September 7, 1999. The total number of visits for this period is 19 based on invoices received from the Rehab Centre.⁵⁰

The evidence and arguments established no reason or basis for me to find fault with this handling of Mr. Sanchez's claim for transportation expenses. I, therefore, dismiss this claim.

Issue 3: is Mr. Sanchez entitled to medical expenses in respect of medication?

The Insurer's letter to Mr. Sanchez dated October 21, 1999 also contained the following reference to this issue:

In respect of the expense that remains outstanding, namely a prescription incurred on July 30, 1999 in the amount of $148.99 for Prevacid, please note that this application for payment also did not comply with Section 38(1), (2), (3) or (17) in the Statutory Accident Benefit Schedule. As we understand that this medication is used in the treatment of ulcers, please provide a certificate from your Health Practitioner confirming that the prescription Prevacid is reasonable and necessary as a result of the accident.⁵¹

The Insurer indicated that Mr. Sanchez did not supply a certificate or any other supporting medical document, as requested, and Mr. Sanchez did not deny this. I am, again, unable to find fault with the Insurer's handling of this claim. It is, therefore, dismissed.

Issue 4: is Mr. Sanchez entitled to medical expenses in respect of aqua therapy?

This form of treatment, which was also referred to as hydrotherapy, was recommended in a treatment plan dated January 11, 2000.⁵² The Insurer refused payment and referred Mr. Sanchez to a Medical/Rehabilitation Designated Assessment Centre (Med/Rehab DAC). The Med/Rehab DAC agreed that both the treatment and the cost of treatment ($2,160) were reasonable and necessary.⁵³ Its report is undated but its assessment took place on June 12, 2000.⁵⁴

On receipt of this report, the Insurer attempted to contact Mr. Sanchez "in order to discuss the recommendations of the DAC" but, when this failed, it decided to write to Dr. Donald Wyckoff, a doctor from whom it had recently received another treatment plan, in order to determine if he could "carry out the recommendations of the DAC for Mr. Sanchez."⁵⁵

At the hearing, the Insurer produced documents showing that on October 31, 2000, it paid Dr. Wyckoff $2,600.85 in respect of services provided to Mr. Sanchez.⁵⁶ The Insurer argued that if Mr. Sanchez did not receive aqua therapy from Dr. Wyckoff, he could not "lay the blame at the feet of CGU". In support of this argument, the Insurer noted that Mr. Sanchez had submitted no additional treatment plan for aqua therapy.

I am reluctant to accept the Insurer's suggestion that Mr. Sanchez was obliged to submit a new treatment plan in order to recover the expense of aqua therapy. He was clearly entitled to recover this expense in accordance with the original treatment plan and the Med/Rehab DAC report. The Insurer acknowledged this by asking Dr. Wyckoff if he was able "to carry out the recommendations of the DAC for Mr. Sanchez."

On the other hand, given that the author of the original treatment plan seems to have been no longer available to provide the treatment,⁵⁷ Mr. Sanchez could have been reasonably expected to find an alternative treatment provider who could, in turn, have been reasonably expected submit a treatment plan and invoice to the Insurer. The Insurer would not, of course, have been entitled to re-challenge this new treatment plan and invoice as long they were in accordance with the Med/Rehab DAC report. I agree that Mr. Sanchez must bear some responsibility for the fact none of these sensible steps were taken.

There are two additional problems with granting Mr. Sanchez a remedy with respect to this issue. The first is that the Med/Rehab report is now a year old. Treatment which was considered reasonable and necessary in June 2000 may no longer be considered reasonable and necessary in June 2001. The second is that aqua therapy was only one of several treatment modalities recommended in the original treatment plan and endorsed by the Med/Rehab DAC and neither the treatment plan nor the Med/Rehab report provided any breakdown of the cost of the various modalities of treatment.

An appropriate remedy might have been to award Mr. Sanchez the expense of aqua therapy and a special award to reflect a finding that the Insurer' had unreasonably withheld this benefit by not ensuring that Dr. Wyckoff was able to provide aqua therapy in accordance with the report of the Med/Rehab DAC. However, that remedy is not possible on the evidence before me because Mr. Sanchez did not prove the cost of aqua therapy. I cannot simply guess how much it cost; Mr. Sanchez bore the burden of proving how much it cost. In that regard, I note that in her pre-hearing letter, the Arbitrator added the following sentence, in italics, after identifying the cost of aqua therapy as an issue for arbitration: "Mr. Sanchez is to provide the particulars of this claim to CGU within 30 days of the date of this pre-hearing letter." Once again, Mr. Sanchez failed to observe a specific direction of the pre-hearing Arbitrator. For this, and for the other reasons mentioned above, I dismiss Mr. Sanchez's claim for medical expense in respect of aqua therapy.

Issue 5: is CGU liable to pay a special award pursuant to subsection 282(10) of the Insurance Act?

Subsection 282(10) of the Insurance Act reads as follows:

If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. R.S.O. 1990, c. I.8, s.282(10); 1993, c. 10, s.1.

Since a special award is calculated as a percentage of the benefits owing to the insured person and since I have determined that CGU owes no further benefits to Mr. Sanchez, he is not entitled to a special award.

Issue 6: is Mr. Sanchez liable to pay an amount pursuant to subsection 282(11.2) of the Insurance Act?

Subsection 282(11.2) of the Insurance Act reads as follows:

If an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration under section 14.

In the case of Richard and Lombard General Insurance Company of Canada, Arbitrator McMahon held that this section is intended to return to the Insurer the filing fee which it should not have been required to pay because the application for arbitration was "so devoid of merit" that it should not have been filed in the first place. In the case of Nguyen and Scottish & York Insurance Company Limited,⁵⁸ I agreed with this logic by holding that an applicant whose arbitration was not frivolous, fraudulent, vexatious or an abuse of process when commenced or filed should not be exposed to the risk of an award under subsection 282(11.2).

The evidence in this case does not, in my opinion, support a finding that Mr. Sanchez's application for arbitration was frivolous, fraudulent, vexatious or an abuse of process when commenced or filed. While all of Mr. Sanchez's claims have been dismissed, only one (the claim for treatment-related transportation expenses) was doomed from the start. The others may have been allowed had Mr. Sanchez better understood his obligation to obtain, produce and present supporting evidence. His failure to discharge that obligation led to the dismissal of these claims but it did not establish that no supporting evidence existed or that Mr. Sanchez had suppressed non-supportive evidence. I am not, therefore, prepared to describe this arbitration as one which should never have been commenced in the first place.

Issue 7: Is either party liable to pay the other's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?

Expense awards must balance the need for access by insured persons to the dispute resolution system with the need to discourage undeserving claims and undesirable behaviour.⁵⁹ In addition, arbitrators must consider the following criteria as stipulated in the Expense Regulation:

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

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, including failure to comply with undertakings or orders.

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.

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

5. If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.

6. Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

Mr. Sanchez was more than simply unsuccessful in this proceeding. In terms of the evidence presented at the hearing, every one of his claims was, in my view, "manifestly unfounded." However, I would not describe Mr. Sanchez's claims as "frivolous, vexatious... or an abuse of process" insofar as these latter terms may imply a desire to harass the Insurer or to trivialize or degrade the dispute resolution system. Mr. Sanchez impressed me as being motivated solely by a genuine desire to recover the substantial benefits he claimed.

Nor would I characterize Mr. Sanchez's constitutional arguments as "conduct... that tended to prolong, obstruct or hinder the proceeding." Mr. Sanchez had complied with the procedure for raising constitutional questions and he had every right to make arguments of this nature. Moreover, when these arguments were rejected, he immediately produced at least one of the documents mentioned in the production orders (the OHIP summary) and advised that the other documents did not exist. Just as the evidence before me does not establish that those documents did, in fact, exist, nor does it establish that Mr. Sanchez refused "to comply with...orders" or that his claims were "fraudulent."

Based on these considerations, and the need to ensure access by unrepresented insured persons, like Mr. Sanchez, to the dispute resolution system, I find that neither party is entitled to recover the arbitration expenses of the other.

June 22, 2001

David Leitch Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 94

FSCO A00-000940

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ALVIN SANCHEZ

Applicant

and

CGU INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

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

1. Mr. Sanchez is not entitled to receive income replacement benefits as a result of the accident of March 8, 1999.

2. Mr. Sanchez is not entitled to treatment-related transportation expenses as claimed.

3. Mr. Sanchez is not entitled to medical expenses for medication as claimed.

4. Mr. Sanchez is not entitled to medical expenses for aqua therapy as claimed.

5. CGU is not liable to pay Mr. Sanchez a special award pursuant to subsection 282(10) of the Insurance Act.

6. Mr. Sanchez is not liable to pay CGU an amount pursuant to subsection 282(11.2) of the Insurance Act.

7. Neither party is liable to pay the other's expenses in respect of the arbitration pursuant to section 282(11) of the Insurance Act.

June 22, 2001

David Leitch 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 FSCO file indicates that the pre-hearing letter was amended on February 13, 2001 to properly reflect all orders made at the pre-hearing.
3. 3Exhibit A; I did not mark this document as an exhibit at the hearing.
4. 4The pre-hearing Arbitrator did not face any constitutional objection from Mr. Sanchez when she ordered him to produce the documents in question. In my view, Mr. Sanchez retained the right to argue before me, the hearing Arbitrator, that these documents should not be admitted into evidence at the hearing in accordance with section 24(2) of the Charter because they constituted evidence "obtained in a manner that infringed or denied [his] rights or freedoms" under the Charter.
5. 5Miron v. Trudel 1995 CanLII 97 (SCC), [1995] 2 S.C.R. 418.
6. 6Slaight Communications v. Davidson 1989 CanLII 92 (SCC), [1989] 1 S.C.R. 1038
7. 7Exhibit 1, tab 13
8. 8See the obiter comments of Madam Justice Wilson in Singh v. Minister of Employment and Immigration 1985 CanLII 65 (SCC), [1985] 1 S.C.R. 177 at p. 207 and Chief Justice Dickson in Irwin Toy v. Quebec 1989 CanLII 87 (SCC), [1989] 1 S.C.R. 927 at 1003.
9. 9R. v. Morgentaler (No. 2) 1988 CanLII 90 (SCC), [1988] 1 S.C.R. 30
10. 10A right to privacy would, in fact, conflict with this wider interpretation of section 7 since claimants are routinely required to disclose otherwise private information about themselves in order to qualify for government-regulated income maintenance and medical benefits programs.
11. 11See, for example, Al-Obaidi and Allstate Insurance Company of Canada (FSCO Appeal P99-00009, May 2, 2000)
12. 12Re B.C. Motor Vehicle Act 1985 CanLII 81 (SCC), [1985] 2 S.C.R. 486
13. 13R. v. White 1999 CanLII 689 (SCC), [1999] 2 S.C.R. 417 but, contra, see R. v. Fitzpatrick 1995 CanLII 44 (SCC), [1995] 4 S.C.R. 154
14. 14Seaway Trust Co. v. Kilderkin Investments Ltd. (1986), 1986 CanLII 2580 (ON HCJ), 55 O.R. (2nd) 545
15. 15Thomson Newspapers v. Canada 1990 CanLII 135 (SCC), [1990] 1 S.C.R. 425 at p. 505
16. 16Hunter v. Southam 1984 CanLII 33 (SCC), [1984] 2 S.C.R. 145; for a case in which the prior authorization requirement was relaxed, see R. v. McKinley Transport 1990 CanLII 135 (SCC), [1990] 1 S.C.R. 425.
17. 17Exhibit 19
18. 18Section 4, par. 1 of the Schedule
19. 19Section 6(1)(a) of the Schedule
20. 20Section 6(1)(b) of the Schedule
21. 21Section 5(2)(b) of the Schedule
22. 22Exhibit 1, tab 2, p. 6; see also part 5 where he again indicated that he was self-employed.
23. 23Exhibit 1, tab 14, pp. 2 and 3. I have left out Mr. Sanchez's bank account number.
24. 24Section 2(5) confirms that employment under the Schedule includes self-employment.
25. 25Section 8(2). At no point did Mr. Sanchez claim that he was an employed person who was entitled under section 8(1) of the Schedule to designate the four week-period prior to the accident for income calculation purposes. He would have gained nothing by making such a claim since the evidence did not establish that he had any income during this shorter period.
26. 26Exhibit 3
27. 27Exhibit 4. Contrary to Mr. Sanchez's belief, an extrapolation provision found in an earlier Schedule was removed from the Schedule applicable in this case. It would not, in any event, have assisted Mr. Sanchez as it only permitted income extrapolations for persons who started self-employment during the 52 week-period prior to their accidents. Mr. Sanchez started his self-employment more than 52 weeks prior to his accident.
28. 28Zdebski and Allstate Insurance Company of Canada (OIC A-011386, July 15, 1997)
29. 29Malik and Allstate Insurance Company of Canada (Appeal FSCO P00-00007, July 17, 2000). Section 62 of the Schedule provides that income from self-employment is determined in the same manner as profit under the Income Tax Act. During the course of the hearing, the Insurer expressed concern that Mr. Sanchez did not appreciate that he was required to calculate his profit by deducting his expenses from his revenues, in the same way that he would be required to calculate his profits for income tax purposes. I, therefore, supplied the parties with a copy of the Director's Delegate's decision in Oliveira and Wellington Insurance Company (P97-00021, April 17, 1998) which involved the interpretation of a provision identical to section 62. I read out loud the following sentence, found at p. 5 of the decision: "Tax legislation calls for the deduction of expenses incurred over a fixed period (usually a fiscal year) from revenues earned during the same fixed twelve-month period, without considering the exact times within that period when the expenditures were made or the revenues earned."
30. 30Mr. Sanchez apparently advised KPMG, the financial advisory company hired by the Insurer to determine Mr. Sanchez's business income, that his business was never incorporated. See Exhibit 1, tab 17, p. 2.
31. 31See his Application for Accident Benefits, Exhibit 1, tab 2, p. 6, and Exhibit 21.
32. 32Exhibit 1, tab 12
33. 33Exhibit 16
34. 34Exhibit 21
35. 35Exhibit 1, tab 17, p. 2
36. 36Exhibit 1, tab 18, p. 2
37. 37Receipt of this letter was acknowledged by KPMG in its letter of July 20, 1999, see Exhibit 1, tab 21, p. 1.
38. 38Section 5(2)(b) of the Schedule
39. 39Exhibit 1, tab 1
40. 40Exhibit 1, tab 4
41. 41Exhibit 1, tab 4
42. 42Exhibit 2
43. 43Exhibit 6
44. 44Exhibit 1, tab 10
45. 45Exhibit 1, tab 11
46. 46Exhibit 1, tab 8
47. 47Exhibit 20
48. 48Exhibit 1, tab 22
49. 49Exhibit 15
50. 50Exhibit 1, tab 24
51. 51Op. cit.
52. 52Exhibit 2
53. 53Exhibit 1, tab 11, p. 3
54. 54Exhibit 1, tab 11, p. 5
55. 55Exhibit 18
56. 56For reasons the evidence did not disclose.
57. 57(OIC A97-001526, April 29, 1998)
58. 58(FSCO A00-000136, May 10, 2001)
59. 59Allison and Markel Insurance Company of Canada (OIC P-001231, August 21, 1996).