Financial Services Commission
Commission des services financiers de l’Ontario
Neutral Citation: 2002 ONFSCDRS 164
Appeal P01-00017
OFFICE OF THE DIRECTOR OF ARBITRATIONS
BARBARA TANZOS
Appellant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Respondent
Before:
David R. Draper
Appearances:
Barbara Tanzos in person
Ian D. Kirby for State Farm
Hearing Date:
August 7, 2002
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The appeal is dismissed and the arbitration order dated April 10, 2001, is confirmed.
Barbara Tanzos will pay State Farm's appeal expenses, fixed at $1,500, all inclusive.
October 22, 2002
David R. Draper Director of Arbitrations
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
This appeal is from an arbitrator's order, dated April 10, 2001, that State Farm Mutual Automobile Insurance Company ("State Farm") is not responsible for paying the cost of an assessment done at DEAHY Medical Assessments Inc. ("Dealry"). Mr. Roland Spiegel, a non-lawyer who represented Ms. Tanzos at the arbitration hearing, filed the appeal as Ms. Tanzos' representative. For reasons set out below, the appeal is dismissed. The more contentious issue addressed in this decision is appeal expenses. More specifically, should Ms. Tanzos be responsible for State Farm's expenses in respect of an appeal that her representative pursued without her specific knowledge?
II. BACKGROUND
The background is set out in the arbitration decision, and in my previous decision in this matter, dated November 21, 2001.1 In short, Ms. Tanzos was injured on May 23, 1998, when her stationary vehicle was rear-ended by a pick-up truck. She returned to work a few days later, but after roughly one month, decided she could not continue due to pain. State Farm refused her application for treatment expenses and, as a result, she was referred to a Designated Assessment Centre ("DAC"), as required by the SABS-1996.2 The DAC concluded that ongoing treatment was unnecessary, and recommended that Ms. Tanzos follow a home exercise program and attend one session with a physiotherapist to review her exercises.
Approximately two weeks after the date of the DAC report, Ms. Tanzos' family doctor referred her to Deahy. He made this referral by signing a Deahy form, "Request for Multi-disciplinary Assessment," and checking the boxes for three assessments — a medical assessment, an "ARCON FAE" and a psychological assessment. This form included the following pre-printed paragraph:
Payment of this assessment is the responsibility of the insured patient's insurance company. According to Bill 59 Section 24.1 (a), the insurer shall pay for all reasonable expenses in obtaining and attending an examination or assessment or in obtaining a certificate, report or treatment plan.3
Catherine Rawn, Deahy's Clinic Co-Ordinator, wrote to State Farm, advising that Ms. Tanzos had been referred for a multi-disciplinary assessment, and that State Farm would be billed directly. In addition, she asked State Farm to provide any relevant medical information within seven days.4
On the day of the assessments, December 1, 1998, Ms. Tanzos signed a number of forms on Deahy letterhead.5 In addition to agreeing to participate in the assessments, she authorized State Farm and Deahy to take certain steps. Two of the forms authorized Deahy to bill State Farm directly, and for State Farm to pay Deahy (Appendices 1 and 2). In another form, she "irrevocably" authorized Deahy to act as her "general agent" in pursuing her claim for medical and rehabilitation benefits (Appendix 3). This included authority to retain and instruct counsel on her behalf, and the right to institute and settle the following proceedings in her name and on her behalf:
a) mediation proceedings under the Insurance Act.
b) arbitration proceedings and appeals under the Insurance Act; and
c) proceedings in a court of competent jurisdiction under Section 2821 [sic] of the Insurance Act.
The final form, entitled "Authorization," was specifically directed at mediation. It authorized R. Spiegel, "a representative of DEAHY MEDICAL ASSESSMENTS INC.," to act as Ms. Tanzos' agent and make binding decisions on her behalf "in all matters connected with this mediation" (Appendix 4).
Deahy sent its invoice, dated January 8, 1999, directly to State Farm. It included separate amounts for the three assessments: functional abilities evaluation ($1,150), psychological assessment ($1,100) and medical assessment ($1,250). State Farm agreed to pay for the psychological assessment, but refused to pay for the other two. It did not quarrel with the amounts charged, but maintained that these assessments were not needed due to the information provided in the DAC report.
In February 1999, before meeting Ms. Tanzos, Mr. Spiegel filed an application for mediation as her representative, presumably relying on the authorizations signed in December. Ms. Tanzos did not raise any objection. On the contrary, she participated in the mediation, with Mr. Spiegel acting as her representative.
When the dispute was not resolved through mediation, Mr. Spiegel filed an Application for Arbitration on behalf of Ms. Tanzos. He signed the application as her representative and she signed as the applicant. In the application, Mr. Spiegel is described as an "ADR Specialist" with Deahy Medical Assessments Inc.
This was not Ms. Tanzos' only dispute with State Farm. Before the arbitration hearing began, she participated in another mediation. Mr. Spiegel was not involved in this proceeding. Instead, she was represented by a lawyer. In June 2000, her lawyer negotiated a full and final settlement of all issues, except the unpaid Deahy assessments.
The arbitration hearing on the Deahy assessments took place over three days in July and November 2000. There is no suggestion that Ms. Tanzos objected to Mr. Spiegel commencing the arbitration on her behalf, or to his involvement as her representative. On the contrary, she made it clear at the appeal hearing that she was upset with State Farm, and pleased to have the issue contested.
The arbitrator released her decision in April 2001. She ordered State Farm to pay the cost of the medical assessment, but concluded that the FAE was not a reasonable expense. Despite the partial success, the arbitrator was critical of Mr. Spiegel, stating that he displayed a lack of competence and respect for the process, and made unfounded allegations of bias. This affected her consideration of expenses as follows:
The Applicant was partially successful in this application. Were it not for Mr. Spiegel 's conduct as outlined above, I would have awarded Ms. Tanzos her expenses. However, when his conduct is considered, I find that it is appropriate to decline to make an award for expenses in her favour.
Having given the Insurer's request for its expenses much thought, I have ultimately decided that given the financial imbalance between the parties' abilities to bear the costs of the hearing, it would not be appropriate to award the Insurer its expenses in this case. In the result, I make no award for expenses.
As at the previous stages, Mr. Spiegel took the next step. He filed a Notice of Appeal as Ms. Tanzos' representative, claiming the arbitrator made serious errors by ignoring material evidence, considering irrelevant information, making findings unsupported by the evidence, and misinterpreting the law. Again, it appears that he relied on the authorization forms signed by Ms. Tanzos in December 1998.
Consistent with the practice at the time, the insured person's signature was not required on the Notice of Appeal. The representative's signature was accepted as sufficient.6 Also consistent with the usual practice, subsequent correspondence was sent to Mr. Spiegel, not Ms. Tanzos.
In late May 2001, Mr. Spiegel filed written submissions in support of the appeal. Following receipt of State Farm's submissions, the hearing was scheduled for November 8, 2001. One week before the hearing, Mr. Spiegel sent a 21-page document entitled, "Motion/Application Before the Director." Stated broadly, it claimed that Commission arbitrators, the Director of Arbitrations and Director's Delegates could not hear any cases dealing with entitlement to accident benefits due to institutional bias and, at least in some cases, personal bias. Mr. Spiegel made similar submissions in all the appeal cases in which he was involved. Some of these cases were before me, while others had already been delegated to other adjudicators.
The hearing in this case went ahead on November 8, 2002. Mr. Spiegel argued that due to bias, I should appoint an arbitrator under the Arbitrations Act, 1991 to decide the case, including the issue of institutional bias. I rejected this request and set out the following options:
If Mr. Spiegel wants to challenge my refusal to appoint someone outside of FSCO, or my refusal to grant a stay, he will need to do so elsewhere, presumably through the Ontario Superior Court of Justice (Divisional Court) on judicial review. Alternatively, if he intends to present his institutional bias arguments to me in the cases I have retained, as is being done in the Persofsky appeal, or to the Director's Delegates appointed in the other cases, he can do so. If this is the course he chooses, it may be possible to streamline the process to avoid the need for separate hearings and decisions in each case. His other option is simply to proceed with the cases on their merits, including going back to arbitration on the Bersteyn and Sverdlick cases.7
Following this decision, I did not receive notice of any court action, or hear from Mr. Spiegel in respect of his intentions. Therefore, on January 10, 2002, I wrote lengthy letters in all the cases before me in which Mr. Spiegel had raised bias arguments, attempting to coordinate them. Because I was concerned about the expanding scope of these matters, I copied these letters to the insured persons and ordered that no further steps would be taken until Mr. Spiegel filed Acknowledgement/Authorization to Represent forms, signed by his clients, indicating their understanding that he is not a lawyer, that he is not a member of the Law Society of Upper Canada and, therefore, not subject to its supervision or discipline, that he is not required to carry insurance as a paralegal, and that, as the named party in the proceeding, they are responsible for paying any order made in favour of the insurance company.8 In the Tanzos letter, I imposed a deadline of January 21, 2002, failing which "Ms. Tanzos' appeal, including the motion, will be dismissed."
Mr. Spiegel filed signed acknowledgement/authorization forms in three of the cases, but not in this one. When the deadline passed, I wrote again, stating that unless Mr. Spiegel provided proof by January 25, 2002, that he had sent the signed form within the time limit, the appeal would be dismissed. Mr. Spiegel did not file any such proof. Instead, he contacted the Appeals Administrator, advising that he wanted to withdraw the appeal due to a lack of funds.
On January 28, 2002, I advised both Mr. Spiegel and Ms. Tanzos that there is no absolute right to withdraw and, therefore, the appeal would be dismissed by formal order. However, before doing so, I gave State Farm two weeks to make written submissions on any remaining issues, including expenses, with Ms. Tanzos being given an opportunity to respond.
In a letter dated January 30, 2002, Mr. Kirby, counsel for State Farm, asked that his client be awarded its appeal expenses. He claimed he and another lawyer had spent an unusual amount of time — approximately 25 hours — due to the manner in which Mr. Spiegel argued this appeal, particularly the bias motion.
On February 1, 2002, I faxed Mr. Spiegel a letter, with a copy sent to Ms. Tanzos by regular mail, inviting him to respond. Although I established a deadline, it was extended due to Mr. Spiegel 's health problems. He wrote on March 27, 2002, stating as follows:
Please be advised that I had been informed that Ms. Tanzos and State Farm Mutual Automobile Insurance Company had settled the entire first party Accident benefit claim on a full and final basis.
If you have any further question [sic], please contact Ms. Tanzos directly.
Mr. Kirby expressed confusion about this letter, stating that there was no new settlement in this matter. As set out above, all of the issues in dispute between Ms. Tanzos and State Farm were settled before arbitration, except for the cost of the Deahy assessments, and no new issues had arisen since.
I then wrote directly to Ms. Tanzos, with copies to Mr. Spiegel and Mr. Kirby. In this letter, I indicated that I was strongly inclined to award State Farm its expenses, but given Mr. Spiegel 's letter and his failure to file the acknowledgement/authorization form, I wanted to give her a chance to respond.
Ms. Tanzos set out her position in a letter received on April 22, 2002. In that letter, she states that she did not know about the appeal until she received my January 10th letter. She says that she contacted Mr. Spiegel, but he was unwilling to help, although, as far as she knows, she is still responsible for Deahy's account. She also states that she did not know that she could be held responsible for appeal expenses, and if she had known, she would not have signed off on the settlement. Finally, she says that she refused to sign the acknowledgement/authorization form because she did not want to be responsible for State Farm's appeal expenses.
After receiving Ms. Tanzos' letter, I wrote to her, Mr. Kirby and Mr. Spiegel on April 29, 2002, setting out the following process:
Ms. Tanzos' allegation is serious. The dispute resolution process depends on representatives having the authority of their purported clients. As Mr. Spiegel's letter of March 27, 2002 leaves me uncertain about his status, I would like to give him an opportunity to respond to Ms. Tanzos' contention that he pursued the appeal without her authority. Therefore, Mr. Spiegel will have until Monday, May 13, 2002, to indicate if he contests Ms. Tanzos' position and, if so, to file any documents that he relies on in support of his position that he had authority to pursue this appeal . . .
If nothing is filed by the May 13th deadline, the issue of expenses will proceed on the basis that the information in Ms. Tanzos' letter is uncontested. If Mr. Spiegel responds, raising a factual dispute about his authority, a hearing may be necessary. I will decide that question after reviewing the response from Mr. Spiegel.
On May 6, 2002, Mr. Spiegel filed submissions, stating that "[i]t is rather unfortunate and regrettable that Insured Persons became [sic] trapped and are further victimized by a complex web of adverse circumstances, and by a 'process', which by all accounts, was intended to protect their rights and interests."9 In his submission, Ms. Tanzos had full knowledge that she was personally responsible for paying Deahy immediately out of any settlement. Despite this, Ms. Tanzos, with the assistance of a lawyer, settled her claim, exclusive of Deahy's account, but did not pay Deahy. In Mr. Spiegel's submission, Ms. Tanzos was not properly advised by her lawyer, leaving her with an immediate obligation to satisfy Deahy's account. The balance of the submissions provide as follows [uncorrected]:
Deahy Medical, which was unaware of any such settlement arrangement, had continued to pursue (on Ms. Tanzos' behalf) payments of the account outstanding (for services rendered) directly from the Insurer. This had been pursued in accordance with their agreement, and in accordance to Ms. Tanzos direction and authorization for direct billing the Insurer. As well as, Ms. Tanzos commitment to co-operate with her representative (Deahy Medical / agent), and participate in the ensuing process in pursuit (on Ms. Tanzos' behalf) payments of the outstanding account with Deahy (as Deahy was also her 'agent" representing Ms. Tanzos' interest with respect to her outstanding account with Deay Medical).
As required, the undersigned (Mr. Spiegel), was in fact appointed by Deahy Medical, with Ms. Tanzos' full consent, and "Authorization and Direction' (please refer to the Authorization and Direction enclosed with the Application for Mediation/Arbitration in the FSCO file), to act as the (ADR Specialist) agent (acting on Ms. Tanzos' behalf), in the pursuing proceedings (in accordance with Ms. Tanzos' agreement with Deahy Medical, and in accordance with the Statutory provisions and the Regulation).
As it stands, Deahy Medical is now in a rightful position to pursue payment for any and all outstanding account (for services rendered), directly from Ms. Tanzos if they wish to do so.
In short, it is rather unfortunate that Ms. Tanzos, who was a MVA victim, continues to be a victim of circumstances, of an unfair and unyielding adversarial process, in pursuit of rightful entitlements for Accident Benefits (first party claim). Which in fact, she had contracted for (as required by law, and as a captured consumer), and which she had paid for in advance, in order to have peace of mind, and security at a time of need (namely, to have 'timely access' to prescribed medical and rehabilitation intervention/services, and other benefits). Only to realize later on, that the pursuit of her rights (contracted and paid for in advanced), would subsequently place her in a much greater disadvantage, compromise, and harm (medically, physically, emotionally, mentally, socially, as well as economically/financially).
Finally, I hop Ms. Tanzos will be able to find a way to resolve her ordeal without much further peril, and I wish her the best of luck (she may be required to seek further legal assistance/advice).
Based on these submissions, I formally removed Mr. Spiegel from the record as Ms. Tanzos' representative. In the same letter, dated May 7, 2002 and copied to Mr. Spiegel, I stated as follows:
After reviewing the material filed, I conclude that a hearing on the issue of appeal expenses is required, either at the Commission or by telephone. Ms. Tanzos' letter, received April 22, 2002, and Mr. Spiegel's letter dated May 5, 2002, will be made exhibits in that hearing. If either Ms. Tanzos or State Farm intends to argue that Mr. Spiegel is responsible for paying appeal expenses personally, he will be invited to participate.
I did not hear from Mr. Spiegel in response to this letter. As well, neither party indicated that they planned to argue that Mr. Spiegel was responsible for paying appeal expenses, nor did they suggest that he should be included in the hearing. The hearing was set for August 7, 2002. The Notice of Hearing was sent to Ms. Tanzos and Mr. Kirby. It was not sent to Mr. Spiegel or Deahy.
In the meantime, I heard the three other cases before me in which Mr. Spiegel's clients had signed acknowledgement/authorization forms. I rejected his bias arguments and, in the only appeal, ordered the insured person to pay expenses fixed at $1,500, and an assessment of $500 under s. 282(11.2) of the Insurance Act on the basis that the proceeding was frivolous, vexatious or an abuse of process.10
At the appeal hearing in this matter, Ms. Tanzos testified and made oral submissions. She acknowledged signing the documents discussed above, but argued that she should not be responsible for State Farm's expenses because she was never told that she faced any liability for expenses and was unaware that Mr. Spiegel was pursuing an appeal in her name.
Mr. Kirby did not challenge Ms. Tanzos' evidence, but argued that someone should pay his client's expenses, which by then were based on 28 hours of counsel time, plus that day's hearing. Although he did not formally ask that Mr. Spiegel or Deahy be included in the hearing, Mr. Kirby argued that if I was not inclined to order Ms. Tanzos to pay, the recent arbitration decision in Gurevich and Royal & SunAlliance Insurance Company of Canada, (FSCO A01-000936, April 29, 2002), provided authority for ordering expenses against someone other than the insured person.
III. ANALYSIS
Applying the criteria in the Expense Regulation,11 State Farm should recover its expenses. It had to pay an assessment and incur substantial legal costs in respect of an appeal that involved just over $1,000 in dispute and was entirely unsuccessful. The more difficult question is who should pay. Although I have serious reservations about the arrangements between Deahy and Ms. Tanzos, particularly given Mr. Spiegel's questionable handling of the claim, I conclude that Ms. Tanzos, as the party to the appeal, is responsible for paying State Farm's expenses.
This case raises many concerns. First, it appears that Deahy adopted a strategy based on the belief that automobile insurers must pay for assessments at any stage of the process. That is not the law. In M.D. and Halifax Insurance Company, (FSCO P00-00049, May 16, 2001), another case involving Deahy, I rejected Mr. Spiegel's interpretation of s. 24 of the SABS-1996 as overly broad:
In my view, Mr. Spiegel's submissions ignore the pivotal role given to DACs by the legislation. Despite his suggestions to the contrary, they are not simply another insurer examination. Their function is to take the dispute out of the back-and-forth of competing partisan reports by providing an impartial assessment. That is the protection provided in the SABS-1996 — an independent assessment at a DAC, not a DAC assessment and then a second opinion by someone of the insured person's own choosing if the DAC's opinion is not helpful. An assessment arranged for the purpose of challenging the DAC through the dispute resolution process is better viewed as a litigation expense, recoverable through negotiation or as arbitration or court costs.12
In this case, Ms. Tanzos' family doctor made the referral to Deahy following a DAC assessment, on a form that assured him that his patient 's insurer was responsible for paying for the assessments. Ms. Tanzos testified — and I accept her evidence — that she agreed to the services on the same understanding. In exchange, she effectively handed over the claim to Deahy and its agents.
Second, I find the direct billing aspect of this case troubling. While the payment section of the SABS-1996 provides for direct billing, it is at the option of the insurer:
- (1) An insurer shall pay a benefit under this Regulation,
(a) by mailing or delivering a cheque payable to the person entitled to the benefit to the address where the person ordinarily resides; or
(b) with the consent of the person entitled to the benefit, by electronic funds transfer to an account in the name of the person.
(2) Despite subsection (1),
(a) an insurer may arrange to be invoiced directly and to pay directly for goods or services provided in respect of an insured person; or
(b) an insurer may pay a benefit into court under section 271 of the Insurance Act. [emphasis added]
In my view, the problems in this case, or, as Mr. Spiegel puts it, the "complex web of adverse circumstances," arise from Deahy's misuse of this section. Direct billing was introduced to streamline the payment of benefits. It allows insurers to deal directly with service providers for the convenience of everyone involved. However, direct billing is only about payment. It does not change the fundamental nature of the claims process. Claims are still made by the insured person, and any resulting dispute is between the insured person and the insurer, not between the service provider and the insurer. It follows that the dispute resolution process is for disputes between insured persons and insurers.13 It is not meant to serve the needs of creditors, including service providers, who want to collect their accounts.
In this case, there is no indication that State Farm "arranged to be invoiced directly" by Deahy. Instead, Deahy simply sent its bill and demanded payment. State Farm could have rejected the claim on the basis that it had not agreed to direct billing, but chose to pay the portion of the claim that it found reasonable. This is to its credit, although with the advantage of hindsight, perhaps not the best strategy.
Third, and most troubling, is the fact that Deahy and Mr. Spiegel acted as if Ms. Tanzos had assigned her claim for benefits. Early decisions established that service providers cannot advance claims in their own name. In Adusei and Royal Insurance Company of Canada, (OIC A-004404, March 3, 1994), Arbitrator Makepeace held that the Insurance Act established arbitration as an option for insured persons, not service providers. In reaching this conclusion, she addressed the service provider's argument that allowing assignments would make services more accessible to insured persons:
In my view, stronger policy considerations support the insurer's interpretation of subsection 281(1). If treatment-providers could commence arbitration proceedings, an insurer could be required to respond to any number of applications from any number of treatment-providers, at a cost of $1,000 per application. If, on the other hand, the proceedings must be initiated by the insured person, it is more likely that all disputes between the insured person and the insurer will be determined in a single proceeding, thus avoiding a multiplicity of proceedings. It is also more likely that in such a proceeding, sufficient evidence will be brought forward to enable the arbitrator to determine whether the claimed medical or rehabilitation expense was a reasonable expense required as a result of the accident within section 6 of the Schedule. Finally, I cannot ignore the pressure of the volume of cases on the arbitration system.
In the absence of a statutory provision giving treatment-providers the right to commence arbitration proceedings, and given the language of subsection 281(1), I find that the authorization signed by Mr. Adusei for Premier is not effective to give Premier the right to commence this proceeding.
I agree with this analysis, which anticipates many of the problems seen in the present case. In the eight years since Adusei was released, legislative changes have only added to its strength. For example, the cost of multiple proceedings has increased substantially, with insurers now being assessed $500 for each mediation and $3,000 for each arbitration. Prompt access to medical and rehabilitation services has been protected to some extent by the DAC process. Most strikingly, the legislation now specifically prohibits the assignment of benefits.14
Ms. Makepeace recently revisited these issues in an appeal decision, Smith and Citadel General Assurance Company, (FSCO P01-00034, August 20, 2002). As in the case before me, Smith involved a claim for the cost of an assessment. Director's Delegate Makepeace upheld the arbitrator's decision, but disagreed with his view that there is nothing wrong with a service provider using the dispute resolution process to collect its account. She expressed concern that assessor-driven claims could lead to referrals based on the interests of the assessment facility, not the insured person, and that the "insured person may have little involvement in litigation decisions, beyond signing an open-ended authorization on first attending the facility." Again, I share her concerns.
While insured persons cannot assign their benefits, or the right to pursue those benefits, they are free to retain someone to act on their behalf.15 This includes the right to retain a lawyer or non-lawyer, even if that person has some connection to a service provider whose bill is the subject of the dispute.16 The key is that the insured person must retain control over, and responsibility for, the proceedings. For example, in Gawronski and Allstate Insurance Company of Canada, (FSCO P98-00004, May 13, 1998), I agreed with the arbitrator that the insured person was responsible for coordinating the various parts of his claim, and could be ordered to pay the insurer's expenses arising from any failure to do so.17
In this case, Ms. Tanzos had every right to challenge State Farm's decisions. However, instead of coordinating her claims, she pursued some with the assistance of a lawyer and handed off others to Deahy to pursue on her behalf. Unfortunately, Mr. Spiegel made matters worse. To the extent that he was taking instructions from anyone, I find that his primary loyalty was to Deahy, and that he only acted on behalf of Ms. Tanzos to the extent that her interests did not conflict with Deahy's. His failure to consult her, and his willingness to abandon her on the issue of appeal expenses, is disgraceful.
In the circumstances, it is tempting to order Mr. Spiegel and Deahy to pay State Farm's appeal expenses.18 However, as a statutory decision-maker, I have no inherent jurisdiction to order expenses. I must find specific authority in the legislation.19While I agree with the recent comments of Arbitrator Alves that some type of enhanced authority is needed to allow Commission adjudicators to deal directly with those who abuse the dispute resolution process,20 I am not persuaded that the current legislation allows me to order a non-party to pay expenses.
According to s. 282(11) of the Insurance Act, expenses can be awarded "to the insured person or the insurer.”21 This wording is also used in the regulation-making authority in s. 121(1)26 of the Act and in the regulation itself.22 Although these provisions do not specify who is to pay the expenses, they do not confer any authority to make an order, particularly an order for the payment of money, against a non-party.
In Television Real Estate Ltd. v. Rogers Cable T.V. Ltd. (1997), 1997 CanLII 999 (ON CA), 34 O.R. (3d) 291, the Court of Appeal considered the following cost power in the Courts of Justice Act, R.S.O. 1990, c. C.43:
- (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
Even with the additional authority to determine "by whom" costs are to be paid, the Court confirmed previous jurisprudence that this section does not authorize an award against someone who is not a party to the proceedings. If this section does not confer authority to award costs against a non-party, the provisions in the Insurance Act certainly do not.
Despite the limitations of the Courts of Justice Act, courts have used their "inherent jurisdiction to prevent an abuse of its process" to order costs against a non-party.23 However, they have only been willing to do so in rare cases. In Television Real Estate, cited above, the Court of Appeal established three conditions: the non-party could have brought the action himself; the plaintiff was not the true plaintiff; and the plaintiff was a "man of straw" put forward to protect the non-party from liability for costs.
In the case before me, the Television Real Estate conditions are not met. Most significantly, this is not a claim that Mr. Spiegel or Deahy could have brought in their own name. Therefore, even assuming that I have inherent authority in respect of expenses, which is doubtful, I still have no basis for ordering anyone other than Ms. Tanzos to pay State Farm's appeal expenses.24
Nor am I persuaded that s. 23 of the Statutory Powers Procedure Act ("SPPA"), which allows the tribunal to control its process, provides any assistance. In my opinion, more specific authority is needed to make a money order against a non-party.25
Subsection 17.1 of the SPPA provides an additional authority to award expenses. It allows a tribunal to award expenses against someone who abuses the process, but only if that person is "a party and the tribunal has adopted relevant rules. Again, the focus on is on parties.
The key fact in this case is that Mr. Spiegel and Deahy are not parties. Mr. Spiegel participated in the appeal as Ms. Tanzos' representative, a role he had previously taken at both mediation and arbitration. The difficulty for Ms. Tanzos is that the documents that she signed in December 1998 specifically authorized Deahy and its agents to pursue an appeal on her behalf. While she may have valid complaints about how she was treated by Deahy and Mr. Spiegel, I am not persuaded that State Farm should bear the consequences. Therefore, with considerable reluctance, I conclude that Ms. Tanzos is responsible for paying State Farm's appeal expenses, which I fix at $1,500.
As Mr. Kirby points out, recent arbitration decisions provide some support for awarding expenses against someone other than the insured person. In Piotto and Kingsway General Insurance Company, (FSCO A00-001061, March 22, 2002) and Gurevich and Royal & SunAlliance Insurance Company of Canada, cited above, Arbitrator Wilson discussed this possibility. However, he did not make an order in either case. Instead, he left the issue open, allowing the insurer to pursue the issue in a further hearing before him that would involve anyone who might be ordered to pay expenses. As a result, there is no final decision on expenses in either Piotto or Gurevich.26
More recently, Arbitrator Alves applied Arbitrator Wilson's analysis.27 She found that Mr. Volfson filed for arbitration without the insured persons' authority. The situation was extreme. Mr. Volfson forged the insured persons' signatures on the authorization forms and pursued claims that had already been paid. In these circumstances, Arbitrator Alves held that he was the real party and ordered him to pay the expenses of the insured persons and the insurer. This decision is currently under appeal.
These decisions are of interest, but distinguishable. I was not asked to add Mr. Spiegel or Deahy as parties. Nor am I prepared to do so on my own motion. In my view, this case is more like those in which Commission adjudicators have viewed representatives and service providers as non-parties who cannot be ordered to pay expenses.28 The question of when someone can or should be added as a party is better left to the subsequent proceedings in Fiotto, Gurevich, Volfson, or some other case in which the issue is raised squarely.
For these reasons, the appeal is dismissed and Ms. Tanzos is ordered to pay State Farm's appeal expenses, fixed at $1,500.
October 22, 2002
David R. Draper Director of Arbitrations
Date
APPENDIX 1
DEAHY Medical Assessments Inc.*
Agreement Regarding Payments/fees for Services Provided to:
Barbara Tanzos
Name of Patient
May 23\ 98
Motor Vehicle Accident or Other Accident Date
State Farm
Company
Company
Company
C01583760
Policy
Policy
Policy
- Authorization To Pay:
I authorize my insurance company to pay directly to DEAHY Medical Assessments Inc. the medical expenses I incurred to me allowable and payable to me. These direct payments are to be credited to DEAHY Medical Assessments Inc. as payment towards the total charges for services rendered.
- Benefits Information Release:
I authorize that information pertaining to benefits paid on my behalf by my insurance company may be released to DEAHY Medical Assessments Inc..
- Authorization to Direct Bill:
I, hereby, request your authorization to have expenses incurred by me at DEAHY Medical Assessments Inc. to be billed directly to you. Kindly provide your authorization to DEAHY Medical Assessments Inc..
x BMTanzos
12\ 1 \ 98
Signature of Patient
Date
CRawn
12 \ 1 \ 98
Witness
Date
APPENDIX 2
DEAHY Medical Assessments Inc.*
5255 Yonge Street, Suite 200, North York, ON, M2N 6P4 • TEL: (416) 221-5810 • FAX (416) 221-7870
Authorization to Pay
Barbara Tanzos
(Name of Patient)
(Address)
C015-83760
(Policy/ Claim Number)
Hereby authorize State Farm Insurance
(Insurance Company/Lawyer)
to pay by cheque made out and mailed directly to
DEAHY Medical Assessments Inc.
5255 Yonge Street, Suite 200
North York, Ontario
M2N 6P4
the medical expense benefits otherwise payable to me under my current insurance policy, as payments toward the total charges for professional services rendered. I have agreed to pay, in a current manner, any balance of said professional services or charges over and above this insurance payment if my case is settled full and final and DEAHY's outstanding charges are for professional services rendered that have not been paid in full.
x BM Tanzos
Dec 1\98
Signature of Patient
Date
Catherine Rawn
CRawn
APPENDIX 3
DEAHY Medical Assessments Inc.*
5255 Yonge Street, Suite 200, North York, ON, M2N 6P4 • TEL: (416) 221-5810 • FAX (416) 221-7870
Authorization
Exhibit II
To: State Farm
I, HEREBY IRREVOCABLY AUTHORIZE Deahy
to act as my general agent to institute and prosecute through to conclusion, including the absolute right to compromise and settle any claim I might have for the payment of medical and rehabilitation benefits provided by Deahy pursuant to the provisions of the Statutory Accident Benefits Schedule against my insurer State Farm under Policy Number CO13-8J160 for or in connection with injuries sustained by me in the motor vehicle collision which occurred on May 23, 1998.
This authorization includes the right, to institute and settle the following proceedings in my name and on my behalf:
a) mediation proceedings under the Insurance Act.
b) arbitration proceedings and appeals under the Insurance Act; and
c) proceedings in a court of competent jurisdiction under Section 2821 [sic] of the Insurance Act.
In addition to the foregoing, Deahy as my general agent, has authority to retain counsel on my behalf and instruct counsel with respect to the foregoing proceedings and to authorize counsel to commence the foregoing proceedings on my behalf, including the authority to commence proceedings as required by Rule 15.02 of the Rules of Civil Procedure.
I further authorize Deahy to disclose to the insurer or its solicitor such clinical notes or records as are necessary to assist in the recovery of my claim for the payment of rehabilitation benefits.
I hereby acknowledge that this Authorization has been explained to my [sic] by CRawn and that I fully understand the meaning and purpose of this document.
DATED this 1 day of December, 1998.
BM Tanzos
12\1\98
Signature of Patient
Date
CRawn
Witness
Date
APPENDIX 4
DEAHY Medical Assessments Inc.*
5255 Yonge Street, Suite 200, North York, ON, M2N 6P4 • TEL: (416) 221-5810 • FAX (416) 221-7870
Authorization
Exhibit III
To: The Ontario Insurance Commission
Dispute Resolution Group
5160 Yonge Street, Box 85
North York, Ontario
M2N 6L9
Re: Our Patient: Barbara Tanzos
Insurance Company: State Farm
Policy Number: C015 – 83760
Claim Number: ___________________________
Date of Loss: May 23 \ 98
I authorize, R. SPIEGEL, a representative of DEAHY MEDICAL ASSESSMENTS INC., to act as my agent and to make binding decisions on my behalf in all matters connected with this mediation.
x BM Tanzos
12\1\98
Signature of Patient
Date
CRawn
Catherine Rawn
Witness' Signature
Witness Name
Interpreter's Signature
Interpreter's Name
1 Some of the procedural history is also described in a related decision, Docoute and Zurich Insurance Company, (FSCO P01-00036, July 29, 2002).
2 Ontario Regulation 403/96, as amended, the Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996.
3 Arbitration Exhibits 1 (Tab 9) and 3. For reasons that are not clear, the record includes two forms from the family doctor, both dated October 23, 1998, with one providing more detail about the reasons for the referral than the other.
4 Arbitration Exhibit 1, Tab 8.
5 Arbitration Exhibit 1, Tab 8.
6 The Notice of Appeal form introduced in May 2001 requires the insured person's signature if he or she is represented by a non-lawyer.
7 Tanzos and State Farm Mutual Automobile Insurance Company, (FSCO P01-00017, November 21, 2001).
8 This approach had been taken in a number of other cases involving non-lawyer representatives, starting with Glinka and Dufferin Mutual Insurance Company, (FSCO P01-00002, March 7, 2001).
9 Emphasis in the original
10 Docoute and Zurich Insurance Company, (P01-00036, July 29, 2002). The other two cases were bias applications under s. 282(12) of the Insurance Act. In those cases, I concluded that I had no authority to award expenses [Bersteyn and Allstate Insurance Company of Canada, (FSCO P01-00049, July 29, 2002) and Sverdlik and Lombard General Insurance Company of Canada, (FSCO P01-00050, July 29, 2002)].
11 R.R.O. 1990, Reg. 664, as amended.
12 See, Wong and Allstate Insurance Company of Canada, (FSCO A99-000545, September 22, 2000), p. 17 [footnote in the original].
13 According to s. 280(1) of the Insurance Act, "the insured person or the insurer" can apply for mediation. Arbitration is even more restrictive, with only "the insured person" being given the right to apply for arbitration [s. 281(1)].
14 According to s. 65(1) of the SABS-1996, the assignment of a benefit "is void."
15 Section 10 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, states that a party to a proceeding may be represented by counsel or an agent, although an agent can be excluded from the proceeding if he or she is not competent to properly represent or advise the party, or does not understand and comply with the duties and responsibilities of an advocate [s. 23(3)].
16 For example, see Sunderani and State Farm Mutual Automobile Insurance Company, (FSCO A99-000724, August 31, 2000); Haripersaud and State Farm Mutual Automobile Insurance Company, (OIC A96-000174, March 16, 1998), aff'd on appeal, (FSCO P98-00018, December 17, 1999); Pelzner and Coseco Insurance Co./HB Group/Direct Protect, (FSCO A99-000860, May 5, 2000); Strachan and Jevco Insurance Company, (OIC A96-001602, September 30, 1997); and Pereira and State Farm Insurance Company, (OIC A96-000996, June 19, 1997).
17 See also, Sunderani, supra, another case involving Mr. Spiegel, in which Arbitrator Palmer refused to allow a claim for an assessment to proceed in arbitration because the insured person was concurrently pursuing a broader range of related claims in court. In Kyei-Nifah and Addai and CUMIS General Insurance Company, (FSCO A00-001246 and A00-001247, June 18, 2001), also involving Mr. Spiegel, Arbitrator Killoran held that the insured person had to attend the pre-hearing personally.
18 Mr. Spiegel and Deahy are not in the same position. Deahy was authorized to pursue the claim on behalf of Ms. Tanzos, while Mr. Spiegel was its agent. However, because neither Mr. Spiegel nor Deahy are parties to the appeal, it is not necessary to distinguish between them for the purposes of this decision.
19 Persaud v. Society of Management Accountants of Ontario (1997), 1997 CanLII 17789 (ON CTGDDC), 144 D.L.R. (4th) 375 (Ont. Div. Ct.); Birnbaum v. Institute of Chartered Accountants of Ontario (1991), 47 O.A.C. 232 (Div. Ct.); Re City of Moncton and Buggie et al. (1985), 1985 CanLII 3135 (NB CA), 21 D.L.R. (4th) 266 (C.A.), leave to appeal to S.C.C. refused (1986), 66 N.B.R. (2d) 270.
20 Volfson and Shuster and Royal & SunAlliance Insurance Company of Canada, (FSCO A01-000440, September 13, 2002), under appeal.
21 Although s. 282(11) addresses arbitration expenses, it is made applicable to appeals by s. 283(7).
22 R.R.O. 1990, Reg. 664, s. 12(2).
23 The seminal decision on this point is Sturmer v. Beaverton (Town) (1911), 25 O.L.R. 190 (Ch.), aff'd (1912), 1912 CanLII 588 (ON DIVCT), 25 O.L.R. 566, 2 D.L.R. 501 (Div. Ct.).
24 I reached the same conclusion in Nunes and St. Paul Fire & Marine Insurance Company, (FSCO P01-00037, April 24, 2002).
25 See, Re Parmour Inc. (1993) 15 Admin. L.R. (2d) 201 (Ont. Env. App. Bd.), cited for this proposition in Mullan, Administrative Law (Third Edition), p. 408.
26 Director's Delegate Makepeace rejected an appeal in Gurevich on the basis that it was premature [Gurevich and Royal and SunAlliance Insurance Company of Canada, (FSCO P02-00011, September 18, 2002)].
27 Volfson, cited above.
28 For example, see Dhawan and State Farm Mutual Automobile Insurance Company, (FSCO A00-000031, September 26, 2002); Smith and Citadel General Assurance Company, cited above; Gik and Zurich Insurance Company, (FSCO A00-001144, October 4, 2001); Sabti and AXA Insurance (Canada), (FSCO P00-00015, February 5, 2001); D'Angelo and Wawanesa Mutual Insurance Company, (FSCO A99-000797, January 5, 2001); Jelisic and Guarantee Company of North America, (FSCO A98-000029, October 21, 1999); and Farella and Security National Insurance Company, (FSCO A98-001162, June 25, 1999).
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