Neutral Citation: 2002 ONFSCDRS 96
FSCO A01-001305
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
BRUNO LARIZZA
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
AND BETWEEN
GIUSEPPINA LARIZZA
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
PRE-HEARING DECISION
Before:
Lawrence Blackman
Heard:
Written submissions received April 26, 2002
Appearances:
Alon Rooz for Mr. and Mrs. Larizza
Ryan M. Naimark for Allstate Insurance Company of Canada
Issues:
The Applicants, Bruno Larizza and Giuseppina Larizza, were injured in a motor vehicle accident on December 19, 2000.
In a March 18, 2002 decision I held, amongst other things, that pursuant to Rule 30 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) (the "Code") these two proceedings should be heard at the same time considering, in large measure, the significant overlap of issues and witnesses, and the consent of the parties.
At the same time, I allowed the parties thirty days to file written submissions as to whether, pursuant to Rule 30, these two proceedings should be combined. Rule 30 provides options1 for the Registrar or an arbitrator to best achieve the most just, quickest and least expensive means of dealing with applications which appear to have in common an issue or question of law, fact, or policy.
Written submissions were received only from the Insurer.
Accordingly, the remaining pre-hearing issue is:
- Should these two applications be combined pursuant to Rule 30 of the Code?
Result:
- These applications should not be combined.
EVIDENCE AND ANALYSIS:
The Insurer submits that:
it is their understanding that the Commission "routinely combines files where there is an issue or question of law, fact or policy in common;"
combining these two applications would be in the interests of both parties, as they would not have to incur additional filing and assessment expenses; and,
combining the applications would result in the least expensive means to deal with these applications, in accordance with Rule 30.1(b) of the Code.
All parties agree that these two proceedings should be combined.
Implicit in Allstate's submissions is section 2.7 of Part D of the Code, which states that "[w]here a proceeding is consolidated with another proceeding, the insurer will be assessed only once." I received no specific submissions as to what combining files means as opposed to having proceedings heard at the same time, nor whether "combining" is the same as or different from "consolidating." In my view, the "combining" option under Rule 30 appears to be akin to consolidation, and results administratively in two or more files continuing, for all purposes, as one file (with one assessment). The other options under Rule 30, while allowing appropriate procedural flexibility, maintain the files as distinct separate entities.
Before its repeal in 1997, subsection 14(1) of the Insurance Act, R.S.O. 1990, c. I.8, stated that the Lieutenant Governor in Council could assess all insurers with respect to expenses incurred and expenditures made by the Ministry of Finance in the administration of the Insurance Act and related legislation, including the expenses and expenditures of this Commission. Subsection 14(3) further stated that:
The regulations made in respect of an assessment made under subsection (1) in respect of expenses and expenditures for dispute resolution under sections 280 to 284 [which includes this arbitration system] may provide that the assessment may be based on such degree of usage of the dispute resolution system as may be provided in the regulations. R.S.O. 1990, c. I.8, s. 14.
[emphasis added]
These provisions, now somewhat amended, are presently found in section 25 of the Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28. Subsection 25(5) states that:
If an assessment made under subsection (1) covers expenses incurred for dispute resolution under sections 280 to 284 of the Insurance Act, the regulations made under this Act may provide that the assessment is based on the degree of usage made of the dispute resolution system that is specified in the regulations. 1997, c. 28, s. 25 (5).
[emphasis added]
Ontario Regulation 11/01 was promulgated pursuant to the Financial Services Commission of Ontario Act, 1997. Part II of the Regulation 11/01 pertains to the assessment of expenses incurred and expenditures made by this Commission in respect of the insurance sector. Section 4 of the Regulation 11/01 provides a detailed method of calculation for the assessment of each regulated entity. Rule 16 (contained within section 4) states that an insurer's automobile insurance share of the assessment is calculated under Rule 8.
Succinctly, Rule 8 provides that the insurer's automobile insurance share of the assessment is calculated as its market share of direct premiums for automobile insurance in Ontario (for the defined period) multiplied against the balance of:2
– the expenses incurred and expenditures made by "dispute resolution activity," the Accident Benefits Analysis Unit, insurance rates, classifications, and actuarial activities and half of the expenses of the Office of the Insurance Ombudsman, LESS
– all dispute resolution assessments (for Commission mediations, neutral evaluations, arbitrations, appeals, variations and revocations).
Under subsection 4(2) of the Regulation 110/1, the insurer's assessment share is then increased by the full assessment cost of each Commission mediation, neutral evaluation, arbitration, appeal, variation and revocation to which that insurer is a party during the assessment period.
In my view, the Regulation 11/01 contemplates, fundamentally, a "user" system of payment by parties to the dispute resolution process (as specifically contemplated, previously under the Insurance Act, and now under the Financial Services Commission of Ontario Act, 1997), as opposed to funding this process primarily by market share or by some other system of financing.
Subsection 282(1) of the Insurance Act states that "an insured person seeking arbitration under this section shall file an application for the appointment of an arbitrator with the Commission." To me, this means that each insured person must file a separate application for arbitration. I note under subsections 3.4, 3.5 and 3.6 of Part D of the Code, filing fees may not be waived, deferred or refunded by the Commission (but may be recovered as part of an applicant's expenses).
The Code is consistent with the Financial Services Commission of Ontario Act, 1997 in advancing a "user" system of financing. Section 2.6 of Part D, for example, states that:
Where there are two insurers named in a proceeding, both insurers must pay assessments ....
To have two applications proceed as distinct files, rather than being combined, does not mean that the Commission gets more funding in the form of an "extra" $3,000 assessment. Rather, it means that equivalently less funding will be forthcoming from other sources, specifically from assessments of insurers by reason of their market share (calculated under Rule 8 of Regulation 11/01 set out above). It is not a question of how much overall is paid towards this system, but rather, who pays and how their share is calculated.
Hence, in determining whether files should be combined, the considerations of justice and expense enumerated in Rule 30 of the Code must include attention to, amongst other concerns, the question of fairness not only to the parties in the proceedings at hand but also fairness to all those subject to the market share assessment.
The clear intent of the legislation is that the primary principle of financing of this dispute resolution system is that of usage. Routinely combining files where there is an issue or question of law, fact, or policy in common would be inconsistent with that intent.
In deciding whether to combine proceedings (rather than exercising one of the purely procedural options under Rule 30 of the Code, such as scheduling proceedings to be heard at the same time), one must consider not merely that the applications have issues in common, but the extent to which the applications overlap. One must consider not merely the potential savings to one party (keeping in mind that filing fees may not be refunded pursuant to Part D of the Code) but the entire funding rationale.
In Balausiak and Allstate Insurance Company of Canada (FSCO A01-001374, March 18, 2002), I combined two applications for arbitration (rather than merely have them heard at the same time) in large measure because:
Mrs. Balausiak's claim involves only a single $900 account for a home assessment by Metro Assessment and Rehabilitation Centre ("Metro"), while Mr. Balausiak's claim involves, in addition to a separate but apparently similar home assessment, claims for approximately $7,000 of physiotherapy and chiropractic treatment;
Charging a separate $100 filing fee and a $3,000 insurer assessment for Mrs. Balausiak's essentially $900 claim in addition to the same assessments being charged for Mr. Balausiak's claim would not produce the most just, quickest and least expensive resolution of these disputes ...3
The applications of Mr. and Mrs. Larizza do not involve one identical compact common issue, such as whether there was an accident as defined. Each application is substantive in terms of both the range of issues and the monetary amounts in dispute. While there are issues in common, there is no evidence, and one would hardly expect, an overlap of identical injuries, medical history, medical progress etc. Much more than in Balausiak, these two applications constitute two separate and substantive "usages" of this system. Mr. Larizza seeks payment of approximately $10,000 in medical services and assessments as well as a special award particular to whether Allstate unreasonably delayed or withheld payment of his claims. Mrs. Larizza claims some $12,000 in medical services and assessments, in addition to a special award particular to whether Allstate unreasonably delayed or withheld payment of her claims.
In Balausiak, I was persuaded in the specific circumstances of that case (where there was essentially only a $900 claim for Mrs. Balausiak) that fairness dictated that the proceedings should be combined, despite this system being "user" driven.
I am not, however, persuaded that it would be unfair to have these applications proceed separately. I am not persuaded that the reduced expense to these specific parties (by combining the applications) outweighs the assessment rationale of this legislatively mandated process. I am persuaded that the application of Rule 30 by having these proceedings heard at the same time will appropriately achieve the most just and least expensive means of dealing with these applications. Accordingly, I am not persuaded that these two proceedings should be combined.
June 13, 2002
Lawrence Blackman
Arbitrator
Date
Neutral Citation: 2002 ONFSCDRS 96
FSCO A01-001305
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
BRUNO LARIZZA
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
AND BETWEEN
GIUSEPPINA LARIZZA
Applicant
and
ALLSTATE 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:
- The Applications of Mr. Larizza and Mrs. Larizza should not be combined.
June 13, 2002
Lawrence Blackman
Arbitrator
Date
S = the insurers automobile insurance share of the assessment,
T = the insurer's direct premiums for automobile insurance in Ontario in the year beginning on the January 1 immediately preceding the beginning of the assessment period,
D = the expenses incurred and expenditures made in respect of automobile insurance, calculated under rule 2,
B = the total assessment for mediations under section 280 of the Insurance Act, calculated under rule 3,
I = the total assessment for evaluations under section 280.1 of the Insurance Act, calculated under rule 4,
K = the total assessment for arbitrations under section 282 of the Insurance Act, calculated under rule 5,
N = the total assessment for appeals under section 283 of the Insurance Act, calculated under rule 6,
Q = the total assessment for applications under section 284 of the Insurance Act, calculated under rule 7,
U = the total, for all insurers licensed for automobile insurance during the assessment period, of all direct premiums for automobile insurance in the year beginning on the January 1 immediately preceding the beginning of the assessment period.
Footnotes
- These options are: combining the proceedings, scheduling the proceedings to be heard at the same time or one immediately after the other (to be heard by the same arbitrator), or suspending the scheduling of a proceeding(s) pending the determination of another proceeding
- The formula provided by Rule 8 is: S = T/U x (D-B-I-K-N-Q), where,
- As is apparent from my prior comments, in light of section 3.6 of Part D of the Code, the separate $100 filing fee for Mrs. Balausiak could not in fact be refunded.