Harry Sinanan v. State Farm Mutual Automobile Insurance Company, 2003 ONFSCDRS 62

Financial Services Commission of Ontario

Neutral Citation: 2003 ONFSCDRS 62 FSCO A02-000850

BETWEEN:

HARRY SINANAN Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Janice Sandomirsky

Heard: February 24, and 25, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: A.K. Grant, agent, for Mr. Sinanan Jonathan B. Schrieder, barrister and solicitor, for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Harry Sinanan, was injured in a motor vehicle accident on August 29, 2000. He applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.¹ State Farm denied Mr. Sinanan entitlement to medical benefits for treatment for a temporomandibular joint ("TMJ") condition and transportation costs. The parties were unable to resolve their disputes through mediation, and applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in the hearing were:

1. Is Mr. Sinanan entitled to a medical benefit for treatment of a TMJ condition in the amount of $15,000, pursuant to section 14 of the Schedule?

2. Is Mr. Sinanan entitled to transportation expenses in the amount of $3,024, pursuant to section 14 of the Schedule?

3. Is Mr. Sinanan entitled to interest for overdue payment of benefits pursuant to section 46(2) of the Schedule?

4. Is either party liable to pay the other's expenses of the arbitration pursuant to section 282(11) of the Insurance Act, R.S.O. 1990, c.I.8.

The transportation claim was resolved between the parties during the first day of hearing. After hearing the testimony on the second day of hearing from Dr. Eric Pierre, the expert witness called to support his claim for benefits for the TMJ treatment, Mr. Sinanan requested permission to withdraw that claim. I decided on the basis of the evidence presented to dismiss the claim for medical benefits and asked the parties for their submissions on the issue of entitlement to expenses.

Result:

1. The claim for a medical benefit for treatment of a TMJ condition is dismissed.

2. Each party is responsible for their own legal expenses of the arbitration proceeding.

Analysis:

An arbitrator may award expenses to an insured person or an insurer under subsection 282(11) of the Insurance Act, if he or she is satisfied that such an award is justified having regard to the following criteria:

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 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 insured person requests, any written offers to settle made after the conclusion of the 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.²

Other arbitration decisions have commented that these legislated criteria ought to be applied having regard to the purpose of the overall statutory accident benefit scheme. As noted by Arbitrator Alves in her expense decision in Gray and Zurich Insurance Company (FSCO A97-001660, January 29, 1999), arbitrators must balance the applicant's need for access to relatively inexpensive, speedy and informal adjudication of disputes, with a "relatively mild deterrent to undeserving claim or undesirable behaviour."

In this case, the parties attempted to resolve the issue of entitlement to benefits for the TMJ treatment after the transportation claim was settled. After some discussion, State Farm asked to hear the evidence from Dr. Pierre before proceeding further with any settlement discussions. Dr. Pierre was scheduled to testify on the second day of the hearing. When asked about the causal relationship between the TMJ diagnosis and the accident, Dr. Pierre stated that, in his opinion, although Mr. Sinanan suffered with TMJ, it was not the result of the accident. After hearing that evidence from Dr. Pierre, Mr. Sinanan asked to withdraw the case.

State Farm did not consent to the request to withdraw and asked that the case be dismissed with an order that Mr. Sinanan pay its expenses.

Mr. Sinanan submitted that he should not be required to pay State Farm's expenses because he was at least partially successful in the proceeding, having resolved one of the two claims for statutory benefits. State Farm argued, however, that the manner in which Mr. Sinanan's case was conducted prolonged the proceeding, given that his own expert witness failed to support the claim that his TMJ symptoms resulted from the accident in issue. State Farm also submitted that both the proceeding, and the position taken by Mr. Sinanan, were manifestly unfounded, frivolous and vexatious.

In my view, while the proceeding may have been avoided if there had been better communication and more thorough preparation for the hearing by the Applicant, I cannot conclude that it was manifestly unfounded, frivolous and vexatious. There were medical reports from Dr. Pierre that at least prima facia appeared to support Mr. Sinanan's claim for medical treatment. The purpose of oral testimony is to test the limits of an expert's written opinion. It is not unusual that an opinion which appears to be supportive in a report is diminished under cross-examination.

Mr. Sinanan testified at the hearing and I found him to be straightforward and that he proceeded to the hearing in good faith based on the advice of his representative. This may be a case where it would be appropriate to award expenses against a representative. Frequently, the conduct or position taken at a hearing is not that of the insurer or the insured person, but that of the representative. Given the specific wording of Regulation 664, however, which only refers to conduct or positions taken by the "insurer or the insured person," and makes no reference to a representative, there is no authority for an arbitrator to make an award of expenses against a representative.³

As noted above, the Expense Regulation requires a balance of the applicant's need for access to relatively inexpensive, speedy and informal adjudication of disputes with a deterrent to undeserving claims or undesirable behaviour. In this case, I accept that Mr. Sinanan met with some success in the proceeding. It is possible, however, the hearing could have been avoided altogether if Dr. Pierre’s testimony had been properly prepared.

As a result, after balancing all of the considerations in this case, I decided to order that each party will be responsible for their own arbitration expenses.

April 16, 2003

Janice Sandomirsky Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 62 FSCO A02-000850

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

HARRY SINANAN Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

ARBITRATION ORDER

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

1. The claim for a medical benefit for treatment of a TMJ condition is dismissed.

2. Each party is responsible for their own arbitration expenses.

April 16, 2003

Janice Sandomirsky Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 2, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.
2. 2Subsection 12(2) of Ontario Regulation 664, as amended by Ontario Regulation 464/96, under the Insurance Act. These criteria have been incorporated into Rule 75 of the Dispute Resolution Practice Code - Fourth Edition, May 31, 2001.
3. 3See Farella and Security National Insurance Company (FSCO A98-001162, June 25, 1999), Jelisic and Guarantee Company of North America (FSCO A98-000029, October 21, 1999), and D’Angelo and Wawanesa Mutual Insurance Company (FSCO A99-000797, January 5, 2001). Note, however, that section 127 of the proposed changes to the Insurance Act amends section 282(11.2) to include a provision that allows an arbitrator to order that a representative personally pay all or part of any expenses awarded against a party under certain specified conditions.