Neutral Citation: 2003 ONFSCDRS 72

FSCO A02-000668

BETWEEN:

JAMES BOLGER

Applicant

and

CGU INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Anne Sone

Heard:

By telephone conference calls on March 21, 25 and 27, 2003. Final written submissions received by April 1, 2003

Appearances:

David Payne for Mr. Bolger Robert H. Rogers for CGU Insurance Company of Canada

The Applicant, James Bolger, was injured in a motor vehicle accident on July 31, 1999. He applied for and received statutory accident benefits from CGU Insurance Company of Canada ("CGU"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Bolger applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8.

The preliminary issues are:

Should Mr. Bolger be permitted to continue his Application for Arbitration and his Supplementary Application for Arbitration, pursuant to section 280 of the Insurance Act?
If Mr. Bolger is permitted to continue his Application for Arbitration and his Supplementary Application for Arbitration, should Mr. Bolger be permitted to combine the proceedings in his Supplementary Application for Arbitration with the proceedings in his Application for Arbitration scheduled for a hearing on June 10, 11 and 12, 2003, pursuant to Rule 30 of the Dispute Resolution Practice Code, (Fourth Edition, May 31, 2001) (the "Code")?
Is CGU liable to pay Mr. Bolger's expenses in respect of the preliminary issue hearing under section 282(11) of the Insurance Act?
Is Mr. Bolger liable to pay CGU's expenses in respect of the preliminary issue hearing under section 282(11) of the Insurance Act?

Mr. Bolger is permitted to continue his Application for Arbitration and his Supplementary Application for Arbitration, pursuant to section 280 of the Insurance Act on the condition that he confirms in writing within 14 days of the date of this decision that he has amended his statement of claim, issued December 12, 2001, to withdraw all claims that may potentially overlap with the claims being decided at the arbitration hearing.
Mr. Bolger is permitted to combine the proceedings in his Supplementary Application for Arbitration with the proceedings in his Application for Arbitration scheduled for a hearing on June 10, 11 and 12, 2003, pursuant to Rule 30 of the Code.
I award Mr. Bolger his reasonable expenses incurred in this preliminary issue hearing, in accordance with Rule 75 of the Code. If the parties cannot agree on the amount of expenses, they may provide a written request for an assessment of expenses, after following the process set out in Rule 79 of the Code.

Background:

Mr. Bolger wishes to add claims for attendant care benefits and for the services of a case manager to an arbitration scheduled to be heard on June 10, 11 and 12, 2003 in St. Catharines.

After a Designated Assessment Centre ("DAC") determined on January 10, 2003 that Mr. Bolger was catastrophically impaired, he issued a Supplementary Application for Arbitration on January 21, 2003. Ms. Sita Welsh, case administrator, responded on January 30, 2003 with a notification that the Financial Services Commission of Ontario (the "Commission") intended to combine the proceedings pursuant to Rule 30 of the Code. By letter dated February 12, 2003, CGU objected to combining the Supplementary Application with the Application already scheduled for hearing.

The facts of this case are very complicated and unusual. For the purposes of this hearing, they are not disputed by the parties. On July 31, 1999, Mr. Bolger was a seat-belted rear seat passenger in a car that was hit from behind at high speed, while stopped on a highway. According to his brother, who was the driver of the vehicle, Mr. Bolger's head smashed into the roof of the vehicle leaving a dent. Mr. Bolger was taken by ambulance to hospital, and was released the same day after approximately six hours of observation.

Since the accident, Mr. Bolger experiences sensations such as pain and/or tingling in his neck, lower back, arms, fingers, left knee and both legs. In addition, he also suffers from throbbing headaches which may cause nausea and vomiting, severe memory impairments and panic attacks. Furthermore, the vision in his left eye is blurry, and he has no peripheral vision. Mr. Bolger lost his driver's licence, after his family doctor notified the Ministry of Transportation that he should not be driving.

Prior to the accident, Mr. Bolger's wife, Karen, had been diagnosed with a brain tumour. Due to Mrs. Bolger's condition at the time, Mr. Bolger had been working, managing the household and providing primary parenting to the couple's two children, Amanda, age 18, and James, age 14. Mr. Bolger was 35 years old, and employed as a machine operator.

On September 24, 2001, Dr. John Schultz, Mr. Bolger's family doctor, issued a Disability Certificate stating that Mr. Bolger was catastrophically impaired. CGU disputed this finding on November 13, 2001.

Dr. Schultz prepared a treatment plan dated November 27, 2001, which was disputed by CGU.

Mr. Bolger provided an Occupational Therapy In Home and Attendant Care Assessment dated December 4, 2001. The report included an Assessment of Attendant Care Needs (Form 1), which calculated attendant care needs for Mr. Bolger totalling $5,034.23 per month.

On December 12, 2001, Mr. Bolger issued a statement of claim against CGU, seeking medical, housekeeping and home maintenance, rehabilitation and attendant care benefits in paragraph 1(a). He also claimed damages for bad faith, aggravated damages for mental distress, punitive damages, interest and costs.

On January 7, 2002, Mr. Bolger applied for mediation at the Commission. On April 16, 2002, the Mediator issued a report setting out the Issues Remaining in Dispute, which included "Attendant Care Benefit, Medical/Rehabilitation Benefits, Interest and Other."

CGU forwarded its statement of defence in the court action to Mr. Bolger on April 19, 2002.

Mr. Bolger's original Application for Arbitration dated April 22, 2002 included claims for medical/rehabilitation benefits and assessments set out in Dr. Schultz's treatment plan dated November 21, 2001, including case manager's fees. It did not include a claim for attendant care.

In the meantime, CGU attempted to obtain an assessment from The Assessment Centre, a DAC facility in Stoney Creek, for the items being claimed by Mr. Bolger. The Assessment Centre was unable to complete the assessment for various reasons. Respecting Mr. Bolger's claim for case management, it stated, in a letter dated April 17, 2002, that the "DAC assessment for the proposed case management would be inappropriate until there has been a catastrophic determination."

In its Response by Insurer to an Application for Arbitration dated June 10, 2002, CGU stated that the mediation at the Commission was a result of the statement of claim issued by Mr. Bolger on December 12, 2001, and noted that Mr. Bolger was not entitled to proceed with both a court action and an arbitration.

An examination for discovery in the court action proceeded on June 12, 2002. The counsel for the long-term disability insurance carrier took the lead, and asked most of the questions. Counsel for CGU and the tort insurer were also present. CGU's counsel asked some questions at the end of the discovery. All of the undertakings were in common.

At a pre-hearing held on June 17, 2002, an arbitration hearing was set down for July 18 and 19, 2002, in St. Catharines, on an urgent basis. The issues included the medical and rehabilitation claims set out in the "Summary of Claims" attached to Mr. Bolger's Application for Arbitration. These claims included a case manager services benefit, but not an attendant care benefit.

On the consent of both parties, the hearing dates of July 18 and 19, 2002 were adjourned to November 12 and 13, 2002. The basis for the adjournment was that the parties were waiting for the results of an assessment at a DAC to determine whether Mr. Bolger was catastrophically impaired. They also wished to have a private mediation to deal with both the tort and accident benefits issues.

On November 8, 2002, the hearing scheduled for November 12 and 13, 2002 was adjourned, on consent, to June 10, 11 and 12, 2003, since a catastrophic determination from the DAC was not yet available. In addition, the parties had scheduled a private mediation to deal with all matters relating to tort and accident benefit claims.

On January 10, 2003, after 13 months, the assessors at the DAC determined Mr. Bolger to be catastrophically impaired.

This determination had three implications. First, it meant that Mr. Bolger could be entitled to an attendant care benefit of up to $6,000 per month (instead of $3,000 per month), pursuant to paragraph 16(5)(b) of the Schedule. Second, pursuant to subsection 18(2) of the Schedule, he could claim an attendant care benefit for expenses incurred more than 104 weeks after the accident. Third, he could claim for all reasonable and necessary expenses for services provided by a qualified case manager, pursuant to section 17 of the Schedule.

As a result, Mr. Bolger filed a Supplementary Application for Arbitration dated January 21, 2003 with the Commission. In this Application, Mr. Bolger indicated that he had been determined to be catastrophically impaired on January 10, 2003. He claimed $50,000 for a case manager services benefit. He also claimed $211,449 for an attendant care benefit, at the rate of $5,034.58 per month from July 31, 1999 to January 31, 2003, and ongoing, plus interest.

Unfortunately, on January 21, 2003, Mrs. Bolger passed away. At that time, whatever community home care assistance the Bolger family was receiving, ceased.

As previously indicated, the case administrator at the Commission notified the parties that she intended to combine the two Applications for Arbitrations, and CGU objected to this proposal.

CGU's Submissions:

CGU objects on a number of grounds to adding the claim for an attendant care benefit to the June hearing.

CGU contends that Mr. Bolger's claim for an attendant care benefit is already the subject matter of an outstanding court action. In paragraph 3 of its Appendix to its Response by Insurer to an Application for Arbitration, CGU states as follows:

It is the position of the insurer that the claims sought in the Application for Arbitration are the same claims being made in the outstanding court action. Pursuant to Section 281 of the Insurance Act, the Applicant is not entitled to proceed with both a court action and an arbitration. The Applicant must select one or the other of such proceedings. Given that the court action was issued well before the Application for Arbitration, the Applicant should be required to discontinue the Application for Arbitration.

In addition, CGU has not been in a position to request an assessment at a DAC for attendant care until recently for two reasons: first the catastrophic determination remained outstanding, and second, the procedure contemplated by the Schedule leading to a DAC assessment had not been properly followed.

Although CGU concedes that it had enough time to proceed with an assessment at an attendant care DAC prior to the hearing date scheduled in June, CGU states that it needs enough time to deal with the issues raised by Mr. Bolger having been determined to be catastrophically impaired.

It objects to the claim for a benefit for the services of a case manager on the basis that this issue has not properly been mediated.

Mr. Bolger's Submissions:

Mr. Bolger admits that he cannot carry on with claiming attendant care in his court case, and continue with a claim for the same benefit at an arbitration hearing. He states that he has abandoned his claim for an attendant care benefit in the court case, in writing. In a letter dated February 17, 2003, addressed to Ms. Sita Welsh, case administrator at the Commission, his counsel states:

The attendant care benefit which forms part of the arbitration application does not form part of an outstanding court action. This has been clarified repeatedly with the insurer.

In his statement of claim, Mr. Bolger did not particularize any claim for attendant care. To address CGU's concerns, Mr. Bolger is willing to amend his statement of claim within 14 days of this decision so as to withdraw from the claim any attendant care issues to date, and any issues enumerated in the Application for Arbitration scheduled to be heard in June. In other words, he is prepared to split his claims, so that the statement of claim only addresses bad faith issues, which the Commission does not have jurisdiction to adjudicate. The remainder of the issues would be dealt with in a hearing under the auspices of the Commission. I note that the pre-hearing letter dated June 21, 2002 makes no reference to a claim for a special award.

In connection with CGU's concerns regarding its inability to request an attendant care assessment at a DAC, Mr. Bolger states that he was determined to be catastrophically impaired on January 10, 2001. In addition, in a letter dated February 7, 2003, Mr. Bolger provided an OCF-16 to CGU in relation to his claim for an attendant care benefit (albeit a bare bones one), so that CGU can proceed with an assessment at an attendant care DAC.

Mr. Bolger states that the claim for the benefit of the services of a case manager was mediated. The Application for Mediation included bills for services provided by the case manager.

Mr. Bolger stated that the waiting period for his court case was approximately one year, whereas his arbitration hearing is scheduled to start next month.

Mr. Bolger provided substantial evidence of the urgency of dealing with his claim. I refer to a letter dated February 15, 2002 from Ms. Marilyn Phillips, an occupational therapist with Community Rehab, where she states the following:

Due to the observed deterioration of the Bolger family unit it is recommended that the above parts of the treatment plan be implemented on an urgent basis. In addition, the 24 hour attendant care recommended by this therapist on December 3, 2001 should also be implemented on an urgent basis.

In addition, Dr. Schutz, Mr. Bolger's family doctor, wrote a medical report dated March 6, 2002 detailing the severe difficulties Mr. Bolger was experiencing as a result of not receiving attendant care. Further, on September 9, 2002, Ms. Jane Staub of Jane Staub and Associates prepared a future care report confirming Mr. Bolger's urgent need for 24-hour supervision.

Perhaps most persuasive of all are reports from Mr. Bolger's treating psychologist, Dr. Sherrie Bieman-Copland. Her report dated August 12, 2002 sets out in great detail her complete agreement that Mr. Bolger urgently requires 24-hour attendant care. She identified a substantial risk for suicide. In an updated report dated March 3, 2003, she states as follows:

I confirm that my most recent appointment with Mr. Bolger occurred on Monday February 24, 2003. This was my first appointment with him since the death of his wife. During that appointment, I interviewed Mr. Bolger specifically to assess suicidal risk. I confirm that Mr. Bolger endorsed significant suicidal rumination. Currently, his risk for suicide attempt is not as high [as] in the past, but only because he is too apathetic and overwhelmed to carry out a self-destructive act. He also expressed that feelings of obligation to his wife['s] memory and a responsibility to not burden his children further are protecting him. While the risk for active suicide may not be currently high, he requires constant supervision if he is to meet his life needs. At present his apathy is so marked that he would fail to take action to meet basic needs unless prompted by someone. In an individual with marked depression, suicidal risk increases as apathy reduces. So either way constant supervision is required by Mr. Bolger at this time.

Accordingly, his apathy and suicidal risk are flip sides of a coin which to his treating psychologist justify constant supervision at this time.

DISCUSSION AND CONCLUSIONS:

Should Mr. Bolger's Application for Arbitration and Supplementary Application for Arbitration be permitted to continue?

The part of Mr. Bolger's statement of claim which overlaps with his claim in the arbitration proceedings states as follows:

The Plaintiff claims:

(a) A declaration that the CGU Insurance Company of Canada pay to the plaintiff the following accident benefits pursuant to the Statutory Accident Benefits Schedule of the Insurance Act, R.S.O. 1990, c.I-A [sic] and Ontario Regulation 403/96, as amended:

(i) Medical benefits in an amount to be determined;

(ii) Housekeeping and home maintenance benefits in an amount to be determined;

(iii) Rehabilitation benefits in an amount to be determined;

(iv) Attendant care benefits in an amount to be determined;

As previously mentioned, the remainder of Mr. Bolger's claim refers to damages for bad faith, aggravated damages for mental distress, punitive damages, interest and costs.

CGU states that, pursuant to section 281 of the Insurance Act, Mr. Bolger is not entitled to proceed with both a court action and an arbitration.

CGU also takes the position that the Commission appeal case of Miller and Allstate Insurance Company of Canada² supports its position that the Application for Arbitration and the Supplementary Application for Arbitration should be dismissed. However, in that case, the proceedings were quite unusual, and the parties did not make submissions regarding a re-framing of the court proceedings. According to Director's Delegate Naylor, fairness required that they should have been given that opportunity. This was not the case here. Both parties considered the possibility of a stay of the overlapping court proceedings, and made cogent submissions regarding this approach.

Although in the Commission appeal case of Mangat and Non-Marine Underwriters, Mbrs. of Lloyd's³ Director's Delegate Draper concluded that the court action should take precedence over the arbitration proceeding, he did state the following at page 15:

Where the insured person elects to pursue statutory accident benefits through arbitration, that choice should be respected to the greatest extent possible. Judges and arbitrators should be slow to force an unwilling insured person into court.

He also noted with approval King and Royal Insurance Company of Canada,⁴ where Arbitrator Bayefsky set out the following principles:

Arbitration decisions have established a number of principles governing the question of whether a person is precluded from proceeding before both a court and the Commission, the most basic of which being that an insured may not pursue a dispute in more than one forum, but is not required to pursue all of his or her disputes in only one forum. The remaining principles may be summarized as follows:

Does the arbitration involve issues substantially similar to those in the civil action?
How far along has the civil action proceeded (for example, have discoveries taken place on the issues before the court)?
Is the civil action broader in scope than the arbitration, both in terms of the issues involved and the relief sought?
Is there any serious impediment to having the issues in the arbitration dealt with in the court proceeding?
Would permitting the Applicant to proceed with arbitration unduly duplicate proceedings, leading to greater costs and delays and raising the spectre of inconsistent results?

[p.4, footnote omitted] [emphasis in the original]

In King, the applicant was allowed to proceed with his arbitration with the exception of insurance for his van, which the arbitrator found was originally raised in the court proceeding. He decided this way since the issues in the two proceedings were "substantially different" and involved "significantly different lines of inquiry." He further found that the evidence required in the two proceedings was not unduly repetitious, there was little danger of inconsistent results, and greater costs and delays would result if Mr. King was required to shift his entire dispute into the court action.

Based on the criteria set out in previous decisions such as King and Mangat, it seems more appropriate at first glance to proceed solely with the court action in this case, For example, the court action was commenced first; the court action has proceeded to the examination for discovery stage; Mr. Bolger has the burden of proof in both proceedings; and the court action is more comprehensive in scope.

However, there are other factors to consider. Mr. Bolger has agreed to withdraw any overlapping court proceedings within 14 days of the issue of this decision. This withdrawal eliminates most concerns regarding duplication of costs and the possibility of inconsistent results. Even if there is some duplication caused by leaving Mr. Bolger's bad faith claim in court, the duplication is minor since there is no claim for a special award being sought at the arbitration. Further, given the reports stating the urgency of dealing with this claim, the additional delay of approximately one year required for the court proceedings could lead to tragic consequences in Mr. Bolger's case.

Accordingly, I permit Mr. Bolger to continue his Application for Arbitration and his Supplementary Application for Arbitration, on the condition that he confirms in writing within 14 days of the date of this decision that he has amended his statement of claim, issued December 12, 2001, to withdraw all claims that may potentially overlap with the claims being decided at the arbitration hearing.

Was the Issue of a claim for a Case Manager Services benefit mediated?

CGU argues that the issue of a benefit for the services of a case manager was not properly mediated. In this connection, the Insurance Act provides at subsection 281(2) that:

No person may bring a proceeding in any court or refer a matter to arbitration unless mediation has first been sought and failed.

In the section of the Mediator's Report dated April 16, 2002 entitled "ISSUES REMAINING IN DISPUTE," there is a reference to "Medical/Rehabilitation Benefits." The Report states at the bottom of this section, "The parties did not settle the above matters at mediation." Mr. Bolger advised that several of the case manager's bills were included with the Application for Mediation. In my view, given the outstanding invoices, this is broad enough to cover off the claim for case manager's bills.

In addition, CGU did not raise this objection to a claim for the services of a case manager in its Response by Insurer to an Application for Arbitration dated June 10, 2002, although Mr. Bolger had claimed this benefit in his original Application for Arbitration dated April 22, 2002. In a "Summary of Claims" attached to the Application for Arbitration, at items E. and F. under the heading "Emergency Medical/Rehabilitation," it states as follows:

E. Payment of the account of BDH Rehabilitation dated December 18, 2001 in the amount of $1,623.69.

F. Payment of the account of BDH Rehabilitation dated October 5, 2001 in the amount of $3,702.21.

CGU also did not raise this objection at the pre-hearing. In connection with medical and rehabilitation benefits, the pre-hearing letter specifically states that:

Particulars of expenses claimed are set out in the "Summary of Claims" attached to the applicant's Application for Arbitration.

Since copies of the case manager bills were included with the Application for Mediation and CGU did not claim that this issue was not mediated in its Response by Insurer to an Application for Arbitration, or at the pre-hearing, I find that it is reasonable to conclude that CGU had ample opportunity to raise this objection earlier in the process. Although the Mediator's Report could have been clearer, I find that the issue of whether Mr. Bolger is entitled to the services of a case manager was mediated.

Should the Proceedings be Combined?

Rule 30 of the Code allows proceedings to be combined if this results in the most just, quickest, and least expensive means to deal with the Applications. Procedurally, it provides as follows:

30.1 Where two or more Applications for Arbitration have been filed and it appears that:

(a) they have an issue or question of law, facts, or policy in common; or

(b) the application of this Rule will result in the most just, quickest, and least expensive means to deal with the Applications;

The Registrar or an arbitrator will notify the parties in writing of the intention to:

30.2 Where a party objects to a notice made under Rule 30.1, the party must promptly notify the Dispute Resolution Group and the other parties involved, in writing of the objection.

30.3 An arbitrator will consider an objection made under Rule 30.2 and make an order on such terms as he or she considers just.

Accordingly, I can consider CGU's objection, and make an order on such terms as I consider just.

Besides the overlap with the court case, the remainder of CGU's objections to adding attendant care benefits to the scheduled arbitration relate to compliance with the DAC process. However, counsel for CGU advised me that CGU now intends to proceed with an assessment at an attendant care DAC, which it anticipates would be completed in time for use at the hearing.

I make some additional observations. Mr. Bolger attempted to add his claim for an attendant care benefit as soon as he received the DAC determination that he was catastrophically impaired. Unfortunately, this process took 13 months to complete. I find that had the catastrophic DAC process been concluded on a more timely basis, it is very likely that Mr. Bolger would have included this claim in his original Application for Arbitration, especially since he had already mediated this issue.

Mr. Bolger provided compelling medical reports regarding the urgency of his claim. CGU did not attempt to refute these reports. Mr. Bolger also states that there is at least a one year waiting period for a trial.

In view of all these circumstances, especially since Mr. Bolger is willing to withdraw all overlapping portions of his court claim, and is at a significant, ongoing apathy and suicide risk, I consider it just that I permit Mr. Bolger to combine the proceedings in his Supplementary Application for Arbitration with the proceedings in his Application for Arbitration scheduled for a hearing on June 10, 11 and 12, 2003. I find that this method of proceeding would lead to the quickest and least expensive means of dealing with the Applications, since it is quicker and less expensive to have one proceeding. In addition, it avoids inconsistent results since it will be heard by one arbitrator. As stated previously, I only give this permission on the condition that Mr. Bolger confirms in writing within 14 days of this decision that he has amended his statement of claim, issued December 12, 2001, to withdraw all claims that may potentially overlap with the claims being decided at the arbitration hearing. In the meantime, the arbitration proceeding is stayed.

EXPENSES:

Based on his success, and the efficient manner in which his counsel conducted the hearing, I exercise my discretion to award Mr. Bolger his reasonable expenses incurred in this preliminary issue hearing, in accordance with Rule 75 of the Code. If the parties cannot agree on the amount of expenses, they may provide a written request for an assessment of expenses, after following the process as set out in Rule 79 of the Code.

May 9, 2003

Anne Sone Arbitrator

Date