Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 114
FSCO A04-002032
BETWEEN:
DARRYL HARRIS
Applicant
and
WAWANESA MUTUAL INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
William J. Renahan
Heard:
July 18, 2005, at the offices of the Financial Services Commission of Ontario in Toronto.
Written submissions were received on July 22, 2005.
Appearances:
Richard Gordon for Mr. Harris
Stephen B. Macaulay for Wawanesa Mutual Insurance Company
Issues:
The Applicant, Darryl Harris, was injured in a motor vehicle accident on January 31, 2004. He applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.1 Wawanesa refused to pay for certain examinations and medical benefits. The parties were unable to resolve their disputes through mediation, and Mr. Harris applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The preliminary issue is:
- Should I exclude Mr. Harris' representative from the hearing on the grounds that he has a conflict of interest.
Result:
- Mr. Harris' representative is excluded from the hearing.
EVIDENCE AND ANALYSIS:
Mr. Richard Gordon is not a barrister and solicitor. Under section 398 of the Insurance Act, a person, other than a barrister and solicitor, cannot represent a person claiming statutory accident benefits unless he is a member of a prescribed class of persons who comply with prescribed terms and conditions. Under sections 18 and 19 of Ontario Regulation 664, a person is exempt from section 398 if he complies with certain requirements issued by the Superintendent of Insurance. Mr. Gordon has complied with those requirements and is registered with the Financial Services Commission as a statutory accident benefits representative.
Sections 438 and 439 of the Insurance Act prohibit a person from engaging in any "unfair or deceptive act or practice." Unfair or deceptive acts or practices are defined in Ontario Regulation 7/00. These acts or practices include an act or omission that is inconsistent with the Code of Conduct for Statutory Accident Benefit Representatives issued by the Superintendent of Insurance.
Effective November 1, 2003, the Superintendent of Financial Services issued a Code of Conduct for Statutory Accident Benefit Representatives. It defines "conflict of interest" and obliges a representative who has a conflict of interest relating to a claim for statutory accident benefits to disclose the conflict to his client and the appropriate insurer. An undisclosed conflict of interest is also an unfair or deceptive act or practice under Ontario Regulation 7/00 and is prohibited under section 439 of the Insurance Act.
Wawanesa claims that Mr. Gordon has a conflict of interest which he has not disclosed and that I should exclude him from the hearing.
Two of the issues for the hearing are:
Is Mr. Harris entitled to the cost of an examination by Dr. John Baird in the amount of $1,969 pursuant to section 24 of the Schedule?
Is Mr. Harris entitled to the cost of a Digital Motion X-ray analysis and report by Dr. Baird in the amount of $3,084 pursuant to section 24 of the Schedule?
Other issues include whether Mr. Harris is entitled to $4,068 for treatment at Canadian Active Rehabilitation Centre and $710 for treatment by Dr. Bourassa.
Wawanesa claims that Mr. Gordon is in a conflict of interest because he has an interest in advancing the interests of Dr. Baird and he referred his client, Mr. Harris, to Dr. Baird for assessment. Wawanesa seeks an order that Mr. Gordon is disqualified from representing Mr. Gordon because of this conflict of interest.
"Conflict of interest" is defined in the Code of Conduct as follows:
"Conflict of interest" of a representative relating to a claim for statutory accident benefits means that,
(1) the representative could receive, directly or indirectly, a financial benefit that arises out of the claim, other than compensation for providing a service referred to in subsection 398(1) of the Insurance Act or for representing a claimant; or
(2) anyone related to the representative may receive, directly or indirectly, a financial benefit that arises out of the claim.
For the purpose of clause (1), a financial benefit arises out of a claim for statutory accident benefits where the benefit is related to the claim and would not have arisen if the claim had not been made.
Wawanesa asked me to draw the inference that the evidence shows a business relationship between Mr. Gordon and Dr. Baird and that Mr. Gordon receives a financial benefit from referring his clients to Dr. Baird.
Mr. Gordon carries on some business under the name WAD 3 Incorporated. He is the sole director of the business. WAD 3 carries on business at the same address as Mr. Gordon's business of representing accident benefit claimants. Dr. Baird carries on some business under the name ADIO and admitted that he was the directing mind behind ADIO. In their testimony concerning their own businesses and that of the other, Mr. Gordon and Dr. Baird used the personal and business names interchangeably. I find that the individuals and the businesses were the same and I sometimes use Mr. Gordon's name to mean WAD 3 and Dr. Baird's name to mean ADIO.
Wawanesa introduced four pieces of documentary evidence to show a connection between Mr. Gordon's business and Dr. Baird's business. Mr. Gordon and Dr. Baird testified that the documents were created to promote the use by Dr. Baird of digital or dynamic motion x-rays [sometimes referred to as "DMX"] for the assessment of soft tissue whiplash-type injuries. The technique, also known as video fluoroscopy, is used in hospital to create a moving x-ray to assess functions such as swallowing and some surgical procedures. They are not widely used to assess soft tissue injuries.
Mr. Gordon introduced himself to Dr. Baird in the summer of 2003 to promote his business. The two had an interest in DMX technology and they both thought they could use this technology in their separate businesses. Both had an interest in diagnosing and proving whiplash type injury. Mr. Gordon started compiling what has become a three volume collection of articles relating to soft tissue injury, including articles explaining the DMX technology. He uses these documents in his business of representing accident benefit claimants.
The documents Wawanesa relies on are:
a DVD Digital Motion X-ray of Mr. Harris with ADIO and WAD 3 printed on the face;
a DVD which Mr. Gordon gave to some clients to explain Digital Motion X-rays which had the names ADIO and WAD 3 printed on it. It directed the reader to contact WAD 3 for bookings;
a website which promoted Digital Motion X-rays which gave two contact numbers, those of ADIO and WAD 3;
a WAD 3 business card which indicated that WAD 3 was booking agent for ADIO DMX and gave Mr. Gordon's business address.
Mr. Gordon referred his client, Mr. Harris, to Dr. Baird for an assessment which took place on April 10, 2004. Among other things, Dr. Baird performed a "Digital Radiographic Analysis." Mr. Gordon incorporated WAD 3 on August 11, 2004. Dr. Baird imported a DMX machine from the United States in January 2005 for use in his practice. Mr. Gordon referred Mr. Harris to Dr. Baird for a second assessment which took place on March 1, 2005 and, among other things, Dr. Baird performed a DMX.
Both Mr. Gordon and Dr. Baird denied that Mr. Gordon asked for, received or expected any payment from Dr. Baird as a result of these two referrals. Dr. Baird testified that he thought Mr. Gordon attached his name to the DMX promotional material because he wanted to be involved at the centre of what he thought was an emerging area of assessing and proving soft tissue injury.
I accept that Mr. Gordon has not received any financial benefit from his relationship with Dr. Baird. However, the test under the definition of "conflict of interest", is whether he "could" receive a financial benefit.
The plain grammatical meaning of the word "could" expands the group of people who have a conflict of interest from those that actually receive a financial benefit to those that "could" receive a financial benefit.
Mr. Macaulay referred to the decision of Granger J. in Moffat v. Wetstein 1996 CanLII 8009 (ON CTGD), 29 O.R. (3d) 371.2 In that case, the defendant sought an Order removing counsel for the plaintiff as the solicitors of record on the basis of an actual and/or apparent conflict of interest. Granger J. wrote:
A fiduciary is subject to a strict ethic to provide, among other things, the utmost good faith and loyalty to those to whom he acts in the capacity of fiduciary. Subsumed in the fiduciary's duties of good faith and loyalty is the duty to avoid a conflict of interest. The fiduciary must not only avoid a direct conflict of interest but must also avoid the appearance of a possible or potential conflict. The fiduciary is barred from dividing loyalties between competing interests, including self-interest.
I see no reason that a statutory accident benefits representative should not owe his client the same duty of good faith and loyalty as a lawyer owes his client, which includes the duty to avoid the appearance of a possible or potential conflict of interest. This conclusion is consistent with the use of the words "could receive, directly or indirectly, a financial benefit" in the definition of "conflict of interest" in the Code of Conduct. The definition is meant to include the appearance of a possible or potential conflict of interest.
In this case, the DVDs, website and business card suggest that Mr. Gordon has a business relationship with Dr. Baird with a common goal of promoting the use of DMX technology in assessing and demonstrating injury and impairment in whiplash cases. This relationship started in the summer of 2003 when Mr. Gordon introduced himself to Dr. Baird to promote his business. This evidence of a business relationship leads to the inference that Mr. Gordon could receive a financial benefit from referring Mr. Harris to Dr. Baird for the DMX assessment which took place in March 2005.
According to Moffat, the remedy where a lawyer is in a conflict of interest, is to remove the lawyer as solicitor of record. Under section 23(3) of the Statutory Powers Procedure Act, a tribunal may exclude an agent from the hearing where the agent does not comply at the hearing with the duties and responsibilities of an advocate or adviser. Mr. Gordon's failure to disclose the conflict of interest is contrary to the Code of Conduct for Statutory Accident Benefit Representatives and is an unfair or deceptive act or practice prohibited by the Insurance Act. Accordingly, I exclude Mr. Gordon from this hearing because of his failure to comply with his duties and responsibilities as an advocate and adviser.
The fact that the conflict of interest only relates to one of the issues in dispute does not mean that Mr. Gordon can represent Mr. Harris with respect to the other issues. In Moffat, Grange J. referred to Shaughnessy Brothers Investments Ltd. v. Lakehead Trailer Park 1987 CanLII 4214 (ON HCJ), 63 O.R. (2d) 225 to describe the right of a party to choose her own solicitor as follows:
. . . her right to name the solicitor of her choice would not be an absolute one but would have to be balanced against the public interest in maintaining confidence in the administration of justice by having lawyers avoid the appearance of impropriety. In Flynn Developments Ltd., supra, at p. 60, Potts J. stated a prima facie right to the solicitor of his choice is displaced "if it creates even a semblance of a conflict of interest".
In my opinion, maintaining confidence in the administration of justice requires that representatives should avoid the appearance of a conflict of interest with respect to all of the issues in dispute.
I point out that disclosure and waiver of the conflict of interest does not necessarily negate the conflict. In Moffat, Granger J. pointed out that although the plaintiffs had waived the conflict, there was no evidence that they were provided with independent legal advice with respect to the waiver, and he questioned whether the plaintiffs fully comprehended the nature of the conflict.
Rulings:
Mr. Gordon complained that Mr. Macaulay raised the conflict of interest issue late. Until shortly before the hearing, Mr. Bhim Goordial represented Mr. Harris. However, the week before the hearing was to commence, Mr. Gordon advised Mr. Macaulay that he would appear at the hearing as representative. Mr. Macaulay then raised the issue of the undisclosed conflict of interest. Mr. Macaulay raised the issue as soon as it became an issue. Mr. Gordon and Mr. Harris could have avoided this issue if Mr. Goordial had continued to act for Mr. Harris.
Mr. Macaulay objected to Mr. Gordon testifying in a proceeding in which he was acting as counsel. I allowed Mr. Gordon to testify, because his conduct was in issue. He was not testifying in support of Mr. Harris' claim. With respect to the conflict of interest issue, his role was more like that of a self-represented claimant.
EXPENSES:
This is the first decision on this issue at the Commission and is novel. Having regard to the expense criteria set out in section 12 of Ontario Regulation 664, I find that each party should bear their own expenses of this application.
August 16, 2005
William J. Renahan
Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 114
FSCO A04-002032
BETWEEN:
DARRYL HARRIS
Applicant
and
WAWANESA MUTUAL 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:
Richard Gordon is excluded as representative of Darryl Harris.
Each party shall bear their own expenses of this application.
August 16, 2005
William J. Renahan
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- (and leave to appeal dismissed in [1997] O.J. No. 772.)