FINANCIAL SERVICES COMMISSION OF ONTARIO
Neutral Citation: 2005 ONFSCDRS 54
FSCO A04-001379
BETWEEN:
JACKIE HALFORD Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA Insurer
PRE-HEARING DECISION
Before: Lawrence Blackman
Heard: By telephone conference call on February 23, 2005. Written submissions were received on March 8, 2005 from the Applicant and on March 17, 2005 from the Insurer.
Appearances: Hugh MacDonald for Mrs. Halford Eric K. Grossman for Allstate Insurance Company of Canada
Issues:
The Applicant, Mrs. Jackie Halford, was seriously injured in a March 16, 2000 motor vehicle accident. Mrs. Halford applied for and received statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under Schedule.1 Allstate retained Dr. M. Macartney-Filgate, a neuropsychologist, to conduct an insurer's medical examination. The doctor opined in a May 6, 2004 report that as a result of the accident, Mrs. Halford sustained a very severe brain injury due both to trauma as well as an anoxic brain injury (an absence of oxygen supply as Mrs. Halford suffered respiratory arrest at the accident scene). The Applicant's initial Glasgow Coma Scale ("GCS") performed by emergency personnel was three. The parties agree that Mrs. Halford's injuries are catastrophic, as defined in the Schedule.
In addition to her brain injury, Mrs. Halford fractured her right scapula (shoulder), right radius and ulna (forearm), and right femur (thigh).
Mrs. Halford and Allstate disagreed as to the Applicant's entitlement to certain statutory benefits. The Financial Services Commission of Ontario received Mrs. Halford's Application for Mediation on or about February 11, 2004. The parties were unable to resolve their disputes through mediation, and Mrs. Halford's Application for Arbitration was received by the Commission on July 2, 2004.
The pre-hearing discussion of this case was held before me on February 23, 2005. The Applicant sought a number of productions from the Insurer. Allstate objected to the following production requests, which are the subject matter of this decision:
Is Mrs. Halford entitled to production from Allstate of a copy of its complete Statutory Accident Benefits file, including all claims adjusting notes, memos and conversation summaries by all persons at Allstate who participated in the administration of Mrs. Halford's claim, including all claims representatives, rehabilitation service advisors and claims managers?
Is Mrs. Halford entitled to production from Allstate of all of its training materials, internal memorandum and policies maintained with respect to the administration of Attendant Care Benefits under sections 16 and 39 of the Schedule?
Result:
Allstate shall produce to the Applicant a copy of its complete Statutory Accident Benefits file up to July 5, 2004, being the date the Commission corresponded with the Insurer, advising them that the Application for Arbitration herein had been registered.
Allstate shall produce to the Applicant any policy manuals or other documents pertaining to attendant care specifically referenced in its records which have been ordered produced; and,
Allstate shall, at least thirty days prior to the start of the arbitration hearing, produce to the Applicant copies of any policy manuals or similar documents upon which it intends to rely at the arbitration hearing.
EVIDENCE AND ANALYSIS:
The Commission received Mrs. Halford's Application for Mediation on or about February 11, 2004. The April 14, 2004 Report of Mediator noted the issues remaining in dispute as including attendant care entitlement and the outstanding balance of a section 24 report. At the February 23, 2005 pre-hearing discussion, I confirmed the substantive issues in dispute as follows:
Is Mrs. Halford entitled to attendant care benefits of $5,826.92 per month from August 2000 to September 2003 and $1,514.78 per month thereafter, less such amounts as have been paid by Allstate, claimed pursuant to section 16 of the Schedule?
Is Mrs. Halford entitled to payment of the outstanding account for a report prepared by Jane Staub and Associates, dated September 2, 2003, claimed pursuant to section 24 of the Schedule?
Is Allstate liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Mrs. Halford?
Only interest and legal expenses were otherwise in dispute. Production exchange was largely agreed, other than the issues noted above. The Applicant was to serve and file written submissions by March 9, 2005, the Insurer, by March 18, 2005. It is my present understanding that the section 24 issue has now been resolved. September 2005 hearing dates have been set in this matter.
Mrs. Halford's Submissions
Respecting production of Allstate's file, Mrs. Halford submits that the adjusters' notes are prima facie relevant. She argues that the onus of establishing either solicitor/client or litigation privilege rests with the party asserting the privilege; one cannot simply rely on a bald assertion by Allstate that its file is privileged. The Applicant asserts that Allstate continued to adjust her file after mediation was accessed, arranging an insurer’s medical examination as well as attendant care and medical/rehabilitation designated assessment centre (DAC) attendances. She concludes that:
The insurer on the one hand cannot make the argument that the [section 42] examination was to determine entitlement to a benefit and then turn the other cheek and claim privilege over its digestion and consideration of the report.
Regarding her request for training and related materials, Mrs. Halford states that her request is very specific, being restricted to those materials pertaining to the administration of attendant care benefits. She submits that this is also relevant to the determination and quantum of a special award and to the allegation that she was not afforded the consumer protection of the Schedule.
Allstate's Submissions
With respect to production of its file, Allstate submits that Mrs. Halford is not entitled to documents created after the date of the Application for Mediation. Allstate agrees to produce only those materials created up to that date which are relevant to and which have a reasonable relationship with the issues of attendant care benefits and section 24 examinations.
Allstate asserts its right, pursuant to subsection 5.4(2) of the Statutory Powers Procedure Act R.S.O. 1990, c. S. 22 (SPPA), to claim privilege. It argues that all documents created after the Application for Mediation are generally considered privileged. Allstate submits that Mrs. Halford has not met her onus of establishing why broader production is warranted in this case.
Regarding production of its policy manuals and similar materials, Allstate submits that a claim for a special award does not, by itself, create a separate basis for production or allow a generalized inquiry into an insurer's conduct; nor does it result in privilege being waived. Allstate argues that such materials are producible only if they deal with the specific, discrete issues in dispute, or if the insured person establishes the reasonable necessity of production. It further maintains that no particular allegations of misconduct have been made by the Applicant to show exactly what Allstate did in this file that was a departure from normal practice. Allstate submits that there is no basis upon which to provide the documents requested.
Analysis
Production of the Insurer's File
- In determining production issues of this nature, arbitrators must weigh:
– on the one hand, society's need for fair trials. This entails, amongst other things, facilitating the search for the truth (see Davies v. American Home Assurance Co., 2002 CanLII 15469 (ON SCDC), 217 D.L.R. (4th) 157), which, in turn, supports the argument for broad disclosure.
– on the other hand, in an age of limited resources, society must place temporal and monetary limits even on the search for the truth. The search for the truth is also specifically restricted by the need for a zone of privacy to facilitate adversarial litigation (General Accident Assurance Company et al. v. Chrusz et al., 1999 CanLII 7320 (ON CA), 45 O.R. (3d) 321, Ont. C.A.), a concept enshrined by the SPPA;
– on the other hand, the interpretive imperative that the purpose of the Schedule is to promote consumer protection (Smith v. Co-operators [2002] S.C.R. No. 129) also buttresses the argument for full disclosure.
Nonetheless, fairness dictates that both parties must also be allowed to speak candidly with their counsel to enable their interests to be fully and properly represented. A fair process requires just and even-handed safeguards. This may well require, in the best of all possible worlds, a very procedural, case-by-case approach;
– on the other hand, this Commission was created to provide an expeditious, simplified, cost-efficient alternative means of dispute resolution. In order to achieve that goal, court processes such as examinations for discovery and affidavits of documents have been discarded. Such an alternative means of dispute resolution is enhanced by broad (but not inflexible) guidelines which discourage repeated motions on the same procedural issues.
Campeau and Liberty Mutual Insurance Company, (FSCO A00-000522, March 12, 2001) endeavoured to balance these competing considerations by finding the date of application for mediation as a prima facie dividing line between producible and non-producible insurer documentation, subject to submissions as to why the scope of production should be narrowed or broadened in a particular case. There is, however, merit in the view of Master Birnbaum in Garratt v. CGU Insurance Co. of Canada [2001] O.J. No. 4124, that "a request for mediation with the Financial Services Commission . . . is an attempt to resolve a dispute, even if required by a statute, not a statement of contemplation of litigation."
I do not agree that there is any prohibition against the production from an insurer's file of any documents created after the date of the Application for Mediation. That point in time is merely a convenient dividing point, subject to possibly more detailed consideration of appropriate production exchange.
I also disagree with the assertion that disclosure from an insurer’s file is limited solely to those documents directly addressing the issues in dispute. Prima facie, an insurer’s entire file is relevant (as, prima facie, is a medical practitioner’s post-accident file). Campeau noted the absence of affidavits of documents and examinations for discovery in this process to fine-tune which precise documents are producible and which are not. It cannot be left to one party to decide which of its documents are relevant, especially in light of the consumer protection comments in Smith.
Hence, in order to adhere to the goals of expeditiousness and cost-efficiency of this dispute resolution alternative, one starts with the premise that a certain range of documentary discovery is relevant and proper, and the onus then switches to the party pleading that prejudice or privilege trumps prima facie pertinence.
As stated by Arbitrator Muir in Wilkerson and Allianz Insurance Company of Canada (FSCO A03-000753, January 13, 2004), the onus of establishing that either solicitor/client or litigation privilege applies rests, at least initially, with the party asserting it. As also stated in Wilkerson, for litigation privilege to be established, the documents in question must be shown to have been created for the dominant purpose of litigation. In this case, there is no allegation nor is there any evidence of counsel being involved in this file prior to mediation. The first evidence of any involvement by counsel on behalf of the Insurer is the Response by Insurer to an Application for Arbitration, dated August 4, 2004. Nor is there is any evidence as to litigation being the dominant purpose of any document or documents up to mediation.
I find that far from meeting its onus as to why the usual production order should be altered, Allstate has laid no basis upon which to narrow production up to the date of the Application for Mediation. As stated by Master Kelly in Sathiyapalan v. Citadel General Assurance Co. 2003 CanLII 47728 (ON SC), [2004] O.J. No. 364, "[a] sweeping assertion by the party claiming privilege, that the documents are litigation-privileged is generally insufficient."
The question is then whether Mrs. Halford has met her onus of establishing a basis for a broader scope of production from the Insurer’s file. The Applicant submits that:
what gives rise to a broader scope and period of disclosure is the issue of what actions, or lack thereof the insurer took when it received the opinion of it own expert [as] this report was congruent with the experts retained by Mrs. Halford . . .
Mrs. Staub, a psychologist, was retained by Mrs. Halford’s counsel to perform an assessment under section 24 of the Schedule. Section 24 allows insured persons payment of reasonable expenses incurred, for amongst other things, attending at an assessment and obtaining a report for the purpose of the Schedule. In her report, Mrs. Staub, upon reviewing the medical documentation and meeting with the Applicant and her husband, calculated the cost of the attendant care for Mrs. Halford at $1,514.78 per month.
A March 1, 2004 In-Home Activities of Daily Living Assessment with Attendant Care report was evidently prepared by a Mr. D. Friesen on behalf of the Insurer. Neither that document nor the attendant care or medical/rehabilitation DAC reports referred to in submissions, were provided to me.
In her report of May 6, 2004, Dr. Macartney-Filgate indicated that the Insurer had:
posed a number of questions concerning diagnosis, prognosis, current level of functioning, degree of impairment and associated disability, and prospects for return to employment and other activities of daily living. The specific questions are addressed in the final section of this report.
- At the end of her report, Dr. Macartney-Filgate concluded that:
From the perspective of recovery of brain function per se, Mrs. Halford has likely reached maximum recovery, although she may make some further mild functional gains through additional driving instruction and occupational therapy intervention . . . I think [Mrs. Halford] will require ongoing attendant care and assistance at a level very close to that which is currently being provided by her husband, although there may be some reduction in the amount of driving he needs to do for her. I thus think that her ongoing care needs are in the range specified by both Ms. Staub and Mr. Friesen.
In its May 26, 2004 letter to Mrs. Halford's counsel, Allstate enclosed a copy of Dr. Macartney-Filgate's report without comment, other than noting subsection 39(9) of the Schedule that pending the DAC report the insurer shall continue to pay the attendant care benefit in the amount that was being paid before the notice under that subsection was given.
Dr. Macartney-Filgate was retained by Allstate pursuant to section 42 of the Schedule. Section 42 provides insurers with an opportunity, as part of their adjusting of a file, to have their insured examined by one or more persons specified by the insurer, for the purpose of determining an insured's entitlement to a benefit. Section 42 is not a defence medical examination, as contemplated by Rule 33 of the Rules of Civil Procedure and section 105 of the Courts of Justice Act, R.S.O. 1990, Chap. c. 43. The purpose of a section 42 assessment is not litigation. Subsection 42(6) of the Schedule mandates that the insurer "shall" provide the insured person with a copy of the report received from its section 42 assessor. Neither the report itself, nor the records of the medical assessor (including correspondence between the insurer and the medical assessor) are privileged.
As stated by Senior Arbitrator Naylor in Scott and T. T. C. (Markel), (OIC A-001116, September 4, 1992), "[t]he exercise of the right to a medical examination under the No-Fault Benefits Schedule is inherently intrusive and an invasion of individual privacy." The Schedule mandates that an insured person must provide the medical assessors with such information as is reasonably necessary. Such information may be extremely personal. The Schedule also mandates that the insured person shall submit to any reasonable physical, psychological, mental and functional examinations requested. Such examination may be extremely intimate.
Regardless of whether Dr. Macartney-Filgate agreed or disagreed with Mrs. Staub, I find that, prima facie, Mrs. Halford is entitled, by a fair reading of the Schedule, to disclosure of the Insurer’s thought process both in setting up and in receiving the section 42 report. If privilege cannot be claimed for the report, for the medical assessors notes, or for any correspondence between the insurer and the assessor regarding the assessment, how can privilege be claimed for the subsequent consideration of the report by the insurer as part of the adjusting of the file?
This is especially so in light of the consumer protection purpose of the statute noted in Smith and in light of the concept of utmost good faith of first-party insurers. As stated by Laskin J. in Whiten v. Pilot Insurance Co. et al., 1999 CanLII 3051 (ON CA), 42 O.R. (3d) 641, "[a]lthough the insurer is not a fiduciary, it holds a position of power over an insured; conversely, the insured is in a vulnerable position, entirely dependent on the insurer when a loss occurs." The allegation that Allstate may have ignored Dr. Macartney-Filgate’s apparent support of Mrs. Staub’s opinion only adds additional relevancy to the legitimate need to air openly Allstate's thought process in taking advantage of a statutory privilege which is afforded no zone of privacy under the Schedule.
Furthermore, in the specific facts of this case, for the period from the date mediation was accessed to the date the Application for Arbitration was received, Allstate has provided no evidence or argument supporting a claim of solicitor/client privilege or litigation privilege. Specifically, it has not provided any evidence that the dominant purpose for the creation of any documents during this period was litigation. The first indication that counsel had been retained is a letter dated August 4, 2004 indicating that the present law firm representing Allstate was in the process of reviewing its client’s file. This was in response to a letter dated July 5, 2004 from the Commission to Allstate, acknowledging receipt of an Application for Arbitration.
Accordingly, I am persuaded that the Applicant has established a basis for extending the period of production of the Insurer's file. I am persuaded that the additional period from February 11, 2004 (when mediation was sought) to July 5, 2004 (when notice was sent to Allstate of the Application for Arbitration) provides the Applicant with a reasonable window of discovery into the Insurer’s considerations in both arranging and in receiving the section 42 reports, and specifically the May 6, 2004 report of Dr. Macartney-Filgate, forwarded by Allstate to the Applicant on May 26, 2004.
Given the absence of any evidence regarding privilege, or any evidence of specific prejudice which would trump production, the entire Insurer's file for this further discrete period of February 11 to July 5, 2004 shall be produced. It should not be left to the insurer to have the final say as to what is or is not relevant in its adjusting file. Nor do I find ordering an affidavit of documents consistent, in these circumstances, with this alternative dispute resolution system.
On the materials filed, I am not persuaded that the Applicant has established a basis for a broader period of disclosure from the Insurer’s file.
Production of Policy Manuals and related Materials
I agree with Allstate’s submission that a claim for a special award does not create a basis for a generalized inquiry into an insurer’s conduct. The issue before an arbitrator is restricted to whether or not an insurer unreasonably withheld or delayed payment of benefits.
Although the Applicant's request is specific regarding the type of benefit in dispute, the request is extremely broad concerning the types of documents it seeks.
In Campeau I stated that:
I find that for general policy manuals to be ordered produced, the specific relevance to the particular claim and/or the reasonable necessity of the document should be established. The routine production of all possibly applicable policy manuals whenever a special award is sought, is simply too cumbersome and expensive. In this case, I am not satisfied that the broad request made is reasonably necessary or relevant. I decline to make the order sought.
At this juncture I am not persuaded of the reasonable necessity of the documents sought, nor am I persuaded as to the specific relevance of same. A special award turns on whether benefits were unreasonably withheld or delayed. The standard of reasonableness is not set by a company’s own internal policy. That an action was unreasonable, however, may be reinforced by inconsistency with an insurer's own policy. For the sake of such possibly corroborative evidence, I am reluctant to start a precedent for the routine production of such materials, with the inherent danger of broadening each hearing from the specific benefits in question to the different question of the correctness of an insurer's general practices.
Hence, I will restrict the order for production as follows:
Allstate shall produce to the Applicant any policy manuals or other documents pertaining to attendant care specifically referenced in its records which have been ordered produced; and,
Allstate shall, at least thirty days prior to the start of the arbitration hearing, produce to the Applicant copies of any policy manuals or similar documents upon which it intends to rely at the arbitration hearing.
EXPENSES:
As the Applicant was partially successful in this motion, I award Mrs. Halford her expenses of this motion. I may be spoken to should the parties be unable to agree on the quantum of the costs.
April 27, 2005
Lawrence Blackman Arbitrator
Neutral Citation: 2005 ONFSCDRS 54
FSCO A04-001379
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
JACKIE HALFORD 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 Allstate shall produce to Mrs. Halford:
a copy of its complete Statutory Accident Benefits file up to July 5, 2004;
any policy manuals or other documents pertaining to attendant care specifically referenced in its records which have been ordered produced; and,
at least thirty days prior to the start of the arbitration hearing, copies of any policy manuals or similar documents upon which it intends to rely at the arbitration hearing.
April 27, 2005
Lawrence Blackman Arbitrator
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.