Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 149
FSCO A06-000257
BETWEEN:
LISA LEVIN
Applicant
and
SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC.
Insurer
PRE-HEARING DECISION
Before: Lawrence Blackman
Heard: August 10, 2006, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Richard Levin for Mrs. Levin
Christopher A. Caston for Security National Insurance Co./Monnex Insurance Mgmt. Inc.
Issues:
The Applicant, Mrs. Lisa Levin, was injured in a motor vehicle accident on June 9, 2003. She applied for statutory accident benefits from Security National Insurance Co./Monnex Insurance Mgmt Inc. ("Security") payable under the Schedule.1 Security refused payment of certain claimed benefits. The parties were unable to resolve their disputes through mediation, and Mrs. Levin applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
At the pre-hearing discussion held August 10, 2006, Mrs. Levin sought production of Security's adjusting notes to the date she filed her Application for Arbitration with the Commission. She submitted that as Security had not retained counsel up to that point, privilege could not be established and hence, the notes created during that period were producible. Mrs. Levin saw support for this position in the decision of Wilkerson and Allianz Insurance Company of Canada, (FSCO A03-000753, January 13, 2004).
The Insurer objected to this production request, arguing that its adjusting notes were protected by privilege as litigation was contemplated during this period.
In Wilkerson, Arbitrator Muir ordered production of the insurer's entire accident benefits file, including the adjusters' notes and internal memoranda, to the date the disputed issues were referred to mediation. As there had been several mediations in that case, the documents relevant to the various issues were ordered produced to the date each issue was referred to mediation.
In his decision, Arbitrator Muir noted that arbitrators have set the referral of a matter to mediation as a "bright line" between production and non-production. He further observed that this presumption can be rebutted where the specific facts of a case persuades the arbitrator that the scope of production should be expanded or limited. In Wilkerson, Arbitrator Muir was not satisfied that the insurer's alleged retaining of counsel prior to mediation justified, in the specific facts of that case, a more limited scope of production.
In the case before me, the only argument for an expanded scope of production to the date the Application for Arbitration was filed was that Security only retained counsel after the latter event. That is not unusual, as Commission statistics historically note that insurers retain legal counsel in a much smaller percentage of cases in mediation than in arbitration. In addition, historically, the percentage of insurers having legal representation during mediation is lower than that of applicants.
Mediation is a legislatively mandated dispute resolution process to assist parties in resolving their disputes on a voluntary basis. Settlement options range from resolving some of the issues formally in dispute to a full and final settlement of all possible claims under the policy.
To expand production orders of insurers' files, as a general rule, to cover the mediation process would mean that represented applicants would have their notes of these discussions protected, while insurers may not. Such a result, in addition to defeating the confidentiality provisions of Rule 18 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003), would prompt insurers to hire counsel earlier in the process simply to protect their notes. This would lead to increased, and essentially artificial, expenses in a system which seeks, amongst other things, to be cost effective.
In the alternative, if insurers were of the view that their notes regarding mediation were not entitled to a zone of privacy and will be ordered produced, with the potential of being eventually seen by a hearing arbitrator, they might be disinclined to properly prepare for mediation or to fully explore in a meaningful way a full range of settlement options, simply treating mediation as an opportunity to listen and record.
One might choose to simply order production of the insurer's notes and records to the date sought, excluding those notes which touch on settlement. This would, however, lead invariably to arguments as to which specific notes may have dealt with past or present settlement discussions, leading to increased motions and to requests for affidavits of documents, results which were sought to be avoided in the more streamlined approach taken in Campeau and Liberty Mutual Insurance Company (FSCO A00-000522, March 12, 2001).
Arbitration should not be a "make work" project. The overall result of clearly defined but sensibly flexible guidelines has been that pre-hearing discussions have been more productive and conducive in moving the parties towards a voluntary or imposed resolution of the substantive issues in dispute, rather than routinely dealing with the same types of time consuming procedural motions in case after case. Dispute resolution should have its eye on resolving disputes, not creating them.
The issue in this pre-hearing is whether there are facts unique to this case which justify adjusting the "bright line" noted by Arbitrator Muir. Given the intrinsic worth of mediation, I am not persuaded that the general arguments advanced in this case establish a basis for Mrs. Levin's requested expanded scope of production, even for the relatively short time span that usually separates mediation from arbitration.
Nor am I persuaded that a case has been established for a more limited period of production, than up to the date of filing the Application for Mediation. The simple denial of benefits in the course of adjusting a file does not colour all subsequent documents created in the adjusting file with having the dominant purpose of anticipated litigation.
Equally, I am not persuaded by the "chicken and egg" argument that an applicant cannot make a claim for a special award without first giving detailed particulars of the claim, but an applicant is not entitled to the particulars of the adjuster's notes without first precisely laying out the specifics of their claim for a special award. Such an argument could equally apply to insurers' routine requests for clinical notes and records from one year pre-accident, even in the absence of any known prior medical condition.
The parties agreed that notes regarding reserves should be exempt from any order, and hence, I do not need to rule on this issue.
September 8, 2006
Lawrence Blackman
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 149
FSCO A06-000257
BETWEEN:
LISA LEVIN
Applicant
and
SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC.
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Security National Insurance Co./Monnex Insurance Mgmt Inc. shall produce to Mrs. Levin a copy of its entire accident benefits file up to the date the Applicant filed her Application for Mediation with the Financial Services Commission of Ontario, being September 16, 2005. Production shall include, but is not limited to, all adjusters' notes and internal memoranda created within the said time frame, but shall exclude, on the consent of both parties, any notes pertaining to the setting of reserves.
September 8, 2006
Lawrence Blackman
Arbitrator
Date