Thomas George v. State Farm Mutual Automobile Insurance Company, 2007 ONFSCDRS 177

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 177

Appeal P04-00028

OFFICE OF THE DIRECTOR OF ARBITRATIONS

THOMAS GEORGE

Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Respondent

BEFORE:

David Evans

REPRESENTATIVES:

Thomas George, representing himself

Angela James for State Farm

HEARING DATE:

Submissions closed on July 27, 2007

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. George shall pay State Farm Mutual Automobile Insurance Company’s arbitration expenses of $8,000.00.

September 18, 2007

David Evans

Director’s Delegate

Date

REASONS FOR DECISION

BACKGROUND AND ANALYSIS

This matter involves the SABS–1996.¹ In a decision dated December 6, 2005, I upheld the arbitrator’s order of August 9, 2004, dismissing Mr. George’s claim that he was catastrophically impaired and ordering him to pay State Farm’s expenses. I also held that I would assess both arbitration and appeal expenses. Despite giving Mr. George every opportunity to participate, he could not be reached on dates when expenses hearings had been arranged, so I eventually ordered a hearing on the record. Mr. George was to provide his submissions by July 27, 2007. He has not done so.

The criteria for awarding expenses are set out in s. 12(2) of R.R.O. 1990, Reg. 664, as amended. The first criterion is each party’s degree of success in the outcome of the proceeding. Mr. George was unsuccessful both at arbitration and on appeal. This criterion favours State Farm.

The only other relevant criterion of those listed in s. 12(2) is the third: “Whether novel issues are raised in the proceeding.” There was a novel issue on appeal, namely an arbitrator’s power in the face of a flawed report by a designated assessment centre (“DAC”) – in this case, that by the Multi Disciplinary Assessment Centre (“MDAC”). I wrote:

[T]he DAC’s assessment was binding on Mr. George until an arbitrator determined whether or not the impairment was catastrophic. However, Mr. George submits that the arbitrator should have declared that MDAC’s assessment was “not binding” without independently finding that he was catastrophically impaired. I find no basis in the law for Mr. George’s position….[I]f there is a power to simply declare a CAT DAC void, I believe fairness requires allowing a response by the DAC.²

Furthermore, this continues to be developing area. In Villers and Pilot Insurance Company, (FSCO P05-00010, January 30, 2006), which also dealt with a flawed catastrophic impairment DAC, the Director’s Delegate held that even if arbitrators and appeals adjudicators have no power to make orders against DACs directly, they have authority to order claimants and insurers to comply with SABS procedures, including arranging appropriate DAC assessments and adjourning a hearing pending completion of an assessment required for a fair hearing. She added at pp. 25-26:

Such orders are not directed to the DAC; they are directed to the insurer, because it is the insurer that must arrange the DAC as part of the claims adjustment process mandated by the SABS. The same logic applies whether a required DAC is not arranged at all or a DAC is conducted, but its validity is fatally undermined by substantial departures from the SABS or the [DAC] Guidelines.

Given that the issue was and remains novel, I find this balances State Farm’s success on appeal, and accordingly the parties should bear their own appeal expenses.

That leaves the assessment of the arbitration expenses. State Farm claims a total of $8,505.60 in arbitration expenses for fees and disbursements. The hearing lasted four days and senior counsel acting for State Farm claims about 30 hours for attendance. The total preparation time for him and other counsel comes to an additional 30 hours, with 45 more hours claimed for the assistance of a clerk. This was appropriate. Regarding the disbursements, I am unclear as to the basis for the conduct fees for five healthcare professionals. Otherwise, the disbursements appear to be in order. I find that Mr. George shall pay $8,000 for State Farm’s arbitration expenses.

September 18, 2007

David Evans

Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Appeal decision, pp. 5,7.