Wakeel Qazi v. Security National Insurance Co./Monnex Insurance Mgmt. Inc., 2008 ONFSCDRS 2

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2008 ONFSCDRS 2

FSCO A07-000109

BETWEEN:

WAKEEL QAZI

Applicant

and

SECURITY NATIONAL INSURANCE CO./

MONNEX INSURANCE MGMT. INC.

Insurer

PRE-HEARING DECISION

Before: Fred Sampliner

Heard: By written submissions August 28, 2007 and October 15, 2007

Appearances: Rita Gratsias for Mr. Qazi

Melisa P. Gust for Security National Insurance Co./

Monnex Insurance Mgmt. Inc.

Issue:

The Applicant, Wakeel Qazi, was injured in a motor vehicle accident on October 3, 2005. He applied for and received statutory accident benefits from Security National Insurance Co./Monnex Insurance Mgmt. Inc. (“Security”), payable under the Schedule.¹ Security terminated payment of Mr. Qazi’s weekly income replacement benefits and housekeeping expenses. Mr. Qazi’s claims for further entitlement to these two benefits is scheduled for hearing on May 26 to May 29, 2008 at the Financial Services Commission of Ontario under the authority of the Insurance Act, R.S.O. 1990, c.I.8, as amended.

During the July 23, 2007 pre-hearing, Mr. Qazi requested an order that Security produce its adjusting file to the date of the pre-hearing. I have considered the parties written submissions and case law.

Result:

Security shall produce its complete adjusting notes, including reserves, to the date Mr. Qazi filed for mediation.

EVIDENCE AND ANALYSIS:

Mr. Qazi seeks production of the adjusting records to the pre-hearing date because he claims the information may be relevant to whether Security unreasonably denied payments, and he is thereby entitled to receive a special award under subsection 282(10) of the Insurance Act. Mr. Qazi must show some factual basis for his request.²

The Basis for Mr. Qazi’s Request:

Mr. Qazi claims Security failed to send him the report from an insurer examination he attended in July 2006, as required under section 42 in the Schedule. However, there is no documentation that Mr. Qazi was either asked to attend or did attend an insurer examination during July 2006. This ground does not form a sufficient basis to request the adjusting records.

Mr. Qazi further contends that Security terminated payment of his income replacement benefits without giving him the required explanatory notice under section 37 of the Schedule.

(1) If the insurer determines that a person is not entitled or is no longer entitled to receive an income replacement, non-earner or caregiver benefit, the insurer shall give the person notice of its determination, with reasons,

(a) within 14 days after receiving an application for the benefit; or

(b) if the insurer has been paying the benefit to the person, no later than the date the next payment of the benefit is due.

Security did not provide me with evidence that a notice was sent to Mr. Qazi before the termination date of his benefits.³ Disclosure of the termination process and substantive basis for the adjuster’s decision to stop payments may form a valid basis for Mr. Qazi’s special award claim and therefore relevant to that issue. This demonstrates a sufficient basis to support his request for Security’s adjusting records.

Security’s Privilege Claim:

Security claims its adjusting records have blanket protection from disclosure through the concepts of litigation privilege or solicitor/client privilege.⁴ The first concept establishes a zone of privacy for internal communications during threatened or pending legal action, and the second protects client communications with their legal counsel.⁵ Ordinarily, I am quite willing to assume the filing date for mediation as a convenient dividing point establishing parties are adversaries in a formal legal process.

Security offers no information that Mr. Qazi disputed its determinations about his benefits until he filed for mediation.⁶ As a result, these class privileges do not protect Security’s adjusting records from disclosure until the date Mr. Qazi filed for mediation.

I normally consider information showing that an insured’s benefits continued to be adjusted by the insurer after mediation is commenced as a rebuttal to the presumption that litigation privilege applies to some portions of the insurer’s records. However, Mr. Qazi has not submitted any information that his claims in this proceeding continued to be adjusted by Security after he filed for mediation. Thus, I find that Security’s adjusting records are protected by litigation privilege after the date Mr. Qazi filed for mediation.

Security opposes Mr. Qazi’s request for disclosure of its accounting reserves on his claims. Reserves are based on the adjuster’s periodic estimates of total claim value, and changes to a reserve can reflect the insurer’s decisions to accept or deny claims.

Security has not provided me with any case precedent supporting its contention that reserve amounts are protected by litigation privilege. Moreover, Security has not convinced me that reserve information is so sensitive to merit creating a new exception to the modern discovery rules favouring open disclosure. The fear that a claimant will develop an unreasonable expectation and gain negotiation advantage by knowing the insurer’s estimated claim value is balanced by the insurer’s concomitant obligations to treat the insured in good faith⁷, assist with gathering claim information and explain available benefits.⁸ I agree with decisions holding that disclosure of reserve information depends on its potential relevance to the issues.⁹

In the present situation, Mr. Qazi has demonstrated a clear basis for disclosure of Security’s reserve information prior to his filing for mediation because there is some factual basis to inquire about the adjuster’s decision to terminate his income replacement benefits. This can be relevant to his claim for a special award, and I find that Mr. Qazi can review this reserve information. My disclosure order does not in any way bind the hearing arbitrator on whether to accept its relevance or the weight it will bear.

EXPENSES:

I defer the issue of the parties’ claims to entitlement to their expenses in this matter to the arbitrator who conducts the hearing.

January 8, 2008

Fred Sampliner

Arbitrator

Date