Allstate Insurance Company of Canada v. Norbert J. Boyer, 2009 ONFSCDRS 112

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 112

Appeal P09-00022

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALLSTATE INSURANCE COMPANY OF CANADA Appellant

and

NORBERT J. BOYER Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. Mark L.J. Edwards for Allstate Insurance Company of Canada Mr. Peter D. Kazdan and Ms. Anya Tamir for Mr. Boyer

HEARING DATE:

By written submissions received by July 31, 2009

PRELIMINARY ISSUE APPEAL ORDER

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

1. The Appellant’s request for a stay of the Arbitrator’s May 29, 2009 decision is denied.

2. The legal expenses of this preliminary issue appeal decision are deferred to the final disposition of this appeal, subject to any further or other order of an appellate adjudicator.

August 7, 2009

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE PRELIMINARY ISSUE AND ANALYSIS

The Respondent, Mr. Norbert J. Boyer, was injured in a July 24, 2001 motor vehicle accident, and applied to his first-party automobile insurer, Allstate Insurance Company of Canada (the “Appellant”), for statutory automobile accident benefits payable pursuant to the Schedule.¹

In his May 30, 2007 decision, Arbitrator Bayefsky (the “Arbitrator”) determined, in part, that the Respondent was entitled to $13,080 as a medical benefit for services provided by Dr. T. Hoff, a psychologist, together with interest thereon.

In his subsequent May 29, 2009 decision, the Arbitrator specified that the interest on Dr. Hoff’s outstanding account ran from the date the Appellant received the applications or invoices for the relevant services, whichever was earlier.

The Appellant’s June 17, 2009 Notice of Appeal submitted that the Arbitrator erred in failing to defer to the Ontario Court of Appeal decision in Mercier v. Royal & SunAlliance Insurance Co. of Canada (2004), 2004 CanLII 5551 (ON CA), 72 O.R. (3d) 94. The Appellant argued that the Court specifically adopted the approach in Pafco Insurance Company Limited and Langdon, (FSCO P02-00017, July 17, 2003), that benefits that are denied by an insurer on the basis of a Designated Assessment Centre (“DAC”) assessment are not overdue until an adjudicator finds the benefits to be owing.

The Appellant, therefore, submitted that interest on Dr. Hoff’s six treatment plans should be calculated not from the date the applications or invoices were received, but from the Arbitrator’s May 30, 2007 decision.

The Appellant sought a stay of the Arbitrator’s May 29, 2009 decision. The Appellant argued that if a stay was not granted and the Appellant was required to pay the interest as ordered (that would then be paid to Dr. Hoff), there would be a “real potential” that the Appellant would never be repaid. The Appellant argued that there was no evidence of any prejudice to either the Respondent or to Dr. Hoff if the interest award were stayed pending the appeal.

The Respondent opposed the Appellant’s request for a stay, arguing that (a) Langdon was not determinative as it was neither specifically adopted in Mercier nor had it been subsequently followed at the Commission, and (b) only one of the six treatment plans in issue was rejected by the DAC. The Respondent submitted that, in any event, it would be open for him to proceed under Rule 66 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”), if necessary.

Rule 66 provides that, on written request, the Director of Arbitrations will provide a party with a certified copy of an order and that a party may file a certified copy of an order in the Ontario Superior Court of Justice where it can be enforced in the same manner as an order of that Court.

Subsection 283(6) of the Insurance Act, R.S.O. 1990, c. I. 8, provides that the Director may stay the order of the arbitrator. If a stay is granted, it is not clear how the stayed arbitrator’s order can be enforced by the court, barring the appellate order being set aside on judicial review.

The Respondent referenced State Farm Mutual Automobile Insurance Company and Pedisic, (FSCO P09-00013, June 4, 2009) where I denied a stay request. In that case, the insurer appellant argued that the reasoning in Langdon should be preferred over that in Coachman Insurance Company and Hejnowicz, (FSCO P05-00024, August 3, 2006) (that held that a DAC referral did not stop interest from running) and that interest commenced only as of the date of the Arbitrator’s decision or, in the alternative, the date initially set for the arbitration.

I raised with the parties in Pedisic and this case whether, using the rationale of Rule 30 of the Code, these two ongoing appeals should be combined to be heard at the same time or one after the other on the basis of having issues of law, fact or policy in common. Written submissions have been received in this regard and a telephone conference, requested by counsel, is pending.

As to the stay request in this appeal, as noted in Pedisic:

Subsection 283(6) of the Insurance Act, R.S.O. 1990, c. I.8, provides that an appeal does not stay an arbitrator’s order unless decided otherwise. As stated by Delegate McMahon in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), a stay “is the exception rather than the rule.”

Delegate Richardson, in Canadian Home Assurance Company and Scavuzzo, (OIC P-000626, May 18, 1992), adopted the following criteria whether a stay should be granted:

1. the bona fides of the appeal;

2. the substance of the grounds for appeal; and,

3. the hardship to the respective parties if the stay is granted or refused.

I am not persuaded that the Arbitrator’s May 29, 2009 order should be stayed for the following reasons:

1. The Court of Appeal in Mercier distinguished Langdon from the factual situation and applicable provisions before them. Delegate Makepeace, in Hejnowicz, found that the Court’s comments fell short of an endorsement of Langdon. Subject to further argument, it appears that the Court of Appeal noted Langdon, without determining whether that decision was correct in law.

2. In any event, Langdon held that no interest was payable “prior to adjudication.” If this means the date of the decision, rather than the start of the hearing or of the arbitration process, the relevant date herein would be that of the initial May 30, 2007 decision that determined entitlement to the medical benefit and to interest. The Appellant, however, seeks a stay of the Arbitrator’s May 29, 2009 interest order, without restriction. It is difficult to see the substantive merit or the bona fides of the scope of this request.

3. The Arbitrator’s May 30, 2007 decision noted that two of Dr. Hoff’s six treatment plans preceded the February 2002 DAC report upon which the Appellant relied and that four treatment plans followed it. The Arbitrator found that reports received in 2002 from Drs. Koepfler, Saul, Ali and Moran significantly altered the weight to be attributed to the DAC report and that this should have led the Appellant to reconsider its denial of further treatment and to have arranged a further DAC assessment.

The Arbitrator concluded that the Respondent “unreasonably denied and/or delayed the payment of Dr. Hoff’s accounts.” For this, and for a brief period in which the Respondent’s income replacement benefits were reduced, the Arbitrator awarded a special award of $5,000 pursuant to subsection 282(10) of the Insurance Act. A special award is calculated on both the principal amounts to which an insured was entitled at the time of the award, as well as interest factors. The special award in this case was not appealed.

If the underlying rationale in Langdon is that the applicable interest under the Schedule of 2 per cent per month, compounded monthly, represents a penalty and that it would be unjust to penalize an insurer that, in good faith, relied on an independent expert DAC report, it is presently difficult to see the application of that rationale to this case, given the special award ordered herein.

4. However, as noted in Pedisic, the Ontario Court of Appeal recently confirmed, in Sorokin v. Wawanesa Mutual Insurance Company (2009), 2009 ONCA 152, 94 O.R. (3d) 81, that the clear policy intent of the interest provisions in the Schedule is compensatory, as stated in Attavar v. Allstate Insurance Co. of Company (2003), 63 O.R. (3d) at 199 (Ont. C.A.). Thus, as stated in Pedisic, it is unclear, at this point in this appeal proceeding, why the reasoning in Langdon is to be preferred over the reasoning in Hejnowicz.

5. As to the hardship to the respective parties if the stay is granted or refused, the Appellant’s submissions regarding difficulties in repayment, if successful on appeal, are speculative, no evidence in support having been tendered. The onus, as noted, is on the party seeking a stay.

The medical benefit claims in question in this case arose between September 2001 and March 2003. The Arbitrator’s decision followed a nine-day hearing in 2006. A dispute as to when interest began to run arose after the May 30, 2007 decision.

Determination of entitlement to first-party automobile accident benefits is predicated on, amongst other things, being expeditious. To now stay the Arbitrator’s decision in these circumstances would, in my view, be prejudicial to the Respondent.

II. EXPENSES

The legal expenses of this preliminary issue appeal decision are deferred to the final disposition of this appeal, subject to any further or other order of an appellate adjudicator.

August 7, 2009

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.