Ayse Alper v. State Farm Mutual Automobile Insurance Company, 2009 ONFSCDRS 89

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 89

FSCO A07-002053

BETWEEN:

AYSE ALPER Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: David Leitch

Heard: May 28, 2009, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Albert Conforzi for Ms. Alper Jonathan B. Schrieder for State Farm Mutual Automobile Insurance Company

Issues:

This hearing commenced on May 25, 2009. The only issue was whether Ms. Alper sustained a catastrophic impairment as a result of her motor vehicle accident of February 20, 2003. Counsel informed me that this determination would assist the parties to assess the Applicant’s entitlement to housekeeping expenses, attendant care benefits and medical and rehabilitation benefits. Entitlement to all of these benefits is significantly extended by a determination that she is catastrophically impaired.¹ I asked counsel whether this hearing could, therefore, be described as a preliminary issue hearing on the issue of catastrophic impairment. Through this question, I learned that the Applicant may not be returning to the Financial Services Commission of Ontario for any further decisions as she is claiming statutory accident benefits in an action against the Insurer in the Superior Court. This led me to ask counsel the following three questions:

Do I, as an arbitrator at the Financial Services Commission of Ontario, have jurisdiction to decide whether the Applicant is catastrophically impaired if her ultimate entitlement to statutory accident benefits will be decided in a court action?
Assuming that I have such jurisdiction, will my decision in relation to catastrophic impairment bind the parties in the court action?
Assuming that I have jurisdiction and that my decision will bind the parties in the court action, should I nevertheless decline to decide the sole issue of catastrophic impairment on grounds of multiplicity of proceedings and potential conflicting results?

The hearing was adjourned to May 28, 2009 to give counsel the opportunity to either discuss the steps they might take to render these questions irrelevant or to prepare submissions responding to these questions. When the matter resumed on May 28, 2009, I only heard submissions; I was not asked to adjourn the matter to give counsel more time to discuss the steps they might take to render these questions irrelevant.

Result:

Assuming, without deciding, positive answers to questions 1 and 2, I also answer question 3 in the positive. Accordingly, I decline to decide whether the Applicant is catastrophically impaired and stay the hearing of her Application for Arbitration.

Background:

This Application for Arbitration was filed at the Financial Services Commission of Ontario in September 2007. In his Pre-hearing letter, dated April 21, 2008, Arbitrator Rogers identified only one substantive issue: “Did Ms. Alper sustain a catastrophic impairment within the meaning of section 2(1.1)(e), (f) or (g) of the Schedule as a result of the accident?” ² While both the Report of Mediator and the Application for Arbitration had identified another issue - whether the Insurer was required to pay the Applicant the cost of a rebuttal report - this issue was apparently resolved and was not referred to in the Pre-hearing letter. Likewise, while the Insurer’s Response to the Application for Arbitration had referred to other issues - a claim for income replacement benefits, a claim for housekeeping expenses, a claim for medical benefits and a claim for the cost of examinations - none of these issues was referred to in Arbitrator Rogers’ Pre-hearing letter.

This is because the Applicant has, so far, advanced her claims for statutory accident benefits through an action in the Superior Court. This action was commenced in February 2005 and is set for trial in March 2010. Paragraphs 18 to 20 of the Statement of Claim read as follows:

With respect to the Defendant, State Farm Mutual Automobile Insurance Co., contrary to the terms of the Statutory Accident Benefits Schedule, it has failed to pay the Plaintiff the following:

(a) Income Replacement Benefits in the amount of $318.46 from October 4, 2004 to date and ongoing;

(b) Other Benefits and Expenses in the amount of $100 per week from February 18, 2004 to date and ongoing.

The Plaintiff disputed State Farm Mutual Automobile Insurance Co.’s refusal and denial to pay benefits in accordance with the Statutory Accident Benefits Schedule and aforesaid policy and participated in a mediation at the Financial Services Commission of Ontario, which failed to resolve the dispute between the Plaintiff and Defendant, State Farm Mutual Automobile Insurance Company.
The Plaintiff further claims against the Defendant, State Farm Mutual Automobile Insurance Co., for all benefits it fails to pay her from time to time hereafter.

I acknowledge that paragraph 18 only refers explicitly to the Applicant’s claim for income replacement benefits and that entitlement to this benefit is not directly affected by a catastrophic impairment determination. Nevertheless, on their face, these paragraphs cover any claim Ms. Alper might advance for statutory accident benefits, including claims for housekeeping expenses, attendant care benefits and medical and rehabilitation benefits. Paragraph 18(b) is an implicit but clear reference to Ms. Alper’s claim for housekeeping expenses. I was also informed that Ms. Alper may advance a claim for attendant care benefits but has not yet determined the forum in which she would do so.

Analysis and Conclusion

Why did I pose the first question about my jurisdiction to decide the sole issue of catastrophic impairment? I was concerned that my decision would, in effect, amount to a stand-alone declaration as opposed to a determination of entitlement to benefits. Administrative tribunals and Small Claims Courts cannot issue declarations having any force beyond their own proceedings; that jurisdiction belongs exclusively to the higher courts. However, since I received no helpful submissions on this point and since I am able to address my concern through my answer to the third question, I am prepared to simply assume, without deciding, that I have jurisdiction to decide the sole issue of catastrophic impairment.

Why did I pose the second question about whether my decision would bind the parties in the court action? I was concerned about the utility of my making a determination about catastrophic impairment which might not bind the parties in the court action. In this regard, I received submissions about the application of res judicata and issue estoppel. However, since it would ultimately be for the court to decide whether the parties were bound by my determination and since I am able to address my concern through my answer to the third question, I will again simply assume, without deciding, that my decision would bind the parties in the court action.

Turning to the third question, I find that the issue of catastrophic impairment is too closely intertwined with issues of entitlement to benefits to be the subject of a separate proceeding in a different forum.

I understand why catastrophic impairment is sometimes perceived as a distinct issue; indeed, I was prepared to describe it as a preliminary issue in this case. But catastrophic impairment and issues of entitlement frequently overlap, as they do in this case, because the Schedule makes catastrophic impairment a condition of entitlement to extended attendant care benefits, housekeeping expenses and medical and rehabilitation benefits. Moreover, the Schedule does not equate catastrophic impairment with ultimate entitlement to any of those benefits. A finding of catastrophic impairment is necessary to establish extended entitlement but it might not be sufficient.

For example, even if I were to determine that the Applicant was catastrophically impaired, the Insurer could still go to court and advance other grounds for challenging the Applicant’s entitlement to extended benefits. In that case, the court could very well end up weighing the same or similar evidence I weighed, hearing from the same or similar witnesses I heard from or analysing the same or similar issues I analysed. In addition to being highly inefficient, this would create the risk of inconsistent findings. For this reason, I decline to decide whether the Applicant is catastrophically impaired and, instead, stay her Application for Arbitration.

In some cases of this kind, the Applicant has effectively been forced to place all the issues before the court: see Non-Marine Underwriters, Mbrs. Of Lloyd’s and Mangat.³ In other cases, the Applicant has been allowed to discontinue the court action and place all the issues before an arbitrator: see Murphy and Certas Direct Insurance Company.⁴ In the present case, I will not make any ruling about what happens next, at least not until the parties have had the opportunity to fashion their own remedy. This is because it was I, not the Insurer, who raised the concern about a multiplicity of proceedings. I will, however, remain seized of the matter until August 31, 2009 in the event either party asks that I provide further directions.

EXPENSES:

Each party will bear her or its own expenses in relation to what has become a Preliminary Issue Hearing.

July 2, 2009

David Leitch Arbitrator

Date