Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2011 ONFSCDRS 31
Appeal P10-00008
OFFICE OF THE DIRECTOR OF ARBITRATIONS
FRANCO CARBONE
Appellant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Respondent
BEFORE:
Delegate Lawrence Blackman
REPRESENTATIVES:
Mr. Sergio Grillone for the Appellant, Franco Carbone
Mr. Robert S. Franklin for the Respondent, State Farm Mutual Automobile Insurance Company
HEARING DATE:
March 25, 2011
APPEAL EXPENSE ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Each party shall bear its own legal expenses of this appeal.
March 31, 2011
Lawrence Blackman Director’s Delegate
Date
REASONS FOR DECISION
I. BACKGROUND
The Appellant, Mr. Franco Carbone, was injured in an April 10, 2002 motor vehicle accident. The Hearing Arbitrator’s March 30, 2010 decision held that the Appellant was not entitled under section 42.1 of the Schedule1 to payment of a catastrophic impairment rebuttal report. The basis of the decision was that the report was not provided to the Respondent, State Farm Mutual Automobile Insurance Company, within the requisite 80 business days and that the Appellant had failed to provide a reasonable explanation for the delay.
My December 20, 2010 decision rescinded the Hearing Arbitrator’s decision and remitted the issue of the Appellant’s entitlement to payment of the rebuttal report to a new arbitration hearing. I found that the Hearing Arbitrator had erred in law in having the paragraph 42.1(3)3 80-day limitation period run not from the date of notice to the insured person but from notice to the medical practitioner signing the Application for Determination of Catastrophic Impairment.
I further set a thirty-day period for requesting an expense hearing, to be accompanied by a Bill of Costs and written submissions.
On January 18, 2011, I received the Respondent’s request for an expense hearing, its Bill of Costs of $2,788.81 and written expense submissions. My January 21, 2011 letter acknowledging same set out time lines for the remaining exchange of submissions regarding the Respondent’s expense request.
On February 3, 2011, I received the Appellant’s written submissions seeking its appeal legal expenses of $2,542.36 in an accompanying Bill of Costs. My February 4, 2011 letter responded that subject to considering a request for an extension of time for delivery of its Bill of Costs, the Appellant’s expense request was presently out of time. The Appellant now submits that both parties should bear their respective legal expenses.
My decision regarding appeal legal expenses follows.
II. ENTITLEMENT TO LEGAL EXPENSES
The Relevant Legislation
Subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8, provides that:
(11) The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.
Under subsection 283(7) of the Insurance Act, subsection 282(11) applies, with necessary modifications, to appeals before the Director. Under subsection 6(4) of the Insurance Act, the Director has appointed me to hold this appeal and exercise the related powers and duties.
Subsection 12(2) of R.R.O. 1990, Reg. 664 (the “Expense Regulation”) provides that:
(2) An arbitrator shall, under subsection 282 (11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:
Each party’s degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with subsection (3).
Whether novel issues are raised in the proceeding.
The conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
Whether the insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation.
Whether the insured person refused or failed to submit to an examination as required under section 44 of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule — Effective September 1, 2010), made under the Act, or refused or failed to provide any material required to be provided under subsection 44 (9) of that regulation.
The Respondent’s Claim for Appeal Legal Expenses
The Respondent argues that for a rebuttal report to be payable, subsection 42.1(2) of the Schedule first requires an insurer’s determination that the insured does not have a catastrophic impairment. The Respondent submits that the result of the appeal is that there was no notice of determination and, accordingly, the Appellant has no right to payment of his rebuttal report. Therefore, the Respondent argues that the Appellant’s “arguments to date have been completely unnecessary and the Respondent ought to be entitled to its costs of having to respond to same.”
In the alternative, the Respondent submits that it recently forwarded to the Appellant’s counsel a copy of an October 13, 2006 letter addressed to the Appellant, copied to his counsel, enclosing an OCF-9 Explanation of Benefits notifying the Appellant of its denial of catastrophic impairment. The Respondent argues that “there is no issue regarding a determination and this was improperly raised on appeal” and, therefore, it is entitled to it legal expenses of this appeal.
Result
The Respondent’s expense submissions, in significant measure, rest on what it submits will be the result of the arbitration rehearing. However, that rehearing is still pending. Thus, the Respondent proposes that this appeal expense hearing be adjourned pending the arbitration result. The Appellant does not disagree.
The initial arbitration addressed the subparagraph 42.1(3)3 limitation period that runs from the day the insurer gave the insured person notice of its determination. Both parties, however, agreed at arbitration that the limitation period ran from the date of notice to the medical practitioner signing the Application for Determination of Catastrophic Impairment. When this was canvassed on appeal, the Respondent submitted that both parties had treated the letter to Dr. Becker as the Respondent’s notice of determination and it was a little late to treat this as an issue.
Co-operation between parties is certainly to be encouraged. However, an adjudicator is not bound by what he or she finds to be the parties’ incorrect rewording of the Schedule. This is specifically important as each decision serves as a precedent.
The Respondent’s October 13, 2006 letter to the Appellant enclosing an OCF-9 Explanation of Benefits, notifying the Appellant of its denial of catastrophic impairment, may have succinctly clarified matters in this proceeding. However, such evidence was not included in the materials before the Hearing Arbitrator, nor on appeal was it provided, sought to be entered as fresh evidence as part of the appeal record or mentioned by either party.
Respectfully, I do not see the point of incurring further legal expense by adjourning this appeal expense hearing pending the outcome of the arbitration rehearing. Both parties had agreed to the Arbitrator’s foundation of her decision that was found to be incorrect in law. I am persuaded that both parties should bear their respective legal expenses of this appeal.
March 31, 2011
Lawrence Blackman Director’s Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.