Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2011 ONFSCDRS 82
FSCO A09-000114
BETWEEN:
C.C.
Applicant
and
ECONOMICAL MUTUAL INSURANCE COMPANY
Insurer
SECOND DECISION ON EXPENSES
Before: Susan Sapin
Heard: By telephone conference call on June 13, 2011
Appearances: David Wilson for C.C.
Ian D. Kirby for Economical Mutual Insurance Company
Issue:
In a decision dated December 23, 2010 I dealt with the parties’ claims for expenses arising out of an interim benefits motion and hearing on the merits. C.C. was successful on the motion for interim benefits, but not on the final arbitration hearing on the merits.
The only issue still in dispute between the parties now is about C.C.’s revised list of disbursements, which should be a list of disbursements incurred in respect of the interim benefits motion. The disbursements, mostly medical report expenses, amount to $11,451.99 plus HST of $1,488.76, for a total of $12,940.75. My Expense Order under section 282 of the Insurance Act, R.S.O. 1990, c. I.8, as amended, reads:
Economical shall pay to C.C. her expenses of her Motion for Interim Benefits, less disbursements specifically related to the final arbitration proceeding. C.C. shall submit a revised list of disbursements to Economical.
C.C. shall pay to Economical its expenses of the arbitration proceeding less legal fees of $2,404.36 incurred by Economical for the Motion for Interim Benefits, and disbursements associated with the motion. Economical shall submit a revised Bill of Costs to C.C.
Result:
- C.C. is entitled to disbursements of $7,251.99, plus HST.
REASONS:
Subsection 282(11) of the Insurance Act provides that an arbitrator “may award . . . all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations . . .”
The types of expenses that qualify are prescribed in the Schedule to the Expense Regulation 664, R.R.O 1990, made under the Insurance Act, as amended. These expenses include, under section 5 of the Schedule: witness fees of $200 per hour for the attendance of an expert at a hearing up to a maximum of $1,600 per day; a maximum of $500 for the expert’s preparation time; and a maximum of $1,500 for an expert medical report. The Schedule is entitled “Dispute Resolution Expenses.”
In addition, section 4.4 of the Schedule provides for the payment of “. . . other out-of-pocket expenses incurred in furtherance of the arbitration, appeal, variation or revocation hearing.”
Economical objects to paying for medical reports it says were prepared on behalf of C.C. before there were issues in dispute between the parties; i.e., before June 12, 2008, the date Economical notified C.C. it was terminating her IRB benefits. Benefits were terminated effective August 10, 2008. Mediation was conducted on December 16, 2008. C.C. applied for arbitration on January 13, 2009. The interim benefits motion was heard on August 6, 2009, and Arbitrator Alves issued her decision in favour of C.C. on December 2, 2009.
Economical argues that C.C. ought not to be entitled to the medical report expenses she claims because, as they pre-date the termination of benefits and C.C’s Application for Mediation, they are not “dispute resolution expenses,” as characterized by the Schedule to the Expense Regulation, nor were they “incurred in respect of an arbitration proceeding” as prescribed by subsection 282(11) of the Act.
The disputed reports and the dates they were prepared are:
Atila Balaban FCE
February 19, 2008
$1,200
Dr. J. Garber
April 9, 2008
$1,500
($8,242.50 claimed)
Dr. Pierre Kirwin
May 4, 2008
$150
Dr. J. Garber
August 7, 2008
$1,500
($6,142.50 claimed)
Economical further argues that C.C. could have sought recovery for the cost of these medical reports by following the procedure set out section 24 of the Schedule, i.e. submitting to the insurer an Application for Approval of an Assessment or Examination.
C.C. concedes the section 24 procedure is one way of obtaining reimbursement for assessment or examination expenses, but submits that the procedure is not always fair to an insured person, because an insurer can challenge the request for approval and the insured person may not, in the end, be able to recover the expense incurred for a report obtained under section 24. The effect of Economical’s argument, if accepted, would be that the cost of a pre-termination expert report could never be recoverable as an arbitration expense, even if used at an arbitration hearing to support an applicant’s case.
Neither party presented any case law in support of their positions.
A review of past FSCO decisions indicates that arbitrators have considered and rejected the approach suggested by Economical here. Medical reports for which insurer approval was not sought have been successfully claimed as arbitration expenses. In Kulasekarampillai and State Farm Mutual Insurance Company1 for example, Arbitrator Rogers found that, although such expenses would normally be incurred after a proceeding was commenced, there was no specific limitation on recovery for reports obtained before there were issues in dispute between the parties. He held that entitlement to the expenses were determined by reference to section 4.4 of the Expense Regulation, “which provides for recovery of out-of-pocket expenses incurred in furtherance of the arbitration . . . application.” I agree with his reasoning that section 4.4. is broad enough to encompass expenses incurred earlier, provided that they can be shown to be “in furtherance” of the proceeding.”
I also agree with the reasoning in decisions such as Ferreya and Royal Insurance Company of Canada2 and Singh and Allstate Insurance Company of Canada3 and Mullen and Dominion of Canada General Insurance Company4 where expenses for expert reports were found to be payable on the basis that they were “necessary and useful,” or “helpful” to the arbitrator.
In her decision awarding C.C. interim IRBs, Arbitrator Alves noted that the Applicant filed a medical brief in support of her claim. Arbitrator Alves stated: “For purposes of this motion I have focused on the two medico-legal reports authored by Dr. P. Kirwin, physiatrist. I find that if Dr. Kirwin’s opinion evidence were accepted and believed, a conclusion in favour of Ms. C’s entitlement to post-104 week [IRBs] would be reasonable.”5 Arbitrator Alves does not refer to any other medical evidence presented as being necessary, useful or helpful to her in arriving at her decision. On that basis, I find the only disputed expense satisfying the requirements of the Expense Regulation is the $150 for a report of Dr. Kirwin. The expenses for the reports of Atila Balaban and Dr. J. Garber are disallowed.
As no other disbursements claimed by C.C. and submitted to Economical were identified as being in dispute during the motion, I find C.C. is entitled to those expenses as presented, less $4,200 claimed in disbursements for the reports of Atila Balaban and Dr. J. Garber, above.
According to my re-calculation of the disbursements submitted and the $150 for Dr. Kirwin’s report, above, C.C. is entitled to $7,251.99 ($11,451.99 less $4,200) plus HST, which I leave to Mr. Wilson to calculate.
September 23, 2011
Susan Sapin
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2011 ONFSCDRS 82
FSCO A09-000114
BETWEEN:
C.C.
Applicant
and
ECONOMICAL MUTUAL INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Economical shall pay to C.C. disbursements of $7,251.99, plus HST.
September 23, 2011
Susan Sapin
Arbitrator
Date