Financial Services Commission of Ontario

Neutral Citation: 2012 ONFSCDRS 38 FSCO File No.: A11-001320

Between:

Annmarie Colquhoun, Applicant

and

Intact Insurance Company, Insurer

Decision on Motion

Before: Richard Feldman Heard: January 25 and 26, 2012, at the offices of the Financial Services Commission of Ontario ("FSCO") in Toronto.

Appearances: Eric Grossman for the Insurer (moving party) Marko Djukic for the Applicant (responding party)

Issue: This is a motion by the Insurer for a stay¹ of this proceeding because the Insurer has commenced proceedings in court that involved related matters.

Result: The request for a stay is denied.

Overview:

The Insurer² has brought a motion for a stay of proceedings in this and fourteen other cases.³ The Insurer requested that all of these motions be heard together. This request was not opposed by the Applicants and I granted the Insurer's request that these motions be heard together.⁴

Over the past few years, the Insurer has received numerous claims for accident benefits submitted by or on behalf of insured persons from Assessment Direct Inc., Osler Rehabilitation Centre Inc. and Metro Rehabilitation Centre Inc. (hereinafter referred to collectively as "the Facilities"). The Insurer has concluded that these Facilities are related to each other and that many of the claims submitted by the Facilities are of dubious merit and that the Facilities have engaged in conduct that was deliberately intended to unjustly enrich the Facilities. In some cases, the Insurer believes that it can prove that the Facilities made misrepresentations to the Insurer.

In the summer of 2011, the Insurer commenced an action in the Ontario Superior Court of Justice (Court File No. CV-11-428030) against the Facilities and their principals (the "Defendants") for, amongst other relief: $15,000,000 in general and punitive damages (which includes the return of approximately $5,000,000 paid by the Insurer to the Facilities); a declaration of unjust enrichment; an accounting and disgorgement of profits by the Defendants; and a declaration that the Insurer need not pay any future or outstanding amounts to the Defendants. That action is still at the very earliest stages as the Insurer is still in the process of serving the Statement of Claim upon some of the Defendants.

The invoices that are in dispute in that court action were submitted by the Facilities to the Insurer on behalf of 218 individual insured persons. The Insurer has not named any insured person as a defendant in that court action. The Insurer has not alleged that any insured person has conspired with the Facilities in the alleged wrongful conduct. Some of those 218 insured persons, including the Applicant in this case and the other fourteen cases heard together with this one, have been denied accident benefits by the Insurer and have chosen to have those disputes adjudicated at FSCO.

In the fifteen motions before me, the Insurer is seeking a stay of these proceedings, on such terms as FSCO deems appropriate. In the alternative, if I am not prepared to stay the entire proceeding, the Insurer is seeking a stay of all issues related directly or indirectly to the Facilities.⁵ The Insurer is seeking a stay of the FSCO proceedings until the conclusion of its court action. In two of fifteen cases, the Insurer is arguing, in the alternative, that a stay is warranted due to the refusal of the Applicant to submit to an examination under oath and is seeking a stay until such time as the Applicant does submit to such an examination. In all fifteen cases currently before me, the Applicants oppose any stay of the FSCO proceedings.

The affidavit, factum and book of authorities filed on behalf of the Insurer (the moving party) were supplemented by lengthy oral argument by counsel for the Insurer. No affidavit was filed on behalf of the Applicant(s) but I did receive a factum and book of authorities and I heard oral submissions from counsel who appeared on behalf of all fifteen Applicants. I have considered all of the written material filed and have considered the arguments advanced by counsel for the parties. For the sake of brevity, I will summarize in broad terms the positions of the parties but it should be recognized that any attempt to provide a summary will, by necessity, fail to reflect some of the nuances of the submissions that were actually made before me.

Should a Stay be Granted as a Result of the Pending Court Action?

Submissions of the Insurer

Insurer's counsel took up considerable time reviewing the apparent merits of each of the fifteen cases. The Insurer's position is that the claims advanced by each of these Applicants is suspicious because:

• in most of these cases, the claims advanced by the Applicants relate exclusively to services provided and/or recommended by the impugned Facilities;
• the Facilities often recommended large amounts of treatment (in terms of the number of plans submitted, the frequency and duration of the recommended treatment sessions and the overall cost of same) and extensive assessments for what appear to be relatively minor, soft-tissue injuries;
• the Facilities continued to recommend treatment even when it ought to have been apparent that similar treatment in the past had done little to improve the condition of the Applicant;
• the Facilities frequently recommended payment of attendant care and housekeeping benefits for up to two years, often in unchanging amounts, for Applicants who appear to have sustained relatively minor injuries and who, in some cases, returned to work shortly after the accident and/or who reported to the Insurer's assessors that they are independent in their activities of daily living;
• the Facilities have submitted forms to the Insurer for different Applicants that contain strikingly similar recommendations and that use identical wording which, from the Insurer's perspective, raises questions as to whether the Facilities are actually basing recommendations on the individual needs of insured persons; and
• in many cases, the Insurer has not yet been provided by the Applicant with any supporting medical or other documentation other than from the impugned Facilities (or other companies related thereto).

The Insurer submits that the Facilities have found weaknesses in the Ontario accident benefit system through which they have been able to wrongfully enrich themselves, at the expense of the Insurer and, ultimately, policyholders. It is true that in the last year or so, the Superintendent of Financial Services and others have expressed concern over what appears to be widespread fraud and abuse of the no-fault insurance scheme and the resulting cost to Ontarians. The Superintendent has encouraged insurance companies to be pro-active in combating such fraud and abuse. Mr. Grossman, on behalf of the Insurer, submits that one way to expose this conduct is through the pending court action, in which the Insurer hopes to establish a pattern of misconduct on the part of the Facilities. Given that arbitrations at FSCO typically involve disputed claims made by a single insured person, the Insurer submits that the court action is more comprehensive and the presiding judge will be in a better position to see the alleged pattern of misconduct than will an arbitrator presiding over a single case at FSCO.

The Insurer also raised concerns about a multiplicity of proceedings. This will likely necessitate calling the same evidence multiple times and carries with it the possibility of inconsistent findings on similar issues, which is something that ought to be avoided.⁶ The Insurer also raised concerns about the additional cost and time that will have to be expended by the Insurer if forced to respond in the normal course to what could amount to hundreds of FSCO applications when one court proceeding might reduce or eliminate many of the claims that are currently pending at FSCO.

The Insurer points out that under sections 21 and 23 of the Statutory Powers Procedure Act, FSCO has the power to adjourn or stay this proceeding or make whatever other order is necessary in order to prevent an abuse of process.⁷

The Insurer submits that in considering whether to grant a stay of proceedings, FSCO is bound to follow the test set out in the decision of the Supreme Court of Canada in Manitoba (Attorney General) v. Metropolitan Stores (MTS) Ltd., 1987 CanLII 79 (SCC), [1987] 1 S.C.R. 110, as followed in that Court's later decision of RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311 ("RJR-MacDonald"). The Supreme Court of Canada adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutory injunction:

First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant [the party seeking a stay] would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.⁸

Submissions of the Applicant

Counsel for the Applicant does not dispute that FSCO has the power, in certain circumstances, to adjourn or stay proceedings. Counsel for the Applicant also agrees that the test set out in RJR-MacDonald is applicable to the Insurer's request for a stay of this proceeding.

With respect to the first part of that three-part test (i.e., the merits of the Insurer's allegations as against the Facilities), counsel for the Applicant concedes that the Insurer's allegations are not obviously frivolous. With respect to the third part of that test (i.e., relative prejudice to the parties), counsel for the Applicant suggested that I could presume that there would be prejudice to the Applicant in staying this application for accident benefits but the Applicant adduced no evidence (by affidavit or otherwise) with respect to the prejudice that will likely be suffered by the Applicant if this motion is granted.

Based upon the oral submissions of counsel for the Applicant, the Applicant appears to be relying primarily upon the second part of the three-part test (i.e., the requirement that the party seeking a stay prove that it will suffer irreparable harm if a stay is not granted). Counsel for the Applicant submits that the Insurer has failed to adduce sufficient or any evidence of irreparable harm and that the risk of inconvenience or greater expense to the Insurer does not constitute irreparable harm. As such, the Applicant submits that it is unnecessary to analyze the third part of the test (i.e., the weighing of relative prejudice to the parties).

Analysis

I am sympathetic to the desire of the Insurer to fight what it perceives to be abuse of the no-fault insurance system in Ontario. Nevertheless, the onus rests upon the Insurer in this motion to establish on a balance of probabilities either that it will suffer irreparable harm if its motion for a stay is not granted or that allowing this case to proceed to be heard on its merits would constitute an abuse of FSCO's process. I find that the Insurer has failed to meet this onus.

The only evidence before me is the affidavit of Steve White, Director of Accident Benefits for Ontario for Intact. Essentially, he states that, if a stay is not granted, the Insurer will be put to "excessive expense and time." This was echoed in the submissions made by counsel for the Insurer. As pointed out the Supreme Court of Canada in RJR-MacDonald, monetary loss will not usually amount to irreparable harm in private law cases.⁹ The Insurer has failed to adduce evidence sufficient to prove that the cost of defending this application would be unrecoverable or that the possibility of additional expense constitutes irreparable harm.

Similarly, the Insurer has failed to prove that a stay is warranted in order to prevent an abuse of process. This is not like the cases relied upon by the Insurer where an applicant has created a multiplicity of proceedings by splitting his or her case.¹⁰ Neither is there any convincing evidence before me that this Applicant has engaged in conduct that would amount to an abuse of process.

The remedy the Insurer is seeking in this motion is extraordinary. This is especially so when one considers that the Insurer is seeking a stay of this proceeding because of alleged misconduct, not on the part of the Applicant, but on the part of one or more other persons who are not even parties to this proceeding.

Given the failure of the Insurer to meet its evidentiary onus to establish the possibility of either irreparable harm or abuse of FSCO's process, it is unnecessary for me to go on to the third part of the RJR-MacDonald analysis and weigh the potential prejudice to the parties. On this issue, however, I will make a few observations.

First, the Insurer's allegations against the Facilities are yet to be proven and the court action against the Facilities may well take many years to resolve. I agree with counsel for the Applicant that prejudice is presumed when an applicant is prevented from pursuing his or her claim for statutory accident benefits in a timely fashion.

Second, this is also not a situation where the Insurer faces the possibility of its court action being prejudiced by FSCO's decision(s) creating an issue estoppel. The Insurer concedes that the criteria for issue estoppel do not exist here: the parties are not the same and the issues, while related, are not identical. If the court action proceeds to conclusion, the Superior Court of Justice will be deciding issues concerning the conduct of the Facilities in relation to the Insurer. FSCO will be deciding whether a particular applicant has proven entitlement to specified accident benefits.

Finally, if a stay of this proceeding is not granted on the basis of the pending court action, I note that the Insurer is not precluded from attacking the credibility or weight that ought to be given to opinions that originate from the Facilities. The Insurer contends that none of these claims can succeed without the opinions of the impugned Facilities. This has yet to be tested. It is possible that, even if the Insurer is able to convince an arbitrator to give little or no weight to evidence from these Facilities, an applicant may nevertheless be able to succeed based upon his or her own testimony and that of other lay or expert witnesses.

Conclusion:

The granting of a stay of proceedings (or an adjournment) is discretionary. In the circumstances of this case, for the reasons set out above, I am not persuaded that such an order is appropriate. The Insurer's motion shall be dismissed.

March 19, 2012

Richard Feldman Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2012 ONFSCDRS 38 FSCO File No.: A11-001320

Between:

Annmarie Colquhoun, Applicant

and

Intact 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:

1. The Insurer's motion is dismissed.

March 19, 2012

Richard Feldman Arbitrator

Date

Appendix "A"

Applicant's Name	Insurance Company	FSCO File No.
Aweys, Iqra Hussein, Ms.	Intact Insurance Company	A10-004067
Aweys, Munira Hussein, Mrs.	Intact Insurance Company	A11-000012
Benjamin, Henrick Archer, Mr.	Belair Insurance Company Inc.	A11-002294
Colquhoun, Annmarie, Ms.	Intact Insurance Company	A11-001320
Dawood, Najib, Mr.	Intact Insurance Company	A11-001742
Facey, Douglas, Mr.	Intact Insurance Company	A11-002826
Forisiuk, Sergei, Mr.	Belair Insurance Company Inc.	A11-000954
Green, Charmaine Marie, Mrs.	Belair Insurance Company Inc.	A11-000765
Horban, Volodymyr, Mr.	Belair Insurance Company Inc.	A11-003788
Jeylani, Abu Abdulkadir, Mr.	Intact Insurance Company	A10-004065
Lowndes, Ruben, Mr.	Belair Insurance Company Inc.	A11-000957
Mohamed, Osman, Mr.	Belair Insurance Company Inc.	A11-003781
Quezada, Dennys Eduardo, Mr.	Intact Insurance Company	A11-001274
Quezada-Barquero, Edwin, Mr.	Intact Insurance Company	A11-001446
Wilson-Durston, Carmen, Mrs.	Intact Insurance Company	A11-002825

Footnotes

1. 1In its Notice of Motion, the Insurer seeks a stay of these proceedings under section 21 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (the "SPPA") which permits a tribunal to adjourn a hearing where it is shown to the satisfaction of the tribunal that the adjournment is required to permit an adequate hearing to be held. In oral submissions before me, counsel for the Insurer relied, in the alternative, upon section 23 of the SPPA (see Tab 1, p.2 of the Insurer's Brief of Authorities), which permits a tribunal to make such orders or give such directions as it considers proper to prevent abuse of its processes.
2. 2There are four related insurance companies that are involved in these matters and that are acting in concert: Belair Insurance Company Inc. ("Belair"), Intact Insurance Company ("Intact"), the Nordic Insurance Company of Canada ("Nordic") and Trafalgar Insurance Company of Canada ("Trafalgar"). In the fifteen cases before me, the named respondent is either Belair or Intact. Throughout this decision, the term "Insurer" is intended to refer to this related group of four insurance companies and each member thereof.
3. 3See Appendix "A" to this decision for a list of the fifteen cases.
4. 4The parties originally agreed to have eleven such motions heard together but counsel for the Insurer sought to have an additional four cases added and, ultimately, counsel for the Applicants (the same counsel who represented all fifteen Applicants) did not oppose this request.
5. 5i.e., claims made for services provided by the Facilities or other claims in which the Applicant relies upon an opinion from one or more of the Facilities.
6. 6The Insurer relies upon section 138 of the Courts of Justice Act, R.S.O. 1990, c. C.43, for this proposition, as well as the cases of Keffer and Wawanesa Insurance Company (FSCO A07-000940, April 3, 2009) ("Keffer"); King and Royal Insurance Company of Canada (FSCO A98-000234, March 24, 1999) ("King"); and Non-Marine Underwriters, Mbrs. of Lloyd's and Mangat (FSCO Appeal P00-00020, August 1, 2000) ("Mangat").
7. 7For this proposition, the Insurer relies upon the cases of: Carpenter and Farmers' Mutual Insurance Co. (FSCO A07-001980, July 31, 2008) ("Carpenter"); Balanki and Zurich Insurance Co. (FSCO A04-002286, April 11, 2005) ("Balanki"); F.S. and Belair Insurance Co. (OIC P96-00039A, June 11, 1996) ("F.S."); and Martucci and Economical Mutual Insurance Co. (FSCO A06-000207, May 8, 2007) ("Martucci").
8. 8RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311 at para. 43. Note that the Supreme Court of Canada makes it clear (at para. 77) that this test applies not just to Charter cases but to private law cases as well.
9. 9RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311 at para. 84.
10. 10i.e., where the applicant is seeking to have some claims for accident benefits adjudicated at FSCO while seeking to have other claims for accident benefits arising from the same accident adjudicated in court.