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

Neutral Citation: 2013 ONFSCDRS 119

FSCO A13-003801

BETWEEN:

BALJIT DEOL Applicant

and

GORE MUTUAL INSURANCE COMPANY Insurer

Before: Arbitrator John Wilson

Heard: August 6, 2013

Appearances: Savannah Chorney for Mr. Deol Pino Cianfarani and Shannon Gaudet for Gore Mutual Insurance Company

Issues:

The Applicant, Baljit Deol, was injured in a motor vehicle accident on April 10, 2011. He applied for statutory accident benefits from Gore Mutual Insurance Company (“Gore”), payable under the Schedule¹, including Attendant Care and Housekeeping benefits.

At the same time, Mr. Deol requested recognition by Gore that he had suffered a catastrophic impairment from the motor vehicle accident. Gore ultimately accepted that he had sustained a catastrophic impairment.

The parties were unable to resolve their entitlement disputes through mediation, and Mr. Deol applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Mr. Deol has now brought a motion, pursuant to Rule 67 of the Dispute Resolution Practice Code — Fourth Edition (the “DRPC”), for interim attendant care and housekeeping benefits to be paid to him pending the resolution of his dispute with Gore.

The issue on this motion is:

Is Mr. Deol entitled to interim attendant care and housekeeping benefits pursuant to section 279(4.1) of the Insurance Act?

Mr. Deol also claims interest and a special award on any amounts owing and his expenses incurred on this motion.

Result:

Mr. Deol is not entitled to an order for interim benefits at this time.
Consequently there is no order for a special award at this time.
Expenses will be addressed when the interim motion is completed.

EVIDENCE AND ANALYSIS:

Section 279(4.1) of the Insurance Act gives arbitrators the discretionary authority to make interim orders pending the final order in any matter.

Neither this provision nor section 16.1(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (the “SPPA”) provides any guidance as to the criteria to be used in making interim orders nor any limitation as to the potential scope for such orders.

As counsel identified at the hearing, there is a range of opinion amongst arbitrators as to the grounds for the granting of interim benefits in the arbitration process. As Arbitrator Killoran stated in Henry and Aviva Canada Inc.²:

Many considerations have been relied on by arbitrators to determine entitlement to interim benefits. Principally, arbitrators have applied the prima facie test and that of urgency/necessity. … A prima facie case is one in which a party provides evidence, which if unanswered and believed, is sufficient to render a reasonable conclusion in favour of entitlement. In Nguyen and State Farm Mutual Automobile Insurance Company of Canada, Arbitrator Wilson embraced a "look at the whole case" approach to awarding interim benefits.

The “holistic” or “look at the whole case” approach to the award of interim benefits is not novel and owes much to judicial analysis of the criteria for mandatory relief, much of which remains relevant. In Hubbard v. Vosper³, Lord Denning observed:

the right course for a judge is to look at the whole case. He must have regard not only for the strength of the claim but also the strength of the defence, and then decide what is best to be done ... the remedy by interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules.

An interim order is discretionary, made judicially on the evidence on motion of one of the parties. Where the claim was frivolous and had no chance of success, no order would be made.

Interim benefits must be examined in the context of the social policy behind the accident benefit system, and whether a grant of interim benefits will favour those goals.

Eberhard J., in Gill v. Zurich⁴, made the following comments on the purposes of the statutory accident benefit scheme:

I adopt the statement of purpose articulated by Arbitrator Mackintosh at page 12 in Edgar v. Wellington Insurance Co. [1994] O.I.C.D. No. 34 File A-005441 that SABS is remedial, that is to be interpreted in a broad and liberal way, and that its principal object is to provide a "fair and adequate income stream to those who are injured and disabled from work". The victim is to receive an approximation of wages, and not be compensated more or less.

In Smith v. Co-operators General Insurance Co.⁵, Gonthier J. made the following comment which provides the legal context for interim orders:

There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance.

While the actual mechanism of determining entitlement to an interim award is rarely critical, in this matter it is of some considerable import.

Whether Mr. Deol has presented a prima facie case, that is, one that in the absence of contrary evidence would support entitlement, or whether one takes a more holistic approach could make a substantial difference in the outcome as will be outlined later in these reasons.

In Nguyen and State Farm Mutual Automobile Insurance Company of Canada,⁶ I considered as potential criteria the balance of the evidence, potential success, urgency and need and the failure to respect the provisions of the Schedule, inter alia, while viewing no single element of the above as a specific pre-condition, the absence of which will necessarily lead to the rejection of an interim application for benefits. I see no reason to alter this pragmatic approach in this matter.

Mr. Deol requests an interim order of benefits because he believes that Gore has ignored the Form 1 recommendations including those of its own experts, all of whom recommended the provision of attendant care services and its obligation to indemnify its insureds for reasonable expenses incurred to address disability-related needs as provided for in the Schedule and the policy of insurance issued to Mr. Deol.

Mr. Deol points to the fact that he suffered a serious motor vehicle accident, (and indeed was deemed to be catastrophically impaired), that he received attendant care services from his wife, who suffered a consequential loss of income, and that the provision of those services was supported not only by his own treating practitioners, but those of the Insurer as well.

Indeed, the reports of the Insurer`s experts recommending payment of attendant care are telling. In another SABS regime similar reports alone may well have mandated immediate payment.

Mr. Deol maintains that given the financial burden of loss of income arising from the accident and the failure of Gore to fund such care, he is in a difficult position with regard to obtaining attendant care and housekeeping services. The financial strains are said to be creating stresses and, indeed, impairing the family structure.

Initially, Gore advised that the sticking point in its refusal to pay attendant care and housekeeping benefits was the failure of Mr. Deol to establish that Mrs. Deol, a non-professional family caregiver, established economic loss which, pursuant to section 3(7) (e) (ii), is a pre-condition to such a claim.

Mr. Deol claimed to have satisfied that requirement as well in that Mrs. Deol had pulled back from her work at Garda Security to care for him, and that the T4 and other information confirmed a lower revenue from that source. Mrs. Deol had also proven unable to continue her work with another employer, HMS Host International, due to the stresses provoked by Mr. Deol’s care needs. The ROE⁷ submitted from that employer showed a departure due to illness.

While not decisive, given the potential loss attributed to the termination of the Garda Security employment, the HMS Host employment situation appears not to be inconsistent with Mr. Deol’s theory of economic loss.

Surveillance and allegations of willful misrepresentation:

While the simple issue of whether Mrs. Deol had established economic loss was originally seen as the crux of the interim benefit application, shortly before the hearing matters took a strange twist with the service by the Insurer of a cross-motion, dated July 24, 2013, to be returnable on the same date as Mr. Deol`s motion for interim benefits.

The Factum served by Gore at paragraph 45 stated:

In this case, Mr. Deol has wilfully represented to Gore that he is not working as a result of the accident. He and his wife also have both wilfully represented that Ms. Deol is not working as a result of providing attendant care benefits to her husband.

This was followed by the Supplemental Responding Motion Record, dated July 30, 2013.

This latter document contained an affidavit as well as a surveillance report outlining surveillance performed on June and July of 2013 including Mr. Deol’s attendance at the FSCO pre-hearing on June 24, 2013. This document, however, contained only the report summary and omitted any actual surveillance footing. It was also not clear whether the surveillance produced represented the entirety of such documentation commissioned by Gore.

The Commission has long taken the position that surveillance and other relevant evidence must be disclosed to an opposing party in a timely manner. In the case of surveillance evidence the DRPC specifically states:

40.1 If a party intends to rely on any portion of surveillance or investigative evidence, including videotapes, photographs, reports, notes and summaries of surveillance observations or investigations, at least 30 days before the hearing, the party shall provide:

(a) the names and qualifications of the persons who secured the investigative or surveillance evidence, the dates, times and places where any surveillance or investigation was undertaken; and

(b) copies of all videotapes, photographs, investigative reports, notes and summaries taken or prepared in connection with the issues in dispute.

In Markandey,⁸ Trafford J. said at paragraph 43:

The importance of full disclosure to the fairness of the disciplinary proceedings before the Board cannot be overstated. Although the standards of pre-trial disclosure in criminal matters would generally be higher than in administrative matters [citation omitted], tribunals should disclose all information relevant to the conduct of the case, whether it be damaging to or supportive of a respondent's position, in a timely manner unless it is privileged as a matter of law. Minimally this should include copies of all witness statements and notes of the investigators.

As G.D. Lane J. has stated, “trial by ambush is incompatible with a fair hearing.”⁹

Given the date on the affidavit which included the excerpts of the surveillance evidence, it is clear that it was not produced at least 30 days prior to the hearing in which Gore intended to use it. Indeed, considering that the documents had to be delivered to opposing counsel and that a long weekend intervened, it can be said that barely a few days of advance notice was given at best. By any definition, this is “trial by ambush.”

Given the timing of the surveillance reports submitted and the decision to continue surveillance at the pre-hearing itself, there can be no doubt that Gore was aware of the nature of the allegations it intended to make, and the existence of the potentially supporting evidence for those allegations at least 30 days before the motion date. It was both able and obliged¹⁰ to produce the underlying surveillance and a summary of the new allegations of improper conduct in a timely manner prior to the motion hearing where they were to be raised.

No request for leave to waive the requirements of the Rule was ever made. In addition, the materials provided were clearly not complete, as required by the Rule, since they lacked any of the original surveillance material, including videos, photographs and notes prepared by the investigators. Nor is it clear that the reports filed constitute the whole of the surveillance potentially available.

Counsel for Gore suggested that the use of surveillance as part of an affidavit supporting the Insurer’s counter-motion and request to dismiss the claim for interim benefits does not offend the Rule.¹¹ In any event, according to counsel for Gore, the Rule will be complied with prior to the full arbitration hearing. This is ingenuous. It constitutes merely an attempt to avoid the consequences of Rule 40.1.

Rule 4 of the DRPC defines “hearing” as “the opportunity to state one's case before an adjudicator in the context of an oral, written or electronic hearing.” A motion hearing clearly meets that definition, with the result that the time lines set out in Rule 40.1 apply to this interim benefits motion.

Consequently, in the absence of a curative order I will decide the outcome of this motion without giving any weight to the surveillance evidence proffered by Gore. To do otherwise would be to reward a conscious violation of the full disclosure principle embodied in the Dispute Resolution Practice Code.

Of course, with the “cat out of the bag” and some surveillance having been produced, it is now incumbent upon Gore to produce the balance of the surveillance, including all original notes and materials in accordance with the DRPC.

The video evidence was not the only preliminary matter raised in this motion. Mr. Deol had initially served and filed an affidavit sworn by Mrs. Deol in support of her husband’s claim. Gore requested an adjournment of the hearing to allow it to cross-examine Mrs. Deol on her affidavit. Applicant’s counsel offered to produce the affiant for cross-examination, but counsel for Gore declined on the basis that he had not had the time to prepare for her cross-examination.

Ultimately, counsel for Mr. Deol withdrew Mrs. Deol’s affidavit, so there was no need to rule on its admissibility or on the related adjournment request. I note however in passing that my letter ordering the motion hearing referenced an apparent agreement that the motion would proceed solely on written evidence and that any deviation from that plan should be raised well before the hearing. There is no correspondence on record requesting a resumption to modify the terms of the motion hearing, and certainly no order adding further issues to this arbitration.

Examination under oath:

Finally there was the question of an examination under oath which had been requested by Gore, and which was recorded in the pre-hearing letter together with Mr. Deol’s reservations about attendance without the production of certain documents in the Insurer’s possession, and disclosure to Mr. Deol of any allegations made against him by Gore.

The Insurer’s materials state that an examination under oath was arranged for Mr. Deol on July 24, 2013 and that he did not attend. Counsel for Mr. Deol does not deny his non-attendance but points to Gore’s failure to provide the productions referenced in the pre-hearing letter as a reason for non-attendance.

Section 33(2) of the Schedule which provides for examinations under oath is quite simple. It requires an insured to attend for an examination when requested by an insurer in matters relevant to the benefits claimed by an insured.

Perhaps because an examination may be requested early in the claims process, there is no provision setting pre-conditions such as the production of related materials by the insurer before the holding of such examinations. Rather, the limited restrictions relate to timely notice, and the provision of appropriate information as to location, timing, and the opportunity to attend with counsel if so advised.

Counsel for Mr. Deol has remarked that it would be unfair to require him to be examined without the availability of the information requested from Gore, especially since, as it turns out, Gore is operating on a belief that Mr. Deol was attempting to mislead it with regard to his claim and that its investigations had established that he had actually returned to work.¹²

Despite the wording of the pre-hearing letter indicating Mr. Deol’s linkage of the documentary production issue with the Examination under Oath, I see no evidence that Gore actually conceded any such linkage.

Clearly, however, Mr. Deol would not be able to speak in an informed manner to questions concerning his alleged activities and the identity of the individual monitored by Gore without some foreknowledge of Gore’s concerns and, more importantly, the information it had giving rise to those concerns.

I would accept that it would be needlessly unfair to Mr. Deol to allow Gore to, in effect, ambush its insured with questions based on information to which he had no access, nor any inkling as to its content.

I would also accept that there is a fundamental unfairness in the use of an examination under oath during the litigation process rather than in the initial investigation of the claim. In effect it gives the corporate party access to oral discovery of its insured, while denying any reciprocal discovery obligation on behalf of the insurer.

Despite pretensions to fairness this is how the current Schedule is written. There is no restriction on the timing of the examination under oath other than to limit it to a single time. Mr. Deol does not argue that he was not provided with appropriate notice, nor that Gore attempted to restrict his access to counsel during an examination under oath. He simply argued fairness, which in this case would appear to be a non-starter.

Gore has included in its materials proof of non-attendance at the examination under oath. There is no contention that he did attend.

According to the legislation, the “insurer is not liable to pay a benefit in respect of any period during which the insured person fails to comply with subsection (1) or (2).” Thus, until either the Insurer withdraws the request for the E.U.O., or Mr. Deol complies with the request, no benefits are payable. If the default is corrected, then any obligation by the Insurer to pay the benefits resumes and the amounts withheld become payable “if the applicant provides a reasonable explanation for the delay in complying with the subsection.”

Given ongoing non-compliance with the requested attendance, it would be premature to determine if Mr. Deol’s unfairness argument would constitute such a reasonable excuse.

Economic loss

As noted earlier, the original intent of this hearing was that it would focus on the question of whether Mrs. Deol, Mr. Deol’s service provider, suffered an economic loss in connection with the provision of caregiving and attendant care services.

As alluded to earlier, I would accept that, in the absence of any evidence tendered by Gore, and barring resolution of the issues as to whether his wife incurred an “economic loss” in providing attendant care and housekeeping services, I would be able to find in favour of Mr. Deol on the grounds that he has made out at least a prima facie case for interim benefit entitlement.

I will deal briefly then with the issue of whether the non-professional care provider, Mrs. Deol, suffered the requisite economic loss in providing for her husband’s care. Gore says that she didn’t, with the result that all attendant care and housekeeping claims for work performed by her in caring for her husband runs afoul of section 7(e) of the Schedule. That provision creates a pre-condition for payment that inter alia the treatment provider “sustained an economic loss as a result of providing the goods or services to the insured person.” (soit a subi une perte pécuniaire par suite de la fourniture des biens ou des services à la personne assurée;)

On August 7, 2012, Ms. Chorney wrote to Gore stating:

As we advise by way of correspondence dated April 25, 2012 Ranjit Deol has stopped working for Garda Canada Security Corp. Inc. As such, we ask that Gore Mutual remit payment immediately for incurred attendant care and home maintenance benefits on a retroactive basis with interest as a failure to remit payment is causing a severe financial burden for the Deol family.

Mrs. Deol was working for two employers prior to the accident, Garda Security and HMS Host. Mr. Deol claims that his wife left her secondary employment with Garda Security to handle his care services, thus generating a reduction in her income or economic loss.

Subsequently she also reduced her employment with HMS Host, ultimately going on medical leave allegedly due to the stresses her new duties as caregiver generated in her life.

There is no definition of “economic loss” in the Schedule and no modifier clarifying the quantum of economic loss required by the provision. Potentially it could be anywhere between minimal and substantial, provided only that it is provable and results from the provision of services to the insured. I also note the lack of any specific temporal restrictions on the economic loss.

Does a service provider have to sustain a loss over an entire tax year, a month, or a day? Should any potential loss be averaged down by earnings at a prior or later date? The Schedule does not specify.

A principle of interpretation of insurance policies, including those elements of the Statutory Accident Benefits Schedule which form part of the Ontario standard automobile policy, is that coverage is to be broadly interpreted while exclusions are to be narrowly construed. Citing Monks, Hoy J.A. summarized in Henry¹³:

The court explained that, as such, the principles applicable to the construction of insurance coverage provisions were applicable to it: insurance coverage provisions are to be interpreted broadly, while coverage exclusions or restrictions are to be construed narrowly in favour of the insured. To the extent that the word “incurred” restricts coverage available to the insured, it must be assigned a narrow meaning.

Likewise, the pre-condition for payment of attendant care and housekeeping that is “economic loss” should see a liberal interpretation of that phrase, acknowledging the potential breadth of the definition.

As the Court of Appeal confirmed in Henry, the provision is merely a threshold that must be crossed to access funding. Hoy J.A. stated:

Applying Monks, I agree with the application judge that, under SABS-2010, economic loss serves as a threshold for entitlement to (and not as a measure or factor in quantifying the amount of) reasonable and necessary attendant care benefits to be paid by an insurer. I conclude this based on the language used, the scheme and logic of SABS-2010, and the fact that the legislature could have, but did not, include a provision in SABS-2010 for calculating the amount payable where a family care-giver sustains an economic loss as a result of providing required care to an insured. Moreover, this interpretation is not inconsistent with the evolution of the regulations governing payment for attendant care provided by family members or the five-year report on automobile insurance in Ontario released by the Financial Services Commission of Ontario (“FSCO”) shortly before SABS-2010 came into force.

Indeed, there need be no direct linkage between the size of the economic loss and the quantum claimed for the services provided.

It is notable that until the most recent revisions to the Schedule, there was no such limitation on the funding of attendant care and housekeeping claims.

Under the rubric “What SABS-2010 does not say”, Hoy J.A. further commented:

As the application judge indicates, if the amount of the monthly care benefit were to be calculated based upon the number of hours the family care-giver was unable to work because she was providing care, or the quantum of the economic loss sustained by the care-giver, SABS-2010 could have so indicated. SABS-2010 is comprehensive legislation. In ss. 4, 7, 8, 9 and 30, it includes detailed formulas for the calculation of income replacement benefits, the adjustment of those benefits after age 65 and their indexation.

Given the lack of precision as to the meaning of “economic loss” in the Schedule, I accept that it means simply any economic loss suffered by the treatment provider, however minimal.

Mrs. Deol, in her statutory declaration dated February 8, 2013, set out the scenario for economic loss. She stated:

After my husband, Baljit Deol, was seriously injured in the accident on April 10, 2011, I have been providing attendant care services to my husband, Ranjit Deol [sic]. I have been forced to terminate my employment at Garda Canada Security Corp. and take sick leave at HMS Host to help take care of my spouse. I have been providing personal support services to Baljit Deol.

It makes sense that even if a part-time employment is reduced or eliminated while a full-time employment is maintained, there would necessarily be some measurable sort of economic loss. There is no evidence that the time freed up by the loss of the Garda Security work was completely taken up by other, paid employment.

In this case, it should be remembered that Gore is essentially pointing to the improbability of someone with two jobs completing the amount of attendant care and housekeeping assistance actually claimed.

However, where the reasonableness of a claim for significant attendant care or housekeeping by someone who only was absent a few hours from the workplace, and consequentially suffered a limited economic loss, that challenge is still available under the rubric of the reasonableness and necessity of the claimed services themselves, not by attacking the threshold to such a claim.

I find that, more likely than not, on the evidence actually before me, Mrs. Deol sustained some measurable economic loss through the diminution of her employment income from her part-time employment at Garda Security as a result of her care responsibilities for her husband, Baljit Deol.

Allegations of Misconduct:

As mentioned earlier, Gore in its factum attempted to raise issues that were new to this arbitration.

In this case, Mr. Deol has wilfully represented to Gore that he is not working as a result of the accident. He and his wife also have both wilfully represented that Mrs. Deol is not working as a result of providing attendant care benefits to her husband.

With regard to Gore’s late allegations of misrepresentation, Rule 27.1(a) and (b) of the Dispute Resolution Practice Code read as follows:

27.1 Where parties do not jointly choose neutral evaluation, the Response by Insurer in FORM E must include:

(a) a response to each issue raised in the Application for Arbitration;

(b) a description of any additional issues that the insurer wishes to have arbitrated, provided the issues were submitted to mediation and failed

The Response filed by the Insurer dated May 2, 2013 in this matter, while it does respond to most of the issues raised by Mr. Deol in his Application for Arbitration and specifically touches on the issue of economic loss, makes no mention however of the larger issue raised in Gore’s materials filed in the context of this motion, namely the alleged misconduct and material misrepresentation by Mr. Deol in bringing his claim forward.

Even in the courts, allegations of fraud require detailed pleading¹⁴, failing which they may be struck. Rule 27.1 of the DRPC, read together with section 8 of the SPPA, requires no less in this forum.

Consequently, if Gore intends to refer the issue of material misrepresentation or fraud to this arbitration, it must amend its Response accordingly. It shall have 30 days to bring forward that request, in writing.

Disposition

In summary, Gore has confirmed that Mr. Deol has suffered a catastrophic impairment. Mr. Deol has presented credible evidence of his need for ongoing attendant care and housekeeping. This information was contained in the affidavit of Ms. Nicole Corriera, together with the attached documents in support, including the recommendations of some of Gore’s own assessors.

Unlike the situation with the proposed evidence of Mrs. Deol, Gore did not express any interest in cross-examining Ms. Corriera on her affidavit.

On the admissible evidence before me, I would accept that Mr. Deol has demonstrated a prima facie case for interim benefits, without consideration of the respondent’s case, which in another situation might justify an order for interim benefits.

However, if one looks at the larger scheme of things, the Insurer has now raised a troubling issue of willful misrepresentation that, if proven, would negate any obligation to pay benefits to Mr. Deol. However, having failed to conform to the principles of fairness and full disclosure with regard to its claimed surveillance evidence, it has nothing to rely on but the bare allegation of misconduct.

More telling, however, is the non-attendance at the examination under oath. The ability to order ongoing benefits, either on an interim or final basis is limited until such default is cured or the request for an examination under oath is withdrawn.

Given the limited options available to an insured when it comes to an examination under oath, Mr. Deol has no choice but to attend or continue to face the ongoing suspension of benefits.

Consequently, even an interim order is barred under the present circumstances.

I will however, make an order that the interim benefit hearing remains in suspense until such time as Mr. Deol complies with his obligation to be examined under oath. The hearing may then be recommenced, and a determination as to entitlement to the requested interim benefits made at that time.

EXPENSES:

The question of expenses is deferred until all issues in this motion are decided

September 3, 2013

John Wilson Arbitrator

Date