Sanharib Sada v. Nordic Insurance Company of Canada, 2013 ONFSCDRS 34

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

Neutral Citation: 2013 ONFSCDRS 34

FSCO A11-001142 and A11-001134

BETWEEN:

SANHARIB SADA

Applicant

and

NORDIC INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A MOTION

Before: Arbitrator John Wilson

Heard: March 8, 2013, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Stefan Juzkiw for Mr. Sada Marnie Miller for Nordic Insurance Company of Canada Richard Shekter for the third party, Assessment Direct

Issues:

The Applicant, Sanharib Sada, was injured in motor vehicle accidents on July 2, 2009 and March 14, 2010. He applied for statutory accident benefits from Nordic Insurance Company of Canada (“Nordic”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Sada applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this motion is:

Are certain named third parties required to produce documents in this arbitration?

Result:

Assessment Direct, Freshway Auto Body, Inline Fiberglass Ltd. and the Ministry of Health and Long-term Care are required to produce the specified documents.

EVIDENCE AND ANALYSIS:

Following his motor vehicle accidents, Mr. Sada received treatment and assessments from various facilities including Assessment Direct. While Nordic apparently paid for some of the treatment and assessments, payment for others submitted by Assessment Direct remained in dispute, and form part of Mr. Sada’s claim in his application for arbitration.

Following the filing of Mr. Sada’s Application, Nordic continued to resist payment of those outstanding invoices, and stated in its Response that “the benefits were not incurred within the meaning of the SABS.”

What Nordic really meant, according to counsel, is that the billings filed for assessments, supposedly done on behalf of Mr. Sada by Assessment Direct, form part of some greater fraudulent scheme to bilk insurers of millions in phony assessments under the SABS. Indeed, Nordic’s affidavit refers to current litigation against treatment providers.

This production motion involved several third parties, principally the Ministry of Health and Long-Term Care, Dr. Magda Ishac, Freshway Auto Body, Inline Fiberglass Ltd, Jane Centre Pharmacy, and Assessment Direct.

The records requested from Assessment Direct included: copies of diary entries, invoices submitted to the treatment facility by treatment providers, verification of remitted payment from the clinic to the practitioner for services, cheques, bank transfers, and copies of agreements to permit use of electronic signatures in order to prepare OCF forms.

At the outset of the hearing, the parties advised that, with the exception of Assessment Direct, the employers (Freshway Auto Body and Inline Fiberglass Ltd.) and the Ministry of Health and Long-term Care, the requested productions had been either completed or were in progress. Consequently, no orders were requested against Dr. Magda Ishac and Jane Centre Pharmacy.

Since no-one appeared either for the employers or the Ministry, despite having been served, and no submissions were received, I am content to order that the employment files and the OHIP summary be produced forthwith.

The request for extensive records from Assessment Direct relating not only to the treatment of Mr. Sada but also to the operations of the facility is more problematic.

I note that at the outset of the hearing, Mr. Juzkiw advised that he had possession of a bundle of documents said to be the treatment records of Mr. Sada with Assessment Direct, and that he would be providing these documents to Nordic.

Mr. Shekter, who appeared on behalf of the third party Assessment Direct, acknowledged that the treatment records related to Mr. Sada were likely relevant to this claim and could be producible. He advised as well that these records would likely be in the bundle of documents referred to by Mr. Juzkiw, since Assessment Direct had already responded to Mr. Sada’s request to produce the clinical notes and records.

Mr. Shekter advised, however, that his client declined to produce the further documents requested by Nordic, namely copies of diary entries, invoices submitted to the treatment facility by treatment providers, verification of remitted payment from the clinic to the practitioner for services, cheques, bank transfers, and copies of agreements to permit use of electronic signatures in order to prepare OCF forms.

As mentioned above, Assessment Direct had no objection to producing the treatment file for Mr. Sada, the clinical notes and records, but resisted production of the other documents on the grounds of relevance, privacy concerns, and the fact that they appeared from the Insurer’s affidavit, to be requested in support of the court litigation rather than this arbitration.

While Nordic primarily lists its reasons for requesting the documents as the instigation of a lawsuit against certain unnamed treatment facilities relating to an alleged intentional interference with economic relations, unlawful conspiracy and deceit, secondarily it maintains that the requested documents are “relevant to the issues in dispute and are required in order to verify the reasonableness and necessity of the treatments provided to, and assessments conducted on the Applicant`s behalf.”

Nordic, as the moving party, has the burden of proving that the documents are both relevant to the issues in litigation and “that the salutary effects of ordering the documents produced to the court for inspection outweigh the deleterious effects of such production.”²

Although, according to L'Heureux-Dubé J in O’Connor, the first stage of the test - that of relevance is satisfied by “likely” relevance, in Rakosi, however, Director’s Delegate Blackman made a cogent case that the test in FSCO arbitrations is one of simple relevance.

The Court of Appeal in SA Capital³ as well has suggested that O’Connor does not translate well into the civil sphere, especially where a second process is underway in a different forum, and a production order could be interpreted as an interlocutory procedural order in that forum.

It should be noted that in this matter the Insurer lists as its primary reason for disclosure the ongoing fraud litigation before the Superior Court.

Director’s Delegate Naylor commented, in Al-Obaidi:

Relevance is framed by reference to the issues being arbitrated ... There must be a reasonable relationship between the records sought and the dispute being arbitrated.⁴

In this matter, as noted previously, the only allegation in the Insurer’s Response is that the expenses “were not incurred within the meaning of the SABS.” That, in my reading is hardly an allegation of conspiracy or fraud, sufficient to bring the internal processes of Assessment Direct into question, and hence render them open to production. Nor does the mention in the supporting affidavit that Mr. Sada’s claim has been one of those noted in the litigation, open any other doors without more specificity.

Admittedly the Insurer, in argument, has made reference to the possibility that reports purporting to be made under certain names were in fact created and signed by others using an unauthorized electronic signature. Had there been admissible evidence of this, and a reference in the Insurer’s Response to its real issue in this arbitration, then the outcome of this motion might well have been different.

Director’s Delegate Blackman has confirmed that the two-stage analysis used in the courts is equally applicable to FSCO arbitrations:

Following Al-Obaidi, this involves, on a case-by-case basis, a two-stage analysis. First, the requested documents must be relevant. Second, as stated by the Respondent, Al-Obaidi establishes that relevance "is a necessary, but not sufficient requirement." Notwithstanding relevance having been established, there is the further question of whether production is reasonably necessary, which requires weighing the degree of relevance against other pertinent considerations.⁵

One of those “pertinent considerations” would be the privacy interests of Assessment Direct and its managers.

Whatever its reputation in the insurance business may be, Assessment Direct is a stranger to this particular litigation and one must be cautious about interfering with the confidentiality of its internal documents without good reason.

As La Forest J. observed in Dyment:

(I)f the privacy of the individual is to be protected, we cannot afford to wait to vindicate it only after it has been violated. This is inherent in the notion of being secure against unreasonable searches and seizures. Invasions of privacy must be prevented, and where privacy is outweighed by other societal claims, there must be clear rules setting forth the conditions in which it can be violated.⁶

Presumptively, Assessment Direct’s employment records and internal accounting documents are entitled to privacy protection, unless that protection is either waived or ordered dispensed with by an order of a judge or an arbitrator. I see neither credible evidence of waiver nor direct relevance to Mr. Sada’s accident benefits claim, and I decline to infer any relevance based on unsupported allegations.

Based on the affidavit and motion materials submitted, I accept Mr. Shekter’s submission that Nordic has not provided the evidentiary foundation for its wide-ranging third-party production request.

It is easy to make allegations and even begin court proceedings on the basis of those allegations. Nothing has to be proven or established to file a claim. While the pleadings in that claim may define the relevance of related productions, they are of little assistance in determining what should be produced in this arbitration.

Orders cannot be made in an evidentiary vacuum. Nordic has recognized that by supplying an affidavit in support of its production motion. Unfortunately that document is devoid of evidentiary value and totally omits to provide any mention of the particular circumstances of the alleged fraud, and how it might relate to this arbitration.

Consequently, I am not satisfied that most of the documents requested are particularly relevant to Mr. Sada’s claim for the reimbursement of his expenses incurred with regard to the assessment services and reports provided by Assessment Direct.

While I am aware that Assessment Direct has provided a bundle of documents, claimed to be the clinical notes and records relating to Mr. Sada’s involvement with Assessment Direct, I will still make an order that it provide its complete clinical file related to Mr. Sada forthwith, there being no evidence before me that the documents produced to date constitute the entirety of its records.

As noted earlier, production orders will go as requested against the two presumed employers, the Ministry of Health, and Assessment Direct, but only as to its clinical notes and records relating to Mr. Sada.

The balance of the Insurer’s motion against Assessment Direct is dismissed without prejudice to being brought again on a more solid evidentiary foundation.

EXPENSES:

I note that Assessment Direct has claimed its costs for attendance on this motion. Should the parties be unable to sort out this issue I may receive brief submissions as to expenses including the foundation for any such award to a third party.

March 15, 2013

John Wilson Arbitrator

Date