State Farm Mutual Automobile Insurance Company v. Nita Mujku, 2013 ONFSCDRS 48

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2013 ONFSCDRS 48

Appeal P13-00008

Appellant

and

Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. Robert S. Franklin and Ms. Joanna Cox for the Appellant, State Farm Mutual Automobile Insurance Company

Mr. Daniel Roncari for the Respondent, Mrs. Nita Mujku

HEARING DATE:

Written submissions were received by March 19, 2013.

Oral submissions received March 21, 2013 by teleconference

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

This appeal of (a) Arbitrator Rogers’ January 14, 2013 decision, (b) Arbitrator Rogers’s oral order at the arbitration hearing regarding production of the accident benefits file of the Respondent’s spouse, and (c) Arbitrator Alves’ April 20, 2012 letter decision on the same production motion, are, on consent, accepted at this time.
Arbitrator Rogers’ January 14, 2013 orders are not stayed pursuant to subsection 283(6) of the Insurance Act.
The legal expenses of this preliminary issue appeal decision are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

April 10, 2013

Lawrence Blackman Director’s Delegate

Date

I. NATURE OF THE APPEAL

The Respondent, Nita Mujku, was injured in a November 10, 2005 motor vehicle accident. As a result, the Respondent sought statutory accident benefits pursuant to the Schedule¹ from her first-party automobile insurer, the Appellant, State Farm Mutual Automobile Insurance Company.

The Appellant appeals Arbitrator Rogers’ January 14, 2013 decision that the Respondent sustained a catastrophic impairment, as defined in clause 2(1.2)(g) of the Schedule, as a result of the accident.

The Appellant also appeals Arbitrator Alves’ April 20, 2012 motion decision denying production of the accident benefits file of the Respondent’s husband on the basis that he was not properly served. The Appellant submits that Arbitrator Rogers also erred in rendering a similar oral ruling at the arbitration hearing.

The Appellant sought leave under Rule 50.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated - August 2011) (the “Code”) to appeal these decisions. It also sought a stay of Arbitrator Rogers’ orders set out in his January 14, 2013 decision.

II. APPEAL FROM PRELIMINARY DECISIONS

Rule 50.2 of the Code provides that a party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute have been finally decided, unless ordered otherwise. Rule 51.2(c) of the Code provides that an appeal may be rejected if it is from a preliminary or interim order that does not finally decide the issues in dispute.

The parties agree that Arbitrator Rogers’ January 14, 2013 decision was a final order, not merely regarding the issue of catastrophic impairment but also in that there were no further issues in dispute in the present arbitration, other than the determination of legal expenses. Therefore, the parties now agree that leave to appeal is not required. The parties further agree that the same production issue was addressed by both Arbitrator Rogers and Arbitrator Alves and that both orders should be addressed in this appeal.

Accordingly, on the consent of both parties, this appeal of Arbitrator Rogers’ January 14, 2013, decision, Arbitrator Roger’s oral production order and Arbitrator Alves’ April 20, 2012 motion decision is accepted at this time.

III. STAY

The Appellant seeks a stay of Arbitrator Rogers’ January 14, 2013 orders that:

The Respondent sustained a catastrophic impairment, as defined in clause 2(1.2)(g) of the Schedule, as a result of the November 10, 2005 motor vehicle accident.
If the parties are unable to resolve the issue of expenses, either may make an appointment for the determination of the matter in accordance with Rules 75 to 79 of the Code.

Subsection 283(6) of the Insurance Act, R.S.O. 1990, c I.8, provides that an appeal does not stay the order of an arbitrator, unless decided otherwise. In Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), Delegate McMahon adopted the following criteria in determining whether a stay should be granted:

The bona fides of the appeal;
The substance of the grounds for appeal; and,
The hardship to the respective parties if the stay is granted or refused.

The Appellant argues that its motion materials did not need to be personally served on the Respondent’s husband for a production order of his accident benefits file to follow and that Arbitrator Alves erred in not considering the merits of its motion. It submits that her decision could not be appealed until all of the issues in dispute in the arbitration were finally determined.

The Appellant submits that Arbitrator Rogers likewise erred in not considering the merits of its production motion and in finding that the Code did not provide for service by leaving a document with an adult member of the same residence. The Appellant argues that Mr. Mujku’s accident benefits file is relevant to the arbitration as it would include information on the weekly benefits paid to the Respondent as caregiver for her disabled husband following her own, subsequent accident. It would also include the records of Kaplan and Kaplan, psychologists, who were providing treatment to the Respondent and her husband.

Rule 67.4 of the Code provides that where a party seeks a production order against a third party, the moving party must serve the third party with the supporting documentation, a description of the order sought, the grounds for the order and the time, date and manner in which the moving party seeks to have the motion heard. Rule 7.1(a) sets out the mandatory options for service, including personal service, specified forms of mail and any other manner specified by the Director. Leaving documents with an adult member of a household is not listed.

What the Appellant ultimately seeks in this appeal is an order that a new arbitration hearing be held that would include Mr. Mujku’s accident benefits file as evidence.

Budd and Personal Insurance Company of Canada, (FSCO P99-00032, January 8, 2000), set out the criteria for deciding whether fresh evidence should be accepted on appeal. The criteria include whether the evidence bears upon a decisive or potentially decisive issue and whether the evidence, if believed, when taken with the other evidence adduced, could reasonably be expected to have affected the result of the hearing.

The Appellant submits that at the arbitration hearing the Respondent admitted that she received $6,000 per month from an insurer for providing care to her disabled husband for a year or two after her own, subsequent accident. The Respondent further admitted that the settlement in that case included amounts for her to provide care for her husband into the future.

Further, the joint medical brief entered as an exhibit before the Arbitrator includes extensive clinical notes, records, reports and assessments of Kaplan and Kaplan.

Given the Respondent’s admissions in her testimony and the voluminous records of Kaplan and Kaplan included in the documentary evidence, it is presently not clear how Mr. Mujku’s accident benefits file could reasonably, when taken with the other evidence adduced at the arbitration hearing, be expected to have affected the result.

In any event, regarding the relevance of the quantum of caregiver benefits the Respondent received to such potential issues as double recovery, as stated by Delegate Makepeace in McMichael and Belair Insurance Company Inc., (FSCO P05-00006, March 14, 2006), a “catastrophic impairment determination does not, by itself, entitle a claimant to any specific benefits. Its effect is to remove a limitation on the benefits for which the claimant may qualify.”

Or, as stated by the Court of Appeal in Liu v. 1226071 Inc., 2009 ONCA 571, “simply meeting the statutory definition does not automatically mean entitlement. It will still remain for claimants to prove their damages as the appellant did at trial.”

Regarding Arbitrator Rogers’ substantive decision on catastrophic impairment, the Appellant argues, in part, that the Arbitrator erred in finding the Respondent credible, misapprehending the evidence, preferring the Respondent’s expert evidence to that of the Appellant’s, not equally critiquing the medical experts of both parties and in not drawing an adverse inference against the Respondent for failing to call family, friends, neighbours and her treating psychiatrist.

However, appeals from the decision of an arbitrator are limited, under subsection 283(1) of the Insurance Act, to questions of law. In AXA Insurance Company and Kernaghan, (FSCO P07-00018, February 4, 2008), I stated:

The restriction of appeals to matters of law reflects, in my view, legislative recognition that judicial resources are limited, that deference should be given to the skills and expertise of first-level adjudicators and that the need for a speedy, simplified and inexpensive dispute resolution system necessitates a narrowed basis for appeal. This 1996 legislative change confirms that arbitrations are not dress rehearsals; appeals are not a “second kick at the can.”

The Appellant also submits that Arbitrator Rogers erred in applying the “material contribution” test regarding causation. However, the Appellant does not presently submit nor provide a basis for the argument that the “but for” test, if applied, would have led to a different result.

In its written submissions, the Appellant argued that there can be no prejudice to the Respondent if a stay is granted of the catastrophic impairment designation as the Respondent had not submitted an OCF-6 for attendant care benefits, there were no applicable pay pending provisions and the Respondent had only incurred $49,981.37 in medical and rehabilitation benefits out of the $100,000 available for non-catastrophic insured persons. Further, the Respondent was still within the ten-year benefit period allowed in non-catastrophic cases.

However, in oral submissions, the Appellant argued that there are attendant care benefits payable to the Respondent under subsection 42(6) of the Statutory Accident Benefits Schedule, O Reg. 34/10, as well as case management and housekeeping benefits payable immediately in the absence of a stay order. The Appellant argued that its only possible defence to these claims, other than possibly disputing quantum, is whether the Respondent is indeed catastrophically impaired. The Appellant submits that in the absence of a stay order it will be subject to a special award under subsection 282(10) of the Insurance Act.

The Respondent submits that there is a June 2009 Form 1, Assessment of Attendant Care Needs, claiming benefits back to 2007, and that the Appellant has paid nothing. The Respondent states that a further Application for Arbitration has been filed in this regard.

The accident in this case took place on November 10, 2005. The Application for Determination of Catastrophic Impairment is dated October 29, 2009. After mediation failed to resolve the issues in dispute, an Application for Arbitration was filed September 17, 2010. A hearing was held May 2012; written submissions were received October 26, 2012. At this juncture, the reason for this extended time period is not clear. It is clear, however, that this time frame is inconsistent with the legislative intent of a speedy determination of entitlement and delivery of payable benefits.

Thus, at this present juncture, there are questions as to the substance of the grounds for appeal, the grounds, to a significant extent, addressing questions of fact in a forum limited to appeals on questions of law. There are also questions regarding the respective hardship to the parties where the Appellant sees itself as subject to a special award in the absence of a stay.

The Arbitrator’s order finding the Respondent catastrophically impaired followed a six-day arbitration hearing. The order was issued more than three years after the Application for Determination of Catastrophic Impairment. Armstrong confirmed that a stay of an arbitration order under subsection 283(6) of the Insurance Act “is the exception rather than the rule.”

Having considered the applicable criteria, I am not persuaded to exercise a stay of the Arbitrator’s order regarding catastrophic impairment.

A stay is also requested regarding the determination of arbitration legal expenses. In oral submissions, the Respondent simply requested that arbitration expenses be determined as soon as possible. I only subsequently became aware that Arbitrator Rogers had, on March 4, 2013, subject to an appellate stay order, determined that arbitration expenses were to be decided simply on the basis of written submissions, with submissions to be received by mid-May. My April 2, 2013 letter to counsel seeking clarification if I was mistaken in this regard, has gone unanswered.

An expense hearing has thus already been expeditiously arranged in a cost effective manner. Should this appeal be successful, there would be savings in time and cost to the parties if the arbitration expense hearing had been stayed. If the appeal is unsuccessful, there would be efficiency in having used the August 23, 2013 oral appeal hearing to also address any appeal that may arise from the Arbitrator’s expense order that presumably will be issued in the interim.

As stated, Armstrong confirmed that a stay of an arbitration order is the exception rather than the rule. I am not persuaded to exercise a stay of the Arbitrator’s order regarding legal expenses.

IV. FURTHER PROCEDURAL STEPS ON APPEAL

On March 21, 2013, I set the following time line for this appeal, as agreed to by the parties:

(1) Amending Rule 54.1 of the Code, the Appellant shall by April 22, 2013 serve on the Respondent and file with the Commission its written submissions.

(2) Amending Rule 54.3, the Respondent shall by May 21, 2013 serve on the Appellant and file with the Commission her written submissions.

(3) The Appellant shall, by June 11, 2013 serve on the Respondent and file with the Commission any reply written submissions.

(4) Oral submissions are to be heard on August 23, 2013, at 10:00 a.m. in Hamilton, Ontario.

V. EXPENSES

The legal expenses of this preliminary issue appeal decision are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

April 10, 2013

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.