Iram Ansari v. State Farm Mutual Automobile Insurance Company, 2015 ONFSCDRS 237

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2015 ONFSCDRS 237

FSCO A12-004303

BETWEEN:

IRAM ANSARI

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Patrick N. Bowles

Heard:

By written submissions completed on August 5, 2015

Appearances:

Ms. Supriya Sharma for Mrs. Iram Ansari

Ms. Jenna Ng for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mrs. Iram Ansari, was injured in a motor vehicle accident on October 8, 2010, and sought accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mrs. Ansari, through her representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

Pursuant to the Arbitration, I rendered my decision on December 24, 2014. I reserved on the issues of expenses, interest and Special Award.

Mr. Bowlin for State Farm made a submission with respect to the issues. Ms. Ng, who now has carriage of the file, provided additional material.

Arbitration Order of December 24, 2014:

Mrs. Ansari is entitled to receive a Non-Earner Benefit of $185.00 per week from April 8, 2011 and ongoing.
Mrs. Ansari is not entitled to payments for Housekeeping and Home Maintenance Benefits.
Mrs. Ansari is not entitled to Attendant Care Benefits.
Mrs. Ansari is entitled to receive the Medical Benefits which are the subject of the Arbitration.
State Farm is liable to pay Mrs. Ansari’s expenses in respect of the Arbitration.
Mrs. Ansari is not liable to pay State Farm’s expenses in respect of the Arbitration.
Mrs. Ansari is entitled to interest for overdue payments.
The parties agreed to make submissions with respect to the claim for Special Award.

I was advised by Ms. Sharma on July 27, 2015, that State Farm paid $46,179.26, inclusive of interest, in full satisfaction of the Award.

Consequently, the Applicant’s claim with respect to interest is no longer an issue.

The issues in this Expense Hearing are:

Is the Applicant entitled to her expenses of the Arbitration?
Is the Applicant entitled to a Special Award and, if so, in what amount?

Result:

State Farm is to pay the Applicant’s expenses in the amount of $28,415.06 plus HST where applicable.
State Farm is to pay a Special Award in the amount of $13,000.00, inclusive of interest.

EVIDENCE AND ANALYSIS:

In awarding expenses, an Arbitrator is to consider the criteria set out in Section 75.2 of the Dispute Resolution Practice Code (“the DRPC”):

75.2 The adjudicator will consider only the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:

(a) each party's degree of success in the outcome of the proceeding; (b) any written offers to settle made in accordance with Rule 76; (c) whether novel issues are raised in the proceeding; (d) the conduct of a party or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders; (e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

Each party's degree of success in the outcome of the proceeding

This was a lengthy Hearing conducted over 10 days in June, 2014. Eight witnesses were called to testify, five for the Applicant and four for the Insurer. The matter was contested on all fronts by the Insurer. The Applicant was successful on two of the four benefit claims, namely: Non-Earner and Medical Benefits; and not successful on Housekeeping and Home Maintenance and Attendant Care Benefits. This would not imply that the ‘contest’ was equal in its results, as suggested by the Insurer. In reality, the Applicant had to go to considerable expense and effort to pursue this matter to its conclusion. Had State Farm accepted the findings of Drs. Mula and Zarnett in April 2014 - the Applicant’s medical experts - a month prior to the Hearing, the matter could have been settled at that time. There was a continuing responsibility and obligation on the Insurer to adjust Mrs. Ansari’s benefit claim as new information became available, before the commencement of the Hearing. It is difficult to see how the Insurer could continue to deny the Non-Earner Benefit and Medical Benefits after receipt of these two very comprehensive expert reports. The responsibility to respect the Insurer’s statutory obligations continue during the course of the Hearing, or again, at the conclusion of the Arbitration when both parties are in possession of the facts of the case. The Insurer, unwisely in my view, chose to see this action to its conclusion.

As for the unsuccessful claims, the medical reports of the Applicant’s experts supported a claim for Attendant Care and Housekeeping and Home Maintenance. She would have been successful in this regard if she had been able, through her husband’s testimony, to establish an economic loss.

It should be noted that State Farm was unable to refute the medical evidence. I am referring to Mr. Bowlin’s very lengthy closing submissions. He was unable to counter or negate the Applicant’s medical expert evidence, which was the core of the Applicant’s claim. Instead, the Insurer went to a lot of effort to persuade me that the Applicant was an unreliable and untrustworthy witness and was improperly motivated by financial incentives. I reject this view.

The Hearing was of necessity lengthy and somewhat difficult. There were multiple categories of benefits claimed requiring extensive productions and oral evidence from eight witnesses. The medical evidence was somewhat complicated as the Applicant had a prior injury from a motor vehicle accident in February 2008, and additionally had concurrent symptoms that were affecting her recovery from the subject motor vehicle accident of October 2010.

Any written offers to settle made in accordance with Rule 76

Written Offers to Settle were sent out by the parties, simultaneously, on May 30, 2014, ten days before the commencement of the Hearing. Both offers remained open for the duration of the Hearing. Neither side accepted or withdrew their respective offers.

I find the parties have met the requirements and are in compliance with Rule 76 of the DRPC.

Mr. Bowlin, in his submission at page 11, has made his Offer to Settle an issue in the calculation of an expense award. The details of their respective Offers to Settle are located at Tabs B and C in Mr. Bowlin’s submissions. Mr. Bowlin wrote:

with consideration to criteria at the outset of these submissions – namely the mixed success of each party, the offers to settle and the conduct of the Applicant … the respondent’s position is that the Applicant’s reasonable global expense should be fixed in the amount of $11,285.95 inclusive of fees, disbursements and any applicable taxes.

I have dealt with the mixed success of each party. For the purposes of reviewing the requirements of Rule 75, I propose to review the adequacy of the Respondent’s Offer when contrasted with the Applicant’s Offer to Settle the Non-Earner Benefits claim, located at Tab B of Ms. Sharma’s submissions. The Applicant’s Offer to Settle was for the amount $37,179.22. On settlement of the award, the Applicant received $42,748.85, including interest. At the time the Offer was made in May 2014, I estimate the amount owing, excluding interest, to be in the region of $35,000.00, calculating the time from April 11, 2011 to the date of the Offer. The Applicant’s Offer was therefore within a reasonable settlement range.

Turning to the adequacy of the Respondent’s Offer, I find the parties have met the requirements and are in compliance with Section 6 of the DRPC.

Mr. Bowlin has asked me to consider in his expense submission at page 6, that State Farm offered to settle the matter “for $16, 000.00, all-inclusive to settle all issues in the disputes”. The actual Offer to Settle, as set out in his letter of May 2014, was in fact more comprehensive than set out in his submissions. The Offer to Settle in Exhibit Tab B, reads:

all-inclusive in exchange for a full and final Release in regards to all past, present and future claims for accident benefits arising out of the accident of October 8, 2010, whether incurred or not yet incurred, and including any amounts already approved but not yet invoiced or paid.

I find the Insurer’s Offer to Settle to be inadequate and unreasonable. To be effective, an offer has to nominate amounts in the specific categories that correspond to the specific benefit being claimed. Each benefit claimed by an Applicant is treated separately, as they require different supporting evidentiary standards of evidence. Meeting the statutory requirement for Attendant Care Benefits is not the same as meeting the requirement for Non-Earner Benefits. In some instances, the evidentiary requirements may depend on the same supporting medical documentation, but as far as adjusting the respective claims, they are treated separately. An Applicant can be successful in one category of benefits but unsuccessful in another category, as was the case here. Similarly, in the Arbitration process, each category of benefits claimed is viewed and adjudicated as if there were separate Hearings although the evidence, particularly medical evidence, may be relied on to support or deny, as the case may be, multiple benefit categories.

To be meaningful, State Farm’s offer should address each benefit category and without unnecessary and unacceptable qualifiers. Instead, the offer of $16,000.00 was on an all-inclusive basis covering everything – all past, present and future claims whether incurred or not yet incurred. This broad-brush approach to offers of settlement is unworkable and was unreasonable in its requirement. An Applicant could not be expected to accept such an offer, particularly as this Applicant was required to give up her entire entitlement and any benefits she might be entitled to on an ongoing basis under the policy.

I find the Applicant’s Offer to Settle to be more accurate with respect to the Non-Earner Benefit claim. State Farm’s offer has to be discounted and excluded from any expense calculation.

Whether novel issues are raised in the proceeding

There were no novel issues to be considered in assessing the expense claim.

The conduct of a party or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders

Mr. Bowlin referred to an Order made by Arbitrator Gueller, dated March 19, 2014, three months before the Hearing. Arbitrator Gueller’s Order was in two parts: an Order for medical records and for financial documents relating to the Applicant’s economic loss.

The medical reports requested were an OHIP decoded summary from December 23, 2011, to date, and the medical records of the family doctor and a Dr. Keith. The Applicant attempted to comply with the Order but did not or was unable to supply the missing documents. In my view, the missing medical records would not have altered the outcome, given the testimony at the Hearing of two medical experts relied on by the Applicant. I find that the Applicant made some effort to locate the missing reports.

As for the Applicant’s financial records, this omission was significant. The Applicant was unable to sustain the claim for Attendant Care and Housekeeping and Home Maintenance which would have been awarded, as being reasonable and necessary, as evidenced by the testimony of the medical experts. Because of the missing financial documentation, the Applicant could not establish an economic loss. I believe, from the husband’s testimony, some financial loss occurred but given the nature of the husband’s work, his loss was controlled and relatively minimal. I expect the cost of establishing economic loss through the services of an accountant would have been quite prohibitive and in all probability inconclusive.

However, notwithstanding the failure to comply, I find there are insufficient grounds to make any conclusions that the failure tended to prolong, obstruct or hinder the proceedings.

Whether any aspect of the proceeding was improper, vexatious or unnecessary

I can find no reasonable grounds to consider any aspect of the proceeding to be improper, vexatious or unnecessary.

EXPENSES:

The Applicant has claimed:

Disbursements: $18,559.67;
Fees: $43,345.20

Mr. Bowlin set out his calculation as follows:

Disbursements: $5,387.06;
Fees: $15,207.82;
And allowing for the mixed success of each party, the Offers to Settle and the conduct of the Applicant with respect to the Order, the amount owing to the Applicant is $11,285.95

For the purposes of assessing the fee expenses, I accept Mr. Bowlin’s calculation framework as set out in his submissions, with some exceptions.

A line-by-line assessment of expenses is not appropriate. Mr. Bowlin suggested I make a global assessment of reasonable expenses or apply a ratio of Pre-Hearing preparation time to hearing time in the range of 3:1, considering the length of the proceedings, the complexity of the issues and the number of witnesses. Mr. Bowlin’s records show 41.4 hours of hearing time. He suggests that the ratio should be 3:1 = 144.2 hours.

I have calculated the hearing time as 45 hours. Given the complexity, length of proceedings, number of witnesses, I set a ratio of 5:1; five hours of preparation time to one hour of hearing time.

As Ms. Sharma is a law student, I applied the hourly rate at $61.64. While Ms. Sharma did an excellent job in managing her file, I have no grounds for exercising my discretion in allowing a higher hourly rate. The calculation is as follows:

Preparation time: 225 hours;
Attendance: 45 hours;
Written submissions: 62 hours

Total hours: 332 @ $61.64 = $20,464.48

The total fee expenses are set at $20,464.48 plus HST.

Disbursements

I accept Mr. Bowlin’s calculation of $5,387.06. To this I added the cost of the second expert Dr. Mula, in the amount of $2,100.00. Mr. Bowlin has argued that the disbursement claim for Dr. Mula was duplicative and unnecessary in light of Dr. Zarnett’s reports and evidence, and should be disregarded. In my view, Dr. Mula’s evidence and reports were relevant and should be considered in the disbursement calculation. Both experts approached the medical issues from differing expertise and perspectives. I relied on both reports in determining the issues.

No invoices or receipts were submitted by the Applicant.

The total disbursements are therefore $7,487.06 plus HST.

In total, the Applicant is entitled to be reimbursed for her Arbitration expenses in the amount of $7,951.06, plus HST.

Total fees and disbursements: $28,415.06 plus HST.

Special Award

Has the Insurer unreasonably withheld or delayed payments?

In my view of the proceedings, the conduct of the Insurer in denying Non-Earner and Medical Benefits was unreasonable. There are a number of reasons which, collectively, demonstrate an unreasonable and inflexible attitude undermining the Applicant’s entitlements under her insurance policy.

It appears there were adjusting problems at the initial stages of the claim. The delay in moving the file out of a Minor Injury Guideline status, notwithstanding the Applicant’s pre-existing medical issues, and the denial of benefits, was unreasonable. These events have to be factored in when assessing the amount of the Special Award.

The earlier difficulties in adjusting the claims indicate a mindset that subsequently took on the appearance of inflexibility and unreasonableness in the face of the later medical evidence presented to State Farm in the two expert reports of April 2014, two months before the Hearing. This was a time for the Insurer to seriously assess its position. The Insurer chose not to do so and proceeded to the Hearing. Again, after listening to the oral evidence of the Applicant’s experts and evaluating the performance of its own experts, it was a time to consider a realistic appraisal of its position, which it chose not to do. The Insurer’s submission following the Hearing also shows a continued determination to undermine the character of the Applicant and her husband as being completely unreliable in their evidence and portrayed them as schemers trying to get the best they could from the insurance company. The Insurer’s view was that the Applicant was able to mislead her doctors and experts and therefore the information relied on by her multiple health professionals was unreliable. The Insurer’s Offer to Settle made one month before the Hearing was indicative of an unrealistic appraisal of the Applicant’s case.

There are no mitigating factors to be considered relating to State Farm’s conduct and its continued denial of the Non-Earner and Medical Benefits. It is noted that State Farm did not pay the Award until July 6, 2015, over six months after the Award was rendered.

While it is true the Insurer was ‘successful’ in two of the four categories, the Insurer’s success was in the Applicant’s failure to establish economic loss. As I mentioned, I believe there was some economic loss experienced by this family but there is a requirement to document the loss as ordered by Arbitrator Gueller, which the Applicant was unable to do.

The Insurer obtained a production Order, and the Applicant’s Counsel, in light of the Order, was well aware of the documentary requirements. Given the length of time since the Mediation, when both Attendant Care and Housekeeping and Home Maintenance were claimed, there was adequate time to collect and document the financial evidence. Therefore, I have discounted the Special Award to reflect the actions of the Applicant in not complying with Arbitrator Gueller’s Order relating to the economic loss.

Conclusion

In light of the events I have outlined, I am awarding $13,000.00 as a Special Award, including interest. The calculation of the Special Award is predicated on the amount of $46,179.26 paid by State Farm to satisfy the Award. The Special Award represents approximately 28% of the total award.

November 9, 2015

Patrick N. Bowles Arbitrator

Date