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

Neutral Citation: 2016 ONFSCDRS 219

FSCO A14-007432

BETWEEN:

MICHELE SMITH Applicant

and

HALWELL MUTUAL INSURANCE COMPANY Insurer

DECISION ON A MOTION

Before: Arbitrator Anne Morris

Heard: By written submissions completed on June 10, 2016

Appearances: Ms. Ava M. Hillier participated for Ms. Smith Ms. Jessica Forester participated for Halwell Mutual Insurance Company

Issues:

The Applicant, Ms. Michele Smith, was injured in a motor vehicle accident on April 30, 2013 and sought accident benefits from Halwell Mutual Insurance Company (“Halwell Mutual”) payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Smith, 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.

The issues in this Motion are:

Is the Applicant entitled to an award for interim expenses under s. 282(11.1) of the Insurance Act² in the amount of $3,390.00 towards the cost of two Omega Medical Associates (“OMEGA”) catastrophic assessment reports?
Is either party entitled to its expenses of the Motion?

Result:

The Applicant is not entitled to an interim award of expenses under s. 282(11.1) of the Insurance Act³ in the amount of $3,390.00 towards the cost of two OMEGA catastrophic assessment reports.
The question of expenses related to this Motion is deferred to the Hearing Arbitrator.

EVIDENCE AND ANALYSIS:

Background

The following facts are not disputed. Ms. Smith, who is 58 years old, was injured in a motor vehicle accident on April 30, 2013. An Application for Determination of Catastrophic Impairment (OCF-19) was completed by her family doctor on September 22, 2015, pursuant to s. 45 of the Schedule. Halwell Mutual denied the Application for Catastrophic Impairment on February 2, 2016, on the basis that the Insurer’s Examinations determined that the Applicant was not catastrophically impaired.

A treatment plan in the amount of $12,091.00 was submitted to Halwell Mutual by Dr. Harold Becker at OMEGA on March 3, 2016. This treatment plan requested that Halwell Mutual pay for a catastrophic determination assessment. This treatment plan was denied by Halwell Mutual on March 24, 2016. Halwell Mutual’s basis for the denial was that the proposed examination was not necessary for preparing an application under s. 45 as the Applicant had already submitted her Application for Determination of Catastrophic Impairment.

According to the Affidavit of Ms. Ava M. Hillier, dated June 7, 2016, the Applicant underwent a catastrophic physiatry assessment with OMEGA on May 5, 2016.⁴ The OMEGA treatment plan also requested a catastrophic rating and analysis report.⁵

In this Motion, the Applicant is not pursuing an interim benefit with respect to the treatment plan for a catastrophic determination assessment. Rather, relying primarily on the reasoning in Cook and RBC General Insurance Company⁶ and Bernicky and Guardian Insurance Company of Canada,⁷ she is seeking an Order requiring the Insurer to pay interim expenses under s. 282(11.1) of the Insurance Act in the amount of $3,390.00 towards the cost of the two OMEGA catastrophic assessment reports.

This amount breaks down to $1,500.00 for each report plus HST. The $1,500.00 amount is in accordance with section “F” of the Dispute Resolution Practice Code which includes the Schedule to R.R.O. 1990, Reg. 664 (“the Expense Regulation”) made under the Insurance Act. The Expense Regulation provides for an award for preparation of an expert report to a maximum of $1,500.00 per report.

Section 282(11.1) provides the Arbitrator with the discretion to make an interim award of expenses as follows. The subsection states:

(11.1) The arbitrator may at any time during an arbitration proceeding make an interim award of expenses, subject to such terms and conditions as may be established by the arbitrator.

The Director’s Delegate in Cook found on the specific facts of that case, that the request for interim funding was a request for interim legal expenses. The Arbitrator at the Arbitration level had specifically found that the objective of the reports for which funding was requested was to provide sufficient evidence to rebut the Insurer’s assessments. As such, the cost of the reports was an Arbitration expense rather than a benefit under the Schedule.

In this case as well, the Applicant, Ms. Smith, submits that the “$12,091.00.00 treatment plan submitted by Omega Medical Associates is reasonable and necessary for the conduct of her Arbitration.”⁸ She submitted that the Insurer “has the benefit of four assessments and five catastrophic determination reports, totaling 105 pages, while the Applicant is relying on a two page OCF-19 completed by her family doctor.”⁹

It appears then that the objective of the catastrophic determination reports in this case is to provide evidence to rebut the Insurer’s evidence at the Arbitration Hearing. The Order requested therefore is properly categorized as a request for an interim expense pursuant to s. 282(11.1) of the Insurance Act.

In Cook, the Director’s Delegate relied on the three-part test established in Bernicky for an award of interim expenses. The Applicant and Insurer both stated in their submissions that the three-part test is as follows:

Does the Application for Appointment of an Arbitrator raise a bona fide issue?
Are the expenses claimed necessary for the Arbitration?
Is the Applicant unable to carry the expenses claimed?

Regarding the first part of the test, the Insurer has not denied that the determination of catastrophic impairment is a bona fide issue and I accept that it is.

Regarding the second part of the test, the Insurer submitted, that even without the OMEGA assessments, the Applicant has a considerable amount of other medical evidence to rely upon. I note, however, that catastrophic determination assessments are very specialized assessments, specifically addressing the criteria for catastrophic impairment, and, as such, the OMEGA reports are reasonably necessary for the Arbitration.

I have difficulty, however, with the third part of the test. The Applicant in her Affidavit of May 12, 2016¹⁰ provides no detail with respect to her financial situation other than simply stating that she is solely responsible for paying OMEGA’s invoice and that she is unable to pay it when it comes due.

Mr. James Wilson, the lawyer of record for the Insurer, provided an Affidavit, dated June 2, 2016,¹¹ and attached as Exhibit “E”¹² to that Affidavit, a letter from the Applicant’s lawyers, dated April 14, 2016, which seems to suggest that the Applicant’s law firm would be responsible for paying the cost of the assessments not covered by the Insurer. The Insurer submitted that this demonstrated an intention to fund “this litigation expense, as many law firms do, pending the ultimate resolution of this action.”¹³

The Applicant’s lawyer provided a reply Affidavit, dated June 7, 2016, in which she advised that the Applicant was solely responsible for payment of the reports and that there was no litigation pending from which the expense could be recovered.¹⁴ She is presumably excluding this Arbitration from “pending litigation.” This does not entirely make sense as what is being requested is an interim litigation or Arbitration expense which may become payable at the conclusion of the Arbitration Hearing.

Be that as it may, I note that the Arbitrator at the Arbitration stage in the Cook case discussed at some length Mr. Cook’s evidence of financial hardship.¹⁵ His income replacement benefits had stopped. He faced eviction because he could not pay his rent. He went on social assistance. He went to live with his sister.

The only evidence of financial plight in this case is a bald assertion by the Applicant that she cannot pay the invoice as it comes due. Mr. Wilson, in his Affidavit, referenced an Examination Under Oath of the Applicant, conducted by the Insurer.¹⁶ The Insurer learned at that Examination that the Applicant was a real estate agent prior to the accident. She owns her own home. She has maintained her real estate licence. The Canada Pension Plan file provided to the Insurer disclosed that she is now in receipt of CPP payments retroactive to March 2015.¹⁷

I am mindful of the statement by the Arbitrator in Bernicky that:

In my view, the proper time for the question of expenses to be decided is after all the issues, evidence and arguments have been placed before an arbitrator. I consider that a pre-hearing arbitrator should exercise his or her discretion to award interim expenses only in restricted circumstances.¹⁸

The Arbitrator in Bernicky went on to say with respect to the inability to carry the expenses claimed part of the test that:

I consider that the awarding of interim expenses should be restricted to the narrow situations where the need is such that lack of funds or financial resources will impair the ability of an applicant to conduct or continue the arbitration. Otherwise undesirable consequences flow such as an increase in the cost, length and complexity of proceedings¹⁹.

In this case, while I recognize my discretion to award interim expenses, I do not believe that an award of interim expenses should be a routine matter. I have insufficient evidence before me of such financial hardship that without an interim expense award, the Applicant will be unable to conduct or continue the Arbitration. I therefore deny the request for interim expenses.

EXPENSES:

The question of expenses related to this Motion is deferred to the Hearing Arbitrator.

August 18, 2016

Anne Morris Arbitrator

Date

Financial Services Commission of Ontario