Neutral Citation: 2017 ONFSCDRS 210 FSCO A13-005263 and A13-002265

BETWEEN:

TAMMY KECK Applicant

and

SOVEREIGN GENERAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Irvin H. Sherman Heard: By written submissions completed July 14, 2017

Appearances: Mr. Allen Wynperle participated on behalf of Ms. Tammy Keck Ms. Janet Young participated on behalf of Sovereign General Insurance Company

Issues:

The Applicant, Ms. Tammy Keck, was injured in an automobile accident that occurred on April 5, 2011 and sought accident benefits from Sovereign General Insurance Company (“Sovereign General”) payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Keck applied, through her representative, for Arbitration of her claims at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The Arbitration Hearing took place before me over an 8-day period in April and June 2016. The Applicant sought: (a) a determination that she suffered a catastrophic impairment as a result of the accident; (b) income replacement benefits in the amount of $400.00 per week from May 22, 2012 to date and ongoing; (c) entitlement to eighteen medical benefits; (d) a special award on the basis that Sovereign General unreasonably withheld or delayed payments to her; and (e) interest on the overdue payments of benefits.

In my decision, dated December 19, 2016, I ordered that:

The Applicant sustained a catastrophic impairment as defined in paragraph 3(2)(f) of the Schedule.
The Applicant is entitled to receive income replacement benefits in the amount of $400.00 per week from May 22, 2012 to date and ongoing.
The Applicant is not entitled to receive medical benefits.
Sovereign General is not liable to pay a special award.
The Applicant is entitled to interest on the overdue payment of income replacement benefits.
If the parties are unable to agree on the entitlement to or the quantum of expenses in this matter, the parties may request an appointment with me for the determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code (“DRPC”).

The parties were unable to agree as to entitlement to or quantum of expenses in this matter, and have sought this Expense Hearing.

The issue in this Expense Hearing is:

Is either party entitled to its expenses with respect to the Arbitration Hearing?

Result:

The Applicant is entitled to her expenses in the amount of $55,572.80, inclusive of disbursements and HST.

EVIDENCE AND ANALYSIS:

APPLICANT’S SUBMISSIONS

Mr. Wynperle, counsel for the Applicant, submitted that his client had achieved overwhelming success at the Arbitration Hearing, such that she should be awarded her expenses. The Applicant submitted an Offer to Settle on March 29, 2016, which proposed that Sovereign General agree to the following: (a) pay income replacement benefits from May 22, 2012 to date and ongoing less any collateral benefits; (b) pay $20,000.00 to three health professionals on account of outstanding treatment plans; (c) confirm that the Applicant was catastrophically impaired as a result of the accident; and (d) pay the expenses of the Arbitration up to the date of the acceptance of the Offer to Settle. The terms of the Offer to Settle were severable.

The Applicant submitted that only one part of the Offer to Settle was inconsistent with my Order, and that related to the payment of $20,000.00 for outstanding treatment plans which were found to be unreasonable and unnecessary. The Applicant further submitted that no more than a half-day of the eight Hearing days related to the treatment plans.

Mr. Wynperle claimed to have spent 377.5 hours on the Arbitration at an hourly rate of $150.00, amounting to $56,625.00 plus $7,361.25 HST. He claimed a further $31,448.00 plus $4,088.29 HST for disbursements. The total claimed was $99,822.94, inclusive of HST.

INSURER’S SUBMISSIONS

Ms. Young, on behalf of Sovereign General, submitted that Sovereign General paid $9,234.90 for the catastrophic assessment reports relied on by the Applicant at the Hearing - the amount it was liable to pay under paragraph 25(5)(a) of the Schedule. The Applicant could not now demand payment of the difference between the $14,383.93 claimed and the $9,234.90 paid, which would exceed the expense guidelines, and then claim it as an expense arising out of the Arbitration. She submitted that $1,900.00, attributable to the cost of Dr. Frasina’s report and his attendance at the Hearing, should be disallowed because Dr. Frasina’s treatments were found to be unreasonable and unnecessary. Ms. Young took issue with Mr. Wynperle’s submission that the time spent at the Hearing with respect to Dr. Frasina’s treatment plans was one-half day, submitting that considerably more time had been spent on that issue.

ANALYSIS

The criteria respecting expenses are set out in Rule 75.2 of the DRPC and are stated thus:

Each party’s degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with Rule 76.
Whether novel issues are raised in the proceeding.
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.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
Whether the insured person refused or failed to submit to an examination as required under the Schedule or refused or failed to provide any material required to be provided.

Criteria 3, 4, 5 and 6 are not relevant to this Expense Hearing.

The Applicant was successful on the issues relating to her entitlement to pre-104 and post-104 weekly income replacement benefits with interest thereon, and the determination of catastrophic impairment. She was unsuccessful on her claims for medical benefits and a special award.

The Applicant made an Offer to Settle under which Sovereign General could accept or reject any or all the terms of the offer. Sovereign General declined the Offer to Settle in its entirety and proceeded to Arbitration.

Sovereign General made no submissions on the hourly rate submitted by Mr. Wynperle, or on the amount of hours he spent with respect to the Arbitration. In view of the parties’ divided success, Sovereign General submitted that the Applicant’s claim for expenses should be reduced by 50 per cent.

In view of the divided success achieved, I reduce the Applicant’s expenses by 40 per cent that, in my view, is reasonable in the circumstances. The Applicant is therefore awarded expenses in the amount of $33,975.00, plus $4,416.75 HST, for a total of $38,391.75.

With respect to disbursements, I requested that counsel provide me with further submissions relating to the catastrophic assessment reports, which I have reviewed.

Ms. Young submitted that under paragraph 25(5)(a) of the Schedule, the amount to be paid for each catastrophic assessment report is limited to $2,000.00. Sovereign General relied on the decision of Arbitrator Bowles in the case of Henderson and Wawanesa Mutual Insurance Company (FSCO A14-001758, July 9, 2015), wherein Arbitrator Bowles held that paragraph 25(5)(a) of the Schedule makes it clear that the expense attributable to each assessment report is limited to $2,000.00.

Mr. Wynperle acknowledged the $2,000.00 limitation for a report, but submitted that under subsection 5(5) of Section F of the DRPC, an Applicant can claim as expenses up to $1,500.00 for each assessment report. The Applicant therefore claimed the further sum of $5,149.03 for the three catastrophic assessment reports on that basis. Mr. Wynperle made no submissions on the application of Henderson to the facts of this Expense Hearing.

I accept Sovereign General’s submission on this issue. If the Applicant were to receive a further $4,500.00 for the three catastrophic assessment reports, she would have been paid twice for each report. She was already reimbursed $9,234.90 for these three reports. Such payments would have been based on two different regulatory authorities. I agree with Arbitrator Bowles that paragraph 25(5)(a) of the Schedule refers to a maximum payment of $2,000.00 for any one (my emphasis) assessment or report, and for preparing reports, whether such reports were conducted at the instance of the insured person or the Insurer. It would be contrary to the intention of the Insurance Act, the Schedule and the Regulations to award two payments for one disbursement.

Sovereign General submitted that it should not be liable for the $1,900.00 claim for Dr. Frasina’s chiropractor’s report. Mr. Wynperle made no submissions on this issue. I deduct the sum of $1,900.00 for this report because Dr. Frasina’s treatment plans were found to be unreasonable and unnecessary.

The Applicant claimed $31,488.40 for disbursements; I deduct $1,900.00 relating to Dr. Frasina’s report and $14,383.93 for the catastrophic assessment reports, given Sovereign General lawfully paid $9,234.90 for those reports, and the balance has been disallowed. The total disbursements payable are $15,204.47 plus $1,976.58 for HST, for a total of $17,181.05.

EXPENSES:

I fix the expenses payable by Sovereign General to the Applicant at $55,572.80, inclusive of disbursements and HST.

July 31, 2017

Irvin H. Sherman Arbitrator

Date

Financial Services Commission of Ontario