Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 104
FSCO A13-005383
BETWEEN:
OPHELIA OFORI
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
EXPENSE DECISION
Before:
Charles Matheson
Heard:
By written submissions completed on May 11, 2018
Appearances:
Ms. O. Ofori, self-represented
Ms. S. Keenan lawyer, for State Farm Mutual Automobile Insurance Company
Issues:
The Applicant, Ms. Ophelia Ofori, was injured in a motor vehicle accident on July 31, 2010. She applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.1 State Farm denied certain claims made by Ms. Ofori. The parties were unable to resolve their disputes through mediation, and Ms. Ofori, through her representative, applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act, R.S.O. 1990, c. I.8, as amended.
The issue in this hearing is:
- Is the Insurer entitled to expenses arising from this proceeding and, if so, in what amount?
Result:
- The Applicant shall pay to the Insurer $10,000.00, inclusive of disbursements and all applicable taxes.
Background
The Applicant pursued at arbitration the following benefits: caregiver, house keeping, attendant care, two unpaid portions of two treatment plans, a special award and any interest on any overdue payments. The Applicant was unsuccessful on all issues at arbitration. The Applicant appealed the arbitrator’s decision and also failed at the appeal.
Arguments
The Insurer argues that through the FSCO Dispute Resolution Practice Code2 (the “Code”) Rule 75, 78 and Section F of the Expense Regulation sets out what items should be considered and the amounts to be awarded by an arbitrator when making an expense hearing award.
The relevant sections of the Expense Regulation found in Section F of the Code reads as follows:.
- 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.
(f) Whether the Insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403196 (Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation; and
(g) Whether the Insured person refused or failed to submit to an examination as required under section 44 of Ontario Regulation 34110 (Statutory Accident Benefits Schedule - Effective September 1, 2010), made under the Act, or refused or failed to provide any material required to be provided under subsection 44 (9) of that regulation.
The Insurer argues the above first three criteria are relevant in this case.
Under criteria a) the Insurer argues that it was the wholly successful party at both the arbitration and the subsequent appeal.
Under criteria b), the Insurer acknowledges that there were a series of settlement offers, however the final offer made by the Insurer was made on March 18, 2016 for a full and final settlement of the arbitration issues, including legal expenses in the amount of $19,350.00. The Insurer contrasts its offer to that of the Applicant, who on the same day replied with their own offer of settlement in the amount of $148, 932.24. The Insurer argues that this offer of settlement was not reasonable, in that the offer exceeded the policy limits for non-catastrophic limits for the care giver benefit and was only to settle the issues at arbitration, and not the complete claim.
Under criteria c), the Insurer argues that the issues within the arbitration were of moderate complexity, however they were not novel, such that the parties required a hearing and could not have resolved the issues on the basis of its fair and reasonable offer of settlement of March 18, 2016.
The Insurer is seeking $19,018.20 for legal fees, which reflects the work of two counsel and a law clerk who mounted the defence for the Insurer, and that of a third lawyer who prepared motion materials for a preliminary motion addressing the Applicant’s proposed witnesses and evidence. Disbursements being claimed by the Insurer is in the amount of $15,057.59, plus an additional $2,472.35 for HST, for a total of $36,548.14. The Insurer argues that its Bill of Costs were calculated in accordance with Rule 78.1 of the Code, as directed under the Legal Aid Services Act, 1998.
The Insurer relies on McCready and State Farm Mutual Automobile Insurance Company3, where the Insurer argues that this case is similar to the current case because the Insurer was wholly successful at arbitration, and the criteria considered by that arbitrator are also similar. Further, the fees awarded in McCready are higher than those being sought by the Insurer in this case and the disbursements are comparable.
The Applicant argues that State Farm did not treat her fairly, throughout the whole process. Despite providing the Insurer with medical evidence of her injuries and on-going medical issues, confirmed by her physiotherapist and psychologist’s various opinions, State Farm continues to deny her benefits. As further proof of the Insurer’s unfair dealings with her, the Applicant claims that the final offer she received from the Insurer would not cover her expenses at the rehabilitation facility and her child care costs, let alone her legal costs. The Applicant submits she is still experiencing the headaches, back pains, constant flash backs, memory issues, and insomnia as a result of the accident.
In her opinion, State Farm caused the hearing to happen as they were the unreasonable party, as the Insurer was not willing to recognize her medical expenses to date and her need for future medical benefits in its full and final offers of settlement. Therefore, State Farm should bear its own expenses in this matter.
Decision
I note that Arbitrator Musson in McCready, finds and agrees with Arbitrator Reilly in Tesfagiorgis and State Farm4, that the objective of an expense hearing is to fix an amount that is fair and reasonable.
Upon review of the arbitration award for this case, I find that it was a legitimate dispute and not a case where the Applicant put forward a fraudulent or misleading claim. Indeed the parties simply had a different view of the case and the Applicant was entitled to exercise her right to dispute the Insurer’s findings. Unfortunately, the Applicant could not prove her entitlement to the claimed benefits.
In my view a broad stroke approach is appropriate and reasonable.
In review of the Bill of Costs for the Insurer, I note that the hourly rate for Ms. Friedman (senior counsel) is $136.43 and not the claimed $150.00 per hour. Furthermore I note that the hours of work being reported by the Insurer is consistent with those hours being charged by the Applicant’s own representative and appear to be reasonable.
In regards to disbursements, I note that the fee being charged for photocopies and printing, for a three day hearing is $5,089.90. This is, in my view, excessive. I note that this same fee in McCready for a nine day hearing was $700.00, which is reasonable and therefore substituted.
Furthermore, I find the fee being charged for the expert witness, Dr. Abuzgaya, of $4,350.00 to be excessive and beyond the allowable maximums under s.5 (3) and (4) of the Expense Regulation- Section F, of the Code, which allows a maximum of $500.00 for arbitration preparation and allows a further $200.00 an hour for the doctor’s attendance with a maximum of $1,600.00 per day. I am allowing $200.00 for the doctor’s preparation time and a further $800.00 for testifying time at the hearing, for a total of $1,000.00. I am not allowing the $1,552.62 fee being charged for the reporter as this service is discretionary on the part of the Insurer, and is not an allowable expense.
Once the above mentioned adjustments are made to the Insurer’s Bill of Costs, I find that the Insurer’s reasonably claimed expenses are in the range of $21,000.00, inclusive of H.S.T. and disbursements.
In my view of the circumstances of this case including degree of success, consumer protection and access to justice, I fix the expenses payable by the Applicant to the Insurer at $10,000.00. This includes legal fees, disbursements, HST, and expenses associated with this Expense hearing.
Charles Matheson
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 104
FSCO A13-005383
BETWEEN:
OPHELIA OFORI
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Ontario Regulation 664, as amended, it is ordered that:
- The Insurer is entitled to its reasonable expenses of $10,000.00, inclusive of H.S.T. and disbursements.
Charles Matheson
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule –Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Dispute Resolution Practice Code, Fourth Edition, January 2014.
- (FSCO A15-006980, August 8, 2017).
- (FSCO A14-003779, April 24, 2017).