Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 117
FSCO A15-008365
BETWEEN:
CLAUDINE MARKLAND
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
DECISION ON EXPENSES
Before: Anne Sone
Heard: Final written submissions received by February 5, 2018 after a telephone conference call on January 26, 2018.
Appearances: Joseph Campisi Jr. for Ms. Markland
Victoria Fraser for Allstate Insurance Company of Canada
Overview:
The Applicant, Claudine Markland, was injured in a motor vehicle accident on April 29, 2015. She applied for statutory accident benefits from Allstate Insurance Company (“Allstate”) payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Ms. Markland applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
A few days prior to the hearing scheduled to commence on July 4, 2017, the parties resolved all of the issues in dispute, except expenses. Regarding expenses, Ms. Markland and Allstate could not agree on an amount, and requested an assessment from the Commission.
Issue:
The issue in this hearing is:
- Is Ms. Markland entitled to her expenses incurred for preparation for her arbitration hearing scheduled for July 4, 5 and 6, 2017?
Result:
- Ms. Markland is entitled to her expenses incurred for preparation for her arbitration hearing scheduled for July 4, 5 and 6, 2017, fixed at $3,000, inclusive of H.S.T. for fees and at $3,294.49, inclusive of H.S.T. for disbursements.
EVIDENCE AND ANALYSIS:
Background:
Ms. Markland filed an Application for Arbitration on November 3, 2015. It set out the following claims:
Income replacement benefits in the amount of $400 per week from August 28, 2015 to date and ongoing.
Attendant care benefits in the amount of $7,792.14 per month from April 29, 2015 to date and ongoing, less amounts paid to date.
Medical benefits for
-Assistive devices in the amount of $4,480.57
-Transportation expenses by taxi in the amount of $1,500.
The cost of an MRI examination in the amount of $1,725.
Ms. Markland’s expenses.
Interest for the overdue payment of benefits.
On February 18, 2016, Allstate advised that it would continue Ms. Markland’s income replacement benefits. Accordingly, this issue was withdrawn.
At the pre-hearing discussion on May 26, 2016, the other issues were still in dispute. It was noted that Allstate paid $9,969.60 for attendant care for May 1 to August 31, 2015 and October 1 to 20, 2015.
A private global mediation with the tort defendant and Ms. Markland’s long-term disability carrier took place on May 17, 2017. It failed. After this, Ms. Markland prepared for the arbitration. In the course of doing so, she looked at the reasons for the insurer’s denials, including reports pertaining to issues no longer in dispute, such as income replacement benefits.
Ms. Markland alleged that the insurer’s reports contained inaccurate, misleading, and biased information. She also alleged that they discovered certain irregularities with respect to two of the insurer’s assessors’ billing practices. As a result, she states she felt obliged to summons insurer examination assessors who conducted assessments with respect to the income replacement benefit, which was no longer in dispute.
In addition, she alleged that Allstate had contravened the Unfair and Deceptive Acts or Practices Regulation2 of the Insurance Act, and summonsed the President and CEO of Allstate.
Ms. Markland states that she took these actions because the opinions given by the assessors for entitlement to an income replacement benefit touched on matters related to the issues in dispute. She submits that her findings regarding billing practices cast doubt on the independence of the reports’ authors, and raised concerns about whether this was a systemic approach adopted by Allstate.
Allstate submits that these actions were not relevant to the issues in dispute in this arbitration and greatly increased the expenses incurred by both parties.
The issues in dispute in the arbitration were settled on June 30, 2017 for the sum of $4,475 paid to Ms. Markland’s counsel, in trust. In addition, Allstate paid $4,480.57 directly to the provider of the disputed assistive devices.
Neither party raised any issue around my jurisdiction to decide the issue of expenses in this case. In any event, I find that I did have jurisdiction to decide it based on the reasoning of Arbitrator Renahan in Thevasagayam and Security National Insurance Company.3
Entitlement to Expenses:
Pursuant to subsection 282(11) of the Insurance Act:
The Arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer all or part of such expenses incurred in respect of an Arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.
The criteria an adjudicator shall consider when deciding whether to award expenses are found in Ont. Reg. 664, in Rule 75.2 and Section F of the Dispute Resolution Practice Code (Fourth Edition, updated January 2014). I will discuss each of these criteria in order.
(a) Each party’s degree of success in the outcome of the proceeding:
Allstate acknowledges that Ms. Markland was successful in settling the issues in dispute in her favour. It states that the issues were resolved once the insurer received all the information it required.
(b) Any written offers to settle made in accordance with Rule 76:
On June 7, 2017, Ms. Markland made an official Offer to Settle to Allstate. It asked Allstate to pay the following:
$4,480.56 for assistive devices
$1,500 for transportation expenses
$10,000 for attendant care expenses from April 29, 2015 to April 29, 2017
$1,725 for the cost of an MRI
This offer was inclusive of interest.
It also stated that Allstate “shall pay the legal expenses and the disbursements of the Applicant, as agreed between the parties or as assessed by an arbitrator.”
On June 8, 2017, Allstate rejected this offer and explained why. It provided a counter-offer of the following:
$2,480.74 to Ms. Markland’s attendant care service provider for an amount outstanding for the period between May 5, 2015 to October 31, 2015
$1,819.30 for an attendant care benefit after the stoppage date of October 21, 2015, in full resolution of all attendant care benefit claims up to and including 104 weeks.
Ms. Markland provided further information to Allstate. After further negotiation, a settlement ensued, except with respect to Ms. Markland’s expenses.
(c) Whether novel issues are raised in the proceeding:
Not applicable to this proceeding.
(d) The conduct of a party or party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders:
Allstate submits that Ms. Markland’s summonses to assessors who prepared reports regarding income replacement benefits and allegations regarding unfair practices were unnecessary and added unnecessarily to the costs of the proceedings for both parties.
Ms. Markland submits that all the matters she raised assisted in obtaining a favourable settlement. There was no affidavit evidence provided to prove that the matters raised by Ms. Markland’s counsel were or were not directly or indirectly related to the arbitration. Accordingly, I have no sworn evidentiary basis to find that there was conduct of a party or party’s representative that tended to prolong, obstruct or hinder the proceeding.
(e) Whether any aspect of the proceeding was improper, vexatious or unnecessary:
For the reasons set out in (d) above, I have no sworn evidentiary basis to find that 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 403/96 (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.
Not applicable to this proceeding.
(g) Whether the insured person refused or failed to submit to an examination as required under section 44 of Ontario Regulation 34/10 (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.
Not applicable to this proceeding.
Conclusion regarding Entitlement to Expenses:
As part of the settlement, Ms. Markland received almost everything she was claiming in the arbitration. Further, the wording of the correspondence between the parties shows that Allstate contemplated and agreed that Ms. Markland would receive expenses.4 The issue was how much those expenses would be. I find that Ms. Markland is entitled to expenses in this proceeding.
Amount of Expenses:
Statutory Framework:
The amount of expenses I may award is set out in section 3 of Schedule – Dispute Resolution Expenses pursuant to subsection 282(11) of the Insurance Act. It states as follows:
3.(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:
For all services performed before an arbitration, appeal, variation or revocation hearing.
For the preparation for an arbitration, appeal, variation or revocation hearing.
For attendance at an arbitration, appeal, variation or revocation hearing.
For services subsequent to an arbitration, appeal, variation or revocation hearing.
(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12(2) of this Regulation.
(3) The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates set out in the Dispute Resolution Practice Code published by the Ontario Insurance Commission or the Financial Services Commission of Ontario, as it may be amended from time to time.
Ms. Markland’s Claim for Expenses:
Ms. Markland submits that after agreeing on the terms for a settlement of the issues in dispute at arbitration, her counsel sent a bill of costs to Allstate. Two copies were sent on July 6, 2017. One used her counsel’s regular hourly rate, and the second set out rates below those established under the Legal Aid Services Act, 1998. She submits that her counsel further divided this bill by two thirds and suggested that Allstate pay $6,633.33 plus H.S.T. for its expenses.
Ms. Markland’s counsel confirmed in a letter dated January 29, 2018 that his time spent at a private mediation was not included in these bills of costs.
Ms. Markland had claimed a balance of $4,904.49 for disbursements. However, she advised Allstate that she was prepared to accept $5,000, inclusive of H.S.T for disbursements. A short time later, she requested an additional $802.20 for disbursements, which were initially overlooked, representing the cost of serving various summons.
Allstate’s Submissions and Ms. Markland’s Response:
Allstate submits that the bulk of the counsel fees (at the Legal Aid rate) that Ms. Markland claims in her bill of costs pertain to unrelated issues including Unfair and Deceptive Practices Regulation2 relating to income replacement benefits.
On July 10, 2017, Allstate offered $1,500 plus H.S.T. for expenses and $2,500 for disbursements in relation to the resolved issues in dispute. It submits that one of Ms. Markland’s counsel spent the following unnecessary time on the file:
Allegations of unfair and deceptive acts and practices
Summonsing health practitioners who conducted assessments in relation to income replacement benefits (not in dispute)
Summonsing the President and C.E.O. of Allstate regarding requests for a copy of attestations filed with the Commission for which no legal authority was provided.
Ms. Markland disputes that these tasks were unnecessary and submits that they were required to produce the settlement that she obtained.
Analysis and Conclusion regarding Fees and Disbursements:
The overriding consideration in fixing arbitration expenses for legal fees is reasonableness.
In terms of the hearing time, Arbitrator Makepeace confirmed in Henri and Allstate Insurance Company of Canada,5 that “a line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.”
As a rule of thumb, Arbitrators have allowed expenses for preparation for hearing time to the actual hearing time on a ratio of between 1:1 and 1:4.
According to the bill of costs provided to me, Ms. Markland’s three counsel, Mr. Campisi, Mr. Murray and Ms. Sylvia Guirguis, spent a total of over 100 hours on this case. It led to a favourable settlement for Ms. Markland; however, it seems that a large part of the 53.16 hours Mr. Murray spent was for the purpose of addressing systemic issues rather than pertaining to the issues in dispute in this case.
Counsel should not be penalized for putting in a lot of effort to obtain a favourable settlement for their client. However, this case did not proceed to a hearing, and I must consider this.
In terms of the disbursements, counsel for Ms. Markland agreed that $1,610 paid for her share of a private mediation be deducted from her original claim for $4,904.49 plus H.S.T. for disbursements.
Ms. Markland also claimed $802.20 in disbursements for summonsing insurer examination doctors not connected to the issues in dispute, and for summonsing the President and C.E.O. of Allstate. I am not prepared to order this amount, as it is not clear to me that this disbursement was justified, based on the issues in dispute in this case at that time.
For the reasons set out above, I order Allstate to pay to Ms. Markland her fees in respect of this arbitration proceeding, fixed at $3,000, inclusive of H.S.T. and $3,294.49, inclusive of H.S.T. for disbursements.
June 18, 2018
Anne Sone Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 117
FSCO A15-008365
BETWEEN:
CLAUDINE MARKLAND
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
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 Regulation 664, as amended, it is ordered that:
- Allstate pay Ms. Markland for fees in respect of this arbitration proceeding fixed at $3,000, inclusive of H.S.T. and $3,294.49, inclusive of H.S.T. for disbursements.
June 18, 2018
Anne Sone Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule - Effective September 1, 2010, Ontario Regulation 34/10, as amended.
- (O. Reg. 7/00).
- (FSCO A05-000493, April 18, 2006).
- Not until its submissions did Allstate claim for its expenses related to time spent responding to matters raised by Applicant’s counsel, which Allstate submits were unrelated to the arbitration. Ms. Markland submits that all the matters she raised assisted in obtaining a favourable settlement. As indicated above, there was no affidavit evidence provided to prove that the matters raised by Ms. Markland’s counsel were or were not directly or indirectly related to the arbitration.
- (OIC A-007954, August 8, 1997).