Neutral Citation: 2018 ONFSCDRS 47 FSCO A13-010835

BETWEEN:

PO YUAN ANDY TSANG Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

EXPENSE DECISION

Before: Charles Matheson

Heard: By written submissions completed on December 19, 2016

Appearances: Mr. P. Yeung, lawyer, participated for Mr. Tsang Ms. L. De Thomasis lawyer, participated for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mr. Po Yuan Andy Tsang, was injured in a motor vehicle accident on October 18, 2010. He applied for and received statutory accident benefits from Nordic Insurance Company of Canada (“Nordic”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Tsang, through his 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 issues in this hearing are:

Is State Farm entitled to recover its reasonable expenses pursuant to Rules 70.3 and 75 of the Dispute Resolution Practice Code?
If so, what is the amount of expenses to which State Farm is entitled?

Result:

The Insurer is entitled to claim its expenses.
The parties shall bear their own expenses.

Background

A pre-hearing on this matter was heard on December 19, 2014, at which time the parties clarified the issues in dispute, which included a non-earner benefit, attendant care benefit and a treatment plan and a small amount of administrative costs for a cost of examination, interest and cost for the arbitration for each party. The Applicant participated at this pre-hearing.

At the pre-hearing the Applicant provided proof of the incurred expenses for their Attendant Care benefit and also provided a requested OCF-3 dated February 8, 2012 to the Insurer.

The arbitration hearing was set to commence on August 31, 2016.

On October 27, 2015 the Insurer paid the clinic $1,890.00, which resolved the medical account and the costs of examination issues. On or about February 5, 2016 the Applicant confirmed that he did not want to pursue the non-earner benefit, and instructed his lawyer to withdraw the application for arbitration.

The Applicant’s law firm sent an e-mail to FSCO stating the withdrawal of the application. The Insurer received this information via e-mail from FSCO on or about February 17, 2016. On or about March 30, 2016 the Insurer registered its objection to the unilateral withdrawal of the application without costs, and requested an expense hearing pursuant to Rule 70.3 of the Dispute Resolution Practice Code (Fourth Edition — Updated January 2014) (the “Code”).

A resumption of pre-hearing was held on September 2, 2016, by teleconference, where the expense hearing was discussed and a timeline for same was established.

Arguments

The Applicant argues that he acted in a forthright manner at all times and withdrew his application well before the arbitration hearing date, but after the Insurer had paid the outstanding clinical amounts owed to the third party service providers.

Upon confirmation by his service providers that he may no longer meet the complete inability test, and that there were no further incurred expenses attached to his attendant care benefit claim, the Applicant promptly withdrew his complete application for arbitration.

The Applicant relies in part on Rule 1.1 of the Code, which reads in part as follows;

These Rules will be broadly interpreted to produce the most just, quickest and least expensive resolution of the dispute.

The Applicant argues that there was no success at the arbitration because the arbitration did not take place. The Applicant was fully participatory in the process and complied with the information requests of the Insurer as promptly as he could.

The Insurer argues that they are entitled to relief from the unilateral withdrawal of the application for arbitration under Rule 70.3, using the criteria under Rule 75.2 of the Code which reads as follows:

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;

(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 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; and

(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.

The Insurer argues it was the successful party by virtue of the fact that the Applicant withdrew the application. The Insurer argues that the withdrawal amounts to an abandonment of the Applicant’s claim.

In regards to offers of settlement in accordance with Rule 76 of the Code, the Insurer relies on the fact that the Insurer made two offers of settlement. The first offer was on June 5, 2014 which made an offer to settle in the amount of $1,474.14 all-inclusive. The second offer was submitted on April 28, 2016 which took the form of an offer to settle for a without costs dismissal. The Insurer submits that the second offer has not been responded to by the Applicant.

In regards to the conduct of a party, the Insurer argues that the Applicant submitted subsequent treatment plans that were not subject to this arbitration, and argues that the mediation, held on April 28, 2016 caused unnecessary and extensive delays.

In regards to improper or vexatious or unnecessary aspects of the process the Insurer argues that by virtue of withdrawing his application, the Applicant abandoned his claim ergo the Applicant’s claims were unnecessary and likely frivolous.

In regards to whether an insured person refuses or fails to submit to a section 44 examination assessment, the Insurer argues that the Applicant failed twice to attend two assessments to determine whether the Applicant’s injuries fell within the Minor Injury Guideline.

The Insurer has submitted its Bill of Costs which show a total of $1,964.59 in legal fees adjusted by Legal Aid for 16.9 hours of effort, plus $3,113.91 for disbursements, (inclusive of the Insurer’s filing fee) for a total of $5,333.90.

Decision

I agree with the Insurer that, under the Rule 70.3, where a party contests a withdrawal of an application, that party may seek their expenses as per Rule 75 of the Code.

However, I remain unconvinced that the Insurer was the successful party, as the outcome of the issues in dispute listed within the pre-hearing letter were divided.

In my view, the Applicant would not have had his service providers paid any amount from the Insurer had the Applicant not pursued his rights at an arbitration.

In my view, the Applicant and the Insurer both started to properly adjust this file after the application for arbitration had been filed. Once the proper adjusting of the file occurred, the Applicant was successful in getting his service providers their respective incurred costs. Therefore, in my view, the Applicant had to push the Insurer to properly adjust the file, which resulted in the costs the Insurer incurred during the pre-hearing and settlement process.

In regards to the expense hearing costs, I note that the Insurer has pursued an expense hearing, and as such has created the expense of this hearing of its own volition. I note the Insurer has spent more time on the expense hearing than it did during any one event within the whole pre-hearing and settlement process.

I remain unconvinced that a withdrawal of an application is in itself an admission of a frivolous or vexatious claim or that the claim had no merit, in light of the fact that the Insurer paid out the service providers. The Applicant, after the passage of time improved to the point where he did not think he could be successful in meeting the complete inability test for the non-earner benefit or qualify for the continued attendant care benefit. Therefore he withdrew the application. This in my view, seems reasonable in the circumstances.

I note the withdrawal was not done at the 11th hour but more than five months prior to the hearing.

I remain unconvinced that an Applicant pursuing his rights to further accident benefits after he has begun the dispute resolution process on previously denied issues is, in itself, unnecessary or prolongs any process. I note, nothing in the Schedule prevents an applicant from applying for new benefits during the Dispute Resolution process.

I am unable to find any expenses incurred by the Insurer which were as a direct result of the withdrawal of the application. In my view, the expenses were all properly accounted for during the file adjustment and pre-hearing stages.

Therefore, for the reasons above, the Insurer has the right to pursue its costs of a contested withdrawal of an application, however, in these circumstances, I find the parties shall bear their own expenses.

February 28, 2018

Charles Matheson Arbitrator

Date

Financial Services Commission of Ontario