AIG Insurance Company of Canada v. Bhupinder Singh Grewal, 2018 ONFSCDRS 85

Commission des services financiers de l’Ontario

Neutral Citation: 2018 ONFSCDRS 85

Appeal P17-00012

Appellant

and

Respondent

BEFORE:

David Evans

J. Claude Blouin for AIG Insurance Company of Canada

Frank Burns for Mr. Bhupinder Singh Grewal

November 23, 2017

APPEAL ORDER

Under section 283 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, R.R.O. 1990, as amended, it is ordered that:

The appeal is dismissed and the Arbitrator’s order of January 3, 2017 is affirmed.
AIG Insurance Company of Canada shall pay Mr. Bhupinder Singh Grewal $3,000 in legal appeal expenses, inclusive of disbursements and HST.

April 24, 2018

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

AIG Insurance Company of Canada appeals Arbitrator Tanaka’s order of January 3, 2017, wherein she ordered AIG to pay arbitration expenses of $27,910.01 inclusive of HST and ordered AIG to pay interest on overdue benefits from 30 days after it received various treatment plans for medical and rehabilitation benefits.

Regarding the expenses, AIG submits that there are errors with respect to the disbursements and that the amount allowed for legal fees far exceeds the normal ratios for preparation hours to hearing hours.

I find that the Arbitrator had the discretion to make the expenses order she did and the Arbitrator did not err in law in doing so.

Regarding interest, AIG submits that, pursuant to s. 38(15) of the New Regulation,¹ payments are only due once an insurer receives an invoice. Since it never received invoices prior to the arbitration hearing, no payments were ever due, so no interest was owed.

I find that s. 38(15) only applies where an insurer has failed to give proper notice explaining why it has refused a medical or rehabilitation benefit. That was not the situation here, so I have no reason to disturb the Arbitrator’s finding.

II. BACKGROUND

This case involved an earlier arbitration and expense hearing before Arbitrator Feldman, followed by the current arbitration hearing and expense hearing. AIG has appealed only the expense hearing order.

Mr. Grewal made numerous claims against AIG arising from an accident that occurred on January 18, 2009. Under the Old Regulation,² he claimed several weekly benefits, attendant care benefits, and the costs of assessments and medical and rehabilitation benefits. The disputed issues proceeded to arbitration. On August 7, 2014, Arbitrator Feldman issued his written decision, dismissing all but one of the claims. However, while he dismissed a claim for treatment in the United States at $56,600 US, Arbitrator Feldman left it open to Mr. Grewal to submit a new treatment plan to AIG once valid neuropsychological test results were obtained.

Before expenses were determined in that case, an appeal was filed that ultimately upheld Arbitrator Feldman’s decision (FSCO P14-00032, August 13, 2015).

Finally, Arbitrator Feldman issued his expense decision on February 17, 2016, allowing 100 hours of legal services by Mr. Blouin, counsel for AIG throughout, but the quantum was reduced slightly because of Mr. Grewal’s minimal success.

The issue of the US treatment, as well as additional medical and rehabilitation claims made after September 1, 2010, came before Arbitrator Tanaka. The Arbitrator issued her substantive decision on February 16, 2016, allowing all the claims.

The issues of expenses, interest, and variation of the amount awarded for the US treatment were determined in the Arbitrator’s decision of January 3, 2017. The Arbitrator determined she had no jurisdiction to alter the quantum of the US treatment. That finding is not under appeal.

Regarding interest, the Arbitrator cited s. 46 of the Old Regulation as governing the payment of interest. She rejected AIG’s submission that because no invoice was ever submitted under the treatment plans, nothing was overdue. I note that AIG’s submission was based on the provisions in the Old and New Regulation that the procedure for claiming med/rehab benefits is governed by the New Regulation since September 1, 2010. It was relying on s. 38(15) of the New Regulation, as discussed further below. The Arbitrator found that interest was owed from 30 days after receipt of the various treatment plans.

As for expenses, the Arbitrator went through the first five expense criteria in the Expense Regulation.³

Under criterion 1, each party’s degree of success in the outcome of the proceeding, the Arbitrator found that Mr. Grewal was successful in this proceeding.

Criterion 2, any written offers to settle, did not apply, as there were no offers.

Under criterion 3, whether novel issues were raised in the proceeding, the Arbitrator noted that there was only one precedent for an Order that an Applicant attend an out-of-country provider for a medical benefit paid for by an Insurer, so it was a novel issue.

Under criterion 4, the Arbitrator noted that no conduct to prolong, obstruct or hinder the proceedings through failure to comply with undertakings or orders or to hinder the proceedings was alleged. However, she then essentially criticized AIG’s adjustment of the file.

Similarly, under criterion 5, whether any aspect of the proceeding was improper, vexatious or unnecessary, the Arbitrator noted that AIG’s adversarial approach had been unnecessary in light of its own assessors’ opinions.

As to the quantum of expenses, the Arbitrator declined to set a limit for legal fees based on a ratio of hearing time to preparation time because of AIG’s adversarial approach to this matter. She ordered that the legal fees, including HST, be paid in full in the amount of $14,848.43, at the maximum hourly rate for insured’s counsel of $150. The Arbitrator awarded disbursements based on Mr. Grewal’s amended Bill of Costs.

III. ANALYSIS

First, with respect to procedure, AIG is correct that the New Regulation governs procedural requirements for claims made after September 1, 2010.

The interaction of the Old and New Regulations was recently discussed in State Farm Automobile Insurance Co. v. Kulaveerasingam, 2017 ONSC 6278. The court noted that the Old Regulation applies to accidents that occurred after November 1, 1996 and before September 1, 2010. However, the Court noted that s. 3(1.2) of the Old Regulation provides that certain Parts of it do not apply after August 31, 2010. These expired Parts include Part X, Procedures for Claiming Benefits, containing both s. 38, dealing with medical and rehabilitation claims, and s. 46, dealing with interest payable on overdue benefits.

Subsection 2(2) of the New Regulation in turn deals with rules for the payment of benefits provided under the Old Regulation. It provides that certain Parts of the New Regulation, including Parts VIII and IX, apply in respect of benefits provided under the Old Regulation. Part VIII sets out the procedures for claiming benefits after September 1, 2010, including those for med/rehab benefits in s. 38; Part IX contains s. 51, dealing with interest.

The Arbitrator therefore erred when she referred to s. 46 of the Old Regulation regarding the payment of interest, although since the accident occurred before the New Regulation came into effect, the interest rate on outstanding benefits is still 2 percent.⁴ Subsection 51(1) of the New Regulation provides that “An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Regulation.”

AIG is also correct that s. 38 in Part VIII of the New Regulation contains certain provisions for the timing of insurer examinations and delivery of reports. AIG submits that s. 38(15) sets out that payment for goods and services need only be made within 30 days of receiving an invoice for them. Since it never received invoices up to the date of the hearing, no amounts payable in respect of the benefits were overdue and no interest was owed.

However, AIG interprets s. 38(15) too broadly. Section 38 deals with claims for medical or rehabilitation benefits where no treatment or assessment plan is required. Subsections (2) and (3) set out the requirements for treatment and assessment plans. Subsection (8) then gives the insurer 10 business days after receiving a proper treatment and assessment plan to give a proper notice why it does or does not agree to it. Subsection (11) actually sets out a penalty for failure to give such a proper notice, namely that the insurer is required to pay for the goods, services, assessments and examinations described in the treatment and assessment plan that are incurred from 11 days after the notice was due until proper notice is provided. Subsection (15) then provides that “The insurer shall pay for goods and services the insurer … is required to pay for under this section within 30 days after receiving an invoice for them.”

The only requirement to pay under this section arises under s. 38(11) – failure to give proper notice. Subsection 38(15) thus only applies in that narrow situation and is not a general rule that payment is overdue for the purposes of s. 51(1) only 30 days after an insurer receives an invoice. The appeal regarding interest is therefore dismissed on this narrow point.

Turning now to the expenses, AIG submits that the Arbitrator erred in some of her awards of expert report costs in her reasons. However, these errors are not reflected in the actual monetary award for these reports, based as the award was on Mr. Grewal’s Bill of Costs that had been revised at AIG’s request. I find no error regarding the disbursements.

Regarding legal fees, AIG submits that the total hours claimed represented a ratio of sixteen hours of preparation for each hour of hearing time, whereas in the earlier expense decision of Arbitrator Feldman, he allowed only a ratio of 2:1 in awarding AIG’s expenses.

AIG arrives at that 16:1 ratio based on twelve hours of arbitration hearing. However, I note that the ratio is more like 10:1, since the total 137 hours claimed included the 12 hearing hours. Subtracting those 12 hours from the 137 leaves 125 hours in preparation time, representing approximately a 10:1 ratio to the 12 hearing hours. Also, many of those preparation hours are at the lower rate for students and a legal assistant; Mr. Burns only claims 65 hours at the $150 hourly rate. Furthermore, as the Arbitrator pointed out, AIG insisted on dockets being produced, but then simply argued for a standard ratio of preparation time to hearing time, an argument the Arbitrator found could have been made without requiring detailed dockets. Some of those hours therefore represent time in preparing for and attending the expense hearing and not just preparation for the substantive hearing. The Arbitrator noted other occasions where, due to AIG’s insistence on strictly following procedure, more time was spent than usual.

It is instructive in this regard to compare Arbitrator Feldman’s expenses order in favour of AIG in the earlier hearing. A total of about 200 hours in legal fees was claimed, virtually all provided by Mr. Blouin. Arbitrator Feldman found this excessive, especially compared with the 86 hours spent by Applicant’s counsel. He allowed 28 hours for the hearing, adding 56 hours based on the 2:1 ratio, and added another 16 hours for preparing a Response and preparing for and attending the pre-hearing discussion. So the total time allowed was somewhat beyond a strict 2:1 ratio for preparation compared to substantive hearing.

Arbitrator Feldman ultimately awarded $14,600 in legal fees including HST (but then reduced them slightly due to Mr. Grewal’s minimal success in that case). Arbitrator Tanaka awarded $14,848.43 in legal fees including HST in this case. I note that about half of the hours she awarded were based on the legal fee allowed Mr. Burns, which was 25 percent greater than the hourly fee allowed Mr. Blouin under the tariff. So just in absolute terms the amount Arbitrator Tanaka awarded does not seem excessive compared to what Arbitrator Feldman awarded.

I do agree with AIG that the Arbitrator’s reasons reflect some extraneous considerations. For instance, regarding criterion 4, she stated that no conduct to prolong, obstruct or hinder the proceedings through failure to comply with undertakings or orders or to hinder the proceedings was alleged. However, she went on to note that AIG had insisted on strict compliance with procedural requirements, had resisted providing the medical benefits to which Mr. Grewal was entitled, and had failed to assiduously follow up on his need for support. Similarly, under criterion 5 – whether any aspect of the proceeding was improper, vexatious or unnecessary – the Arbitrator stated that AIG’s adversarial approach had been unnecessary in light of its own assessors’ opinions. Those considerations are more properly part of a special award, but the Arbitrator had refused to hear submissions on a special award in the substantive hearing because the issue was only effectively raised during final submissions.

Nevertheless, Mr. Grewal was successful, and this was a novel case, so the Arbitrator was correct in finding that he is entitled to his legal arbitration expenses. As to quantum, while the use of ratios may be a handy shortcut to arrive at a reasonable figure, it is not mandatory. In this case, the Arbitrator had found that more time than usual was spent on preparation due to AIG’s fastidiousness. This was open to her to find. Finally, since it has often been stated that it is not appropriate to do a line-by-line analysis of a bill of costs, this may mean that sometimes the expenses bill is accepted in its entirety, as here.

Accordingly, I am not persuaded that the Arbitrator erred in law in her findings. The appeal is therefore dismissed, and the order is affirmed.

IV. EXPENSES

The parties spoke briefly to appeal expenses at the end of the appeal hearing. Mr. Grewal seeks legal appeal expenses of $5,000.

Since both the oral and written submissions were brief, I award $3,000 in legal appeal expenses, representing approximately 15 hours at $150 an hour plus HST and some disbursements.

April 24, 2018

David Evans Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Effective September 1, 2010, O. Reg. 34/10, as amended.
The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
RRO 1990, Reg 664, s. 12.
State Farm Mutual Automobile Insurance Company v. Federico, Financial Services Commission of Ontario, 2014 ONSC 109.```