Carolyn Mooney v. Wawanesa Mutual Insurance Company, 2019 ONFSCDRS 7

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2019 ONFSCDRS 7

Appeal P17-00050

Appellant

and

Respondent

BEFORE:

David Evans

Leonard H. Kunka for Ms. Mooney

Katherine E. Kolnhofer for Wawanesa Mutual Insurance Company

November 30, 2018

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 decision dated June 26, 2017 is affirmed.
A party may seek an order of legal appeal expenses, as set out below.

February 13, 2019

David Evans Director’s Delegate

Date

I. NATURE OF THE APPEAL

Ms. Carolyn Mooney appeals Arbitrator Huberman’s expense decision of June 26, 2017 that awarded expenses payable by Wawanesa Mutual Insurance Company but denied any further interest was owing for accident benefits he had awarded pursuant to the SABS–1996.¹

Ms. Mooney submits the Arbitrator erred by not granting her solicitor/client costs or at least the full amount of expenses claimed pursuant to the Expense Regulation. However, the Arbitrator correctly found that solicitor/client costs are not prescribed expenses, and he had the discretion to determine how much of the expenses claimed should be awarded.

Ms. Mooney submits that the Arbitrator erred in not granting her additional interest for retroactive attendant care benefits awarded or for housekeeping expenses. However, the Arbitrator correctly applied the law that interest is owed on attendant care benefits only after a Form 1 has been provided, and the issue of delayed payment of housekeeping expenses had not been in dispute before him.

The appeal is therefore dismissed.

II. BACKGROUND

Ms. Mooney appeals Arbitrator Huberman’s expense decision of June 26, 2017, which dealt with expenses and interest arising out of his main decision of February 26, 2016, wherein he awarded Ms. Mooney some accident benefits.

As set out in the main decision, Ms. Mooney, born September 18, 1989, was a pedestrian on November 14, 2007 when a motor vehicle struck her. She was rendered unconscious, required intubation, and sustained a brain injury with resultant cognitive impairment, as well as numerous other injuries and impairments, including a fractured pelvis and left leg and an injury resulting in double vision. After several weeks of hospitalization, she was transferred to a rehabilitation hospital until she was discharged home in February 2008. After initially returning to her high school, she began an Adult Learning Education Program (ALEP) in September 2008, completing the program in June 2009, and receiving her High School Diploma. As part of that program she started working at Home Depot with employer accommodations and the support of a full rehabilitation team. At the time of the arbitration hearing, she was enrolled in a social service worker program. The Arbitrator noted:

Wawanesa has continued to pay for the treatment plans of all of Ms. Mooney’s rehabilitation team, for rehabilitation services they have been providing to Ms. Mooney, from the date of the accident through to the present time.

However, disputes arose between her and Wawanesa, leading to a multiple-day hearing in February and March 2015 and the 113-page main decision. The claims included non-earner benefits (NEBs), increased attendant care benefits (ACBs), housekeeping and home maintenance benefits, costs of examinations and a few minor rehabilitation benefits.

The NEB claim was denied, and the issues under appeal in the expense decision relate mostly to the ACB claim that was awarded in the main decision. However, since the 85-page NEB portion of the main decision includes some ACB background, I will go through it first.

The Arbitrator found the testimony of Ms. Mooney and her mother generally credible despite inaccuracies recalling some facts and circumstances. Ms. Mooney had a bipolar condition diagnosed before the accident. She had also mostly recovered from an earlier May 2007 accident.

Following the November 2007 accident and after discharge from the rehabilitation hospital, Ms. Mooney’s typical day included 10-14 hours of sleep followed by cueing to get out of bed, leave her bedroom and eat. Ms. Mooney briefly moved from her parents’ home to live with an unsupportive and abusive boyfriend. Ms. Beverley Cott – the occupational therapist whose attendant care assessments were later reviewed by the Arbitrator – performed a kitchen assessment at their apartment. This showed that the significance of Ms. Mooney’s organizational and planning problems required a rehabilitation support worker (RSW) to assist.

Ms. Mooney also needed accommodations to return to school and work. In Ms. Cott’s initial assessment, she summarized Ms. Mooney’s difficulties in planning, initiating and organizing for her ALEP goals. The ALEP program consisted of one course per semester along with a paid work component. To that end, Ms. Mooney was able to get a job as a cashier at Home Depot. Ms. Cott attended there to make sure appropriate accommodations were in place, including the use of a stool, extended breaks, and memory aids.

In January 2013, Ms. Mooney started a wellness program called “Redirection Through Education” at George Brown College with the assistance of her full support team: speech language therapist, occupational therapist, physiotherapist, RSW, psychologist, and psychiatrist. Ms. Mooney graduated in April of 2014 with Honours and a Dean’s Medal.

In September of 2014, Ms. Mooney enrolled in the two-year Social Service Worker program at George Brown College. With considerable accommodations from the College, this is the program Ms. Mooney was following at the time of the hearing. However, she stopped working at Home Depot as she could not manage that job and the program. The Arbitrator noted that along with the support at school, Ms. Mooney continued to receive other support as before.

In addition, the reports of a case manager detailed her efforts in managing Ms. Mooney’s rehabilitation team with the numerous rehabilitation services she had received since the accident. Wawanesa continued to pay for each case management treatment plan submitted.

The Arbitrator then set out in some detail information about Ms. Cott, the treating occupational therapist to September 2011. Ms. Cott first met Ms. Mooney and her parents in December 2007 while she was still a rehabilitation hospital inpatient. She remained her OT until September 2011, when her colleague Nancy Lok took over the file. By her estimate, she met with Ms. Mooney approximately 45 times. Ms. Cott testified that Ms. Mooney’s needs fluctuated, which she accounted for by updating attendant care assessments. Ms. Cott also testified that the injuries from the accident were made worse because of Ms. Mooney’s pre-existing bipolar condition.

One of the main issues was hypersomnolence. In this NEB portion of his decision that I have been discussing, the Arbitrator noted that Ms. Cott testified that she always asked her clients whether they had sleep issues and was aware there was one because, for instance, Ms. Mooney would stay up late making it difficult for her to get up in the morning. She confirmed that, as a Form 1 item – the form to claim ACBs – she would have discussed with Ms. Mooney’s mother her ability to respond to an emergency. Nonetheless, she did not think Ms. Mooney’s hypersomnolence was a safety concern.

In concluding the NEB portion of the decision, the Arbitrator found that, as a result of the November 14, 2007, motor vehicle accident, Ms. Mooney sustained: (1) a brain injury that exacerbated her pre-existing condition, including the bipolar disorder; and (2) an independent adjustment disorder. The Arbitrator also found that Ms. Mooney had required and received significant educational and employment accommodations and support following the accident, and that Wawanesa had continued to pay for the treatment plans submitted by each member of Ms. Mooney’s rehabilitation team. However, he did not find that these supports meant Ms. Mooney suffered a complete inability to carry on a normal life – the NEB test. Accordingly, he found that NEBs were not payable from April 1, 2011 and ongoing.

I turn now to the ACB portion of his decision. The Arbitrator noted that Ms. Mooney claimed payment by Wawanesa of ACBs from February 15, 2008, to date and ongoing, less amounts paid by Wawanesa, in accordance with the Form 1s (Assessments of Attendant Care Benefits) completed by Robin Kadanoff, dated June 25, 2010, May 28, 2012 and March 1, 2013. The Arbitrator noted that, under the 1996 SABS, retroactive ACBs can be claimed and the undefined term “incurred” in that SABS included services not actually received but were reasonably necessary.

Occupational therapist Robin Kadanoff of Inter-Action Rehabilitation was retained by counsel for Ms. Mooney. She performed past, present, and future attendant care assessments in May 2010. She provided further assessments in 2012 and 2013, in response to attendant care assessments by Ms. Luciana Zazzara, a second occupational therapist engaged by Wawanesa.

The Arbitrator noted that up to March 9, 2011, Ms. Mooney was paid ACBs pursuant to the Form 1s submitted by Ms. Cott. As of March 10, 2011, Ms. Mooney had been paid ACBs as per the January 28, 2011 Form 1 of Ms. Zazzara. The issue in dispute was whether additional attendant care benefits should be paid to Ms. Mooney pursuant to the various Form 1s (three of them retroactive) of Ms. Kadanoff.

The Arbitrator noted that Ms. Kadanoff’s Form 1s recommended a higher level of attendant care assistance than previously recommended. This difference was mostly attributable to Ms. Kadanoff’s retroactive opinion that – up to her attendance on April 24, 2012 – Ms. Mooney needed 9-12 hours of supervisory care every night in order to ensure her safety in the event of an emergency. He also noted that, once the issue of nighttime supervision was dispensed with, Ms. Kadanoff’s reports were similar to those of Ms. Cott and Ms. Zazzara.

The Arbitrator found that Ms. Mooney reasonably required nighttime supervision from February 15, 2008 to April 24, 2012. He also preferred the Form 1 opinions of Ms. Kadanoff over those of Ms. Cott. He found that Ms. Cott’s assessments for the initial period failed to properly capture the full extent of the care Ms. Mooney required and the amount of cueing and supervision being provided by her family, and, in particular, her mother. He found the same regarding Ms. Zazzara’s assessments for the later periods. Accordingly, he found that Ms. Mooney was entitled to the ACBs pursuant to Ms. Kadanoff’s Form 1s (less amounts paid by Wawanesa). These dropped over time, starting around $3,700 a month for the first two years after discharge, around $2,700 a month for the next two years, and a few hundred dollars a month thereafter.

The Arbitrator also found Ms. Mooney was entitled to housekeeping and home maintenance services of $100 per week from February 15, 2008 to February 26, 2013, and $92 per week thereafter. (As an aside, no dispute was raised before the Arbitrator at the hearing about the manner of those payments, a point whose relevance will be clearer below.)

The Arbitrator allowed the costs of several costs of examinations, although the amounts awarded were reduced because most were written after September 1, 2010, so they were subject to the $2,000 cap in the 2010 SABS. Finally, he denied a few minor rehabilitation expenses.

This brings us to the decision under appeal on legal arbitration expenses and interest.

With respect to legal arbitration expenses, Ms. Mooney submitted that she should be entitled to her entire costs of the Arbitration on a solicitor/client scale under section 12 of Regulation 664, R.R.O. 1990, made under the Insurance Act (the Expense Regulation), or by way of a special award, or because Rule 49.10 of the Rules of Civil Procedure would allow enhanced expenses for Wawanesa’s failure to accept an advantageous offer.

The Arbitrator denied the claim for solicitor/client expenses. With respect to the Expense Regulation, the Arbitrator noted that it is enacted under the authority of s. 282(11) of the (pre-transition) Insurance Act, which provides that awards may be made “according to criteria prescribed by the regulations” for prescribed expenses up to the prescribed maximums. With respect to legal fees, he noted that Rule 78.1 of the DRPC sets the maximum for them based on the Legal Aid Rate, with an option to increase the rate to $150 an hour for insured’s counsel where justified. Solicitor/client fees are therefore not prescribed expenses.

The Arbitrator also rejected Ms. Mooney’s submission that Waldock and State Farm Mutual Automobile Insurance Company, (FSCO A13-001725, November 16, 2015) stands for the proposition that solicitor/client expenses are available under the Expense Regulation.

Accordingly, he found there was no basis for awarding solicitor/client expenses under the Expense Regulation.

The Arbitrator also rejected the submission that solicitor/client expenses could be granted as a kind of special award. First, he noted that this directly contradicted the provisions just cited. Second, he found in any event that Ms. Mooney had not met the statutory test for a special award in s. 282(10) of the Insurance Act because he found that Wawanesa had not unreasonably withheld or delayed payments within the meaning of that subsection.

Finally, with respect to the offer to settle, the Arbitrator found that

Rule 49.10 of the Rules of Civil Procedure, which details costs consequences of a party’s failure to accept an opposing party’s Offer to Settle when the award subsequently exceeded the Offer to Settle, has no application to this Arbitration. There is no authority to support the contention that Rule 49 of the Rules of Civil Procedure applies to Arbitration proceedings before this Commission. Indeed, the Applicant cited none.

The Arbitrator then considered the criteria to be considered in awarding expenses set out in Rule 75.2 of the DRPC. He found that the pertinent criteria for the award of expenses in this case were: (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 were raised in the proceeding, and (d) Whether the conduct of a party or party’s representative tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders.

With respect to success, the Arbitrator found that, while it was mixed, this criterion favoured Ms. Mooney because the amount awarded for ACBs exceeded the amount denied for NEBs.

With respect to offers to settle, both sides made such offers, but the Arbitrator noted that the amount he awarded far exceeded them. This supported Ms. Mooney’s entitlement to reasonable expenses, but not on the escalated scale under R. 49.10 of the Rules of Civil Procedure.

The Arbitrator found the issues not novel because the existing case law was adequate to resolve the issue of NEBs and Ms. Mooney could have anticipated failure based on the evidence.

With respect to the parties’ conduct, the Arbitrator accepted Ms. Mooney’s argument that Wawanesa could have settled one or more of the issues prior to the arbitration. He also accepted Wawanesa’s argument that Ms. Mooney’s conduct, set out in nine points over about a page of the decision, also hindered the proceeding. He concluded that both parties engaged in conduct that tended to prolong, obstruct or hinder the arbitration proceeding.

On those bases the Arbitrator concluded Ms. Mooney was entitled to arbitration expenses, but he did not award the entire amount claimed by her.

Regarding quantum, the Arbitrator set out the general principles that have long been accepted at the Commission: The overriding consideration in fixing legal expenses is reasonableness; A line-by-line assessment is not required; The task involves a pragmatic, broad-strokes approach to fix a reasonable amount, which may involve a ratio of pre-hearing preparation to hearing time in the range of 1:1 to 4:1.

The Arbitrator found that the total hearing time was 55.5 hours and that the claimed 578.9 hours for fees overall ($85,912.00 at the enhanced $150 per hour higher rate) was excessive. He found that a reasonable number of total hours for preparation was 157.62 hours, which represented a ratio of 2.84:1 to the hearing hours. These totaled 213.12 hours, which at the higher hourly rate of $150 totaled $31,968 for legal fees, exclusive of HST.

While Ms. Mooney claimed disbursements in the amount of $45,671.09, exclusive of HST, the Arbitrator found that was excessive, and after analyzing the disbursements over a couple of pages, allowed $27,933.54, exclusive of HST. He therefore awarded a total amount of $67,688.74 for fees and disbursements inclusive of HST.

Turning to the question of interest, Ms. Mooney sought an award of interest in the amount of $195,520.00 as of April 25, 2017, for the overdue payment of past ACBs ($192,807.00) and housekeeping and home maintenance benefits ($2,713.00) awarded.

Ms. Mooney submitted that interest on the ACBs was overdue and payable from the time an insurer had sufficient information to be aware of the obligation to pay the benefit, regardless of whether the insured had submitted a Form 1 at that time. If an insured is awarded retroactive benefits, the interest begins to run from the time the insurer was aware, or ought to have been aware, of the obligation to pay the benefits.

However, the Arbitrator noted that under the amended language in section 39 of the 1996 SABS, as interpreted by the Divisional Court in Grigoroff v. Wawanesa Mutual Insurance Co., 2015 ONSC 3585 (Div.Ct.), there is a requirement that the application for attendant care benefits be in a Form 1 before an Insurer is required to pay attendant care benefits. An insurer is therefore not required to pay a claim for attendant care needs until 10 business days after it receives an assessment of attendant care needs.

The Arbitrator noted that in this case, the first of the Form 1s was received by Wawanesa on July 28, 2010 and that the applicable sections of the version of the SABS that were in effect at that time were identical to the sections of the SABS that were considered in Grigoroff. Furthermore, Grigoroff was applied by Arbitrator Rogers in Nadesu and Zurich Insurance Company Ltd. (Commercial Business), (FSCO A09-001538, January 22, 2016).

The Arbitrator agreed with those cases, and concluded that Wawanesa was not required to pay the Applicant’s claim for attendant care needs until 10 business days after it received a Form 1 assessment of attendant care needs:

Based on the evidence before me, I find that Wawanesa received the first Form 1 for an assessment of attendant care needs on July 28, 2010, and that the Insurer has paid all interest that was due and payable in respect of attendant care benefits and housekeeping and home maintenance benefits owing to the Applicant under the 1996 Schedule.

The Arbitrator concluded that Ms. Mooney was “not entitled to an award of interest for the overdue payment of past attendant care benefits and housekeeping and home maintenance benefits awarded.”

III. ANALYSIS

With respect to expenses, Ms. Mooney submits that she is entitled to solicitor/client expenses.

However, I note that the Waldock arbitration decision upon which Ms. Mooney had relied was reversed by Delegate Lee on appeal: State Farm Mutual Automobile Insurance Company and Waldock, (FSCO P15-00068, September 10, 2018).² Delegate Lee found that the arbitrator in that case erred in law when he awarded amounts for legal fees above the maximum hourly rates set out in the Dispute Resolution Practice Code and the Expense Regulation. His reasoning was essentially the same as the Arbitrator’s in this case: only prescribed expenses can be awarded, and solicitor/client fees are not prescribed expenses.

I agree with that analysis.

I also agree with the Arbitrator that the provisions under the Rules of Civil Procedure allowing enhanced fees where an offer was not accepted do not apply here. As was stated long ago, “The Rules of Civil Procedure do not apply in arbitration and appeal proceedings, and FSCO adjudicators do not have the residual inherent powers of the superior courts. We have only those powers that are granted by statute, expressly or by necessary implication”: Gracey and Carranza and Alamin, (FSCO P03-00001, September 11, 2003).

I further agree with the Arbitrator that enhanced fees are not available as some sort of special award. Beyond that, the Arbitrator found that no special award was payable, as he did not find Wawanesa unreasonably withheld or delayed payments. In that regard, I note the several points in his main decision where the Arbitrator remarked that Wawanesa had paid everything it was asked to, other than the disputed points that clearly merited determination by an arbitrator. This was a finding of fact and not subject to appeal.

Ms. Mooney submits that if there is no discretion to award solicitor/client costs, this creates an unequal bargaining power between insurer and insured. However, given that the expense regime has changed from one where initially only insureds could get their legal expenses and were often awarded them even if they lost, to one where they rarely get their expenses even if they win, I see little evidence of a concern about unequal bargaining power by the Legislature.

Therefore, the aspect of the appeal requesting solicitor/client costs is denied.

Turning to the quantum of expenses that the Arbitrator did allow, he was not required to award everything that Ms. Mooney sought. For instance, s. 282(11) of the Act states that an arbitrator may award prescribed expenses to the maximum set out in the regulations. As was recently stated by the Divisional Court in Clancy v. Aviva Canada Incorporated, 2018 ONSC 5390, “A costs appeal is a difficult proceeding in which to succeed. Costs orders are highly discretionary. They are entitled to significant deference on appeal or judicial review.”

In this case, the Arbitrator determined what he thought was reasonable, and then noted that this fell within the accepted ratios between preparation and hearing time. In fact, the ratio was closer to the higher end, being nearly 3:1. Beyond that, the Arbitrator had identified reasons for reducing the amount claimed, like partial success and delaying tactics, and he was not required to do a line-by-line analysis of the expenses claim. Since the award of costs is discretionary, and I can identify no error of law in the Arbitrator’s reasoning, I have no basis upon which to intervene. This aspect of the appeal is denied as well.

Turning now to the appeal regarding interest, I find the Arbitrator correctly applied the binding case law set out in Grigoroff. Contrary to Ms. Mooney’s submission, interest does not run from the date of the very first assessment of attendant care needs, if that was paid, but from the date of the revised one where a higher amount is retroactively awarded. The triggering event for the interest on the higher benefits is the more recent Form 1. Thus, In Grigoroff, there had been an initial assessment of attendant care needs for the period January 20, 2002 to August 1, 2003. The revised assessment was not filed for that period until February 2009. The Court found that payment was only overdue 10 business days after that later assessment. In this case, there were initial assessments that were later overridden by the higher assessments, just as in Grigoroff.

Furthermore, in Edwards and Optimum Insurance Company Inc., (FSCO P16-00008, March 13, 2017), Delegate Rogers confirmed the approach he had taken as an arbitrator in Nadesu. I agree with his analysis.

The Arbitrator had evidence before him that Wawanesa had calculated and paid interest owing from 10 days after Ms. Kadanoff’s first retroactive Form 1 was filed. He was therefore correct to state that Ms. Mooney was not entitled to an award of interest for the overdue payment of past attendant care benefits.

Now, it might seem troubling that the Arbitrator rolled into that finding a conclusion that no interest was owed on housekeeping benefits either. After all, housekeeping claims are not subject to the Form 1 rule and Grigoroff does not apply to them. However, Wawanesa had not taken the position that Grigoroff applied to the housekeeping claim, and the issue of alleged late payment of the housekeeping benefits had not been disputed before the Arbitrator. Evidence on how the adjuster paid the benefits was never led at the hearing. The Arbitrator thus had no evidence to find that interest was owing on those earlier housekeeping payments. Therefore, he did not err in stating that no interest was owing for housekeeping benefits either.

The appeal regarding interest on both the ACBs and the housekeeping is likewise denied.

The appeal herein is therefore denied and the Arbitrator’s decision is affirmed.

IV. EXPENSES

If the parties are unable to agree about expenses of this appeal, any party seeking expenses should serve and file a Bill of Expenses within 45 days of the date of this decision, including any written submissions on entitlement and other particulars. The opposing party will then have 30 days to serve and file a response. The party seeking expenses will then have 15 days to serve and file a reply and any required documentation. The hearing will be on the record.

February 13, 2019

David Evans Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
Judicial review has been filed.