2015 ONSC 3099
COURT FILE NO.: CV-12-450586
DATE: 20150721
ERRATUM RELEASED: 20150826
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ARCELORMITTAL DOFASCO INC.
Plaintiff
– and –
INDUSTRIAL ALLIANCE INSURANCE
and FINANCIAL SERVICES
Defendant
Geoffrey D. E. Adair Q.C. and Gordon McGuire, for the Plaintiff
Barry Percival Q.C. and Grant D. Bodnaryk,
for the Defendant
HEARD: May 5, 2015
G. Dow j.
reasons FOR JUDGMENT
Corrected decision: The text of the original judgment was corrected on August 26, 2015 and a description of the correction is appended.
[1] The plaintiff, Arcelormittal Dofasco Inc., seeks summary judgment from the defendant, Industrial Alliance Insurance and Financial Services Inc., for its payment of the drug Soliris from October, 2009 to November 28, 2011 in the amount of $1,280,163.95 (90 percent of $1,422,404.40) on behalf their (mutual) insured, Donna Caffell. The cause of action is equitable contribution. The defendant admits its obligation to pay from January 24, 2011, decreasing the amount in dispute by $488,396.30, but rejects the earlier claims on the basis the action, commenced April 4, 2012, is beyond the time permitted by the two-year limitation period allowed under the Limitations Act, 2002, S.O. 2002, c. 24 or the one-year limitation period set out in its contract with Ms. Caffell’s employer, Blaney McMurtry.
Facts/Background
[2] The situation can be summarized as follows:
a) Donna Caffell, employed at the law firm Blaney McMurtry, had a benefits plan contract with the defendant which provided for payment of 90 percent of the expense of medication “obtained with the written prescription of a physician” (Affidavit of James MacLean, sworn December 16, 2014, Exhibit E at page 4-3 or page 112 of the Motion Record);
b) the plan with Industrial Alliance excluded payments “for any prescriptions which are dispensed by a clinic or by any non-accredited hospital pharmacy or for treatment as an outpatient in a hospital” (Exhibit E to the affidavit of Jason MacLean – page 116 of the Motion Record);
c) Donna Caffell is also the spouse of Larry Caffell, a retired employee of the plaintiff that paid GreatWest Life to administer its (self) insured benefit plan which included coverage for Donna Caffell and provided for payment of 100 percent of prescribed medication;
d) Donna Caffell contracted an extremely rare life-threatening blood disorder, paroxysmal nocturnal hemoglobinuria or “PNH”, for which the drug Soliris (eculizumab) was an effective medication that “greatly improved quality of life and the treatment is well tolerated” according to her treating hematologist, Dr. Brian Leber (Exhibit D at page 79 of the Motion Record). The medication “would be administered in a private medical clinic”;
e) Donna Caffell applied to the defendant for payment of this medication September 27, 2009, but was rejected on the basis that “Soliris is not eligible for benefit under the terms of the policy” (Exhibit G to the affidavit of Jason MacLean at page 131 of the Motion Record). It was subsequently discovered that the individual who processed the application failed to follow the defendant’s own protocol (read the letter from Dr. Leber) choosing to input the drug on its Pharmacy Benefit Manager computer program which indicated the medication was usually administered in a hospital setting (which would be paid under OHIP) and was thus not covered;
f) the plaintiff reviewed and accepted Donna Caffell’s application and began paying the $24,666.48 per month expense. It is important to note GreatWest Life was also aware of Industrial Alliance’s obligation to pay and denial of the benefit as of sometime in October, 2009;
g) at the plaintiff’s request given the cost involved (and acknowledging GreatWest Life’s complete failure to conduct its own investigation) in October, 2010 GreatWest Life began to investigate the possibility of coverage for the medication with Industrial Alliance, pursuing it for details of coverage and the reasons for its rejection of Donna Caffell’s claim;
h) the plaintiff notes that both it and Industrial Alliance are signatories to the Canadian Life and Health Insurance Association Inc. (CLHIA) Coordination of Benefits – Group Health and Dental Agreement which clarifies, in this case, the defendant’s obligation to be the primary payor of the medication, that is 90 percent of the expense, and the plaintiff’s obligation to pay the remaining 10 percent (Affidavit of Joan Wilson, sworn January 13, 2015 at Exhibit E of the Motion Record);
i) the conduct of the defendant remained substandard. In an email dated December 15, 2010, Keith Bullock, Senior Consultant, Group Benefits and Compliance at Industrial Alliance states, “After paying for a year GW has now come back to us on our denial and which we have now determined was inappropriate. Therefore Sheila was asked me to look at and to see if there were was a way to continue the denial under the terms of the contract” (Exhibit Y to the affidavit of Jason MacLean at page 196 of the Motion Record);
j) in response to what appears to be classic stonewalling in production of its policy by Industrial Alliance, Joan Wilson of GreatWest Life sent an email January 18, 2011 indicating, “We will have to escalate this matter with our senior management or our Law Dept. if necessary” (Affidavit of Joan Wilson, Exhibit L at page 298 of the Motion Record);
k) there was also an email chain starting June 27, 2011 from Dallas Ewen, Senior Counsel for GreatWest Life, requesting the information. An email from Mr. Ewen, August 24, 2011 stated, “I have been instructed to begin preparing materials in contemplation of litigation” (Affidavit of Joan Wilson, Exhibit S at page 322 of the Motion Record);
l) the persistence by GreatWest Life in its efforts to have Industrial Alliance clarify its position was met with partial success when Industrial Alliance sent a letter dated January 11, 2012 acknowledging a change in its position and that it “will pre-approve Soliris as an eligible drug under our group plan for claims commencing January 24, 2011”. However, it also took the position that given GreatWest Life had already paid the claim submitted to date, it had “no contractual relationship or obligation to GreatWest Life”. It was unwilling to reimburse the plaintiff until its obligation was clarified at the hearing of this motion (Affidavit of Jason MacLean, Exhibit FF at page 227 of the Motion Record).
Genuine Issue for Trial
[3] The plaintiff submits there is no genuine issue that requires a trial and relies on the recent Supreme Court of Canada decision in Hryniak v. Mauldin, 2014 SCC 7. The guiding principles include when the judge is able to reach a fair and just determination on the merits. This involves and allows the judge to make the necessary findings of fact, allowing the judge to apply the law to the facts and determine whether summary judgment is a proportionate, more expeditious and less expensive means to achieve a just result (see paragraph 49). The defendant raises, in response to the direction that that the Court should assume the parties have placed before it, in some form, all of the evidence that will be available for trial, that there are significant portions of the GreatWest Life file (approximately 3,500 pages) which would be disproportionate to place before a judge in a summary judgment motion. However, it is the Court’s view that it is incumbent on the parties in seeking summary judgment (or defending a motion for summary judgment) to distill the relevant material into a manageable form in order to argue the important aspects of its case. On the evidence placed before the Court, a summary judgment is a proportionate and more expeditious manner to achieve a just result.
Issue – Equitable Contribution/Unjust Enrichment
[4] In Aviva Insurance Co. v. Lombard General Insurance Co,. 2013 ONCA 416, the Court of Appeal accepted equitable contribution as an actionable claim relying on the criteria confirmed by the Supreme Court of Canada in Family Insurance Corp. v. Lombard Canada Ltd., 2002 SCC 48. Like the matter at hand, the Aviva Insurance Co. v. Lombard General Insurance Co. decision involved a claim between two insurance companies where one (Aviva) sought reimbursement from the other (Lombard) for damages it paid and for which Lombard had a policy which afforded an insured coverage and a right to be indemnified.
[5] Justice Blair described equitable contribution “or some combination of equitable contribution and the restitutionary principles of unjust enrichment” as “both simply examples of the fair play rules imposed by equity” (at paragraph 26). Justice Blair also notes that “Resort to principles of equity calls for flexibility” (at paragraph 40). In this matter, the key component would appear to be ensuring Industrial Alliance is not released of its payment obligation by the existence of other applicable insurance.
[6] The alternative analysis is to utilize the principle of restitution known as unjust enrichment. This was also referenced in the Aviva Insurance Co. v. Lombard General Insurance Co. decision, reviewing and adopting the Supreme Court of Canada’s decision in Kerr v. Baronow, 2011 SCC 10. The Court reviewed the three elements of unjust enrichment, being enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment. Further, “the courts must apply those common principles in ways that respond to the particular context in which they are to operate”. They must be applied with flexibility and common sense (see paragraph 49).
[7] Clearly, in the situation described above, the defendant has, to date, avoided its responsibility to pay 90 percent of the cost of the Soliris it admits was “inappropriate” to dispute. The expense has been incurred by the plaintiff and aside from what is set out below, there is not a juristic reason to allow Industrial Alliance to benefit from the situation as it currently stands. It is particularly noted Industrial Alliance has acknowledged its obligation and pre-approval of Soliris as an eligible drug under Donna Caffell’s group plan for claims commencing January 24, 2011. This is set out in their letter from Avril Hasselfield, in house counsel for Industrial Alliance to Dallas Ewen, Senior Counsel at GreatWest Life dated January 11, 2012 (Exhibit FF of Jason MacLean’s affidavit, page 227 of the Motion Record). While the letter purports to maintain a position that reimbursement is not required, counsel for Industrial Alliance acknowledged at the hearing of this matter it would be doing so and the amount was calculated to be $488,396.30, representing 90 percent of the amount paid by GreatWest Life from January 24, 2011 through November, 2011.
Issue – Limitations Act
[8] Industrial Alliance asserts its contract provides one year for an action to be commenced against it as set out in the general provisions at page 1-15 of its contract with Donna Caffell’s employer, Blaney McMurtry (see Exhibit E of Jason MacLean’s affidavit, page 109 of the Motion Record). However, the plaintiff is not a party to that contract and is not asserting a breach of contract claim but rather a claim for unjust enrichment detailed above. The alternative argument is that the plaintiff has failed to commence this matter within the two years permitted under the Limitations Act, and particularly section 22. In this regard, the plaintiff acknowledges, through its agent, GreatWest Life, that it was aware of the defendant’s obligation to pay and rejection of Donna Caffell’s claim as of October, 2009. Further, while the conduct of the defendant was substandard, GreatWest Life did nothing to investigate the rejection of the claim for almost one year and only after prompting to do so by the plaintiff. However, GreatWest Life, like the defendant, is a large, sophisticated insurer that regularly litigates claims and has its own legal department. Further, as noted in the evidence reviewed above, it was aware of the need and had threatened “to escalate this matter with our senior management or our Law Dept., if necessary” as of January 18, 2011. Beyond this, the senior counsel of GreatWest Life had the salient facts in his hands as of June 27, 2011 with the email chain indicating he was “preparing materials in contemplation of litigation” as of August 24, 2011.
[9] As a result, I conclude the possible claim against the defendant was “discovered” by the plaintiff as of October, 2009 and the Statement of Claim issued April 4, 2012 is beyond the time permitted under section 22 of the Limitations Act. However, the claim for reimbursement has been submitted on a monthly basis. I reminded counsel of our Court of Appeal’s decision in State Farm Mutual Automobile Insurance Co. v. Dominion of Canada General Insurance Co., 2005 CanLII 47587 (ON CA), [2005] O.J. No. 5502. That case involved a claim for indemnification by one insurer against another pursuant to section 275 of the Insurance Act, R.S.O. 1990, c.I. 8. The Court held, at paragraph 7, there was the “clear implication that a cause of action arises with every payment for which indemnification can be claimed. It is an entitlement that arises in relation to each benefit paid, not just the first one.” I would agree with that interpretation and the reasoning contained therein. Thus, the defendant is responsible to reimburse the plaintiff for claims going back to April 4, 2010 or two years before this action was issued. In this regard, the chart attached to Exhibit EE, the affidavit of Jason MacLean (at page 215-16 of the Motion Record) indicates the plaintiff ought to be reimbursed for claims submitted after April 4, 2010 in the amount of $535,996.08 for which the defendant would be responsible for 90 percent or $482,396.47.
[10] In response to the issue regarding the limitation argument by the defendant, the plaintiff raised the doctrine of fraudulent concealment and referred to the Giroux Estate v. Trillium Health Centre, 2004 CanLII 18056 (ON SC), [2004] O.J. No. 557, a decision involving a claim by the estate of a patient who had expired while under the care of a physician whom it was subsequently discovered had not only fraudulently misrepresented the treatment he had proposed to the deceased but had also falsified his notes to include the fraudulent misrepresentation. In these situations, the Court will not allow a limitation period to operate so as to defeat the claim. However, while the conduct of the defendant was clearly substandard, the defendant did eventually acknowledge its responsibility as set out in the letter of January 11, 2012 without litigation having commenced and, as such, its conduct does not equate to the requisite fraudulent concealment necessary to set aside application of the limitation period.
Conclusion
[11] The defendant has acknowledged its obligation to reimburse the plaintiff the $488,396.30 representing 90 percent of the amount GreatWest Life paid for Donna Caffell’s Soliris between January 24, 2011 and November, 2011. In addition, the defendant will also be responsible for reimbursement to the plaintiff of $482,396.47 representing 90 percent of the amount paid by GreatWest Life after April 4, 2010 through to January 24, 2011. The plaintiff is entitled to pre-judgment interest on these amounts in accordance with sub-section 128(3) of the Courts of Justice Act, R.S.O. 1990, c.C. 43.
Costs
[12] Counsel for the plaintiff failed to provide counsel for the defendant or the Court with a Costs Outline at the conclusion of the hearing of its own motion as required by r 57.01(6). Under cover of letter dated May 21, 2015 counsel for the plaintiff delivered a Bill of Costs proposing $42,238 inclusive of fees, HST and disbursements for partial indemnity costs of the motion and claims $72,377.36 at “full” indemnity. For the entire action, the claim rises to $102,709.87, all inclusive at partial indemnity and $166,301.75 all inclusive at “full” indemnity. This is net of the $5,000 cost award of April 1, 2015 by Justice Myers arising from the defendant’s request to adjourn this motion on that date given Mr. Percival having been called to trial elsewhere. The defendant’s submissions in writing were requested and received June 22. The defendant claimed the time spent, and hourly rates claimed, were excessive. The defendant also claims the work described lacked sufficient detail or copies of dockets kept. The defendant provided copies of its actual accounts to its client which totalled (only) $67,366.96.
[13] The plaintiff delivered reply submissions to the Court under cover of letter July 7 which is acknowledged.
[14] Given the circumstances above, the time and amounts claimed by the plaintiff is excessive, particularly the lack of complete success on the part of the plaintiff, and an award of $50,000 inclusive of fees, HST and disbursements for the motion and action (in addition to the prior order of Justice Myers) is appropriate for the plaintiff to recover from the defendant. The Costs Outline of the defendant provided at the conclusion of the hearing for this motion in the amount of $26,257.03 inclusive of fees, HST and disbursements was also a factor in determining this award of costs.
Mr. Justice G. Dow
Released: August 26, 2015
Corrected decision: The following sentence in paragraph [9] replaces the corresponding sentence in the original judgment issued on July 21, 2015.
[9] In this regard, the chart attached to Exhibit EE, the affidavit of Jason MacLean (at page 215-16 of the Motion Record) indicates the plaintiff ought to be reimbursed for claims submitted after April 4, 2010 in the amount of $609,995.52 for which the defendant would be responsible for 90 percent or $548,995.97.
Corrected decision: The following sentence in paragraph [11] replaces the corresponding sentence in the original judgment issued on July 21, 2015.
[11] In addition, the defendant will also be responsible for reimbursement to the plaintiff of $548,995.97 representing 90 percent of the amount paid by GreatWest Life after April 4, 2010 through to January 24, 2011.
2015 ONSC 3099
COURT FILE NO.: CV-12-450586
DATE: 20150721
ERRATUM RELEASED: 20150826
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ARCELORMITTAL DOFASCO INC.
Plaintiff
– and –
INDUSTRIAL ALLIANCE INSURANCE
and FINANCIAL SERVICES
Defendant
REASONS FOR JUDGMENT
Mr. Justice G. Dow
Released: August 26, 2015