Kingsway General Insurance has been ordered to pay Julian Hotchkiss a non-earner benefit of $185 per week and an attendant care benefit of $5,910.80 per month plus legal fees following Kingsway’s request for an adjournment the Arbitration Hearing so it could appoint new counsel.
In this instance, Kingsway hired Counsel to defend an Arbitration proceeding commenced by Mr. Hotchkiss from the same firm that represented him in a concurrent tort action creating a clear conflict of interest. Although Kingsway had been notified of this conflict it took no steps to rectify the problem before the Hearing.
This decision will allow an injured person to rely on the insurer’s misconduct as grounds for interim benefits that is separate and apart from the test for payment of interim benefits already established in the case law.
Entitlement to Interim Benefits
A party’s entitlement to interim statutory accident benefits for injuries suffered in a motor vehicle accident pending dispute resolution has been dealt with in previous FSCO decisions. In summary, an Order for payment of interim benefits may be granted where the Insured is entitled to the benefits claimed and has demonstrated a need, necessity, urgency or the risk of suffering irreparable harm if the benefits are not paid.
“Need” has been defined as an absence of cash flow as well as an impairment of capital which would jeopardize the Applicant’s future security in order to meet day to day living expenses. “Urgency” is defined as “requiring immediate action or attention”. The Insured’s financial situation including evidence of financial hardship has been accepted as evidence of urgency.
To succeed in this motion, the Insured produce evidence, which, if unanswered and believed, is sufficient to render a conclusion in favour of entitlement.
In Hotchkiss, Arbitrator Wilson relied on section 279(4.1) of the Insurance Act and Rule 72.4 of the Dispute Resolution Practice Code as a basis for exercising his discretion to award interim benefits.
Section 279(4.1) of the Insurance Act provides the foundation for interim orders. There is no statutory pre-condition other than an Application for Arbitration has been filed and an Arbitrator has been appointed. Rule 72.4 gives an Arbitrator to adjourn a proceeding on such terms as are just.
In determining whether it would be just to order payment of interim benefits, Arbitrator Wilson reviewed the decision in Ioannidis v. Canadian General Insurance Group wherein the exercise of discretion should address the following concerns:
- The existence of an element of necessity or urgency.
- A blatant disregard by the Insurer of the Schedule or Act.
In the end, Arbitrator Wilson concluded that Kingsway’s counsel’s failure to deal with the conflict of interest and force an adjournment had “the ring of inappropriateness” especially in light of the fact a request for an adjournment had denied at an earlier proceeding.
Arbitrator Wilson’s reliance on Counsel’s approach to this matter as a reason for awarding interim benefits comes on the heels of the decision in McQueen v. Echelon Insurance wherein the Court awarded the insured damages for mental distress arising out of the insurer’s multiple denials.
Is this a sign of things to come? Will we continue to see FSCO and the Courts awarding benefits based on the Insurer’s conduct?