Malin and State Farm, Case Summary: Is More Arbitration the Best Solution?

Case Summary: Malin and State Farm (FSCO A12-000108)

Nature of the Case:

To deal with possible expenses entitled the Respondent, State Farm, as the Applicant, Mr. Abdi Malin, failed to attend both pre-hearing discussions and the actual hearing of this case. (FSCO A12-000108, April 30, 2014)

History of the Case:

Mr. Abdi Malin, the Applicant’s claim for accidental benefits, from State Farm Mutual Automobile Insurance Company, was dismissed on March 31, 2014, according to the statutory accident benefits under The Statutory Accident Benefits Schedule regarding accidents on or after November 1, 1996; however, the arbitrator, Edward Lee, had reserved on the issue of expenses.

The Facts of the Case are as Follows:

  • A pre-hearing was held on September 10, 2013 with the applicant Mr. Malin in attendance with his counsel and another pre-hearing was scheduled on that date for December 6, 2013
  • Mr. Malin’s council served a motion to withdraw as his representative following the meeting and the arbitrator permitted Mr. Malin’s former counsel to withdraw
  • Mr. Malin failed to attend the second pre-hearing on December 6, 2013
  • The hearing was scheduled for March 21, 2014
  • Mr. Malin did not attend the hearing on March 21, 2014.
  • Mr. Malin’s application was dismissed on March 21, 2014.
  • Parties were given thirty dates to submit all evidence and submission regarding expenses.
  • State Farm provided documentation while Mr. Malin provided nothing

Issues:

  1. Is State Farm entitled to expenses incurred in respect to this arbitration hearing?
  2. If the answer to the first question is ‘yes’, what is the amount of expense to which State Farm is entitled?

Decision:

  1. State Farm is entitled to expenses incurring in respect of this hearing.
  2. State Farm is entitled to $2,000 as expenses in respect to this arbitration hearing, inclusive of all costs, disbursements and taxes.

Reason for Decision:

State Farm was successful in handling this case and is entitled to expenses. Based off case law (Salva and Paramanantham and Allstatem, FSCO A05-002958 and FSCO A06-000004, July 30, 2007), the main consideration of arbitration expenses is reasonableness (Ragulan and Security National, FSCO A05-002940, January 7, 2008). State Farm appeared before the Financial Services Commission of Ontario on three occasions, although no arbitration was actually conducted. State Farm is awarded $2,000 (inclusive of all disbursements, costs and taxes) based on time spent by counsel, legal assistance and preparation.

Significance of Decision

The main issue here is that the Applicant initiated the case, but then failed to follow through and attend the mandatory pre-hearing conference and the hearing itself, essentially abandoning his own application. This wasted time and resources for both the FSCO and the Respondent. There is a need for reform to prevent abuse in regards to wasting time and resources of the parties involved.

In my previous article, I discussed the potential for new tribunals and amendments to help lower insurance rates for consumers, one of the recommendations in Justice Cunningham’s Report was to focus on scheduled arbitrations.

 Importance of Arbitration

Clearly, this case in support of his recommendations, as the arbitration process was able to save actual court time, which would have been wasted since Mr. Malin would likely not have appeared or followed through with his application. The important factor here is having a skilled arbitrator appointed under an order in council who understands the system to administer the appropriate decisions based off previous case law and is accountable for their decisions.

Penalties for Not Meeting Timelines

Justice Cunningham also recommended new penalties for not meeting timelines. If this recommendation was in place, it would prevent Mr. Malin from being eligible for his claim much earlier, and the cost would be awarded much faster. With less wasted time on these cases, which have no merit or follow through from the Applicant, more time and money could be saved.

Conclusion

Overall, Malin and State Farm is a case that provides strong evidence and support of Justice Douglas Cunningham’s recommendations on the Ontario auto insurance dispute resolution system.

 

Case Citation: Malin and State Farm  (FSCO A12-000108, July 4, 2014)

Jason E. Lau is a Paralegal student at Centennial College in Toronto studying professional communications with Omar Ha-Redeye.

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