Ontario arbitrator says AB insurer must pay full cost of expert report used in both accident benefits and tort proceedings

An Ontario arbitrator has ordered an insurer to pay for the full cost of an expert report even though the report was also being used in a related tort case.
In Sanmuganathan Elaiathamby v. State Farm Mutual Automobile Insurance Company, Elaiathamby claimed $8,505.42 for expert reports and disbursements at a Financial Securities Commission of Ontario (FSCO) expense hearing related to his accident benefits claim.
At the expense hearing, a FSCO arbitrator awarded only $6,289.68 for the expert reports and disbursements. The arbitrator allowed only one half of the cost of reports by four experts (two of them doctors), whose reports were also being used in a related tort case.
The decision at the expense hearing was overturned on appeal.
In his appeal decision, FSCO Director’s Delegate David Evans said the original decision to half the expenses on the basis of their use in a tort case was “without reference to case law or legislation.”
Evans noted that Subsection 282(11) of the Insurance Act provides that all or part of the expenses incurred in an arbitration may be awarded based on prescribed criteria set out in s.12(2) of Reg 664, R.R.O. 1990. “Those criteria do not include whether a party may potentially be entitled to recover a portion of his or her expenses in another proceeding [such a tort case],” he wrote.
State Farm argued that allowing only half of the disbursements would prevent “double recovery.” This describes a situation in which the accident benefits carrier and the tort insurer each pay the full cost of an expert report used in both accident benefits and tort proceedings.
“However, the arbitration and appeal decisions are public, so there is no reason to assume there would be double recovery, even aside from the assumption that counsel will act honorably,” Evans countered. “Finally, while the automobile insurer is the insurer or last resort, that does not apply to legal expenses incurred in arbitration.”