Court ruling calls independence of auto claims dispute arbitrators into question

The Ontario Licence Appeal Tribunal’s first ruling on whether an auto accident claimant is catastrophically impaired has been quashed by a three-judge Divisional Court panel.

The decision-making process at LAT “creates a reasonable apprehension of lack of independence” on the part of the arbitrator, Divisional Court Justice Julie Thornburn wrote in Mary Shuttleworth v. Licence Appeal Tribunal, released Wednesday.

The LAT, a quasi-judicial organization, is a forum for Ontario auto insurers and claimants to bring disputed accident benefits claims. Before 2016, such disputes were arbitrated by the Financial Services Commission of Ontario (FSCO).

Mary Shuttleworth was a passenger in a vehicle involved in a head-on collision in 2012. A dispute arose over whether she was catastrophically impaired, which normally increases the limit for accident benefits to $1 million – more than 10 times greater than the limit those for those claimants who are not deemed to be catastrophically impaired.

Shuttleworth’s insurer disputed her claim that she was catastrophically impaired.  A LAT arbitrator held that Shuttleworth was not catastrophically impaired in a ruling released in April 2017.

That ruling was set aside by the Divisional Court in its decision released June 20, 2018. The Divisional Court ruled that the LAT ruling was “subjected to a peer review process that did not contain the required safeguards of adjudicative independence,” Justice Thorburn wrote. Concurring were Justices Michael McKelvey and Frederick Myers.

“The big problem that the case identified was the fact that there is  huge difference between voluntary consultation and non-voluntary consultation,” Shuttleworth’s lawyer, Gary Mazin, the founder of personal injury law firm Mazin & Associates, said in an interview.

The Divisional Court ordered that Shuttleworth’s accident benefits dispute be heard before a new arbitrator.

Several months after the LAT ruling, a lawyer received an anonymous note alleging that, after the LAT adjudicator drafted her decision, the draft was changed by the executive chair of the Safety, Licensing Appeals and Standards Ontario (SLASTO). Shuttleworth’s lawyer obtained some information after filing a Freedom of Information Act request, the Divisional Court noted.

It turns out that with LAT decisions, “adjudicators are ‘expected’ to subject their decisions for review and decisions get sent to the executive chair by the legal department without any assent or input from adjudicators,” Justice Thornburn wrote. “When comments come back to adjudicators from the executive chair, they are being made by a person with authority over the adjudicator’s reappointment.”

LAT declined to be interviewed by Canadian Underwriter but a LAT spokesperson wrote in an email that LAT has a “peer and legal review process.” Comments made in that process “are non-binding and adjudicators are free to accept or reject them.”

As a result of the Divisional court ruling in Shuttleworth, LAT plans to put in writing that “all comments generated through the review process are for the author’s consideration only” and that those comments are “non-binding.”

In addition to accident benefits claims disputes, LAT also adjudicates disputes on non-insurance matters such as liquor licences, new home warranty claims, medical suspension of driver’s licences and vehicle. Arbitrating disputed auto claims was added to LAT’s mandate in 2016.