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Law Times • December 12, 2011 Gov't comes up short on LAO, auto insurance audit Y ou can't manage what you don't measure, as any execu- tive would agree. And that's where the Ontario gov- ernment is falling short, according to Auditor General Jim McCarter's annual report last week. Spendthrift habits aside, there's a general lack of earnest investigation and followup into what kind of bang for the buck government programs deliver. Th ere were few surprises. Th e Green Energy Act was front and cen- tre with McCarter noting the feed-in tariff will add $4.4 billion to energy costs and account for half of hydro bill increases as they rise by 46 per cent over the next four years. Th ey've already jumped 65 per cent since 1999 when the government restruc- tured the energy sector. McCarter also noted that while consumers have paid $8 billion towards the $7.8-billion residual stranded debt of the old Ontario Hydro through charges on their bills, there's no accounting for the balance remaining. Th en there's Legal Aid Ontario, which received $354 million last year and the highest amount per capita of any province. Despite long-term plans now in place to improve effi - ciency and service levels, McCarter said eligibility rules haven't changed since the 1990s. Meanwhile, McCarter says, costs per certifi cate have risen; fewer peo- ple are getting certifi cates; and more clients rely on duty counsel. He noted as well that there has been no audit program for quality assurance. Th e Ministry of Health and Long-Term Care changed the way it pays many family doctors and spe- cialist physicians, a move that has in- creased costs but provided no metrics to quantify the results. Has care im- proved? We just don't know. Th e Offi ce of the Children's Law- yer refuses some 40 per cent of the child custody and access cases re- ferred to it by the courts but never followed up to see what the impact of those decisions has been on the children, their parents and guardians or the courts. All of this is bad enough, but the headline from the report that caught the general public's attention was about car insurance because it has be- come such an expensive necessity. We pay the highest premiums in the na- tion, ostensibly because we have the highest claim record. But do we? Death and injury rates are the lowest of any province, Mc- Carter pointed out. "Th e increasing cost of claims cannot be explained by common sense. Somebody's got to get a handle on this," McCarter told the media on delivering his report. We pay the 100 or so automo- bile underwriters $9.8 billion in premiums. In turn, they paid out 584,000 claims in 2010 at a cost of $8.7 billion. But premiums are rising while benefi ts shrink, and McCarter suggests the Financial Services Commission of Ontario should do a better job of serving the other parts of its mandate under the In- surance Act beyond just routinely approving rate hikes. More curiously, McCarter asks, why does the act still set a 12-per-cent Inside Queen's Park By Ian Harvey guaranteed return on premiums? It stems from the corresponding long- term bond rate that was 10 per cent in 1996. It's three per cent today. McCarter also asks why claims are so high in the Greater Toronto Area and wonders who's responsible for investigating the rampant fraud the industry says is the source of 10 to 15 per cent of all claims at about $1.3 billion annually and a cost of $150 on each $1,000 in premiums. But just what are the numbers? "Th at's an industry fi gure," says Nick Gurevich of the Alliance of Com- munity Medical & Rehabilitation Providers that represents roughly 80 companies and 3,500 health-care providers who work with accident victims. "No one knows if it's right. All we've seen are three charges and some $200,000 in restitution." Right now, it's a mess. Th e com- mission says it can't handle the inves- tigations into clinics that participate in staged accidents in order to bill in- surance companies for medical treat- ment. Th e insurance companies have resorted to seeking civil remedies. One of them, for example, is suing an individual whose three clinics billed $1.2 million in 2010. At the same time, insurance com- panies are denying more claims for treatment and drivers are seeking mediation through the commission under the Insurance Act. Over the last fi ve years, hearings are up 135 per cent while pending applications have ballooned by 645 per cent. According to Gurevich, some of that is the result of a change in the rules last September that lets adjust- ers decide whether a recommended treatment is necessary. "Th ey're not health-care profes- sionals, and before a denial was sent to an independent examiner to re- view," he says. "Not now." Since last year, the alliance's num- bers show a 55-per-cent increase in declined requests for initial assess- ments and a 290-per-cent rise in rejections of recommendations for followup treatment. Insurance companies exist in a provincially legislated oligopoly and too often act imperiously when as- sessing drivers' applications and pay- ing out claims. Th e public has a right to expect better oversight. As such, McCarter raises perti- nent questions about the govern- ment's overall management strategy. He reminds us that good man- agement isn't about throwing money at a problem in hopes it'll go away. Audits and inventory counts aren't glamorous but they provide critical feedback about returns on invest- ment. In tough times like these, a little drilling could turn up some bottom-line gold. Ian Harvey has been a journalist for 34 years writing about a diverse range of issues including legal and political af- fairs. His e-mail address is ianharvey@ rogers.com. COMMENT PAGE 7 Court should take more active role over religious disputes diff erent forms. Th ere may be factional disagreements between members or even wrongful dismissal claims, as exemplifi ed by the Ontario Court of Appeal decision in Hart v. Roman Catholic Episcopal Corp. of the Diocese of Kings- ton in Canada. A Central to these dis- putes is the court's ju- risdiction to adjudicate them. Hart concerned what may be classifi ed as a religious dispute. It raises an intriguing question of what hap- pens when the courts encounter employ- ment disputes answerable by canon law. In the court's view, wrongful dismissal claims arising from an ecclesiastical relationship are not justiciable in civil courts because they are subject to an internal review pro- cess established by a religious organization. Hart reaffi rms that judicial supervision of the functioning of a self-governing organi- zation is legally narrow. In Hart, an ordained Roman Catholic priest, Rev. Brian Hart, was appointed for a six-year renewable term as pastor. In this role, he was subject to canon law, a norma- tive system that governs the church and its members. From 2006 to 2008, the archdi- ocese placed Hart on administrative leave, suspended his facilities to exercise sacra- mental ministry, and ultimately removed him from his ecclesiastical offi ce. Prior to his removal, it issued Hart three decrees, each of which he could, but did not appeal, under canon law. Instead, Hart brought an action for damages for con- structive dismissal in the Superior Court. In response, the archdiocese moved to stay Hart's action on the grounds that the court lacked jurisdiction over his claim. Th e mo- tion judge found that the archdiocese's internal processes, which are designed to address employment-related disputes, do not off end the principles of natural justice and stayed Hart's action. Hart appealed but failed to persuade the court that it had jurisdiction to adjudicate his claim. In refusing to exercise its jurisdiction, the court explained that the Roman Catholic Church is a self-governing organization. Its canon law provides for the internal review process and off ers a broad range of remedies, including the substitution of a diff erent de- cree, monetary compensation, and even a trial. Because Hart had neither exhausted the internal review process nor alleged that it breaches the requirements of natural justice, the court lacked jurisdiction to adjudicate his claim. Contrast Hart with David v. Congregation B'Nai Israel. On a similar jurisdiction motion, the court in that case found it had jurisdic- tion to adjudicate Rabbi Joseph Ben David's wrongful dismissal case despite the congrega- tion's internal review mechanisms and, im- portantly, the rabbinical court of New York's competing jurisdictional claim. At trial, the court granted 30 months' notice to a 59-year- old rabbi terminated after 26 years. In Hart, the court explained that the general rule that the Superior Court has jurisdiction to adjudicate wrongful dis- missal claims has several exceptions. One is where the essential character of an em- ployer-employee dispute arises from the interpretation, application, administra- tion or violation of a collective agreement. Another exception is where the rules of a self-governing organization, especially a religious one, provide an internal dispute www.lawtimesnews.com s with their secular counterparts, disputes aren't uncommon in reli- gious organizations and may take Labour Pains By Nikolay Chsherbinin resolution process. Th e former disputes must be resolved by arbitration, while the latter go through the organization's inter- nal procedures. Consequently, a court will interfere in the internal aff airs of a self- governing organization in two situations: where the organization's internal processes are unfair or do not meet the requirements of natural justice or where the aggrieved party has exhausted them. Signifi cantly, the reviewing court will not consider the merits of the internal decision but will determine only whether the decision was carried out in ac- cordance with the organization's rules and the requirements of natural justice. Th e more diffi cult question is whether a litigant is bound to follow an internal re- view process instead of suing in the civil court where the relationship with a self- governing organization was multifaceted and involved property and civil rights. Th e answer to this question appears to turn on the nature of the litigant's dispute with the organization. Th e court explained that the nature of the dispute is determined not by its legal classifi cation but by the facts giv- ing rise to it. In Hart, the plaintiff argued that some aspects of his dispute concerned matters of property, namely his loss of lodging. Th e court brushed his argument aside, stating that "at its essence this dispute is ecclesi- astical." Regrettably, the court neither delineated the contours of an ecclesiastical dispute within religious organizations nor off ered factors capable of turning an internal church matter into an ecclesiastical one. Th erefore, this pronouncement creates uncertainty be- cause it is unclear which disputes are eccle- siastical and not subject to judicial oversight and which are not. Th is is of signifi cance in part because in Ivantchenko v. Th e Sisters of Saint Kosmas Aitolos Greek Orthodox Mon- astery, the motion judge, having refused to grant summary judgment against a nun who sought damages for constructive dis- missal, acknowledged that "the concepts underpinning the relationship between civil law, on the one hand, and religious organi- zations and their internal laws, on the other hand, have not been fully worked out." It does not help to insist that the courts should avoid deciding secular legal ques- tions in cases involving religious organiza- tions. Th e prevailing argument that adju- dications involving people who voluntarily chose to be a member of a self-governing organization should be governed by its in- ternal review process creates its own dif- fi culties. Firstly, it may well be that lawyers or even non-lawyers who drafted docu- ments purporting to govern a particular dispute did not do so in ways that refl ect the ecclesiastical or secular realities of the organization. Secondly, there may be no documentation at all. Th irdly, the orga- nization may not have a tribunal in place governing the subject matter. Lastly, there may be a need, like in Ivantchenko, to de- termine who are the proper employers. In my view, the courts should take a more active role in adjudicating employ- ment law disputes in cases involving reli- gious organizations as long as they do not intrude into the determination of the doc- trinal issues. Nikolay Y. Chsherbinin is an employment litigator in Toronto. He can be reached at 416-907-2587, nc@nclaw.ca or nclaw.ca.