Arbitration Appeal Decision Regarding Failed Mediation

On February 10, 2012, in Leone and State Farm, a FSCO arbitrator ruled that mediation was deemed to have failed because it did not take place within 60 days of an application being filed and that the parties could not extend the time limit on consent once 60 days had expired.

In this particular case the claimant filed for mediation on September 28, 2010 and FSCO acknowledged receiving the application 2 days later. A mediation number was assigned to the file and the claimant was informed that there would be a delay in assigning a mediator because of high volumes.

The claimant filed for arbitration on March 14, 2011 indicating that although mediation had not taken place, it had failed because of the passage of time. FSCO received the arbitration application 169 days after receiving the mediation application. On August 18, 2011 a mediator was assigned to the file, 382 days after receiving the mediation application. The claimant maintained the position that mediation had failed. There had been an agreement to extend the timelines but the arbitrator ruled that it was invalid because 60-day timeline has already expired.

The insurer supported the position of FSCO that the 60-day timeline does not begin until a mediator has been assigned. The arbitrator disagreed with this interpretation of the statute. The arbitrator also disagreed with the position that a mediator's report is required stating that mediation has failed. The arbitrator indicated that the requirement in this case was unreasonable and should be waived.

The arbitration decision was appealed.

On July 31, 2012, a decision​ was released by the director’s delegate that upheld the 60-day deemed failure but stated that the parties had the ability to extend the time for mediation, as has been the practice for many years.

The director's delegate agreed with the arbitrator that the 60-days timeline begins when a completed application is filed not when a mediator is assigned. Therefore, the mediation was deemed to have failed by November 29, 2010.

The director's delegated disagreed with the arbitrator on the issue of extending the timeline. He indicated that the parties could extend the timelines after the 60-days timeline has passed and to prevent the parties from doing so would be contrary to the intent of the statute.

Finally, the director's delegate also agreed that the arbitrator had the ability to waive the requirement of a mediator's report before filing for arbitration.

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