Neutral Citation: 1995 ONICDRG 96

File No. A-010804

ONTARIO INSURANCE COMMISSION

BETWEEN:

GEORGE DAVID QUARRINGTON

Applicant

and

JEVCO INSURANCE COMPANY

Insurer

DECISION

Background:

The Applicant, George David Quarrington, was injured in a motor vehicle accident on June 19, 1993. He claimed entitlement to certain dental services from the Insurer, payable under Ontario Regulation 672¹. The parties disagreed on what services should be provided, and were unable to resolve their dispute through mediation. The Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

At the commencement of the hearing, the parties advised me that the Insurer was no longer disputing the treatment sought by the Applicant. Counsel agreed that the estimated cost of this treatment is $25,000. The parties had not, however, resolved the Applicant's claims for a special award and interest, and requested a hearing confined to those two issues.

Issues

The issues in this hearing are:

1. Should Jevco be required to pay a special award under section 282(10) of the Act because It unreasonably withheld or delayed the payment of dental benefits to the Applicant?

2. Is the Applicant entitled to interest on expenses to be incurred in the future?

3. The Applicant also claimed his expenses of the arbitration.

Result:

1. The Applicant is entitled to a special award of $10,000, inclusive of interest.

2. The Applicant is entitled to interest on amounts payable for dental services, from October 6, 1994, in accordance with subsection 24(4) of the Schedule.

3. The Applicant is entitled to his expenses of the arbitration.

Hearing:

The hearing was held in North York, Ontario, on June 12, 1995, before me, Deena Baltman, arbitrator.

Present at the Hearing:

Applicant:

George David Quarrington

Applicant's Representative:

James Newland Barrister and Solicitor

Stacie Stanton Barrister and Solicitor

Insurer's Representative:

B.W. Brucker Barrister and Solicitor

Witnesses:

George David Quarrington

Lisa Norton

Exhibits and other documents before me are listed in Appendix "A" to this decision.

A. PRELIMINARY ISSUE

In his preliminary submissions, counsel for the Insurer argued that I had no jurisdiction to decide the issues of special award or interest, on the ground that they were neither mediated nor raised in the Application for Arbitration. I reserved my ruling. After considering this matter, I find I have jurisdiction over these issues, for the following reasons:

1. As to a Special Award:

The Applicant seeks a special award under section 282(10) of the Act, on the basis that the Insurer unreasonably withheld or delayed the payment of dental benefits.

The checklist of benefits in the Application for Arbitration does not include a space for a special award; this may reflect the fact that a special award is not a separate head of benefits, but is a discretionary sum that flows from an arbitrator's determination that specific benefits were unreasonably withheld.

In Victoria Anizor and Royal Insurance Company of Canada, January 24, 1995, OIC File No. A-003702, Arbitrator Palmer expressed the view that an arbitrator has an inherent jurisdiction to consider a claim under section 282(10) of the Act once she finds an insurer has acted unreasonably, regardless of whether the applicant raised such a claim at any time prior. I agree with that view and believe it is supported by the wording of the subsection:

If the arbitrator finds that an insurer has unreasonably withheld or delayed payments...the arbitrator...shall award a lump sum...

I note as well that the Insurer suffers no real prejudice by the inclusion of this issue; the Insurer has known for over a year that if an arbitration took place, the Applicant would be seeking a special award. By letter dated March 31, 1994, Mr. Newland advised Jevco that:

If you continue to maintain you [sic] denial, we will be forced to proceed with mediation and will be seeking a "special award" and costs as provided under section 242d [now section 282(10)] of the Insurance Act. [emphasis added]

In addition, Mr. Brucker quite candidly advised that in the week prior to this hearing, his office had discussions with the Applicant regarding the special award claim. He clearly anticipated the claim and had time to prepare for it.

2. As to Interest:

The Applicant's entitlement to interest flows directly from his claim for benefits. This is supported by subsection 24(4), which states that the "insurer will pay interest on overdue payments from the date they become overdue at the rate of 2 per cent per month." This entitlement is not altered by counsel for the Applicant's inadvertence in omitting to refer to interest in the Application for Arbitration.

B. HISTORY OF PROCEEDINGS

The Applicant seeks a special award under subsection 282(10) of the Act, on the ground that the Insurer unreasonably withheld or delayed the payment of dental benefits.

The Applicant suffered many serious injuries in this accident. He has received several forms of rehabilitative and therapeutic assistance through Jevco (the "Insurer"). To date, the Insurer has paid approximately $102,000 in various benefits.

Due to the accident, four of the Applicant's teeth in the right upper quadrant were damaged and one tooth in the right lower quadrant was knocked out. Since December of 1993, he has been engaged in a dispute with the Insurer over appropriate treatment; the Applicant seeks permanent dental implants, whereas the Insurer agreed only to a removable denture.

It was this dispute alone which formed the subject matter of the arbitration. During the course of the arbitration proceeding, the Applicant notified the Insurer that he was seeking a special award.

On the last business day prior to the hearing, the Insurer advised the Applicant that it would pay for implants. It refused, however, to pay any amount toward a special award or for interest.

Having regard to the consent of the Insurer, I award the cost of treatment for dental implants, which counsel estimate to be $25,000. I deal now with the remaining issues, namely special award and interest.

C. SPECIAL AWARD

1. The Accident and Injuries

The Applicant, George David Quarrington, who is now 30 years of age, was involved in a very serious motorcycle accident on June 19, 1993. While travelling on Broadview Avenue, he skidded on streetcar tracks and hit two parked cars. His helmet came off and he was flung from the bike, ending up wedged under the second car.

He was taken unconscious from the accident scene to St. Michael's Hospital, where he remained in a coma for 17 days. He was eventually transferred to Queen Elizabeth Hospital for follow-up treatment, and discharged on August 10, 1993.

The Applicant suffered extensive injuries in this accident. These included a closed head injury, fractures to six ribs, open fractures to the facial bones and right jaw, a fracture of the first cervical vertebrae with consequent spinal cord and nerve root damage, and injury to the right brachial plexus. During his stay in hospital (nearly two months), he battled pneumonia, meningitis and urinary tract infection.

As a result of his various injuries, the Applicant has lost the use of his right arm, suffers deficits of speech and motor control and has been left with permanent impairment of his cognitive and communication functions. His speech is slurred, he suffers memory impairment and he becomes fatigued if he must do any mentally challenging work for more than a few hours. He lost all memory of events in the week leading up to the accident. His sequential memory did not return for a number of months post-accident and remains impaired, particularly for short-term memory.

For several years prior to the accident, the Applicant worked as a restaurant manager. Due to his extensive injuries, he has not been able to return to his employment and is still undergoing various forms of rehabilitation.

I heard testimony from Mr. Quarrington. He struck me as a credible, forthright witness who was well motivated and persistent, despite profound injuries. He referred to his numerous difficulties with memory and concentration. Often midway through the day, his "brain gets tired", which makes it difficult for him to keep track of everyday tasks. He is prone to misplace items or forget appointments.

The Applicant described speech impairment; he slurs certain words and has difficulty completing words and sentences. This problem becomes more pronounced when he is fatigued, which usually occurs at some point in the afternoon, particularly if he has had therapy or other appointments in the morning. I noted that his speech had a halting, slurred quality and that several times he had difficulty finding the word he wanted.

Mr. Quarrington has a number of small scars around his chin area and an obvious scar which extends from the right side of his neck down into his shoulder and then under his right armpit.

His right arm is in a sling and he cannot lift it above his chest or bend it from the elbow. He is left handed.

The numerous facial fractures sustained by the Applicant are of particular relevance to this case. The right side of his face was crushed. He underwent many surgical procedures to repair the fractures, and has been left with permanent disfiguration of the right side of his skull and face, along with several damaged teeth.

He drools on occasion out of the right side of his mouth, which droops below the left side.

He has difficulty chewing certain foods, such as apples, ribs or wings, because of his damaged teeth. He prefers "easy chew" foods, like pasta and bananas. He conceded that a denture may well have alleviated these chewing difficulties; however, he did not accept the Insurer's offer to fund a denture because his medical advisers were recommending implants instead. He is prepared to endure whatever discomfort arises from the implant treatments in order to get his teeth "as close as you can get to real teeth."

He acknowledged that none of his doctors has suggested to him that the delay in treatment has resulted in a deterioration in his gums or teeth.

Mr. Quarrington is self-conscious about his teeth and therefore he "[tries] not to smile". He has taken to growing a moustache down to his lower lip so that no one will notice the condition of his teeth.

I also heard testimony from Lisa Norton, the Applicant's spouse. Ms. Norton has been living with the Applicant since approximately one year before the accident. She testified about the Applicant's current difficulties with cooking, dressing, and eating certain foods. Since the accident she has noticed a marked deterioration in his speech, memory and concentration. He is less sociable, more irritable, and easily fatigued. She notices that he turns the left side of his face toward people in order to conceal his teeth, and that he avoids smiling.

2. Dispute re Dental Treatment

Because of his damaged teeth, the Applicant was eventually referred to Dr. Izchak Barzilay, a specialist in prosthodontics and implant dentistry.

On November 29, 1993, Applicant's counsel forwarded a treatment plan by Dr. Barzilay to Mr. Kelly of Lindsey Morden, the claims adjusters for the Insurer. Dr. Barzilay proposed the following treatment for Mr. Quarrington:

(a) restoration of the lower quadrant with either a four or six-unit bridge

(b) implant prosthesis for the upper quadrant; this would be achieved in three stages: first, the four teeth would be extracted and a temporary partial denture would be provided during the healing period; secondly, Dr. Baker, an oral and maxillofacial surgeon who had also assessed the Applicant, would place four implants in the region; lastly, after a further healing period of six months, Dr. Barzilay would insert a four-unit, fixed-implant bridge.

Dr. Barzilay notes at the conclusion of his letter that:

My office policy is to have half the fees paid at the beginning of treatment with the remaining fees (including lab fees) payable upon completion of treatment.²

The letter estimates the costs for the implant procedure (not including Dr. Baker's work) at $8,780. A further report from Dr. Barzilay, also dated November 29, 1994, explains the plan for the Applicant's lower quadrant in greater detail. Dr. Barzilay recommended a fixed bridge rather than an implant, as a single implant would be difficult to do because of the closeness of the neighbouring teeth. He estimated the cost of this bridge work to be between $4,800 and $7,000.

Applicant's counsel asked the Insurer to assess Dr. Barzilay's treatment plan and "notify Mr. Quarrington of his expected coverage. Treatment can commence once my office is in receipt of your authorization."

In February of 1994, Dr. Baker was asked by Ms. Lise Malouf, a claims administrator for Jevco, to "advise why [he] chose implant treatment" for the upper region and to further "advise what alternative treatment is available." By letter dated February 17, 1994, Dr. Baker responded:

...Mr. Quarrington was involved in a very serious accident. His treatment to date has been directed at attempting to return Mr. Quarrington, as close as possible, to his pre-accident state. The same principle must apply to his dentition. Accordingly, the most appropriate treatment is to provide a fixed prosthesis independent of adjacent, sound teeth. Accordingly, an implant-supported bridge would fulfil this goal.³

[emphasis added]

Dr. Baker went on to discuss two alternative treatments, which were:

1. a removable denture; or

2. a fixed bridge

He rejected both of those treatments:

... a removable denture would not approach his pre-accident state. Furthermore, it would, in time, likely damage the adjacent teeth from which it would gain support. [A fixed bridge] would involve the cutting of otherwise healthy teeth, which would ultimately endanger their health. There would be a high incidence of requiring later root canal treatment on the supporting teeth...

In review, the only appropriate treatment for Mr. Quarrington, in order to properly restore his occlusion as close as possible to the pre-accident state, is an independent implant-supported prostheses.⁴ [emphasis added]

In a written attachment, Dr. Baker estimates fees of $8,400, for the portion of the implant procedure that he would perform. Counsel agreed at this arbitration that the total estimated cost for the combined work of Drs. Barzilay and Baker, on both the upper and lower quadrant, is $25,000.

After receiving these materials, Jevco retained Dr. William Sanders of the McGill University's Faculty of Dentistry in Montreal. Dr. Sanders did not examine the Applicant but instead reviewed the treatment plan proposed by Dr. Barzilay. In a one page letter dated March 16, 1994, Dr. Sanders advised Asco Ltie. (an affiliate of Jevco, through which he was retained), as follows:

Certainly Dr. Barzilay's treatment plan embodies sound "State of the Art" dental principles. The mandate of Asco Ltee, on the other hand, is to provide compensation for "reasonable" treatment.

Submitted radiographs of Mr. Quarrington show the presence of maxillary teeth which could effectively be used to receive clasps and rests of a cast removable partial denture. Such an appliance would provide replacement of the lost 11, 12, 13, and 14 teeth, and would restore esthetics and function to the dentition.

It is my recommendation that settlement be made on this basis.⁵

[emphasis added]

On the basis of Dr. Sanders' recommendation, Jevco advised the Applicant by letter dated March 23, 1994, that "a cast removable partial denture would be highly adequate to restore aesthetics and function to the dentition". They indicated that while the Applicant had the final choice as to which treatment to undergo, they would allow a maximum of $1,000 for any approach; this amount would cover the fees for a partial denture, in accordance with the Ontario Dental Association's suggested fee guide for general practitioners.

On March 31, 1994, Applicant's counsel advised Jevco that if it continued to refuse payment for implants, the Applicant would proceed with mediation. Jevco's response, dated April 5th, 1994, was to continue to deny the claim. It asserted that:

...properly caring for implants is actualy [sic] more trouble than a partial denture can be for a healthy person, not to say for someone with motion control problems...implants are more difficult to care for than a mobile denture....the use of a partial denture would settle Mr. Quarrington's drooling control problem as efficiently as the implants would...⁶

Applicant's counsel then obtained a further report from Dr. Barzilay, commenting on the need for using implants to restore the Applicant's dentition:

The loss of these teeth has created and/or exasberated [sic] a speech impediment as well as being responsible for exasberated [sic] drooling out of the right side of Mr. Quarrington's mouth.

In order to restore Mr. Quarrington to his pre-accident condition the best way available to date would be to use implants. This would allow the fabrication of a bridge in the involved region without involving any other teeth. The bridge would be fixed and not removable and consequently the maintenance would include oral hygiene procedures. The prosthesis is removable by a dentist so should adjustments be required it could be easily accomplished. Once again, it is only through implant treatment that this type of prosthesis can be fabricated.

It is possible to place a removable prosthesis for Mr. Quarrington but due to his current mental condition there is a chance that the patient may loose [sic] this prosthesis. Comfort usually is better achieved with implants than with partial dentures. Partial dentures could also further impede Mr. Quarrington's speech. By placing any prosthesis in Mr. Quarrington's mouth, the drooling problem should be somewhat corrected.

The third option that is available to us is a fixed bridge. This would however involve crowning most of the remaining maxillary teeth. I feel that the teeth present would not support such a prosthesis.

It is my opinion that Mr. Quarrington is best served with an implant supported bridge. Once again, this would restore Mr. Quarrington as close as possible to his pre-accident condition and would be in his best interest.⁷

[emphasis added]

In order to further rebutt the opinions expressed by Dr. Sanders on behalf of Jevco, the Applicant's solicitor obtained a report from Dr. Gerald Baker, the head of Oral and Maxillofacial Surgery at Mount Sinai Hospital. Dr. Barzilay anticipated that Dr. Baker would place the implants in the upper region (see p. 9, above). In his letter of September 27, 1994, Dr. Baker stated:

There has been both an evolutionary and revolutionary process over the last thirty years, resulting in a predictable, functional, and durable tooth replacement system: titanium osseointegrated implants which support a fixed bridge. The state of the art is clearly an "implant supported prosthesis" whenever possible as opposed to other forms of fixed bridges or removable partial dentures...implant supported bridges or prostheses have the best overall prognosis...⁸ [emphasis added]

Dr. Baker then addressed himself specifically to the points made in Dr. Sanders' letter:

Dr. Sanders states that a removable partial denture (RPD) is professionally acceptable, and while this may be true, it is at least a second, and usually, the third choice...There is considerable manual skill required in maintaining even the most routine oral hygiene procedures. Additional skills would be required for the removal as well as maintenance even of an RPD. Furthermore, the clasps of an RPD can damage the teeth onto which they attach creating the need for later repair.

An implant supported prosthesis has the potential of providing the most natural replacement of missing teeth as it has no metal or acrylic [sic] framework on the palatal side which can impede speech by virtue of its thickness. While this is not always an issue, it may be more important in view of the patient's specific problems.

Finally, Dr. Baker addressed the more subtle but pervasive personal element of this case:

There is the issue of dignity. This individual has suffered a significant loss both physically and emotionally. I believe that we have the opportunity to minimize the impact of this loss by providing a prosthetic replacement which can become a "permanent" part of his body, namely, an implant supported prosthesis. It seems to me that a removable prosthesis may compound the loss issues by reminding him of his functional deficits every time he has to remove and clean his teeth! I believe a removable prosthesis will be a further indignity to an individual already suffering a significant loss. [emphasis added]

As mentioned above, Drs. Barzilay and Baker are the Applicant's treating physicians. I was, however, also presented with the opinions of four caregivers (in addition to Dr. Sanders) retained by the Insurer. Three were involved in the day-to-day care of the Applicant: Michelle Cohen, a speech language pathologist; Cynthia Hines, a rehabilitation counsellor; and Dr. Harold Becker.

Ms. Cohen, the speech language pathologist, discussed dental options in her report of May 8, 1994, to Mr. Newland. She indicated that as a result of the accident, the Applicant suffered impairment of three motor processes involved in speech production, namely 1) resonance; 2) articulation; and 3) drooling. She then stated:

...adding a foreign body, namely, a partial denture, would further compromise an already compromised system.⁹

Ms. Cohen also pointed out that the Applicant was receiving treatment to address his cognitive-communication deficits, and, while he was making gains in several areas, he

...may experience difficulty caring for and wearing a removable denture on a consistent basis.

She then concluded that, For the above speech and cognitive-communication reasons, it is this clinician's opinion that implant treatment rather than a partial denture is required.

Further comment on the advisability of dental implants came from Cynthia Hines, the rehabilitation counsellor, who noted the following in her report of May 12, 1994:

... [His] memory and attention deficits and his inability to use his right hand would make it difficult for him to use and care for a partial removable denture...there is a strong possibility that Mr. Quarrington will misplace or lose a partial denture in the future...From an emotional perspective Mr. Quarrington already must adjust and accept many impairments resulting from his multiple injuries; in my opinion any medical treatment which returns Mr. Quarrington as close as possible to his pre-accident state is necessary to minimize the already significant impact this accident has had upon [his life].¹⁰

[emphasis added]

On November 9, 1994, Dr. Harold Becker conducted a comprehensive assessment of the Applicant on behalf of the Insurer. Dr. Becker is an expert in vocational and disability assessment, and is the doctor responsible for coordinating the interdisciplinary care being provided to Mr. Quarrington. His facility has been appointed a Designated Assessment Centre (DAC) by the Commission with respect to disability assessments made under the Schedule.

Dr. Becker's report of November 9, 1994, to Ms. Hines is a detailed, sensitive and valuable outline of the Applicant's injuries and treatment needs. He had this to say about dental treatment:

What is obvious at the outset of my involvement is that he requires dental prosthetic treatment at this time. He is walking around with significant loss of teeth in the right side of his mouth. He has been assessed by experts at Mount Sinai who recommend, apparently, that he undergo dental implants. This is reasonable and necessary in my opinion. Mr. Quarrington is developing significant problems with self-esteem (already seriously affected as a result of his marked shoulder and facial injuries) and everything should be done to put Mr. Quarrington back together the way he was at the time of this accident. Considering he is young and he has reasonable dentition, I do not believe that dental implants are unreasonable and I have indicated so to him. I do not understand why this issue should have to come to arbitration. He has no other bridgework; it is unreasonable in my opinion that he should not [sic] have to wear a bridge to provide repair to these dental injuries when he can function virtually normally with dental implants. He is prepared to undergo the pain and the suffering involved in the application of these implants and to me that is the major issue.¹¹ [emphasis added]

In preparation for this arbitration, the Insurer retained yet another dental specialist, Dr. Bruce Glazer. His report of May 15, 1995 includes the following comments:

...you state that your client is obliged to make payments for reasonable expenses. My definition of reasonable is probably different in the case of a prosthetic replacement of a natural body part than it would be in the case of replacement of a personal item like a radio. My definition would include provision of a replacement as close to the natural state as possible. In addition, you would want a prosthetic replacement which would impact the least on the natural dentition and speech.

... A person with a badly compromised mouth before an accident would not expect it to be close to perfect after the fact. David's mouth however, was decay free, he had all his own teeth and they were disease free...

The placement of implants to replace the remaining missing teeth today is very routine and not really state of the art. The science of implants is now over 25 years old and has become the treatment of choice in many cases.

The only advantage to using the partial denture is that it is the most conservative and least costly treatment other than no treatment at all and is inappropriate in this case.¹² [emphasis added]

Upon receipt of this opinion, Insurer's counsel returned to Dr. Sanders, the only medical advisor so far who was opposing the implant procedure, and requested a further report from him. In his response of June 5, 1995, Dr. Sanders maintained his original position that implants were neither reasonable nor necessary. In so doing he claimed that a majority of patients who cannot afford implants make do with dentures, even though "there is no better way to do it [than implants] - it is the Cadillac treatment in dentistry."¹³

Applicant's counsel filed a supplementary report from Dr. Baker, dated June 8, 1995, which purports to set out the problems arising from the delay in dental rehabilitation. In this report, Dr. Baker does not identify the degree to which the Applicant actually suffered any such problems.

On Friday, June 9, 1994, the last business day before the hearing, the Insurer advised Applicant's counsel that it would pay for the cost of the implants. As I noted above, counsel agree that the estimated cost is $25000.

3. Findings

a. Entitlement to Special Award

The Applicant is claiming a special award under subsection 282(10) of the Act, which states:

If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the No-Fault Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. [emphasis added]

The purpose of the section is to penalize unreasonable conduct. Under this provision, if I find that the Applicant's dental benefits have been unreasonably delayed, I am obliged to award him a special lump sum payment.

Previous case law has considered the term "unreasonable". In Larry Erickson and The Guarantee Company of North America, June 2, 1992, OIC File No. A-000560, Senior Arbitrator Rotter stated that for conduct to be "unreasonable" it need not amount to bad faith or wilful misconduct. On the other hand, it has to be more than erroneous, or a simple error of judgment. It must be conduct that departs from what is sensible and fair.

In this case the Insurer refused to pay for dental implants until virtually the eve of arbitration. I conclude that this was unreasonable. The following factors led to my decision:

1. The Insurer received abundant medical evidence that the implant procedures were both reasonable and necessary, as required by the legislation.

Section 6 of the Schedule sets out the criteria which must be met to establish an Applicant's entitlement to dental benefits. The section states:

6.(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident all reasonable expenses resulting from the accident within the benefit period set out in subsection (3) for,

(a) medical, psychological, surgical, dental, hospital, chiropractic, nursing and ambulance services and the services of physiotherapists

(b) prostheses, dentures, prescription eyewear, hearing aids and other medical or dental devices. [emphasis added]

In addition, under subsections (4) and (6), before making a payment for an expense the Insurer may require the applicant to submit a statement signed by a person qualified to practice dentistry, stating that the expense is "necessary for the applicant's treatment or rehabilitation."

These provisions have been reviewed in many arbitration decisions. In Richard Mark Plows and Jevco Insurance Company, January 16, 1992, OIC File Nos. A-000175 and A-000588, Senior Arbitrator Rotter stated that the criteria for entitlement are threefold:

(1) it must be a reasonable expense resulting from the accident;

(2) it must be required because of the accident;

(3) a medical practitioner must provide a signed statement that the expense is necessary for the insured's treatment or rehabilitation, if the insurer so requires.

The parties agree that the treatment sought is required because of the accident. The dispute is over whether implants are both "reasonable" and "necessary".

Counsel for the Applicant submitted that while the Insurer is entitled to challenge the cost of treatment, it is not entitled to dispute the method of treatment, provided it receives supporting documentation from the Applicant's dentist. I disagree; section 6 does more than require that the "expense" be "reasonable"; it also requires that the "treatment" be "necessary". As such, adequate support for both the type of treatment sought and its cost is clearly required.

In any case, both these criteria were thoroughly satisfied at the outset by the reports from the Applicant's treating dentists, Drs. Barzilay and Baker. If any doubt remained, the subsequent reports of Michelle Cohen, Cynthia Hines, and Drs. Becker and Glazer clearly established that implants were reasonable and necessary. I find it significant that these last four caregivers were all retained by the Insurer; moreover, three of them (Becker, Hines and Cohen) were involved in the day-to-day care of the Applicant, and were, therefore, in the best position to assess his needs.

What emerges consistently from virtually all the reports is that the implant procedure best satisfies the goal of section 6 benefits, which is to restore the Applicant to a condition where his mental and physical status most closely approximate his pre-accident condition.¹⁴

In particular, I find it difficult to overlook the urgent pleas from Dr. Becker, who not only found the implants to be "reasonable and necessary", but also could "not understand why this issue should have to come to arbitration" (see p. 17, above). I share his bewilderment.

The Insurer submitted that it was entitled to consider cost when assessing a claim. It does not dispute that implants will cost $25,000. Nor does it suggest a cheaper form of implants is available; it argues that the cost of implants is excessive when compared to other available treatments.

I have already found that the implant procedure is a necessary treatment.

The fact that other treatments cost less is irrelevant, as they do not meet the Applicant's needs.

Finally, I note that while the Insurer disputed the implant procedure for the upper region, at no time did it even respond to the Applicant's request for a bridge for the lower region. While both parties likely contemplated that the work on the upper and lower regions would be dealt with as a "package", the Insurer was not entitled to simply ignore a portion of the claim that had been clearly documented by the Applicant.

2. The Insurer violated the "pay pending dispute" provision.

Subsection 6(7) of the Schedule states that the Insurer must "pay now, dispute later" with respect to certain medical and rehabilitation benefits:

(7) In case of a dispute concerning an expense described in clause 1(a), (b) or (d), the insurer will pay the expense pending resolution of the dispute.

This provision applies to claims for dental treatment (subsection 6(1)(a)) and dental devices (subsection 6(1)(b)).

Subsection 268(8) of the Insurance Act addresses the payment of benefits pending the resolution of a dispute:

268.-(8) Where the No-Fault Benefits Schedule provides that the insurer will pay a particular no-fault benefit pending resolution of any dispute between the insurer and an insured, the insurer shall pay the benefit until the dispute is resolved.

The Applicant submitted that violation of the "pay pending dispute" provision supported a special award. The Insurer's response was that subsection 6(7) only applies in situations where the applicant has actually incurred an expense. I disagree. Subsection 6(7) refers to expenses "described"; nothing in the wording limits its application to expenses actually paid for by the Applicant. Had that been the legislative intent, it would have been a simple matter to restrict the wording in the subsection to "an expense incurred", or other similar language.

The goal of the "pay pending dispute" provision is to ensure that benefits which are urgently required be paid for promptly, even where there is a dispute with respect to those benefits. That should happen regardless of whether an applicant can afford to fund the expense and then claim reimbursement.

I agree that when faced with a "pay pending dispute" claim, an insurer may require some reasonable supporting documentation. It is unreasonable, however, to require a consensus among all caregivers before acceding to the applicant's request. It is even less reasonable to rely on a sole dissenting view against an array of consistent opinion among highly qualified caregivers. If either of these positions were correct, there would be no force or meaning to the "pay pending dispute" provision.

The significance of the pay pending dispute provision was recently addressed by Arbitrator Makepeace in Patrick White and Pilot Insurance Company, June 6, 1995, OIC File No. A-008462. I agree with her comments:

I accept that an insurer is entitled to require reasonable supporting documentation before paying a claim covered by subsection 6(7). What is "reasonable" documentation in any given case must take account of the legislative intent that disputes about entitlement should not prevent insured persons from getting treatment. ...In my view, an insurer is not entitled to ignore the provisions of subsection 6(7) in reliance on a medical examination required under subsection 23(2).

...subsection 6(7) reflects the legislative object of securing early treatment and rehabilitation for injured persons.

I am prepared to accept that an insurer may not be required to pay medical and rehabilitation benefits pending dispute where, for example, the insurer raises a serious question of fraud, or where the claim is clearly unreasonable. [emphasis added]

There was no suggestion of fraud in this case. Nor was the claim clearly unreasonable; in fact, the overwhelming evidence was that the Applicant's claim was both reasonable and necessary.

3. The Insurer knew, or ought to have known, that the delay was having a detrimental effect on the Applicant. Several of the reports provided to the Insurer made this clear:

a) Dr. Barzilay advised that the damaged teeth created a speech impediment and increased drooling out of the right side of the Applicant's mouth.

b) Dr. Baker spoke of the loss of dignity which the Applicant had already suffered due to his injuries from the accident, and advised that implants would "minimize the impact of this loss."

c) Dr. Becker warned that the Applicant was developing "significant problems with self-esteem" because he was "walking around with significant loss of teeth in the right side of his mouth."

The evidence of the Applicant and his spouse, Lisa Norton, confirmed these reports.

b. Quantum of Special Award

Having found that the dental benefits were unreasonably withheld by the Insurer, I turn now to the quantum of the special award. The legislation provides that I shall award a lump sum of up to 50% of the amount to which the applicant was entitled. As indicated above, counsel agree that for the purposes of this hearing, that amount is $25,000.

Earlier arbitration decisions suggest that the amount of the special award is discretionary, and should be tailored to reflect the insurer's conduct.¹⁵

In this case, I find that the Insurer's refusal was highly unreasonable, given the compelling medical evidence in support of implants. Moreover, the gravity of the Applicant's injuries created a greater need for prompt and sensible treatment by the Insurer.

On the other hand, I have considered certain mitigating factors:

1. There is no evidence that the Insurer's refusal, while most unreasonable, was spiteful or motivated by bad faith.

2. The Insurer has responded reasonably to several other claims for benefits made by the Applicant as a result of this accident.

3. There is no evidence that the delay caused further decay or deterioration in the Applicant's teeth or gums. Dr. Baker's report of June 8, 1995, speaks only in generalities and does not indicate that this Applicant actually suffered any physical damage as a result of the delay.

Having regard to all these factors, I have determined that a special award of $10,000.00, inclusive of interest, is appropriate in this case.

D. INTEREST

The Applicant seeks interest on the amount payable for the implants, which has been agreed at $25,000; he submits that interest is payable on this sum within 30 days from the date the application for implants was first made to the Insurer.

The Insurer argues that interest should only be awarded on those expenses which have actually been incurred. Clearly, the dental implants have not yet been paid for and therefore no expense has been incurred.

Section 24 sets out criteria for the payment of interest. Subsections 24(1) and 24(4) are of particular relevance:

(1) Amounts payable under Parts II, III and V are overdue if not mailed or otherwise delivered by the insurer within thirty days after it has received a completed application for statutory accident benefits.

(4) The insurer will pay interest on overdue payments from the date they become overdue at the rate of 2 per cent per month. [emphasis added]

On first reading, it follows from the wording in section 24(1) that dental benefits (Part II of the Schedule) become overdue and start attracting interest within thirty days of application. However, the subsection applies only to "amounts payable". Is an expense that has not yet been incurred an "amount payable" within the meaning of subsection 24(1)?

Previous case law has found that the insurer's obligation to pay for a section 6 item does not depend on it being incurred by the applicant. In Plows, Senior Arbitrator Rotter stated:

Nor do I accept the Insurer's argument that it is only liable for expenses that have already been incurred by the Insured. The wording of section 6(1) is very clear: it states that the Insurer "will pay" all reasonable expenses, but does not require that the expenses be incurred. Had such a requirement been intended, I have no doubt that it would have been clearly stated in the legislation, as it has been, for example in the wording of section 6(2), which only obliges the Insurer to pay for expenses which have been actually incurred...

If an insurer may be liable for expenses that have not yet been incurred, an expense (or "amount") could conceivably become "an amount payable", within the meaning of 24(1). This is consistent with the definition of "payable" in the Concise Oxford Dictionary:

1. That must be paid; due; 2. that may be paid

[emphasis added]

Under what circumstances will an expense become an amount "that must be paid" and therefore an "amount payable" for the purpose of subsection 24(1)?

Subsection 24(1) states that an expense does not become an "amount payable" until "thirty days after [the Insurer] has received a completed application" for statutory benefits. The wording suggests that receipt of a completed application is the catalyst for an amount to become payable. However, it is not any application that will make an amount "payable"; it must be a "completed" application.

In my view, the words "completed application" assume that the application satisfies the criteria for payment under the relevant subsection. In the case of a section 6 benefit, the criteria are those described above. I have already stated that in my view these criteria were well met in this case. I find they were satisfied by the initial report of Dr. Barzilay dated November 29, 1993, which formed the basis of the application.

The 30 day period referred to in subsection 24(1) does not begin until the insurer has "received" the completed application. It is not clear from the evidence exactly when Dr. Barzilay's report was received by the Insurer; however, neither counsel suggested it took longer than five mailing days. I therefore find that the Insurer received the report no later than December 6, 1993.

There was, then, "a completed application" for an "amount payable" before the Insurer by December 6, 1993. In accordance with subsection 24(1), the Insurer then had 30 days within which to agree to pay the dental expense, i.e. by January 6, 1994. When the Insurer did not agree to pay that expense by January 6, 1994, the expense became overdue within the meaning of subsection 24(1).

Once the expense became overdue, i.e. on January 6, 1994, it began to attract interest at the rate of 2% per month, pursuant to subsection 24(4).

However, it is clear from the medical reports that the dental work was to be performed in stages, over a period of 12 to 18 months. While Dr. Barzilay required some fees to be paid in advance, the bulk of the expense would have been paid out as the work was performed. This means that if the Insurer had acted properly, it would not have incurred the entire expense of $25,000 at the outset. The payment of interest should be adjusted accordingly.

As it is unclear from the evidence precisely which expenses would have been incurred and at what time, I find that interest should be paid from the mid-point of the 18-month span over which the work was to be done. This means interest will commence nine months after the 30 day notice period, i.e. on October 6, 1994.

I recognize that this finding departs from the usual business practice that interest only commences from the time an amount has actually been incurred. It is, however, consistent with the purpose of the interest provisions in the Schedule, which is to encourage prompt payment of valid expenses by the Insurer upon receipt of an application.

This is particularly important with respect to section 6 expenses, where early treatment can hasten recovery and avoid long-term disability. This need is even more compelling with the "pay pending dispute" provisions of section 6.

Furthermore, this goal would be defeated if an applicant was denied interest simply because, as in this case, he was too impecunious to pay for the expense himself. Such a result would allow the insurer to benefit financially by delaying the provision of a benefit, which is tantamount to profiting by one's own breach. It is this very result that interest provisions are designed to prevent.

I do not intend by these comments to suggest that interest provisions are punitive in intent.¹⁶ Nor do they duplicate a special award; interest is payable when an insurer is late in paying a valid claim, whether or not the insurer acted "unreasonably". By contrast, the special award is a penalty, which requires a minimum of "unreasonable" conduct.

EXPENSES

The Applicant is entitled to his expenses of the arbitration under section 282(11) of the Act. If the parties cannot agree on expenses, I may be spoken to.

Order

1. The Applicant is entitled to payment of dental implants.

2. The Applicant is entitled to a special award of $10,000, inclusive of interest.

3. The Applicant is entitled to interest on amounts payable for dental services, from October 6, 1994, in accordance with subsection 24(4).

4. The Applicant is entitled to his expenses of the arbitration.

July 17, 1995

Deena Baltman Arbitrator

Date

APPENDIX A

Exhibits:

Exhibit 1

Tabs A - M of Applicant's brief

Exhibit 2

Report of Dr. Glazer, May 15, 1995

Exhibit 3

Report of Dr. Sanders, June 5, 1995

Exhibit 4

Report of Dr. Baker, June 8, 1995

Exhibit 5

Report of Michelle Cohen, February 28, 1994

Exhibit 6

Report of Michelle Cohen, August 12, 1994

Other documents before the arbitrator:

Report of Mediator, dated July 25, 1994

Application for Arbitration, dated December 23, 1994

Response by Insurer, dated January 30, 1995

Pre-hearing letter, dated April 10, 1993

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2Exhibit 1, tab A
3. 3Exhibit 1, tab C
4. 4Exhibit 1, tab C
5. 5Exhibit 1, tab F
6. 6Exhibit 1, tab F
7. 7Exhibit 1, tab H
8. 8Exhibit 1, tab I
9. 9Exhibit 1, tab J
10. 10Exhibit 1, tab K
11. 11Exhibit 1, tab L
12. 12Exhibit 2
13. 13Exhibit 3
14. 14Hugh John MacMaster and Dominion of Canada General Insurance Company, October 26, 1994, OIC File No. A-006025; Balwinder Singh and Simcoe Erie Group, December 31, 1992, OIC File No. A-000532.
15. 15Lucy Beiler and Alpina Insurance Company Limited, February 22, 1994, OIC File No. A-003051; Larry Erickson and The Guarantee Company of North America, June 2, 1992, OIC File No. A-000560.
16. 16Hugh John MacMaster and Dominion of Canada General Insurance Company, October 26, 1994, OIC File No. A-006025