State Farm Mutual Automobile Insurance Company v. Walker, 1996 ONICDRG 199

Neutral Citation: 1996 ONICDRG 199

Appeal P96-000036

OFFICE OF THE DIRECTOR OF ARBITRATIONS

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Appellant

and

SHIRLEY J. WALKER

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Philippa G. Samworth (for State Farm)

Eric M. Appotive (for Shirley J. Walker)

APPEAL ORDER

1. The appeal is dismissed and the arbitration order, dated February 23, 1996, is confirmed.

2. The appellant, State Farm Mutual Automobile Insurance Company, shall pay Mrs. Walker's reasonable appeal expenses.

December 3, 1996

David R. Draper Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Shirley Walker was injured in a motor vehicle accident on January 10, 1994. The arbitrator found that she sustained soft-tissue injuries to her back, resulting in pain in her back and down her right leg. In March 1994, her husband purchased a home whirlpool spa for her use. The arbitrator described it as a Beachcomber 690i , 80" x 88", and 36" deep, seating five to six people. Ms. Walker testified at the arbitration hearing that the whirlpool spa is large enough that she can exercise in it. It also has a special "recliner" or "lounger" seat she finds comfortable.

The Beachcomber spa was installed in the Walker's backyard, covered by a tent to provide protection against the weather. The total cost was about $6,380. Ms. Walker applied to State Farm for reimbursement of this amount, plus approximately $425 per year for the cost of the chemicals and electricity needed to operate it. State Farm refused her claim.

The arbitrator denied Ms. Walker's claim for the cost of the particular unit she purchased, concluding that it was not a "reasonable expense." However, she found that "the combination of heat, agitation and pressure provided by a hot tub is required to provide therapeutic relief for Ms. Walker," and ordered State Farm to pay "the reasonable cost of a Jacuzzi-type bathtub."

State Farm appeals this order, submitting that:

1. The arbitrator erred in finding that Ms. Walker provided a certificate from her doctor stating that the home whirlpool spa she purchased was reasonable and necessary for her treatment, as required by section 37 of the Schedule.¹

2. The arbitrator exceeded her jurisdiction in ordering State Farm to pay for something that Ms. Walker never claimed, with no notice to State Farm that a "Jacuzzi-type bathtub" was being considered.

3. There was no evidence to support the arbitrator's finding that the expense of a "Jacuzzi-type bathtub" was reasonable and necessary for Ms. Walker's treatment.

4. The arbitrator erred in failing to give proper weight to the opinion of the Designated Assessment Centre that the expense of a home whirlpool tub was not reasonable or necessary.

II. THE HEALTH PRACTITIONER'S CERTIFICATE

Ms. Walker made her claim under section 36(1)(h) of the Schedule, which provides:

36.-(1) If an insured person sustains an impairment as a result of an accident, the insurer shall pay for all reasonable expenses incurred by or on behalf of the insured person as a result of the accident for,

(h) other goods and services of a medical nature that the insured person requires.

According to section 37 of the Schedule, the insurer "may require a person claiming payment of an expense under section 36 to furnish a certificate from the person's health practitioner stating that the expense is reasonable and is necessary for the person's treatment." At the arbitration hearing, State Farm argued that Ms. Walker's claim should be denied because she failed to provide a certificate meeting the requirements of section 37. State Farm claims that the notes Ms. Walker submitted from Dr. Hyman Rabinovitch, a neurologist, state that a home whirlpool was reasonable, but not that it was necessary.

The arbitrator rejected State Farm's argument, concluding that Dr. Rabinovitch's notes were prepared to comply with section 37 and were adequate for that purpose. State Farm reasserted its position on appeal. For the following reasons, I am not persuaded that the arbitrator erred. The certificate required by section 37 is part of a process designed to help insurers evaluate claims for supplementary medical benefits. If an insured person applies for benefits under section 36, the insurer may require a certificate from a health practitioner stating that the requested expense is reasonable and necessary for the insured person's treatment. For certain types of expenses, including goods and services under section 36(1)(h), the insurer can arrange an assessment at a designated assessment centre (DAC) if it is not convinced by the certificate.

The DAC is specifically directed to prepare a report stating whether, in the opinion of the person or persons who conducted the assessment, the expense claimed is reasonable and necessary for the person's treatment (s.39(10). If the DAC concludes that the expense is not reasonable and necessary, as in this case, the insurer does not have to pay pending a decision of the court or an arbitrator. If the DAC concludes that the expense is reasonable and necessary, the insurer can still dispute the claim, but it must pay the expense in the meantime.

Following her accident, Mrs. Walker was involved in a physiotherapy program that included the use of a heated pool with water jets. She and her husband decided that if they had something similar at home, she could avoid the travel and use it more often. Mr. and Mrs. Walker acknowledged that it was initially their idea to purchase a home whirlpool spa. However, before they purchased one, Dr. Rabinovitch provided a note, dated February 17, 1994, stating as follows:

Whirlpool would be of benefit for the above. She continues to have significant back pain which is helped with hot water jets. Thanks.

(Exhibit 1, tab 3, page 18)

Mr. Walker contacted State Farm's claims adjuster, Trevor Crow, in February 1994 to ask for approval of a home whirlpool spa. According to Mr. Crow, he told Mr. Walker he did not believe it was a reasonable expense, but would contact Dr. Rabinovitch. In the meantime, he sent Ms. Walker a statement that State Farm was denying her claim because a home whirlpool spa was not a reasonable medical expense.

Despite State Farm's refusal to approve funding, Mr. Walker purchased the Beachcomber spa on March 25, 1994. He obviously did so with no guarantee that he would be reimbursed by State Farm.

Dr. Rabinovitch wrote to State Farm on April 21, 1994, reviewing Ms. Walker's condition and concluding:

... Whirlpool treatments have given an effective pain relief. As the relief is not longstanding she needs to go at frequent intervals. It is also most helpful when her back muscles go into increased muscle spasm. It is therefore most reasonable that she has a whirlpool available for her at home. I do not think that it requires any additional professional monitoring.

(Exhibit 1, tab 3, page 19)

State Farm was not convinced by this note, but did not take the position that Ms. Walker had failed to provide a certificate. Neither Ms. Walker nor Dr. Rabinovitch was told that the certificate had to be in a different form, or include additional information. Instead, State Farm arranged for Ms. Walker to be assessed at a DAC.

Before the DAC assessment was done, Ms. Walker applied for mediation. The mediation was unsuccessful, concluding before the DAC report was available.

The DAC report from Dr. Lynne MacGregor, a specialist in physical medicine and rehabilitation, is dated August 23, 1994. She concluded that a whirlpool spa was not a reasonable or necessary expense. In her opinion, Ms. Walker could have gone to a number of heated pools or whirlpools in the area, and would have benefited from a community-based program. Relying on this report, State Farm refused to reimburse Ms. Walker for the whirlpool spa pending the outcome of the arbitration hearing.

In my view, the process worked as it was designed. Ms. Walker made a claim. State Farm asked her to provide medical support through a certificate from her doctor, which she did. There is no standard form for the certificate and, therefore, Dr. Rabinovitch provided a note addressing the issue as he understood it. Because it still was not persuaded, State Farm arranged a DAC assessment under section 39(1) of the Schedule. This section allows an insurer to schedule a DAC "if the insurer receives a certificate under section 37 in respect of an expense." I agree with Ms. Walker's submission that by arranging a DAC, State Farm demonstrated its acceptance that she had filed a certificate, although not one that convinced it to pay the claim.

State Farm was entitled to argue, as it did at the arbitration hearing, that Dr. Rabinovitch's note provided limited support for Ms. Walker's claim. I agree with the arbitrator, however, that where a DAC assessment has been done, it would be unduly technical to reject the claim on the basis that the certificate did not comply with section 37.

III. JURISDICTION TO CONSIDER A "JACUZZI-TYPE BATHTUB"

State Farm contends that the issue in dispute from the mediation onwards was Mrs. Walkers' claim for the Beachcomber spa. It maintains that she never made an alternative claim for a less expensive model. Therefore, State Farm submits that the arbitrator violated the principles of natural justice and fairness by ordering it to pay for something that was never claimed - a "Jacuzzi-type bathtub." Mrs. Walker's response is that State Farm opened the door for the arbitrator's order by arguing that the Beachcomber spa was not a reasonable expense because less expensive options were available.

I have no difficulty accepting the principle raised by State Farm. Arbitrators are not free to make any order they believe is appropriate. The principles of natural justice and fairness require that the parties have reasonable notice of the issues being considered and, particularly, the potential risks they face.

This does not mean that arbitrators are limited to accepting the position of one party or the other. It is not unusual for an arbitrator to conclude that weekly benefits should continue for a longer period than the insurer believes, but not as long as the insured person claims. Similarly, an arbitrator may order weekly income benefits at a rate somewhere between the amounts argued by the parties, provided the determination is based on the evidence and submissions, rather than some entirely different approach to the issue.

It is a question of degree. Arbitrators can make orders reasonably arising from the hearing, but there are limits. These limits should be considered in the context of the dispute resolution process. Arbitration is an alternative to the stricter, more formal court process.² Given the lack of formal pleadings, shorter time-frames, and the ongoing and evolving nature of many claims, arbitrators need a reasonable level of flexibility for the process to work. Parties cannot expect the level of specificity and certainty found in the courts. However, if the arbitrator strays so far from the parties' expectations that a party is denied a reasonable opportunity to respond, the order cannot stand.

The question in this case, therefore, is not whether Mrs. Walker made a specific claim for a "Jacuzzi-type bathtub." It is whether State Farm was effectively denied an opportunity to present relevant evidence and make submissions on that issue. For the following reasons, I conclude that the arbitrator did not overstep her authority.

As I read the material before me, including the transcript of the arbitration hearing, this case fundamentally involves a claim for a home whirlpool. Mr. Walker contacted State Farm about a home whirlpool before he purchased the Beachcomber spa. The claim was refused on the basis that a home whirlpool was not a reasonable medical expense, not because the particular model was too extravagant.

If the Walkers had not purchased the Beachcomber spa, the arbitrator would have been asked to determine if Mrs. Walker needed a home whirlpool and, if so, what type. Once the Beachcomber spa was purchased, however, it became the focus of the dispute. While this is understandable, it is not clear to me that Mrs. Walker abandoned her less specific claim for a home whirlpool. Her application for arbitration refers to a "whirlpool spa @ home," and the pre-hearing letter is equivocal.

Further, it would be unfair to assume that by purchasing the Beachcomber spa, Mrs. Walker meant to limit her claim to that item. As an extreme example, the arbitrator might have concluded that she needed a large, outdoor home whirlpool, but that some features of the Beachcomber spa, such as wood trim, unnecessarily increased the cost. Surely, the arbitrator faced with that situation could make an order in Mrs. Walker's favour, but limited to the cost of a similar model without wood trim. Why should the insurer be relieved of its obligation to pay for reasonable goods and services simply because the insured person's choice is found to be somewhat excessive?

The purchase of the Beachcomber spa resulted in both parties supplementing their positions, rather than significantly changing them. Mrs. Walker claimed that she needed a home whirlpool and that the cost of the Beachcomber spa was reasonable. State Farm continued to argue that she wanted a whirlpool for pain relief and, therefore, it was not "necessary." Even if a whirlpool was necessary, however, State Farm claimed that she did not need one at home because there were reasonable alternatives in the community. After the Walkers purchased the Beachcomber spa, State Farm added the argument that even if Mrs. Walker needed a home whirlpool, the Beachcomber spa was not a reasonable expense because there were less expensive options, such as a Jacuzzi bathtub, an attachment to an existing tub, or renting a home whirlpool.

State Farm pursued this last argument at the pre-hearing by asking Mrs. Walker to provide the following information:

• All estimates, brochures, pamphlets and other information obtained while investigating the purchase of a whirlpool spa.
• The names and outlets consulted with respect to the purchase of a whirlpool spa. Owner's manual or user's guide to the spa which was purchased.

Alternatives were also raised at the arbitration hearing. State Farm filed two advertisements showing less expensive whirlpools.³ Counsel for State Farm asked Mrs. Walker and her witnesses about less expensive alternatives to the Beachcomber spa. For example, he asked Dr. Rabinovitch if he knew "whether or not there would be any distinction between having an outdoor whirlpool and having a Jacuzzi bath tub, or a fitting that attaches to your bath tub that makes the water swirl around."⁴ He asked Mr. Walker whether he explored whether a hot pack, a hot water bottle, a heating pad, or a hot bath would do the same job as a whirlpool.⁵ He also asked Mr. Walker the following questions:

• Did you consult a physician or a therapist about the difference between a Jacuzzi bath tub and the outdoor whirlpool that you bought?⁶
• With respect to the chemicals, would you agree with me that if you had a Jacuzzi bathtub that you would fill, just as you would a regular bathtub, with water, you wouldn't require all these chemicals?⁷

State Farm called its claims adjuster as a witness. He testified about other services available to Mrs. Walker, including less expensive whirlpool alternatives that he investigated.⁸

Finally, counsel for State Farm made the following submissions:

He [Mr. Walker] also admitted that if he had purchased a Jacuzzi bathtub rather than the large six-person whirlpool ...he would not require the chemicals that he requires for the whirlpool. And he also admitted that he did not go beyond the Yellow Pages in terms of looking for a whirlpool. In my submission, if he wants State Farm to be paying for this, he had an obligation to go beyond the few places that he went to, and clearly there's evidence from Mr. Crow that there were other places available that provided better rates and also would rent the whirlpools.⁹

The range of orders available to an arbitrator will depend on the particular facts of the case. The record in this case shows that less expensive alternatives to the Beachcomber spa were repeatedly raised at the arbitration hearing, primarily by State Farm. For this reason, I find that the arbitrator did not go off on an unexpected tangent, but made an order reasonably arising from the evidence and submissions. State Farm was not denied a reasonable opportunity to address this issue and, therefore, this aspect of its appeal is dismissed.

IV. SUFFICIENCY OF THE EVIDENCE

State Farm submits that there was no evidence to support the arbitrator's conclusion that the expense of a "Jacuzzi-type bathtub" was reasonable and necessary. As part of this argument, State Farm contends there was no evidence that without a home whirlpool, Mrs. Walker would not have recovered. That may be so, but in my opinion, the Schedule does not impose such a strict test.

According to section 36(1)(h), the insurer is to pay "all reasonable expenses incurred by on behalf of the insured person as a result of the accident" for "goods or services of a medical nature that the insured person requires." If the insurer asks, the insured person must provide a certificate from his or her health practitioner stating that the expense is "reasonable and necessary for the person's treatment" (s.37). The focus of these sections is on providing reasonable medical and rehabilitation services. If the proposed treatment or rehabilitation plan is reasonable, the goods and services necessary to carry out the plan are to be provided, as long as the cost of those goods and services is also reasonable. The fact that the insured person might recover eventually without treatment does not disqualify him or her from receiving reasonable medical and rehabilitation expenses.

State Farm also submits that the only evidence addressing bathtub options suggests that a "Jacuzzi-style bathtub" was not appropriate. It points to the testimony of Mrs. Walker and her witnesses that Jacuzzis do not have some crucial features offered by the Beachcomber spa - size, comfort and constant temperature. Mrs. Walker clearly felt that the cost of the Beachcomber spa was justified. For the reasons set out above, however, this did not preclude the arbitrator from considering less expensive alternatives.

The arbitrator was able to consider the documentary evidence in light of the testimony that she heard from five witnesses over two days. As stated in many appeal decisions, it is not my role to second-guess the arbitrator's evaluation of the evidence. The question is not whether I would have reached a different conclusion, but whether there was sufficient evidence to support hers.

In her decision, the arbitrator made a number of key findings, namely:

• Mrs. Walker required effective and ongoing pain relief as part of her rehabilitation;
• the combination of heat, agitation and pressure provided by a hot tub provided therapeutic pain relief in a more effective and less intrusive manner than other options;
• due to transportation problems and the limited hours of community facilities, a home whirlpool was preferable;
• the expense of the Beachcomber spa was reasonable, but "an indoor Jacuzzi-type bathtub would provide the essential elements of heat and agitation in a similar fashion as the outdoor tub, at far less expense." (p.20)

After reviewing the record, I am satisfied that there was sufficient evidence to support each of these findings. The focus of much of the evidence was on the Beachcomber spa, but there was also substantial, more general evidence about Mrs. Walker's injuries, her rehabilitation efforts and possible treatment options.

State Farm specifically argued that there was no evidence to support the arbitrator's finding that a Jacuzzi-type bathtub would be far less expensive. Given the evidence called and the submissions made by State Farm about less expensive options to the Beachcomber spa, this submission is curious. The arbitrator acknowledged that there was insufficient evidence for her to decide with certainty the reasonable cost of purchasing and installing a "Jacuzzi-type bathtub." Therefore, she agreed to hear additional evidence and submissions on that issue if the parties were unable to resolve it. In my view, that was appropriate.

V. DESIGNATED ASSESSMENT CENTRE (DAC) REPORT

State Farm submits that the arbitrator erred in failing to give proper weight to the DAC assessment done by Dr. MacGregor. It contends that the DAC process was established to provide greater certainty and, therefore, the DAC assessment should be accepted unless other evidence shows it is clearly wrong.

I agree with the arbitrator that this overstates the role of the DAC assessment. The legislature has given the arbitrator responsibility for making the final decision. He or she must consider all the evidence, including any DAC reports, and reach a decision based on an assessment of that evidence.

This is not to minimize the importance of DACs in the process. They play a crucial role in determining whether benefits will be paid pending a final determination of the dispute. Also, there are systemic reasons why an arbitrator might prefer a DAC assessment. One would expect the DAC assessor to have the advantages of neutrality, familiarity with the issues under the Schedule, and a duty to produce a report that specifically deals with the critical questions.

The DAC report in this case is based largely on the availability of appropriate community alternatives. This is precisely the type of factual issue on which the arbitrator should evaluate the basis of the DAC assessment based on the other evidence that she hears. Therefore, I find no error.

VI. ARBITRATION EXPENSES

State Farm's appeal of the order for arbitration expenses is contingent on my revoking the arbitrator's order for a "Jacuzzi-type bathtub." Since I have declined to do so, this part of State Farm's appeal is also dismissed.

VII. APPEAL EXPENSES

As Mrs. Walker was successful in resisting State Farm's appeal, she should receive her reasonable appeal expenses.

December 3, 1996

David R. Draper Director's Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after January 1, 1994, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 635/94.
2. 2See Levenson and The General Accident Assurance Company of Canada, (September 29, 1992, OIC P-000260).
3. 3Arbitration exhibit 2, Tabs 6 and 7.
4. 4Transcript, Volume 4, page 74, question 263.
5. 5Transcript, Volume 5, page 35, questions 142 - 145.
6. 6Transcript, Volume 5, page 36, question 149.
7. 7Transcript, Volume 5, page 46, question 201.
8. 8Transcript, Volume 5, pages 72 - 76.
9. 9Transcript, Volume 6, page 161.