Neutral Citation: 1998 ONFSCDRS 69

FSCO A98-001209, FSCO A97-000490

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

KHOA A. PHAM

Applicant

and

PROGRESSIVE CASUALTY INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY MOTION

Issues:

The Applicant, Khoa A. Pham, was injured in a motor vehicle accident on December 17, 1995. He applied for and received statutory accident benefits from Progressive Casualty Insurance Company, payable under the Schedule.¹ Progressive suspended weekly income replacement benefits on April 26, 1996 and terminated weekly income replacement benefits by letter dated September 13, 1996. The parties were unable to resolve their disputes through mediation, and Mr. Pham applied for arbitration at the Financial Services Commission of Ontario² under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues on this motion brought pursuant to section 65 of the Dispute Resolution Practice Code are:

1. Is Mr. Pham entitled to interim income replacement benefits from April 26, 1996 to December 17, 1997?

2. Is Mr. Pham entitled to a special award?

Mr. Pham also claims interest on any amounts owing and his expenses incurred on this motion.

Result:

1. Mr. Pham is entitled to interim income replacement benefits from April 26, 1996 to December 17, 1997, together with interest calculated in accordance with section 68 of the Schedule.

2. The issue of a special award is deferred to the arbitration hearing.

3. Mr. Pham is entitled to his reasonable expenses of this hearing.

Hearing:

The hearing of the application for interim benefits was held at the offices of the Financial Services Commission of Ontario in North York, Ontario, on October 22, 1998.

Present at the Hearing:

Applicant:

Khoa A. Pham

Mr. Pham's

Kevin Doan

Representative:

Barrister and Solicitor

Progressive's

Stephen Macaulay

Representative:

Barrister and Solicitor

Progressive's

Karen Quelle

Officer:

Before:

William J. Renahan

Arbitrator

Background:

On December 17, 1995, Mr. Pham suffered injuries when he swerved on the highway to avoid hitting a deer and drove off the road and into a tree. At the time of the accident, Mr. Pham was 29 years old. He was employed as a fork lift operator. Mr. Pham has not returned to work.

Progressive paid Mr. Pham weekly income replacement benefits until April 26, 1996.

The prehearing was held on October 14, 1997. The issues for hearing include entitlement to weekly income replacement benefits up to 104 weeks after the onset of disability and supplementary medical benefits, housekeeping expenses and a special award. The hearing was scheduled to commence July 27, 1998 but was adjourned at the request of Progressive because it wished to consider new grounds of disability raised in medical reports filed 10 days before the hearing was scheduled to commence. The hearing is now scheduled to commence June 21, 1999.

On July 22, 1998, Mr. Pham filed this application for interim benefits. He argued that he is entitled to interim benefits for two reasons: first, because Progressive failed to comply with section 64 of the Schedule when it stopped paying benefits and, second, because his need for interim weekly benefits is urgent and it is unfair that he has to wait for the hearing scheduled next June.

The cases I reviewed to determine the test to apply on an application for interim benefits are set out in the Appendix. In my view, the cases fall into two groups. First, are those cases where the applicant claims that the insurer failed to comply with a procedural provision which requires the insurer to pay certain benefits notwithstanding the insurer has decided that the insured is not entitled to those benefits. These provisions include section 64 which sets out the circumstances under which the insurer must continue to pay weekly benefits after it has decided that the insured is no longer entitled to weekly benefits. The second group of cases on interim benefits are those where the applicant claims that he urgently requires benefits on an interim basis and that it would be unfair to make him wait for a hearing. In my view, the two cases involve two different tests and two standards of proof.

Section 64 argument:

I deal first with the claim that Progressive failed to comply with the stoppage provisions in section 64.

Section 64 of the Schedule sets out the procedures the insurer must follow after it decides to terminate weekly benefits. One of the purposes of section 64 is to protect the flow of weekly benefits by controlling the insurer's right to cancel them. The insurer must pay weekly benefits pending the assessment by the Designated Assessment Centre (DAC) even though the insurer claims the person is no longer entitled.³ I find that arbitrators have awarded interim weekly benefits where the insured established on a balance of probabilities that entitlement to weekly benefits was a serious issue and that it was clear on its face that the insurer had terminated weekly benefits contrary to section 64. It was not necessary for the insured to establish an urgent need for interim benefits.

With these criteria in mind I turn to the evidence.

Evidence:

About one year after the accident Mr. Pham underwent an operation on his lower back to treat a bulging disc. He submitted evidence that he cannot work because of continuing back pain and that the disc problem was caused or aggravated by the car accident. Progressive submitted evidence that the disc surgery was unnecessary and that if Mr. Pham had a disc problem, it was not caused by the accident. I find a serious issue of entitlement to weekly benefits.

The parties submitted eight documents to show what Progressive relied on to stop weekly benefits.

Progressive stopped payments April 26, 1996. The first document is a letter dated April 15, 1996 from Dr. Sawa, a neurologist, to Dr. Stants of the DAC. He wrote:

At this point, it is my opinion that your client continues to be disabled. The following are required to complete the assessment for disability:

3. EMG of left leg to rule out nerve entrapment.⁴

Once all this information is available, I can make a final determination regarding disability. A follow-up appointment in this office will be required in order to complete this assessment.

Interim Guidelines for Designated Disability Assessment Centres issued in September 1994 by the Accident Benefits Advisory Committee, appointed under section 7 of the Insurance Act, provide for an Assessment of Disability form to be completed by the DAC. The form states: "The claimant's essential tasks or normal activities at the time of the accident are described above. Is the claimant disabled from returning to these activities?" Dr. Stants signed and dated the form May 24, 1996 but did not answer the question. In the Summary of Assessment portion he wrote that Mr. Pham was "a no-show for the EMG exam" and that he was uncertain if Mr. Pham was disabled.

On June 6, 1996 Dr. Sawa reported to the DAC that he was not certain whether Mr. Pham was substantially disabled from his previous employment. He recommended an EMG to "further evaluate his symptoms."

On July 3, 1996, Progressive wrote to Mr. Pham that Dr. Stants of the DAC reported that Mr. Pham was not disabled from returning to his employment and that it was suspending benefits pursuant to subsections 64(14) and (9) because he failed to attend at the EMG examination⁵. I found no evidence that Dr. Stants reported that Mr. Pham could return to work.

Another EMG examination was arranged. Dr. Sawa performed an EMG study on July 25, 1996. He reported the study as normal. On September 13, 1996 Progressive wrote to Mr. Pham that since the EMG study was completed, the DAC assessment was complete. Progressive wrote "that the results of the assessment concludes that there is no disability as a result of the motor vehicle accident." I found nothing to indicate this was the conclusion of the DAC assessment.

The DAC's failure to render its opinion on whether Mr. Pham continued to suffer a disability is confirmed in a letter dated October 6, 1996 from Dr. Sawa to Progressive in which Dr. Sawa wrote that he needed further information to make a final determination of disability. As late as July 9, 1998, in a letter to Progressive's lawyer, Dr. Sawa would not provide his opinion on whether Mr. Pham was disabled. He did note, however, a causal connection between the motor vehicle accident and Mr. Pham's back pain.

Analysis:

Section 64(1) provides that the insurer "shall not stop payment of weekly benefits" on the grounds that the insured is no longer disabled, except in accordance with this section. Since Mr. Pham asked for a disability DAC assessment, Progressive could stop weekly benefits until it had a report from the DAC that Mr. Pham was "no longer suffering from a disability resulting from the accident."

This is not a question of interpretation of the DAC assessors' reports. I found no evidence which could be construed as satisfying section 64. I find it clear on its face that Progressive was not justified in terminating weekly benefits. Further, since Mr. Pham did attend an EMG study, Progressive should have complied with subsection 64(14) and reinstated any suspended weekly benefits.

Accordingly, Mr. Pham is entitled to the interim weekly benefits he asked for.

In view of my decision on this issue, it is not necessary to consider whether Mr. Pham is entitled to interim benefits on any other ground.

Special Award:

Mr. Pham asked for a special award and submitted that where the insurer has unreasonably withheld benefits, subsection 282(10) of the Insurance Act directs me to award a lump sum of up to 50 percent of the amount to which the person was entitled at the time of the award, together with interest.

An application for interim benefits is dealt with in a summary manner. I do not think it is appropriate in this case to make findings relevant to a special award in a summary manner.

Accordingly, I defer the issue of special award to the arbitration hearing.

Expenses:

Mr. Pham is entitled to his reasonable expenses of this motion.

Order:

1. Progressive Casualty Insurance Company shall pay Khoa A. Pham income replacement benefits for the period April 26, 1996 to December 17, 1997 together with interest calculated in accordance with section 68 of the Schedule.

2. The issue of a special award is deferred to the arbitration hearing.

3. Progressive Casualty Insurance Company shall pay Khoa A. Pham his reasonable expenses of this application.

November 4, 1998

William J. Renahan

Arbitrator

Date

Appendix

Cases considered:

Brown and Allstate Insurance Company of Canada, (OIC A97-000579, May 29, 1997)

Coutu and Wawanesa Mutual Insurance Company, (OIC A97-001916, June 5, 1998)

Cripps and AXA Insurance (Canada), (OIC A-013360, August 8, 1997)

Fortney and Lombard General Insurance Company of Canada, (OIC A97-000553, December 24, 1997)

Gomez and Pilot Insurance Company, (OIC A95-01308, May 10, 1995)

Harkness and Economical Mutual Insurance Company, (OIC A96-001420, December 10, 1996)

Ioannidis and Canadian General Insurance Group, (OIC A97-001551, December 15, 1997)

Lucas and Dominion of Canada General Insurance Company, (OIC A95-009670, March 23, 1995)

Malabanan and Canadian General Insurance Company, (OIC A96-000084, July 26, 1996)

Osbourne and Allstate Insurance Company of Canada, (OIC A-009110, November 18, 1994)

Simpson and Trafalgar Insurance Company of Canada, (FSCO A98-000215, July 16, 1998)

Singh and Allstate Insurance Company, (OIC A96-001403, December 31, 1996)

Sweete and Jevco Insurance Company, (OIC A96-000614, Octobert 24, 1996)

Tanner and Allstate Insurance Company of Canada, (OIC A95-000616, May 20, 1998)

Ms. Z and Dominion of Canada General Insurance Company, (FSCO A98-000124, September 25, 1998)

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94 and 463/96.
2. 2Effective July 1, 1998, the Ontario Insurance Commission was changed to the Financial Services Commission of Ontario, pursuant to the Financial Services Commission of Ontario Act, S.O. 1997, c.28.
3. 3Henry and Allstate Insurance Company, (OIC P96-00064, July 23, 1997)
4. 4Progressive conceded that although the doctors note other omissions, the only one it relies on in its decision to suspend benefits, is Mr. Pham's alleged failure to attend an EMG examination.
5. 5Although Mr. Pham claimed that he attended all examinations he was asked to attend, in view of the standard of proof in this application, I accept, for the purposes of this application, that Mr. Pham knew about the EMG examination but did not attend.