Financial Services Commission
Commission des services financiers de l’Ontario
Neutral Citation: 1998 ONFSCDRS 71
Appeal P98-00022
OFFICE OF THE DIRECTOR OF ARBITRATIONS
ALBINA PEREIRA
Appellant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Respondent
Before:
David R. Draper, Director's Delegate
Counsel:
Lou Ferro (for Albina Pereira)
Douglas N. Patton (for State Farm)
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The appeal is dismissed and the arbitration order dated April 24, 1998 is confirmed.
No appeal expenses are payable.
November 6, 1998
David R. Draper
Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
This is an appeal by Albina Pereira from an arbitration decision dated April 24, 1998. She submits that the arbitrator erred in dismissing her claim for rehabilitation benefits.
II. BACKGROUND
On May 28, 1994, Mrs. Pereira and her husband were on their way to a wedding. They stopped at a red light, waiting to make a left turn, when their car was hit from behind. The damage to the car was minimal - approximately $800. The following day, Mrs. Pereira went to a medical clinic. The initial medical certificate, completed on June 27, 1994 by her family physician, Dr. L. Desrosier, lists her injuries as cervical sprain, tendonitis in the right shoulder and a thoracic contusion.
At the time of her accident, Mrs. Pereira was 53 years old and lived with her husband and two children. She was not employed, but testified that she was very active, taking responsibility for the household tasks, doing volunteer work with senior citizens, working on various crafts, swimming and going for long walks with friends.
Mrs. Pereira received a great deal of medical attention. She continued to see Dr. Desrosier, who prescribed medication and made a number of referrals for testing and treatment. In December 1994, State Farm retained a case management company, Crawford & Company, to manage her rehabilitation in close consultation with Dr. Desrosier. As a result, in the year following the accident, Mrs. Pereira was involved in passive physiotherapy, a home exercise program, massage, nerve block injections, active physiotherapy, pain management and relaxation training in a multidisciplinary setting, occupational therapy, the assistance of a personal trainer and health club access, aqua therapy and psychological treatment. She also underwent many medical investigations: CT scans, x-rays, a surface EMG, an EEG and an ECG. There is no issue about the funding of any of these services.
In May 1995, one year after the accident, Mrs. Pereira was assessed at State Farm’s request by Dr. T. Schapira, a specialist in occupational medicine. Dr. Schapira found no disability, stating that any residual impairment was “characterized by an exaggerated pain-focus behavior, subjective under-estimation of her abilities, and objective under-estimation of her abilities in a willful manner.” He recommended that Mrs. Pereira maintain an active exercise program, but felt she could return to her pre-accident activities.
State Farm wrote to Mrs. Pereira on June 8, 1995, advising her that based on Dr. Schapira’s opinion, it would not pay weekly benefits beyond July 1, 1995. However, it agreed to fund 25 more sessions of psychological counselling, a gym membership and two more occupational therapy sessions.
Also in June 1995, Dr. Desrosier signed back a letter from Crawford & Company agreeing that Mrs. Pereira was not substantially disabled from performing her pre-accident activities and approving Dr. Schapira’s treatment recommendations. However, in July 1995, Dr. Desrosier modified another letter from Crawford & Company, stating as follows: “what is more important is that the claimant (and her family) feels that she is substantially disabled and cannot manage with the basic activities of the household.” Dr. Desrosier also reported that Mrs. Pereira wanted to be assessed at Trauma Services1 and because she felt Mrs. Pereira was still physically or psychologically disabled, Dr. Desrosier made the referral.
Mrs. Pereira contacted Trauma Services in August 1995, approximately 14 months after the accident. Before conducting its initial assessment, Trauma Services asked State Farm for funding approval. State Farm refused on the basis that Mrs. Pereira did not need another assessment. Despite this refusal, Trauma Services went ahead. State Farm subsequently paid for the assessment ($2,495), but refused to fund the tests and programs recommended by Trauma Services.
The question of Mrs. Pereira’s rehabilitation needs was then referred to a Designated Assessment Centre (“DAC”). The DAC assessment was done in November 1995 at The Credit Valley Hospital. It involved separate orthopaedic, physiotherapy and psychological examinations. In their individual reports, the assessors agreed with some aspects of the Trauma Services’ treatment plan, but disagreed with others. The consolidated DAC assessment report, dated December 5, 1995, recommended that Mrs. Pereira continue in psychological treatment and suggested exercises and six to eight weeks of active physiotherapy.
After receiving the DAC report, State Farm wrote to Trauma Services advising that it would not pay for any of its services to Mrs. Pereira. State Farm also wrote to Mrs. Pereira setting out the services it was prepared to fund.
The arbitrator found that Crawford & Company, with Dr. Desrosiers’ approval, arranged for Mrs. Pereira to attend a six to eight-week program at Columbia Health Centre. She also continued to see her psychologist, Dr. Pilowsky, and participate in the aqua-fitness program. Based on a suggestion in the orthopaedic surgeon’s report, an appointment was made for Mrs. Pereira to see a rheumatologist. However, the arbitrator could not find any evidence that this assessment took place.
Although State Farm refused funding, Trauma Services continued to provide services to Mrs. Pereira. Instead of demanding payment from Mrs. Pereira, Trauma Services asked her to sign a “Permission to Allow Trauma Services to Get Help From the Mediation/Arbitration Services of the Ontario Insurance Commission,” authorizing it to submit its accounts directly to State Farm and pursue mediation and arbitration if payment was refused.
In February 1996, Trauma Services’ case facilitator filed an application for mediation as Mrs. Pereira’s representative. The application raises only State Farm’s refusal to pay rehabilitation benefits - at that point totalling $34,170.23. There is no claim for weekly benefits.
State Farm continued to provide services to Mrs. Pereira until March 1996. By that time, she had completed the program at Columbia Health Centre. She had also chosen to stop seeing Dr. Pilowsky and was no longer going to aqua fitness. However, she remained involved with Trauma Services.
By the time of the mediation in April 1996, the claim was for $60,399.76. The dispute was not resolved and, therefore, Trauma Services’ patient advocate applied for arbitration on behalf of Mrs. Pereira.
As part of the arbitration process, a pre-hearing was held in November 1996. Mrs. Pereira did not participate, but was represented by Mr. Lou Ferro, who also acts for Trauma Services. The pre-hearing arbitrator was concerned about Mrs. Pereira’s absence and Mr. Ferro’s authority to act on her behalf. As a result, he asked for a proper authorization from Mrs. Pereira. A form was subsequently filed, signed by Mrs. Pereira on January 3, 1997, appointing Mr. Ferro as her agent for the arbitration.
The arbitration hearing started in April 1997. By that time, the claim was for $110,302.02. The first day dealt with a preliminary issue raised by State Farm. It argued that the arbitrator had no jurisdiction to deal with the claim because Trauma Services, not Mrs. Pereira, was the real applicant. The witnesses on this issue were Mrs. Pereira and Ms. Ellen Helden, the Director of Trauma Services.
The arbitrator reserved her decision on the preliminary issue, but proceeded with the main issue for the next three days. The hearing was not completed in the scheduled time and, therefore, four more days were scheduled in December 1997. In the meantime, the arbitrator issued her decision on the preliminary issue. She found that Mrs. Pereira did not assign her rights to Trauma Services, but merely authorized Trauma Services to pursue them on her behalf. As a result, she concluded that she could deal with the claim.
The final arbitration decision was issued on April 24, 1998. As noted above, the arbitrator denied the claim for rehabilitation services, concluding that the services were neither necessary nor reasonable. She also denied Mrs. Pereira her arbitration expenses. The appeal is from this decision.
II. REHABILITATION BENEFITS
I find no error in the arbitrator’s decision. On the contrary, she provided detailed reasons that state the law correctly, set out her factual findings and the evidence upon which they are based, and explain how the law applies to those facts. Therefore, there is no basis for disturbing the order.
The specific arguments made by Mr. Ferro are dealt with below.
A. Rejection of holistic model / attitudinal bias
Mr. Ferro claims that the arbitration hearing was a contest between two treatment models - the case management model followed by State Farm and the holistic, client-centred, nursing care approach provided by Trauma Services. In his submission, the arbitrator displayed “an unusual attitudinal bias” against the services provided by Trauma Services and erred in finding that they do not fit within the Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996, O.Reg. 776/93, as amended (“the SABS-1994”).
In support of his argument, Mr. Ferro refers to the following part of the decision:
For reasons outlined below, I am not persuaded that the treatment Trauma Services provided to Mrs. Pereira meets the requirements of the type of service contemplated by the statutory scheme.
I do not find that Trauma Services’ program constituted reasonable measures designed to meet the objectives of the scheme. The statutory accident benefits scheme requires insurers to pay for reasonable measures for rehabilitation treatment for the injuries sustained by insured persons in automobile accidents. That is, insurers are only required to fund reasonable rehabilitation initiatives directed at treating accident-related injuries. I find this runs counter to a basic tenet of Trauma Services’ treatment methodology - the desirability of treating the whole person. What this has meant for Mrs. Pereira’s case is that Trauma Services has purported to address all of her conditions, whether accident-related or not, which has contributed to the excessive and unreasonable nature of the treatment and associated expenses.
(pp. 15-16)
Mr. Ferro contends that in this excerpt, the arbitrator rejects the Trauma Services’ approach. In other words, the services it provides are not eligible for funding under the SABS-1994. This bias, he contends, permeates the rest of the decision, compromising the result.
I do not agree with Mr. Ferro’s interpretation of the decision. The arbitrator was not asked to make general findings about Trauma Services. The issue before her was specific: Is Mrs. Pereira entitled to rehabilitation benefits under section 40 of the SABS-1994 for the services rendered by Trauma Services? That is the question she considered, concluding that the benefits claimed in this case were neither necessary nor reasonable.
Section 40 of the SABS-1994 clearly contemplates rehabilitation that broadly considers the injured person’s particular circumstances. A rehabilitation program that is so standardized that it fails to meet the person’s needs would not be a reasonable expense. However, the insurer’s obligations are limited. It must respond to impairments resulting from an accident. Consequently, a service provider that makes little or no effort to separate accident and non-accident related conditions is bound to have trouble communicating with insurers.
Mr. Ferro suggests that the arbitrator refused to recognize the services provided by Trauma Services because they challenge the mainstream, cost-control model. I do not agree. At page 37 of her decision, the arbitrator specifically says that “unconventionality in itself ought not to be fatal to a program being considered for funding.” However, in this case, she found that the services were not reasonable measures because Mrs. Pereira’s needs were adequately met through other services up to March 1996 and after that date, no further services were needed. In the alternative, the arbitrator found that even if Mrs. Pereira needed additional rehabilitation, the services provided by Trauma Services were not reasonable because they promoted dependency instead of facilitating her return to her pre-accident activities and, in addition, the billings were excessive. The record shows that there was ample evidence to support the arbitrator’s findings and, therefore, it would be inappropriate for me to second-guess them on appeal.
In my view, the problems with this claim are obvious. Mrs. Pereira was involved in a minor accident for which she received extensive treatment and rehabilitation services for over a year. At that point, there was substantial medical support for State Farm’s conclusion that she could return to her pre-accident activities, perhaps with some ongoing support - primarily psychological. However, Trauma Services took a different view, essentially wanting to start over with numerous medical tests and an elaborate, expensive program. This was at a time when others felt that prolonging treatment, particularly the kind of intensive, supportive program provided by Trauma Services, would only serve to convince Mrs. Pereira that she was disabled.
This conflict was put before a DAC, which the legislation establishes as a neutral assessor. The DAC recommended some additional services, but nothing like the extensive program provided by Trauma Services. State Farm followed the recommendations of the DAC with the approval of Dr. Desrosier.
The conflict was then re-examined in a lengthy arbitration hearing. After hearing from nine witnesses and considering the voluminous documentary evidence, the arbitrator was not persuaded that the services provided by Trauma Services were necessary or reasonable. This is precisely the kind of evaluation that an arbitrator must make and which I should not disturb on appeal, absent some clear error.
If Trauma Services had offered to provide the services recommend by the DAC, there might be some question why State Farm did not accept Mrs. Pereira’s preference for Trauma Services. However, that is not the case. As Mr. Ferro emphasized at the appeal hearing, Trauma Services does not provide this kind of time-limited, cost-controlled service. It uses a holistic, client-centred approach, the cost of which is inherent in the approach.
B. The DAC report
Mr. Ferro submits that the DAC assessment must be completely discounted because State Farm did not provide it with Trauma Services’ treatment plan. State Farm argues that the DAC had the treatment plan, pointing to a number of references to it in the consolidated DAC report and in the individual reports of the three assessors.
Paragraph 45(8)(a) of the SABS-1994 provides that when a DAC assessment is being done, “the insured person and the insurer shall provide the person or persons who conduct the assessment with such information as is reasonably necessary.” This suggests that both parties can send material to the DAC. However, on October 24, 1995, State Farm wrote to Mrs. Pereira advising her that a DAC assessment was being arranged at The Credit Valley Hospital and that they would “be forwarding all medical documentation, as well as other pertinent information, for their easy reference and review.” I agree, therefore, that State Farm took on the responsibility of providing the DAC with the reports it needed for a proper assessment.
It is clear from the DAC reports that it had Trauma Services’ initial assessment report and at least one other report. However, Trauma Services also prepared two treatment plans - an original and an amended plan. The arbitrator sets out her understanding on page 23 of the decision:
As I understand it, Trauma Services produced an original version of the treatment plan (tab 16, Applicant’s Supplementary Document Brief) and an amended version (tab 11, Applicant’s Supplementary Documents Brief), the latter of which was implemented from August 1995 to April 1996.
Mr. Ferro complains that the DAC did not have these treatment plans. I note, however, that on page 29 of the decision, the arbitrator finds that “Mrs. Pereira’s treatment plan was not available to State Farm’s witnesses at the time they prepared their reports.”2 These reports were prepared in the spring of 1997, well after the DAC assessment. I interpret this as a finding that State Farm did not have the treatment plans, a finding supported by the fact that they were presented to the arbitrator in a supplementary documents brief.
Even if State Farm had the treatment plans and should have provided them to the DAC, however, I am not persuaded that any failure to do so invalidates the DAC assessment. The treatment plans are based on the same recommendations set out in Trauma Services assessment report, which the DAC considered. These recommendations specify the treatment being proposed, giving the DAC adequate information to evaluate the claim.
C. Duplication of services
Mr. Ferro contends that where there has been a breakdown in the therapeutic relationship, alternative services should not be viewed as a duplication. However, the arbitrator did not find a breakdown in the therapeutic relationship. On the contrary, she specifically found that the services funded by State Farm adequately and effectively met Mrs. Pereira’s needs. As stated above, there was ample evidence supporting the arbitrator’s findings and, therefore, no reason for me to interfere.
D. Expert evidence
State Farm called three expert witnesses at the arbitration hearing to comment on the services provided by Trauma Services. Mr. Ferro argues that in accepting the testimony of these witnesses, the arbitrator failed to consider the power imbalance between insurers and insured persons, and accepted the “quantity of evidence over the quality of evidence.” I am unable to accept this argument for the following reasons.
Given that Mrs. Pereira authorized Trauma Services to pursue this claim on her behalf with no cost to her, it is hard to see that her resources are a relevant consideration. I accept that there may also be a power imbalance between a service provider and an insurer, but am not persuaded that is a critical factor here. There is no indication that Mr. Ferro objected to State Farm calling expert witnesses, or asked for interim expenses to retain other experts in support of the claim. In addition, the DAC process was set up to help level the playing field by involving a neutral expert to conduct assessments. The obstacle for Trauma Services is that the DAC agreed with only limited parts of its recommendations.
E. The evidence of Dr. David Corey
Mr. Ferro particularly objects to the evidence of one of the three expert witnesses - Dr. David Corey. He argues that the arbitrator should not have relied on Dr. Corey’s evidence because he is not a registered psychologist in Ontario and is the President of the Health Recovery Group, the parent company of the Health Recovery Clinic where Mrs. Pereira was treated in early 1995.
I find some merit in this submission. Dr. Corey may not have been the ideal expert witness because of his connection to a rehabilitation clinic that Mrs. Pereira attended. However, he had no direct involvement with Mrs. Pereira and her involvement with the Health Recovery Clinic ended at least four month before she approach Trauma Services. Dr. Corey was not called as a treating psychologist, but as an expert on the business of rehabilitation and the general approaches and costs of rehabilitation. The electronic, “rough copy” version of the transcript shows that most of the more specific, treatment questions were asked by Mr. Ferro, not counsel for State Farm. I am not persuaded, therefore, that the arbitrator erred in relying on Dr. Corey’s evidence as set out in her decision.
Even if I had concerns about Dr. Corey’s evidence, I am not convinced that it was critical to the outcome. The arbitrator relied on substantial evidence from other sources that independently supports her decision.
F. Release by the family doctor
Mr. Ferro argues that the arbitrator erred in fact in finding that Dr. Desrosier released Mrs. Pereira to resume her pre-accident activities. In his submission, she supported the need for additional treatment.
I find little strength in this argument. The arbitrator acknowledged that Dr. Desrosier supported the involvement of Trauma Services, but questioned the basis for this support. As set out above, Dr. Desrosier had previously agreed that Mrs. Pereira was not substantially disabled from performing her activities of normal living. However, she then supported an assessment at Trauma Services, apparently because Mrs. Pereira and her family were convinced that she was still disabled. The arbitrator was also uncertain why Dr. Desrosier would support a new rehabilitation program while also agreeing with the services arranged by Crawford & Company.
The arbitrator was left without clear answers to these questions because Dr. Desrosier did not testify and was not asked to provide a report detailing her opinion. In the circumstances, the arbitrator had ample reason to give little weight to Dr. Desrosiers’ opinion about the need to involve Trauma Services.
G. Quantum meruit
Mr. Ferro submits that the arbitrator erred in not applying the principle of quantum meruit. In the Notice of Appeal, this ground is set out as follows:
The Arbitrator lost her jurisdiction because she failed to judiciously apply her mind even to services rendered and failed to apply the equitable principle of quantum meruit. Whether she failed to do so because of her attitudinal bias or because of some reason not apparent on the record she nevertheless was compelled in law to address the issue of quantum meruit as this is a contract dispute and the principle applies and goes to the very essence of the dispute.
I have great difficulty following this argument. As I understand it, the contention is that even if the arbitrator found that some of the services provided by Trauma Services were not compensable, she was obliged to consider whether any of them were and, if so, order State Farm to pay them. There is no indication, however, that this was argued at the arbitration hearing. On the contrary, the submission was that Mrs. Pereira needed the unique package of services offered by Trauma Services. I am not prepared to criticize the arbitrator for not dealing with an alternative argument not raised by counsel.
More importantly, the arbitrator found that the services provided by Trauma Services were unnecessary because Mrs. Pereira received the services she needed up to March 1996, when she no longer required any further assistance. She went on to conclude that even if she was wrong in this finding, the services provided by Trauma Services were inappropriate and unreasonable. For the reasons above, I find no basis for second-guessing these findings which, in my view, leave no room for a quantum meruit argument.
III. APPEAL EXPENSES
This is not an appropriate case for appeal expenses. Mrs. Pereira’s claims have been completely rejected at both arbitration and appeal. She cannot have expenses awarded against her because the current appeal rules do not apply to this case. However, I see no reason State Farm should be expected to fund this appeal.
November 6, 1998
David R. Draper
Director’s Delegate
Date