Neutral Citation: 2000 ONFSCDRS 11

FSCO A99-000959

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

CISLYN MAY REID

Applicant

and

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE AND ON INTERIM BENEFITS

Before:

Lawrence Blackman

Heard:

December 22, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

David S. Wilson for Ms. Reid

Peter Trueman for Royal & SunAlliance Insurance Company of Canada

Issues:

The Applicant, Cislyn May Reid, was injured in a car accident on April 26, 1993. She applied for and received statutory accident benefits from Royal & SunAlliance Insurance Company of Canada ("Royal"), payable under the Schedule.¹ Royal terminated weekly income benefits in 1994. In or about 1998, Ms. Reid began a court action against Royal for weekly income benefits.

She did not claim supplementary medical or rehabilitation expenses in that action. In September 1999, Ms. Reid amended her action to include a claim for "damages for bad faith," which included the allegation that Royal had failed to pay specific dental and chiropractic accounts under the "pay pending dispute" provision of the Schedule.

In September 1999, mediation failed to resolve the question of Ms. Reid's actual entitlement to these same dental and chiropractic accounts. On October 5, 1999, this Commission received Ms. Reid's Application for Arbitration seeking payment of the said medical accounts as well as interest, legal expenses of the arbitration proceeding and, pursuant to subsection 282(10) of the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Insurance Act"), a special award.

Royal seeks the dismissal of this arbitration as being duplicitous with Ms. Reid's court action. Ms. Reid seeks an order that Royal pay her dental and chiropractic accounts pending resolution of this entitlement dispute. The determination of certain procedural questions is also sought.

The issues in this motion, therefore, are:

Should Ms. Reid's motion for interim benefits be adjourned?
Should the defence medicals be excluded from my consideration?
Should this arbitration proceeding be dismissed?
Is Ms. Reid entitled to payment of the following benefits on an interim basis:

(a) Dr. Goldberg's account in the amount of $2,845.33; and,

(b) Dr. Goldstein's account in the amount of $1,153.60?

Is Ms. Reid entitled to interest on any overdue payments?
Is Ms. Reid entitled to a special award?
Is Royal entitled to its $3,000 assessment?
Are either Ms. Reid or Royal entitled to their legal fees incurred on this motion?

Result:

The adjournment request is denied.
The defence medicals shall be considered by me.
This arbitration may proceed.
Ms. Reid is entitled to payment, on an interim basis, of $2,145.33 towards Dr. Goldberg's account and $1,153.60 for Dr. Goldstein's account.
Ms. Reid is entitled to interest on the said sums at the rate of two per cent per month from thirty days after the accounts were received by Royal, in accordance with section 24 of the Schedule.
Royal shall serve and file any submissions regarding a special award by January 26, 2000. Ms. Reid shall serve and file any reply by January 31, 2000.
Royal is not entitled to payment of any part of its $3,000 assessment.
Royal shall pay Ms. Reid her legal fees for both motions.

EVIDENCE AND ANALYSIS:

1. Should the motion for interim benefits be adjourned?

Royal requested that Ms. Reid's motion for interim benefits be adjourned to allow for the production of the clinical notes and records of:

Dr. R. Beharry, Ms. Reid's family doctor;
Dr. R.C. Wong, whom a decoded OHIP summary notes as having treated Ms. Reid between August 1991 and a subsequent April 1994 accident; and,
a dentist who allegedly replaced Ms. Reid's dentures in 1998.

I was advised that the clinical notes and records of Dr. Beharry were in the Applicant's possession. As the notes were readily available and might assist in the motion for interim benefits, I proceeded with Royal's motion and held down the Applicant's motion until 2:00 p.m. to allow the notes to be delivered and reviewed by Royal. No request was subsequently made at the interim benefits motion that any portion of Dr. Beharry's notes be made an exhibit. The only significant reference to the notes was Ms. Reid's concession that they made no reference, at least prior to 1995, to the orofacial pain or temporomandibular joint ("TMJ") problems allegedly suffered by her.

I was not persuaded that the clinical notes and records of either Dr. Wong or the dentist were reasonably necessary for this motion. A fair hearing on a motion for interim benefits does not necessitate production of all possibly relevant medical documentation, especially where the benefit is a pay-pending dispute item. As stated by Senior Arbitrator Rotter in Cripps and AXA Insurance (Canada) (OIC A-013360, August 8, 1997), it is presumed that in a motion for interim benefits "the evidentiary basis for the order is generally less than complete."

2. Should the defence medicals be excluded from my consideration?

Included in Royal's briefs were medical reports of Dr. W.J. Horsey, neurosurgeon, dated March 7, 1997, Dr. N.H. Lithwick, orthopaedic surgeon, dated March 31, 1997, Dr. H. Berry, psychiatrist, completed October 9, 1997 and Dr. J.J. Friedlich, a specialist in Oral and Maxillofacial Surgery, dated November 30, 1999. These were defence medicals pertaining to Ms. Reid and were generated in court actions pursuant to Rule 33 of the Rules of Civil Procedure.

Ms. Reid submits that Rule 30.1 of the Rules of Civil Procedure (the "deemed undertaking" rule) prohibits the use of such documentation "for any purposes other than those of the proceeding in which the evidence was obtained," subject to specific exceptions, including consent. Ms. Reid does not consent to the disclosure of this evidence in this proceeding.

Rule 30.1 codified and refined the common law rule established in Goodman v. Rossi (1995), 1995 CanLII 1888 (ON CA), 24 O.R. (3d) 359. Rule 30.1.08 provides that a court may order that the deemed undertaking rule does not apply if "satisfied that the interests of justice outweigh any prejudice that would result to a party who disclosed evidence."

Director's Delegate Makepeace recently agreed in Haripersaud and State Farm Mutual Automobile Insurance Company (FSCO P98-00018, January 6, 2000) with Director's Delegate Naylor's decision in Branchaud and Co-operators General Insurance Company (OIC P96-00048, May 2, 1997) that arbitrators "have the powers that are conferred on them either expressly by the legislation or by necessary implication." If the deemed undertaking rule is part of the general law of Ontario, then implicitly, the adjudicative discretion inherent in the common law rule is also accorded to this Commission.

Ms. Reid did not cite any specific prejudice to her resulting from the collateral use of the above-noted reports beyond the important primary rationale for the implied undertaking rule, being protection of privacy. On the other hand, I find these reports to be prima facie relevant, in that they address the injuries which Ms. Reid states that she sustained in the car accident which is the subject of this arbitration. They further speak, either directly or indirectly, to the need for treatment. More importantly, I note that there is no provision under this Schedule for insurers' or Designated Assessment Centre examinations for the medical issues in dispute, and hence, without the above-noted reports, Royal would be significantly prejudiced in responding to this application for arbitration.

I am satisfied, in this case, that the interests of justice outweigh the prejudice to Ms. Reid. Accordingly, I find that the deemed undertaking rule does not apply in this application to the disputed medical reports and I shall consider these reports.

3. Should this arbitration proceeding be dismissed?

Royal submits that this arbitration and Ms. Reid's court action against Royal are duplicitous. It argues that both proceedings require a determination of causality, of the reasonableness of the treatment provided and the reasonableness of its refusal. Royal further submits that the special award sought in this proceeding is subsumed in Ms. Reid's court claim for punitive damages. Royal argues that to allow both proceedings to continue would result in a duplication of evidence, the genuine danger of contradictory results and an abuse of process, justifying not merely the dismissal of this action with expenses but also an award of its $3,000 assessment.

Royal relies on The Citadel General Assurance v. Gogna, an unreported decision of the Ontario Court of Justice (General Division) dated September 16, 1992, and Arbitrator Bayefsky's decision in King and Royal Insurance Company of Canada (FSCO A98-000234, March 24, 1999). The latter sets out a list of "principles governing the question of whether a person is precluded from proceeding before both a court and the Commission, the most basic of which being that an insured may not pursue a dispute in more than one forum, but is not required to pursue all of his or her disputes in only one forum."

King sets out additional principles, including the important consideration of whether the arbitration involves issues substantially similar to those in the civil action. As stated by Arbitrator Manji in Andreeski and Pilot Insurance Company (OIC A96-000714, March 26, 1997) "an insured person may not proceed before a court and an arbitrator in respect of the same matter or issues in dispute. However, he or she may proceed before a court and an arbitrator in respect of a different matter or unrelated issues in dispute."

In this case, I am persuaded that the two proceedings are distinct and are not duplicitous.

This arbitration is essentially limited to two claims for medical expenses. Those expenses are not sought in the court action. Indeed, there is no claim whatsoever for medical or rehabilitation expenses in the court action. I do not agree with Royal's submission that the claim for a special award in this arbitration is subsumed in the court action for "damages for bad faith." In Whiten v. Pilot Insurance Co. et al., 1999 CanLII 3051 (ON CA), 42 O.R. (3d) 641, the Ontario Court of Appeal held at page 649 that:

For an award of punitive damages to be made, two requirements must be met: first, the defendant must have committed an independent or separate actionable wrong causing damage to the plaintiff; and second, the defendant's conduct must be sufficiently "harsh, vindictive, reprehensible and malicious" or "so malicious, oppressive and high-handed that it offends the court's sense of decency."

A special award does not require conduct which is "harsh, vindictive, reprehensible and malicious" or "so malicious, oppressive and high-handed that it offends one's sense of decency." Nor does a special award require "an independent or separate actionable wrong causing damage to the plaintiff." A special award, rather, flows merely from the unreasonable withholding or delay of payments.

Although some evidence may be relevant to both a special award and punitive damages, I agree with the conclusion in King that "while there will inevitably be some overlap between the two proceedings, they will lead to significantly different lines of inquiry." Arbitrator Seife's comment in Oliviera and Markel Insurance Co. of Canada (February 9, 1995, OIC A-006434) is also pertinent: "the issues in arbitration are wholly capable of being resolved on their own. While there may be duplication of evidence in the two forums, and perhaps a potential for inconsistent findings of fact, in my view, this is not sufficient grounds to stay or dismiss the arbitration." I further note the following sensible suggestion made by Bellamy, J. in Simpson v. Trafalgar Insurance Company of Canada, an unreported decision of the Ontario Court of Justice (General Division), dated April 29, 1999:

A Special Award under the Insurance Act is not the same as an award for bad faith or for punitive damages . . . [the former] is considerably narrower than the test for punitive damages . . . Having said that, the plaintiff is not entitled to a windfall nor should Trafalgar be required to pay twice for the same issues under determination. To the extent that there is any duplication in the amount that has been or may end up being awarded to the plaintiff in the arbitration and in this action, it is open to Trafalgar to argue before the trial judge that an amount awarded by an arbitrator, on facts identical to those in this action, may be reduced accordingly by the trial judge, if the plaintiff is successful in this action.

Another important consideration stated in King is whether there is any serious impediment to having the issues in the arbitration dealt with in the court proceeding.

The expenses in dispute in this arbitration are agreed to come under what is entitled "Payments Pending Dispute Resolution" in subsection 268.1(8) of the Insurance Act, which finds voice in subsection 6(7) of the Schedule. In Murray and Wawanesa Mutual Insurance Company (OIC A-003224, August 23, 1996), I stated that "[s]ection 6(7) is mandatory. It requires certain expenses to be paid by the Insurer, pending the resolution of any dispute as to the reasonableness, necessity, or requirement of the expense. Preventing any delay of an insured's access to a restricted range of goods and services, is the paramount legislative concern."

This concern outweighs Royal's submissions that the court action is more comprehensive than the arbitration, that the statement of claim was amended to include a punitive damage claim before (albeit by only a few weeks) the Application for Arbitration was received and that Ms. Reid has the burden of proof in both proceedings. In any event, to allow Royal's motion would require the court pleadings to be amended and further examinations for discovery to be held in an action not yet set down for trial.

Forcing this Applicant to join her medical expenses issue with the court action would unnecessarily complicate the relatively straightforward issues in arbitration leading to unnecessary expense and delay. This would impede Ms. Reid's right to an expeditious and inexpensive resolution of this discrete pay-pending issue. Accordingly, Royal's motion is denied.

4. Is Ms. Reid entitled to interim benefits pursuant to subsection 279(4.1) of the Insurance Act?

Subsection 279(4.1) of the Insurance Act gives arbitrators the discretion to make interim orders pending the final order in any matter.

As noted above, subsection 268.1(8) of the Insurance Act refers to "Payments Pending Dispute Resolution." It states that:

Where the Statutory Accident Benefits Schedule provides that the insurer will pay a particular statutory accident benefit pending resolution of any dispute between the insurer and an insured, the insurer shall pay the benefit until the dispute is resolved. R.S.O. 1990, c. I.8, s. 268 (8); 1993, c. 10, s. 1.

[emphasis added]

Section 6 of the Schedule provides, in part:

(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 . . . and other medical or dental devices;

(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.

[emphasis added]

Section 6 also provides that before paying a "pay-pending dispute" item, an insurer may require an insured to submit a statement signed by the insured's qualified medical practitioner (including a chiropractor in respect of chiropractic services and a qualified dentist in respect of dental services) stating that the expense is necessary for the insured person's treatment or rehabilitation. No such request was made by Royal in this case.

I agree with Ms. Reid's submission that of "two evils," namely an insured not receiving timely (pay-pending dispute) treatment and an insured getting treatment to which he or she was ultimately found not entitled, the law would err in favour of the insured. I also agree with Arbitrator Palmer's comments in Simpson and Trafalgar Insurance Company of Canada (FSCO A98-000215, July 16, 1998) that where (as here) the Schedule provides direction as to what amount is to be paid pending resolution of the dispute, the principles of a prima facie case and urgency need not be considered in the interim motion. I find applicable (although from a different context) Senior Arbitrator Rotter's statement in Brown and Allstate Insurance Company of Canada (OIC A97-000579, May 29, 1997) that the applicant must establish enough of a connection or nexus so as to generate an obligation on the part of the insurer to respond. I find that in order to allow insureds expeditious access to pay-pending dispute treatment allowed by the Schedule, an applicant need only establish at this interim stage, a minimum threshold, namely that the treatment sought falls within the enumerated types of treatment and that the connection is more than de minimis or immaterial.

Arbitrator Makepeace indicated in White and Pilot Insurance Company (A-008462, June 5, 1995) 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." That is not the case here. Indeed, Royal concedes that the Applicant has attained the de minimis requirement.

Accordingly, I do not agree with Royal's submission that Ms. Reid must, at this interim stage, prove with convincing evidence that the treatment submitted is reasonable, necessary or is caused by the accident in question. Rather, I agree with Arbitrator Palmer in Pintucci and Jevco Insurance Company (FSCO A97-000755, April 23, 1999) that:

It is important to the integrity of the operation of the Schedule that the parties comply with its terms. Prompt, continuing access to reasonable and necessary treatment, even while a dispute is underway, is a hallmark of the system . . . Insurers cannot flout the terms relating to the provision of and payment for supplementary medical and rehabilitation benefits and substitute in their stead adjustment procedures that they find more convenient or suitable to their purpose.

Establishing, on a balance of probabilities, reasonableness, necessity and causation is to be left to the arbitrator making the final determination of entitlement.

Turning to the chiropractic expense in dispute, the medical experts relied upon by Royal agree that Ms. Reid sustained a musculoligamentous injury (Dr. Lithwick) or a musculoskelatal strain (Dr. Berry) as a result of the 1993 accident.

Ms. Reid saw Dr. M. Goldstein, D.C., for chiropractic treatment from April 1998 to March 1999. Dr. Goldstein's account is $1,153.60. All of this amount is billed towards "adjustments" other than $69 for a "lumbar support." Dr. Goldstein states in his report dated October 30, 1998 that Ms. Reid was suffering from headaches, neck and low back pain as a result of the April 1993 accident. He further states that in addition to adjustments to reduce muscle spasm, Ms. Reid's chiropractic treatment consisted of stretches, the use of an electrical modality for pain relief and a home exercise program to increase her strength, endurance and level of functioning.

I find that Dr. Goldstein's services come within paragraph 6(1)(a) of the Schedule as chiropractic services. I find that the "lumbar support" comes within paragraph 6(1)(b) as a medical device. I find, as conceded by Royal, that Dr. Goldstein's report establishes a de minimis link between the April 1993 accident and the services and device provided. Accordingly, Royal is responsible for paying Dr. Goldstein's $1,153.60 account as a pay-pending dispute item.

The Applicant having at this stage established the requisite minimal nexus, Royal cannot be absolved from its contractual obligations by arguing that Ms. Reid had degenerative disc disease prior to the 1993 accident or was in a subsequent April 1994 car accident. These causation issues are matters to be considered by the final hearing arbitrator, as are the arguments that Ms. Reid's orthopaedic problems from the first accident had resolved by the time of the second accident (according to the 1997 opinions of Dr. Horsey and Dr. Lithwick), that no further passive treatment was called for (based on the 1994 opinion of the Canadian Back Institute) and that Dr. Goldstein's opinion may have been based on inaccurate information.

Turning to the dental expense, Ms. Reid submits three accounts of Dr. Y.K. Goldberg, a "general dentist with special interest in TMJ, orofacial pain, headache," totalling $2,845.33. Other than $700 for a written report, the individual entries are noted to be for orofacial pain management or denture treatment. Dr. Goldberg states in his accounts that the treatment provided was both reasonable and necessary for Ms. Reid's rehabilitation. He certifies in a separate letter that the treatment was materially related to both her 1993 and 1994 accidents.

Dr. Goldberg's report of July 5, 1999 states that Ms. Reid's jaw was hurt and her face was swollen in the 1993 accident and that she then began having noise and pain in her TM joints. He further states that she found it difficult to swallow or open her mouth for a period of time following this accident.

There is, however, no mention of any facial or jaw injury or complaint in Ms. Reid's Application for Accident Benefits. I am advised that none of the complaints noted by Dr. Goldberg are to be found in the clinical notes of Ms. Reid's family doctor, Dr. Beharry. An August 1995 functional evaluation by Cranio Cervical Rehabilitation sets out 25 possible areas of pain. Nine areas are identified by Ms. Reid. "TMJ" and facial pain are not checked off. I also note the opinion of Dr. J.J. Friedlich in November 1999 that the history of a fractured denture with a repair being required as a result of the loss in question was not supported in any of the documents available for review.

In her affidavit, Ms. Reid states that she had "some" jaw pain shortly after this accident which resulted in difficulty chewing food. She further states that "[i]t was my view that the problem to my jaw was relatively minor when compared to my other injuries." She does not otherwise address the above-noted absence of oral or facial complaints in the documentary evidence.

The Insurer, however, concedes a de minimis connection has been established by the Applicant. Based on the opinions of Dr. Goldberg, I agree, except as to the $700 for a medical report. I do not find that a medical report qualifies as a service or device as contemplated by paragraphs 6(1)(a) and (b) of the Schedule. Hence, Ms. Reid is entitled to payment of the sum of $2,145.33 towards Dr. Goldberg's account.

Should, however, the hearing arbitrator ultimately find Ms. Reid not entitled to payment of these accounts (and specifically because the opinions of Drs. Goldberg or Goldstein are found to be based on false information provided by the Applicant), it would be open to Royal to argue that it was entitled not only to repayment of the interim award, but also to its expenses of the arbitration hearing and its assessment fee.

5. Is Ms. Reid entitled to interest on overdue payments?

Subsection 24(4) of the Schedule mandates that an insurer "will pay interest on overdue payments from the date they become overdue." Medical expense payments are overdue if not mailed or otherwise delivered within thirty days after receipt by the insurer of a completed application for no-fault benefits.The benefits coming within the pay-pending dispute provision are overdue. Interest is, therefore, payable at the rate of two per cent per month, in accordance with section 24 of the Schedule.

6. Is Ms. Reid entitled to a special award?

Royal submitted that it was taken by surprise by Ms. Reid's claim for a special award at this motion. Although on further review I note that paragraph seven of Royal's own affidavit sworn October 27, 1999 in support of its motion states that the Applicant seeks a special award, I will still allow Royal a further opportunity to respond to Ms. Reid's submissions.

Royal shall serve and file any submissions regarding a special award by January 26, 2000. Ms. Reid shall serve and file any reply by January 31, 2000.

7. Is Royal entitled to payment of its $3,000 assessment?

I find that Royal has not established that Ms. Reid commenced an arbitration that was frivolous, vexatious or an abuse of process. Therefore, Royal is not entitled to any award of its assessment fee pursuant to subsection 282(11.2) of the Insurance Act.

EXPENSES:

Given the Applicant's degree of success in these motions, I award Ms. Reid her legal fees of both motions, in accordance with Rule 73 of the Dispute Resolution Practice Code.

January 19, 2000

Lawrence Blackman Arbitrator

Date