Neutral Citation: 2000 ONFSCDRS 13

FSCO A99-000139

BETWEEN:

LOIS KENNELLY

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: Deena Baltman

Heard: October 18, 19, and 20, 1999, in Thunder Bay, Ontario.

Appearances: Bruce Latimer for Lois Kennelly Greg Birston for Wawanesa Mutual Insurance Company

This case deals with two novel issues. First, what level of proof must an applicant meet in order to convert part-time income to full-time income under section 86 of the Schedule?¹ Second, has an expense been "incurred" when the treatment in question is no longer available?

The Applicant, Lois Kennelly, was injured in a car accident on February 13, 1995. She applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company (Wawanesa), payable under the Schedule, on the basis that she was not able to return to her pre-accident part-time employment as a Clinical Nursing Instructor. Wawanesa paid Ms. Kennelly Income Replacement Benefits (IRBs) until July 31, 1998, when it made her an offer for Loss of Earning Capacity Benefits (LECBs). Ms. Kennelly disputes the LECB offer, arguing that it fails to account for future full-time work, in accordance with section 86 of the Schedule.

The parties also dispute the amount of speech pathology and psychological treatment to which Ms. Kennelly is entitled as a result of her injuries from the accident. In particular, they disagree about whether an expense has been "incurred" when the treatment in question is no longer available.

The issues in this hearing are:

Is Ms. Kennelly entitled to convert her part-time income preceding the accident to full-time income, for the purpose of calculating her LECB?
Is Ms. Kennelly entitled to recover the cost of speech pathology sessions from June 1, 1998 onwards?
Is Ms. Kennelly entitled to recover the cost of psychotherapy sessions from October 1, 1998 onwards?
Is Ms. Kennelly entitled to a special award on the basis that Wawanesa unreasonably withheld benefits?

Ms. Kennelly is entitled to convert her part-time income preceding the accident to full-time income, for the purpose of calculating her LECB.
Ms. Kennelly is entitled to recover the cost of speech language therapy twice-weekly from June 1, 1998 onwards at the rate of $84 per session, subject to Wawanesa obtaining a DAC assessment indicating treatments are no longer reasonable and necessary.
Ms. Kennelly is entitled to recover the cost of psychotherapy from October 1, 1998 onwards, subject to Wawanesa obtaining a DAC assessment indicating that the treatments are no longer reasonable and necessary.
Ms. Kennelly is not entitled to a special award.

Overview:

Ms. Kennelly, now 47 years old, lives with her husband, Patrick Kennelly, in a house approximately 30 kilometres outside of Thunder Bay. Ms. Kennelly has a daughter from a previous relationship, who lives in Manitoba.

After high school Ms. Kennelly attended college and became a Registered Nursing Assistant (RNA), and worked for about five years in that capacity. She then enrolled in the nursing program at Lakehead University (Lakehead) and in 1982 obtained an Honours B.A. in Nursing. She worked as a nurse in the surgery and intensive care units of McKellar Hospital in Thunder Bay until 1985, when she injured her back. She was off work for several months. Eventually she had to give up hospital nursing as its physical demands aggravated her back.

In 1988 she began employment as a Clinical Nursing Instructor at Lakehead, where she worked part-time until this accident. She was paid on the basis of a 16-hour work week.

Mr. Kennelly is seasonally employed as a construction worker. He works out of town four to five months a year, on average. In 1993, he and the Applicant built an attractive, well-appointed three bedroom lakeside home. In 1994, in order to supplement Mr. Kennelly's income and fill his time when he was in between jobs, the couple decided to run the house as a Bed & Breakfast (B&B) facility. They moved into a smaller bedroom and opened the master bedroom suite to guests. At the beginning, Ms. Kennelly's daughter, who was still living at home, helped manage the B&B. However, since her departure in 1996, Ms. Kennelly and her husband manage the B&B on their own. Their uncontradicted evidence was that although the B&B operation helps to defray household expenses, it yields no profit.

Before this accident Ms. Kennelly was an avid flower and vegetable gardener, with many garden beds incorporated into their rural property. Along with her husband, she enjoyed canning and preserving foods. She also performed some volunteer work in support of a medical charity.

The accident giving rise to this claim occurred on February 13, 1995. Ms. Kennelly was a passenger in a car which was sideswiped. She was hospitalized for four days with multiple soft tissue injuries and bruising to the back of her head. She required extensive physiotherapy. She also experienced significant emotional distress, including depression, and cognitive deficits in speech, memory and concentration. She received treatment from a psychotherapist and a speech pathologist. She has not returned to any form of employment since the accident, except for one unsuccessful attempt at her previous job.

Wawanesa paid Ms. Kennelly IRBs of $239.07 per week until July 31, 1998 (excluding the time she tried to return to work). Under the Schedule, where an insured person continues to qualify for IRBs more than 104 weeks after the onset of disability, the insurer is required to pay LECBs instead of IRBs. The parties agree that Ms. Kennelly was entitled to LECBs, but disagree on the amount. According to the Schedule, LECBs are calculated based on 90 per cent of the difference between the insured person's pre-accident earning capacity (PEC), determined according to section 29, and her residual earning capacity (REC), determined according to section 30.

The parties have agreed on Ms. Kennelly's REC, but dispute her PEC. The dispute relates to section 86 of the Schedule, which provides that when determining the PEC, the insured person's part-time income can be converted to full-time income if she "would have worked on a full-time basis at some time after the accident." Ms. Kennelly maintains that had this accident not happened, she would have found full-time employment at some point in the future. Wawanesa disagrees, arguing that her pre-existing back injury combined with her lifestyle make it highly unlikely she would have ever sought, much less obtained, full-time employment.

Issue #1: Is Ms. Kennelly entitled to convert her part-time income preceding the accident to full-time income, for the purpose of calculating her LECB?

A. The Legislation

Section 86 of the Schedule deals with the conversion of part-time income to full-time income. It provides:

(1) For the purpose of subsection 29(1) [determination of pre-accident earning capacity], a person's net weekly income used in determining the person's pre-accident earning capacity shall be converted to a full-time net weekly income in accordance with this section if,

(a) the person was employed on a part-time basis at some point during [the employment period preceding the accident];

(b) the person would have worked on a full-time basis at some time after the accident; and

(c) the gross income used [to determine the insured person's IRB] includes income from employment other than self-employment.

[emphasis added]

The parties agree that Ms. Kennelly meets the requirements of paragraphs (a) and (c). They dispute, however, whether she satisfies the requirement under paragraph (b). The wording of paragraph 86(b) has not previously been considered at the Commission or in the courts.

B. The Burden of Proof

The parties disagree on the standard of proof governing subsection 86(b). Wawanesa argues that Ms. Kennelly must establish future employment on the balance of probabilities, whereas Ms. Kennelly argues that she need only demonstrate a genuine possibility of future employment. The question boils down to this: how likely must it be that an insured person "would" have worked full-time at some time after the accident? This is a question of statutory interpretation.

In a recent decision² interpreting the provisions of the Schedule, Laskin J.A. of the Ontario Court of Appeal noted that "the modern approach to statutory interpretation calls on courts to interpret a legislative provision in its total context." Justice Laskin stated that the court's interpretation should satisfy three criteria, namely to "comply with the legislative text, promote the legislative purpose and produce a reasonable and just meaning."

In this case, after applying those three criteria, I find much support for Ms. Kennelly's position.

Compared to its predecessor, Bill 164 significantly expanded both the range and amount of benefits available to an applicant. At the same time, it removed the right to sue in tort for economic loss, no matter how serious the injury. This means that an applicant must recover any past or future economic losses solely from the Schedule. To ensure that goal is achieved, future work plans are recognized and rewarded. I find that section 86 was designed to compensate for anticipated but unrealized full-time employment.

Numerous Commission cases have pointed out that the Schedule is remedial legislation and should be interpreted in a broad and liberal manner. I find that the language in paragraph 86(b) is also broad and liberal — it says that part-time income "shall" be converted to full-time income if an applicant "would" have worked on a full-time basis "at some point" after the accident. It does not specify how soon after the accident the full-time employment would have occurred, or for how long it would have lasted. The relaxed language in this provision suggests that it is to be interpreted in a manner consistent with the broad purposes of the Schedule. Had the legislators wished to impose stricter guidelines, they could have done so.

Future prospects are, by their nature, hard to determine with much certainty. The legislative goal of compensating these eventualities would be defeated if arbitrators applied a rigid or exacting standard. I find support for this approach in the decision of the Ontario Court of Appeal in Schrump et al. v. Koot et al³ In that case, the plaintiff sued in tort as a result of personal injuries sustained in a car accident. There was conflicting evidence over the likelihood of future surgery. Writing for the Court, Justice Lacourciere noted that when assessing damages for personal injury, although a plaintiff must prove causation on the balance of probabilities, he need only demonstrate "a reasonable chance" that a future loss might occur. Justice Lacourciere quoted with approval the following passage from 12 Hals., 4th ed., pp.483-4:

The plaintiff must prove his damage on a balance of probabilities. In many cases, however, the court is called upon to evaluate chances, such as the chance of a plaintiff suffering further loss or damage in the future; in these cases the plaintiff need only establish that he has a reasonable, as distinct from a speculative, chance of suffering such loss or damage, and the court must then assess the value of that chance. [emphasis added]

Although the Schrump case was framed in tort, where Ms. Kennelly’s case is for statutory benefits, both are concerned with evaluating future possibilities for claimants injured in car accidents. If anything, obligations created by statute, particularly where they are remedial, most deserve to be honoured liberally. In Davies v. Taylor,⁴ another case referred to in Schrump, Lord Reid of the House of Lords considered the assessment of damages under fatal accident legislation, and observed:

You can prove that a past event happened, but you cannot prove that a future event will happen and I do not think that the law is so foolish as to suppose that you can. All that you can do is to evaluate the chance. Sometimes it is virtually 100 per cent; sometimes virtually nil. But often it is somewhere in between. And if it is somewhere in between I do not see much difference between a probability of 51 per cent, and a probability of 49 per cent. [emphasis added]

For all these reasons, I find paragraph 86(b) permits a conversion to full-time income where an applicant can demonstrate a real or serious possibility⁵ that she would have worked full-time at some point in the future. For the reasons that follow, I find that Ms. Kennelly adduced sufficient evidence to meet that standard.

C. Evidence and Findings regarding Ms. Kennelly's Future Employment

Ms. Kennelly testified that before this accident she intended to work full-time. She felt capable of more than what she was doing in her part-time teaching position. In that role, Ms. Kennelly taught students in the classroom and supervised them while they were on placement within a variety of hospital settings. Although she was paid for a 16-hour week, on average she worked between 20-30 hours each week, including time for classroom preparation and grading. Lakehead has full-time teachers on staff but none of these positions opened before the accident.

Full-time teachers performed many of the same tasks, but also conducted research, published, and worked on committees, all of which Ms. Kennelly believed were within her physical and mental capabilities.

Ms. Kennelly emphasized that although her pre-existing back problems prevented her from full-time hospital work, where heavy physical tasks might be required, she felt capable of full-time employment in other positions within the nursing field. During the seven years she worked at Lakehead, she applied for several full-time positions, ranging from a teacher at Confederation College, to a nurse manager at Westmount Hogarth Hospital and a clinical practitioner at McKellar Hospital. She was interviewed for one of those positions but was not offered a job. She also made several informal inquiries at various hospitals and homes for seniors. She explained that during these years there were many unemployed nurses competing for precious few jobs, causing several nurses to move to the United States to find work.

Although Ms. Kennelly did not file copies of any job applications, or call evidence from any colleagues regarding her efforts at finding full-time employment, I found her to be a credible, well-motivated individual and accept her evidence that she had made various inquiries about full-time work over the years. I also agree that her inability to find such work was largely attributable to the poor job market for nurses during the early 1990's. This was corroborated by Dr. Lorne McDougall, Director of the Lakehead nursing school. Dr. McDougall testified that Ms. Kennelly was a highly competent, valued employee. He confirmed that in the years preceding the accident there were no full-time openings in positions for which Ms. Kennelly is qualified. However, since then there have been three or four such openings at Lakehead or Confederation College, one of which was filled by a part-time instructor from Lakehead. Although there is no guarantee that she would have been offered those positions, he noted that they were well within her abilities. Dr. McDougall agreed that before the accident Ms. Kennelly often worked more than the 16 hours per week for which she was paid.

Wawanesa argued that Ms. Kennelly's pre-existing back injury made it unlikely she would ever seek much less manage full-time employment. In January 1985, Ms. Kennelly injured her back while working as a trauma nurse in the hospital. The injury resulted in an L4-5 disc herniation, associated with low back pain and right leg tingling. Ms. Kennelly received rehabilitation through the Workers' Compensation Board (the Board) and in 1989 was awarded a permanent disability pension of 20 per cent. That award was confirmed following a reassessment by the Board in February 1999.

As a result of this injury, Ms. Kennelly changed her career direction, moving from hospital nursing to teaching, in order to avoid heavy lifting.

Wawanesa referred to documents in its file that suggest that Ms. Kennelly reported that she was not able to work full-time. In July 1995, Frances Etches, a medical consultant retained by Wawanesa, met with Ms. Kennelly to assess her injuries as a result of her car accident. Her report of August 2, 1995 summarizes her alleged conversation with Ms. Kennelly regarding the earlier WCB injury, and states in part:

Lois described this time of her life as very difficult, learning to manage chronic pain and making lifestyle adaptations. When she was able to return to work approximately six years ago, she began part time as a clinical nursing instructor/assistant at Lakehead University. Lois states she is physically able to manage this type of employment as she would not of [sic] been able to return to more physically demanding hospital nursing or manage full time employment. [emphasis added]

Wawanesa argues that these comments confirm that Ms. Kennelly had no intention of working full-time in any position. Ms. Kennelly testified that this report misstates her advice to Ms. Etches, as it was only full-time bedside nursing that she would have identified as beyond her capabilities. Ms. Etches did not testify at the hearing.

When read in context, I find it unclear whether the comments were intended to include full-time employment outside of a hospital. I also find this statement, made after the accident by a rehabilitation consultant in a report to the Insurer, less reliable than statements made by Ms. Kennelly contemporaneously with her recovery following the WCB injury. In a report dated February 15, 1989, the rehabilitation counsellor at the Board noted that Ms. Kennelly "...anticipates the possibility of full time employment as a nursing instructor with this employer commencing September, 1989, however, the position has not been guaranteed at this time." The report then refers to numerous health facilities to which Ms. Kennelly had applied for positions, and goes on to state:

Worker feels that she is capable of a full time teaching position such as she presently performs for Lakehead University, as the job allows flexibility in her work schedule as well as the ability to avoid static positioning... she intends to teach full time at the University or Confederation College and plans to work on her Masters degree in nursing on a part time basis over the next several years.[emphasis added]

Ms. Kennelly explained at the hearing that she was not able to obtain a Masters degree because the only suitable programs at that time were in the United States, and were very expensive. Such programs would also have required her to relocate or commute two to three days a week, neither of which was compatible with her family commitments.

Wawanesa also relied on the file notes of Dallas Turner, the claims examiner handling this file. Shortly after this accident, Ms.Turner telephoned Ms. Kennelly to obtain some preliminary details. Her notes of this conversation, set out in an "Injury Questionnaire Sheet" state, in part:

Has Workers Compensation Board Pension. Injury 10 years ago to lower back. Would not have been able to work full-time. [emphasis added]

Ms. Turner testified that this note was based on Ms. Kennelly's statement over the phone that she was not able to work at any full-time position. Although I found Ms. Turner to be candid in much of her evidence, I do not accept her version of this conversation with Ms. Kennelly, for several reasons. Ms. Turner testified that the initial telephone interview is designed to obtain only the basic information needed to set up reserves; fuller details are obtained in a subsequent face-to-face meeting. It is therefore not clear that she recorded the full context of any comments made by Ms. Kennelly over the telephone. Moreover, Ms. Turner could not recall the length of the telephone conversation, nor how much of it she recorded, yet claimed to be able to recall specifically the questions she asked and the answers she received. I find this unlikely, given that the conversation occurred over four years ago and was only one of many telephone interviews that Ms. Turner has conducted with claimants. Finally, and most importantly, I note that Ms. Turner made no such reference in her notes during her meeting with Ms. Kennelly at her home on February 28, 1995, shortly after the preliminary telephone conversation. Ms. Turner stated that during this interview, Ms. Kennelly again told her that she never planned to work at any full-time position after her WCB injury. Ms. Turner admitted that it is her practice to record very important information, which she considered this to be, but could not explain why this was not recorded.

For all these reasons, I am not persuaded that Ms. Kennelly advised Ms. Turner that she was not capable of any full-time employment. I find it more likely that any statement she made about her inability to work full-time was in the context of hospital nursing.

Medical evidence from before and after this accident is mostly consistent with Ms. Kennelly’s testimony. Dr. J. Burrell, the orthopaedic specialist who treated Ms. Kennelly following the WCB injury, wrote a letter to the Board on August 17, 1988, regarding her restrictions. He noted she was able to sit for approximately four hours per day, provided she could occasionally get up and move around, and that she could stand for four to five hours if she is able to move around. Although these restrictions may have impeded full-time employment as a trauma or hospital nurse, they would not, in my view, have prevented full-time employment as a nursing instructor, where much of the work can be done by alternating between sitting and standing positions and where there is little, if any, heavy lifting required.

Board documents from 1988 indicate that Ms. Kennelly tried, unsuccessfully, to be compensated for neck, shoulder and right leg pain, all arising from the same work injury that damaged her back. However, I received no evidence that she continued to complain or even suffer significantly from those areas between 1989 and the accident.

In November 1995, the Canadian Back Institute performed a Functional Capacity Evaluation, and noted that based on its results "Ms. Kennelly's physical abilities exceed the demands associated with her activities of daily living and her position as a nursing instructor at Lakehead University."

Wawanesa also pointed to Ms. Kennelly's involvement in the B&B after this accident, suggesting that this additional responsibility made it even less likely that she would seek full-time work. It noted that because her husband was periodically living out of the city on work assignments, she regularly ran the B&B on her own, further adding to her workload. However, I am not persuaded that the B&B was that demanding. It was a modest operation, yielding no profit. The couple had only one suite available for guests, meaning that they never had more than two guests in the house. Mr. and Ms. Kennelly testified that a B&B has the advantage of flexibility: if he was out of town, she might decline guests, or, alternatively, accept them only on weekends. When Mr. Kennelly was home, they divided the workload, although he did the heavier work. I accept their evidence that had Ms. Kennelly found full-time work, they could have scaled back the operation, if necessary.

D. Conclusion

If Ms. Kennelly had to prove future employment on the balance of probabilities, I might have declined her claim. She had a pre-existing back injury that limited her employment options; after this accident she became involved in a B&B operation which, however modest, consumes time and energy; and she was engaged in numerous hobbies, including an extensive and impressive garden. Although none of those factors, in itself, precludes full-time employment, their combination make it less than probable that she would have obtained full-time employment in the future.

At the same time, however, there is a reasonable possibility that Ms. Kennelly would have worked full-time. She expressed that intention in statements before the accident and applied for several positions. Her employer confirmed that had she not been injured in this accident, she would have been seriously considered for full-time positions that have opened since. I find her to be a capable, well-motivated woman with a strong work ethic and a genuine love of teaching. There is uncontroverted evidence that before this accident occurred she was already performing between 20-30 hours per week, even though she was paid for less. It would not have been a huge leap for her to assume a full-time position in a related field. She should not be penalized because few such jobs were available before this accident, particularly when that is no longer the case. Section 86 takes a prospective rather than a retrospective view. For all these reasons, I find that there was at least a real or cogent possibility that Ms. Kennelly would have, at some point in the future, worked full-time.

The parties agreed that if Ms. Kennelly was successful on this point, her full-time income for the purpose of her PEC is $39,853 annually. I assume that the parties can agree on the resulting adjustment to her LECB, failing which I may be revisited.

Issue #2: Is Ms. Kennelly entitled to recover the cost of speech pathology sessions from June 1998 onwards?

A. Introduction

Section 36 of the Schedule states that an insurer shall pay for "all reasonable expenses incurred by or on behalf of the insured person as a result of the accident for...speech-language pathology services"[my emphasis]. An insurer may require a person claiming payment of an expense to furnish a certificate from a health practitioner stating that the expense is reasonable and is necessary for the person’s treatment. If an insurer disputes whether treatments are warranted, it may require the insured person to be assessed at a Designated Assessment Centre (DAC).

Two questions arise in this case. The first is how much speech pathology was reasonable and necessary for Ms. Kennelly. The second is whether an expense has been "incurred" when the treatment in question is no longer available.

B. Factual Background

Following the accident, Ms. Kennelly demonstrated various speech and communication impairments. They included difficulties with word retrieval, listening and reading comprehension, and written skills. As a result, Wawanesa agreed to fund cognitive-communication therapy, which Ms. Kennelly received from Ms. Elizabeth Morrison, a speech language pathologist. Treatment was initiated in January 1997 on a thrice weekly basis.

In April 1997, at Wawanesa's request, Ms. Kennelly attended a DAC for an assessment of her communication and cognition deficits. In its report of May 7, 1997, the DAC noted that she had significant difficulties in all areas of communication (speaking, listening and reading comprehension, verbal and written expression) and cognition (attention/concentration, memory) which would "severely impact" on her vocational and personal interactions. Although the assessors did not believe she had sustained a brain injury, and found that there was likely a psychogenic basis to her communication and cognitive difficulties, there was no suggestion that she exaggerated her difficulties or was disingenuous in her presentation.

The DAC recommended that Ms. Kennelly continue with speech language therapy for another year, with gradual reductions in frequency: twice a week for six months, followed by once a week for two months, and then once a month for four months. The DAC did not recommend a further review in one year's time.

Despite the DAC's recommendation to reduce treatments over the following year, Ms. Morrisson continued to provide and Wawanesa continued to pay for two sessions each week, until May 1998 when Wawanesa terminated treatments on the basis that the DAC had only recommended another year of therapy.

In her report of May 29, 1998, Ms. Morrison recommended to Wawanesa that Ms. Kennelly continue in therapy on a twice-weekly basis for at least four or five more months. Ms. Morrison noted that although Ms. Kennelly’s functional abilities had improved with therapy, she continued to demonstrate a "significant" cognitive-communication deficit, and it was therefore "premature" to discontinue therapy. Ms. Morrison noted that Ms. Kennelly was highly motivated and would likely continue to show improvements.

On July 30, 1998, Wawanesa advised Ms. Morrison that despite her recommendations, it was not prepared to fund treatments beyond the one-year projection made by the DAC. As Ms. Kennelly could not afford to fund the treatments, she has not received any speech therapy since the termination date of May 28, 1998.

In April 1999, at the request of Ms. Kennelly's counsel, Ms. Morrison re-evaluated Ms. Kennelly. In her report of May 14, 1999, she stated that Ms. Kennelly continued to exhibit a significant cognitive-communication deficit. She recommended that Ms. Kennelly receive treatment thrice weekly, and anticipated that she would make good progress in treatment due to her high motivation to improve and her history of achievement in therapy.

Ms. Kennelly's claim breaks down into two parts: first, she seeks the cost of missed treatments from the termination date until the reassessment, being the period of June 1, 1998 to May 31, 1999 (52 weeks). At the rate of $84 per session, twice a week, this totals $8,736. Second, she seeks ongoing speech therapy from June 1, 1999, in accordance with Ms. Morrison’s recommendations, i.e. thrice weekly at the rate of $84 per session, subject to Wawanesa obtaining a DAC assessment indicating treatments are no longer warranted.

Wawanesa's position is twofold: it argues that none of the treatments in question are reasonable or necessary. It also argues that it should not be made to pay for any missed treatments as they have not been "incurred." I shall deal with each position in turn.

C. Are the disputed expenses for speech therapy reasonable and necessary?

Wawanesa terminated speech therapy in May 1998, relying on the DAC report of May 1997, which stated that treatments should be gradually discontinued over the following year. The difficulty is that at the conclusion of that year, by letter dated May 29, 1998, Ms. Morrison advised Wawanesa that Ms. Kennelly should continue in therapy twice-weekly for at least four or five more months. In addition, in his report of July 28, 1998, Dr. Tari, a neuropsychologist, agreed that Ms. Kennelly required further treatment, although he suggested that her schedule could be reduced to once a week for a couple of months and then gradually discontinued as she progressed.

Regrettably, upon receipt of these reports, Wawanesa neither requested a further DAC nor forwarded the reports to the original DAC in order to obtain their response. Instead, it continued to rely on a year old DAC report.

I find that the reports provided by Dr. Tari and Ms. Morrison suggested that further treatments were reasonable and necessary. At the very least, upon receipt of those reports, it was incumbent upon Wawanesa to reassess Ms. Kennelly's needs before terminating treatment. Ms. Turner admitted quite candidly in cross-examination that a more current assessment would have been a more reliable indicator of Ms. Kennelly's treatment needs than a year-old DAC. She also acknowledged that had she been the applicant, she would have expected her insurer to rely on more current reports.

I find that once presented with the recommendations of Dr. Tari and Ms. Morrison for ongoing speech therapy, Wawanesa was not entitled to terminate treatments without reassessing Ms. Kennelly or at least asking the DAC to review the current reports. This is particularly so given that the expenses in question fall within the "pay pending dispute" provisions of the Schedule. Reliance on a year-old DAC, in the face of current contradictory evidence, does not excuse an insurer from its obligations under the Schedule.

These factors mandate that Wawanesa be ordered to pay Ms. Kennelly’s ongoing speech therapy from June 1, 1998 onwards, subject to Wawanesa obtaining a DAC assessment indicating treatments are no longer reasonable and necessary. The remaining question is the frequency of the treatments to which Ms. Kennelly is entitled. She seeks the cost of missed treatments twice-weekly from the termination date until the reassessment, being the period of June 1, 1998 to May 31, 1999 (52 weeks) and thrice-weekly from June 1, 1999 onwards, in accordance with Ms. Morrison’s recommendations in her most recent report. I find the frequency of twice-weekly throughout to be the fairest approach; although Ms. Morrison may have recommended an increase in order to compensate for the gap in treatment, I note that she previously treated Ms. Kennelly adequately twice-weekly and that Dr. Tari was not certain that even twice-weekly was "absolutely necessary."

D. Has an expense been incurred when the services in question are no longer available?

Wawanesa submits that even if it is obliged to pay for ongoing speech therapy, it should not have to pay for any missed treatments. It argues that Ms. Kennelly cannot be said to have "incurred" expenses for treatments she did not receive and can no longer obtain; although Ms. Kennelly can resume speech pathology treatments, she cannot replace missed treatments. I agree with Wawanesa that in this sense these benefits are forever lost and can never be recouped.

This, however, does not mean the expenses were not incurred. Ms. Kennelly established the reasonable necessity of these services, along with their amounts, and properly presented them to Wawanesa.

Wawanesa maintains that it would be unfair to make them pay for a service which can no longer be provided, and which therefore provides no benefit to Ms. Kennelly. This is not only wasteful, it argues, but it amounts to a windfall for Ms. Kennelly.

While at first glance there is some logic to this argument, if allowed it would undermine the statutory goal of prompt and timely payment for necessary medical services. Insurers might deny payment of needed services with impunity, believing that an arbitrator will not later order them to pay for the treatments, however reasonable, because they can no longer be of benefit to the applicant. As Arbitrator Palmer noted in Pintucci,⁶ "it does not behove an insurer to deny the process of the Schedule and ask to be relieved from payment at arbitration." Although an aggrieved applicant can recover a special award if the hearing arbitrator finds that an insurer unreasonably withheld benefits, this penultimate remedy cannot substitute for prompt, regular treatments during the period of entitlement.

Nor am I persuaded that this amounts to a windfall for Ms. Kennelly. She was deprived of a service that she was entitled to by statute. The termination of therapeutic support delayed her recovery, increased her frustration over her impairments, and caused her to lose some of the gains she had made over the previous year. Moreover, the insurer has had the benefit of these monies throughout the time that they should have been dispensed to Ms. Kennelly.

For all these reasons, I find that the expenses in question were incurred.

Issue #3: Is Ms. Kennelly entitled to recover the cost of psychotherapy from October 1, 1998 onwards?

A. Background

Section 36 of the Schedule requires an insurer to pay for all psychological services incurred by the applicant, provided they are reasonable and necessary expenses arising from the accident.

Following the accident, Ms. Kennelly began treatment with a psychotherapist, Katharine Armstrong, for anxiety and depression. In April 1997, Wawanesa referred Ms. Kennelly to a DAC for an opinion regarding her psychological status and what further treatment, if any, she required. By report dated June 6, 1997, Dr. Dwight Mazmanian, the DAC assessor, diagnosed a major depressive disorder of moderate severity with an associated pain disorder. He found Ms. Kennelly to be a "sincere and highly motivated individual." Dr. Mazmanian recommended that Ms. Kennelly continue with her psychological treatments. After cautioning that it was "very difficult" to predict the expected duration, he suggested that "one might reasonably expect that psychological treatment would be necessary for two to four months."

Wawanesa continued to fund Ms. Kennelly’s treatments with Ms. Armstrong, but later advised Ms. Armstrong that it planned to terminate treatments by June 1998. On May 28, 1998, Ms. Armstrong reported to Wawanesa that it was "vital" to Ms. Kennelly’s psychological well-being that treatments be maintained. On July 28, 1998, Dr. Tari, the neuropsychologist retained by Wawanesa to conduct an assessment, recommended continued treatment for a "short period of time" with provisions for periodic follow-up. Dr. Tari stressed that the reduction of services should not be "done with undue haste." By letter dated August 11, 1998, Wawanesa advised Ms. Kennelly that it intended to terminate benefits as of September 30, 1998.

Following termination, Ms. Kennelly continued to obtain psychological treatments, attending 32 sessions between October 1, 1998 and the arbitration. Because she was able to recover 90 per cent of the cost through her husband’s medical plan at work, the treatments cost her only $10 per session, for a total of $320. In addition to that sum, Ms. Kennelly seeks to recover the cost of ongoing therapy twice-monthly, subject to Wawanesa obtaining a DAC assessment indicating treatments are no longer reasonable and necessary.

B. Are the disputed expenses for psychological services reasonable and necessary?

Various opinions support Ms. Kennelly's claim. As noted above, her treating psychotherapist, Ms. Armstrong, with the concurrence of her associate, Dr. C. Netley, report that Ms. Kennelly continues to have problems managing depression and anger. They strongly supported ongoing treatment to both maintain her gains and achieve further progress. In her letter of June 7, 1999, Ms. Armstrong predicted that Ms. Kennelly will need regular counselling for "at least several more years."

Wawanesa argues that it not only complied with the recommendations of the DAC, but exceeded them; in June 1997, Dr. Mazmanian recommended only two to four months of further treatment, but Wawanesa funded treatment until September 1998. However, whatever the predictions of the DAC, I find Wawanesa had a continuing obligation to consider new evidence as it became available. As Dr. Mazmanian noted, it is extremely difficult to predict the rate of an individual's recovery in psychotherapy. Where a DAC recommends ongoing treatment, even on a gradually discontinuing basis, the insurer is obliged to further reassess the case if evidence later appears to suggest that the predictions may have been overly optimistic. In this case, once Wawanesa was presented with the recommendations of Ms. Armstrong and Dr. Netley for ongoing treatment, it was not entitled to terminate treatments without reassessing Ms. Kennelly or at least asking the DAC to review the current reports.

I do not agree with Wawanesa that this would create a never-ending cycle of assessments. If a DAC recommends gradually reduced treatment, and an applicant obtains a conflicting opinion, the insurer can resolve the matter expeditiously by having the applicant reassessed by the DAC, whereupon a report stating no further treatment was warranted would end the matter. Alternatively, if upon reassessment the DAC agreed that its original prediction was premature, it could revise its opinion. This process, rather than prolonging the matter unduly, best reflects the fluid and unpredictable nature of psychological recovery, and is in my view consistent with the legislative intent of flexible and fair treatment.

In this case, instead of responding promptly to current assessments, Wawanesa followed the recommendations of a 14-month old DAC and terminated benefits. It did not obtain an updated assessment until a few weeks before this hearing, when it referred Ms. Kennelly to a DAC for a psychological assessment. Dr. A. Bosma, who conducted the assessment, determined that there was no objective evidence that Ms. Kennelly was likely to benefit from treatment beyond September 1998. He noted that there was no improvement between her current test scores and those taken before treatment began. Dr. Bosma stated in his testimony that although Ms. Kennelly may get an "emotional lift" from therapy, a DAC assessment must consider whether this is "leading to rehabilitation, by that I mean returning her to employment or full level of functioning - and there was no evidence of that."

I find that Dr. Bosma applied the wrong test. Arbitrators have previously determined that in order for treatment to be reasonable and necessary, an applicant does not have to prove that it will return her to work or to a "full" level of functioning. Supportive care that relieves pain, be it physical or emotional, and therefore improves function, is a legitimate medical and rehabilitative goal.⁷

In any case, Ms. Kennelly demonstrated signs of improvement, albeit not of the type that is measured in traditional psychological testing. Ms. Kennelly testified about positive change in her levels of confidence and communication, in her capacity to cope with change, and in her relationship with her husband. No one disputes that these benefits are attributable to the supportive counselling that she has received, or that her problems arose from the accident.

For all these reasons, I find there is sufficient evidence that the disputed services are reasonable and necessary, subject to Wawanesa obtaining a DAC report stating otherwise.

Issue #4: Is Ms. Kennelly entitled to a special award?

Ms. Kennelly seeks a special award on the basis that Wawanesa unreasonably denied her ongoing speech language therapy and psychotherapy. She argues that Wawanesa violated the pay pending dispute provisions and ignored current opinions that supported ongoing treatment.

I have found that Wawanesa disregarded current reports which contradicted the DAC's predictions. However, Wawanesa operated under an honest, albeit mistaken belief that the DAC report relieved it from the pay pending dispute provisions. Moreover, it not only complied with but exceeded the recommendations of the DAC. Finally, somewhat unusually, Ms. Kennelly has recovered a significant sum for past treatments that are no longer available, and which she may therefore use in whatever manner she sees fit. Under all these circumstances, I do not find this an appropriate case for a special award.

EXPENSES:

I received no submissions from the parties with respect to expenses. I encourage the parties to resolve this issue on their own, failing which I may be revisited.

January 21, 2000

Deena Baltman Arbitrator

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