Deborah Turner v. State Farm Mutual Automobile Insurance Company, 2000 ONFSCDRS 136

Neutral Citation: 2000 ONFSCDRS 136

FSCO A99-000578

BETWEEN:

DEBORAH TURNER

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE (Corrected Decision)

Before: Fred Sampliner

Heard: January 24, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Stanley Tessis for Ms. Turner Robert Franklin for State Farm Mutual Automobile Insurance Co.

Issues:

The Applicant, Deborah Turner, was injured in a motor vehicle accident on June 16, 1993, and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (State Farm), payable under the Schedule.¹ State Farm claims that Ms. Turner did not file for arbitration of her disability benefits and treatment expenses within the limitation period, and that an arbitrator may not hear their merits. The parties did not resolve their disputes through mediation, and Ms. Turner applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

What are the benefits and treatment expenses which may not proceed to hearing because Ms. Turner did not file her application for arbitration within the limitation period set out in subsection 281(5) of the Insurance Act?

Result:

Ms. Turner's claims for further disability benefits after June 16, 1996, taxi and travel expenses, prescriptions, cognitive aids and assistive devices, biobeam, rehabilitation at the Centre for Traumatic Brain Injury and Columbia Rehabilitation Centre are statute-barred and may not proceed to hearing.

EVIDENCE AND ANALYSIS:

A claimant must commence an arbitration of a disputed benefit or category of benefits within two years² of the insurer's delivery of a clear and unequivocal written refusal to pay a claim.³This time period promotes three objects: it allows the insured person a reasonable length of time to decide whether to contest the insurer's decision, it helps prevent evidence from becoming stale with time, and it establishes finality to disputes.

History of the Parties' Disputes:

The evidence is that these parties initially resolved their disputes by negotiation. State Farm agreed to reinstate Ms. Turner's disability benefits at a May 1994 mediation, and at a later mediation in 1995 both parties agreed there were no contentious medical or rehabilitation items. The situation changed during the winter of 1996. Mediation did not resolve Ms. Turner's claim for $5,568.13 for vocational rehabilitation at Therapeutic Rehabilitation Services, Inc. (TRS) or her claim for $74,696 in rehabilitation expenses at the Centre For Traumatic Brain Injury (CTBI). In April of that year, State Farm rejected Ms. Turner's use of taxis to travel to appointments, her claims for cognitive aids, audio tapes and night lights, and in the following month denied funding for a biobeam device.

State Farm also demanded more proof that Ms. Turner's expenses were reasonable and necessary. Correspondence indicates the company's unwillingness to accept further billing for medical and rehabilitation without specific itemization of the expenses, together with an expert opinion explaining its connection to treatment of Ms. Turner's accident injuries.

Both Ms. Turner and her solicitors received the June 19, 1996 Assessment of Claim form respecting her disability benefits,⁴ wherein the adjuster ticked off the box marked "portion of claim denied," and wrote:

"Benefits terminated June 16\96 in accordans (sic) with OMPP 2.35(b) as your injuries do not continuously prevent you from engaging in substantially all of the activities in which you would normally engage."

The adjuster similarly marked the "portion denied" box in the category for supplementary medical and rehabilitation benefits, stating:

No invoices submitted by Centre for Traumatic Brain Injury Clinic will be considered as the treatment was not reasonable and necessary for injuries sustained in the MVA.

On the same day, State Farm wrote to the Centre and Ms. Turner's lawyers, explaining its position and rejecting the invoices.

On October 8, 1996, State Farm addressed Ms. Turner's future treatment expenses:

It is State Farm's position that Ms. Turner has undergone sufficient treatment to recover from her injuries. Based on the medical documentation compiled, no further treatment is required.

Shortly thereafter, the company formally rejected Ms. Turner's specific claims for additional taxi expenses to her appointments, use of Scarborough Support Services, a videotape, cognitive aids and nerve block injections.

Mediation:

Ms. Turner's counsel filed an application for mediation on October 28, 1996 stating that she received disability benefits until June 16, 1996 at $250 per week. Her lawyer checked the box "length of time benefits were paid," framing the issue as "whether the insured is disabled under s.235(b) of OMPP."

Ms. Turner's subsequent 1996 mediation includes the treatment expenses which State Farm had rejected. In March 1997, State Farm refused Columbia Rehabilitation Centre's billing, briefly explaining Ms. Turner's arbitration option.

When the law firm of Iler, Campbell and Klippenstein undertook to represent Ms. Turner in December 1997, the firm requested the status of all her claims. Her counsel clearly expressed concern about the limitation period in correspondence during early 1998. They requested and received copies of the entire file from State Farm in March 1998.

Ms. Turner's application for arbitration was received by the Commission on June 10, 1999, nearly three years after the June 19, 1996 assessment.

Ms. Turner's Arguments:

Ms. Turner argues that the notices she received regarding her disability benefits, medical and rehabilitation expenses were not satisfactorily clear or unequivocal. She urges me to adopt a strict view respecting State Farm's notice obligations, that an insurer's assessment notice can have no ambiguity or defect due to the onerous consequence that the limitation imposes on insureds.

Specifically, Ms. Turner claims the June 19, 1996 notice gave her incorrect reasons for State Farm's denial and did not identify the amounts denied. Without clarification, Ms. Turner claims she did not believe her disability benefits were terminated.

Ms. Turner essentially argues that the scope of review is limited to the document which is claimed to trigger the limitation period. I disagree, and rely on the case law where arbitrators have reviewed the parties' dealings both before and after the notice.⁵

Disability Benefits:

The evidence demonstrates that prior to June 19, 1996, Ms. Turner understood a conflict was imminent. In correspondence and at the mediations, State Farm continued to deny her taxi expenses, rehabilitation, vocational training and various other minor expenses.

I find that the words State Farm used in the June 1996 notice clearly convey that Ms. Turner's disability benefits were terminated. The language sets out the period of time and weekly amount that Ms. Turner's disability claim was paid, which explains why the adjuster indicated a portion of her claim was denied. I am convinced that the words "Benefits terminated June 16/96" are sufficiently plain and simple for the understanding of a layperson, and Ms. Turner did not elicit any evidence that she or her representatives misunderstood.

Ms. Turner's filing for mediation of her disability benefits, four months after the June notice provides the clearest evidence that she understood the decision. I find that Ms. Turner knew State Farm terminated her disability benefits after receiving the June 19, 1996 notice.

State Farm's acknowledgment to mis-stating the disability test on the June 19, 1996 assessment does not affect the limitation period. Section 24(8) of the Schedule requires insurers to "give written notice to the insured person giving reasons for the refusal. "Adding that insurers provide "correct" reasons reads in an additional requirement to the legislated policy where there is no inconsistency or ambiguity with the subsection's language.⁶

In the result, I find that State Farm's June 19, 1996 decision to terminate Ms. Turner's disability benefits was conveyed to her in a clear and unequivocal manner, and that she is precluded from arbitration on the issue of her claim for further disability benefits.

Transportation Expenses:

State Farm denied Ms. Turner's claims for taxi fares in a letter during April 1996, and requested an explanation why they were necessary. The evidence is that State Farm did not relent in its position, although Ms. Turner continued to submit further taxi charges. Ms. Turner mediated this issue in the fall of 1996.

Case law has established that an insurer's request for a additional information to support an expense does not necessarily change an insurer's refusal.⁷ Nor is there is any evidence here that State Farm misled Ms. Turner and her solicitors or that the company changed its position on taxi usage. Again, it is Ms. Turner's mediation of the taxi issue following the notice which indicates most clearly that she understood the nature of the language used in State Farm's notice.

I find that Ms. Turner received a clear and unequivocal denial of her claims for taxi expenses in April 1996, and that she did not file for arbitration of her taxi expense claims within the statutory limitation period.

Additionally, I find that Ms. Turner's claims for travel expenses from Scarborough Support Services which were submitted to State Farm in November 1996 were specifically rejected in a clear unequivocal assessment notice the same month. Thus, Ms. Turner's claims for taxi expenses and her submitted travel claim for $110 are barred by the time limitation.

However, State Farm did not terminate the entire transportation expense category. The company agreed at the time of the denial to fund Ms. Turner's public transit fares or reimburse her for automobile usage.

Vocational Rehabilitation/Case Management:

Ms. Turner filed applications for mediation in February and October 1996 concerning her two vocational rehabilitation accounts (totalling $5,568.13) at Therapeutic Rehabilitation Services. State Farm's argument is that its specific denial of these expenses should be inferred from its October 8, 1996 notice that she had undergone sufficient treatment, together with her mediation of the issue shortly thereafter.

The Schedule imposes a strict requirement that insurers "forthwith give written notice to the insured by giving reasons for the refusal" of an amount claimed. The section anticipates that in most cases insureds will submit their ongoing medical and rehabilitation claims and insurers will specifically review and respond to each one.

In my opinion, it is imperative that an insurer clearly identify its intent to deny multiple categories of treatment where ongoing claims are being submitted, so the insured person understands the status of the claims and implications of the insurer's decision. An insurer cannot successfully claim that a notice triggers the commencement of the limitation period where individual claims are not precisely denied.

I find State Farm's October 1996 general denial did not satisfy the Schedule's notice requirements respecting her vocational rehabilitation. Ms. Turner may proceed to arbitration hearing on her claims for vocational rehabilitation accounts of December 14, 1995 ($2,672.49) and October 31, 1995 ($2,895.64).

The evidence does not reflect that Ms. Turner submitted her claims for case management from Tishman Group ($342.70) to State Farm until she applied for mediation on other matters, one in November 1996 and the other in November 1998. However, State Farm did not send Ms. Turner the required written rejection of either the general category of case management or this particular expense.

In the absence of a written denial relating to case management expenses, I am not prepared to find that the failure of the mediation or State Farm's broad rejection of all medical and rehabilitation expenses satisfies the statutory requirement for a specific response to this claim.

I find that State Farm did not provide Ms. Turner with a clear and unequivocal denial of Tishman Group's case management expense, that the limitation period does not apply and she may proceed to hearing on the merits of that claim.

Nerve Block Injections:

In its November 15, 1996 notice, State Farm denied coverage for Ms. Turner's treatment with nerve block injections, stating it was experimental and covered by the Ontario Health Insurance Plan. According to Ms. Turner's arbitration filing, the treatment cost $2,974.

I am satisfied that State Farm clearly identified and unequivocally denied the nerve block expense in its November 15, 1996 notice. I find that Ms. Turner's arbitration respecting the nerve block treatment was not filed within the time limit and the claim may not proceed to hearing.

Cognitive Aids and Biobeam Device:

Ms. Turner's April 8, 1996 application to State Farm claimed $300.45 for "various expenses," without itemizing the items. On April 19, 1996, State Farm responded to Ms. Turner's solicitors:

Expenses in the amount of $300.49 have not been reimbursed. We are not responsible for cognitive aids as it has not been proven that your client suffered a brain injury. We will be asking Dr. Berry to address this issue.

In a November 15, 1996 assessment, State Farm denied Ms. Turner's claims for cognitive aids as not reasonable or necessary, but did not specify the portions rejected. The itemized list Ms. Turner produced for her February 1999 mediation shows that she incurred $279.63 in costs for 10 cognitive aids, but only $36.88 related to the time when she originally applied for these devices.

Ms. Turner's evidence of the amounts she incurred or claimed for cognitive aids is unclear. However, I find that State Farm's November 15, 1996 notice gave her a sufficiently clear and unequivocal notice that it would not accept this particular type of expense.

Likewise, I also find that State Farm provided a clear and unequivocal refusal to pay Ms. Turner's claim for a biobeam device. State Farm wrote her lawyers on May 27, 1996, stating:

You have also requested funding for a biobeam in the amount of $342.70. It is my understanding that the biobeam is an experimental device and in accordance with the Statutory Accident Benefits Schedule, section 36(2), we are not liable to pay any expenses for goods and services that are experimental in nature.

The letter suggests that State Farm would reconsider the claim only if Ms. Turner could demonstrate the device was not experimental and was necessary and reasonable for treatment of her accident injuries.

I find that Ms. Turner's arbitration concerning cognitive aids and the biobeam device is not timely, and that she may not proceed to hearing on these claims.

Rehabilitation and Assistive Devices:

After mediation failed to resolve Ms. Turner's rehabilitation account ($74,696.28) at the Centre For Traumatic Brain Injury (Centre), State Farm formally rejected the other assistive devices she claimed ($342.92) by sending a May 6, 1996 letter to the Centre. It was not forwarded to Ms. Turner or her solicitors, and I find this notice does not commence the limitation period.

The June 19, 1996 assessment notice which State Farm sent Ms. Turner also mentioned the Centre's expenses. Written under the box marked 'portion of claim denied", the adjuster said:

No invoices submitted by Centre for Traumatic Brain Injury Clinic will be considered as treatment was not reasonable and necessary for injuries sustained in the MVA.

State Farm reiterated its denial of this treatment in a letter to Ms. Turner's solicitors, dated October 8, 1996:

As stated previously, it is State Farm's position that the rehabilitation that was conducted at the Centre for Traumatic Brain Injury was not reasonable and necessary in accordance with the Statutory Accident Benefits Schedule for Ms. Turner's rehabilitation from the above stated motor vehicle accident. We will not be remitting payment for these invoices.

I find that State Farm's June 19, 1996 notice constitutes a clear and unequivocal refusal to pay any of Ms. Turner's claims for rehabilitation and assistive devices at the Centre. If that assessment is insufficient in some respect, I find that State Farm's October 8, 1996 letter provided her with proper notice of the denial. Thus, I find that Ms. Turner's application for arbitration was not timely and she cannot proceed to arbitration respecting the Centre's rehabilitation expenses and assistive devices.

Columbia Rehabilitation Centre (Columbia) directly sent invoices to State Farm for Ms. Turner's treatment in the fall of 1996 and winter of 1997. State Farm's January 30, 1997 response to Columbia did not notify either Ms. Turner or her solicitors that the company rejected the expenses. State Farm did copy Ms. Turner with its response to Columbia's next billing statement ($1,766.71) on March 24, 1997, stating:

I received your invoice for account number 00296, dated January 31, 1997. As we previously informed you and Ms. Turner, we will not honour these invoices. It is State Farm's position that the treatment received by Ms. Turner is not reasonable and necessary due to injuries sustained in the motor vehicle accident, If you dispute this issue, your only recourse is to have Ms. Turner file for arbitration on this matter.

This notice identified the amount, services and reasons for State Farm's rejection.

I find the March 24, 1997 letter constitutes a clear unequivocal denial of the Columbia accounts. Ms. Turner's January 1997 mediation of her expenses at Columbia occurred before the expiry of the two-year limitation period on that issue, and concluded with the mediator's report on March 12, 1999. Ms. Turner's June 10, 1999 application for arbitration on this issue falls outside the limitation period, and she may not proceed to arbitration on the merits of Columbia's account ($1,766.71).

Prescriptions:

On April 19, 1996, State Farm sent Ms. Turner's solicitors an assessment form and letter explaining its denial of her prescription expenses ($1,296.99), and requesting a statement from her doctor of the necessity for each medication. State Farm's November 15, 1996 reiterated the company's previous position. By the time Ms. Turner filed for mediation on her prescriptions later that month, the total expenses had risen to $2,157.

State Farm's April 19, 1996 notice explicitly sets out the amount and basis for denying Ms. Turner's $1,296.99 prescription expenses, satisfying the company's statutory obligation to respond to her claim. The evidence that Ms. Turner filed for mediation of her ongoing prescriptions directly after State Farm's second assessment notice indicates quite clearly that she understood that the denial encompassed her continuing expenses. I find that Ms. Turner is precluded from arbitration of her claims for $2,157 in prescription expenses.

EXPENSES:

The parties submitted an enormous amount of material. The joint medical and rehabilitation briefs were totally irrelevant to the matter here, and a great deal of the remaining paper (such as Ms. Turner's tax returns, employment records, group accident insurance documents) had nothing to do with the time limitation question. I estimate there are about 50 pages of material that are directly relevant.

Both counsel did not heed my suggestion that they cull the material, re-submitting the same reorganized evidence. The preparation and resubmission of this extraneous material is both wasteful and extravagant, especially in a process that is supposed to be simple and cost efficient.

If need be, costs may be assessed with consideration of these factors.

July 24, 2000

Fred Sampliner Arbitrator

Date