Neutral Citation: 2000 ONFSCDRS 138

FSCO A99-000321

BETWEEN:

HAGOS TESFAI

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before:

Stewart McMahon

Heard:

January 25, and 26, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Roland Spiegel for Mr. Tesfai

John Dean for Allstate Insurance Company of Canada

Issues:

The Applicant, Hagos Tesfai, was injured in a motor vehicle accident on May 3, 1998. He applied to Allstate Insurance Company of Canada ("Allstate"), for payment of an assessment conducted by DEAHY Medical Assessments Inc. ("DEAHY"), pursuant to section 24 of the Schedule.¹ Allstate refused the request for payment. The parties were unable to resolve their dispute through mediation, and Mr. Tesfai applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Is Mr. Tesfai entitled to payment of DEAHY's account in the sum of $2,461 pursuant to section 24 of the Schedule?
Is Mr. Tesfai entitled to interest on any overdue amount?
Is Mr. Tesfai entitled to a special award?
Is either party entitled to its expenses of the arbitration?

Result:

Mr. Tesfai is entitled to partial payment of DEAHY'S account. Allstate shall pay $1,498 plus interest in accordance with section 46(2) of the Schedule.
The claim for a special award is dismissed.
I may be spoken to on the question of expenses if necessary.

EVIDENCE AND ANALYSIS:

(i) Overview

On May 3, 1998, Mr. Tesfai was struck by a vehicle while he was crossing the street. He sustained a severe fracture of his right ankle that required open reduction and internal fixation. He also bruised his hip, and suffered soft tissue injuries to his shoulder, neck and back. In mid-October 1998, DEAHY conducted a multidisciplinary assessment. DEAHY sent the bill totalling $2,461 directly to the Insurer, asking for payment in accordance with section 24 of the Schedule. The Insurer denied the benefit.

The Insurer's response to the application for arbitration cites three grounds for denying the benefit:

First, the examination did not fall within the purview of section 24 of the Schedule.
Second, the examination constituted a duplication of services. During the course of the hearing this defence was expanded. The Insurer argued that it was unreasonable to embark upon the assessments in light of the already available information and the limited issues that were in dispute.
Third, the fees were unreasonable for the services rendered.

I will deal with each of these three defences in turn.

(ii) The statutory context

Section 24 provides in part:

(1) The insurer shall pay for all reasonable expenses incurred by or on behalf of an insured person for the purpose of this Regulation in obtaining and attending an examination or assessment or in obtaining a certificate, report or treatment plan, including: (Emphasis added)

(a) fees charged by a person who conducts an examination or assessment or provides a certificate, report or treatment plan,

(b) fees charged by a designated assessment centre; and

(c) transportation expenses incurred in transporting the insured person to and from an examination or assessment, including transportation expenses for an aid or attendant.

(iii) Was the assessment conducted "for the purposes of this Regulation "?

The initial referral letter is signed by the family doctor. The Insurer pointed out that there is nothing in the doctor's notes indicating why he made the referral. The Insurer argued that in the absence of some explanation from the doctor, who did not testify, the Applicant has failed to establish that the assessment was conducted "for the purpose of this Regulation."

The purpose of the assessment can often be found in the report itself. If the report addresses issues found in the Regulation, such as disability and the need for treatment and rehabilitation, it is fair to draw an inference linking the two.

To my mind it is evident from a review of the report that the examinations were undertaken "with respect to this Regulation," and the absence of any specific reference in the doctor's note as to why he was making the referral is not fatal.

DEAHY conducted an orthopaedic examination, a physiotherapy assessment and a functional capacity evaluation. The orthopaedic component was concerned with a review of the physical injuries sustained in the accident, and Mr. Tesfai's ongoing limitations. In addition, it commented on the need for further treatment and Mr. Tesfai's ability to return to work. The physiotherapy assessment was concerned with the need for further therapy. The functional capacity assessment, as its name implies, examined Mr. Tesfai's physical abilities. Each of these reports addressed matters dealt with in the Regulation.

The reports might be useful in other contexts, such as a tort action, or an action against London Life, which provided income protection and some extended health coverage. However, the language of the reports clearly links the assessments to the type of benefits provided for in the Schedule. The fact that they might have a secondary collateral use does not take them outside of the scope of section 24.

I find that the assessments were conducted "for the purposes of the Regulation."

(iv) Was it reasonable to undertake the assessments?

This question raises two different issue. One, was it reasonable to conduct the assessments in light of the benefits that were in dispute at the time? Two, were the assessments reasonable in light of information that was available from other sources without the need for an assessment? I will deal with each in turn.

(a) Was it reasonable to conduct the assessment in light of the benefits in issue?

In this case, the question of whether or not the assessments were reasonable is complicated by the fact that the request for the assessments was made on August 14, but the assessments were not done until a little over two months later, on October 20 and 22.

In my view, the inquiry into the reasonableness of the assessments should not arbitrarily be frozen as of the date of the request. As this case points out, some changes in circumstances may tend to cast doubt on the need for an assessment. Other changes may reinforce the need for an assessment. When assessing the insurer's obligation to pay for an assessment, all of the circumstances must be taken into account, including any changes that occur in the interim between the request and the assessment. The fluid nature of the inquiry can be illustrated by the Insurer's own submissions. It argued against the need for a physiotherapy assessment based upon the circumstances at the time the family doctor referred Mr. Tesfai. It then argued against the need for an FCE based upon the circumstances at the time the assessment was actually conducted.

The Insurer argued that a physiotherapy assessment was not justified because at the time the family doctor made the referral, it was paying the physiotherapist's account without protest.

However, by the time the assessment was undertaken, the adjuster had advised the physiotherapist that she would pay for the current treatment plan, but any further treatment would be refused. The physiotherapist was intent on continuing treatment.

In light of the Insurer's rejection of the treatment centre's assessment, I think that it was reasonable to conduct a physiotherapy assessment by a third party.

The Insurer initially argued that the referral for an FCE was unnecessary because, at the time, it was paying IRBs and had given no indication that it disputed Mr. Tesfai's entitlement to this benefit. However, Mr. Tesfai testified that during an IME conducted the day before the referral, he was told by the IME assessor that he should be returning to work. This would suggest that assessments concerned with his fitness to return to work were reasonable.

The Insurer argued in the alternative that at the time the assessment was undertaken, two months later, Allstate was no longer paying IRBs because Mr. Tesfai was receiving an income benefit from London Life. The Insurer argued that if it was not paying Mr. Tesfai an IRB, it was unreasonable to conduct an assessment that focused on his ability to work.

This argument overlooks the fact that Allstate was still responsible for Mr. Tesfai's rehabilitation program. At some point in this rehabilitation process it would be prudent to order an FCE to measure his functional capacity in relation to his job demands.

Notwithstanding that the Insurer was no longer responsible for paying IRBs I find that the functional capacity evaluation was useful in the context of Mr. Tesfai's treatment needs, and that accordingly it was reasonable to conduct the assessment.

(b) Were the tests necessary given available information from other sources?

This issue relates principally to the orthopaedic examination.

At the time of the referral to DEAHY, the family doctor had received nothing from the treating orthopaedic surgeon other than a few radiological reports and a couple of very brief consultation reports. Shortly after the referral, he received another equally brief consultation note. If the family doctor had wanted a detailed report from an orthopaedic surgeon, the most logical source would have been from the treating surgeon.

The adjuster wrote to the surgeon in early July asking for a status report. The doctor replied to the Insurer in early August. However, there was no evidence that this report was even sent to the Applicant or his family doctor or lawyer. There was certainly no evidence that the orthopaedic assessment undertaken by DEAHY was designed to address any deficiencies in the treating surgeon's report or treatment.

In my view, the family doctor should have written to the treating surgeon asking for a detailed report before having his patient assessed by another orthopaedic surgeon. There was no apparent benefit to the family doctor in obtaining an opinion from a non-treating surgeon. This was not a situation similar to the physiotherapy assessment, where the treating facility's opinions were being challenged and where it was legitimate to seek a second opinion.

Had Mr. Tesfai ordered a report from the treating surgeon and then demanded payment of the account pursuant to section 24, I would likely have found the request reasonable. However, that question is not before me. I have been asked to determine if it was reasonable for the Applicant to undergo an assessment by another surgeon. I find that it was unreasonable to conduct an orthopaedic examination at DEAHY's facilities, and the Insurer is not responsible for the $963 that represents the portion of the account related to the fee for the orthopaedic assessment.

(v) Were the fees charged reasonable?

I turn now to the final question. Were the fees charged reasonable? In the event that I am wrong concerning the reasonableness of conducting the orthopaedic examination, I will address the fees related to all three assessments.

DEAHY's account is itemized as follows:

Physiotherapy assessment

$450

Orthopaedic assessment

$900

Functional abilities assessment

$950

GST

$161

TOTAL

$2,461

The Insurer advanced two arguments on this issue:

the fees exceeded what other assessors charged;
the quality of the assessments and the reports demanded a reduction in the fee.

There was little direct evidence related to the first argument and it can be dealt with briefly.

Dr. Jacobs testified that the fees charged for the three assessments were in keeping with the fees ordinarily charged by other assessment centres.

The Insurer did not call any direct evidence to contradict Dr. Jacobs. However, counsel pointed out that the fee charged by the orthopaedic surgeon who conducted the IME was $802.50. Counsel also pointed out that in Tsimidis and Liberty Mutual Insurance Company (FSCO A98-000388, January 6, 1999) there is reference to a fee of $800 for a functional capacity evaluation that was done at about the same time as the assessment being considered in this case.

In Plows and Jevco Insurance Company (OIC A-000175, January 16, 1992) Senior Arbitrator Rotter defined "reasonable" in the context of rehabilitation expenses by reference to the Oxford Dictionary definition which included a measure that is "not greatly less or more than might be expected." That measure strikes me as fair in the present context.

The fees for the orthopaedic IME, and the FCE referred to in Tsimidis are lower than the fees charged by DEAHY, but not drastically so. I find that the fees charged by DEAHY were in keeping with the fees ordinarily charged for similar assessments.

I heard some limited evidence concerning the amounts that the individual assessors charged DEAHY for their services, and a few references to how long the assessments took. Frankly, this evidence in isolation was of only marginal use to me in my deliberations and did not persuade me that the fees charged were unreasonable.

I turn now to the second argument. Do the quality of the assessments and reports demand a reduction in the fee?

The Insurer relied upon Arbitrator Joachim's decision in Tsimidis in support of the contention that it is appropriate to discount the assessment fee where the "quality and value of [the] assessments and reports do not justify the expense." In general, I agree with this contention. However, I think that the caution voiced by Director's Delegate Naylor in Salvaggio and Simcoe & Erie General Insurance Company (FSCO P97-00062, January 21, 1999) should be heeded. At the hearing stage, the arbitrator had drastically reduced a psychologist fee on the basis that it offered the patient little new in the way of insight into his vocational options. The Director's Delegate suggested that careful scrutiny of the report is essential when deciding what weight to give it when considering the treatments being contested. However, she went on to say that when assessing whether the insurer is responsible for paying the fees charged for the assessment, care must be taken not to judge the value of the report "solely with the benefit of hindsight."

In addition, I believe that the focus should be on a review of the time, care, and expertise that goes into the assessment, rather than on the correctness of the opinion.

In this case the Insurer argued that inaccuracies in the reports bring into question their value. Two examples were highlighted by counsel. One was a misstatement of the date of the accident in the physiotherapist's report. The second was the failure of the orthopaedic surgeon to comment upon the discrepancy between Mr. Tesfai's statement that he thought he was unconscious after the collision, and the notation in the hospital records that there had been no loss of consciousness.

The date of the accident was properly stated in other portions of the physiotherapist's report. I am satisfied that it was nothing other than a "typo." The failure to deal with the loss of consciousness issue is more problematic because the physician does suggest the possibility of post-concussive headaches. However, in the scheme of things this issue was a very small part of the doctor's assessment and report. More to the point, these are isolated deficiencies that are apparent only with the type of after the fact scrutiny that Director's Delegate Naylor cautioned against. The Insurer was not able to point to widespread inaccuracies that would justify a reduction in the fees.

Both the orthopaedic surgeon and the physiotherapist reviewed the history of the accident and the injuries sustained. They considered detailed descriptions of Mr. Tesfai's work demands and conducted physical examinations that appeared to me to be consistent with what one would generally expect.

Counsel characterized the orthopaedic report as analogous to a weather report that predicted sunny periods with a chance of rain. He suggested that such a weather report may not be inaccurate, but neither is it useful. He suggested the orthopaedic report fell into the same category. I reject this characterization. The report follows the pattern typical of such reports. The doctor summarizes his interview with Mr. Tesfai including the details of the accident, his job demands, the course of his treatment, and his present complaints. It indicates that the doctor then conducted a typical physical examination and reported his findings. Finally, the doctor summarized his impressions and set out his opinion on Mr. Tesfai's ability to return to work and his suggestions for further treatment. If this information had not been as readily available from Mr. Tesfai's treating orthopaedic surgeon, I would have allowed the account in full.

Counsel for the Insurer dismissed the FCE on the basis that it was a "self-fulfilling prophesy," providing no more insight than the self evident statement that the ankle injury would limit Mr. Tesfai's function. Again, I disagree. The uncontradicted evidence of Dr. Jacobs was that the ARCON assessment is useful because it provides empirical data that can be used to determine the extent of the individual's abilities and deficiencies.

The Insurer also questioned the value of the physiotherapy report, suggesting that it did not comment upon whether or not the treatment plan being contested met Mr. Tesfai's needs. It would have been preferable if the report had referred specifically to the treatment plan, but it is unfair to characterize it as useless. The assessor clearly set out his opinion that treatment had been prematurely terminated and that Mr. Tesfai would benefit from "an active exercise program designed to improve symptoms of pain and decreased range of motion."

In conclusion I would not reduce any of the accounts on the grounds that the value of the work done did not justify the fees charged.

(vi) Should DEAHY's account have been recovered from OHIP?

The Insurer argued that DEAHY's account ought to have been recovered from OHIP rather than the Insurer. The following passage from a letter written by W. Novak a Service Manager with the Ministry of Health to Dr. Jacobs, dated April 29, 1999, puts this matter to rest:

A patient that is referred to a medical assessment unit that does multi-disiplinary assessments including a medical assessment to obtain information for insurance purposes is considered third party billing and is not payable by OHIP.

(vii) Special Award

I dismissed out of hand a number of the adjuster's initial reasons for denying the claim. However, it was not until the hearing that the Applicant addressed the Insurer's response that the claim should first be presented to the collateral insurer. In addition, while some of the individual positions taken by the Insurer at the hearing were weak, it was successful on having the claim for the orthopaedic portion of the assessment dismissed. Taken as a whole the Insurer's position was reasonable.

No special award is owing.

(viii) Rulings during the course of the hearing

A number of procedural issues were vigorously argued by the Applicant's representative. Two merit brief mention.

Mr. Tesfai's representative served summonses on the Insurer's president, ombudsman, and the "head office claims manager." At the commencement of the hearing, Counsel for the Insurer sought to quash the summonses on the grounds that none of these individuals had any involvement in the handling of this file. During argument, the Applicant's representative indicated that he has repeatedly tried, without success, to meet with senior executives of various insurers. His stated concern is that the industry's front-line decision makers are ill-equipped to make decisions regarding entitlement to benefits, including the right to have assessments paid for pursuant to section 24. In the face of the senior executives' refusal to meet with him, he was seeking to cross-examine these individuals in this hearing. He argued that the front-line workers' lack of knowledge and understanding of rehabilitation issues went to the heart of his claim for a special award. As I explained to Mr. Spiegel, a special award does not turn on whether the decision maker was ill equipped to make the decision. The issue turns on whether or not the decision itself was reasonable or unreasonable. This issue demands a focus on the decision and potentially the reason for the decision, rather than a focus on the decision maker. It certainly must focus on the case at hand and not on general concerns about the way the insurance industry trains or equips its front-line decision makers.

In addition, as I indicated to Mr. Spiegel, I am charged with controlling the proceeding. If arbitration is to remain a viable option, it must remain economically feasible to present a case and defence in reasonable time. Allowing Mr. Spiegel to call all of the witnesses he had summonsed would have required a hearing that extended well beyond what could have been justified keeping in mind the issues before me.

I quashed the summonses for all three of these individuals.

The second matter concerns Mr. Spiegel's request to cross-examine Ms. Lowndes, who was the claims representative handling the file when the request for payment was denied. Ms. Lowndes was on maternity leave at the time of the hearing, and the Insurer proposed to present the claims manager in her stead. Mr. Spiegel sought to adjourn the hearing until Ms. Lowndes could be produced for cross-examination. I deferred the question until after I had heard from Mr. Barber.

It certainly would have been preferable if Ms. Lowndes could have been available, but after hearing from Mr. Barber and reviewing Ms. Lowndes' log notes I was satisfied that the Applicant was not prejudiced by the inability to cross-examine Ms. Lowndes. I denied the request for an adjournment.

EXPENSES:

I may be spoken to about expenses if necessary.

July 26, 2000

Stewart McMahon Arbitrator

Date