Neutral Citation: 2001 ONFSCDRS 140
FSCO A99-001072
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
KOLSOM KHALEDI
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
SUPPLEMENTARY DECISION
Before:
Shari L. Novick
Heard:
Written submissions were received from the parties on July 26 and August 22, 2001.
The Applicant, Kolsom Khaledi, was injured in a motor vehicle accident on February 8, 1999. In a decision dated December 13, 2000, I considered her claim for payment of an outstanding account at Recovery Rehab ("the clinic"), a clinic she attended in the months following the accident. I made certain findings and determined that she was entitled to payment of part of the account.1 I left it to the parties to calculate the exact amount owing by Allstate Insurance Company of Canada ("Allstate").
Further to my order, Allstate made a payment of $1,480 directly to the clinic. The clinic asserts that this amount is insufficient and does not reflect my findings. It sent letters to both the claims adjuster at Allstate and its counsel requesting that the balance owing be paid, but the parties were unable to resolve the issue on their own. I received a written request from the clinic on July 26, 2001 to clarify the amount owing by Allstate. This letter was forwarded to counsel for Allstate, and written submissions were received on August 22, 2001.
There are three areas of contention between the parties:
(1) Do my findings relate to all of the services provided by the clinic, or just to the physiotherapy treatment Ms. Khaledi received there?
I determined that the treatment received by Mrs. Khaledi up until May 18, 1999, when the DAC report was received, was reasonable, save for six sessions. Aside from physiotherapy treatments, the clinic's account includes charges for massage therapy treatments, a physiotherapy assessment and initial assessment report, the preparation of three treatment plans and items such as a lumbar support and cervical pillow. Some amounts were paid by Allstate prior to the hearing, although it was not clear exactly which charges these payments related to.
The clinic asserts that its entire account owing as of May 18, 1999 should be paid. Allstate submits that the only issue under consideration was Ms. Khaledi's entitlement to physiotherapy treatment, and that it is only obliged to pay the amounts charged for physiotherapy treatments that I determined were reasonable.
I agree with Allstate's submissions on this point. I heard no evidence relating to Mrs. Khaledi's entitlement to massage therapy treatment or any of the other items that form part of the outstanding account. On page three of the decision I framed the issue to be decided as follows - "Is Mrs. Khaledi entitled to payment of the outstanding account of Recovery Rehab for physiotherapy treatment she received?" Dr. Sarrafian, the Applicant's representative, focussed exclusively on the physiotherapy treatment provided to Mrs. Khaledi in his submissions and during the course of his testimony, and my order that treatment be paid for up to May 18, 1999 must be interpreted in that context.
(2) How many physiotherapy sessions is Allstate required to pay for ?
I determined that the physiotherapy treatment provided by the clinic was reasonable up to May 18, 1999, save for six sessions in April 1999. The clinic submits that Allstate is required to pay for 46 treatment sessions, while Allstate claims that it is only required to pay for 43 sessions. I have reviewed the invoice in detail and counted all of the physiotherapy sessions provided to Mrs. Khaledi between February 16 and May 18, 1999, and arrive at a figure of 54. When the six April sessions are deducted, a final figure of 48 sessions is obtained.
Given that I found that the rate charged of $100 per session was reasonable, the amount owing by Allstate for physiotherapy treatment is $4,800. Allstate made two payments in April and May of 1999, totalling $2,820. The balance owing is therefore $1,980.
(3) What is the correct amount of interest owing, if any?
The clinic claims that interest is payable on the amount ordered owing from June 30, 1999 to the date Allstate made the $1,480 payment in January 2001, at the rate of 2% per month. Allstate submits that interest is not payable on the amount determined to be owing until such time as the dispute is resolved, which in its view was December 13, 2000, the date of my decision. Section 46 of the Schedule provides for the payment of interest on overdue amounts. It states:
- (1) An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Part.
(2) If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly.
Director's Delegate Draper recently considered the question of when interest becomes payable in the appeal decision in Bajic and Pafco Insurance Company Ltd. and Zurich Insurance Company.2He rejected Pafco's submission in that case that interest does not become payable until a dispute is finally determined through the dispute resolution process. He made the following comments on the issue:
In my opinion, Pafco's interpretation goes too far. It suggests that interest rate is only payable if the insurer fails in its duties - a test similar to s.282(10) of the Insurance Act for special awards. While "overdue" must be given meaning, I find no indication that the legislative intention is to relieve insurers from paying interest whenever the insured person's entitlement is questionable. On the contrary, the high rate of interest imposed by s.68 is clearly meant to encourage insurers to pay benefits in a timely fashion.
Pafco's interpretation would be far more attractive if the legislation included an option to order interest at a lower rate. However, it does not. Pafco suggests this is an oversight, but I find no basis for this assertion. As Director's Delegate Naylor stated in Sebastian and Canadian Surety Company, (FSCO P96-00032, July 28, 1998), the interest provisions are remedial, not punitive. They are "designed not only to compensate applicants for the value of money withheld but to further the system's fundamental goal of ensuring prompt payment of benefits for an injured person's medical and vocational rehabilitation, their care or their day-to-day financial support."3 I agree with this analysis...
Director’s Delegate Draper went on to say that interest may not run in circumstances where an insured person acted in a manner that prevented the insurer from assessing his or her entitlement. I note that the Bajic case was governed by the 1994 SABS. That version of the Schedule does not contain a provision comparable to subsection 46(1), which attempts to explain when an amount payable in respect of a benefit is "overdue."
In the Bill 59 Schedule that applies to this case, the legislators have specified that an amount is overdue if "the insurer fails to pay the benefit within the time required under this Part." Section 38 addresses the parties' obligations with respect to medical and rehabilitation expenses claimed. Paragraph 38(14)(b) provides that "subject to the determination of the dispute in accordance with section 279 to 283 of the Insurance Act," an insurer is not required to pay a treatment expense if a DAC report assessing that expense provides an opinion that it is not reasonable and necessary.
The application of subsection 46(1), namely that a benefit is overdue if the insurer fails to pay within the time required, is not obvious in this scenario. On the one hand, the provision permits the insurer not to pay the expense claimed if the DAC assessors opine that it is not reasonable. On the other hand, that right is clearly subject to the dispute being determined at arbitration. In my view, given the remedial nature of the interest provisions and the comments cited in the Bajic appeal regarding their purpose, I find that when an amount is subsequently determined by an arbitrator to be reasonable, it is implicit that it was reasonable all along. It would then follow that an applicant would be entitled to interest on the benefits owing at the prescribed rate from the date the amount first became owing.
Applying that analysis to the facts of this case, Allstate is required to pay interest at 2% per month compounded on the $1,480 it has already paid from June 30, 1999 until January 17, 2001, the date it made that payment, as well as interest at the same rate from June 30, 1999 until the date it ultimately pays the additional $500 that I have found remains owing. I leave it to the parties to calculate the exact amount of interest owing in accordance with my findings above.
September 27, 2001
Shari L. Novick
Arbitrator
Date
Neutral Citation: 2001 ONFSCDRS 140
FSCO A99-001072
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
KOLSOM KHALEDI
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
ARBITRATION ORDER (NO. 2)
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Allstate shall pay to Mrs. Khaledi the amount of $500, in addition to the payment it has already made for the physiotherapy treatment she received at Recovery Rehab.
Allstate shall pay interest on the $1,480 it has already paid as well as the additional $500 set out above from June 30, 1999 until the date of payment, at the rate of 2% per month, compounded monthly.
September 27, 2001
Shari L. Novick
Arbitrator
Date