Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2001 ONFSCDRS 196

Appeal P00-00048

OFFICE OF THE DIRECTOR OF ARBITRATIONS

HAGOS TESFAI

Appellant Respondent on Cross-Appeal

and

ALLSTATE INSURANCE COMPANY OF CANADA

Respondent Appellant on Cross-Appeal

Before:

Nancy Makepeace, Director’s Delegate

Counsel:

Mr. Roland Spiegel (for Mr. Tesfai)

Mr. John D. Dean (for Allstate)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal and cross-appeal are dismissed and the arbitration order, dated July 26, 2000, is confirmed.
Each party shall pay its own appeal expenses.

December 21, 2001

Nancy Makepeace

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Mr. Tesfai appeals and Allstate Insurance Company of Canada (“Allstate”) cross-appeals an arbitration order dated July 26, 2000. The arbitrator partially allowed Mr. Tesfai’s claim under s.24 of the SABS-1996¹ for the cost of a multidisciplinary assessment by DEAHY Medical Assessments Inc. (“DEAHY”). DEAHY billed $2,461 for the assessment, which included an orthopaedic assessment, physiotherapy assessment, and functional abilities evaluation (“FAE”). The arbitrator ordered Allstate to pay $1,498² for the physiotherapy assessment and FAE. He dismissed Mr. Tesfai’s claim for the $963 cost of the orthopaedic assessment.³ The arbitrator also dismissed Mr. Tesfai’s claim for a special award. He deferred the question of arbitration expenses.

II. BACKGROUND

Mr. Tesfai was injured in a motor vehicle accident on May 3, 1998 when he was struck by a vehicle while crossing the street. The arbitrator found that he suffered a severe fracture of his right ankle (requiring open reduction and internal fixation), a bruised hip, and soft tissue injuries of his shoulder, neck and back. He was initially treated at Humber River Regional Hospital and then by his family doctor, Dr. Efrem Alemayehu. Dr. Stephen Reed, the orthopaedic surgeon who operated on his ankle, continued to follow him after his discharge. Mr. Tesfai’s cast was removed and replaced with a removable ankle brace on June 12, 1998, and he was referred for physiotherapy at Dufferin Active Physiotherapy (“Dufferin”). Allstate approved Dufferin’s treatment plan. Mr. Tesfai has also seen a psychiatrist, starting in September 1998. Mr. Tesfai was employed full-time as a janitor at a university before the accident. Allstate began paying income replacement benefits in mid-June 1998, when Mr. Tesfai’s short-term sick credits expired, and stopped the payments in August 1998, when London Life accepted his application for long-term disability benefits. I have no information as to whether Mr. Tesfai ever returned to work.

On August 4, 1998, in a report addressed to Allstate, Dr. Reed opined that Mr. Tesfai was still unable to work because of his ankle injury. He anticipated that Mr. Tesfai would have a permanent impairment of his ankle, but he did not expect this to be “significantly functionally disabling.” A further six to eight weeks of physiotherapy was recommended.

On August 13, 1998, Allstate had Mr. Tesfai assessed by Dr. R. Saplys, an orthopaedic surgeon, pursuant to s.42 of the SABS-1996. Dr. Saplys also felt that Mr. Tesfai would have a permanent impairment of his right ankle. He concluded that it would be reasonable for Mr. Tesfai to consider returning to work on a graduated basis starting at the beginning of October. He recommended that Mr. Tesfai continue with physiotherapy, especially targeting his ankle.

Allstate continued to recognize Mr. Tesfai’s entitlement to physiotherapy treatments at Dufferin, and paid for 18 weeks of treatment in total, covered by two treatment plans, less the amounts paid by London Life. On September 16, 1998, Allstate sent Mr. Tesfai’s lawyer a letter stating,

We have accepted 2 separate treatment plans for a total of 18 weeks of treatment and, we will be proceeding to a Medical DAC if treatment goes past the date of October 9, 1998.

We have an Independent Examination and, Mr. Tesfai has been advised that he should be prepared to return to work in 6 weeks time.

Another letter Allstate sent to Mr. Tesfai’s physiotherapist on September 16, 1998 suggests that the basis for terminating physiotherapy was that Mr. Tesfai had sustained a Grade II whiplash injury, and Allstate felt that 18 weeks of treatment was sufficient. Dr. Saplys had recommended further physiotherapy, but made no recommendation as to its duration. In mid-October, Allstate refused Dufferin’s third treatment plan and required Mr. Tesfai to be assessed by Medical-Rehabilitation Designated Assessment Centre (“DAC”) pursuant to s.43 of the SABS-1996.

The DAC assessment was performed by an orthopaedic surgeon and a pysiotherapist on November 26, 1998. In December 1998, they reported that Mr. Tesfai was expected to reach maximum medical recovery nine to twelve months post-fracture, and would continue to have functional limitations with prolonged standing and walking. However, the DAC assessors did not feel there was any need for further treatment. They recommended that Mr. Tesfai continue with his independent exercise and normal activities. Allstate relied on this report in refusing to pay for ongoing physiotherapy.

On August 14, 1998, the day after Mr. Tesfai was assessed by Dr. Saplys, Dr. Alemayehu completed a DEAHY referral form, indicating that Mr. Tesfai required physiotherapy, psychological, functional, medical and other assessments. A second DEAHY referral form, entitled “Request for Multi-Disciplinary Assessment” was signed by Dr. Alemayehu on September 20, 1998.

The assessment was done on October 20 and 22, 1998. Dr. Brian Alpert, an orthopaedic specialist, diagnosed chronic musculoligamentous strains and facet joint pain in the cervical spine, trapezii and lumbar spine; chronic post-traumatic cervicogenic headaches and apparent post-concussion headache; persisting pain, stiffness and nerve damage in the right ankle; and post-traumatic stress. It was his opinion that Mr. Tesfai remained disabled from working as a janitor, and would face permanent functional restrictions. He recommended a multidisciplinary pain management program, further orthopaedic follow-up and additional physiotherapy. The physiotherapist, Sandy Pister, recommended that Mr. Tesfai resume his physiotherapy as soon as possible. Erika Gamble, a certified kinesiologist, conducted an ARCON FAE on October 22, 1998. She concluded that Mr. Tesfai was functioning at the sedentary industrial level, and therefore could not work as a janitor, which is classified as a medium-strength job.

Allstate refused DEAHY’s invoice for the assessment, and Mr. Tesfai commenced mediation, followed by arbitration, of the dispute. The arbitration hearing was held on January 25 and 26, 2000. The main issue at the hearing was the scope of s.24(1) of the SABS-1996, which is as follows:

(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,

(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 aide or attendant.

The arbitrator rejected Allstate’s submission that the DEAHY assessments were not incurred “for the purpose of the Regulation.” The core of his reasoning is found in the following comments:

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 ability. Each of these reports addressed matters dealt with in the Regulation.

Having decided that the assessments were done for the purpose of the Regulation, the arbitrator considered whether the expenses were reasonably incurred. He broke this down into two questions: whether it was reasonable to undertake the assessments in light of the benefits that were in dispute at the time, and whether the assessments were reasonable in light of information that was available from other sources.

The arbitrator allowed the cost of the physiotherapy assessment because Allstate had put Mr. Tesfai’s benefit entitlements in issue by the time of the assessment, although it was paying the physiotherapists’ account without protest at the time of the referral. Allstate was also paying IRBs at the time of the referral, but by the time the assessment was done, it had stopped paying because Mr. Tesfai had started receiving disability benefits from London Life. The arbitrator accepted Mr. Tesfai’s testimony that the day before the DEAHY referral, Dr. Saplys had told him he should be returning to work, thereby putting his ongoing entitlement to IRBs in issue. The arbitrator also found that the cost of the FAE assessment was reasonable because Allstate continued to be responsible for Mr. Tesfai’s rehabilitation. The arbitrator disallowed the claim for the orthopaedic assessment because Dr. Alemayehu had not requested a report from Dr. Reed, who would have been “the most logical source” for a second opinion. He also noted “there was no evidence that this report was even sent to the Applicant or his family doctor or lawyer.”⁴

Turning to the question whether the fees charged were reasonable, the arbitrator found that the fees charged were “in keeping with the fees ordinarily charged for similar assessments” and justified by the value of the work, considering “the time, care, and expertise that [went] into the assessment, rather than . . . the correctness of the opinion.”

On appeal, Mr. Spiegel submits that the arbitrator had no basis for denying the orthopaedic assessment while allowing the claim for the physiotherapy and FAE assessments, because all were part of DEAHY’s multidisciplinary assessment. Mr. Spiegel argues that Dr. Alpert is a pain specialist as well as an orthopaedic surgeon, and that he considered Mr. Tesfai’s symptoms as a whole, not just his ankle. Further, Dr. Alpert had the benefit of the physiotherapy and FAE assessments, which were not available to Dr. Reed, and his focus was on Mr. Tesfai’s work-readiness, not just his impairments. Mr. Tesfai withdrew his appeal of the arbitrator’s special award ruling.

Allstate submits that there was no evidence before the arbitrator about how the physiotherapy and FAE reports were used, and therefore he erred in concluding that the fees were incurred for the purpose of the regulation. Allstate also argues that the quality and value of the reports cannot be ignored in determining whether the expense claimed is reasonable. However, Allstate concedes that the arbitrator’s conclusion that the fees charged were reasonable is not an error of law unless it was made in the absence of any supporting evidence, and accordingly, Allstate does not dispute the arbitrator’s finding that the fees charged were reasonable, for the purpose of this appeal.

III. PRELIMINARY ISSUES

A. Fresh Evidence

At the appeal hearing, Mr. Spiegel tendered a report by Dr. Howard Jacobs, described himself as a Board Certified Pain Medicine Specialist. Allstate objected to this report being admitted, since it was prepared well after the arbitration hearing. “Fresh evidence” is generally not admissible on appeal, although this is a matter for the adjudicator’s discretion. The relevant factors are whether the evidence could have been made available at the arbitration hearing with the exercise of due diligence by the party tendering the evidence, whether the evidence is relevant and reasonably capable of belief, and whether the evidence, considered together with the rest of the evidence, is likely to affect the outcome of the appeal. The decision requires a balancing between the values of efficiency and finality, on the one hand, and, on the other, ensuring the adjudicator has sufficient evidence to decide the case on its real merits.

I declined to exercise my discretion to admit this report because there is no reason it could not have been presented at the arbitration hearing, when Dr. Jacobs testified. Mr. Spiegel submitted that the report was prepared in response to the arbitration decision, which could not have been anticipated. This relates to another problem with the report: it is an exercise in “oath helping.” Rather than providing an expert opinion about Mr. Tesfai’s impairments, Dr. Jacobs simply reiterates Mr. Spiegel’s submissions on appeal. The courts have cautioned against the use of experts to give spurious authority to evidence and submissions outside the scope of their expertise.⁵ I declined to admit the report for both reasons.

B. Post-Hearing Submissions

After the oral hearing in this matter, Director Draper released his appeal decision, M.D. and Halifax Insurance Company, dealing with many of the same issues.⁶ I invited the parties to file written submissions concerning that decision, and both parties did so.

Mr. Spiegel’s submissions on Mr. Tesfai’s behalf went beyond the M.D. and Halifax case. Beginning at paragraph 54 on page 38 of his submissions, Mr. Spiegel alleges institutional bias and/or reasonable apprehension of bias on the part of FSCO. Mr. Spiegel has brought similar motions in a number of arbitration and appeal decisions, apparently in response to Director Draper’s preliminary issue decision in Persofsky and Liberty Mutual Insurance Company.⁷ In this appeal, Mr. Spiegel moved for a stay of the proceeding pending resolution of his bias motion, and sought an order that the proceedings be heard by “a proper body,” namely “an outside (third party) neutral Arbitrator/Adjudicator” selected by agreement of the parties, in accordance with the Arbitration Act, 1991.

I dismissed that motion by letter of August 8, 2001. My reasons were as follows: 2001).

Rule 44 of the Dispute Resolution Practice Code - Fourth Edition (May 31, 2001)⁸ gives an arbitrator discretion to reopen a hearing at any time before making a final order in the arbitration. The factors to be considered by an arbitrator are well-established, and have been discussed in a number of cases, usually in the context of a motion to admit fresh evidence. Director’s Delegate Naylor reviewed the principles in Norton and Colonial Penn Insurance Company as follows:

Arbitrators have a broad discretion to reopen a hearing before their final order is issued. However, the decision to do so is not viewed lightly. As with the decision to admit new evidence on appeal, the exercise of the discretion to reopen a hearing involves balancing competing interests. The process must be finite. However, there must also be scope for including important developments that come into existence or come to light after the hearing or for admitting other information where a failure to do so would work an injustice.⁹

Although there is no rule in the Code specifically addressing re-opening of appeals proccedings, I find that Rule 1.2 authorizes an appeals adjudicator to re-open an appeal where, in his or her discretion, it is appropriate to do so.¹⁰ The relevant factors include the apparent merits of the motion, whether the motion could reasonably have been brought at an earlier stage, and the prejudice to the parties of allowing or denying the motion.

. . . . Mr. Tesfai now moves to re-open the appeal to consider an entirely new issue not raised in the arbitration or previously in this appeal. An allegation of bias is a serious matter, and very significantly expands the scope of the appeal. Based on the submissions received, I am not satisfied that the motion warrants re-opening the appeal. Accordingly, the motion to re-open is denied. I will render my decision based on the submissions received.

Mr. Spiegel filed additional written submissions in response to my ruling, but they did not persuade me to change it.

C. Reasons for Refusal

Allstate’s Explanation of Assessment form, dated January 4, 1999, gave two reasons for refusing to pay DEAHY’s invoice: first, “please submit to London Life - they are primary coverage” and second, “please see enclosed Med DAC - not reasonable and necessary.”

At the arbitration and appeal hearings, Allstate took a different position. They argued that the assessments were not incurred for the purpose of the regulation, under s.24. On behalf of Mr. Tesfai, Mr. Spiegel submitted that the Insurer should be held to its initial reasons for refusal.

Sections 41 and 68 of the SABS-1996 require an insurer to give written notice of its reasons for refusing a claim for benefits under s.24.¹¹ The purpose of this requirement is to ensure that the insured person has the information he or she needs to decide whether to dispute or accede to the refusal. By requiring the insurer to disclose its reasons for denying a claim, the notice requirement also reinforces the insurer’s obligation to give full and fair consideration to every claim. Accordingly, an insurer’s initial reasons for refusing a claim are to be taken seriously, and insurers should be prepared to defend their initial reasons at arbitration. An insurer who provides inadequate or equivocal reasons runs the risk of a finding that the notice was not sufficient to trigger commencement of the two-year limitation period. In some cases, an insurer’s failure to provide adequate reasons may warrant a special award. However, FSCO adjudicators have long recognized that the legislative objective of promoting early claims assessment and ongoing communications between the parties requires that parties be given some leeway in reassessing and developing their positions after the initial refusal.¹² In this case, I am not satisfied that Allstate should be held to its initial reasons for refusing the claim, or that its conduct was unreasonable or improper.

IV. ANALYSIS

This is the fourth appeal decision concerning the scope of s.24.¹³ The issue has also been considered in a number of arbitration decisions.¹⁴ These cases raise issues about the interplay between s.24 and the medical and rehabilitation benefits provisions of the SABS-1996, OHIP coverage, and the arbitration expenses provisions of the Insurance Act and regulations.

Section 24 clearly requires insurers to pay for all reasonable expenses of obtaining:

a disability certificate from a health practitioner of the insured person’s choice, which an insurer may require under s.34 of the SABS-1996;
an autopsy report which an insurer may request under ss.25(5);
a treatment plan, which an insured person must include along with an application for medical and rehabilitation benefits, pursuant to s.38;
an attendant care certificate, which an insurer may require under s.39;
an Insurer Examination required by the insurer under s.42;
an assessment and report by a Designated Assessment Centre under s.43 with respect to disability, medical and rehabilitation benefits, attendant care benefits, or catastrophic impairment; and
transportation expenses relating to Insurer Examinations and DAC assessments.

Although it might be argued that s.24 coverage is limited to the specified items, Allstate did not take this position in this appeal, and I do not accept it. There are several textual indicators that the drafters contemplated a broader scope of recovery. First, the preamble of s.24(1) is broadly worded – “the insurer shall pay for all reasonable expenses . . . for the purpose of this Regulation . . .”. Secondly, the recoverable costs are described in general language – “an examination or assessment . . . a certificate, report or treatment plan, . . .” – rather than by reference to specific provisions of the regulation, as I have done in the previous paragraph. That would have been an easy way to circumscribe the benefits payable. Thirdly, it is clear that s.24 is not limited to the cost of mandatory reports, like treatment plans, which must be included with an application for medical or rehabilitation benefits, and DAC reports, which an insurer must obtain if refusing a claim for medical or rehabilitation benefits, attendant care benefits, or a catastrophic impairment determination, but also clearly covers reports that “may” be required by an insurer (disability certificates and autopsy reports, for example), or an insured person (disability DAC reports). This indicates that the legislature contemplated giving insured persons and insurers a certain amount of discretion in determining what are reasonable expenses “for the purpose of this Regulation.” Finally, the cost-control provisions in ss.24(2)-(4) were probably thought necessary because s.24 enables insured persons, as well as insurers, to incur expenses for the purpose of the regulation. For all these reasons, I do not accept that s.24 is limited to assessments and reports required by or under the regulation.

Mr. Spiegel argues that, in addition to the listed items, s.24 gives an insured person an unqualified right to obtain assessments and reports for the purposes of advancing his or her claim for accident benefits. He took the same position in M.D. and Halifax, arguing that s.24 extends to “a second opinion [obtained] to challenge an unfavourable DAC assessment.” Director Draper rejected that view, stating that s.24 “is not that broad, nor do any of the arbitration or appeal decisions cited by Mr. Spiegel go that far.” M.D. is not directly applicable in this case, because Mr. Tesfai’s assessment was requested weeks before Allstate referred him to a DAC, and it was completed about a month before the DAC assessment took place. However, I agree with the Director’s general approach, which focuses on the assessments and reports specifically listed in the section, and places s.24 in the context of the balanced claims adjudication process, prescribed in the SABS-1996:

The SABS-1996 attempts to balance various interests. Insured persons must be able to present their claims effectively, while insurers need a reasonable opportunity to assess the claims they receive. Both parties have an interest in a clear, efficient claims process. To meet these objectives, the SABS-1996 establishes detailed rules for claiming different types of benefits and addresses the cost of the process.

The arbitrator in this case took a broader approach. Although the family doctor did not testify, and his notes did not indicate the reason for the referral, the arbitrator was satisfied that the reports were obtained for the purpose of the regulation because they addressed Mr. Tesfai’s disability and need for treatment and rehabilitation. However, while the arbitrator “set a relatively low threshold” for establishing that the assessment was obtained for the purpose of the regulation, his analysis focussed on whether it was reasonable for the insured person to obtain the assessment, considering the benefits at issue and the other information available at the time. Mr. McMahon, as Director’s Delegate, took the same approach in his appeal decision, Aleman and State Farm, stating:

One of the advantages of focussing on the reasonableness test, rather than on the initial threshold question, is avoiding inconsistences in the treatment of the threshold for s.24 assessments and IMEs undertaken pursuant to s.42.

Which ever approach is favoured, it is entirely appropriate for the arbitrator to demand some positive and pointed evidence concerning the use to which the report was intended to be put, and in the absence of such evidence to dismiss the claim.¹⁵

The arbitration decisions reflect some variations in approach, but they are consistent in requiring the insured person to provide evidence of the reasons for obtaining the report. In Aleman and State Farm, Delegate McMahon confirmed the arbitrator’s finding that there was no evidence that the report “was used by anyone for any purpose.” In M.D. and Halifax, Director Draper noted that while Mr. Spiegel assumed that the assessments were done to challenge the DAC report, the arbitrator’s finding was that “he was not given any explanation for the referral.”¹⁶ I agree with my colleagues that an insured person must provide evidence that the assessment was obtained for the purpose of the regulation.

In my view, the starting point is that s.24 applies to the examinations, assessments, certificates, treatment plans and reports specifically mentioned in the SABS-1996. While s.24 extends beyond those services, there can be little doubt that its drafters did not contemplate stand-alone assessments initiated by the assessment-provider without reference to treatment needs or claims for other benefits.¹⁷ I have no hesitation in saying that such assessments are not reasonable expenses obtained for the purpose of the regulation.¹⁸ Rather than treating “for the purpose of [the] Regulation” as a threshold test, I find that the purpose requirement qualifies the phrase “all reasonable expenses” [italics added]. In any event, whether the analysis is focussed on the purpose requirement or reasonableness, I find that the key questions are “what benefits were at issue at the relevant time?” and “what other relevant information was available at the time?” Answering these questions usually involves going beyond the report itself to enquire into the insured person’s circumstances at the time. Consequently, I do not agree that “[t]he purpose of an examination or assessment can often be found in the report itself.”¹⁹

Allstate argued that the quality and value of the reports must be considered in deciding whether an assessment or report was obtained for the purpose of the regulation. The arbitrator considered this question only in relation to the reasonableness of the fee charged for the FAE and physiotherapy reports. He agreed, “in general,” with Arbitrator Joachim that “it is appropriate to discount the assessment fee where the ‘quality and value of [the] assessments and reports do not justify the expense.”²⁰ However, he took heed of the caution voiced by Director’s Delegate Naylor that it is important not to judge the reasonableness of a report “solely with the benefit of hindsight.”²¹ In addition, he said “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.” As Director’s Delegate, Mr. McMahon expanded on his approach in his appeal decision in Tsimidis and Liberty Mutual. He recognized that “[t]here is a natural correlation between value in the sense of the ultimate usefulness of the report or correctness of the opinion, and value in the sense of the time, care, and expertise, that went into the process,” but reaffirmed that the adjudicator “should be primarily concerned with the process. The correctness of the opinion is principally important to the extent that it sheds light on whether sufficient time, care, and expertise went into the conduct of the assessment and preparation of the report.” This “contemporaneous assessment” approach is consistent with the Commission’s approach to IME requests under s.42 of the SABS-1996, which is to ask whether the request was reasonable in light of the issues and available information at that time. I agree this is the correct approach.

After examining the reports, the arbitrator concluded that it was not appropriate to reduce the DEAHY account “on the grounds that the value of the work done did not justify the fees charged.” Allstate gave me no particular reason for second-guessing the arbitrator’s assessment on appeal, and acknowledged that the arbitrator’s assessment of the fees payable involved a finding of fact, not reviewable on appeal. I would not be inclined to vary the arbitrator’s order as to the amount payable, in any event, based on my review of the reports. Though there may be cases where the quality and value of a report precludes a finding that it was obtained for the purpose of the regulation, this is not that case. The real issue in this case was whether the reports were reasonably obtained for the purpose of the regulation, considering the benefits in issue and the other information available at the time.

I turn now to the arbitrator’s findings on the DEAHY assessments.

Orthopaedic Assessment

The arbitrator concluded that it was not reasonable for Mr. Tesfai to undertake the DEAHY orthopaedic assessment because “[i]f the family doctor had wanted a detailed report from an orthopaedic surgeon, the most logical source would have been from the treating surgeon [Dr. Reed].” This was based on the following findings of fact:

At the time of the referral to DEAHY, the family doctor had received nothing from [Dr. Reed] 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. . . .

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 ever 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.²²

These factual findings were not challenged on appeal, and the record offers no basis for doing so.

The arbitrator found that DEAHY’s assessment fees could not have been billed to OHIP because this was “a medical assessment to obtain information for insurance purposes.”²³ Allstate did not challenge this finding on appeal, and I find no error in the arbitrator’s conclusion on this point.

Mr. Spiegel argued that Dr. Alpert’s pain management expertise and multidisciplinary focus gave his report additional value beyond what Dr. Reed could provide. He submitted that Dr. Alpert did not restrict himself to Mr. Tesfai’s ankle injury, as Dr. Reed did, but considered “the whole person,” including soft tissue injuries. He did not explain why this was needed in this case. Dr. Reed’s August 4, 1998 orthopaedic report supported Mr. Tesfai’s claim for further disability benefits and further physiotherapy treatment. His opinion was that Mr. Tesfai continued to be disabled from working as a janitor because of his ankle injury. Dr. Saplys, who assessed Mr. Tesfai for Allstate on August 13, 1998, also thought Mr. Tesfai was likely to have a permanent ankle impairment and recommended that he continue with his therapy. As to disability, Dr. Saplys stated,

Although his return to work will be directed by his orthopaedic surgeon, based on the specifics of his ankle fracture and the amount of damage to the joint, it would be reasonable for Mr. Tesfai to consider starting at modified duties at the beginning of October, even on a modified hourly basis, such that he tries to work his usual job for three to four hours at a time for approximately six weeks, and then proceed to full or altered work such that he does not have to use heavy equipment. Any help that can be obtained in this regard with his employer would benefit his overall rehabilitation. In fact, if a different type of job can be made available for him, that allows him to sit for periods and rest, he can likely return to work earlier than October and possibly as early as mid September.

Answering Allstate’s specific questions, Dr. Saplys recommended that Allstate consult Dr. Reed about the prognosis in relation to the right ankle. Dr. Saplys’ report is far from a confident opinion that Mr. Tesfai would be able to return to his pre-accident job in six weeks. It is the sort of report that calls for a re-assessment after a further period of treatment or rehabilitation and an approach to the employer to discuss a return to work program. The assessment was arranged in late July, and Dr. Saplys appears not to have had the advantage of Dr. Reed’s report of August 4, 1998. Reminding Allstate of that fact, or asking Dr. Reed to review Dr. Saplys’ report, would have been reasonable responses.

The real problem was the arbitrator received very little evidence about Dr. Alemayehu’s reasons for making the DEAHY referral. When he filled out DEAHY’s ARequest for Multidisciplinary Assessment form on the September 30, 1998, Dr. Alemayehu checked off the boxes for “ARCON (Functional Assessment),” “Physiotherapy” and “Medical Orthopaedic Assessment.” Asked to identify the patient’s ongoing problems, he checked off “headache,” “difficulties in activities of daily living,” and “difficulty in “returning to work,” but did not check off the boxes marked “neck pain” and Aback pain.” He provided no information about the ankle injury, which was clearly Mr. Tesfai’s main problem. The explanation may be that the check-off form did not invite it, but that raises the question how seriously Dr. Alemayehu considered the referral.

I am not persuaded the arbitrator erred in finding that the orthopaedic assessment was not obtained for the purpose of the regulation.

Functional Capacity Evaluation and Physiotherapy Assessment

Allstate submits that the arbitrator erred in allowing the cost of the FAE and physiotherapy assessment because there was no dispute about Mr. Tesfai’s entitlement to income replacement benefits or physiotherapy treatment at the time of the referral, and because Mr. Tesfai presented no evidence about how the reports were used. By October 1998, when the assessments were done, Allstate had stopped paying IRBs because Mr. Tesfai had begun receiving disability benefits from London Life. It had terminated physiotherapy treatments and referred Mr. Tesfai to a DAC. The DEAHY reports were not sent to the family doctor until December 1998, and the only evidence that they were put to any use at all came from Mr. Tesfai’s testimony that he discussed them in general terms with Dr. Alemayehu. Allstate submits that the use of the word “obtaining” in s.24 reflects the drafters’ focus on the time when the report is received and the use that is made of it.

The arbitrator took a more flexible 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 FAE based upon the circumstances at the time the assessment was actually conducted.

I agree with the arbitrator’s approach, which recognizes the fluid and ongoing nature of accident benefits claims. This flexible approach recognizes that an insured person may be aware a dispute is developing before the insurer formally refuses a claim, and, conversely, that subsequent events may resolve the need to use a report that was reasonably obtained. As with insurer medical examinations under s.42, the test is whether the examination was reasonable at the time.

Mere speculation that an insurer may some day refuse benefits does not warrant an assessment. However, the arbitrator implicitly accepted Mr. Tesfai’s testimony 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 was presumably the assessment by Dr. Saplys on August 13, 1998. It is not my role to second guess the arbitrator’s factual findings, and the record offers no basis for doing so. Allstate relied on Dr. Saplys’ report, as well as the availability of collateral benefits, when it stopped paying income replacement benefits. Although this was a judgment call, I find no error in the arbitrator’s conclusion that it was reasonable for Mr. Tesfai to arrange an assessment focussing on the same question. For the same reason, I find no error in the arbitrator’s conclusion that it was reasonable for Mr. Tesfai to undergo a physiotherapy assessment given that Allstate had refused further treatment by that time, and the physiotherapist “was intent on continuing treatment.”

IV. INTEREST

The arbitrator ordered Allstate to pay Mr. Tesfai $1,498, together with interest in accordance with s.46(2) of the SABS-1996. At the time of the appeal hearing, Allstate had not paid this amount. Allstate submits that interest should not begin to accrue until July 26, 2000, the date of the arbitration decision, because it was not until January 25, 2000, the first day of the hearing, that it was satisfied the DEAHY account had not been paid by London Life.²⁴

Subsection 46(2) requires interest to be paid “if payment of a benefit under this Regulation is overdue.” Section 24 benefits are payable “within 30 days after the insurer receives the application for the benefit,” pursuant to s.41(1). The interest payable on overdue benefits is compensatory rather than punitive in nature. In my view, the high rate mandated by the regulation – “2 per cent per month compounded monthly” – reflects the drafters’ objective of encouraging prompt payment of accident benefits, in order to ensure that insured persons are able to maintain an income stream and obtain early and appropriate treatment. Problems occur when the insured person’s initial “application for the benefit” is incomplete, making it difficult or impossible for the insurer to assess entitlement to or the amount of benefits payable. As Director Draper has observed, interest may not run “[i]f the insured person acts in a manner that effectively prevents the insurer from assessing his or her entitlement.”²⁵

In this case, I heard no evidence about the efforts of the parties to find out whether London Life would pay the DEAHY account. Accordingly, I am not persuaded to interfere with the arbitrator’s interest order.

V. EXPENSES

The appeal and cross-appeal raised legitimate issues about the scope of s.24. Each party shall pay its own appeal expenses.