M.D. v. Halifax Insurance Company, 2001 ONFSCDRS 72

Financial Services Commission of Ontario

Neutral Citation: 2001 ONFSCDRS 72

Appeal P00-00049

OFFICE OF THE DIRECTOR OF ARBITRATIONS

M.D. Appellant

and

HALIFAX INSURANCE COMPANY Respondent

Before: David R. Draper, Director of Arbitrations (A)

Appearances: Roland Spiegel, agent (for M.D.) Aimee Draper, Barrister and Solicitor (for Halifax)

APPEAL ORDER

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

1. The appeal is dismissed and the arbitration orders dated July 27, 2000 and January 4, 2001, are confirmed.

2. M.D. shall pay Halifax Insurance Company's appeal expenses, fixed at $750.

May 16, 2001

David R. Draper Director of Arbitrations (A)

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

M.D. appeals from arbitration orders dated July 27, 2000 and January 4, 2001. In the first, the arbitrator dismissed M.D.'s claim under s.24 of the SABS-1996¹ for the cost of assessments done at DEAHY Medical Assessments Inc. ("DEAHY"). In the second, he ordered M.D. to pay Halifax Insurance Company ("Halifax") its arbitration expenses, plus an assessment of $3,000 under s.282(11.2) of the Insurance Act on the basis that she commenced an arbitration that was frivolous and an abuse of process.

II. ANALYSIS

The relevant facts, as found by the arbitrator, are straightforward. M.D. was involved in an automobile accident on May 25, 1998, suffering bruising on her neck, back and shoulders. Her family doctor, Dr. E.A. Mastrangelo, referred her for physiotherapy and to see a neurologist and psychologist. M.D. reported back that the only thing that helped was massage.

Halifax initially accepted M.D.'s claim for income replacement benefits ("IRBs"). However, approximately three months after the accident, it determined she was no longer disabled and provided notice that her IRBs would be terminated effective August 18, 1998. Through her lawyer, Mr. Daniel Daly, M.D. asked for an assessment by a Designated Assessment Centre ("DAC"), as she was entitled to do under s.37 of the SABS-1996. Complying with its obligations under s.37(3)(c), Halifax continued paying IRBs pending the results.

The DAC assessment took place in September 1998. It consisted of an intake interview, a medical evaluation, a physiatric evaluation, a psychological evaluation and a functional capacity evaluation. The DAC's summary report is dated October 1, 1998, and sets out the consensus opinion that M.D. was not suffering a substantial inability to perform the essential tasks of her pre-accident employment. As a result, Halifax notified Mr. Daly that it would not be paying any further IRBs.

In September 1998, M.D. was also assessed by the same DAC facility with respect to a treatment plan she had submitted for psychological treatment. The assessor recommended focussed, short-term psychological intervention, which Halifax agreed to fund.

Following the DAC assessments, M.D. asked Dr. Mastrangelo for a referral to DEAHY. He made the referral, signing a "Request for Multi-Disciplinary Assessment." This is a pre-printed form that includes the following statement upon which M.D. relies:

Payment of this assessment is the responsibility of the insured patient's insurance company. According to Bill 59 Section 24.1 (a), the insurer shall pay for all reasonable expenses in obtaining and attending an examination or assessment or in obtaining a certificate, report or treatment plan.

DEAHY sent this form to Halifax, along with forms authorizing payment directly to DEAHY. The covering letter, dated October 29, 1998, advised Halifax of the referral and that it was proceeding to schedule the examinations. Halifax responded the next day, stating that it would not accept any billings for the proposed examinations because M.D. had recently completed two DAC assessments and, as a result, no further examinations were needed.

Despite Halifax's refusal to pay, M.D. was assessed at DEAHY in November 1998. The assessment included a functional abilities evaluation, psychological assessment, physiotherapy assessment and medical assessment. In January 1999, DEAHY sent Halifax its account for $3,745 (including GST). At the same time, it sent the assessment reports to Dr. Mastrangelo. The DEAHY assessors concluded that M.D. was unable to return to her pre-accident employment and recommended an active exercise program and additional counselling sessions, including a pain management program. Although Halifax did not reinstate IRBs or agree to pay for the additional treatment recommended by DEAHY, the only issue pursued through the dispute resolution system was the cost of the assessments.

On appeal, Mr. Spiegel focussed on the role and scope of s.24 of the SABS-1996, which provides as follows:

24. (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.

In Mr. Speigel's submission, this section gives insured persons a virtually unfettered right to obtain their own medical assessments at the insurer's cost, including a second opinion to challenge an unfavourable DAC assessment. In my opinion, s.24 is not that broad; nor do any of the arbitration or appeal decisions cited by Mr. Spiegel go that far.²

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.

For example, someone applying for IRBs can be required to provide a certificate from a health professional of his or her choice to support the claim. The reasonable cost of obtaining the certificate is clearly covered by s.24. Similarly, an insured person applying for medical or rehabilitation benefits must file a treatment plan with his or her application, the reasonable cost of which is borne by the insurer under s.24.

As part of its assessment of the claim, the insurer can require the insured person to attend an examination by a health professional of its choosing. According to s.42 of the SABS-1996, it must be "for the purpose of determining whether an insured person is entitled to a benefit." This allows the insurer to test the medical information provided by the insured person. The cost of the examination, the report (which must be provided to the insured person), and the insured person's transportation expenses are paid by the insurer under s.24.

The SABS-1996 also controls the refusal or cancellation of benefits. If the insurer determines that the insured person is not entitled to weekly benefits, including IRBs, it can stop paying, but only by following the steps in s.37. This involves notice to the insured person, including the date on which benefits will stop. If the insured person disagrees, he or she has the right to a DAC assessment, with the insurer being obliged to continue paying benefits pending the outcome. Unlike certificates, treatment plans and insurer examinations, neither party chooses the DAC.

The assessment is done by the closest DAC with the appropriate expertise. The cost, including the insured person's transportation expenses, is paid by the insurer under s.24.

Although the process is somewhat different for medical and rehabilitation benefits, the DAC plays essentially the same role — it provides an impartial assessment where the parties are unable to agree on the insured person's entitlement to accident benefits. If the insurer decides that the medical or rehabilitation benefits claimed by the insured person are not payable, it must notify the insured person of its decision and arrange for a DAC assessment. In other words, the insurer must arrange an independent review of its decision.

The DAC report is not just another opinion. Although either party can challenge it through the dispute resolution system, the DAC's conclusion governs the payment of benefits in the meantime. If it finds that the insured person meets the test for IRBs, or that the medical and rehabilitation expenses are reasonable and necessary, the insurer must pay. If, as in this case, the DAC reaches the opposite conclusion, the insurer does not have to pay. The "losing" party's option is to apply for mediation and, if the dispute is not resolved, proceed to court or arbitration.³

In my view, Mr. Spiegel's submissions ignore the pivotal role given to DACs by the legislation. Despite his suggestions to the contrary, they are not simply another insurer examination. Their function is to take the dispute out of the back-and-forth of competing partisan reports by providing an impartial assessment. That is the protection provided in the SABS-1996 — an independent assessment at a DAC, not a DAC assessment and then a second opinion by someone of the insured person's own choosing if the DAC's opinion is not helpful. An assessment arranged for the purpose of challenging the DAC through the dispute resolution process is better viewed as a litigation expense, recoverable through negotiation or as arbitration or court costs.⁴

Insurers must also respect the role of DACs. If the DAC does not support its position, the insurer has a choice. It can accept the conclusion and pay benefits, or apply for mediation. It cannot require the insured person to attend an insurer examination for the purpose of challenging the DAC's opinion. An insurer examination only becomes appropriate if it is reasonably required to determining the insurer person's ongoing entitlement, or in response to a new claim.⁵

As stated above, the underlying goal is to achieve a reasonable balance between the parties. In a completely straightforward case, the DAC may provide a clear dividing line between the claims process and the dispute resolution process. However, other cases may be complicated by multiple claims or the passage of time. As a result, the facts of each case will be critical in determining whether the assessment is a reasonable expense under s.24, or the insurer examination is reasonably required to determine entitlement.

Although this analysis responds to the arguments presented in the appeal, it is not essential for deciding this case. Mr. Spiegel assumed throughout his submissions that the DEAHY assessments were done to challenge the DAC. However, that was not the arbitrator's finding. The problem, as he clearly sets out in the decision, is that he was not given any explanation for the referral. M.D. did not testify. Dr. Mastrangelo did, but said he only made the referral because M.D. asked. He had never heard of DEAHY and mistakenly believed they would provide or arrange for treatment. Most tellingly, Dr. Mastrangelo testified that he would not have made the referral if he had known DEAHY only did assessments.

Beyond the lack of explanation, the purpose of the assessment was far from obvious. At the time M.D. asked to be referred to DEAHY, she was still receiving physiotherapy and had been referred for a psychological assessment. In fact, she has not applied for mediation with respect to any claims other than the cost of the DEAHY assessments. Most strikingly, she did not challenge Halifax's decision to terminate her IRBs even though the DEAHY assessors concluded that she was substantially unable to perform the essential tasks of her pre-accident employment.

Although the arbitrator might have stopped there, he went on to consider whether each of the DEAHY assessments was necessary, concluding they were not. His reasons can be summarized as follows:

1. Functional abilities evaluation

M.D. had already undergone two functional abilities evaluations, one arranged by Halifax in June 1998, and the second as part of the DAC assessment in September 1998. There was no explanation why another evaluation was needed within six months.

2. Psychological assessment

Psychological assessments had already been done in August 1998, on referral from M.D.'s family doctor, and in September 1998, at a DAC. M.D. was in the process of undergoing psychological treatment when she was referred to DEAHY. There was no explanation why another assessment would have been useful, particularly given her failure to disclose her full medical history to the assessors.

3. Physiotherapy assessment

Halifax agreed to pay for eight weeks of physiotherapy as recommended by Dr. Mastrangelo. Although the treatment plan was for three to five times a week, M.D. only went twice a week. According to Dr. Mastrangelo, she did not find it helpful. She was still attending physiotherapy when she asked for the referral to DEAHY, and in its discharge summary, the physiotherapist reported that M.D. was pain focussed and limited herself, recommending that she continue with home exercises. Other than Dr. Mastrangelo's testimony that M.D. did not like the physiotherapy centre, there was nothing to explain why the programme failed or how another physiotherapy assessment would be helpful.

4. Medical assessment

Between the time of his referral to DEAHY and receiving their reports, Dr. Mastrangelo referred M.D. to another orthopaedic surgeon. If he had planned to rely of the DEAHY assessment, Dr. Mastrangelo would not have made this referral.

I find no basis for interfering. The arbitrator provided detailed reasons for his factual findings and the application of the law to those facts. Although the appeal was argued quite broadly, the lack of any explanation for the referral to DEAHY was fatal to M.D.'s claim.

The one specific submission was that the arbitrator erred in addressing the assessments separately. However, even accepting Mr. Spiegel's submission that a multi-disciplinary assessment is more than the sum of its parts, I am not persuaded that it affects the outcome. The arbitrator clearly found that M.D. had undergone extensive assessments within a relatively short period of time and, absent an explanation, could find no reason for the DEAHY assessments.

Therefore, the appeal on the main issue is dismissed.

The arbitrator did not decide the issue of arbitration expenses in his initial decision. Instead, he gave the parties 60 days to make written submissions if they were unable to reach an agreement. Halifax made written submissions, but M.D. did not, despite being invited to do so. On January 4, 2001, the arbitrator issued a second decision, ordering M.D. to pay Halifax's arbitration expenses. In addition, he found that her arbitration application was frivolous and an abuse of process, warranting an assessment of $3,000 under s.282(11.2) of the Insurance Act.

On appeal, Mr. Spiegel submits that M.D. was entitled to act through an agent and is an innocent victim trying to get justice. He contends that the arbitrator took an unduly antagonistic approach to the claim, inappropriately "bashing the victim." I disagree. Although the dispute resolution process is meant to provide a less formal alternative to court, insured persons must take responsibility for their use of the process, including the actions of their chosen representatives.

In this case, it appears that DEAHY attempted to insulate M.D. from the claims process. She signed forms authorizing Halifax to pay expenses directly to DEAHY, and for DEAHY to act as her agent in pursuing her claims for medical and rehabilitation benefits. She did not participate at any stage of the dispute resolution process, but was represented by Mr. Spiegel throughout. However, Mr. Spiegel failed to attend the pre-hearing and did not comply with the production orders made by the pre-hearing arbitrator. In addition, he did not present any evidence at the arbitration hearing to explain the referral to DEAHY, and failed to provide any written submissions on the question of arbitration expenses despite being invited to do so. In the circumstances, it is not surprising that M.D.'s claim was unsuccessful, or that she was ordered to pay expenses and an assessment.

In his oral submissions, Mr. Spiegel objected to the arbitrator's use of the word "fraudulent," arguing that there was nothing fraudulent about M.D.'s claim. The decision makes it clear, however, that the arbitrator found the claim frivolous and an abuse of process, not fraudulent.

For these reasons, the appeal of the arbitrator's second order, dated January 4, 2001, is dismissed.

III. APPEAL EXPENSES AND ASSESSMENT

I have no hesitation in ordering M.D. to pay Halifax's appeal expenses. Her appeal was unsuccessful and, although her representative clearly wanted to expand the scope of s.24 of the SABS-1996, this was the wrong case. The arbitration decision turned more on the facts than any question of law, making it unlikely that the appeal could succeed.

May 16, 2001

David R. Draper Director of Arbitrations (A)

Date

Footnotes

1. 1Ontario Regulation 403/96, as amended, the Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996.
2. 2Salvaggio and Simcoe & Erie General Insurance Company, (FSCO P97-00062, January 21, 1999), Tesfai and Allstate Insurance Company of Canada, (FSCO A99-000321, July 26, 2000), under appeal; Tsimidis and Liberty Mutual Insurance Company, (P99-00013, August 28, 2000); Sivanesan and CIBC Insurance, (FSCO A99-000872, January 4, 2001). Section 24 issues have also been addressed in Sunderani and State Farm Mutual Automobile Insurance Company, (FSCO A99-000724, August 31, 2000); Glinka and Dufferin Mutual Insurance Company, (FSCO A99-000849, November 21, 2000), under appeal; Aleman and State Farm Mutual Automobile Insurance Company, (FSCO A00-000498, March 6, 2001), under appeal; Xiao and State Farm Mutual Automobile Insurance Company, (FSCO A00-000471, April 4, 2001); and Tanzos and State Farm Mutual Automobile Insurance Company, (FSCO A99-000711, April 10, 2001), under appeal.
3. 3Only the insured person can opt for arbitration. The insurer must go to court.
4. 4See, Wong and Allstate Insurance Company of Canada, (FSCO A99-000545, September 22, 2000), p. 17.
5. 5See, Chafe-Moote and Prudential of America General Insurance Company (Canada), (FSCO P99-00044, September 8, 2000), p. 14.