Mindi Smith v. Citadel General Assurance Company, 2001 ONFSCDRS 96

Neutral Citation: 2001 ONFSCDRS 96

FSCO A00-000984

BETWEEN:

MINDI SMITH

Applicant

and

CITADEL GENERAL ASSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: William J. Renahan

Heard: April 23 and 26, 2001, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Rod Hare for Ms. Smith Jonathan Schreider for Citadel General Assurance Company

Issues:

The Applicant, Mindi Smith, was injured in a motor vehicle accident on February 21, 2000. She applied for and received statutory accident benefits from Citadel General Assurance Company ("Citadel"), payable under the Schedule.¹ Citadel refused to pay for the cost of two assessments claimed pursuant to section 24 of the Schedule. The parties were unable to resolve their disputes through mediation, and Ms. Smith 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 Ms. Smith entitled pursuant to section 24 of the Schedule to the cost of an In-Home Assessment and a Worksite Assessment performed by Profile Evaluations?
Is Ms. Smith entitled to a special award pursuant to subsection 282(10) of the Insurance Act on the grounds that Citadel unreasonably withheld or delayed payments?
Is Citadel entitled to an award pursuant to subsection 282(11.2) of the Insurance Act on the grounds that the application was frivolous, vexatious or an abuse of process?
Is either party entitled to expenses pursuant to subsection 282(11) of the Insurance Act?

Result:

Ms. Smith is not entitled to the cost of the assessments performed by Profile Evaluations.
Ms. Smith is not entitled to a special award.
Citadel is not entitled to an award pursuant to subsection 282(11.2) of the Insurance Act.
The issue of entitlement to expenses of the arbitration proceeding is deferred.

EVIDENCE AND ANALYSIS:

Background

On February 21, 2000, Ms. Smith suffered soft tissue injuries to her neck and back when the vehicle she was driving was struck from the rear. At the time of the accident, Ms. Smith worked long hours through a temporary employment agency as a data entry clerk. She returned to part-time work after about two weeks. By May 2000, Ms. Smith was nearly working full-time hours with time off for physiotherapy. Ms. Smith quit that job and has not returned to working the long hours that she worked before the accident.

At the end of March and the beginning of April 2000, Citadel arranged for Janice Ray, a certified kinesiologist with Ray Rehabilitation Consultants Inc., to interview Ms. Smith and prepare an "Activities of Daily Living" report and a "Job Analysis with Ergonomic Adjustment" report (the "Ray" reports or assessments). In mid-April 2000, Ms. Smith's family doctor, Dr. Ronald Oda, referred Ms. Smith for further assessments with Profile Evaluations. Profile Evaluations contracted Ms. Sue-Anne Lee, a certified kinesiologist, to perform an "In-Home Assessment" and a "Worksite Assessment" (the "Profile" reports or assessments).

Citadel refused to pay for the Profile assessments.

Mr. Rod Hare is a co-owner of Profile. He acted as Ms. Smith's representative and testified.

Scope of hearing:

Citadel's defence:

Citadel refused to pay for the Profile assessments because they duplicated the work done by Janice Ray. Mr. Hare argued that Citadel was restricted at this hearing to arguing whether the Profile assessments were duplicate. In its Response to Ms. Smith's Application for Arbitration, Citadel denied that the examinations and costs were reasonable and necessary. The pre-hearing letter identifies the issue of this hearing as whether Ms. Smith is entitled to payments for the costs of examinations. This hearing is about whether Ms. Smith is entitled to the benefit she claims. It is not about whether Citadel's decision not to pay the benefit is correct. That issue may be relevant to a special award if I determine that Ms. Smith is entitled to the benefit she claims. Citadel is entitled to raise these other defences at this hearing.

Nature of assessments performed by Citadel:

Mr. Hare questioned the witnesses and made submissions on the basis that Ms. Ray performed "section 24 assessments" and that Citadel was in a conflict of interest by performing these assessments, that Citadel should have submitted a treatment plan, that Citadel should have complied with section 32 of the Schedule by giving itself notice that Ms. Smith was applying for a benefit and that Citadel's examinations were "illegal." Ms. Lorraine Parks, Citadel's adjuster, also testified that Citadel's assessments were performed pursuant to section 24.

An insurer's right to examine its insured is set out in section 42 of the Schedule, not section 24.

Neither party referred to section 42. I set it out in full:

(1) For the purpose of determining whether an insured person is entitled to a benefit, except a funeral or death benefit, an insurer may give the insured person notice requiring him or her to be examined by one or more persons specified by the insurer, each of whom is a member of a health profession or a person with expertise in vocational rehabilitation.

(2) The notice shall state the benefit to which the examination relates.

(3) The insurer may require examinations as often as is reasonably necessary.

(4) The insurer shall make reasonable efforts to schedule the examination for a time that is convenient for the insured person and shall provide the insured person with reasonable notice of the examination.

(5) For the purpose of the examination,

(a) the insured person shall provide the person or persons who conduct the examination with such information as is reasonably necessary; and

(b) the insured person shall submit to any reasonable physical, psychological, mental and functional examinations requested by the person or persons who conduct the examination.

(6) The person or persons who conduct the examination shall prepare a report and provide a copy of the report to the insurer.

(7) An insurer that receives a report under subsection (6) shall provide the insured person with a copy of the report within seven days.

(8) If an insured person fails or refuses to submit to an examination required by the insurer under this section or fails to comply with subsection (5),

(a) the insurer may stop payment of the benefit related to the examination until the person submits to the examination or complies with subsection (5), after which time the insurer shall resume payment of the benefit; and

(b) no benefit is payable for the period after the giving of the notice under subsection (1) or the failure to comply with subsection (5) and before the insured person submits to the examination and complies with subsection (5).

In M.D. and Halifax Insurance Company, (May 16, 2001, Appeal P00-00049), Director Draper distinguished section 42 from section 24 as follows:

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.

He added "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."

In my view, the Ray assessments were performed under the authority of section 42 of the Schedule. Ms. Smith's evidence and submissions concerning the duty of Citadel to submit a treatment plan to itself and concerning conflict of interest were irrelevant.

At the time of the Ray Assessments, Sal Grillo, Barrister and Solicitor, represented Ms. Smith. Ms. Catherine McRae Hill testified that she worked in Mr. Grillo's office at that time and that she handled Ms. Smith's file. Citadel mailed its medical documentation to Mr. Grillo's office on May 8, 2000. No one from Citadel testified as to whether the Ray reports were included in that documentation. Ms. McRae Hill testified that she received the Ray reports and that she may have looked at them. She did not have the file and did not remember when she received the reports. The Ray reports were dated April 7, 2000 and May 4, 2000. This is the only evidence I heard on whether Citadel complied with subsection 42(7) which requires the insurer to provide the insured person with a copy of the report within seven days.

I find that the Ray reports were included in the documentation mailed to Ms. Smith's legal representative on May 8, 2000.

On May 25, 2000, after the completion of the Profile assessments, Mr. Hare asked Citadel for the Ray assessments. He wrote that he would charge Citadel to review these assessments.

I heard no submissions on the issue of whether Citadel complied with subsection 42(7). This is not surprising since both parties referred to the Ray assessments as "section 24 assessments" and Mr. Hare and Ms. McRae Hill treated the Ray assessments as irrelevant. I do not deal with whether Citadel complied with section 42 because the meagre evidence on this issue arose tangentially to other issues and was largely irrelevant and because neither party addressed compliance with section 42 in argument.

Nature of the evidence and argument:

Ms. Sue-Anne Lee, the kinesiologist hired by Profile, met Ms. Smith on May 8, 2000. Ms. McRae Hill testified that she knew Ms. Smith had undergone some type of assessments arranged by Citadel but that "we decided" that Profile should perform further assessments. I find that Ms. McRae Hill arranged for the Profile assessments with knowledge that Ms. Smith had undergone some type of assessments. Other than the argument that Ms. Smith was entitled to her own independent assessments as of right, I heard no evidence or argument to explain why further assessments were arranged when there was a risk that they would duplicate assessments already performed.

Ms. MacRae Hill left Mr. Grillo's office in September 2000 and took Ms. Smith with her as a client, but she did not take the file.

I heard very little evidence on how the Profile assessments were to be used and very little analysis comparing the Ray and Profile assessments. Mr. Hare took the position that an insured has an absolute right to an independent assessment and that the insurer has to pay for it even if the report is never used. As I will discuss below, I disagree with this interpretation of section 24.

Mr. Hare also made general claims that Citadel acted inappropriately by directing Ms. Smith's rehabilitation. It was not clear to me what rehabilitation he referred to. In a letter dated June 7, 2000 to Ms. Carolan Shannon, Citadel's claims supervisor, Mr. Hare wrote:

The Citadel Assurance has totally manipulated and attempted to inappropriately direct medical rehabilitation of its claimant by completing its own assessments and not informing its claimant of her right to have those assessments conducted by her own chosen medical rehabilitation providers.

As I stated above, the insurer's right to an assessment is set out in section 42 of the Schedule. The right assists the insurer in its investigation and adjustment of the claim. It is not a right to direct rehabilitation.

The only evidence that Citadel was involved in the rehabilitation of Ms. Smith is that Ms. Ray gave Ms. Smith assistive devices for home and work such as an Obus form and a gel wrist rest, that she made minor adjustments at home and work to assist Ms. Smith and that Ms. Ray encouraged Ms. Smith once she returned to work. A long line of cases starting with Gaba and Allstate Insurance Company, (OIC A-000624, August 21, 1992) have urged insurers to cooperate in the rehabilitation of their insureds. On the other hand, Mr. Hare argued that Citadel's intervention amounted to treatment and that the insurer's obligation is merely to pay for treatment, not render it. If there was any treatment by Citadel, it was minor. The Ray assessments were undertaken to assess and adjust the claim, not for the purpose of rendering treatment. The parties did not fully develop an evidenciary basis that Citadel was involved in Ms. Smith's treatment. Nor did they make complete submissions on this important issue. I therefore do not deal with the issue of the extent to which an insurer should involve itself in the rehabilitation of its insured.

Test for entitlement to the cost of examinations:

The relevant portions of section 24 of the Schedule are 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

(2) The insurer is not liable under clause (1) (a) or (b) to pay for expenses related to professional services rendered to an insured person that exceed the maximum rate or amount of expenses established under the Professional Fees Guidelines published in The Ontario Gazette by the Ontario Insurance Commission, as they may be amended from time to time.

The first question is whether the Profile assessments were for the purpose of the regulation. If they were, the next question is whether the expenses were reasonable. Whether the expense is reasonable involves two tests. In Tsimidis and Liberty Mutual Insurance Company, (August 28, 2000, Appeal P99-000013) the insurer conceded that the referral for the assessment was reasonable. The only issue in that appeal was whether the amount of the expense was reasonable. The tests therefore are whether it was reasonable to refer Ms. Smith to Profile for assessments and, if so, was the cost of those assessments reasonable?

Whether Profile assessments were for the purpose of the Regulation?

Arbitrator Joachim stated² that section 24 must be interpreted to include those examinations, assessments, certificates, reports or treatment plans which are obtained in furtherance of claims for benefits set out in the 1996 Schedule. She distinguished assessments for medical, rehabilitation, attendant care and case manager services under Part V of the Schedule with the cost of examinations under section 24 which is in Part VI. She wrote that "Examinations and assessments which are conducted primarily for the purpose of assessing an applicant's condition (to determine or justify entitlement to benefits), rather than for the purpose of returning the applicant to pre-accident levels of functioning, fall under section 24." I do not find this distinction helpful because many assessments satisfy both purposes.

In Aleman and State Farm (FSCO A00-000498, March 6, 2001) Arbitrator Palmer dealt with a claim under section 24 where the author of the report wrote that "the assessment was required for the preparation of a treatment plan or for the ongoing medical rehabilitation management of claim and benefit issues." Arbitrator Palmer wrote:

In my view, then, to establish that this specific report was "for the purpose of the Regulation" evidence should have been offered that this report was intended to be used to establish a treatment plan, was otherwise useful in the course of Mrs. Aleman's rehabilitation, or was used in some way in a dispute with the Insurer over her entitlement to some benefit under the Schedule.

The test of reasonableness is the same whether an assessment or report is made for a medical or rehabilitation purpose and is claimed under section 14, 15 or 24 of the Schedule. The main difference between claims under section 14 and 15 and claims under section 24 is that an insured must submit a treatment plan³ before incurring most medical or rehabilitation expenses whereas an insured is not required to submit a treatment plan for an assessment or report performed under section 24.

In my opinion "for the purpose of this Regulation" includes an assessment or report made for a medical or rehabilitation purpose or for the purpose of claiming a benefit available under the Regulation.

Ms. Sue-Anne Lee was the kinesiologist Profile contracted to conduct the assessments. She testified that the assessments could be used to establish treatment goals. I heard no evidence that they were used for this purpose.

In her In-Home Assessment, Ms. Lee made recommendations. They were "postural and general conditioning exercises," a "self-directed stretching and strengthening exercise program in her home," "education regarding 'hurt vs. harm'" "posture awareness and the use of energy conservation and pain management strategies," an Obus form, cervical pillow and ice packs. Ms. Lee also recommended that Ms. Smith continue to receive housekeeping assistance. All these recommendations are for rehabilitation purposes and for the type of benefit available under the Schedule. I therefore find that the In-Home Assessment was performed for the purpose of the Regulation.

In the Worksite Assessment, Ms. Lee recommended a "stretching and strengthening exercise program," "education regarding 'hurt vs harm', ice packs and a cervical pillow." Again, all these recommendations are for rehabilitation purposes and the type of benefit available under the Schedule and I find that the Worksite Assessment was performed for the purpose of the Regulation.

The more difficult question is whether it was reasonable to conduct the assessments.

Was it reasonable to conduct the assessments?

Included in this question is who asked for the assessments and why, was the referral reasonable and, did the insured have a medical or rehabilitation need that was not met or that required assessment?

Dr. Ronald Oda:

Dr. Ronald Oda is Ms. Smith's family doctor. He asked for two assessments. It is not clear why he asked for the assessments. He ticked off boxes on a Profile referral form asking for a "Home Assessment" and an "Attendant Care Form 1 Report." He did not tick off the box for a "Worksite Assessment." Mr. Hare testified that he thought the Worksite Assessment was more appropriate than the Attendant Care Report and he decided to do the Worksite Assessment rather than the Attendant Care Report. The only evidence Dr. Oda gave as to why he asked for the assessments was in response to a letter from Profile asking for confirmation that the assessments were useful. Dr. Oda replied that "Both these reports were reviewed and were of value in giving me a better understanding of the impact of her injuries both at home and in the workplace." I was not directed to and could not find any reference to Profile's assessments in Dr. Oda's clinical notes and records. I heard no explanation as to what Dr. Oda thought about Profile performing a Worksite Assessment when he had asked for an Attendant Care Form 1 report. For these reasons, I do not place much weight on Dr. Oda's evidence.

Ms. Catherine McRae Hill:

Ms. Catherine McRae Hill is the paralegal who worked on Ms. Smith's files while she worked in a law office. She took Ms. Smith with her as a client when she left the office but she did not take the file. Because she did not have the file, she did not know if the Profile assessments lead to the creation of any treatment plans. She testified that the Profile assessments were useful in that they assessed Ms. Smith's needs from her perspective rather than the insurer's perspective and got her the help she needed. She did not say what that help was. In a letter to Profile, Ms. McRae Hill wrote that the reports assisted her to access Ms. Smith's benefit entitlement. Again, she gave no evidence of what benefits Ms. Smith applied for or received as a result of the Profile assessments.

Ms. Smith:

Ms. Smith signed a Profile document in which she agreed to protect and pay for Profile's account. Other than testifying that Profile was her choice, she had no complaints against Ms. Ray. Citadel has paid all of Ms. Smith's claims, except for the Profile assessments. Ms. Smith did not have any input into the decision to have Profile conduct assessments for her. She could not think of any benefit she received as a result of the assessments. I heard no evidence that anyone discussed the reports with her. Ms. Smith testified that she read the Profile assessments the morning of the hearing. Ms. Smith testified in an intelligent manner and I question the significance of the Profile assessments when neither Mr. Hare, Ms. McRae Hill or Dr. Oda thought the assessments were important enough to give to Ms. Smith so that she could consider the recommendations.

Mr. Hare:

Other than arguing that Ms. Smith was entitled to an independent assessment, Mr. Hare did not address the issue of the reason for the Profile assessments.

The reports:

One can read a report and determine its purpose from its contents. The question is what use is the report to the reader? Appeal decisions in Salvaggio and Simcoe & Erie General Insurance Company and Wellington Insurance Company (FSCO P97-00062, January 21, 1999) and Tsimidis and Liberty Mutual Insurance Company (FSCO P99-00013, August 28, 2000) have cautioned against measuring the usefulness of a report with 20/20 hindsight. I believe determining the purpose of a report is a different process from determining the usefulness of the opinion it expresses. I therefore read the Profile reports to determine their purpose in the sense of what use were they to the reader in the context of the situation that existed at the time they were commissioned. For me, it is not helpful to say that an insurer must pay for an assessment undertaken to assess rehabilitation or other needs when there is no reason to believe that the insured has needs which require assessment.

The Profile In-Home Assessment described Ms. Smith's essential tasks at home and concluded that her "injuries have placed limitations on her ability to complete some of her activities of daily living due to the resultant impairment" and that her husband completed some of her regular tasks. The report described her leisure activities and noted that she had difficulty caring for her dogs. I noted the recommendations earlier in this decision.

The Profile Worksite Assessment described Ms. Smith's essential tasks as a data entry clerk and observed that her only physical limitation was sitting which was restricted to 45 to 60 minutes. It noted that Ms. Smith had no difficulty with her other physical tasks of walking, reaching and manual dexterity.

The Profile assessments described other elements of Ms. Smith's life but neither party referred to them in evidence or submissions. At the time of the assessments, Ms. Smith was 25 years old. I found the description of Ms. Smith's leisure activities the most revealing description of her pre-accident activity level and her level of impairment. Prior to the accident she participated in bike riding, horseback riding and ski-dooing. Once a week she rode her bicycle in the Niagara area for about six hours at a time. The report noted that since the accident she had not participated in these activities.

Ms. Lee met with Ms. Smith one month after Ms. Ray had completed her Activities of Daily Living Report and four days after Ms. Ray had completed her Job Analysis. I heard very little evidence or submissions on the difference between the two reports. Ms. McRae Hill testified that she may have looked at the Ray reports but she was not sure since she did not have the file.

In a letter to Citadel, Mr. Hare asked for the Ray reports so that he could compare them with the Profile reports. He wrote that he would charge Citadel for the review.

Ms. McRae Hill testified that the Profile reports were better than the Ray reports because they addressed Ms. Smith's pre-accident status. I disagree. The Ray reports refer to Ms. Smith's limitations which refers to her pre-accident status.

The Ray reports indicated that Ms. Smith suffered soft tissue injuries to her neck and back, that she worked long hours as a data entry clerk, that she was very active in athletic activities before the accident and that she was trying to get back to work and her former level of activity. The Ray reports recommended assistive devices and follow up consultations with the physiotherapist and family doctor. The Profile assessments, undertaken about five weeks later, report basically the same information and recommend the type of exercise and education programs one sees in other cases involving soft tissue injuries to the neck and back.

Benefits in dispute:

I do not know what benefits Citadel has paid Ms. Smith, but it has paid her everything she has asked for, other than the cost of the Profile assessments.

Conclusion on the reasonableness of conducting the Profile assessments:

I received very little evidence from Dr. Oda, Ms. Smith, Ms. Lee, Ms. McRae Hill and Mr. Hare on the use of these reports to anyone. Although I categorized the recommendations in the reports as those for rehabilitation purposes, I heard no evidence to persuade me that the Ray recommendations were inadequate or that the Profile assessments were better than the Ray assessments or that Ms. Smith received any benefit from the Profile assessments. I heard no evidence that anyone had any concern that Ms. Smith had medical problems or rehabilitation needs or other needs that were not addressed. After reading the reports, I cannot determine the use of the Profile reports.

Accordingly, I am not satisfied that it was reasonable for Dr. Oda to make the referrals for the Profile assessments.

Cost of reports:

Ms. Lee charged Profile a flat rate of $200 for each report and Profile charged Citadel $1,000 for each report. Ms. Lee now charges Profile at an hourly rate of $35. Mr. Hare testified that the guidelines of the Ontario Kinesiology Association allow a maximum rate of $120 per hour. Ms. Ray charged Citadel $469.34 for the Activities of Daily Living report which included GST and travel and $654.96 for the Job Analysis which included GST and travel. Ms. Ray obtains business from Citadel and I find that the fees she charges represent market rates. I believe a reasonable fee for Profile should reflect market rates.

Profile expenses are greater than those of Ms. Ray in that Mr. Hare has to market his services to more smaller customers. I therefore find that a reasonable fee for his services would be a little higher than what Ms. Ray would charge an insurance company. I also find that the Job Analysis is a little more involved than the In-home Assessment. If I had found that Ms. Smith was entitled to the cost of the Profile Assessments I would have allowed Profile somewhat more than what Ms. Ray charged an insurance company. Inclusive of taxes and disbursements, I would have rounded off and allowed $500 for the In-home assessment and $700 for the Job Site Assessment.

Award pursuant to subsection 282(11) of the Insurance Act:

Ms. Smith expressed no concern that she owed Profile $2,000 for the two assessments it performed and she had little input into the decision to undergo the Profile assessments. I find that Profile is the entity which stood to win or lose in this proceeding. I see nothing wrong with a service provider using this forum to collect its account. The accessibility of this process to organizations that provide medical or rehabilitation assistance may result in injured insured persons receiving services they might not otherwise receive.

Although Mr. Hare represented the applicant in Aleman and State Farm, another case where the applicant unsuccessfully sought the cost of a Profile assessment under section 24, neither party referred me to this decision. I find similarities in the two cases. In both cases, Mr. Hare unsuccessfully attempted to limit the scope of the insurer's defence. In Aleman, Arbitrator Palmer wrote "no evidence produced at this hearing established that the information gathered in this report was used by anyone for any purpose." [emphasis in original] In this case, Mr. Hare took the position that Ms. Smith was entitled to the cost of his assessments as of right and did not address the use of the assessments.

On the other hand, I found that the Profile assessments in this case were conducted for the purpose of the regulation. I do not find that the claim Profile brought in the name of Ms. Smith amounted to an abuse of process or was frivolous or vexatious.

EXPENSES:

If the parties cannot agree on the issue of entitlement to expenses of the arbitration proceeding, they may make written submissions to me within 30 days of this decision.

June 27, 2001

William J. Renahan Arbitrator

Date