Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2002 ONFSCDRS 165

Appeal P01-00011

Appellant Respondent by Cross-Appeal

and

Respondent Appellant by Cross-Appeal

Before:

Stewart M. McMahon

Counsel:

Altor Shields for Ms. Mostajo

Darrel P. March for Wawanesa

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.
Wawanesa shall pay 80 per cent of Ms. Mostajo's legal expenses associated with the combined appeals.

October 25, 2002

Stewart M. McMahon Director's Delegate

Date

Ms. Mostajo was injured in a motor vehicle accident on June 5, 1998.¹ Approximately ten months later she received a course of psychological counselling and chiropractic treatment, stemming from an injury to her right knee. Some, but not all, of this treatment was described in two concurrent treatment plans. The Arbitrator awarded Ms. Mostajo benefits associated with the treatment described in the two plans. However, he dismissed the balance of the claim on the basis that Ms. Mostajo had not submitted a treatment plan in relation to it. Ms. Mostajo appeals the latter ruling. Ms. Mostajo also appeals the dismissal of her claims for housekeeping expenses and a special award.

Wawanesa Mutual Insurance Company ("Wawanesa") appeals the award on the basis that the Arbitrator erred when he found that Ms. Mostajo had injured her right knee in the accident.

The Insurer's appeal can be dealt with quite briefly. I will address it first.

A. Did the Arbitrator err when he concluded that Ms. Mostajo had injured her right knee in the accident?

In the days following the accident Ms. Mostajo complained of neck and back pain and a sore left knee. She made no mention of trouble with her right knee. Ms. Mostajo returned to work within three or four months. Approximately six months after the accident Ms. Mostajo complained of spontaneous swelling and pain in her right knee. She was diagnosed with a torn meniscus. After arthroscopic surgery she was referred for therapy.

Wawanesa refused to fund the therapy. At the arbitration hearing, it argued that Ms. Mostajo had not proven her right knee was injured during the accident. Amongst other things, Wawanesa argued that given the gap between the accident and the onset of symptoms, it was more likely that Ms. Mostajo had injured her right knee at work. The Arbitrator respected this argument. He allowed the claim in part, finding that Ms. Mostajo had "discharged the burden on her to establish, on the balance of probabilities, that her right knee problems were the result of the accident...."

On appeal, Wawanesa advances two related arguments. One, it argues the Arbitrator erred in law when he found a causal link in the absence of a supporting medical opinion. Two, it argues that the Arbitrator improperly reversed the onus by requiring it to establish that the injury was attributable to some cause other than the accident.

There is no basis for the first ground of appeal. The medical reports filed at the arbitration hearing include at least two opinions that can support a finding that the meniscal tear was caused by the accident. This ground of appeal is dismissed.

I turn now to Wawanesa's second argument — that the Arbitrator improperly reversed the onus on the causation question. Wawanesa refers to the following passage from the Arbitrator's reasons in support of its submissions. For ease of reference I have italicized the key sentences.

In my opinion, the causation issue raised by the history of Ms. Mostajo's right knee problems must be resolved in her favour for the following reasons. First, I accept Ms. Mostajo's evidence that she struck her right knee in the motor vehicle accident. Insurer's counsel speculation that Ms. Mostajo injured her knee at work is not supported by any evidence. Second, the operative report of Dr. Paul H. Marks the orthopaedic specialist who performed arthroscopic surgery on March 19, 1999, confirms that Ms. Mostajo did have a right knee medial meniscal tear. None of the other medical evidence before me, including the reports of two specialists who saw Ms. Mostajo after that surgery (Drs. S. W. Joseph Wong, a physiatrist, and R. Zarnett, an orthopaedic surgeon), suggests that such a tear could not have remained asymptomatic from June 5 to November 23, 1998. A finding that such a tear could not have remained asymptomatic from June 5 to November 23, 1998 would not be based on any medical evidence. In the absence of such evidence, and of any evidence identifying a cause other than the one identified by Ms. Mostajo in her description of the accident, I find that she has discharged the burden on her to establish, on the balance of probabilities, that her right knee problems were the result of the accident of June 5, 1998. [footnotes omitted]

I understand Wawanesa’s concerns, but I do not read this passage in the same way as it does.

The first italicized sentence simply re-states Wawanesa’s theory together with a concise statement that this theory was not supported by the evidence. This kind of re-statement of a party’s position is to be encouraged. It does not signal a shift in onus, but does let the unsuccessful party know that the Arbitrator heard and considered their argument.

The balance of the passage suggests to me that the Arbitrator recognized that the lengthy period between the accident and the onset of symptoms was a factor to be considered. The import of the reference to Drs. Wong and Zarnett is not self-evident, but the Arbitrator’s reasoning is more apparent when it is noted that their reports contain statements that there was a link between the accident and the torn meniscus. I read the passage as a statement by the Arbitrator that he was satisfied that the evidence that Ms. Mostajo struck her right knee in the accident, when combined with the opinions of Drs. Wong and Zarnett, was sufficient, if unanswered, to prove the causal link between the accident and the torn meniscus. The second italicized portion of the passage is no more than a statement that the Insurer had not answered the case made by the Applicant. It does not represent a shifting of the legal burden or onus of proof.

This ground of appeal is dismissed.

B. Did the Arbitrator err when he ruled that Ms. Mostajo was only entitled to recover the expenses encompassed by the treatment plans submitted to Wawanesa?

(i) Overview

As noted earlier, some, but not all, of the treatment in issue was described in treatment plans submitted to Wawanesa. It argued that the submission of an application and treatment plan for all of the expenses was mandatory, and that in the absence of these documents, it had no obligation to reimburse Ms. Mostajo. The Arbitrator accepted this argument, at least in part, and dismissed the claim for much of the treatment. Ms. Mostajo appeals this ruling. She advances two main arguments. One, she argues that the statutory provisions do not require her to submit subsequent applications or treatment plans when the initial plan has been rejected by the insurer. Two, she argues that because Wawanesa did not provide a proper reason for denying the initial application, it forfeited any right to demand further applications or treatment plans.

(ii) Background facts

Ms. Mostajo was referred to a clinic for physical therapy following the arthroscopic surgery to her knee. The clinic immediately began to treat her with a combination of physiotherapy and chiropractic treatments, and within a few weeks initiated counselling sessions. The clinic staff prepared two concurrent treatment plans; one for the physical therapy, and one for the counselling. There was some unexplained delay in preparing, and then sending the treatment plans to Wawanesa. By the time it received the plans, Ms. Mostajo had almost completed the proposed treatment. Wawanesa immediately advised that the treatment plans were "not accepted" and arranged an assessment at the Designated Assessment Centre ("DAC"). However, the adjuster did not provide a reason for not accepting the treatment plans.

The clinic staff continued to treat Ms. Mostajo beyond the terms of the initial treatment plans, but did not prepare further treatment plans. The arbitration record contains copies of contemporaneous invoices for the additional treatment, but there is no record of when they were sent to the Insurer. Ms. Mostajo had already completed the regime set out in the treatment plans by the time the DAC assessment was conducted.

It would appear from the DAC reports that at least some of the assessors were aware of the fact that Ms. Mostajo had received treatment beyond what was described in the treatment plans. As is often the case, when the DAC is reviewing a treatment plan well after the fact, it is difficult to interpret their findings. In any event, Wawanesa interpreted the report as a statement that the treatment undertaken pursuant to the treatment plan was not reasonable or necessary and advised Ms. Mostajo that "all treatment is denied as per Med/Rehab DAC assessment."

(iii) Statutory references

Section 38 of the SABS-1996, which is made up of 25 sub-sections, provides a detailed procedure for claiming medical and rehabilitation benefits. The starting point for the process is the submission of an application [s. 38(1)]. The key component of this application is a treatment plan that contains a description of the treatment to be provided and an estimate of its duration and cost [s. 38(2) and s. 2]. The insurer, in turn, is obliged to promptly determine what portion, if any, of the services it will agree to pay for, and to advise the insured of its decision and reasons [s. 38(7), 38(8) and 38(12)(b)(i)]. In addition, if the insurer indicates that it will not pay for any portion of the expense, it must arrange a DAC assessment [s. 38(12)(a) and s. 43(6)].

Sections 38(1) and (2) indicate that the insured person must submit an application, and hence a treatment plan, before obtaining treatment. However, s. 38(17) provides a measure of relief. It states that if the insured incurs expenses before submitting an application and treatment plan, she "shall" submit the necessary documentation within 30 days after incurring the expenses. On receipt of such an application the insurer has thirty days to either pay the expenses, or give the insured person notice of its reasons for not paying the expenses [s. 38(18)].

Section 31(1) affords a more general and potentially more important form of relief. It stipulates that a failure to comply with a time limit set out in Part X of the SABS does not disentitle the person to a benefit provided she has a reasonable explanation. The significance of s. 31(1) is that it can be used to save an application that is made beyond the 30 day limit found in s. 38(17). However, unlike, s. 38(17), the insured must also provide an explanation for the default.

Sections 31(1) and 38(17) provide the possibility of relief in the event of a late application and, by extension, the late submission of a treatment plan. I was not directed to any section that affords relief in the event the insured does not submit an application or treatment plan.

(iv) The arbitration decision

It is difficult to discern precisely what Ms. Mostajo argued at arbitration. It would appear that her argument focussed on the Insurer's failure to provide a reason for not accepting the initial treatment plan. The Arbitrator's reasons on this issue are quite brief. He started his analysis by citing the obligation to file an application and treatment plan before starting treatment, and the possibility of relief as set out in s. 38(17). He then noted that neither Ms. Mostajo, nor the representative from the treatment facility, explained why further treatment plans had not been submitted to Wawanesa. He concluded by stating; "on these facts I accept the submission of Insurer's counsel that Ms. Mostajo is not entitled to recover the cost of treatment for which treatment plans were not submitted to the Insurer."

The Arbitrator invited the parties to contact him if they were unable to agree on the amounts owing pursuant to the treatment plans that had been submitted. They did so, resulting in a second decision. In this second decision the Arbitrator elaborated on his initial reasoning. The latter decision is not under appeal, however, the reasoning in it is inextricably linked to the first decision, and I have considered it in the context of this appeal.

As is typical, the plans, submitted by Ms. Mostajo, proposed treatment that was defined by three variables; the number of weeks over which the treatment would be conducted, the number of sessions per week, and the cost. Wawanesa took a very hard stand during the second hearing. It argued that it had no further obligations once the treatment exceeded any of these variables. Ms. Mostajo urged the Arbitrator to take a more flexible approach, arguing that she should be able to recover payments that exceeded a single variable provided that they roughly coincided with the other two variables.

The Arbitrator stated that there was merit to each party's submission. He acknowledged that treatment providers cannot always be expected to predict the exact parameters of treatment, and therefore some latitude must be allowed. However, he concluded that a treatment provider is obliged to provide insurers with "revised or new estimates whenever the duration, frequency, or cost of the treatment as originally proposed is significantly revised or extended." [emphasis in original]. He went on to state that what constitutes a significant revision or extension would have to be determined on a case by case basis.

(v) Argument and Analysis

Ms. Mostajo submits that the Arbitrator erred by failing to recognize that once the insurer has rejected the initial treatment plan, the insured person has no obligation to file further plans in the event that she intends to pursue additional treatment. I do not accept this submission. Ms. Mostajo's reasoning is more consistent with an open-ended process, in which the insured person makes a single application for expenses, irrespective of the ultimate duration or cost of the treatment.

Each successive version of the accident benefits schedule has moved further away from this type of process to the point where s. 38 of the current version requires the insured person to file a well-defined plan with the insurer before commencing treatment. Section 2 of the SABS-1996, indicates that this plan must include a description of the proposed treatment, together with an estimate of its duration and cost. The treatment plan form prepared by the Superintendent of Insurance takes this one step further. It asks the treatment provider to also indicate the frequency of the proposed treatment. This kind of specificity suggests that the initial treatment plan can only support the first application for expenses. If the insured person wishes to pursue additional treatment she must file another application and treatment plan that describes the new round of treatment including an estimate of its duration and cost.

I recognize that the definition of a treatment plan refers to an "estimate" of the duration and cost of treatment. This is consistent with the prospective nature of the exercise. I agree with the Arbitrator's comment that this means some latitude is necessary. It would not benefit anyone to require the treatment provider to prepare and submit an additional treatment plan each time they intend to extend the treatment by a few sessions, or the cost will be a little more than originally anticipated. However, at some point, the ongoing treatment can no longer be fairly characterized as part of the initial proposal. Instead it is more accurately characterized as a new round of treatment that should be the subject of a separate application, supported by a new treatment plan. As stated by the Arbitrator, what constitutes a "significant" revision or extension, that should be the subject of a fresh proposal, must be determined on a case by case basis. If each round of treatment is the subject of a discrete application, then it does not necessarily follow, as argued by the insured person, that she has no obligation to file subsequent plans, merely because the insurer rejected a previous plan.

In the alternative, Ms. Mostajo argues that because Wawanesa did not give any reasons for denying the initial plan, it forfeited its right to demand additional treatment plans. The insurer's reasons - or lack thereof - may become very important. However, I am not prepared to take the argument as far as Mr. Shields proposes.

The reason given by the insurer at the time it denies the initial treatment plan may be significant in two respects. The reasons may contain a waiver of the need to file additional treatment plans. Alternatively, the insured person may be able to rely on the reasons to provide an explanation for why she did not file an additional treatment plan in a timely fashion, thereby permitting her to take advantage of s. 31(1). Neither of these alternatives was argued. Instead, Ms. Mostajo focussed on the absence of a reason for denying the initial application. Ms. Mostajo's counsel argued that the Insurer forfeited its right to demand additional treatment plans because it failed to give reasons for rejecting the initial plan. The absence of a reason for not accepting the initial plan might also be used by the insured person to explain why she did not file a subsequent application and treatment plan in a timely fashion, but it does not automatically relieve the insured person of her obligations. In this case, neither Ms. Mostajo nor the treatment provider offered any explanation for the failure to file an additional treatment plan. In these circumstances, I see no error in the Arbitrator's ruling that Ms. Mostajo was limited to recovering the expenses described in the initial treatment plans.

C. Did the Arbitrator err in dismissing Ms. Mostajo's claim for housekeeping expenses?

Ms. Mostajo submitted a claim for housekeeping expenses during two periods. The first started with the accident and lasted for approximately seven months. The second followed the arthroscopic surgery and lasted for approximately two months. The Arbitrator dismissed the claims. The Arbitrator relied, in part, on the fact that Ms. Mostajo had returned to work during a large portion of the first period, noting that her work duties closely resembled her housekeeping obligations.

On appeal, Ms. Mostajo argues that having made the link between her work duties and housekeeping obligations, the Arbitrator should have awarded her housekeeping expenses during the periods when she was unable to work. I have some sympathy for this argument, but it focusses exclusively on one of the factors cited by the Arbitrator and ignores the balance. Amongst other things, the Arbitrator noted that Ms. Mostajo was unable to produce any of the individuals who purportedly helped her. She also admitted on cross-examination that some of the duties she was claiming for had been the responsibility of other family members before the accident. The Arbitrator also noted that she admitted, during a functional capacity evaluation, that she could do some of the tasks she was claiming. She also admitted to Wawanesa's adjuster that she was not getting any help with housekeeping for at least a portion of the period during which she was claiming benefits.

Whatever the strength of Ms. Mostajo's argument about the link between her work duties and household obligations, it was only a small piece of the picture. As noted by the Arbitrator, it was the "cumulative effect of these weaknesses and inconsistencies" that defeated Ms. Mostajo's claims. The weighing of all of this evidence is the province of the Arbitrator, not the appeals adjudicator. It would be inappropriate for me to extract a single element, and then overturn the Arbitrator's conclusions on that basis.

D. Did the Arbitrator err in dismissing Ms. Mostajo's claim for a special award?

Ms. Mostajo included in the issues submitted to arbitration a claim pursuant to s. 24 of the SABS-1996, for the cost of a psychological assessment. The Arbitrator allowed the claim, but dismissed the demand for a special award. The Arbitrator's decision relies heavily on the reasoning in the appeal decision in Tsimidis and Liberty Mutual Insurance Company, (FSCO P99-00013, August 28, 2000). In rejecting the demand for a special award, the Arbitrator stated that "this decision re-stated the law in a way which, in my opinion, made the Insurer's position untenable." However, the Arbitrator then went on to note that the arbitration decision in M.D. and Halifax Insurance Company, (FSCO A99-000690, January 4, 2001), while distinguishable, provided "at least some authority for the Insurer's position." On appeal, Ms. Mostajo argues that in light of the finding that Wawanesa's position was "untenable," he was obliged to order a special award.

Section 282(10) of the Insurance Act provides that the insurer shall pay a special award in the event that it unreasonably withheld or delayed payments. In this case, the Arbitrator stated that the change in the law made Wawanesa's position "untenable," but was not prepared to say that the refusal to pay the benefit had been "unreasonable."

The principle focus should be on the situation as it existed at the time the insurer refused benefits, and its decision should not be judged with the benefit of hindsight. See Gan Canada Insurance Company and McConachie (FSCO P97-00069, October 28, 1998). However, that is not the same as saying that the insurer's conduct post-termination is irrelevant.

In Moschonissios and York Fire and Casualty Insurance Company (FSCO A97-002196, December 23, 1999 affd. P00-00008, March 12, 2001), Arbitrator Makepeace stated, "Insurers have a responsibility to take reasonable care in ascertaining the current state of the law. Where the law is changed or clarified ... insurers must make the appropriate adjustments with reasonable promptness." I agree with this statement, though I would hasten to add that, in that case, the "clarification" in the state of the law came about by reason of the Supreme Court of Canada's refusal to hear an appeal from the Ontario Court of Appeal on a very discrete issue. On the release of the Supreme Court's decision, there remained no reasonable doubt about the issue. In contrast, s. 24 is multi-dimensional and during the relevant time, the jurisprudence dealing with it was immature. The Tsimidis decision was the first appellate decision to consider the law concerning s. 24 and as of the start of this arbitration hearing, had not yet been the subject of discussion at either the arbitration or appellate level.

In these circumstances, I am not prepared to say that the Arbitrator erred in refusing to say that Wawanesa had unreasonably withheld the benefit in issue.

3. EXPENSES

Wawanesa was unsuccessful on its appeal and is responsible for Ms. Mostajo's expenses in relation to this appeal. Ms. Mostajo was unsuccessful on the main issue in her appeal - the application of s. 38 to ongoing treatment claims, but she raised legitimate points with respect to an issue that had not yet been discussed at the appeal level. She is entitled to her expenses on this issue. Ms. Mostajo was unsuccessful on the other two issues raised in her appeal. These issues did not raise novel questions. I am not prepared to award her expenses in relation to them. In all of the circumstances, Wawanesa shall pay 80 per cent of Ms. Mostajo's expenses in relation to the combined appeals.