Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2002 ONFSCDRS 73

Appeal P01-00007

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALLSTATE INSURANCE COMPANY OF CANADA

Appellant Respondent on Cross-Appeal

and

ZITA DA ROSA

Respondent Appellant on Cross-Appeal

Before:

Nancy Makepeace, Director's Delegate

Counsel:

Ian D. Kirby (for Allstate)

Rebecca Nelson (Mrs. Da Rosa)

APPEAL ORDER

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

The appeal of the arbitrator's order, dated December 20, 2000, is allowed in part.
Paragraph 1 of the arbitrator's order is revoked, and the following substituted:
Pursuant to s.36(1)(a) of the SABS-1994, Allstate shall pay Mrs. Da Rosa's chronic care co-payments to the Riverdale Hospital, and pursuant to s.47(1)(b), Allstate shall pay Mrs. Da Rosa's chronic care co-payments to the O'Neill Centre, in the amount of $180 per month, from August 1, 1995 and ongoing, plus interest under s.68 of the SABS-1994, less amounts already paid.
Within 30 days of this decision, Mrs. Da Rosa shall complete an application for an exemption with respect to the Riverdale Hospital and the O'Neill Centre, and provide all necessary documentation to support the application, as well as a copy of the decision.
Either party may move to reopen this hearing within 60 days of this decision, in the event of any remaining disputes about the amount payable.
Paragraphs 2 and 4 (additional benefits for services not received from a health care aid and community support worker), and paragraph 7 (special award) of the arbitrator's order are revoked.
Paragraph 3 of the arbitrator's order is revoked and the following substituted:

Allstate shall pay rehabilitation benefits for the services of a community support worker from the date of the arbitration order.

The appeal of the arbitrator's order with respect to the RMI report, dated December 8, 1998, is dismissed, and paragraph 6 of the arbitrator's order is confirmed.
The cross-appeal of the arbitrator's order with respect to arbitration expenses is allowed. Paragraph 9 of the arbitrator's order is revoked, and the following substituted:

Allstate shall pay Mrs. Da Rosa's arbitration expenses.

The request for a special award with respect to Allstate's conduct since the date of the arbitrator's order is dismissed.
Allstate shall pay half of Mrs. Da Rosa's expenses of the appeal and cross-appeal. The parties may contact me if there is a dispute about the amount owing.

May 16, 2002

Nancy Makepeace

Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal raises issues about the medical and rehabilitation benefits and attendant care benefits available to a seriously injured resident of a long-term care facility.

At the time of the motor vehicle accident on January 21, 1995, Mrs. Da Rosa was 50 years old. Her husband had died several years previously, and she lived with her adult daughter, Gina, who is developmentally challenged. She lived on a CPP survivor's pension and a small amount of interest income, totalling about $3-4,000 a year. Gina also received a pension.

Mrs. Da Rosa was hit by a car as she crossed the street. She suffered a number of serious injuries, including a severe brain injury resulting in right hemiparesis and significant cognitive impairment. As a result, she has permanent cognitive and mobility impairments, leaving her dependent and mentally incapacitated. After initial treatment at York County Hospital, she was transferred to Sunnybrook Hospital. She remained in Sunnybrook until April 27, 1995, when she was transferred to the Riverdale Hospital. On February 12, 1997, she was transferred to the O'Neill Centre, a nursing home, where she remains.

Mrs. Da Rosa receives weekly caregiver benefits from Allstate. They are indexed annually. At the time of the arbitration hearing, they totalled about $14,200 per year. In addition to the care provided by employees at Riverdale and O'Neill, she receives private attendant care and occupational therapy, paid for by Allstate. She claims additional care.

The arbitrator ordered Allstate to pay Mrs. Da Rosa's ongoing accommodation fees (or "chronic care co-payments") to O'Neill, and to reimburse her for payments she had already made to both facilities. She also ordered Allstate to provide additional medical benefits (physiotherapy, occupational and vocational assessments and treatment), and rehabilitation benefits (a community support worker and a health care aid for various periods), a case manager, and payment for the December 8, 1998 report of Rehabilitation Management Inc., as well as interest on all benefits owing. A special award of $10,000 was ordered in relation to the co-payments. The arbitrator found that Mrs. Da Rosa was not entitled to an attendant, support worker, homemaker, a practical nurse or a companion. Although she was largely successful in the arbitration, Mrs. Da Rosa was awarded only two-thirds of her expenses because two significant claims – for relocation to her brother's home and for a modified van – were not withdrawn until after the hearing.

Allstate appeals on a number of grounds, but its main dispute is with the arbitrator's findings about accommodation fees and the insurer's conduct of the claim. It also submits that the arbitrator erred in awarding past medical and rehabilitation benefits for expenses that were never incurred. Mrs. Da Rosa cross-appeals, claiming that the arbitrator relied on improper considerations in limiting the special award to $10,000.

After the arbitration hearing, Allstate's counsel communicated with the facilities to request a reduction of the fees payable. Mrs. Da Rosa's counsel submits this was improper. Because of the parties' dispute about the availability of further reductions in the amounts payable, I invited their submissions about whether the accommodation fees dispute is more properly an application for variation, under s.284 of the Insurance Act, based on material change in circumstances. The parties agreed that the matter should proceed by way of appeal under s.283, since the appeal and variation issues overlap. They also agreed that Ms. Luba Trivanovic, the supervisor of Riverdale's business office, and Ms. Linda Berry-Morgan, the bookkeeper at O'Neill, should testify in the appeal about events following the arbitration decision.

For reasons that follow, I am not satisfied Allstate's counsel acted improperly. I find no error in the arbitrator's conclusion that Allstate is responsible for paying Mrs. Da Rosa's accommodation fees, but the order is varied because I find that a partial exemption from amounts ordered is reasonably available to Mrs. Da Rosa, and a full exemption may be available. Mrs. Da Rosa is ordered to complete an exemption application within 30 days of this decision. Either party may move to reopen the hearing within 60 days in case of any remaining dispute about the amount payable. I find that the arbitrator erred in ordering a special award.

II. ANALYSIS AND FINDINGS

A. Accommodation Fees

The SABS-1994 requires the insurer to pay for all reasonable expenses for hospital services (s.36(1)(a)) and services provided by a long-term care facility, including a nursing home or chronic care hospital (s.47(1)(b)), incurred as a result of the accident. Allstate does not dispute the arbitrator's finding that this includes the accommodation fees charged by Riverdale and O'Neill, as authorized by the Health Insurance Act¹ and the Nursing Homes Act,² and I agree with her conclusion. However, s.75(13) states that the insurer is not required to pay "for that portion of an expense that is reasonably available in respect of the insured person under any insurance plan or law or under any other plan or law."³ Accordingly, Allstate is not required to pay for hospital services that are insured services under the Health Insurance Act ("HIA") or subsidized under any other program sponsored by the Ministry of Health.

The HIA regulation requires "an insured person who, in the opinion of the attending physician, requires chronic care and is more or less permanently resident in a hospital or other institution" to pay a "co-payment for accommodation and meals that are insured services." The co-payment is made to the institution, and is not passed on to the Ministry. The maximum amount is increased annually on July 1^st for the coming year.⁴ It is "related to the minimum income guarantee provided by federal and provincial payments to the single elderly: Old Age Security (OAS), Guaranteed Income Supplement (GIS) and Guaranteed Annual Income System (GAINS)." The rationale for charging the co-payment to chronic care patients is that they have " their room and board provided while in hospital and are, therefore, required to contribute towards these costs," as the elderly who live in the community must do.⁵

Co-payments have been charged to patients in chronic care facilities since 1979. In January 1997, the regulation was amended to allow for chronic care patients to be charged, whether they are in a chronic care hospital, an acute care hospital or another facility. The reason for this change was to discourage use of acute care beds for chronic care patients.⁶ Mrs. Da Rosa was admitted to the chronic care unit at Riverdale on June 22, 1995, and, in accordance with the regulation, she became responsible for paying a co-payment 60 days later.

The HIA and NHA regulations allow certain low income patients to pay a reduced co-payment, at a prescribed amount, or to be granted a full or partial exemption from the co-payment. Ms. Trivanovic (Riverdale) and Ms. Berry-Morgan (O'Neill), testified that the issue is routinely discussed with new residents, and an application for a reduction or exemption is completed at that time, if appropriate. A new rate reduction application must be made each year when the rates are increased. The applications are made on forms provided by the Ministry, and are based on the previous year's income, documented by the patient's Notice of Assessment issued by the Canada Customs and Revenue Agency. Ms. Trivanovic testified that hospitals are authorized to grant rate reductions or exemptions. According to Ms. Berry-Morgan, nursing homes are authorized to grant a prospective rate reduction based on the regulation and Ministry guidelines, but a retroactive rate reduction or an application for an exemption must be forwarded to the Ministry.

According to documents published by the Ministry of Health, a full exemption is available for patients who:

are under the age of 18;
are in receipt of family benefits or general welfare assistance;
have monthly incomes below a certain level, established annually;
have a third party (such as Workers' Compensation Board, insurance company, department of Veterans Affairs, or other Federal Government agency) pays either the total hospital cost or the co-payment.

The regulation defines "income" as average monthly taxable income, including payments made under federal or provincial legislation. Since caregiver benefits are not taxable, Mrs. Da Rosa's income consists only of her CPP pension and interest income. At all times since the accident, these sources of income fell well below the income level, established by regulation, at which co-payments begin to be payable. If that is right, Mrs. Da Rosa would not have to pay any accommodation fees to Riverdale or O'Neill.

However, the fourth bullet point in the Ministry document suggests that an exemption is available where there is a third party payer. According to Mrs. Da Rosa, this means Allstate is responsible for paying the full amount of her co-payment. Ms. Trivanovic testified that this was her understanding. At the appeal hearing on September 10, 2001, Ms. Berry-Morgan expressed the same view about how the two systems interact, recalling that in the one previous case where a resident had other insurance coverage, the insurer paid the co-payment fee. This represented a change from her earlier position.

Neither Ms. Trivanovic nor Ms. Berry-Morgan has any expertise in law, and neither referred to any hospital policy documents or other authorities in support of her understanding. I have the impression that their jobs involve applying practical rules on a day-to-day basis, to ensure that patients are cared for and the facility is adequately funded. I expect neither witness has ever had to deal with the kind of legal dispute that developed in this case. Accordingly, where their evidence contradicts the regulations and Ministry of Health guidelines, I preferred to rely on the latter.

The fourth bullet point confuses the question "who pays?" with the question "what amount is payable?" In any event, I find that it refers to third party medical or rehabilitation benefits rather than disability or income support benefits, which are dealt with under the third point. Moreover, the fourth bullet point does not create third party obligations. It just says that patients who "have a third party" to pay, must look to that source first. This begs the question whether Allstate is obliged to pay "the total hospital cost of the co-payment." The answer to that question is clear: s.75(13) of the SABS-1994 makes accident benefits secondary to other medical and rehabilitation coverages.⁷

Mrs. Da Rosa concedes that any benefits provided to chronic care patients "across the board" are "reasonably available" – for example, the exemption all patients have for the first 60 days of chronic care. She argues that any reduction or exemption for which an application must be made is not "reasonably available" if denied. She submits that OHIP is not intended to pay chronic care expenses related to motor vehicle accidents, and that the co-payment exemption is only for those who have no other resources. I specifically reject the latter argument, since s.75(13) clearly makes Allstate the secondary payer where any portion of the expense is payable "under any insurance plan or law or under any other plan or law."

It appears from the Ministry documents that a full exemption will only be considered where the patient has dependants. Mrs. Da Rosa's daughter, Gina, does not come within the plain words of the definition of "dependant" in the HIA regulation, which refers to dependent spouses and children under 18, but makes no allowance for adults who are dependent because of mental or physical incapacity. The Ministry documents set out the following formula for chronic care patients without dependants:

Patients without dependents will keep $112 of their monthly income as a comfort allowance. Any income above this level will be used up to the full co-payment.⁸

Ms. Trivanovic agreed with Mr. Kirby that Mrs. Da Rosa would owe Riverdale a co-payment of about $180 per month, calculated on that basis.⁹ In my view, this is the correct calculation, if Mrs. Da Rosa is not eligible for a full exemption.

In her decision of December 20, 2000, the arbitrator ordered Allstate to pay Mrs. Da Rosa the full amount of co-payments charged by both institutions to the date of her decision – $13,063.99 for Riverdale and $39,303.66 for O'Neill. She also ordered Allstate to pay O'Neill $890.89 per month, ongoing, on the same basis, subject to any further reduction or exemption in fees. The O'Neill figures were based on the prescribed reduced rate, which O'Neill accepted just before the decision was released.

Allstate appealed, and Mrs. Da Rosa cross-appealed. Director's Delegate McMahon stayed the arbitrator's order with respect to pre-judgement co-payments on March 19, 2001. Despite this, on March 27, 2001, Allstate sent Mrs. Da Rosa's lawyer a cheque for $25,729.95, representing monthly co-payments of $180 owing to Riverdale and O'Neill between August 1, 1995 and March 31, 2001, plus interest, and agreed to pay this amount directly to O'Neill on a monthly basis henceforth.

I find that a partial exemption is reasonably available to Mrs. Da Rosa, reducing her co-payments to approximately $180 per month. Because of the involvement of Riverdale and O'Neill, either party may move to reopen this hearing within 60 days if the parties and the institutions are unable to agree on the amount Allstate owes.

B. Special Award

The arbitrator found that Allstate misled Mrs. Da Rosa and her representatives in asserting that she must use her caregiver benefits to pay for her accommodation fees. The arbitrator also implicitly found that Allstate failed to provide an explanation of the benefits available and information to assist Mrs. Da Rosa in applying for benefits, as required by ss.59(2)(b) and (c) of the SABS-1994. She concluded that Allstate remained "inflexible and unyielding" on the co-payment issue, and ordered a special award of $10,000 inclusive of interest.

Allstate appeals from this award on the basis that its foundation – the amount the arbitrator ordered it to pay for Mrs. Da Rosa's accommodation fees – is erroneous. As stated, I accept that a partial exemption is reasonably available, substantially reducing Mrs. Da Rosa's fees, and a full exemption may be available. Allstate's position is that Mrs. Da Rosa's lawyers are standing in the way of a reduction or exemption application in order to advance her special award claim. Allstate also submits that its refusal to pay these benefits was based on an honestly held, though mistaken, understanding about the interaction between the automobile insurance and health insurance systems.

Mrs. Da Rosa submits that the special award is too low and that the arbitrator considered irrelevant factors, including that Mrs. Da Rosa did not suffer from Allstate's actions because she had the money to pay the fees, that Allstate paid for other benefits, including attendant care, that Mrs. Da Rosa's representatives failed to apply for a reduction or exemption until after the arbitration hearing, and that Allstate's position changed somewhat in January 1999.

Section 282(10) of the Insurance Act mandates a special award where the arbitrator finds that the disputed benefits were unreasonably delayed or withheld. The amount of the award, subject to the legislated maximum, is a matter for the arbitrator's discretion, guided by consideration of a number of factors. Director's Delegate Naylor expressed the appellate approach to special awards this way:

A finding that the insurer's actions were unreasonable is a finding of fact, resting to a large extent on the arbitrator's view of the evidence. However, while such a finding is given a great deal of leeway on appeal, it must have an adequate evidentiary basis and take into account all relevant evidence.¹⁰

In my view, the special award of $10,000 cannot stand because it was based on the arbitrator's finding that Allstate owed Mrs. Da Rosa some $52,000 for accommodation fees. The question remains whether Mrs. Da Rosa is entitled to a special award in a smaller amount proportionate to the benefits payable pursuant to my order. I considered whether this question should be referred back to the arbitrator for determination in accordance with my reasons, but in the interests of finality, and considering the already convoluted history of this matter, I concluded that it is more efficient for me to resolve this question.

I find that the evidence does not support any special award, based on my review of the history of the dispute.

By the time Mrs. Da Rosa became responsible for co-payments in the summer of 1995, the Ontario Public Guardian and Trustee (OPGT) had been appointed to represent her interests. Allstate paid Mrs. Da Rosa's caregiver benefits to the OPGT, and that office paid Mrs. Da Rosa's monthly co-payment to Riverdale out of her income. Riverdale initially charged her $819.53 per month, the maximum co-payment at that time. This was reduced to $730 per month in March 1996, presumably based on information received from the OPGT, but Ms. Trivanovic was unable to advise as to the exact calculation. She did not know whether Mrs. Da Rosa's representatives ever formally applied for a rate reduction or exemption.

Allstate's initial position, expressed through its Staff Claims Representative, Ms. Sonia Fearon, was that it was responsible for paying only that portion of Mrs. Da Rosa's co-payment that exceeded her income from her CPP benefits.¹¹ Soon afterwards, Ms. Fearon suggested that while the co-payment issue was "still being investigated," recent literature she had received indicated that Mrs. Da Rosa "would qualify for a partial if not a total exemption" because of her low income and dependent daughter.¹² The OPGT advised that Mrs. Da Rosa had not received social assistance before the accident. Ms. Fearon requested confirmation of this from the Ministry of Community and Social Services, and it was provided in January 1996. In subsequent letters, Ms. Fearon took the position that Mrs. Da Rosa's caregiver benefits, as well as her CPP pension and small interest income, would be sufficient to cover her accommodation fees, and therefore Allstate was not responsible. The OPGT appears to have agreed.¹³

On June 25, 1996, Mr. Gualdino Silveira, who is Mrs. Da Rosa's brother, took over guardianship, and retained Mr. Joseph Amorin, a lawyer, to represent her interests. He continued payment of his sister's accommodation fees.¹⁴ Mr. Amorim requested payment of Mrs. Da Rosa's co-payments in January 1997. In response, Ms. Fearon reiterated her position that Allstate would not pay because Mrs. Da Rosa's CPP and caregiver benefits were "collateral sources."¹⁵

Allstate's position did not change until January 1999, when it took the position that no chronic care payment was payable beyond July 1, 1997 because the Ministry's notice of the extension of the co-payment program to all chronic care beds also stated that only taxable income was included in establishing entitlement to a reduction or exemption. At that time, Allstate also refused to consider payment of benefits before July 1, 1997 without "full documentation of pre-accident financial status and how the co-payment was calculated."¹⁶ This was the first time Allstate relied on a possible reduction or exemption in refusing to pay Mrs. Da Rosa's co-payment.

By this time, Mrs. Da Rosa was represented by her current solicitors. Mr. Anthony Azevedo, who represented her at that time, responded to Allstate's January 1999 letter, stating that since "a patient is 'exempt' from making co-payments if an 'insurance agency' is making the payments on the patients [sic] behalf," and since Mrs. Da Rosa was not on social assistance before the accident, she would only be entitled to an exemption if her caregiver benefits were not "income."¹⁷ This exchange of letters shows that neither party understood the co-payment rules.

At the arbitration hearing, Ms. Berry-Morgan testified that she told Mr. Silveira about the option of applying for a rate reduction or exemption, but he never provided Mrs. Da Rosa's Notices of Assessment.¹⁸ However, she said Mrs. Da Rosa could still apply for a rate reduction or exemption, if her Notices of Assessment were provided, although O'Neill would have to get approval from the Ministry for a retroactive change. This was done, and the application was granted on October 26, 2001, bringing Mrs. Da Rosa's co-payment to the "low rate" – $890.89 per month at that time. This resulted in a credit of $17,088.26 on Mrs. Da Rosa's O'Neill account.

This was the state of affairs at the time the arbitrator released her decision in late December 2000.

With respect to the arbitrator's implicit finding that Allstate misled her about her entitlements,¹⁹Mr. Kirby points to Allstate's letters of September 11, 1995 and January 21, 1999, which correctly describe how the two coverages interact. However, both letters, like Allstate's other letters on the issue, were refusals, and Allstate paid no money toward Mrs. Da Rosa's accommodation fees until March 2001. Allstate wisely does not attempt to defend its initial position that Mrs. Da Rosa's caregiver benefits were "collateral sources." This was wrong in law. However, I cannot agree with the arbitrator's comment that ss.36(1)(a) and 47(1)(b) of the SABS-1994 "are so clear in their provisions that it is difficult to understand Allstate's failure, from the outset in 1995, to openly and completely recognize its primary responsibility to pay for Mrs.

Da Rosa's care. . ."²⁰ I am aware of no previous cases about this issue, and, as is clear from my reasons, I find that the interaction of the two coverages is sufficiently complex that almost everyone involved had difficulty understanding the application of the co-payment regulations to Mrs. Da Rosa's situation. There was no evidence to suggest Allstate knowingly misstated the law in its dealings with Mrs. Da Rosa's representatives.

The arbitrator stated that Allstate continued to maintain its denial of the co-payments "[d]espite numerous solicitations by two sets of lawyers for Mrs. Da Rosa." However, Mr. Amorim, apart from his letter of January 1997, appears to have focussed his efforts on obtaining a lump sum settlement. Ms. Nelson's office was involved by early 1998, but did not pursue an application for a rate reduction or exemption until September 2001. The arbitrator's criticism of Allstate's handling of the matter does not sit well with her finding that Mrs. Da Rosa and her representatives bore the responsibility of applying for a rate reduction or exemption.

The real problem in this case is that no applications were made on Mrs. Da Rosa's behalf until the arbitration hearing. By that point, the facilities were drawn into the dispute. Counsel invited me to consider who bears the onus of applying for a rate reduction or exemption on Mrs. Da Rosa's behalf. I agree with the arbitrator's answer to this question: Mrs. Da Rosa's representatives were responsible for making the applications. It was also in her interest to do so, since Allstate was entitled to the benefit of any "reasonably available" coverages, whether applied for or not. Moreover, the required supporting documents were in the custody or control of Mrs. Da Rosa's representatives – not Allstate.

Mrs. Da Rosa seeks a special award in respect of Allstate's handling of the matter after the decision was released. The seriousness of the allegations warrants a detailed review of what happened. On January 19, 2001, Allstate's counsel wrote to Ms. Trivanovic (Riverdale) and Ms. Berry-Morgan (O'Neill) enquiring as to the status of the institutions' applications to the Ministry of Health for an exemption from the accommodation charges. Both letters state:

We heard evidence from you that based upon Mrs. Da Rosa's limited taxable income, she was eligible for a co-payment reduction and indeed, an application was to be made to the Ministry of Health seeking an exemption.

It is my understanding that since the hearing, such application for co-payment exemption has been made on Mrs. Da Rosa's behalf.

I would appreciate hearing from you on the results of the application for the co-payment exemption. We require this information so that we may determine what obligation Allstate Insurance Company of Canada has for the balance of any accommodation fees . . ..

In response, Ms. Berry-Morgan confirmed that the Ministry had approved the rate reduction, but her letter made no reference to an exemption. She testified at the appeal hearing that she phoned Ms. Nelson because she was unsure what Mr. Kirby was asking about. In her letter of March 21, 2001, Ms. Berry-Morgan confirmed that the rate reduction application was the only application O'Neill made on Mrs. Da Rosa's behalf, and stated that an exemption application could not be made unless O'Neill was provided with proof "that all other sources of income have been denied (i.e. Family Benefits, Old Age Security, CPP, etc.). At this time no documents have been received by our facility. However, you have informed me that Allstate Insurance is required to pay Ms. Da Rosa's fee. Therefore, the criteria would not apply to this application and is not appropriate for Ms. Da Rosa."

This was wrong. Whether Allstate is responsible for paying Mrs. Da Rosa's co-payment has nothing to do with the amount that is payable, as the arbitrator made clear in her reasons.²¹ Ms. Berry-Morgan's testimony at the appeal hearing differed from her testimony at the arbitration hearing, when she agreed with Mr. Kirby's suggestion that the Ministry would probably grant Mrs. Da Rosa an exemption from co-payment fees based on her taxable income, documented by her Notices of Assessment.²²

Ms. Berry-Morgan referred to no authority for requiring Mrs. Da Rosa to apply for CPP, OAS or social assistance benefits to establish entitlement to an exemption, and this is not required by the regulations or Ministry of Health documents.²³ Anyway, I think there are probably no other available income sources. Mrs. Da Rosa is now 57 years old. I understand her CPP pension is a survivor's benefit, and that she had only a marginal connection to the workforce ending years before the accident. She is unlikely to be entitled to any disability or retirement pension to speak of. She is not entitled to a OAS or GAINS benefit until she turns 65. She does not qualify for social assistance under the Ontario Disability Support Program Act because her caregiver benefits from Allstate are considered "income" under that Act.²⁴

Accordingly, I find that additional CPP benefits, OAS and GAINS benefits, and ODSP benefits are not reasonably available to Mrs. Da Rosa to date. I find there is no reason an exemption (exceptional circumstances) application cannot be made on Mrs. Da Rosa's behalf, in respect of her co-payments to O'Neill. Mrs. Da Rosa, through her solicitor, is directed to pursue the application through O'Neill.

Mr. Kirby spoke to Ms. Trivanovic, from Riverdale, on March 26, 2001. His letter of March 30th, confirms their discussions:

Specifically, I confirm your advice that on making the request and providing the appropriate income tax information, you will issue a draft to Mrs. Da Rosa's solicitors, refunding chronic care co-payment, by virtue of Mrs. Da Rosa's eligibility for an exemption.

To the above end, at this time I enclose copies of the Notices of Assessment from Revenue Canada for Mrs. Da Rosa for the taxation years 1994-1997.

In accordance with this letter, Ms. Trivanovic sent Ms. Nelson a full refund of the co-payments made on Mrs. Da Rosa's behalf – $13,063.99 for the period of her hospitalization at Riverdale, between June 22, 1995 and February 12, 1997. Ms. Trivanovic testified before me that she refunded the money because Mr. Kirby left her with the impression there was a FSCO order to that effect. She did not receive a copy of the arbitrator's order until Ms. Nelson sent it on April 24, 2001.

Ms. Nelson responded as follows:

I acknowledge receipt of your letter of April 20, 2001, along with the cheque for $13,063.99.

I confirm our conversation of April 20, 2001 in which you indicated that Mr. Kirby, the solicitor for Allstate, had forwarded Ms. Da Rosa's income tax returns to your office for application for a reduction in the chronic care co-payment made by Ms. Da Rosa for the period June 22, 1995 to February 12, 1997. I further confirm that Mr. Kirby did not advise you that there is an order from the Financial Services Commission, dated December 20, 2000, in which Allstate was directed to reimburse Ms. Da Rosa for these co-payments. I enclose a copy of the Arbitration Order for your reference.

Ms. Da Rosa's care in your facility arose out of a motor vehicle accident,. Ms. Da Rosa therefore has coverage for certain medical and care expenses, including accommodation expenses, through Allstate. This was one of the issues at the arbitration.

Please be advised that Allstate has appealed the arbitration order. Until the appeal is concluded, the order of December 20, 2000 is stayed, at least with respect to payment of the chronic care co-payments. However, if Allstate is not successful in changing the decision on appeal, it will remain responsible for these payments pursuant to the order. On the other hand, if Allstate is successful on appeal and shows that it is not responsible for these payments, then Ms. Da Rosa will not have access to any other source of coverage for the co-payments made to your hospital.

Given this additional information, would you please provide me with a letter outlining the following:

Assuming that the arbitration order is not overturned on appeal, does the order affect the hospital's, and the Ministry of Health's, recent decision to refund the chronic care co-payment?
If the decision to refund the chronic care co-payment is affected, please outline how the decision changes and the basis for that change. In what way does Allstate's involvement affect Ms. Da Rosa's entitlement to an exemption in the co-payment?

Mr. Kirby's letter of April 25, 2001 to Ms. Nelson confirmed their telephone conversation of the day before:

I understand from you that notwithstanding the repayment, you have some information that The Riverdale Hospital may now be claiming this money back on the basis of the decision of Arbitrator Palmer. I can only assume that information came from your office.

In any event, I trust that you have also made The Riverdale Hospital aware that an appeal has been taken from the decision of Arbitrator Palmer based upon the fact, inter alia, that she was mistaken in law in ordering Allstate to refund the co-payment, the application for exemption from such co-payment having not previously been made.

I would also suggest to you that if you are taking any steps to actively or inactively encourage either The Riverdale Hospital or The O'Neill Centre to either rescind their decision to reimburse the co-payment or to refuse to reimburse the co-payment, you are doing so at your client's peril and this is a matter which I intend to bring to the attention of the Director's Delegate on appeal.

In her response, dated April 27, 2001, Ms. Nelson stated,

I understand from The Riverdale Hospital that your office failed to advise them of the existence of insurance to respond to the accommodation costs or of the Order of Arbitrator Palmer when requesting reimbursement of the co-payment. I am advised by The Riverdale Hospital that this information would have affected Ms. Da Rosa's entitlement to reimbursement. For this reason, I advised you that it is not clear that Ms. Da Rosa is, in fact, entitled to reimbursement of these payments. There is also, of course, the legal issue of whether this payment should be made by Allstate. I am holding the funds in trust pending resolution of this matter.

I have advised The Riverdale Hospital not only of the Order of Arbitrator Palmer, but also that the order is under appeal. This really should have been done by your office when making the initial requests and if you have concerns about the veracity of the information the centres are receiving, you are fully capable of advising them of these facts yourself.

I note that your firm has been contacting both the O'Neill Centre and The Riverdale Hospital without advising our office, and without providing our office, or Ms. Da Rosa's legal guardian, with copies of any letters or other communications to these centres, despite your full knowledge that we are representing Ms. Da Rosa.

Please provide me with copies of all letters that have been sent to either centre. I trust that I will be copied with any further letters and advised of any future communications.

Please be advised that I will be bringing [Allstate's] conduct, particularly in relation to the non-disclosure of all facts to The Riverdale Hospital, to the attention of the Director's Delegate on appeal. I will also be requesting a special award for [Allstate's] conduct during this appeal.

On behalf of Mrs. Da Rosa, Ms. Nelson submitted that Mr. Kirby acted improperly by communicating with the facilities in order to pursue a rate exemption. At the arbitration, Ms. Nelson took the position that Allstate bore the responsibility of determining whether a reduction or exemption is "reasonably available" for Mrs. Da Rosa.²⁵ She changed her position in correspondence after the appeal hearing, relying on the arbitrator's finding, which correctly stated the law, that it was Mrs. Da Rosa's responsibility to pursue any available reductions or exemptions. In any event, I find no impropriety on Mr. Kirby's part.

In an ideal world, counsel would have approached the facilities jointly, providing a copy of the arbitrator's order, information about the appeal, and the Notices of Assessment required for a rate reduction and exemption. However, Allstate and its counsel were in a difficult position. The arbitrator's order contemplated a further reduction in Mrs. Da Rosa's post-judgement accommodation fees at O'Neill, which had already granted a rate reduction by the time the decision was released, but the arbitrator gave no directions as to how the parties were to proceed. Her order for the payment of pre-judgement co-payments did not allow for the possibility of any reduction in the amount payable from either facility. Another problem for Allstate was that Mrs. Da Rosa's representatives did nothing to pursue an exemption because they took the position that since Allstate was required to pay the co-payments, no further reduction or exemption was reasonably available. This was wrong in law, and misunderstands the arbitrator's decision.

While the focus of a special award enquiry is on the conduct of the insurer, the conduct of the insured person must be considered, along with all the other contemporaneous circumstances, in deciding whether the insurer's delay in paying benefits was unreasonable. In this case, the conduct of Mrs. Da Rosa's representatives is important because they failed to pursue reasonably available primary coverages. Considered in context, I find that Allstate's delay in paying Mrs. Da Rosa's co-payment fees was wrong, but not unreasonable.

Given my finding that no special award is payable, I need not address Mrs. Da Rosa's cross-appeal with respect to the amount of the award.

C. Past Medical and Rehabilitation Benefits and Attendant Care Not Incurred

The arbitrator ordered Allstate to pay for benefits she found Mrs. Da Rosa should have received at O'Neill, but did not receive. Allstate submits this was an error in law because s.36(1) of the SABS-1994 (medical benefits), s.40(5) (rehabilitation benefits) and s.47(1) (attendant care benefits) provide entitlement for expenses incurred.

Mrs. Lillian Carrera, a Portuguese-speaking health care aide, has been helping Mrs. Da Rosa since June 1997, three months after her transfer to the O'Neill Centre. Initially, she worked with Mrs. Da Rosa three days a week, 8 hours a day. Allstate approved these benefits based on the recommendation of Dr. M. Gutman, who treated Mrs. Da Rosa at Riverdale at the time of her transfer to O'Neill. Dr. Gutman recommended that Mrs. Da Rosa receive ongoing attendant care for three days a week.

In the summer of 1999, at Allstate's request, Ms. Tazmeen Lalani, an occupational therapist, conducted an in-home occupational therapy assessment of Mrs. Da Rosa at O'Neill. She concluded that Mrs. Da Rosa's care needs were being met at O'Neill, but recommended that services be provided in Portuguese. Mrs. Carrera speaks Portuguese, and Ms. Lalani observed that Mrs. Da Rosa seemed to enjoy Mrs. Carrera's company. She testified that she made the specific recommendation of increasing Mrs. Carrera's hours to five days a week when speaking with Trent Caulfield, Allstate's adjuster, after filing her report. Allstate increased Mrs. Carrera's hours to five days a week in the fall of 1999. The arbitrator ordered Allstate to pay for Mrs. Carrera's additional three days a week between June 1, 1997 and when her hours were increased in late 1999.

The arbitrator also ordered Allstate to provide a community support worker for 8 hours a week, at $47.83 per hour, from June 1, 1997 until December 31, 1998, and from January 1999 and ongoing. The role of the community support worker would be to provide additional opportunities for Mrs. Da Rosa to engage in Portuguese-language activities. The arbitrator noted that "[n]o one testified specifically in support of Mrs. Da Rosa's claim for entitlement to the services of a community support worker . . . during the period from her admission to Riverdale Hospital until December 31, 1998."²⁶ Like the additional two days a week of attendant care, this was care Mrs. Da Rosa did not receive.

The leading case interpreting the word "incurred" is Smith (Committee of) v. Wawanesa Mutual Insurance Company, decided under the pre-1990 standard policy, which provided for payment of "all reasonable [medical] expenses incurred within four years from the date of the accident . . ."²⁷Just before the expiry of the four-year period, the insured's doctors and therapists identified certain treatments the insured would need, including psychological treatment. The referral was not made until after the end of the four-year period, and the insurer argued that there was no entitlement because the insured had not incurred a legal liability to pay for psychological services within the four-year period. The Ontario Divisional Court upheld the ruling of the motions judge that the expenses were recoverable because the insured's need for treatment had been "determined with certainty prior to the expiration of the limitation period, although the actual carrying out of the treatment and payment of expenses occur afterwards." Since "incur" was capable of a narrower and wider meaning, the determinative consideration was the need to adopt a remedial and purposive interpretation that would not "require an insured person to finance, or to pledge her credit, in order to secure the very benefits for which she is insured."

It is well established in arbitral case-law that the statutory accident benefits regulations should be interpreted in a remedial and purposeful way that encourages early access to medical and rehabilitation services. However, I received no submissions about the application of Smith and Wawanesa in the context of the detailed claims adjustment process mandated under the SABS-1994. In fact, Allstate appears to have increased Mrs. Carrera's hours reasonably promptly after Ms. Lalani identified this need in the fall of 1999.

The arbitrator did not find that Mrs. Da Rosa's need for additional care was "determined with certainty" before Ms. Lalani's report. Instead, her order seems to turn on her finding that "[i]n the move from Riverdale Hospital to the staffing pattern at the O'Neill Centre, Allstate should have paid closer attention to Mrs. Da Rosa's long-term rehabilitation and attendant care needs and addressed these in a comprehensive manner."²⁸

Similarly, the arbitrator found that Allstate should have paid for a physiotherapy assessment within six months of Mrs. Da Rosa's transfer to O'Neill (by the end of August 1997), and a comprehensive occupational therapy assessment within four months of her transfer (by the end of June 1997).²⁹ The arbitrator expressly found that "no additional care for Mrs. Da Rosa was formally requested, according to the evidence in this hearing, until Ms. Wilkinson's report of December 8, 1998 was provided to Allstate."³⁰ Mrs. Da Rosa's counsel claimed these benefits by letter of January 12, 1999.³¹

Effective rehabilitation requires the co-operation of both parties – the insurer and the insured person. Insurers are expected to explain the benefits are available and to assist insured persons in obtaining appropriate services. However, insurers may not unilaterally direct the insured person's treatment and rehabilitation. The SABS-1994 sets out a claims-driven process for obtaining benefits which starts with the insured person (or her representatives) identifying a need and claiming the appropriate benefits. Where no need is "determined with certainty," and no expenses incurred, it is not the arbitrator's role to award benefits based on his or her view of what should have happened.

The arbitrator's award of benefits for increased attendant care services between June 1, 1997 and the fall of 1999 will be revoked, as will her order for pre-judgement benefits for a community support worker. My order does not affect the arbitrator's orders with respect to future benefits.

D. The RMI Report

Allstate appeals from the arbitrator's order allowing Mrs. Da Rosa's claim for the cost of the RMI "Long Term Functional Needs and Costs Analysis" report, dated December 8, 1998, in the amount of $2,237.18.³² Allstate has two objections. The first is that half the report is premised on Mrs. Da Rosa moving to her brother's home. In her reasons for allowing Mrs. Da Rosa only half her arbitration expenses, the arbitrator stated that this proposal "was not formally withdrawn until two and a half months after the hearing, although [it] was virtually abandoned by the time of the hearing." Allstate submits that the same reasoning suggests RMI's fee should be discounted.

Allstate also objects to RMI's fee. Sue Wilkinson, the occupational therapist who prepared the report, testified that she spent only 2.1 hours meeting with Mrs. Da Rosa and her family at O'Neill in September 1998.³³ The report itself is billed at $110 per hour for 3 hours. The remaining items listed on the RMI invoice refer to correspondence, phone calls with Mrs. Da Rosa's family or with O'Neill, document review, case conferences, travel and waiting time, and costing the recommended services, equipment and supplies, billed at different rates. There are also mileage, postage/courier and copying disbursements.

The report was prepared at the request of Mrs. Da Rosa's lawyers, and Ms. Wilkinson's testimony suggested she did little independent assessment of Mrs. Da Rosa's needs. Another arbitrator might have found that the report should be billed as an arbitration expense rather than an assessment under s.57 of the SABS-1994, but the arbitrator's treatment of this item is consistent with her reliance on the report in reaching her findings about Mrs. Da Rosa's care needs. The award of $2,300 for this report was very generous, but it was within the arbitrator's adjudicative discretion, and Allstate gave me no compelling reason to intervene. I am not persuaded the arbitrator erred in law.

E. Arbitration Expenses

The expenses regulation requires FSCO adjudicators to consider a number of factors in deciding whether to award expenses to either party, including the outcome of the proceeding, the positions taken by the parties, and whether either party's conduct tended to prolong or obstruct the proceeding or to expedite it. Access to justice considerations have generally favoured an award of arbitration expenses to the insured person, depending on the other pertinent factors, unless the claim was fraudulent or manifestly unfounded, or the conduct of the insured person did not warrant the award.

Mrs. Da Rosa submits that the arbitrator erred in awarding her only two-thirds of her arbitration expenses, since little evidence was led on the abandoned claims for a minivan and community living arrangements, and there were no other factors supporting a departure from the usual rule that a substantially successful applicant will be awarded her arbitration expenses.

An arbitrator's decision with respect to arbitration expenses is based on her assessment of the merits of the case and the conduct of the parties, and involves an element of discretion. For this reason, an arbitrator's expenses award will not be disturbed lightly on appeal.³⁴ However, the appeal of the arbitrator's co-payments award had a variation aspect because of developments after the arbitration decision was released, and this required a more detailed review of the arbitrator's findings than usual in an appeal, including hearing evidence about the availability of a reduction or exemption in the fees. I am persuaded that fairness requires me to revisit the arbitrator's expenses award.

Mrs. Da Rosa's late withdrawal of the claim for a minivan and relocation to her brother's home were not the only factors considered by the arbitrator in making her expenses order. I agree with Mrs. Da Rosa that the arbitrator erred in relying on her order that Allstate pay "a special award of a significant amount" to reduce the expenses award. An insured person who is forced to proceed through arbitration to obtain benefits "unreasonably delayed or withheld" can normally expect to be awarded her expenses unless there are other strong reasons for denying the award.

Reading the decision as a whole, I have the impression the arbitrator's expenses order was influenced by the size of the overall order. The award is substantially reduced as a result of this appeal. Given Mrs. Da Rosa's success at arbitration, the difficulties of the issues involved, and the absence of any other factors warranting a reduction in the award, Mrs. Da Rosa will be awarded her arbitration expenses.

III. APPEAL EXPENSES

Allstate did not seek its expenses of the appeal or cross-appeal. This was appropriate, given the issues in dispute.

Mrs. Da Rosa seeks her expenses of the appeal and cross-appeal. In considering whether to award appeal expenses to an unsuccessful appellant, the weighting of the prescribed factors is different than in arbitration. Access to justice is given less weight and the outcome of the appeal is given more weight because the decision to commence an appeal is made following an arbitration hearing and a reasoned decision.³⁵ However, where an insurer succeeds on appeal, the insured person will generally be awarded her appeal expenses.

The main issue in this case was Allstate's appeal with respect to the co-payments. Mrs. Da Rosa's cross-appeal on the special award, which was closely related to that question, received little attention. These factors, and the difficulty of the issues in dispute, suggest that Mrs. Da Rosa should be awarded her appeal expenses. However, the appeal was prolonged by her counsel's allegations of improper conduct on the part of Allstate's counsel. In my view, these allegations had little weight, particularly in light of the failure of Mrs. Da Rosa's representatives to pursue any reduction or exemption in her accommodation fees. The arbitrator's decision may have contributed to both parties' confusion about how to proceed. On balance, I find it appropriate for Allstate to pay half of Mrs. Da Rosa's appeal expenses.