Kelly Ann Hunt v. Co-operators General Insurance Company, 2002 ONFSCDRS 76

Neutral Citation: 2002 ONFSCDRS 76 FSCO A00-001308

BETWEEN:

KELLY ANN HUNT Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Tanja Wacyk Heard: February 26, 2002, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Katherine Badenoch for Ms. Hunt Bruce A. Keay for Co-operators General Insurance Company

Issues:

The Applicant, Kelly Ann Hunt, was injured in a motor vehicle accident on August 4, 1994. She applied for and received statutory accident benefits from Co-operators General Insurance Company ("Co-operators"), payable under the Schedule.¹ Co-operators terminated benefits in June 1995. The parties were unable to resolve their disputes through mediation, and Ms. Hunt applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Is Ms. Hunt's Application for Arbitration premature?
If the Application for Arbitration is not premature, then should the arbitration hearing be adjourned pending the outcome of a Med/Rehab DAC?
Should the Ms. Hunt pay the Insurer's expenses?

Result:

Ms. Hunt's Application for Arbitration is not premature.
The arbitration hearing in the matter, scheduled to begin May 27, 2002, is adjourned until the completion of the pending Med/Rehab DAC process.

In addition:

Ms. Hunt shall particularize the specific expenses claimed in a manner which makes the expenses at issue, as well as the date and purpose for which they were incurred, apparent. She shall convey this information to the Insurer no later than 60 days prior to the arbitration hearing.
Ms. Hunt shall determine and convey to the Insurer no later than 60 days prior to the arbitration, the dates for which she had collateral benefits coverage.
The matter of expenses is left to the hearing arbitrator.

HISTORY:

The following facts were not disputed.

Subsequent to the accident, the Applicant claimed and received payment from the Insurer for various medical and rehabilitation benefits.

The Applicant attended for physiotherapy treatment until she was discharged in June 1995.

The Insurer next heard from the Applicant sometime in May 1996, when she requested funding for additional treatment. The Insurer resumed paying for chiropractic treatment, massage therapy and prescription medication.

In June 1998, the Insurer received a Med/Rehab Disability Assessment Centre ("DAC") Report which concluded that further treatment was not necessary or reasonable.

A copy of the Med/Rehab DAC report was provided to the Applicant and her counsel, and Ms. Hunt was advised that based on the report, no further claims for treatment, medication or mileage would be paid. Consequently, her benefits were terminated in July 1998.

No further claims were submitted by Ms. Hunt and the Insurer heard nothing further from her until she filed for mediation on May 24, 2000. The Application for Mediation stated that the medical benefits in dispute were ongoing medication, mileage, physiotherapy, massage therapy and chiropractic."

The mediation took place in November 2000.

The Insurer received little or no supporting documentation from Ms. Hunt until the day prior to the mediation. At that time, the Applicant provided a number of documents to the Insurer. These included a printout of prescription receipts for which she is claiming payment, for the period from October 1994 to June 27, 2000.

In support of her claim for mileage, the Applicant provided a handwritten note from her family physician, listing seventy-eight office visits, as well as a list of specialists she had travelled to see from her home in Buckhorn. She has also claimed mileage to see various therapists, i.e. massage therapists, chiropractors and physiotherapists.

Also provided were the notes of her orthopaedic surgeon, a neurologist's report, a neuropsychologist's evaluation, and the report of Dr. Gardner-Nix (whose designation was not clear), and a treatment plan from Fox Rehabilitation Centre.

Finally, a Med/Rehab DAC assessment is pending - although the date had not been set by the time of the hearing.

ARGUMENT:

Insurer

The Insurer argued that the Application for Arbitration suggests there are outstanding and ongoing claims for medication, mileage, physiotherapy, massage therapy and chiropractic treatment.

However, none of these claims were submitted to the Insurer by the Applicant before mediation. Consequently, the Insurer argued that no items claimed have been denied.

Furthermore, to the best of the Insurer's knowledge, no further treatment costs had been incurred, and it appears that most, if not all of the Applicant's claims for mileage pre-date July 1998 - and therefore, have already been paid by the Insurer.

Consequently, the Insurer maintained there is nothing in dispute at this point, and that without a dispute between the Applicant and the Insurer, she has no access to the dispute resolution process. This was also the position of the Insurer at mediation.

The Insurer further pointed out that the Applicant has never quantified her claim or alleged loss, has never advised the Insurer as to exactly what is sought in respect of many of these expenses, and cannot advise which of the expenses may have already been paid by the Insurer. The Insurer maintained that it is entitled to notice of any dispute prior to mediation.

The Insurer argued that it is entitled to receive a certificate pursuant to section 37, and to assess the Applicant's claim through a Med/Rehab DAC. However, the Insurer maintained that Designated Assessment Centres will not arrange an appointment until a section 37 certificate has been received.

Consequently, the Insurer maintained that it has been placed at a significant disadvantage as it cannot assess the reasonableness and necessity of the Applicant's claim if the necessary information was first made available in the context of a mediation or arbitration.

That having been said, the Insurer also indicated that the Applicant has agreed to a Med/Rehab DAC assessment and one is being scheduled.

The Insurer also indicated that the Applicant has access to a collateral benefits insurance plan which pays for the bulk of her claims for medication and may pay for various treatment expenses. However, the Insurer has not been provided with a copy of the policy or details in that regard.

The Insurer asked that the arbitration proceeding scheduled for May 27, 2002 be dismissed.

In support of its argument, the Insurer relied on the decision of Arbitrator Manji in Zeko and Progress Casualty Insurance Company.² In that case, as in this one, the Insurer argued that the arbitrator had no jurisdiction to hear the matter because the applicant had failed to submit the claims at issue to the insurer prior to applying for arbitration. Nor had the claims been mediated.

Arbitrator Manji ruled at the pre-hearing that the applicant could proceed with the arbitration provided she first submits her claims to the insurer within 30 days, and mediated those that remained in dispute. In addition, the applicant was to obtain an order dismissing a court action initiated in the same matter.

However, when the applicant delayed both the submitting of the claims and acquiring the court order, and had yet to apply for mediation, Arbitrator Manji dismissed the arbitration on the basis that it was premature, and awarded the Insurer its expenses, as well as an assessment of $3,000.

In this case, the Insurer also asked for its legal expenses thrown away, quantified at $1,500. These expenses related to the hours spent responding to the Application for Arbitration, chasing production, preparing for and attending the pre-hearing, and preparing for and attending the preliminary issues hearing.

In the event I did not dismiss the proceeding, the Insurer requested that I order production of the documents the Applicant has undertaken to produce, as only two have been produced thus far.

Applicant

Counsel for the Applicant indicated her firm did not have carriage of the file in June 1998, when the Insurer advised it would be denying further benefits. When the firm took over the file on May 19, 2000, it immediately filed for mediation to preserve the Applicant's entitlement to proceed - as section 72 of the SABS requires that a mediation proceeding be commenced within two years from an insurer's refusal to pay the amount claimed.

Counsel for the Applicant further explained that the dearth of information the firm had at the time they assumed carriage of the file resulted in what she acknowledged was a "bare bones" Application for Mediation.

To remedy the situation, the Applicant was sent for assessments and the resulting reports were received just prior to the mediation. They were then forwarded to the Insurer.

Counsel for the Applicant conceded that the Insurer received documentation late in the process - but pointed out that it is not accurate to say nothing has been received.

The Applicant maintained there had been compliance "in spirit," and that she is doing everything she could to bring herself into full compliance.

The Applicant pointed out there were no fresh issues raised in the arbitration, and the prescriptions, mileage and treatment plans for which payment is sought have now all been provided. Given the Insurer has now had the material for 12 years, the Applicant argued that it has ample knowledge of the claim.

The Applicant argued that no cost award should be made against her in light of her compliance with the spirit of the SABS. Rather, the Applicant maintained that the matter should proceed to arbitration commencing May 27, 2002 as scheduled.

The Applicant relied on the decision in Kaur and CIBC Insurance³ in support of her position.

In that case, the Application for Arbitration included issues that had not been mediated until after filing of the application. Nor were those issues identified at the pre-hearing as issues in dispute between the parties.

Although Arbitrator Killoran noted this was somewhat unorthodox, she allowed all matters to proceed together to arbitration, as the Insurer had received notice of all benefits in dispute from the time the Application for Arbitration was filed, and mediation had occurred.

In the alternative, the Applicant in this instance argued that the arbitration might be postponed until after the pending Med/Rehab DAC.

The Applicant also indicated that she had made and continued to make best efforts to satisfy her undertakings regarding production.

With regard to the issue of collateral benefits, the Applicant maintained that while she currently has collateral coverage, she did not during the period at issue. She and her husband had separated during that time, and coverage under his plan was not available to her. However, she was unable to specify the period of time during which she did not have coverage.

The Insurer's Reply

The Insurer maintained that it is not sufficient to provide supporting documentation the day prior to a mediation. The Insurer pointed out that Bill 164 contains an obligation to pay pending the resolution of a dispute. It again reiterated that the Insurer can only challenge or assess a claim for which it has details or section 37 certificates. While some medical reports had been provided, they were not section 37 certificates as requested.⁴

The Insurer also maintained that it was not sufficient to simply submit a list of medication over a six month period of time. It pointed out that some of the medication, such as antibacterial medication and birth control pills, were clearly not related to the accident. Nor, argued the Insurer, was it sufficient to simply produce a note from her family doctor 12 years after the medication had been prescribed.

Regarding the mileage claims from the day of the accident until November 2000, the Insurer pointed out that most would have been submitted and paid by the Insurer before June, 1998. The Insurer maintained that some of those visits would have had nothing to do with the accident.

The Insurer pointed out that it has requested the dates, distances, reasons for each trip and the details of the claims - but they have not been provided.

That being the case, the Insurer raised the specter of spending the first two days of the arbitration identifying specifically what has been claimed - when that information should have been available long before mediation.

The Insurer maintained that there are rules to the dispute resolution process and the Applicant should comply with them before she be allowed to proceed.

ANALYSIS:

The articulated issue before me is whether there is a dispute between the parties, so as to trigger the right to proceed through the dispute resolution process as set out under the Insurance Act.

The Insurer argues that because no specific expenses had been claimed and denied prior to the mediation, there is no dispute between the parties to mediate or arbitrate.

Section 71 of the SABS, titled "Right to Dispute," states as follows:

If an insurer refuses to pay a benefit that a person has applied for under this Regulation or reduces the amount of a benefit that a person received under this Regulation, the insurer shall inform the person in writing of the procedure for resolving disputes relating to benefits under sections 279 to 283 of the Insurance Act. [emphasis added]

In June 1998, the Insurer advised Ms. Hunt it would not pay for additional claims for treatment, medication or mileage. In other words, the Insurer was refusing to continue to pay the supplementary medical benefits it had been paying until that time.

It is true that the Applicant did not submit any further claims subsequent to her benefits being terminated, and prior to her application for mediation. However, there is no provision which makes that a prerequisite step.

In my view, notice that it will no longer pay the benefits at issue constitutes a "dispute" as contemplated by section 71, and would start the clock running with regard to the two year statutory limitation period in which Ms. Hunt could initiate a proceeding in order to resolve this dispute.⁵

This somewhat straightforward analysis has been confused by the fact that the Insurer did not receive the documents relied upon from the Applicant until immediately before the mediation.

However, while this may impact on considerations regarding how to best minimize any disadvantage resulting to the Insurer from the delay, in my view it does not render the application for arbitration premature.

(I suspect that had Ms. Hunt brought her application sometime after June 2000, the Insurer would have had no difficulty taking the position that the time period was triggered by its notice of June 1998.)

Consequently, it is my view that Ms. Hunt's application for arbitration cannot be viewed as premature.

The Insurer maintains that it is now disadvantaged as it has had no opportunity to assess the specific expenses claimed.

The Applicant concedes that the information initially provided to the Insurer was essentially "bare bones" and that this material should have been available to the Insurer earlier in the process. However, the Insurer has now had information regarding the expenses claimed for approximately 12 years and additional productions are pending.⁶ While much of this information was provided on the eve of the mediation, which is not ideal, it was provided nevertheless.

In addition, the Applicant has agreed to participate in another Med/Rehab DAC.

I find this situation quite different from that in Zeko and Progressive Casualty [supra], relied on by the Insurer. That case involved the complication of delay in securing a release from the court as ordered by the arbitrator, which obviously does not exist here.

Nor had the issues in Zeko been mediated. That cannot be said to be the case here. Although Co-operators raised the issue of prematurity at the mediation, the Mediator's Report indicates the mediation proceeded and failed. No one has suggested otherwise.

The Insurer has also raised a concern regarding the "pay pending dispute" provision. Subsection 36(4), the applicable provision, states:

36(4) Subject to subsection (5), clause 39 (11) (b) and subsection 39c(12), the insurer shall pay an expense under subsection (1) pending resolution of a dispute relating to the expense in accordance with sections 279 to 283 of the Insurance Act.

It is not clear whether any of the exceptions referred to subsection 36(4) would be applicable in this case. Nor is this an issue before me. In any event, it is difficult to see how the provision could be held applicable regarding a period of time prior to the submission of a claim for specific expenses.

On the other hand, it is also difficult to see how a finding that the arbitration is premature would reduce the Insurer's exposure once the claims have been particularized in a manner to which the Insurer could reasonably be expected to respond.

These questions, as well as the submissions made regarding the merits of the claims, are best addressed by the hearing arbitrator in the context of the overall factual underpinnings of this case - and I leave it to the hearing arbitrator to do so.

This is not to suggest the Insurer has not raised legitimate concerns.

The first is the lack of clarity regarding the specific expenses claimed. In my view, that can be remedied by a further particularization of the amounts claimed. Consequently, the Applicant must particularize the expenses claimed in a manner which makes the expense at issue, as well as the date and purpose for which it was incurred, apparent.

Similarly, it is appropriate that the Applicant determine and provide the dates for which she had collateral benefits coverage to the Insurer, and I will so order.

With regard to productions, the Applicant maintained she was doing all she could to satisfy her undertakings. Without more information, I am not in a position to make any determinations in that respect. However, if production remains an issue between the parties, and they are not able to resolve that issue themselves, they can request a resumption of the pre-hearing to deal with any outstanding production issues.

Finally, the parties have agreed to a Med/Rehab DAC assessment. In light of the history of this case, I am prepared to adjourn the arbitration hearing scheduled to begin May 27, 2002, in order for the DAC to be completed before the parties move to arbitration. I do so in the hope that additional information will facilitate settlement between the parties - which is in most instances preferable to litigation.

If subsequent to the results of the Med/Rehab DAC, the parties are not able to resolve this matter, they should contact the case administrator in this file to set new dates for the arbitration hearing.

EXPENSES:

I leave the matter of expenses to the hearing arbitrator.

May 17, 2002

Tanja Wacyk Arbitrator

Date

Neutral Citation: 2002 ONFSCDRS 76 FSCO A00-001308

FINANCIAL SERVICES COMMISSION OF ONTARIO