Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2003 ONFSCDRS 107

Appeal P01-00046

Appellant

and

Respondent

Before:

Stewart M. McMahon

Representatives:

Todd McCarthy for Allstate

Theodore P. Charney for Mrs. Khaledi

Hearing Date:

April 11, 2002, with supplementary written submissions

APPEAL ORDER*

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

The appeal from the arbitration order dated September 27, 2000, is dismissed, save that Allstate is not required to pay interest pursuant to s. 46(2) on the 48^th treatment session.
Allstate shall pay Mrs. Khaledi her appeal expenses.

July 17, 2003

Stewart M. McMahon Director's Delegate

Date

This decision is being released concurrently with Glinka and Dufferin Mutual Insurance Company, (FSCO P01-00002); Amoa-Williams and Allstate Insurance Company of Canada., (FSCO P01-00052) and Langdon and Pafco Insurance Company Limited. (FSCO P02-00017). Each case involves an accident that occurred after November 1, 1996 and accordingly, all of the claims are made pursuant to the SABS-1996.¹ The common issue can be stated as follows: If a Designated Assessment Centre ("DAC") reports that a medical expense is not reasonable and necessary, but an arbitrator ultimately decides that some, or all, of the expenses are payable, is the insured person entitled to interest on these expenses? Section 46(2) of the SABS-1996 states that an "insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly." Therefore, the resolution of these appeals depends on if, and when, the payment became overdue.

A. When do benefits become overdue?

I disagree with the suggestion made by some insurers that a benefit can never be overdue in the event of a dispute, because the claimant has not yet proven the benefit is "due." However. I also reject the suggestion that a finding by an adjudicator that a benefit is owing, necessarily means the unpaid benefit was overdue, and therefore attracts interest.

The SABS-1996

At the risk of seeming to over-simplify an issue that has engendered a lot of debate, s. 46(1) of the SABS-1996. defines overdue. It states "[a]n amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Part" [emphasis added]. Part X. which is entitled "Procedures for Claiming Benefits." contains the rules governing payment of the various benefits contained in the SABS. The specific rules relating to medical and rehabilitation benefits are found in s. 38. Therefore, for our purposes, s. 46 (1) can be read as follows:

An amount payable in respect of a medical benefit is overdue if the insurer fails to pay the benefit within the time required by s. 38.

In light of this, the first step in establishing a claim for interest pursuant to s. 46(2) is identifying the applicable payment obligation imposed by s. 38. The second step is to ascertain if the insurer has fulfilled that obligation within the stipulated time. I have highlighted the words "within the time required." because they suggest to me that careful attention must be paid to the point at which the insurer is obliged to make a payment. This temporal connection is reinforced by the wording of s. 46(2) , which states that interest is payable "from the date the amount became overdue."

With one exception. I discuss below, if a disputed expense is submitted to a DAC assessment, and the report does not state the expense is reasonable and necessary, s. 38 does not impose any payment obligations, short of a finding by an adjudicator that a benefit is owing.² In the absence of an obligation to pay in advance of the order, there is no foundation for a finding that the amount was payable prior to the order.

The easiest way to establish that the insurer is not under an obligation to pay, prior to adjudication, is to walk through s. 38 highlighting the instances in which the insurer is obliged to pay.

Subsections 38(1) and (2) require the insured person to submit an application and treatment plan before expenses are incurred. Subsection 38(8) states that within 14 days of receiving these documents, the insurer must deliver a notice to the insured person stating whether it will pay for some, all, or none of the proposed treatment.

The insurer's acknowledgment that it will pay for at least some of the treatment triggers the first obligation to pay an expense. Subsection 38(11) states that the insurer shall pay for these services within 30 days of receiving the invoice. A failure to honour this obligation will result in a finding that the amount payable is overdue. Pursuant to s. 46(2) the insurer will be obliged to pay interest on this amount from 30 days after receipt of the invoice.

Subsections 38(12) and (13) provide that the insurer must arrange a DAC assessment if it has not agreed to pay for all of the proposed treatment. However, in keeping with the fact that this takes time, and the prevailing medical view is that soft tissue injuries respond best if treated promptly, s. 38(16) provides that even though the insured person is to be assessed by a DAC, the insurer must pay for the lesser of the first 15 sessions with a chiropractor or physiotherapist, or the total of such expenses incurred within six weeks after the accident.³ Section 38 does not contain any explicit statement about when these expenses must be paid. Counsel for Allstate in the Amoa-Williams case suggested that to be consistent, the insurer should pay for these services within 30 days of receipt of the invoice. This makes sense to me. This represents the second instance in which s. 38 imposes an obligation on the insurer to pay an expense. If an insurer fails to pay for these limited services within 30 days of receiving the invoice, the amount payable is overdue, and hence the insurer would also be responsible for the payment of interest pursuant to s. 46(2).

The insurer's obligations on receipt of the DAC report are set out in s. 38(14). Subject to a determination by an adjudicator, if the DAC reports that "an expense is reasonable and necessary for the insured person's treatment or rehabilitation, the insurer shall pay for the expense." Section 38(14) is silent on when this benefit must be paid. Again, to be consistent, the most apparent time is within 30 days of receipt of an invoice. This represents the third instance in which s. 38 imposes an obligation on the insurer to pay a benefit. Accordingly, these expenses are overdue if the insurer fails to pay them within 30 days of receipt of the invoice. It follows that interest is payable on these overdue payments in accordance with s. 46(2).

However, s. 38(14)(b) states that, subject to adjudication, if the DAC report is negative, the insurer is not required to pay for the expenses. The insured person can decide to pursue the treatment and commence legal proceedings, but the insurer is under no obligation to pay the expenses until there is a positive decision from a judge or arbitrator that the treatment was reasonable and necessary. This finding will oblige the insurer to pay for the expenses incurred by the claimant. The question remains, does it also trigger an obligation to pay interest pursuant to s. 46(2)? To my mind, the answer is no.

When considering the interest provisions found in the SABS, it is important to keep in mind that they are not the same as the pre-judgement interest provisions in s. 128 of the Courts of Justice Act, which provide (with some exceptions) that pre-judgement interest is payable whenever a party is entitled to an order for the payment of money. The event that triggers an obligation to pay interest in a civil proceeding is a finding that money is payable. In contrast, the event that triggers an obligation to pay interest pursuant to s. 46(2) of the SABS-1996 is not merely the determination that a benefit is owing – it requires an additional finding that the insurer failed to pay the benefit within the time required by s. 38. In the event that a matter is referred to a DAC. and the DAC releases a negative report, there is no obligation to pay until there has been a determination after trial or arbitration. Accordingly. I can see no basis for a finding that the insurer's failure to pay, in advance of the adjudicator's ruling, can be characterized as a failure to pay the benefit within the time required by s. 38.

This conclusion can be bolstered by asking when the insurer should have paid the benefit (in other words, when would the benefit be overdue on the grounds that the insurer had failed to pay in a timely fashion)? The only real option is 30 days from receipt of the account. But that is the date that applies in the event of a positive DAC. Clearly, the legislature intended a different result in the event of a positive DAC versus a negative DAC.

The evolution of the interest provisions in the 1990 and 1994 versions of the SABS supports this reading of the SABS-1996.

The SABS-1990

The 1990 version of the SABS was quite straightforward. It contained a general section that governed the payment of all benefits. Weekly benefits were defined as overdue if not paid within 10 days of receipt of a completed application. Medical and rehabilitation benefits were overdue if not mailed within 30 days of receipt of the application. With some minor exceptions, that are not relevant for our purposes, there were no provisions that displaced or nullified the insurer's obligation to pay benefits merely because of the existence of a dispute. Section 24(4) stated that "[t]he insurer will pay interest on overdue payments from the date they become overdue at the rate of 2% per month."

In Sebastian and Canadian Surety Company, (FSCO P96-00032, July 28, 1998), Director's Delegate Naylor considered a claim for interest on an award of weekly benefits. The principal dispute related to the amount of the benefit. The insurer argued that interest should only be awarded from the time Mr. Sebastian produced all the documents necessary to allow it to calculate the amount of his benefit. The Director's Delegate rejected this submission. She held that the obligation to pay interest pursuant to s. 24(4) of the SABS-1990 was mandatory and that there is "no residual authority or discretion." She then asked the question – when were the payments overdue? To answer that question she went directly to the payment obligations set out in s. 24. Because the insurer had failed to pay the full amount of the benefit within the time set out in s. 24(1) she concluded the benefit was overdue, and hence attracted interest from that date forward. This direct tie between an examination of the payment obligations set out in the SABS and the obligation to pay interest, is consistent with the approach I have adopted in the cases before me.

In Sebastian, the insurer argued that at 2% per month, the interest provisions were designed to punish the insurer for reprehensible conduct, and therefore, interest should not be awarded short of this kind of wrongdoing. The Director's Delegate rejected this submission. However, she acknowledged that the interest provisions in the SABS had a dual component. In addition to compensating the claimant for the value of the money withheld, she concluded that it was designed "to further the system's fundamental goal of ensuring prompt payment of benefits..." I had made the same observation a few months earlier in an arbitration decision dealing with caregiver benefits. See Urquhart and Zurich Insurance Company, (OIC A96-000368. February 26. 1998).

The SABS-1994

When considering the significance of these "prompt payment" comments, in the context of the 1994 and 1996 versions of the SABS, it is important to note that in Sebastian the Director's Delegate observed that "[t]he emphasis at the outset is on speedy payment with a minimum of formality." Both the SABS-1994 and the SABS-1996 contain a significant amount of process and formality, including detailed rules about when payments must be made, and when they do not have to be made. In light of these changes it is too simple to say that the interest provisions are part of a larger scheme designed to encourage prompt payment. Instead, it is now more accurate to say that the interest provisions are part of a larger scheme designed to encourage the insurer to pay in accordance with the rules and time-frames set out the in the SABS. Bill 164 removed the right to sue for pecuniary losses. Accordingly, the statutory accident benefits contained in the SABS-1994 were significantly expanded. There was a corresponding increase in the amount of process that attached to the application and payment provisions. For our purposes, the most important change was the introduction of the DAC system that was designed to provide the parties with an independent assessment of the claim. The DAC opinion is not the final word on the parties' rights and obligations – that is reserved to the judge or arbitrator – but the outcome of the DAC generally defines their rights and obligations pending adjudication. See M.D. and Halifax Insurance Company, (FSCO P00-00049. May 16. 2001).

The provisions governing the payment of all the principal benefits contain sections, similar to those found in the SABS-1990, that stipulate the insurer must pay on receipt of an application. In most cases, these obligations are accompanied by corresponding statements that the amount payable is overdue if the insurer fails to comply with these obligations. For example, the payment provisions governing weekly benefits are found in s. 62. Subsections 62(1) and (2) state that the insurer shall start paying these benefits within 14 days of receipt of an application, and every second week thereafter. Section 62(4) states that the amount payable is overdue if the insurer fails to comply with these obligations. Section 68 states that "the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of two per cent per month compounded monthly."

All of the decisions considering the interest provisions in the SABS-1994 deal with weekly benefits. The first decision to consider these provisions in any detail was Bajic and Pafco Insurance Company Limited and Zurich Insurance Company, (FSCO P00-00050, June 5, 2001). On appeal, the Director upheld an order that the insurer was responsible for the payment of interest on IRBs found to be owing after an arbitration hearing. The insurer argued interest should not accrue until the arbitration, and any appeals therefrom, were completed. The Director stated that overdue must be given some meaning, but was not prepared to go as far as the insurer urged. To ascertain if interest was owing, the Director examined the payment provisions in s. 62 and determined that the insurer was obliged to start paying IRBs within 14 days of receipt of an application, and to continue paying every two weeks thereafter, for as long as the insured was entitled to benefits. In light of these provisions, the Director found that the payments were overdue and awarded the insured person interest pursuant to s. 68. It is worth noting that the claimant did not request a DAC, and consequently, the case does not consider the interaction between the DAC rules and the definition of overdue.

Faraj v. Prudential of America General Insurance Co., [1999] O.J. No. 4574, did involve a consideration of the interaction between the DAC provisions and the payment of interest on IRBs. Mr. Faraj requested a DAC which reported he was no longer eligible for benefits. In accordance with the applicable provisions, the insurer terminated benefits following the release of the DAC report. However, while preparing for the ensuing litigation the insurer obtained a report from one of its own experts that contradicted the DAC. A few months later the insurer reinstated benefits and ultimately paid the arrears, but refused to pay interest pursuant to s. 68. Justice Thompson rejected the insurer's argument that the benefits were not overdue prior to reinstatement because there was still a dispute about causation up to that point. However, he also rejected the insured's argument that the amount was overdue as of the date of termination. Justice Thompson concluded that until the insurer's own expert contradicted the DAC assessment the insurer had "done everything it was required to do and nothing was overdue until someone said it was overdue." In the circumstances, he ordered interest, pursuant to s. 68. from the date of the report forward.

In Mercier v. Royal and Sun Alliance Company of Canada. 2003 CanLII 21638 (ON SC), [2003] O.J. No. 1233. Justice Quinn rejected the reasoning in Faraj, stating that in his view, the court put "too sharp a point on the meaning of 'overdue.'" He expressed the view that "[w]here it has been adjudged that benefits have been improperly withheld from a plaintiff. I can see no reasons in law or logic why those benefits should not attract interest." With respect. I disagree. I do not think it is possible to put too fine a point on the definition of overdue. To the contrary, a determination of entitlement to interest pursuant to s. 68 turns on a finding of overdue. I harken back to my earlier comment about the differences between the interest provisions in the Courts of Justice Act and the SABS. However. I note with interest that, after making these general comments. Justice Quinn embarked on the type of analysis that I have suggested is essential to an assessment of any claim for interest pursuant to the SABS. He looked at the insurer's obligations in s. 62(1) and (2) and the definition of overdue. Unfortunately, for our purposes, he did not go on to inquire into what, if any, effect the DAC provisions have on the issue of whether a payment is overdue.

The Court of Appeal has considered the question of interest on weekly benefits awarded after trial. In Attarvar v. Allstate Insurance Company of Canada, 2003 CanLII 7430 (ON CA), [2003] O.J. No. 213, the Court upheld a decision that interest was payable on the difference between the loss of earning capacity benefit ("LECB") paid by the insurer, which was based on the outcome of a DAC assessment, and the amount ultimately determined at trial. The payment of LECBs is also governed by s. 62 and. Accordingly, the insurer is under the same obligation to begin paying these benefits within 14 days of receipt of an application, and every two weeks thereafter, and these payments are overdue if the insurer fails to comply with this obligation, Justice Laskin rejected the insurer's argument that the shortfall in the LECBs was not overdue because it had followed the DAC's recommendations. He noted that if the legislature had intended this result there would have been a statement to this effect in s. 62.

The common thread in all of these decisions is the link between the insurer's failure to meet its statutory obligation to pay the amount owing on receipt of the application, and a finding that the payment was overdue and hence attracted interest. The Court of Appeal took the matter one step further in the context of LECBs when it determined that a reading of s. 62 did not support the contention that the DAC rules were intended to supplant the obligation to pay the full amount of the benefit on receipt of the application.

These cases are important because they reinforce the link between the payment provisions contained in s. 62 and the interest provisions in s. 68. However, ultimately, the provisions governing the payment of medical and rehabilitation benefits are far more important to our deliberations because these sections contain direct links between the DAC rules and the definition of overdue.

The sections governing these benefits start with the universal obligation to pay on receipt of an application. However, from this starting point the insurer is given a number of sequential options governing the response to the claim. As the insurer moves through these options, the previous rules that define when it must pay are displaced by a fresh set of rules, and statements defining when the amount payable is overdue.

The most straightforward example of this sequence is found in the rules governing rehabilitation benefits. Section 45.1(1) states that the insurer shall mail or deliver benefits within 14 days of receipt of an application, and s. 45.1(2) stipulates that payments are overdue if the insurer fails to comply with this obligation. However, if the insurer asks for a certificate from a medical practitioner attesting to the reasonableness and necessity of the treatment, s. 45.1(3) states that ss. 45.1(1) and (2) do not apply. Instead, a new rule takes effect that obliges the insurer to pay within 14 days of receipt of the certificate, and the payment is overdue if the insurer fails to comply. Similarly, s. 45.1(4)(a) states that if an insurer refers a rehabilitation claim to a DAC, ss. 39.1(1)(2) and (3) no longer apply. The net effect of this sequence is that once the matter is referred to a DAC, the previous rules that define the insurer's payment obligations and the corresponding statements about when a payment is overdue, become irrelevant. In large measure, this sequence does what the Court of Appeal said was absent in the LECB context.

The rules governing payment on receipt of the DAC report are set out in s. 45.1(4)(b) and (c). They provide that the insurer must pay the disputed expense within 14 days of receipt of a positive DAC report, and the payment is overdue if the insurer does not comply. Therefore, if the insurer arranges a DAC assessment, but then fails to pay for any expenses the DAC states are reasonable and necessary, it will also be responsible for the payment of interest from 14 days after receipt of the report.

Can interest be payable pursuant to s. 68 in the event of a negative DAC report? A plain reading of s. 45 and 45.1 suggests the answer is no. It is clear from the opening words of s. 45(11) that the insurer's ultimate obligation to pay for treatment is determined by the adjudicator, not the DAC. However, interest pursuant to s. 68 only attaches to that award if the payment became overdue at some point in time. In the absence of any requirement to pay on receipt of a negative DAC, the benefit ultimately awarded by the adjudicator is not overdue prior to adjudication.

The provisions with respect to the payment of medical benefits under the SABS-1994 are a little more complicated. The provisions governing the payment of some types of medical expenses track the rehabilitation provisions. In other cases, a referral to a DAC does not automatically displace the insurer's obligation to pay on receipt of the certificate. However, on my reading of these provisions, once the DAC report is released, the insurer's prior obligations are displaced, and its ongoing obligations, pending adjudication, are determined by the outcome of the DAC.

Conclusion

Interest is not payable in the SABS-1994 context because the initial obligation to pay is displaced once a referral is made to a DAC, and because the only obligation to pay imposed by the DAC provisions is tied to the release of a positive DAC report. The SABS-1996 is even more straightforward because there is no initial obligation to pay. In the absence of an obligation to pay, there is no statutory basis for saying that the insurer failed to pay the disputed expense "within the time required by s. 38." In light of this, there can be no basis for a finding that the benefit was overdue, and hence no basis for the imposition of interest pursuant to s. 46(2).

In addition to a plain reading of the provisions, I think that the rationale for the interest provisions in the SABS also supports a conclusion that interest should not be payable in the event of a negative DAC report.

Modern theories of pre-judgement interest suggest that it is designed to compensate the successful party for the loss in the value of money that occurs in the interval between the time they became entitled to the money, and the date of judgement. At the same time, it deprives the unsuccessful party of any benefit they may have gained from holding onto the money. See M.A. Waldron, The Law of Interest in Canada (Scarborough: Carswell, 1992) at p.127. In this sense, pre-judgement is designed to be neutral. These theories were developed in the context of pre-judgement interest rates tied to commercial rates. However, at 2% per month (either simple or compound), the interest payable pursuant to the SABS is not neutral. It does more than compensate the insured for the delay, or deprive the insurer of any benefit gained from the use of the money pending judgement. It represents a penalty that is imposed in the event of an overdue payment.⁴ This penalty component is the incentive designed to encourage the insurer to pay within the time-frames set out in the parts of the SABS that define the insurer's payment obligations. Imposing interest in the event of non-compliance encourages the insurer to meet its obligations. However, this incentive is negated if the interest is payable in any event.

This interpretation of the interest provisions means that a claimant will not be compensated for the loss in the value of benefits that are not paid until after judgement. This is an important consequence that cannot be ignored. However, any consideration of the relationship between the obligation to pay interest and the DAC provisions must consider all the consequences that flow from the release of a DAC report. A positive DAC report triggers an obligation to pay for disputed benefits pending the outcome of the litigation. This is a significant departure from traditional contract principles, and represents a significant advantage in favour of the claimant. The inability to claim interest after a negative DAC is part of the balancing integral to this system. In addition, if the claimant is ultimately unsuccessful at trial or arbitration, they will be obliged to repay the benefits that post-date the DAC, but it is not obvious to me that the insurer is entitled to demand interest on the repayment. In this respect, the interest provisions following a DAC report work in tandem.

For all of these reasons, I am satisfied that if the insurer refers a dispute over medical benefits to a DAC, which delivers a negative report, but a judge or arbitrator later finds that the treatment is reasonable and necessary, the insurer will be responsible for payment of the treatment, but will not be responsible for the payment of interest pursuant to s. 46(2), prior to adjudication because the amount awarded was not overdue before that time. Having said this, the question of whether interest is payable will often be complicated by the fact that it is not uncommon for the DAC to assess the person after most of the treatment contained in the initial treatment plan has already been undertaken. This problem can be exacerbated by the fact that the DAC reports often comment only in prospective terms, and it can be difficult to determine what, if any, opinion they are proffering on the past treatment. All of the cases before me exhibit these difficulties. However, for the purposes of these appeals, counsel have largely ignored these elements and with one significant exception, have argued the matter on the basis that the DAC rejected the proposed treatment, but the insured person chose to pursue the treatment anyway, and ultimately succeeded in establishing entitlement to the benefits in issue. One significant wrinkle in the Khaledi and Langdon cases is the existence of a dispute over the hourly rate charged by the treatment centres. I will deal with this issue in the individualized portions of the affected decisions.

B. Application of the law to Mrs. Khaledi's situation

The factual basis on which the Arbitrator dealt with the question of interest, and the foundation for the appeal, are not straightforward, and require some explanation.

Mrs. Khaledi was injured in a motor vehicle accident on February 8, 1999. She was referred to Recovery Rehab for active and passive treatment of her injuries.⁵ The clinic started treatment immediately and then prepared a treatment plan proposing six to eight weeks of treatment at a cost of between $3,000 and $3,500, based on a per-session fee of $100.⁶ Allstate responded by stating that the "treatment duration and cost appears to be excessive" and arranged a DAC assessment.

The DAC reports were released in early May. The assessors used primarily prospective language. For example, the physiotherapist reported that Mrs. Khaledi "should have no more passive treatment." and the orthopaedic surgeon reported that he "did not feel she requires any further supervised physiotherapy, chiropractic treatment, massage therapy, acupuncture or pool therapy." However, the Arbitrator found that the assessors concluded that the treatment proposed in the first treatment plan was not reasonable and necessary. Notwithstanding the opinion of the DAC assessors. Mrs. Khaledi chose to continue attending for further treatment until late June 1999. Mrs. Khaledi attended for 70 sessions in total.

Allstate did not call any witnesses at the arbitration, but based on the clinic's accounts, the Arbitrator found that Allstate made an initial payment of $900 representing the initial 15 treatments at a per session fee of $60. She also noted that shortly after the release of the DAC report Allstate made another payment of $1.920, which she found represented "payment for a further 32 sessions at $60 per hour." It is not clear on the record whether this was a voluntary payment, or whether at the time Allstate read the DAC report as a statement that the past treatment was reasonable. In the end, it does not matter to my analysis.

On the question of the number of sessions that were reasonable, the Arbitrator found that the treatment undertaken up to May 18 was reasonable, save for six sessions. On the question of the rate, she found that the per session fee of $100 was reasonable. She left it to the parties to calculate the amount owing.

Allstate calculated what it thought was outstanding based on its review of the number of sessions undertaken prior to May 18 and crediting itself for the $2.820 it had already paid, and then forward a cheque to Mrs. Khaledi for $1.420. However. Mrs. Khaledi did not agree with Allstate's calculations. She believed that Allstate had not paid for all the outstanding sessions. In addition, she took the position she was entitled to interest. The Arbitrator invited counsel to file written submissions on these points.

Allstate's submissions include a review of the Arbitrator's findings regarding the amounts it had paid prior to the arbitration hearing, and its subsequent post-decision calculations and payment. On the question of interest, Allstate submitted that "given there was a dispute between the parties as to the number of sessions that ought to have been undertaken, and also as to the amount owing for each session, that interest would not be payable until such time as the dispute was resolved. In this case the dispute was resolved upon release of your decision."

In a supplementary decision dated September 27, 2001, the Arbitrator determined that Allstate was responsible for 48 sessions. Based on the per-session fee of $100, the Arbitrator found that the amount owing was $4,800. She then credited Allstate for the 47 sessions paid at $60 per session, and determined that the outstanding balance was $1,980. In light of the fact Allstate paid $1,480 on January 17, 2001, she found that Allstate owed Mrs. Khaledi a further $500.

On the question of interest, the Arbitrator expressed some uncertainty about how s. 46(1) applied to the facts of the case before her. Ultimately, she stated "I find that when an amount is subsequently determined by an arbitrator to be reasonable, it is implicit that it was reasonable all along. It would then follow that an applicant would be entitled to interest on the benefits owing at the prescribed rate from the date the amount first became owing." Based on this analysis she ordered Allstate to pay interest on the $1,480 Allstate paid after judgement, from June 30, 1999 (the date of the first invoice post-dating the DAC) until January 17, 2001 (the date of payment). She also ordered Allstate to pay interest on the outstanding $500 from June 30, 1999, until such time as it was paid.

Although it is not crystal clear, it would appear that when the Arbitrator was considering the interest issue her principal concern was the shortfall that arose due to the fact Allstate paid at $60 per session, rather than $100 per session, and that she was not concerned with the interaction between the DAC rules and the meaning of overdue. I come to this conclusion based on three factors. One, she proceeded on the basis that Allstate had paid for 47 of the 48 sessions she found were reasonable. Two, her use of the word "amount" in her concluding statement that "when an amount is subsequently found by an arbitrator to be reasonable, it is implicit that it was reasonable all along." Three, in a "letter decision" in Zacharias and Allianz Insurance Company of Canada, (FSCO A97-001283. April 29. 1999). she had concluded that interest was not payable on benefits found owing by an arbitrator after a negative DAC. but in this case, she made no reference to that decision, nor did she make any attempt to distance herself from that prior conclusion.

Allstate appealed the Arbitrator's ruling on interest. In the Notice of Appeal, it stated that the Arbitrator erred in determining that the benefits in question were overdue. As a result of pre-hearing discussions, it was decided that the Amoa-Williams appeal and this matter would proceed one after the other, as they both dealt with the question of interest, and it appeared that both shared the common factual foundation of a negative DAC. Allstate's submissions in this case and the Amoa-Williams case focused on the relationship between the definition of overdue and the negative DAC finding. Initially, Mrs. Khaledi was represented by the owner of the treatment facility. However, after the agreement to proceed with the two cases one after the other, the counsel who was representing Mrs. Amoa-Williams agreed to represent Mrs. Khaledi. He filed a single set of submissions that also focused on the DAC issue.

During the course of the appeal hearing. I indicated to counsel that it appeared to me that in this case, the relationship between the negative DAC report and the meaning of overdue might not be as significant as the fact that almost all of the money on which the Arbitrator found interest to be owing, arose out of a dispute about the per-session fee. Because neither counsel had considered this point. I gave them an opportunity to file further written submissions.

As a preliminary matter. Allstate objects to my raising this issue. It submits that in my capacity as a quasi-judicial officer I should not interfere with counsels' conduct of the case, and that I should not raise issues on my own initiative. In that regard. Allstate cites a number of appeal decisions that overturned a trial decision on the basis that the trial judge transgressed the proper limits of judicial intervention. Mrs. Khaledi argued the question should be addressed.

I agree that a judicial or quasi-judicial officer should guard against undue intervention in a case, particularly if that intervention suggests he or she is becoming an advocate for one side or the other. However, where a party is asking me to overturn the decision of an arbitrator, and it appears to me that even if the appellant's arguments are accepted the decision should not be overturned for other reasons, I believe I am within the bounds of my discretion to ask counsel to address the issue of concern to me.

In this case, the Arbitrator found that Allstate paid for 47 sessions, but at a per-session fee below the rate charged by the treatment centre, and below the rate the Arbitrator ultimately found to be reasonable. If that was a voluntary payment the ongoing dispute about whether further treatment was reasonable and necessary, and the impact of the DAC report on that question, had little if anything to do with this debate, and the DAC rules do not assist Allstate. Alternatively, if Allstate made the payment because it felt it was obliged to on the basis of the DAC report, it did not pay in accordance with the DAC report, in as much as it did not pay the full amount billed by the clinic. A more detailed analysis of this argument can be found in the accompanying appeal decision in Langdon. In these circumstances, I see no error in the Arbitrator's conclusion that the payment of the difference between the amounts paid by Allstate and the amount she found to be owing was overdue, and hence attracted interest, save and except that Allstate should not be responsible for interest on the one additional session ordered payable by the insurer.

IV. EXPENSES

The appeal was largely unsuccessful, but not on the basis of the arguments made by Mrs. Khaledi. More importantly, the resolution of the question of overdue is important to the community at large. In light of the fact that Mrs. Khaledi and Mrs. Amoa-Williams were represented by Mr. Charney, and he filed a joint written submission on their behalf, Mr. Charney is instructed to prepare and deliver to Allstate a single account that details the work done on the two files, thereby avoiding any duplication of expenses.