Neutral Citation: 2003 ONFSCDRS 116

FSCO A02-000673

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

HARRIET BRAKO

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Susan Sapin

Heard:

April 8, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received from Joanna M. Chadwick on May 12, 2003.

Appearances:

Kathryn McRae Hill for Ms. Brako

Marlett M. Dobson for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Harriet Brako, was injured in a motor vehicle accident on March 13, 2001. She applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.¹ State Farm refused to pay caregiver benefits and housekeeping and attendant care benefits on the basis that Ms. Brako did not attend an in-home occupational therapy assessment requested by State Farm pursuant to section 42 of the Schedule. The parties were unable to resolve their disputes through mediation and Ms. Brako applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. State Farm seeks a stay of the arbitration.

The preliminary issues are:

1. Did Ms. Brako fail to make herself reasonably available for an in-home occupational therapy assessment requested by State Farm pursuant to section 42 of the Schedule?

2. If so, what are the consequences of Ms. Brako's failure to make herself reasonably available for the assessment requested by State Farm?

3. Is either party entitled to its expenses of the preliminary issue hearing pursuant to section 282 of the Insurance Act, R.S.O. 1990, c.I.8?

Result:

1. Ms. Brako failed to make herself reasonably available for an in-home occupational therapy assessment requested by State Farm pursuant to section 42 of the Schedule.

2. As a consequence of her failure to make herself reasonably available for the assessment requested by State Farm,

d) The arbitration is stayed until Ms. Brako attends the IE; and

e) Pursuant to subsection 42(8), no benefit is payable for the period after Ms. Brako was notified of the assessment and before she submits to the assessment.

3. State Farm is entitled to its reasonable expenses of the preliminary issue hearing, fixed at $500.

EVIDENCE AND ANALYSIS:

Background:

The following facts are not in dispute. On March 13, 2001, Ms. Brako was the driver of a vehicle which rear-ended a van as it prepared to make a right-hand turn off Jane Street in Toronto. She injured her left leg, chest and neck. She visited her family doctor of ten years, Dr. Andrew Otoo, a day or two later. He sent her to Century Physiotherapy and Assessment Centre ("Century") for physiotherapy and prescribed painkillers.

Ms. Brako was not working at the time of the accident. She had been laid off from her job as a "General Helper" at PolyRim, a manufacturer of car parts, in November 2000, and was receiving Employment Insurance benefits at the time of the accident.

Ms. Brako testified that she was in too much pain to be able to do anything after the accident, and was unable to care for her two children, aged ten and seven, or manage her household tasks. She engaged a friend of hers, Sandra Osei, to help her with these duties.

In her Application for Arbitration dated April 29, 2002, Ms. Brako claimed caregiver benefits of $300 per week from March 13, 2001 to April 25, 2002, attendant care benefits of $1540 for the three months after the accident, ongoing housekeeping expenses of $100 per week and $365 for assistive devices.

State Farm has refused to pay any of these benefits on the ground that Ms. Brako failed to attend an "Occupational Therapy Home Functional & Attendant Care Independent Examination" (IE) scheduled to take place in her home, first on April 26, 2001, then rescheduled to May 2, 2001. State Farm submitted that the assessment was reasonably necessary because the Insurer was provided with insufficient information to be able to determine the amount of caregiver, attendant care and housekeeping benefits it should pay to Ms. Brako. It argued that the arbitration should be stayed because she did not attend.

Ms. Brako's agent submitted that the IE was not reasonable or necessary for a number of reasons: At the time State Farm arranged the assessment, Ms. Brako had not yet made a claim for caregiver or housekeeping benefits; Ms. Brako had obtained an occupational therapy assessment by her own treatment provider and therefore State Farm's IE was duplicative and not reasonably necessary; and State Farm failed to take into consideration all of the relevant medical and other information provided by Ms. Brako and her doctor substantiating her need for medical, housekeeping and childcare assistance.

The Law:

Subsection 50(b) of the Schedule precludes an insured person from commencing a mediation proceeding under section 280 of the Insurance Act unless he or she made himself or herself reasonably available for any examination required by the insurer under section 42.²

Section 42 sets out the obligations of the insurer and the insured person with respect to an IE:

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

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

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

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

(5) For the purpose of the examination,

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

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

Section 42 also sets out the consequences to an insured person who fails to cooperate:

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

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

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

The right of insurers to request IEs has been discussed in numerous arbitration decisions. Arbitrators agree that the purpose of these examinations is to enable insurers to fairly and effectively assess a claim independently of the insured person's own sources.³ This is both a right of the insurer and an obligation towards its insured. That right, however, must be balanced by the insured person's right to privacy, and is qualified by the requirement of reasonableness. The use of the word "may" in the Regulation emphasizes the discretionary nature of an insurer's decision to request an IE, which in turn requires an arbitrator to review the reasonableness of the insurer's decision.

Yasmin Nair, a former State Farm adjuster, testified about her handling of Ms. Brako's claim. Her contemporaneous log notes indicate that she received Ms. Brako's completed Application for Accident Benefits and statutory declaration from Ms. Brako's agent, Ms. Katherine McRae Hill, on April 5, 2001. She also received an Activities of Normal Life form signed by Ms. Brako indicating she was only partially able to drive, walk, sit, stand, climb stairs, shop, clean her home, prepare meals and do laundry after the accident, and a Permission to Disclose Health Information Form which would permit Ms. Nair to obtain information from Dr. Otoo, the family doctor.

On April 6, 2001, with this information in hand, Ms. Nair approved two Treatment Plans submitted by Century, and dictated a letter to Ms. McRae Hill, copied to Ms. Brako, stating that Ms. Brako was required to elect either caregiver, non-earner or income replacement benefits (IRBs) and enclosed the required election form for Ms. Brako to complete and return. Ms. Nair advised that once she received the completed form, she would review Ms. Brako's entitlement to weekly benefits accordingly. Ms. Brako's private insurer was to be billed first for all claims.

Ms. Nair's April 6, 2001 letter continued as follows:

Please also note that I am awaiting receipt of the Disability Certificate Form and the Employer's Confirmation of Income Form (if applicable).

Please also note that in accordance with the Activities of Normal Living Form [sic], I have assigned OT Solutions Inc. in order to conduct an analysis of your client's activities of daily living within her home environment.

The occupational therapist assessment has been scheduled under Section 42 of the Statutory Accident Benefits Schedule. This will provide valuable information to be used in developing your client's rehabilitation plan.

Under Section 42 of the SABS, the in-home analysis to be carried out by the occupational therapist is rendered necessary to determine a level of disability...

On April 6, 2001, OT Solutions faxed a notice to Ms. McRae Hill, copied to Ms. Brako by mail, advising that the assessment would take place at Ms. Brako's home on April 26, 2001.

Neither Ms. Nair's letter nor OT Solutions' notice identifies the benefit to which the examination relates, as required by subsection 42(2). Arbitrators have deemed similar notices to be defective in a material respect, because the requirement to specify the benefit to which the examination relates is an important feature of the insurer examination process as it allows an insured person to evaluate whether she wishes to continue to pursue an insurer for a specific benefit, or instead decline to attend an examination and thereby effectively choose to forego the insurer's payment of that benefit, either permanently or for a period of time.⁴

Arbitrators have also held that a simple reference to, or reiteration of, the relevant sections of the Schedule is inadequate: failure to clearly advise of the consequences of non-attendance "does not fulfil the objective of consumer protection inherent in automobile insurance."⁵

On that basis, I find State Farm's notice regarding the first scheduled IE date of April 26 defective in a material respect because it did not comply with the notice requirements in subsections 42(1) and (2) in that it did not state the benefits to which the assessment related. In my view, it would be inappropriate to allow State Farm a stay of the arbitration hearing because Ms. Brako failed to attend the assessment, where State Farm had not itself complied with a very important, and mandatory, part of the section 42 procedure.

However, I find State Farm remedied this defect when it rescheduled the IE to May 2, 2001, because Ms. Brako was sent a notice that complied with subsections 42(1) and (2).⁶ In addition, I heard no evidence that the date or time of the rescheduled assessment was inconvenient.

The remaining question, then, is whether State Farm's request for an IE was reasonably necessary in the circumstances. Ms. Nair testified that she required the IE because she did not have enough information from Ms. Brako to be able to determine the amount of caregiving, attendant care and housekeeping expenses she should pay her. Ms. Brako submitted that State Farm ought to have begun paying her on the basis of information from her own health care providers.

I note that for weekly benefits, section 35 of the Schedule requires the insurer to "promptly determine" whether the benefit is payable, and, if so, to begin paying within fourteen days of receiving the application. Where an insured person may qualify for more than one weekly benefit, (caregiver or IRBs in Ms. Brako's case), the insurer must notify her of her right to elect one or the other within fourteen days. For claims for weekly benefits and housekeeping expenses, section 34 of the Schedule provides that an insurer may require the insured person to provide a Disability Certificate "from a health practitioner of the person's choice as often as is reasonably necessary," stating the cause and nature of the impairment and the estimated duration of the disability.

Attendant care claims are treated somewhat differently. Section 39 of the Schedule requires the insurer, within fourteen days, to either determine whether it is required to pay for "the expenses described in the application," or to notify the insured person that it requires a "certificate from a member of a health profession who is authorized by law to treat the person's impairment stating that the expenses described in the application are reasonable and necessary for the person's care."

In my view, these provisions, read together with the discretion built into section 42 of the Schedule, were intended to balance the insurer's right to reliable medical evidence to support payment of statutory accident benefits with the insured person's right to receive prompt payment. The insured person's need immediately after an accident is likely to be at its most acute. It may not always be practical, expedient or reasonable for the insurer to rely on its right to obtain its own IE in order to determine initial entitlement, especially where this would delay payment. In order to comply with the stringent timelines for paying benefits, the insurer may need to rely on information provided by the insured person's own health practitioners in fulfilling its obligation to promptly determine entitlement. In my view, it is with these considerations in mind that the legislature drafted the Schedule so as to require insurers to use discretion in how medical information is obtained to support a claim.

The right to an IE is not automatic; the Regulation requires the insurer to use its discretion in determining how to begin prompt payment of benefits until an IE can be arranged.

The other important aspect to this issue is whether the initial information provided by an insured person is sufficient for the insurer to begin paying a claim without first obtaining its own IE. In this particular case, I find the information provided by Ms. Brako was inadequate, and State Farm's request for an IE was reasonable on that basis.

Ms. Nair's log notes, which listed the documents she received on behalf of Ms. Brako, do not mention a two-page standard-form "Certificate of Incapacity," (Exhibit 10), prepared by Dr. Otoo during Ms. Brako's visit to his office on March 16. Ms. Brako testified that Dr. Otoo was to send this certificate directly to State Farm. Dr. Otoo checked off boxes on the certificate indicating Ms. Brako required assistance with housekeeping, babysitting and personal care for three months, due to "injuries which have made her incapable of carrying out her activities of ordinary living." Unlike other documents received by State Farm, the certificate entered as Exhibit 10 does not bear a date-received stamp. I find there is no evidence to indicate Dr. Otoo sent the certificate or that State Farm received it.

Although an actual Disability Certificate in the form prescribed by regulation to the Schedule does not appear to have ever been provided, I find that Dr. Otoo's certificate contains the information required by the Schedule and, had it been received, could have served the same purpose. Had it been accompanied by invoices for the services requested, or a detailed description of the caregiving or housekeeping duties performed on behalf of the insured person, and the amount of money Ms. Brako had agreed to pay Ms. Osei, this information might have been sufficient for State Farm to begin paying these benefits.

I accept Ms. Nair's testimony that neither of the two assessments provided on Ms. Brako's behalf assisted her to determine the amount of attendant care, caregiver or housekeeping benefits she should pay. The Baseline Functional Assessment conducted by Century Physiotherapy and Assessment Centre on April 3, 2001 and sent to State Farm on April 11, outlined Ms. Brako's functional capacities but did not address specific activities of daily living or her caregiving, attendant care or housekeeping needs.

I agree with Ms. Nair that, as she has no medical training, she does not have the expertise to even attempt to deduce from this document the type and amount of assistance required, and it would be inappropriate for her to do so.

I find the in-home Activities of Daily Living assessment conducted by Counter Assessments on behalf of Ms. Brako on April 11, 2001 and received by State Farm on May 8, to be equally unhelpful. Ms. Nair's log notes and her letter of May 9, 2001 to Counter Assessments, copied to Ms. McRae Hill, indicate that she did not find the assessment useful because it did not set out any recommended levels of assistance for housekeeping and caregiving.

I note that invoices for childcare and housekeeping services were not provided to Ms. Nair until July 2, 2001.

On the evidence before me, therefore, I find that the IE was reasonably necessary because Ms. Brako did not provide State Farm with sufficient information reasonably required for it to determine whether the weekly and attendant care benefits and housekeeping expenses claimed were payable.

I find that Ms. Brako did not have a reasonable excuse for not attending the in-home IE. The uncontested evidence was that Ms. McRae Hill called OT Solutions prior to the first scheduled date for the IE, April 26, 2001, to advise that she would not permit the IE to go ahead, and that she called again prior to May 2 to advise that Ms. Brako would not be attending the rescheduled assessment.⁷ This is consistent with Ms. McRae Hill's opening argument, that the IE was not reasonably necessary because it was "duplicative." I find that Ms. McRae Hill frustrated the IE because she believed that State Farm should begin paying benefits based on assessments conducted on Ms. Brako's behalf and on information provided by Ms. Brako's own health care providers.

This was a serious mistake on Ms. McRae Hill's part, for two reasons. First, the law is quite clear that insurers are entitled to an effective medical assessment independent of an applicant's own sources, although subject to the interrelated requirements of proper exercise of discretion and reasonable necessity. The means, or the process, by which the insurer satisfies itself as to a claim is determined by the Schedule, not by an applicant's representative,⁸ which is precisely what Ms. McRae Hill attempted to do. Second, Ms. McRae Hill's actions led to Ms. Nair's refusal, pursuant to section 42(8), to pay for attendant care benefits as assessed by Counter Assessments and submitted to State Farm on May 8, 2001.

Finally, as Ms. McRae Hill in her role as agent for Ms. Brako effectively prevented the IE from going ahead on two occasions, her submission that Ms. Brako was nevertheless available at home on May 2 and would have been willing to participate had the assessor presented herself (confirmed by Ms. Brako in her testimony), is irrelevant.

Under normal circumstances I would give effect to the provisions of subsection 50(b) of the Schedule and order that Ms. Brako is precluded from proceeding to arbitration because she failed to make herself available for the IE. However, in this case, State Farm has requested a stay of the proceeding. In most cases the duration of the stay would be until the insured person attends the rescheduled IE, something that makes little sense in this case. In any event, pursuant to subsection 42(8)(b) of the Schedule, no benefit is payable to Ms. Brako from the time she was notified of the IE until she attends.

EXPENSES:

Both parties claim their expenses incurred in this preliminary issue hearing. I find that State Farm was dragged into an unnecessary proceeding solely because Ms. McRae Hill does not understand the requirements of the Schedule or the dispute resolution process, and provided her client with misguided advice and representation as a result. Consequently, I award State Farm its reasonable expenses of the preliminary issue hearing, fixed at $500.

July 30, 2003

Susan Sapin

Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 116

FSCO A02-000673

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

HARRIET BRAKO

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The arbitration is stayed until Ms. Brako attends a rescheduled Insurer's examination.

2. Ms. Brako shall pay to State Farm its expenses of the preliminary issue hearing, fixed at $500.

July 30, 2003

Susan Sapin

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.
2. 2An arbitrator's authority to stay an arbitration proceeding pending the insured person's attendance at an IE is a remedy arising from the arbitrator's inherent jurisdiction to control the adjudicative process. It is one of a number of remedies that may be imposed where subsection 50(b) does not apply because the insurer requested an IE after the insured person had already applied for mediation, as was the case in Belair Insurance Company and F.S. (OIC P96-00039A, June 11, 1996).
3. 3See in particular Belair and F.S., supra note 2, and Scott and Toronto Transit Commission (Markel Insurance) (OIC A-001116, September 4, 1992)
4. 4Choumchoui l'Avdalimov and CGU Insurance Company of Canada ( FSCO A00-000433, May 25, 2001); Atul Dhir an dRBC General Insurance Company (FSCO A01-000741, January 15, 2002)
5. 5R.B. and Dominion of Canada General Insurance Company (FSCO A00-000447, May 17, 2002)
6. 6Exhibit 4, Tab 10
7. 7Exhibit 4, tabs 9 and 13.
8. 8Scott and TTC, supra note 3.