Louise Fenech v. State Farm Mutual Automobile Insurance Company, 2003 ONFSCDRS 13

Commission des services financiers de l’Ontario

Neutral Citation: 2003 ONFSCDRS 13

Appeal P01-00040

Appellant

and

Respondent

Before:

Stewart McMahon

Representatives:

Roland Spiegel for Ms. Fenech

Edmund W. Kent for State Farm

Hearing Date:

January 29, 2003

APPEAL ORDER

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

The appeal is dismissed and the arbitration order of August 29, 2001 is confirmed.
Ms. Fenech shall pay State Farm Automobile Insurance Company its expenses of the appeal fixed at $500, if demanded.

February 5, 2003

Stewart McMahon

Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Ms. Fenech appeals from an order dated August 29, 2001, which dismissed her claim for the cost of an assessment conducted by DEAHY Medical Assessments Inc.

Ms. Fenech's claim was made pursuant to s. 57(1) of the SABS-1994¹ which provides that the insured person can recover the cost of certain assessments. The section reads as follows:

57.-(1) The insurer shall pay for all reasonable expenses incurred by or on behalf of an insured person in obtaining and attending an examination or assessment for the purpose of this Regulation or in obtaining a certificate or report for the purpose of this Regulation, including,

(a) fees charged by a person who conducts an examination or assessment or provides a certificate or report; and

(b) transportation expenses incurred in attending an examination, including transportation expenses for an aide or attendant.

The decisions examining this provision, and a similar provision in the SABS-1996, have focused on the need for the insured person to establish two key points. One, that the assessment was undertaken for the purpose of the SABS. In general, this requires a link between the assessment and a claim for accident benefits. Two, that the expense was reasonable. Reasonableness relates to the decision to undertake the assessment, and to the nature and cost of the assessment.

In this case, the Arbitrator concluded that Ms. Fenech failed to adduce sufficient evidence to establish these points. This was principally a fact-based inquiry. In contrast, appeals are restricted to questions of law. See Insurance Act R.S.O. 1990 Ch. I. 8, s. 283(1). Ms. Fenech has failed to establish that the Arbitrator committed a reviewable error and, consequently, her appeal is dismissed. My reasons for this conclusion are set out below.

II. BACKGROUND and THE ARBITRATION DECISION

Ms. Fenech fractured her thumb and strained her neck and back in a motor vehicle accident in May 1996. She was referred to a physiotherapy clinic by her family physician, but her injuries were not sufficient to prevent her from returning to work.

Approximately four months after the accident, an assessor retained by State Farm Mutual Automobile Insurance Company ("State Farm") suggested that Ms. Fenech should wind down her treatment. The following month, State Farm advised Ms. Fenech that it would no longer fund her treatment. Ms. Fenech discharged herself from the physiotherapy program at about the same time and consequently, there is no ongoing dispute about this treatment. Ms. Fenech has continued to be treated intermittently by a massage therapist. However, her representative advised, during the course of the appeal hearing, that no claims were submitted for this expenses because it was covered by an insurance policy connected to Ms. Fenech's employment. Over the next couple of months, State Farm's adjuster called and wrote to Mr. Daley, Ms. Fenech's counsel at the time, to inquire about her status, but received no response.

Approximately two years later, Ms. Fenech returned to Mr. Daley's office with a complaint that she was suffering from headaches that were interfering with her daily activities. Mr. Daley provided her with a pre-printed referral form for an assessment at DEAHY, and asked her to have her family doctor sign the form. The referral form states, "I [the referring physician] require this assessment...to assist me in further management and treatment of my patient." However, the Arbitrator found that Mr. Daley was the true source of the referral.

Ms. Fenech attended at DEAHY for a functional abilities assessment and an orthopaedic examination. The report prepared by DEAHY indicated that Ms. Fenech was fit for work, but her ability to carry out other activities was impaired by decreased lifting and carrying strength, decreased spinal range of motion, decreased postural tolerance, and general deconditioning. It recommended that she participate in a structured exercise program, attend for massage therapy as needed, and that an ergonomic assessment of her work environment be carried out. DEAHY sent a copy of this report to State Farm with a request for payment of its account. State Farm's adjuster refused to pay the account because she did not think the assessment was reasonable or necessary.

The Arbitrator noted in his decision that no one testified about why these assessments had been undertaken. Nor was there any evidence that anyone used the reports. There was nothing in the family doctor's notes to suggest that he reviewed the report with his patient, or made any other use of the report, and Ms. Fenech did not undertake the recommended treatment, nor did she or her lawyer seek a commitment from State Farm that it would fund the treatment. Quite simply, there was no evidence that the report was used for any purpose related to Ms. Fenech's entitlement to claim benefits under the SABS-1994. The Arbitrator concluded, quite rightly, that in the absence of such evidence, Ms. Fenech had not proven her claim. He stated; "The test under section 57(1) is reasonableness. For the reasons outlined above, I am not satisfied that the cost of the DEAHY assessments was reasonably incurred for the purposes of the Regulation."

III. ARGUMENT AND ANALYSIS

On appeal, Ms. Fenech submits that the Arbitrator erred by failing to recognize that the purpose of the assessment could be established by reference to the report itself, and that there was no need for further evidence on this point. Ms. Fenceh cites my arbitration decision in Tesfai and Allstate Insurance Company of Canada, (FSCO A99-000321, July 26, 2000), cfd. (FSCO P00-00048, December 21, 2001) in support of this submission.

In Tesfai, I expressed the opinion that "the purpose of the report can often be found in the report itself." I also stated that "[i]f the report addresses issues found in the Regulation, such as disability and the need for treatment and rehabilitation it is fair to draw an inference linking the two." However, these comments must be put in context. Ms. Tesfai's assessment was undertaken in the midst of a protracted dispute over entitlement to benefits, and it was evident to me that the report was commissioned to further her claim for benefits.

In addition, when reading Tesfai, it is important to keep in mind that it was one of the earliest decisions to consider this kind of claim. Since then, Arbitrators have commonly noted the need for direct evidence about what use was made of the report. Some have commented on the need for this type of evidence in relation to the purpose of the assessment, others have discussed it in relation to whether the expense was reasonable. I discussed some of these cases in a recent appeal decision - Aleman and State Farm Mutual Automobile Association, (FSCO P01-00014, September 21, 2001), in which I expressed the opinion that it was preferable to set a relatively low threshold with respect to the purposes of the assessment, and to focus on the reasonableness question. However, I stated that at some point in the inquiry it "is entirely appropriate for the arbitrator to demand some positive and pointed evidence concerning the use to which the report was intended to be put and in the absence of such evidence to dismiss the claim." I do not mean to infer that viva voce evidence will always be required. For example, if the documentary records establish that following an assessment the insured person provides the insurer with a treatment plan based on the report, and seeks payment for the treatment pursuant to the SABS, that should be sufficient.

In this case the kind of evidence mentioned above was entirely lacking. The report was commissioned at a time when there were no active disputes, and the cost of the only treatment being undertaken at the time, was not being claimed pursuant to the SABS. Ms. Fenech responds by noting that the SABS-1994 provides for a lifetime benefit, and that it should be immaterial that there are no active disputes or ongoing claims when the assessment was undertaken. Ms. Fenech's point is well taken as far as it goes, but it has little application to the case at hand. If an insured person, who is no longer receiving benefits, approaches her doctor or representative with new complaints, attributed to the accident, and her advisor arranges for an appropriate assessment before treatment, and subsequently submits a claim for benefits in accordance with the assessment report, it strikes me that the report is likely to be claimable. However, that is not what happened in this case. Ms. Fenech did not pursue the treatment recommended in the report, nor did she submit a claim for supplementary medical or rehabilitation benefits. The necessary link between the report and a claim for benefits was missing.

Ms. Fenech argued that the fact that DEAHY itself forwarded the report to State Farm should have been sufficient to satisfy the Arbitrator's demand for some evidence that it was used to advance a claim for benefits. Ms. Fenech submitted that State Farm had a positive obligation to respond to the report, and that it acted improperly when it took no action other than denying DEAHY's request for payment of its account. I agree with the general proposition that a first-party insurer owes the insured person a duty to respond to materials that it receives, and to assist its insured as appropriate. However, the type of response will depend on the circumstances. In this case, DEAHY's letter accompanying the report did not indicate that Ms. Fenech was making plans to undertake the treatment, nor did it indicate that it was seeking approval for the treatment on her behalf. In addition, the adjuster's earlier attempts to enquire about Ms. Fenech's status were ignored. In these circumstances, I do not think State Farm can be criticized for waiting for something to follow from the insured person, or her doctor or lawyer.

In conclusion, I see no error in the Arbitrator's decision. He considered the relevant evidence, made findings of fact supported by the evidence, and applied the law correctly. This was not a close case. The Arbitrator's decision to deny the claim was well founded. In fact, any other outcome would have been very surprising. Reviewing all the evidence, one is left with the impression that the assessment served no good purpose. The appeal is dismissed.

IV. EXPENSES

This appeal had virtually no chance of succeeding. It was in essence an attack on the Arbitrator's consideration of the evidence. In the circumstances, Ms. Fenech shall pay State Farm's expenses fixed at $500, if demanded.

February 5, 2003

Stewart McMahon

Director's Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended.