Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 169

Appeal P04-00028

OFFICE OF THE DIRECTOR OF ARBITRATIONS

THOMAS GEORGE

Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Respondent

Before:

David Evans

Representatives:

Ian A. Little for Mr. George

Robert Franklin for State Farm

Hearing Date:

May 13, 2005

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 arbitration order dated August 9, 2004 is dismissed.
The parties may contact me in accordance with Rule 79 of the Dispute Resolution Practice Code if they are unable to agree on appeal expenses.

December 6, 2005

David Evans Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Mr. George appeals the arbitrator's order that he is not catastrophically impaired as defined in the SABS-1996.¹ His position is that the assessment at the Multi Disciplinary Assessment Centre ("MDAC") was flawed, and, therefore, "not binding"on him. He submits that a proper assessment is needed before his impairment level can be determined. However, Mr. George provided no evidence to show that he is catastrophically impaired, and the assessment by MDAC was not fatally flawed.

II. BACKGROUND

Mr. George received income replacement, attendant care and housekeeping benefits from State Farm for his injuries arising from the motor vehicle accident of November 30, 1999, when he was struck by a car. His most serious injury was to the left thigh, causing muscle atrophy and requiring him to use a cane. Although State Farm continues to pay him income replacement benefits, it terminated his attendant care and housekeeping benefits in December 2001, 104 weeks after the accident, as allowed by sections 18 (attendant care) and 22 (housekeeping) of the SABS-1996 where the insured's impairment is not "catastrophic." Mr. George submitted to State Farm an Application for Determination of Catastrophic Impairment (OCF-19) signed by Dr. Robert Athey, family physician, and dated July 3, 2002.

Catastrophic impairment is defined in clauses (a) to (g) of subsection 2(1.1) of the SABS-1996. Mr. George claimed he suffered a catastrophic impairment due to either whole-person impairment [clause (f)], or mental or behavioural impairment [clause (g)]. Impairment of the whole person is determined by percentage. Impairment due to mental or behavioural disorder is determined by class on a five-category scale that ranges from class 1 (no impairment) to class 5 (extreme impairment). Whole-person impairment ("WPI") is catastrophic when an impairment or combination of impairments results in 55 percent or more impairment of the whole person. Mental or behavioural impairment ("MBI") is catastrophic when an impairment results in a class 4 marked impairment or a class 5 extreme impairment due to mental or behavioural disorder. Both clause (f) and (g) assessments must be "in accordance with" the American Medical Association's Guides to the Evaluation of Permanent Impairment, 4th edition, 1993 ("the Guides").

State Farm disputed Mr. George's position that he met the definition of catastrophic impairment. Mr. George then requested a catastrophic DAC ("CAT DAC") assessment. State Farm arranged the assessment at MDAC for January 2003, just over three years after the accident.² The MDAC assessors concluded that Mr. George was not catastrophically impaired, rating his WPI as 30 percent. As to the MBI, the consensus report found only mild impairment (compatible with most useful functioning) of activities of daily living and concentration ability. It found Class 3 moderate impairments (compatible with some, but not all, useful functioning) of social functioning and adaptation.

At the arbitration hearing, Mr. George objected that the MDAC assessment was not "binding" on him. His argument was that the assessors had not followed the CAT DAC manual.³ He argued that MDAC had not included a psychologist in the team assessing MBI; it had not forwarded Assessor Practice Summaries; and the physiatrist for the WPI assessment, Dr. Ben Meikle, lacked sufficient experience. The arbitrator acknowledged the first two objections, while noting that Mr. George should have raised them earlier in the process. He did not consider the objection regarding Dr. Meikle, as Mr. George did not raise it until closing submissions and State Farm did not have an opportunity to adduce evidence on the issue. The arbitrator wrote:

I take these defects in the DAC process into account in determining the reliability of the DAC opinion. However, Mr. Little presented no argument that Mr. George satisfied the definition of "catastrophic impairment."

With respect to the WPI, the arbitrator then reviewed all the medical evidence and testimony under each body part to first determine if Mr. George suffered a permanent impairment in that body part or function and, if so, how the impairment is rated in the Guides. He found that the only WPI rating applicable to Mr. George was 30 percent for an impaired gait.⁴ With respect to the MBI, the arbitrator noted that the highest class found by the psychiatrist was class 3, so Mr. George did not meet the minimum of class 4 (marked impairment).

The arbitrator also noted the following:

Although the Guides provides calculations for combining different body impairments, it does not provide a means to add a mental or behavioural impairment to a whole body impairment unless the mental impairment is due to structural brain injury.

However, after the arbitrator issued his decision, Spiegel J. in Desbiens v. Mordini, 2004 CanLII 41166, [2004] O.J. No. 4735 (ON S.C.), found that the Guides do allow adding a non-structural MBI to the WPI. Spiegel J. then added the plaintiff's psychological impairment to his WPI by assigning percentage ratings to the MBI classes — although the Guides recommend against doing so because "rating impairment on ordinal scales into a method for assigning percentage of impairments . . . cannot be done reliably."⁵ He also held that both psychological and physiological impairments should be included, since the clause (f) definition includes "an impairment or combination of impairments." The arbitrator in McMichael and Belair Insurance Company Inc., (FSCO A02-001081, March 2, 2005), under appeal, agreed in general with the conclusion in Desbiens that all impairments should be included in the WPI, but he found it would have resulted in double counting of the applicant's psychological impairments in that case.

I asked the parties to provide additional submissions, and I received a long and careful analysis of Desbiens. However, the parties agreed that even combining Mr. George's MBI with his 30 percent WPI would not provide him with a 55 percent WPI. Thus, only if I find the arbitrator was mistaken at law in determining the 30 percent WPI will I have to consider Desbiens.

On the issue of attendant care, the arbitrator found that he had heard no reliable evidence on the amount of monthly care required by Mr. George, so he found no entitlement. Similarly, he found no reliable evidence of the amount of housekeeping services provided by Mrs. George on account of the accident.

Finally, the arbitrator ordered Mr. George to pay State Farm's expenses. His reasons were: State Farm succeeded, and although the issues were novel, Mr. George "presented no argument or theory" to show that he had a 55 per cent WPI; it was not clear what was hoped to be achieved at the arbitration hearing and so the proceeding was unnecessarily prolonged; and a reasonable person with any knowledge of the Guides would not have commenced the proceeding, so the hearing was unnecessary.

III. ANALYSIS

Section 40 governs the determination of catastrophic impairments, and s. 40(4) provides:

The determination by the designated assessment centre is binding on the insured person and the insurer, subject to the determination of a dispute, in accordance with sections 279 to 283 of the Insurance Act, relating to whether the impairment is a catastrophic impairment.

That is, the DAC's assessment was binding on Mr. George until an arbitrator determined whether or not the impairment was catastrophic. However, Mr. George submits that the arbitrator should have declared that MDAC's assessment was "not binding" without independently finding that he was catastrophically impaired. I find no basis in the law for Mr. George's position. The issue at the hearing was whether or not Mr. George was catastrophically impaired. At that point, the strength of the CAT DAC assessment was a factor in the determination of the dispute, not an end in itself.

Arbitrators have found that DACs erred in, for example, applying the wrong test for the matter at issue, and they have applied appropriate remedies between the parties at the appropriate times. For instance, on a motion for interim benefits in Boniface and Liberty Mutual Insurance Company, (FSCO A97-002106, order issued June 15, 2000, reasons issued July 6, 2000), the arbitrator held that the serious flaws in the DAC entitled the applicant to reinstatement of benefits until a proper DAC was held. However, once the matter reached a hearing in this case, Mr. George had to go beyond merely calling the DAC into question. The onus lay on him to present evidence that he met the definition of catastrophic impairment. The arbitrator found that there was no such evidence.

In the absence of Mr. George's own evidence, then, the issue is whether the arbitrator could rely on the DAC to find that Mr. George was not catastrophically impaired. In this case, State Farm sent Mr. George to a DAC that was authorized to conduct the catastrophic assessment. By way of contrast, the arbitrator in Dicerbo and Citadel General Assurance Company, (FSCO A04-000594, May 30, 2005), who was the same arbitrator as in this case, found that the DAC had not been authorized to conduct the assessment. On the argument that there had not been a proper termination of income replacement benefits, the arbitrator ordered their interim reinstatement until the insurer took the proper steps to terminate benefits.⁶ It was open to the arbitrator to find that the breaches by MDAC rendered the CAT DAC void for the purposes of dispute resolution, but he did not do so. For one thing, the prescriptions in the CAT DAC manual are not absolute, as the manual provides: "When the DAC deviates from this guide, an explanation should be noted in the report." Although there does not appear to be an explanation for the deviations in the report, the DAC personnel may have been able to provide an explanation in testimony. In that regard, counsel for the insurer indicated that he asked permission to lead evidence on these points, but the arbitrator declined the request. Indeed, if there is a power to simply declare a CAT DAC void, I believe fairness requires allowing a response by the DAC. Furthermore, even if the arbitrator had found the DAC was void, Mr. George would likely not have been automatically entitled to a resumption of his benefits. Unlike with income replacement benefits, entitlement did not depend on whether there was a proper termination of benefits — the ultimate issue in Dicerbo — as the insurer was not required to keep paying the attendant care benefits pending a DAC.⁷

I am concerned at the high standard the arbitrator required of Mr. George to raise issues regarding the DAC. For instance, he found that Mr. George should have raised the absence of a psychologist before he consented to the plan for the DAC, and should have raised the lack of the Assessor Practice Summary before the assessors examined Mr. George. However, in Dicerbo, it was only the week before the hearing that the parties discovered that the insurer terminated weekly income benefits on the basis of a report from a DAC which was not authorized to express an opinion on Mrs. Dicerbo's disability. I believe that Mr. George was entitled to raise these issues about the DAC after the assessment; the problem is that he did not raise them until the hearing itself.

However, the issue in Dicerbo went to the fundamental nature of the DAC's power to conduct the assessment. To return to my earlier point, MDAC was an authorized DAC for the purposes of the SABS-1996 and was entitled to conduct the assessment. For its assessment to be considered void, its breaches would have to be equivalent of making it an unauthorized DAC. Implicitly, the arbitrator found that did not occur here. I find that the arbitrator committed no error in law in weighing the merits of the CAT DAC and proceeding with the hearing.

In the alternative, Mr. George submits that the arbitrator should have asked the Director to state a case to the Divisional Court under s. 285 of the Insurance Act.⁸ However, the referral to the Divisional Court can only be made by the Director. An arbitrator does not have the power to refer an issue of law to the Divisional Court, nor to require the Director to do so. I do not believe the delegation to me includes the power to state a case.⁹ Even if I did have the power to state a case, I would decline to do so based on the grounds set out in Salmon and Toronto Transit Commission (Markel Insurance) (OIC P-000235, June 15, 1992), [1992] O.I.C.D. No. 24:

In my opinion it was not essential, in order to resolve the dispute between the parties, that the legal issues be referred to the Divisional Court. This is not a case involving a lack of legal expertise on the part of the Arbitrator or Director's Delegate. As the appeal involves primarily questions of interpretation of the Insurance Act and the regulations thereunder, it was my view that these matters could and should be determined by the tribunal administering the legislation.

I was also of the view that, the applicant having elected under section 281 of the Insurance Act to resolve his dispute with the insurer by way of the statutory dispute resolution process instead of proceeding to court, he should not now seek to substitute the views of the Divisional Court for those of the forum chosen.

Indeed, I am being asked to determine the question of law in this appeal, and my decision is also subject to judicial review by the Divisional Court.

Turning to the substance of the appeal, Mr. George provided no substantive grounds on which I could overturn the arbitrator's findings as an error of law. The arbitrator found that Mr. George had a 30 percent WPI after reviewing the evidence before him. I heard nothing to suggest that the arbitrator made findings in the absence of evidence, or that he drew inferences unsupported by the evidence. Mr. George suggests that perhaps if a psychologist had been a member of the DAC team, he or she may have found that Mr. George had a class 4 MBI, which might have changed the outcome. However, that is speculation, as there was no evidence to support that suggestion. At the very least, to return to the discussion above about the merits of the DAC, Mr. George could have provided a report from a psychologist indicating that he suffers from a higher class MBI and that this would have changed the outcome of the MBI portion of the DAC. Mr. George has given me no basis to find the arbitrator committed an error of law in making the findings with respect to the WPI and MBI that he did. Accordingly, I find the arbitrator committed no error of law in finding that Mr. George is not catastrophically impaired.

Since I have found that the arbitrator committed no error in assessing Mr. George's WPI at 30 percent, I do not have to consider Desbiens further.

In light of my finding, I also do not have to consider the arbitrator's findings on the amounts of attendant care and housekeeping expenses.

With respect to expenses of the hearing, Mr. George essentially applied for an arbitration on the issue of catastrophic impairment without evidence to support his position. In these circumstances, I see no error in the arbitrator's finding that it was not clear what counsel for Mr. George hoped to achieve at the hearing, given the lack of evidence. This supports his conclusions that the hearing was unnecessary and unnecessarily prolonged. Given the insurer's success in the matter, I see no error in the arbitrator's order requiring Mr. George to pay State Farm's expenses of the arbitration proceeding.

The appeal is dismissed.

IV. EXPENSES

I stayed the hearing of the expenses in the arbitration order, and advised the parties that I would be willing to assess both arbitration and appeal expenses. If the parties are unable to agree on expenses, I may be contacted in accordance with Rule 79 of the Dispute Resolution Practice Code.