Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2006 ONFSCDRS 16

Appeal P05-00010

OFFICE OF THE DIRECTOR OF ARBITRATIONS

LLOYD ALISON VILLERS Appellant

and

PILOT INSURANCE COMPANY Respondent

Before: Nancy Makepeace

Representatives: David Morin for Mr. Villers Kevin Griffiths for Pilot Insurance Company

Hearing Date: September 8, 2005 in Huntsville, Ontario

APPEAL ORDER

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

1. Mr. Villers’ appeal is dismissed and the arbitrator’s order of March 17, 2005 is confirmed.

2. Pilot’s appeal of the arbitrator’s expenses order of August 11, 2005 may now proceed, along with any dispute about appeal expenses.

January 30, 2006

Nancy Makepeace Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal concerns the assessment of catastrophic impairment under the SABS–1996.¹ The arbitrator recognized certain flaws in the CAT DAC² process in this case, but went on to consider the evidence presented in the hearing, ultimately finding that the accident of June 19, 2000 did not significantly or materially contribute to Mr. Villers’ catastrophic impairment. Mr. Villers submits the arbitrator erred in law by failing to order a new CAT DAC before deciding the case.

I agree there were serious and substantial flaws in the CAT DAC process. However, I conclude the arbitrator’s decision was within his authority, and I am not persuaded I should interfere. My reasons follow.

II. BACKGROUND

A. The Accident and its Consequences

Neither party takes issue with the arbitrator’s account of the evidence at pages 2-11 of his decision. Mr. Villers was stopped at a red light in his pick-up truck on June 19, 2000, when he was rear-ended by another vehicle. His complaints of pain in his neck, right shoulder and on the top of his head were initially diagnosed as cervical sprain. X-rays done within days of the accident showed Avarious abnormalities, including loss of disc space, traction spurs, and degenerative changes, with no acute fractures or dislocations. In March 2002, Dr. A. Albert, Mr. Villers’ family physician, reported that the degenerative changes had “been there for many years and were documented in previous x-rays of his neck in 1992.”³ However, Mr. Villers’ condition, and especially his mobility, has deteriorated a great deal since the accident, and he was wheelchair-bound by the time of the arbitration hearing. The main issue at the arbitration hearing was whether the changes resulted from the natural progression of Mr. Villers’ pre-accident problems or an accident-related aggravation of them. This was a particularly difficult question because of Mr. Villers’ age – he was 75 at the time of the accident – and numerous pre- and post-accident medical problems. The main factual dispute concerned the timing of his post-accident neurological decline.

According to his counsel, Mr. Villers did not apply for accident benefits until the fall of 2000 because he was in receipt of veterans’ benefits. Pilot paid benefits, including medical and rehabilitation benefits exceeding the $100,000 available to non-catastrophic claimants under s. 19(1)(a) of the SABS-1996, and attendant care benefits for the first 104 weeks after the accident in accordance with s. 18(2) of the SABS-1996.⁴

In March 2002, Dr. Phillip Porter, the neurosurgeon who performed a surgical decompression for Mr. Villers’ cervical spinal stenosis in August 2001, completed an Application for Determination of Catastrophic Impairment (OCF -19/59) stating that Mr. Villers had “severe cervical spondolytic myelopathy causing quadriparesis which makes him dependent for basic ADL’s [activities of daily living] – this is the result of underlying degenerative changes exacerbated by an mva [motor vehicle accident] 19/6/1.” Mr. Villers submitted the application package through counsel in April 2002, asking that Pilot accept his catastrophic impairment status.

Pilot then had three options under s. 40(2) of the SABS-1996. It could determine that Mr. Villers was catastrophically impaired, determine that the impairment was not catastrophic and give Mr. Villers’ the option of requiring a CAT DAC, or give him notice that it required a CAT DAC. Pilot chose the third option, set out in s. 40(2)(c): “The insurer shall, within 30 days after it receives the application, . . . give the insured person notice that the insurer requires the insured person to be assessed by a designated assessment centre in accordance with section 43.”

Pilot arranged to have Mr. Villers assessed at MDAC (“Multi-Disciplinary Assessment Centre”), an authorized CAT DAC. The assessors were Dr. J. Mayer, a neurosurgeon, and Dr. E. Urovitz, an orthopaedic surgeon. The Medical Director of MDAC, Dr. A. Ameis, a physiatrist, also signed the consensus opinion as Determination Co-ordinator. On September 30, 2002, MDAC reported its conclusion that “the impairments sustained in the accident in question are not catastrophic.” Rather, Mr. Villers’ ongoing impairments were determined to result from the progression of his cervical degenerative disc disease, stenosis and cervical myelopathy.

Relying on the CAT DAC report, Pilot denied Mr. Villers’ claim for case management services and for the enhanced attendant care and medical and rehabilitation benefits that are available only to catastrophically impaired claimants. Mediation failed to resolve the dispute, and Mr. Villers applied for arbitration.

B. The Arbitration Decision

At an arbitration pre-hearing in December 2003, a preliminary issue hearing was scheduled to determine whether Mr. Villers was catastrophically impaired. If so, his entitlement to the various benefits claimed would be decided in a resumed hearing.

The catastrophic impairment hearing took place over two days in June 2004. The arbitrator admitted several briefs of medical evidence, heard oral evidence from Mr. and Mrs. Villers and Carol May, a friend and neighbour, and watched a videotaped interview with Laura Emerson, Mr. Villers’ stepdaughter, who had passed away before the hearing. He also heard oral evidence from Dr. Jack A. Mayer, who testified at Pilot’s request.

The arbitrator began his analysis by stating that Mr. Villers “spent a considerable amount of time attacking the process followed by the DAC in this case.”⁵ Mr. Villers submitted there were three contraventions of the DAC Guidelines – the omission of Dr. Porter’s narrative report from the assessment, the DAC’s failure to conduct a clinical assessment before reaching a “not catastrophic” determination, and the pre-hearing communication between the insurer’s former counsel and Dr. Mayer.

The arbitrator recognized “the flaws in the DAC process,” and therefore held he could not rely on the DAC’s conclusion that Mr. Villers’ catastrophic impairment did not result from the accident. However, he did not exclude the DAC report or Dr. Mayer’s evidence from his deliberations. He stated:

I am conscious of the importance of the completeness, fairness and neutrality of the DAC process, as set out in the Commission’s Catastrophic Impairment Designated Assessment Centre, Assessment Guidelines, and General Guideline #4, Ensuring Neutrality of the Designated Assessment Centre System. I agree, however, with the arbitration decision of Lee and State Farm Mutual Automobile Insurance Company (FSCO A03-000181, November 27, 2003) to the effect that the discretion to accept or reject a DAC’s evidence rests ultimately with the presiding arbitrator. As noted, despite the limitations in the DAC process, I find the DAC’s and Dr. Mayer’s evidence to be sound and helpful as it pertained to the general medical question of the potential relationship between the motor vehicle accident and the development of Mr. Villers’ medical condition and impairment. I will, therefore, rely on their evidence to the extent of establishing the general medical considerations applicable to the issue of causation in this case.⁶

As the arbitrator noted, Pilot does not dispute that Mr. Villers is catastrophically impaired by severe cervical spondolytic myelopathy causing quadriparesis.⁷ However, Pilot argued that Mr. Villers’ condition resulted from a natural progression of his pre-existing spinal stenosis, to which the accident did not make a significant or material contribution. Its position was supported by the consensus opinion of the CAT DAC:

The claimant has a long history of widespread cervical spondylosis. The claimant suffered from carpal tunnel syndrome and was having symptoms of neck pain as well as limb paresthesia prior to the accident in question.

The information available with respect to the accident suggests that this was an acceleration-deceleration soft tissue injury to the cervical spine producing a benign whiplash disorder with no increase in degenerative change. It did not produce any evidence of acute neurologic or orthopaedic abnormality, i.e. fracture, dislocation, or evidence of new and significant neurological deficits. There was no evidence of any acute or abrupt change in the claimant’s condition suggesting a traumatic contribution to myelopathy. The development of myelopathy was in this case a slow, progressive process, which is in keeping with the natural history of gradual progression of this preexisting disease.

Although Dr. Lapp correctly indicated that a spinal segment suffering from pre-existent degenerative disc disease could be vulnerable to injury from a car accident, this is a potential complication realized in some but not all cases. When realized, the requisite clinical picture would involve an abrupt and marked increase in symptomatology with associated objective findings. Such a clinical picture does not correspond to the evidence in this case. Given that in this case the pattern does correspond fully with the natural pattern of slow and progressive change, it is necessary to conclude that Mr. Villers’ symptoms were manifestations of the natural evolution of a cervical myelopathy, solely on the basis of pre-existing degenerative disc disease.

It would appear from the latest records available that Mr. Villers is left with some ongoing impairments as a result of cervical degenerative disc disease, stenosis and cervical myelopathy, which necessitated decompression. However, as it is not felt that such impairments arose as a direct result of the motor vehicle accident in question, it is necessary to conclude that the impairments do not meet the causation criterion for catastrophic impairment.⁸ [emphasis added]

In assessing causation, the arbitrator accepted that a causal relationship required “an abrupt, marked and objective increase in symptomatology following the accident.”⁹ He noted that the timing of Mr. Villers’ neurological decline was also the central issue for Dr. Albert, Mr. Villers’ family doctor, and by Dr. T. J. Lapp, the physiatrist who diagnosed the cervical myelopathy and made the referral to Dr. Porter.¹⁰ Further, the arbitrator noted that Mr. Villers “did not go so far as to suggest that the DAC report was inadmissible or that Dr. Mayer ought to be excluded as an expert witness at the hearing.”¹¹ Finally, rather than challenging the “abrupt, marked and objective” test, Mr. Villers argued that he satisfied it.

After discussing the deficiencies in the DAC process, the arbitrator considered lay and expert evidence about Mr. Villers’ condition and treatment before and after the accident. It was not disputed that Mr. Villers had many medical problems before the accident, which, according to the arbitrator, included “diabetes, right knee pain, degenerative disc disease, chronic obstructive pulmonary disease, gout, Paget’s disease, bilateral carpal tunnel syndrome, cerebrovascular disease, a stroke, renal calculi, blindness in the left eye [resulting from stroke] and a cataract in his right eye.”¹² Relying on the numerous references to various related impairments in the medical records, and noting inconsistencies in the testimony of the lay witnesses, the arbitrator rejected evidence that Mr. Villers had normal functioning before the accident. In particular, he found that Mr. Villers suffered from neck pain for several years before the accident, as well as pain, weakness and neurological deficits bilaterally in his arms and legs.¹³ These factual findings were not challenged on appeal.

Turning to the post-accident evidence, the arbitrator considered conflicting evidence about the course of Mr. Villers’ neurological deterioration, and when, in particular, he became wheelchair bound. There was little dispute this had happened by September 2001, when Dr. Porter performed a cervical decompression of C3-7. The arbitrator heard conflicting lay and medical evidence on whether the deterioration began shortly after the accident or only a year later. He concluded that Mr. Villers’ condition “remained relatively stable following the accident,” apart from his “problems with pre-existing carpal tunnel syndrome, COPD and right-leg pain and weakness, as well as the new problem of anemia.”¹⁴ The arbitrator concluded that Mr. Villers’ condition “changed significantly between June and July 2001, when Dr. Lapp reported “distinctive findings” and that Mr. Villers had begun to use a wheelchair.”¹⁵

The arbitrator found that Dr. Porter did not give sufficient weight to the timing issue. In fact, Dr. Porter “suggested that Mr. Villers was asymptomatic prior to the accident, or at least that he did not have symptoms similar to those he had following the accident,” assumptions the arbitrator rejected based on his assessment of the expert and lay evidence.¹⁶

The arbitrator’s ultimate conclusion was as follows:

Returning then, to the relevant medical criteria in this case, I find that Mr. Villers did not suffer an abrupt, marked and objective increase in symptomatology following the accident. Mr. Villers suffered significant medical problems and restrictions prior to the accident. He suffered a marginal increase in neck pain following the accident, with no new complaints of upper extremity pain or paresthesia. He remained relatively active until well after the accident. He suffered from a number of problems in the months following the accident, but these were due to pre-existing and/or non-accident-related medical conditions. Mr. Villers’ walking difficulties did not surface until several months post-accident. Mr. Villers began to complain of a significant increase in upper extremity pain in the late spring or early summer of 2001, which Dr. Lapp noted to be “distinctive” and “suggestive of progressive cervical myelopathy.” Dr. Porter subsequently confirmed this diagnosis, after which Mr. Villers underwent a cervical decompression.

While Mr. Villers had a number of medical problems following the accident, and eventually underwent surgery for a serious spinal condition, I find, on a balance of probabilities, that the June 2000 motor vehicle accident did not significantly contribute to the deterioration in his condition. Mr. Villers did not experience the significant and rapid neurological decline generally associated with a traumatic exacerbation of his pre-accident degenerative condition. In relation to Dr. Porter’s diagnosis of catastrophic impairment, I find that the accident did not significantly or materially contribute to the development of severe cervical spondolytic myelopathy causing quadriparesis. I find it more likely than not that Mr. Villers’ condition was a function of a naturally progressing disease that had not been materially changed or exacerbated by the motor vehicle accident.¹⁷

III. ANALYSIS

A. Catastrophic Impairment under the SABS-1996

“Catastrophic impairment” is a defined term in the SABS-1996. It includes, for example, paraplegia or quadriplegia, amputation or other impairment causing the total and permanent loss of use of both arms, or of both an arm and a leg, total loss of vision in both eyes, and certain serious brain impairments, whole body impairments and impairments due to mental or behavioural disorders.

Because of the severity of these injuries, the SABS-1996 provides enhanced benefits for those who are catastrophically impaired as a result of an automobile accident. Whereas the sum of medical and rehabilitation benefits for any one accident cannot exceed $100,000 in respect of a non-catastrophically impaired person, the limit is $1,000,000 for those who are catastrophically impaired.¹⁸ There are durational as well as monetary limits. Medical and rehabilitation benefits are not payable for expenses incurred more than ten years after the accident, but that time limit does not apply to catastrophic claims.¹⁹ Attendant care is limited to $3,000 per month, to a maximum of $72,000, and is not payable after 104 weeks, but for catastrophically injured claimants, there is no time limit, the maximum monthly benefit is $6,000 and the lifetime monetary cap is $1,000,000.²⁰ No visitors’ expenses or housekeeping and home maintenance expenses are payable after 104 weeks except for catastrophic cases.²¹ Case manager services are not available unless the claimant is catastrophically impaired.²²

Clearly a determination that a person is or is not catastrophically impaired has significant consequences for the claimant and the insurer. That is why the legislature created a special process for making this determination outside the process for adjusting particular claims for medical, rehabilitation, attendant care and other benefits. Only a few specialized DACs are authorized to conduct catastrophic impairment assessments. “It is generally acknowledged that CAT DACs are the most complicated of all DAC assessments. As a result, CAT DAC costs are, on average, significantly higher than other assessments.”²³

The catastrophic impairment determination process is described in section 40 of the SABS-1996, which, at all times relevant to this appeal, read as follows:

40(1) n insured person who sustains an impairment as a result of an accident may apply to the insurer for a determination of whether the impairment is a catastrophic impairment.

(2) The insurer shall, within 30 days after it receives the application,

(a) determine that the impairment is a catastrophic impairment and give the insured person notice of the determination;

(b) determine that the impairment is not a catastrophic impairment and give the insured person notice of the determination, including the reasons for the determination; or

(c) give the insured person notice that the insurer requires the insured person to be assessed by a designated assessment centre in accordance with section 43.

(3) If the insured person receives a notice under clause (2) (b) and the insured person disputes the insurer’s determination, the insured person may require that he or she be assessed by a designated assessment centre in accordance with section 43.

(4) 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.

Section 43 sets out additional rules for the DAC assessments, including CAT DACs:

43(1) If an assessment is required to be conducted by a designated assessment centre,

(a) the insurer shall, within 15 days, notify the designated assessment centre; and

(b) the designated assessment centre shall promptly notify the insured person and arrange for the assessment.

(2) For the purpose of the assessment,

(a) the insured person and the insurer shall provide the person or persons who conduct the assessment 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 assessment.

(3) If an insured person does not make himself or herself reasonably available for an assessment or fails to comply with subsection (2),

(a) the insurer may stop payment of the benefit related to the assessment until the person submits to the assessment or complies with subsection (2), after which time the insurer shall resume payment of the benefit; and

(b) no benefit is payable for the period after the insured person failed to make himself or herself reasonably available or failed to comply with subsection (2) and before the insured person makes himself or herself reasonably available and complies with subsection (2).

(4) After conducting the assessment, the person or persons who conducted the assessment shall prepare a report and provide a copy of the report to,

(a) the insurer;

(b) the insured person; and

(c) the insured person’s health practitioner.

(8) If the assessment is required under section 40 to determine whether an impairment is a catastrophic impairment, the report shall include a statement of whether, in the opinion of the person or persons who conducted the assessment, the impairment is a catastrophic impairment.²⁴

In addition, the DAC process is governed by Guidelines issued under the authority of the DAC Committee created under s. 7 of the Insurance Act. The Guidelines pertinent to this appeal are the Catastrophic Impairment Designated Assessment Centre Assessment Guidelines, revised April, 2002 (“CAT DAC Guidelines”) and General Guideline #4, Ensuring the Neutrality of the Designated Assessment Centre System, March 1999 (“General Guideline #4”).

The SABS-1996 gives the DACs a “pivotal role” in the accident benefits scheme:

. . . they are not simply another insurer examination. Their function is to take the dispute out of the back-and-forth of competing partisan reports by providing an impartial assessment.²⁵

A DAC report is binding on the parties pending resolution of any dispute. In the case of a Disability, Med-Rehab or Attendant Care DAC, this means the insurer must pay the benefits claimed, pending resolution of any dispute, if the DAC report supports the claim (a “positive” DAC), and need not do so if it does not (a “negative” DAC).²⁶ No specific benefits are payable in the event of a positive CAT DAC, but the insurer is bound by the determination that the impairment is catastrophic in responding to any claims for the enhanced med-rehab or attendant care benefits or case manager services available to catastrophically impaired claimants; other disputes may be resolved in accordance with the usual process.

B. The Appeal

On appeal, Mr. Villers’ counsel argues that the arbitrator erred in law by considering the DAC report and the evidence of Dr. Mayer despite serious contraventions of the DAC Guidelines. He submits he was effectively denied the CAT DAC to which he was entitled under the SABS-1996. He asks me to revoke the arbitration order and remit the matter for re-hearing following a new CAT DAC to be completed in accordance with the DAC Guidelines.

Pilot submits that the flaws in the DAC process were trivial and do not detract from the strength of the DAC report. Further, the DAC Guidelines were not binding on the arbitrator, and he was within his discretion to admit and rely upon the DAC report and Dr. Mayer’s testimony. In any event, the arbitrator’s reliance on this evidence was minimal, in the submission of the insurer, and his ultimate conclusion was supported by other evidence he heard. In particular, he preferred the evidence of Dr. Albert and Dr. Lapp about the timing of Mr. Villers’ neurological decline over that of Dr. Porter. What Mr. Villers really seeks, in the insurer’s opinion, is a reconsideration of the arbitrator’s findings of fact, which is beyond the scope of review in an appeal under s. 283(1) of the Insurance Act.

C. Pilot’s failure to provide Dr. Porter’s Report

On March 29, 2002, Dr. Phillip Porter, Mr. Villers’ neurosurgeon, completed an Application for Determination of Catastrophic Impairment (OCF-19/59) pursuant to s. 40(1) of the SABS-1996. Under Part 2, “Health Practitioner’s Report of Catastrophic Impairment,” he gave the following narrative:

Patient has severe cervical spondolytic myelopathy causing quadriparesis which makes him dependent for basic ADLs – this is the result of underlying degenerative changes exacerbated by an mva 19/6/1. He required neurosurgical decompression which resulted in some improvement, but he remains dependent for ADLs.

The instructions to Part 2 of the OCF-19 ask the health practitioner to “please attach a report explaining the impairment and your findings.” In the appropriate boxes of Dr. Porter’s completed OCF-19, check marks indicate that an examination report, test reports and a specialist’s evaluation report are attached. Dr. Porter’s narrative report, sent to Mr. Morin’s office, indicates that his clinical notes and records were attached. The pertinent part of the narrative report is as follows:

Mr. Villers clearly had degenerative disease involving the cervical spine prior to his MVA. This is documented on the x-ray report from March 3 of 1992. Radiologic changes of this type are part of the normal aging process and are contributed to by minor or major trauma to the neck (for example involvement in sports, motor vehicle accidents, etc.) through the years. Many people with these radiologic changes, however, remain asymptomatic. Mr. Villers clearly had new symptoms following the MVA including neck pain and progressive neurological decline. When one has underlying degenerative changes and particularly spinal stenosis, any sudden extreme movement of the neck, particularly hyperextension, can lead to neurological decline.

Thus my opinion is that this man clearly had underlying cervical degenerative disease which was exacerbated by the motor vehicle accident and resulted in severe persistent neurological impairment despite surgical decompression. It is difficult to predict whether Mr. Villers would have ultimately gotten into similar clinical problems in the absence of the MVA, since the natural history of silent or minimally symptomatic cervical degenerative disease is highly variable. There are some individuals who progress to myelopathy slowly without any clearly recognized trauma, but there is no question that trauma such as an MVA does precipitate neurological decline as seen with Mr. Villers.

Trace Dunsmore, Mr. Morin’s law clerk, faxed the report and the OCF-19 to Pilot on April 10, 2002. As required, Pilot arranged the CAT DAC and provided a package of documents along with the required Designated Assessment Referral (OCF-11A), dated May 17, 2002, which was copied to Mr. Villers’ counsel. At this point in the process, Mr. Villers and his counsel had an opportunity to provide any other material they felt important to the assessment. However, they had no reason for concern because the OCF-11 listed Dr. Porter’s report along with a number of other documents sent to the DAC.²⁷

Only when the DAC report was released on September 30, 2002 was the omission revealed: it lists only Dr. Porter’s OCF-19 under “Documentation Reviewed.” His narrative report and the other documents he provided are not listed or mentioned in the text of the report.

On October 10, 2002, Mr. Dunsmore wrote to MDAC (copied to Pilot) to request clarification. He provided a copy of the report and noted the reference to it on the OCF-11. The DAC Coordinator replied by stating that MDAC did not have a copy of the report and that the Guidelines did not permit a DAC to review material provided after the summary report (OCF- 11B) is completed. Dr. Porter’s report was returned to Mr. Dunsmore.

Mr. Dunsmore then wrote to Pilot, again referring to the OCF-11, which, he said, led Mr. Villers and his counsel to believe the report had been provided to MDAC. He stated that Dr. Porter’s report was “a pivotal document,” and its omission “at the hand of Pilot – has prejudiced the outcome of the DAC.” He requested that Pilot either deem Mr. Villers to be catastrophically impaired or arrange for a CAT DAC at another facility. In a subsequent letter, he asked Pilot to resume paying attendant care benefits, which were terminated based on the CAT DAC report. Pilot’s response, dated October 24, 2002, is as follows:

We have provided all medical documents to MDAC. Based on MDAC findings, Mr. Villers did not meet the criteria for catastrophic injury are maintaining our position outlined in the Explanation of Benefits form of October 11, 2002.

The DAC relied on General Guideline #4 when it refused to accept Dr. Porter’s narrative report sent by Mr. Dunsmore after the DAC report was released. The relevant portion of that Guideline states:

If there is new information and the parties agree that the review of the new material may alter the DAC’s opinion, then a new DAC assessment should be arranged, rather than one party requesting an “updated” report from the DAC. Where the parties disagree with either the outcome of the DAC or that any new information will have an impact on the original DAC findings, either party may choose to apply for mediation with the Dispute Resolution Group of the Financial Services Commission of Ontario.

This guideline was intended to prevent a party that disagrees with a DAC report from requesting that the DAC change its opinion based on new material. In that situation, the requesting party’s remedy is to apply for mediation. General Guideline #4 was not intended to address the problem in this case, where the missing material was included with the application for catastrophic impairment determination in the first place. Nevertheless, an agreement to arrange another CAT DAC might have provided an early remedy for the omission. Pilot’s refusal to remedy the omission put Mr. Villers in an unenviable situation: he had no way to find out why Dr. Porter’s report was omitted from the assessment, and had to depend on the insurer to arrange and pay for another CAT DAC. Even if he arranged his own catastrophic impairment assessment, a favourable conclusion would not bind the insurer.

The main point is that Dr. Porter’s report formed part of Mr. Villers’ OCF-19²⁸ and was submitted in compliance with the instructions on the form itself. Its omission from the DAC assessors’ review of the claim was a substantial departure from the CAT DAC Guidelines, which are intended to ensure, in accordance with s. 43(2)(a) of the SABS-1996, that the claimant and the insurer provide the assessors with all reasonably necessary information.²⁹ This was not the way the process was supposed to work.

D. The DAC’s failure to conduct a clinical assessment of Mr. Villers

Equally significant was the DAC’s failure to conduct a clinical assessment of Mr. Villers. The consensus opinion of the DAC assessors, based on their review of the documents provided (the “paper review”), was that “there was no evidence of any acute or abrupt change in [Mr. Villers’] condition suggesting a traumatic contribution to myelopathy.” Rather, the “slow, progressive process” in this case was in keeping with “the natural evolution of cervical myelopathy, solely on the basis of pre-existing degenerative disc disease.” Having reached this conclusion, “driven by the documentary evidence,” the assessors “were of the opinion that the use of a direct clinical assessment would not alter their conclusion over lack of causation.”

The arbitrator accepted “that the DAC ought to have followed its usual process of bringing the applicant in for an assessment, given the DAC’s general view that Mr. Villers had not been catastrophically impaired by the accident,” and he found this would have greatly aided the assessment, “given the importance of understanding Mr. Villers’ pre-and post-accident medical history.” It was for this reason that the arbitrator was “unable to rely on the DAC’s general conclusion that Mr. Villers did not suffer a catastrophic impairment as a result of the June 2000 motor vehicle accident.”

Conducting a clinical assessment of the claimant before reaching a “not catastrophic” determination is required by the CAT DAC Guidelines:

If a file review is deemed sufficient to establish catastrophic status, the appropriate team is assembled, and the file review commences. DACs must note that a decision of “not catastrophic” cannot be rendered without conducting a clinical assessment of the claimant.³⁰

The point is repeated in Part 4, which describes the assessment process: “CAT DACs are reminded that a claimant who is deemed ‘not catastrophic at this time’ must have undergone a clinical assessment by the CAT DAC.”³¹

This is an important rule, obviously intended to minimize the risk of wrongly finding that a claimant is not catastrophically impaired, which would have very serious implications for the benefits available to the most vulnerable accident victims. The arbitrator appears to have heard no explanation for MDAC’s failure to conduct a clinical assessment, though Dr. Mayer was questioned about it:

In cross-examination, Dr. Mayer testified that it was unusual that Mr. Villers was not brought in for an assessment by the DAC and that he did not know why this occurred.³²

The CAT DAC consensus opinion suggests an explanation. Under the heading, “Stage 1 Exit Decision,” appears the following:

The Assessment Team concluded that in the absence of causal relationship, the applicant’s circumstances cannot meet the requirements of Catastrophic Impairment designation on the basis of the accident in question. This conclusion is driven by the documentary evidence. The Assessors were of the opinion that the use of a direct clinical assessment would not alter their conclusion over lack of causation.

Accordingly the evaluation will terminate at this point, with the conclusion that catastrophic impairment was not sustained in the accident in question.³³

The Guidelines emphasize that assessors are expected to use their clinical judgment in planning the assessment process, including any deviations from the usual rules:

When the DAC deviates from this guide, an explanation should be noted in the report. Although CAT DAC processes must conform to the SABS and the requirements of this guide, it is the responsibility of each clinician involved in the assessment to use his/her own clinical judgment in planning the assessment and interpreting the assessment outcome.³⁴

Nothing in the Guidelines suggests the drafters contemplated a wholesale exception to the clinical assessment requirement where the “not catastrophic” determination is based on the causation question. This could too easily be used to withhold a clinical assessment from the most seriously injured claimants, like Mr. Villers, for whom the complex medical-legal question of causation is the only real dispute. I do not accept this was intended by the drafters of the SABS and the Guidelines.

E. Private communication between Dr. Mayer and Pilot’s Counsel

On December 12, 2003, Mr. Martin E. Tiidus, then Pilot’s counsel, wrote to Dr. Mayer, Dr. Urovitz, and Dr. Ameis stating that if the matter did not resolve, they would be required to testify at the upcoming hearing. Dr. Ameis responded on December 18. The pertinent part of that letter is as follows:

My role was supportive, as clinical coordinator of the DAC, including the consensus determination process. I did not examine the claimant or render a personal opinion on either impairment or causation. It is my responsibility to ensure that the Minister’s committee guidelines and the elements of the SABS Definition are understood and that our process leads to a valid conclusion.

The Minister’s Committee guideline on transparency and neutrality, as it pertains to litigation is that the DAC assessors may not communicate about the case with either side, outside of expert testimony in the courtroom. The DAC assessment does not fall under either side’s witnesses, defense or plaintiff. Therefore, any advance discussion with either party about the case would be permitted only at the direction of the trial judge.

The assessors will be asked for any potential problems with their availability . . . .

On January 6, 2004, Mr. Tiidus wrote to Dr. Ameis again. He acknowledged receipt of the December 18th letter,³⁵ stated Dr. Ameis would not be called, and asked who would be the most appropriate expert from the CAT DAC assessment team.

On May 25, 2004, Mr. Tiidus wrote to Dr. Mayer. The text of the letter is as follows:

I confirm our telephone conversation on May 20, 2004, in regard to the [Villers and Pilot] matter.

As discussed, I shall at this time require you to attend at this FSCO arbitration which is being held June 14 and 15, 2004, in a location in Huntsville. I shall advise you of the specific location once I have it.

As requested, I enclose copies of the following:

1. Dr Phillip Porter’s report dated March 29, 2002, which unfortunately was not included in the CAT DAC referral package that you reviewed at the time of your CAT DAC opinion.

2. Application for Determination of Catastrophic Impairment (OCF-19/59) by Dr. Porter which was included earlier to you for your review.

The reason I forward to you the additional report that had been omitted earlier when you completed your CAT DAC assessment, is because the solicitor for the claimant is arguing that since this report of March 29, 29002, was not before you, your opinion may be in error.

From reviewing the matter, it seems to me that you considered precisely the issue of causation as suggested by Dr. Porter in his report dated March 29, 2002. The (OCF-19/509) form prepared by Dr. Porter described the same position on causation. It was also set out in Dr. Lapp’s medical documentation which you reviewed.

3. CAT DAC assessment report in which you participated dated September 30, 2002, for your review.

I would be pleased to discuss this matter with you at any time.

On June 1, 2004, Mr. Tiidus, responding to a number of requests from Mr. Morin, enclosed copies of the correspondence with the CAT DAC. Mr. Morin wrote to Dr. Mayer on June 8, ,2004, enclosing a copy of General Guideline #4 and requesting “written confirmation of details of all your discussions with Mr. Tiidus and/or his client. . . .” The letter also stated that he had asked Mr. Tiidus “for the gist of his verbal conversations with you,” but “Mr. Tiidus has not favoured me with a summary of the verbal communication.” The letter was copied to Mr. Tiidus. At the appeal hearing, Mr. Griffiths, now representing Pilot, stated he did not know why there was no response to Mr. Morin’s requests for information about meetings with Dr. Mayer or Dr. Mayer’s expected testimony.

According to Mr. Morin, it was not until Dr. Mayer’s cross-examination that it became clear Dr. Mayer had met with Mr. Tiidus in advance of the hearing. Mr. Morin submits that Pilot’s one-sided communication with Dr. Mayer tainted the doctor’s testimony and further confirmed that the DAC process had become adversarial.

FSCO adjudicators have long regarded unilateral communications intended to influence the outcome of a DAC assessment as a serious contravention of the Guidelines, undermining the role of the DACs in the SABS. In most of these cases, the contact is a request for a “supplemental” or “updated” DAC report when the initial report is unfavourable.³⁶ General Guideline #4 addresses the issue under the heading “Communications with Parties:”

Verbal

Except during the DAC assessment itself (when the claimant is present for and involved in an examination), there should be no one-sided verbal communication between the DAC and either of the parties unless the DAC confirms the details of the discussion in writing and copied to the other party. This includes all telephone communications before the assessment to set up the appointment, verbal reminders to the parties to provide necessary documentation, etc. All other questions or concerns that are posed to a DAC, by either party, should be in writing.

Written

When a DAC responds to written correspondence, the response must be written and copied to both parties. If a party corresponds with the DAC, and the other side has not received a copy of the correspondence, the DAC must copy both the original letter, and their response, to the other party. This includes the covering letters from either the insurer or the claimant and their representatives. The DAC should not provide any type of report, verbal or written, to one side or the other, in advance of the final written report. The completed and signed OCF-11 (Referral and Summary Report) may be sent to both parties in advance of the final report, if necessary.

Pilot submits that this passage addresses communication before and during the assessment and does not address communication in preparation for a hearing. As noted by Mr. Villers’ counsel, this certainly was not Dr. Ameis’ understanding, based on his December 18, 2003 letter to Mr. Tiidus.

I do not accept that the drafters of the Guideline contemplated a letter like the one Pilot’s counsel wrote to Dr. Mayer, which could only undermine the neutrality or appearance of neutrality of the DAC assessors. For example, under the heading “Post-DAC Treatment and Examinations,” the Guideline prohibits a DAC from providing treatment or conducting a medical-legal assessment for either party after a DAC, except in certain limited circumstances. The explanation is as follows:

If the matter is not resolved after the DAC assessment, and the matter continues to arbitration or court, the DAC assessor may have to testify. This assessor must remain and appear to remain neutral. This objective cannot be met if the assessor has provided/performed post-DAC treatment, a medical-legal assessment or an Insurer Examination at the request of one of the parties. Please note this applies to all post-DAC medical-legal assessments whether the request is to conduct a paper review and/or an actual examination. The DAC is, however, permitted to conduct a further DAC assessment of the claimant.

The DAC Committee offered further guidance on this question in its Information Communique of July 1999, stating, in response to questions about one-sided communication between a DAC and a party preparing for trial or arbitration:

The decision to meet with either party is left to the discretion of a DAC. However, DAC assessors should be aware that any meeting must not be used, or be perceived as being used, to tailor their DAC testimony.

As outlined in General Guideline # 4, it is critical to the dispute resolution process that DACs and their assessors to maintain their actual and perceived neutrality. In keeping with this fundamental principle, DACs are required to notify the other party if they choose to meet with either parties’ counsel.

Pilot relies on Lee and State Farm Mutual Automobile Insurance Company, (FSCO A03-000181, November 27, 2003), which also concerned a CAT DAC assessment. In that case, Dr. R. I. Hershberg, the psychiatrist who assessed the claimant for the DAC, provided a supplementary report at the insurer’s request, commenting on a post-DAC report from Dr. R. van Reekum, the claimant’s psychiatrist. Rather than requiring another DAC assessment, the arbitrator admitted Dr. Hershberg’s supplementary report. She noted that the material on which Dr. van Reekum based his opinion was not new; it was the same material considered by Dr. Hershberg in his assessment. The arbitrator reasoned that since Dr. Hershberg could be questioned about Dr. van Reekum’s report if called as a witness, his supplementary report was no more inappropriate than a pre-hearing “will-say statement,” and indeed it was consistent with the Commission’s early disclosure rules. In addition, all “verbal and written communications” were copied to the claimant’s counsel. She concluded that “The neutrality, in fact or in appearance, of Dr. Hershberg or MDAC, an important issue addressed in the Guideline, has not been affected.”³⁷

In this case, the issue was Pilot’s failure to provide a “will-say” statement or information about its counsel’s private discussions with Dr. Mayer. And whereas the supplementary DAC report in Lee considered a post-DAC medical-legal assessment obtained by the claimant, Mr. Villers’ complaint was that Dr. Porter’s report, on which he based his catastrophic impairment claim, was not considered by the CAT DAC assessors. Finally, the partisan commentary by Pilot’s counsel could only undermine Dr. Mayer’s apparent neutrality.

On appeal, the parties disagree on whether Dr. Mayer’s testimony was influenced by his discussions with Mr. Tiidus. Short of Dr. Mayer reversing his opinion on the cause of Mr. Villers’ catastrophic impairment, there is, of course, no way to tell.

F. Remedy

The procedural irregularities in this case were substantial and serious, and their cumulative effect was to undermine the apparent neutrality of the assessment process as well as the value of the CAT DAC report. Despite Mr. Villers’ early objections to the omission of Dr. Porter’s report and the unilateral communication between Dr. Mayer and the insurer’s counsel, Pilot neither explained these irregularities nor attempted to mitigate them by arranging a new CAT DAC to be completed in accordance with the DAC Guidelines, including a clinical assessment. This was not the balanced process intended by the SABS or the Guidelines.³⁸

Given his recognition of “the flaws in the DAC process,”³⁹ did the arbitrator have authority to order a new CAT DAC? Even if arbitrators and appeals adjudicators have no power to make orders against DACs directly, they certainly have authority to order claimants and insurers to comply with SABS procedures, including arranging appropriate DAC assessments. Moreover, arbitrators have authority to adjourn a hearing pending completion of an assessment that is required for a fair hearing.⁴⁰ Indeed, arbitrators have taken this step in a number of cases, deferring final adjudication pending a properly completed DAC assessment, with or without an interim benefits order.⁴¹

Such orders are not directed to the DAC; they are directed to the insurer, because it is the insurer that must arrange the DAC as part of the claims adjustment process mandated by the SABS. The same logic applies whether a required DAC is not arranged at all or a DAC is conducted, but its validity is fatally undermined by substantial departures from the SABS or the Guidelines.⁴² Mr. Villers sought his remedy from Pilot, not MDAC. Whatever the reason for the omission of Dr. Porter’s report and the DAC’s failure to undertake a clinical assessment, it was Pilot that refused to arrange another CAT DAC, and it was Pilot’s counsel that communicated with Dr. Mayer, despite Dr. Ameis’ cautionary letter, and without notice to Mr. Villers’ counsel. More to the point, it was Pilot that relied on the report and Dr. Mayer’s evidence at the hearing.⁴³

I conclude it was well within the arbitrator’s authority to adjourn the hearing to allow a CAT DAC to be completed in accordance with the SABS and the Guidelines. However, it does not follow that this was the order he was required to make. The arbitrator relied on Lee for the principle that “the discretion to accept or reject a DAC’s evidence rests ultimately with the presiding arbitrator.”⁴⁴ This principle has been reaffirmed in any number of FSCO decisions, beginning with Walker and State Farm Mutual Automobile Insurance Company.⁴⁵ Walker also established the principle that an arbitrator is not bound to accept any one expert report offered by one of the parties, but must consider all the expert and lay evidence in making findings of fact. “Like all expert reports, the DAC report is assessed as to its accuracy, completeness, relevance, expertise and impartiality.”⁴⁶

Applying these principles to this case, the arbitrator was not bound to accept Dr. Mayer’s opinion, or Dr. Porter’s, or either one of them. It was within his authority to reach his decision based on all the evidence.⁴⁷ Consider some alternative scenarios. If, despite procedural irregularities, the CAT DAC assessors had determined that Mr. Villers was catastrophically impaired as a result of the accident, the arbitrator would not have been obliged to order a new CAT DAC assessment rather than finding in favour of Mr. Villers. And if there had been no departures from the Guidelines, the arbitrator would still have had discretion to give little or no weight to a CAT DAC report, whether or not it favoured Mr. Villers; he was not bound to accept its conclusions. From this perspective, the arbitrator’s decision to disregard the DAC assessors’ “not catastrophic” determination while accepting their opinion that the timing of Mr. Villers’ neurological deterioration was critical in answering the causation, an opinion that was shared by Mr. Villers’ treating doctors, reflected a nuanced assessment of the evidence that took into account the problems with the DAC process.

In my view, this case is close to the line because of the serious departures from the DAC Guidelines. However, Mr. Villers did not ask to have the DAC report and Dr. Mayer’s evidence excluded from the evidence.⁴⁸ Nor did he bring an interim benefits motion seeking an order that the insurer arrange another CAT DAC before his catastrophic impairment claim was heard.⁴⁹ Indeed, while he challenged the integrity of the DAC process, Mr. Villers presented a great deal of evidence in support of his catastrophic impairment claim. The arbitrator considered that evidence, and gave detailed reasons for rejecting it. I am not persuaded he erred in his disposition of the case.

I conclude that the arbitrator considered the appropriate factors in exercising his discretion concerning the CAT DAC report. Ultimately, he was charged with deciding, based on all the evidence, whether Mr. Villers was catastrophically impaired as a result of the evidence. He gave careful, detailed reasons for his conclusion. I am not persuaded there is any reason to interfere.

IV. ARBITRATION AND APPEAL EXPENSES

In a second decision released on August 11, 2005, the arbitrator ordered Pilot to pay Mr. Villers’ arbitration expenses in the amount of $3,047.89. With respect to the criteria set out in the Expense Regulation (Ontario Regulation 664, R.R.O. 1990, as amended), the arbitrator considered these factors: Pilot was successful on the main issue, but did not pursue its position that Mr. Villers was not catastrophically impaired, and relied on a flawed DAC report; Pilot did not respond to Mr. Villers’ attempts to discuss settlement; the arbitration did not raise novel issues; there was no conduct that tended to prolong, obstruct or hinder the proceeding; and no part of either party’s position was improper, vexatious or unnecessary. The arbitrator concluded that Mr. Villers was entitled to twenty per cent of his arbitration expenses.

Pilot has appealed from the arbitrator’s expenses decision, arguing it was entitled to its expenses of the arbitration based on the outcome. The insurer submits that the arbitrator erred in law by considering other issues, especially the DAC process and settlement discussions. Further to our discussion at the appeal hearing, the insurer’s expenses appeal was deferred pending this decision, and may now resume. Mr. Villers will now have 20 days from the day he receives this decision to file a Response to Appeal with respect to arbitration expenses. Pilot will then have 30 days to file written submissions on expenses, and Mr. Villers will have 20 days to file responding submissions.

With respect to appeal expenses, either party may request an expenses hearing in accordance with Rule 79 of the Dispute Resolution Practice Code, if they are unable to agree.

It may, of course, be most convenient to deal with both expenses disputes by way of a single telephone conference, without the need for additional written submissions. The appeals administrator may be contacted with respect to the parties’ preference.

January 30, 2006

Nancy Makepeace Director’s Delegate

Date

OCF 1; 3; 5; 12; 18; 14 & 20, medicals, clinicals, Hospital records, Dr. Lapp report; Form 1; Rehab Reports; Occupational reports; Dr. Phillip Porter report, Toronto Western Hospital University Health Network and numerous other medical reports and testing.

As Dr. Porter practises in the Division of Neurosurgery at Toronto Western, the medical and test reports referred to in the last line would appear to be the materials enclosed with his OCF-19.

The Referral form also cautions the insured person: “It is the claimant’s responsibility to advise the Designated Assessment Centre of any other documents not listed which may be useful in completing the assessment.” Such documents are to be listed in Part 7, but that part of the form was left blank in this case.

In Pereira and State Farm Mutual Automobile Insurance Company, (FSCO P98-00022, November 6, 1998), confirming (OIC A96-000996, April 24, 1998), there was an issue as to whether the insurer had failed to provide the Med-Rehab DAC with two of the Trauma Services treatment plans in dispute. Director’s Delegate Draper stated: “Even if State Farm had the treatment plans and should have provided them to the DAC, however, I am not persuaded that any failure to do so invalidates the DAC assessment. The treatment plans are based on the same recommendations set out in [the] Trauma Services assessment report, which the DAC considered. These recommendations specify the treatment being proposed, giving the DAC adequate information to evaluate the claim.” (at p. 9) The Pereira decision is distinguishable because the narrative report that the DAC considered was likely more comprehensive than the treatment plans that were omitted; in this case, it was Dr. Porter’s more comprehensive narrative report that was omitted. In any event, I do not read Pereira as authority for the substantially incomplete DAC assessment that was done in this case.

If it is determined with reasonable medical certainty that direct clinical assessment will not be helpful or possible, and that evidence provided by the documentation clearly demonstrates either that there is no significant causal relationship between the current impairments and the accident in question, or that the traumatic impairments will under no circumstance approach threshold and a direct assessment will not alter that expectation, the evaluation process is terminated with the conclusion that the applicant has not sustained Catastrophic Impairment from the accident in question.

See also: Dhir and Non-Marine Underwriters, Members of Lloyd’s, (OIC A97-000760, May 11, 1998); Onno and Wawanesa Mutual Insurance Company, (FSCO A00-000111, September 27, 2000); and Mrs. S. and Non-Marine Underwriters, Members of Lloyd’s, (FSCO A02-001635, August 3, 2004).

And in the second arbitration decision in Blake and Jevco Insurance Company, (FSCO A98-000102, March 22, 2000), the arbitrator concluded that while neither the claimant nor the insurer was responsible for the first REC DAC’s non-compliance, the interim benefits paid pending the second REC DAC report were not repayable: “Finally, I note that Jevco was not entirely without a remedy. Upon receiving the report of the first REC DAC, Jevco opted to treat this as a statement that Mr. Blake was not co-operating. That was not the only option open to it. Jevco could have arranged to have Mr. Blake attend another REC DAC.” (at p. 35)

Footnotes

1. 1The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2A “CAT DAC” is an assessment by a designated assessment centre (“DAC”) authorized to determine whether a person suffered a catastrophic impairment as defined under s. 2(1) [now s. 2(1.1)] of the SABS-1996.
3. 3Arbitration decision, p. 2.
4. 4About $1,900 per month at the time they were terminated.
5. 5Arbitration decision, p. 13.
6. 6Arbitration decision, p. 14.
7. 7Arbitration decision, p. 12. Nor did Pilot deviate from this approach on appeal.
8. 8Arbitration decision, pp. 9-10.
9. 9Arbitration decision, p. 22. quoting from p. 6 of the CAT DAC’s consensus opinion.
10. 10Arbitration decision, pp. 14-15.
11. 11Arbitration decision, p. 13.
12. 12Arbitration decision, p. 16.
13. 13Arbitration decision, p. 18.
14. 14Arbitration decision, p. 21.
15. 15Arbitration decision, p. 22.
16. 16Arbitration decision, p. 14.
17. 17Arbitration decision, pp. 22-23.
18. 18Subsection 19(1). Section 27(1)3 requires the insurer to offer optional enhanced medical, rehabilitation and attendant care benefits.
19. 19Subsections 18(1)(a) and (3). Those who are less than 15 at the time of the accident may claim for expenses incurred to the age of 25.
20. 20Subsections 16(5), 18(2) and (3) and subsection 19(2).
21. 21Sections 21and 22.
22. 22Section 17.
23. 23DAC Committee Information Communique, November 2002, p. 2.
24. 24As it read at all times relevant to this appeal. Additional rules are set out in subsection 2(2) of the SABS-1996 [no catastrophic impairment determination under the whole person impairment or mental or behavioural impairment provisions unless three years have elapsed since the accident or the claimant’s health practitioner states that the condition has stabilized and is unlikely to improve with treatment] and Part XI [establishment of DACs, place of assessment, goods or services after assessment].
25. 25M.D. and Halifax Insurance Company, (FSCO P00-00049, May 16, 2001), at p. 6.
26. 26Subsections 37(5), 38(14) and 39(7) of the SABS-1996 respectively.
27. 27Part 6 of the Referral form, “List of Documents Forming Referral Package,” gives these instructions: “List of documents forming referral package (for example: medical reports, clinical notes and records, surveillance video tapes, and test results). Attach index of medical brief (if available).” Handwritten in the blank space provided, over the signature of Cindy Saunders, Pilot’s Accident Benefit Adjuster, dated May 10, 2002, is the following:
28. 28See DeMartini and ING Insurance Company of Canada, (FSCO A03-000733, March 11, 2004), for example, where the issue was a claim under s. 24 of the SABS-1996 for Dr. Becker’s fee for the narrative report that accompanied an OCF-19. The arbitrator allowed the claim, stating “a completed OCF-19 must include a report from the health practitioner assessing the Applicant’s level of impairment.” (at p. 9)
29. 29The claimant is also required to co-operate. Subsection 43(2)(b) requires him or her to “submit to any reasonable physical, psychological, mental and functional examinations requested by the person or persons who conduct the assessment.” If the claimant “does not make himself or herself reasonably available for an assessment” or fails to provide reasonably necessary information, the insurer may stop payment of the benefit related to the assessment until the person complies, pursuant to s. 43(3), and the claimant may be barred from mediation pursuant to s. 50(c).
30. 30Part 3, “Intake Process,” step 11, p. 3-5.
31. 31Para. 4.1, “Introduction,” p. 4-1. See also Standard Referral Confirmation Letter, Appendix B, p. B-2 of the Guidelines.
32. 32Arbitration decision, p. 11. According to the Overview section (p. 2) of the DAC report, the assessment has two stages. Stage 1 is a paper review, while stage 2 is a clinical assessment. The stage 1 review seeks to determine if the documents “satisfactorily demonstrate” “that the client has sustained traumatic impairments causally related to this accident,” and that documented impairments clearly meet the criteria, permitting a catastrophic designation based on the paper review (“usually those found in Clauses 1(a)-(e).”) The Overview describes three possible outcomes following the stage 1 review: “catastrophic impairment was sustained,” “catastrophic impairment was not sustained,” and “continue to stage 2.” It appears that Mr. Villers was determined to fall into the “catastrophic impairment was not sustained” category:
33. 33At p. 6.
34. 34CAT DAC Guidelines, Section 1.1, “Overview,” p. 3-31.
35. 35And a letter of December 19, 2003, in which Dr. Ameis stated he had received formal notice of Pilot’s intent to call him and would comply.
36. 36The leading case is Levey and Traders General Insurance Company, (FSCO P98-00035, February 25, 1999), confirming (OIC A96-001590, June 30, 1998). In his initial Disability DAC report, the orthopaedic surgeon who assessed the claimant concluded she was disabled by spasmodic torticollis, but he recommended a referral to a neurologist associated with the same DAC because torticollis is more within the expertise of neurologists. The insurer did not make the referral, but instead sent the orthopaedic surgeon additional information about the claimant’s pre-accident condition. The doctor provided an “addendum” to his report, stating that the torticollis was pre-existing and the claimant was not disabled as a result of the accident. The insurer relied on the addendum to terminate benefits, then, shortly before the arbitration hearing, asked the claimant to attend an insurer examination by a neurologist. The arbitrator refused the insurer’s motion for a stay pending the insurer examination, and awarded the weekly benefits claimed, as well as a special award. The arbitrator’s decision was confirmed on appeal. Director’s Delegate Draper stated, “. . . this kind of one-sided contact undermines the neutrality of the DAC. According to the Guidelines in effect at the time, Traders was responsible for preparing the package of material that the DAC required to do its assessment. It was not entitled to meet this obligation in a piecemeal fashion until it got the answer it wanted.” (at p. 9).
37. 37At p. 4.
38. 38M.D. and Halifax Insurance Company, (FSCO P00-00049, May 16, 2001), at p. 7: “. . . the underlying goal [of the DAC system] is to achieve a reasonable balance between the parties.” See also, for example, Onno and Wawanesa Mutual Insurance Company, (FSCO A00-000111, September 27, 2000), at p. 15: “The neutrality, independence and balanced nature of DAC assessments are their most important features.”
39. 39Arbitration decision, p. 13.
40. 40F.S. and Belair Insurance Company Inc. (OIC P96-000039, June 11, 1996).
41. 41For example, see Coutu and Wawanesa Mutual Insurance Company, (OIC A97-001916, June 5, 1998), Blake and Jevco Insurance Company, (FSCO A98-000102, October 28, 1999) and (FSCO A98-000102, March 22, 2000), Boniface and Liberty Mutual Insurance Company, (FSCO A97-002106, June 15, 2000), Dicerbo and The Citadel General Insurance Company, (FSCO A04-000594, May 30, 2005), and Kong and Personal Insurance Company of Canada, (FSCO A04-001188, July 21, 2005).
42. 42To the extent that George and State Farm Mutual Automobile Insurance Company, (FSCO P04-00028, December 6, 2005), confirming (FSCO A03-001062, August 9, 2004), takes a contrary position, I respectfully disagree. Moreover, I do not accept the suggestion that an arbitrator must give the DAC notice and an opportunity to speak to the issue of compliance before requiring a claimant or an insurer to comply with the SABS process. Different considerations may apply where it is the DAC that refuses to conduct the assessment, as in Baptiste and Pilot Insurance Company, (FSCO A04-000446, January 25, 2005). Of course, different rules apply where the DAC is a party to a civil proceedings, as in Lowe v. Guarantee Company of North America, 2005 CanLII 25095 (ON C.A.).
43. 43See, for example, the arbitrator’s comment on this issue in Cook and State Farm Mutual Automobile Insurance Company, (OIC A96-001284, March 20, 1998), at p. 25: “Although the Insurer cannot be blamed for the manner in which the DAC reported its findings, instead of taking a reasonably cautious approach, the Insurer appears to have been eager to terminate benefits at the first opportunity. The request for a second DAC assessment should have given the Insurer pause. Unfortunately, and contrary to the legislation’s clear direction, it has been Mr. Cook who has shouldered the economic burden of this dispute pending this arbitration.”
44. 44Arbitration decision, p. 14.
45. 45(OIC P96-000036, December 3, 1996) at p. 13.
46. 46Driver and Traders General Insurance Company, (FSCO P03-00006, November 18, 2003), at p. 16.
47. 47In Monette and Commercial Union Assurance Company, (OIC A97-000318, June 29, 1998), for example, the arbitrator found that where the REC DAC failed to address the issues it was required to consider under s. 30(2)1.ii of the SABS-1994, the arbitrator nevertheless had authority to make findings.
48. 48Arbitration decision, p. 13.
49. 49For example, see Sweete and Jevco Insurance Company, (OIC A96-000614, October 24, 1996), Harkness and Economical Mutual Insurance Company, (OIC A96-001420, December 10, 1996), Fortney and Lombard General Insurance Company of Canada, (OIC A97-000553, December 24, 1997), Simpson and Trafalgar Insurance Company of Canada, (FSCO A98-000215, July 16, 1998).