Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 109

FSCO A05-001520

BETWEEN:

UMBALA THIYAGARAJAH

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before: Arbitrator Lawrence Blackman

Heard: Written submissions received by January 12, 2007.

Appearances:

Mr. David S. Wilson for Mr. Thiyagarajah

Mr. William M. Sproull for ING Insurance Company of Canada

The Applicant, Mr. Umbala Thiyagarajah, was injured in a motor vehicle accident on March 6, 2004. As a result, he applied for statutory accident benefits from ING Insurance Company of Canada ("ING") payable under the Schedule.¹

The arbitration hearing in this matter addressed Mr. Thiyagarajah's entitlement to certain benefits. My October 26, 2006 decision ordered ING to pay Mr. Thiyagarajah further income replacement benefits (IRBs) of $353.14 per week from June 2, 2005 to March 5, 2006. The parties were also asked to provide further submissions regarding pre-judgment interest, the jurisdiction to award the special award sought, and the appropriate quantum for same.

Accordingly, the further issues to be addressed in this decision are:

Is Mr. Thiyagarajah entitled, pursuant to subsection 46(2) of the Schedule and/or pursuant to the terms of an agreement reached at mediation, to interest for the overdue payment of benefits?
Is ING liable to pay Mr. Thiyagarajah a special award, in accordance with subsection 282(10) of the Insurance Act, R.S.O. 1990, c. I.8, and if so, in what amount?

Mr. Thiyagarajah is entitled to payment of pre-judgment interest, in accordance with subsection 46(2) of the Schedule, at the rate of 2 per cent per month compounded monthly, on the weekly income replacement benefits of $353.14 from June 2, 2005 to March 5, 2006, from 14 days after each weekly installment to the date of payment, less any amounts paid by ING in respect of such interest.
Mr. Thiyagarajah is entitled to a special award of $625.
The issue of legal expenses claimed pursuant to subsection 282(11) of the Insurance Act may now be addressed in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003).

(a) Interest

The Applicant submits that pre-judgment interest is payable on the IRBs to which he was found entitled in accordance with subsection 46(2) of the Schedule. Subsection 46(2) provides that the insurer shall pay interest on an overdue benefit for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly. Subsection 35(2) provides that "if the insurer determines that a [weekly] benefit is payable, the insurer shall pay the benefit within 14 days after receiving the application."

The Insurer advises that by letter dated November 20, 2006 it forwarded to the Applicant the sum of $13,974.28 for income replacement benefits covering the June 2, 2005 to March 5, 2006 period of entitlement ordered in my October 26, 2006 decision, plus interest in the amount of $3,732.38.

The Applicant does not object to the interest provided. Neither party refers to any agreement reached at mediation, as set out as an issue by Arbitrator Renahan in his October 22, 2005 pre-hearing letter.

Accordingly, I find that the Applicant is entitled to payment of pre-judgment interest of two per cent per month, compounded monthly, on the weekly IRBs of $353.14 from June 2, 2005 to March 5, 2006, from 14 days after each weekly installment to the date of payment, less any amounts paid by ING for pre-judgment interest.

(b) Special Award Jurisdictional Issue

The arbitration hearing addressed Mr. Thiyagarajah's entitlement to IRBs ongoing from June 2, 2005. Well before the hearing, ING paid Mr. Thiyagarajah IRBs of $4,237.68 (representing the twelve weeks from March 13 to June 4, 2004) by Explanation of Benefits dated August 11, 2004 and $22,247.84 (representing IRBs to June 1, 2005) confirmed by letter dated July 18, 2005. The Applicant's special award claim is based on ING's alleged unreasonable withholding or delay of IRBs both before and after June 2, 2005.

My October 26, 2006 decision stated that:

I find that the parties had an inadequate opportunity to address the question I posed of whether I have authority to grant a special award in regard to IRBs paid for the period up to June 1, 2005, if I found an award was warranted. The wording of subsection 282(10) of the Insurance Act requires that the lump sum special award shall be "up to 50 per cent of the amount to which the person was entitled at the time of the award." I note that I have not made an order regarding the payment of these benefits, I have not been asked to make an order for their payment, and the issue of payment of such benefits has never been raised in this arbitration proceeding.

The Applicant's Argument

Mr. Thiyagarajah submits that the issue of IRB payments before June 2, 2005 was indeed in dispute in this proceeding, as the second IRB and related interest payments were made subsequent to the application for arbitration. Mr. Thiyagarajah also states that the October 25, 2005 pre-hearing letter sets out the Applicant's argument that ING had delayed payments and had made payments in a haphazard and inconsistent manner. Mr. Thiyagarajah submits that this reference could only refer to ING's handling of pre-June 2, 2005 IRB payments.

The Application for Arbitration, however, received by the Commission July 18, 2005 states that the Applicant, having received weekly IRBs from March 13, 2004 to June 1, 2005, was now claiming ongoing benefits. Further, while Arbitrator Renahan referred, as noted above, to the basis of the Applicant's special award claim, the pre-hearing letter restricted the issue of IRB entitlement to the period from June 2, 2005.

Mr. Thiyagarajah further argued that the legislation should be read purposively and that the clear statutory intent was that benefits should be paid on a timely basis and that unreasonable positions should be discouraged. Relying on the decisions in State Farm Mutual Automobile Insurance Company and Lopez (FSCO P98-00031, September 20, 1999) and Jensen and GAN Canada Insurance Company (FSCO P96-00079, March 31, 1999), the Applicant noted that the Insurance Act provides that a special award may be awarded on monies unreasonably delayed. Such wording would be rendered superfluous should special awards be restricted solely to cases where monies, withheld throughout the proceeding, were found owing by an arbitrator.

Mr. Thiyagarajah also argued that there was nothing in the Act or in the Schedule precluding an arbitrator awarding a special award on benefits paid prior to the arbitration hearing, noting Graper and Liberty Mutual Fire Insurance Company (FSCO A00-000133, July 20, 2001) and Commercial Union Assurance Company and Singh (FSCO P01-00042, June 12, 2002) as decisions where special awards were ordered notwithstanding the insurer paid benefits on the eve of the arbitration hearing.

The Insurer's Argument

ING notes the comments in Leitgeb and Allstate Insurance Company of Canada (OIC P-012407, November 16, 1995) that:

The focus of the arbitration, therefore, is on the applicant's entitlement to benefits, or the proper amount of the benefits. The basis for ordering a special award arises out of that inquiry. The special award provision does not expand the arbitration into a generalized inquiry into the insurer's conduct.

I agree with the arbitration decisions that have held that a special award is not a claim to be advanced like a claim for benefits . . . Rather, it is a statutory authority, or a direction, given to the arbitrator to make an award if he or she finds that not only are benefits owing to the applicant, but that they were unreasonably withheld or delayed by the insurer.

This view is echoed in the comments of Director Sachs in Simpson and Royal Insurance Company of Canada (OIC P-03863, August 22, 1996) that:

A special award is not a stand-alone claim, but an amount which an adjudicator may order to be paid according to the circumstances of a case. It arises out of the insurer's conduct, as evaluated by the adjudicator. It is not a claim to be made in order to expand the arbitration into a generalized inquiry of the insurer's actions.

The Insurer distinguishes the Graper and Singh decisions from this case in that in the former, the amounts against which the special award was sought were the very benefits in dispute in the proceeding and the claims which were paid by the insurer on the eve of the hearing. ING notes my earlier comments that I have not made an order regarding payment of IRBs before June 1, 2005, I have not been asked to make an order for their payment and the issue of payment of such benefits has never been raised in this arbitration proceeding.

ING also notes the words of Director Draper in Liberty Mutual Insurance Company and Persofsky et al. (FSCO P00-00041, January 31, 2003) that the first step in determining a special award is to "determine the benefits owing to the insured person." ING, thus, submits that the arbitrator must first determine whether benefits are owing before deciding whether payment of such benefits were unreasonably withheld or delayed. ING submits that the dispute in this case was framed by the Application for Arbitration and its Response, and within that framework, the only benefits found owing by myself were from June 2, 2005 to March 5, 2006.

ING further argues that Mr. Thiyagarajah, by accepting a mediated partial settlement, has waived any right to claim and/or be entitled to a special award. The Insurer cites Delegate Naylor in Jensen that:

A special award under s. 282(10) is not part of the schedule of benefits.² It is an aspect of an arbitrator's authority in relation to adjudication of a person's right to benefits or the amount of benefits. However, cases dealing with a party's right to withdraw an application or appeal have held that a party is not free unilaterally to end a proceeding.³ It would seem to follow that the unilateral action of GAN Canada in agreeing to pay the benefits in issue does not necessarily dispose of the question of a special award. It is, of course, different if the parties mutually enter into a legitimate settlement which terminates all or part of the proceeding.

ING states that Mr. Thiyagarajah's case is clearly distinguishable from the situation "where an insurer directly concedes entitlement during the course of an arbitration hearing, or does so implicitly by paying or reinstating benefits before or during an arbitration hearing."

Decision

Subsection 282(10) of the Insurance Act provides that:

If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

[emphasis added]

The provision does not restrict the special award to benefits unreasonably withheld, ignoring benefits which have been merely delayed. The provision does not say that the special award calculation is restricted to amounts which are ordered paid as a disputed item in the arbitration proceeding. Rather, the key words are the amount to which the person was "entitled."

The Concise Oxford Dictionary of Current English (1990, Clarendon Press, Oxford) defines "entitle" as giving a person etc. a just claim or right.

In Prudential of America General Insurance Company (Canada) and Chafe-Moote (FSCO P99-00044, September 8, 2000), the insurer argued that the arbitrator had erred in ordering a special award when entitlement to the benefits had never been in issue and there was no finding of entitlement to which a special award could attach. Rather, benefits had been withheld pending Mrs. Chafe-Moote's attendance at an insurer medical examination as provided for under the applicable legislation. Director Draper responded:

With respect, I find little merit in this argument. Section 282(10) is clearly meant to encourage the timely payment of benefits, as are various sections of the SABS-1994. A special award is payable if the insurer unreasonably withholds or delays payments. The amount of the special award is based on a percentage of the amount to which the person was entitled at the time of the award. In this case, however, entitlement was not in issue. The only basis for withholding benefits was Mrs. Chafe-Moote's non-attendance at the two sets of examinations. It follows, therefore, that if she was not in breach of s.65(5) of the SABS-1994, her entitlement continued and the special award can be calculated based on this entitlement.

[emphasis in the original]

On the one hand, one has Commission decisions stressing that a special award is not a "stand alone claim," that a special award claim does not expand the arbitration into a generalized inquiry of the insurer's actions and that the basis for ordering a special award arises out of the inquiry into an applicant's entitlement to benefits or the proper amount of those benefits.

On the other hand, there are Commission decisions stating that the unilateral action of an insurer does not necessarily dispose of the question of a special award and that entitlement, as required by subsection 282(10) of the Insurance Act, can be independent of an arbitral order and, indeed, in the absence of entitlement being in issue. As well, there are the guiding words of the Supreme Court of Canada in Smith v. Co-operators General Insurance Co. 2002 SCC 30, [2002] S.C.J. No. 34, 2002 S.C.C. 30, that:

There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance.

The question is, in the face of this enunciated principle, the extent to which subsection 282(10) is properly and fairly restricted. Is the consideration of a special award limited to benefits in actual dispute at the arbitration hearing and ultimately ordered paid by an adjudicator? In the alternative, can such consideration also encompass benefits paid during or on the eve of an arbitration hearing, or earlier, but after the commencement of arbitration? In the further alternative, can such consideration include benefits paid prior to the Application for Arbitration? Delegate Naylor, in Jensen, held that the unilateral action of an insurer in agreeing to pay the benefits in issue (as opposed to a "legitimate settlement") does not necessarily dispose of the question of a special award. She stated that:

Defining the subject of a special award, particularly where entitlement ceases to be an issue, is critical.

In my view, this is the key.

Subsection 282(3) of the Insurance Act directs the arbitrator to determine all issues in dispute, whether raised by the insured person or the insurer. Accordingly, notwithstanding that section 281 of the Insurance Act allows only insured persons to refer issues in dispute to an arbitrator at the Commission, once a matter is in arbitration, insurers' issues such as repayment may be added to a proceeding, certainly where the issue has been mediated and flows naturally and consequentially from the insured's issues initially raised in this forum.⁴

While an applicant has control over a claim being brought to this forum and under subsection 279(1) of the Insurance Act claims are restricted to entitlement to and the quantum of benefits under the Schedule, there is discretion to allow both insured persons and insurers to "piggy-back" certain additional issues. While an applicant may not "piggy-back" onto an arbitration proceeding a generalized inquiry into the insurer's actions, to give effect to the wording of subsection 282(10) regarding "delayed benefits" and to protect the consumer's right to timely payment of benefits, there is scope for a special award inquiry more expansive than just benefits withheld.

In exercising one's discretion, a key factor is fairness and the provision of reasonable notice. As stated by Director Draper in Royal Insurance Company of Canada and Clark (OIC P97-00008, September 26, 1997):

In other words, a special award is always a possibility if the arbitrator finds that the insurer unreasonably withheld or delayed the payment of benefits. The specific notice requirements in section 8 of the SPPA do not apply, although the more general common law principles of natural justice and fairness must be met.

In that particular case, Director Draper accepted "Royal's contention that it would have presented its case differently if it had known a special award was being considered. It did not call the adjuster or any of its medical experts as witnesses."

Was there reasonable notice in this case? Was ING taken by surprise by the special award claim advanced?

As noted, the Application for Arbitration herein, sent by the Commission to the Insurer July 18, 2005, includes a claim for a Special Award. The particulars thereunder state that:

Payment of income replacement benefits made in haphazard and inconsistent manner, and were characterized by unreasonable delay.

As noted above, this was reiterated in the October 25, 2005 pre-hearing letter.

At the arbitration hearing, in addition to calling as a witness Dr. B. Albert (who had conducted an insurer's medical examination), ING also called Mr. S. Gallagher, its senior casualty claims representative, to give evidence. In his examination-in-chief, Mr. Gallagher went through, in considerable detail, ING's handling of the file, starting a few days of the March 6, 2004 accident. Almost all of the questions asked and the answers elicited in chief dealt with ING's handling of the file prior to it receiving the Application for Arbitration in July 2005.

There is no contention in this case that the special award claim regarding pre-June 2, 2005 IRBs took ING by surprise, that it would have presented its case differently or that it would have called any additional witness.

I am persuaded that ING received reasonable and fair notice of the basis of the claim for a special award presented, it had a reasonable opportunity to respond and that it came to the arbitration hearing fully prepared and able to respond to the special award claim regarding the entire history of IRB payments. If it is a necessary pre-requisite, there is no doubt that entitlement to IRBs was mediated, that mediation specifically included IRBs ongoing from June 5, 2004, and that the handling of IRB benefits through the history of this claim "flowed naturally and consequentially" from the IRB issue in dispute.

As to whether there was a settlement of IRBs up to June 1, 2005 rather than unilateral payment, the Report of Mediator, marked as part of an exhibit, notes under "Issues Resolved," that the Insurer agreed to pay IRBs up to June 1, 2005. There is no mention in the Report of Mediator of any "settlement," although the Mediator notes that any resolution "may" be subject to the requirements regarding settlements provided in section 9.1 of Regulation 664, R.R.O. 1990, as amended. This recognizes that some issues may be resolved by unilateral actions, such as reinstating or paying benefits, rather than by formal settlement.

ING's letter of July 18, 2005 to the Applicant's counsel confirming the issuance of $22,247.84, however, does not refer to any settlement or compliance with the Settlement Regulation. Nor does ING's Explanation of Benefits Payable, dated August 11, 2004, confirming issuance of a cheque for $4,237.68, make any reference to a settlement, partial or otherwise, of IRB entitlement. Nor does the Insurer's Response, which contributes to the framework of the issues, provide any defence that the Applicant's pre-June 2, 2005 special award claim is barred by reason of any settlement.

Accordingly, I find that ING's prior IRB payments do not constitute a settlement but rather ING's unilateral action in agreeing to pay the benefits in issue, which does not, in the words of Delegate Naylor, "dispose of the question of a special award."

Therefore, I find that I have jurisdiction to consider the Applicant's special award claim regarding both pre and post-June 1, 2005 IRB payments.

(a) Special Award: Entitlement and Quantum

The August 11, 2004 IRB payment

Subsection 35(2) of the Schedule provides that the insurer shall pay IRBs within fourteen days of receiving an application if it determines that the benefit is payable. By letter dated April 29, 2004, the Applicant's counsel sent ING's independent adjuster a completed Application for Accident Benefits, the Employer's Confirmation Form and a Disability Certificate of Dr. D. Wong, the latter estimating the duration of disability at nine to twelve weeks. The covering letter acknowledged a "modest delay" in returning the forms due, in part, to the Applicant having to leave Toronto with regard to a death in the family.

The Insurer states that the independent adjuster failed to forward these documents to ING. Accordingly, the Applicant's counsel was required to resubmit the forms directly to ING by letter dated July 28, 2004. By letter dated August 11, 2004, ING forwarded the Applicant a cheque for $4,237.68, representing twelve weeks of benefits. Mr. S. Gallagher, ING's representative, conceded that as ING had retained the independent adjusters, it must take responsibility for their failings.

The Applicant submits that payment of late interest should have been included in ING's August 11, 2004 correspondence. Instead, an interest cheque in the amount of $239.06 was forwarded to Mr. Thiyagarajah under cover of letter dated January 20, 2005. Mr. Gallagher agreed that ING had "dropped the ball" and had no excuse for the delay. Mr. Gallagher, as noted in my earlier decision, did not take carriage of this file until July 2005. The Applicant estimates that the total amount upon which a special award would be based would be approximately $4,800, inclusive of the interest component set out in subsection 282(10) of the Insurance Act. The Applicant submits that as the period of delay was relatively short, a Special Award of $750 is appropriate.

The Insurer submits that the delay on the part of the Insurer was three months, from 14 days after the Application for Benefits was received on May 4, 2004 (it taking more than a month for the forms to be returned) to August 11, 2004. It further submits that if a Special Award is found owing, a lump sum of $500 would not be inappropriate.

In my October 26, 2006 decision, I added a repayment issue to this proceeding at a date to be set. I allowed the Applicant his costs of the motion, fixed at $450, inclusive of GST, payable forthwith, in any event of the cause. I further held that the Applicant was entitled to his costs of the further hearing, in any event of the cause. ING advises that it will not be pursuing its repayment claim. Nonetheless, ING submits that its $4,086.38 overpayment claim must be considered regarding any special award. I agree with the Applicant's submission that as there has been no finding of an overpayment, I cannot consider same.

I agree with the Applicant that the principal amount of $4,237.68, plus interest under the Schedule of $239.06, plus interest under the Insurance Act would total approximately $4,800. 50% of that is roughly $2,400. I find, as essentially conceded by the Insurer, that the delay was not reasonable. However, I note the relatively modest amount involved, the relatively short delay and that the error was corrected. I also note the statement in Persofsky that one should order "an appropriate lump sum special award, not a percentage, that responds to the facts of the case and bears a reasonable relationship to other special awards, and does not exceed the maximum." I find that a Special Award of $625 is warranted regarding the August 11, 2004 IRB payment.

The July 18, 2005 IRB payment

The second IRB payment, by letter dated July 18, 2005, consisted of $22,247.84 in IRBs (which ING submits inadvertently included the initial twelve weeks) and $1,514.10 in interest.

Mr. Thiyagarajah states that the total amount upon which the Special Award would be based is approximately $25,750. The Applicant submits that a Special Award of $8,000 is appropriate, given the Insurer's inappropriate conduct, including its continued insistence on a statutory declaration notwithstanding the Applicant's offer to give ING a statement at his lawyer's office. Mr. Thiyagarajah also notes the following adjusting note entered August 11, 2004:

I am not comfortable that this claimant will go away and at this point we do not have any proof this claimant was indeed in the mva. Suggest that you write to claimant & lawyer that we need proof of identity. At the same time arrange for IE to confirm he no longer is substantially disabled.

The Applicant submits that his failure to provide a disability certificate is irrelevant, as it was not the reason for the Insurer failing to pay benefits.

ING submits that IRB payments for this period were delayed because Dr. Wong's March 15, 2004 Disability Certificate estimated only nine to twelve weeks of disability. ING's Explanation of Benefits Payable dated August 11, 2004 indicated that should Mr. Thiyagarajah's condition change from that estimate, it required an updated Disability Certificate as well as the Statutory Declaration previously requested March 30 and July 30, 2004.

By letter dated September 28, 2004 to the Applicant, copied to his counsel, the Insurer reiterated its request for a disability certificate, if Mr. Thiyagarajah was still off work. In addition, ING advised that, in accordance with subsection 34(4) of the Schedule, should it not receive the certificate within 21 days of the request, no benefit would be payable more than 21 days after receipt of ING's request and before the certificate was provided. By letter dated November 30, 2004, the Applicant's counsel acknowledged that his response had not been forthcoming. By letter dated January 20, 2005, the Insurer reiterated that the Applicant was in non-compliance, in part because an updated Disability Certificate had not been received.

The Applicant's counsel responded by letter dated February 7, 2005 questioning whether a further disability certificate had not been forwarded, but in any event, submitting that the Insurer had failed to comply with the stoppage provisions of section 37 of the Schedule. In cross-examination, Mr. Gallagher indicated that ING did not have an excuse for the latter failure.

Ultimately, following Dr. Alpert's assessment and ING's Notice of Stoppage of May 13, 2005 (effective June 1, 2005), the Insurer paid Mr. Thiyagarajah IRBs to June 1, 2005, including, ING submits, payments for the first three months, which it had already paid. As of June 1, 2005, the only document in ING's possession in support of the Applicant's IRB entitlement was still Dr. Wong's March 15, 2004 Disability Certificate, Dr. Alpert finding (as a result of his February 4, 2005 assessment) that Mr. Thiyagarajah did not meet the requisite disability test. The Applicant did not provide any further medical reports addressing disability until January 2006.

ING conceded that while requiring a statutory declaration and failing to follow up with the Applicant's offer to take a signed statement, after a time, was probably wrong, that does not detract from its reliance on subsection 34(4) of the Schedule, noted above, in light of its continued requests for an updated Disability Certificate.

ING relies on the decision in Zurich Insurance Company and C.L. (FSCO P98-00043, March 24, 1999) that benefits cannot be seen as unreasonably withheld or delayed where the insurer has an acceptable basis for not paying them, even if its further reason for denying benefits was wrong. Further, ING notes the decision in Iankilevitch and CGU Insurance Company of Canada (FSCO P03-00013, August 31, 2004). That decision considered, ING submits, consequences under section 33 (concerning an insured's failure to provide information) similar to the consequences of an insured person failing to comply with section 34. Iankilevitch held that non-compliance "almost certainly removes any risk of a special award, pursuant to s. 282(10) of the Insurance Act, based on unreasonable delay."

ING also states that it paid interest on the outstanding IRBs, notwithstanding its submission that no interest was payable for most of the period in question.

ING states that if a special award is to be made, the maximum lump sum payable would be $1,500.

I find that for this particular period of IRB benefits, both sides failed to comply with certain obligations under the Schedule. Had, however, the Applicant responded to ING's requests and provided a certificate confirming ongoing disability, which ING then ignored without any reasonable justification, there would certainly be a basis for a special award.

As I noted in Vellipuram and State Farm Mutual Automobile Insurance Company (FSCO A05-002629, December 8, 2006):

Arbitrator Palmer defined "unreasonable" behaviour by an Insurer in withholding or delaying payments in Plowright and Wellington Insurance Company (OIC A-003985, October 29, 1993) as behaviour which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate. She described the standard expected of an insurer as "one of sound and moderate judgment." The standard, as stated by Director's Delegate McMahon, is not one of perfection.⁵

The decision in Gan Canada Insurance Company and McConachie (FSCO P97-00069, October 28, 1998) also states that:

arbitrators should be careful not to judge insurer actions with the benefit of hindsight nor to scrutinise the actions of company representatives as if under a microscope. As one arbitrator puts it: "the standard is not one of perfection."

ING may have had additional reasons in delaying IRB payments. However, the Applicant failed to provide ING with reasonably required medical substantiation of a continuing disability claim, subsequent to Dr. Wong's March 2004 nine to twelve week estimate, until January 2006. This was notwithstanding ING's requests for an updated disability certificate, first made in the same letter advising of payment of twelve weeks of IRBs. January 2006 was almost two years after Dr. Wong's Certificate and more than six months after the second IRB payment. In these circumstances, I am not persuaded that ING's delay in paying further IRBs was unreasonable, or that a special award is warranted.

IRBs after June 1, 2005

The Applicant calculates the principal amount of benefits for this period as approximately $14,125.60, interest under the Schedule of about $4,100, and interest under the Act of about $3,000, for a total of around $21,225. The Applicant submits that a special award of $5,000 is warranted, given the evidence referenced in my earlier decision and what he submits are the inherent and obvious shortcomings in Dr. Alpert's evidence, upon which ING relied.

Mr. Thiyagarajah argues that by the time of the arbitration hearing, ING had been presented with abundant evidence which called for an immediate re-evaluation of the claim. The true nature of the Insurer's position is shown, he submits, in the August 11, 2004 adjusting entry, noted above that an IE should be arranged "to confirm he no longer is disabled."

By letter dated November 20, 2006, the Insurer paid the Applicant $13,974.28 for IRBs for the June 2, 2005 to March 5, 2006 period, together with $3,732.38 in interest.

ING submits that as of June 2, 2005 (the date IRBs were terminated), the only medical evidence supporting IRB entitlement was Dr. Wong's March 15, 2004 Disability Certificate, which estimated disability up to June 15, 2004, at the latest. Further medical support for entitlement was forthcoming only in January 2006 and subsequently in May 2006. The Insurer further submits that the Applicant did not attend the October 25, 2005 pre-hearing discussion. Implicitly, there is an argument that ING did not have an opportunity to assess the credibility of the Applicant.

ING submits that this hearing came down to conflicting opinions of Dr. Alpert for the Insurer, and Dr. Kirwin and Mr. Balaban for the Applicant. It cites the decision of Arbitrator Allen in Thevaranjan and Personal Insurance Company of Canada (FSCO A05-001820, August 24, 2006) that:

In the adversarial system, the parties are expected to read their expert reports critically and not simply rely on the conclusions in deciding how to adjust claims.⁶ However, they are not expected to be able to prejudge the evidentiary value of a report or the performance of an expert witness before they are tested in a legal proceeding. It is most often the case that the worth of an expert report or witness is only appreciated through the rigours of the adversarial process. I believe this is what occurred in this case. I find a party should not be penalized or faulted, as the Applicant's counsel suggests, for having gone ahead to a hearing, under these circumstances, with expert evidence they have generated to support their case, no matter how weak in retrospect this evidence turned out to be.

If a special award is, however, found appropriate, ING submits, considering the alleged $4,086.38 overpayment and the substantial mitigating factors, that a lump sum of up to $1,000 would be appropriate.

In the preamble to my October 26, 2006 decision, I noted that ING had raised valid doubts as to the Applicant's claim. I spent eight pages enumerating the reasons I had significant difficulty accepting that the Applicant's complaints of pain and shoulder dislocation were as severe as he claimed.

The some seven pages I spent reviewing the weaknesses I found in Dr. Alpert's evidence does not detract from the Applicant having the onus of proof or from my view that it was not unreasonable for the Insurer to proceed to a hearing to test the Applicant's credibility and the strength of his supporting medical experts. Nonetheless, by the end of an extremely effective cross-examination, ING's senior casualty claims representative was at a loss as to why his principals had failed to reinstate benefits on the basis of the Applicant's medical reports provided in anticipation of the arbitration hearing.

The decision in Wawanesa Mutual Insurance Company and Sorokin (FSCO P04-00008, August 9, 2005) states that a Special Award:

. . . is an administrative penalty that is related to the legislative objective of ensuring prompt claims adjustment on a first-party basis. It is not a general penalty section for any and all insurer errors. Moreover, the poor performance of an adjuster as a witness may relate to factors that have nothing to do with unreasonable withholding or denial of benefits, the passage of time and a high volume of cases being the most obvious.

Given my findings set out on pages seven to fifteen of my earlier decision regarding the Applicant's evidence, including a variety of inconsistencies, a paucity of non medical-legal appointments and the Applicant's motivation to return to work, I am not persuaded that the Insurer's withholding of IRBs subsequent to June 1, 2005 was unreasonable, or that a special award is warranted.

EXPENSES:

I wish to thank both counsel for their most helpful submissions.

The parties requested that the issue of expenses be deferred until after the issuance of this decision. Accordingly, I now refer the parties to Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003), should they not agree on the issue of the expenses of this proceeding.

May 31, 2007

Lawrence Blackman Arbitrator

Date