Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2007 ONFSCDRS 150

FSCO A06-001620

BETWEEN:

MARYANN KASUN

Applicant

and

AVIVA CANADA INC.

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Maggy Murray

Heard: Written submissions were received on April 16, May 3 and 11, 2007.

Appearances: Steven Sieger for Mrs. Kasun

Michael Chadwick for Aviva Canada Inc.

Issues:

The Applicant, Maryann Kasun, was injured in a motor vehicle accident on October 30, 2002. She applied for and received statutory accident benefits from Aviva Canada Inc. (“Aviva”), payable under the Schedule.¹ Aviva refused to pay for various benefits. The parties were unable to resolve their disputes through mediation, and Mrs. Kasun applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issues are:

1. Are the Applicant’s claims for the cost of examinations, pursuant to section 24 of the Schedule, barred pursuant to s.24(1.1) of the Schedule because she did not seek Aviva’s prior approval for the following:

a) Psychological assessment by Dr. Brian Hoffman in the amount of $3,745.00 dated September 1, 2005;

b) Vocational assessment by Joel Kumove in the amount of $3,424.00 dated May 5, 2005?

2. What is the consequence of the Applicant’s failure to submit treatment plans to Aviva for the following:

a) Psychological treatment by Dr. Brian Hoffman in the amount of $7,500.00 claimed pursuant to s.14 of the Schedule;

b) Prescriptions in the amount of $5,000.00 recommended by Dr. Wong in his report dated September 27, 2004 claimed pursuant to s.14 of the Schedule; and

c) Rehabilitation counseling by Joel Kumove in the amount of $5,500.00 claimed pursuant to s.15 of the Schedule?

3. Is the Applicant entitled to a copy of the accident benefits file from the date of the accident up to April 10, 2006 (i.e., the date of her second Application for Mediation)?

Is the Applicant entitled to copies of Aviva’s internal manuals, policies and any other documentation setting out its policy, if any, to refuse to lump out future medical and rehabilitation benefits?

EVIDENCE AND ANALYSIS:

No evidence was led in this motion. The facts alleged are not controversial.

Issue 1: Section 24 Expenses

Law:

On October 1, 2003, s.24 of the Schedule was amended to provide that, with specified exceptions, an insurer is not required to pay an examination cost if the expense is incurred before obtaining the approval of the insurer. Subsection 38.2 sets out the procedure the parties should follow when applying for approval of an expense under s.24 and the procedure to follow if the insurer denies approval.

Ontario Regulation 281/03 of the Insurance Act was the regulation enacting the amendments to s.24. It was filed on July 2, 2003. It was published in the Ontario Gazette on July 19, 2003.² Unless otherwise stated in it, a regulation comes into force and has effect on and after the day upon which it is filed.³ That s.24 was amended effective October 1, 2003 was known no later than July 19, 2003 due to its publication in the Ontario Gazette.

Reports:

The report of Dr. Hoffman and the report of Joel Kumove were received by Aviva on September 19, 2005.

The Applicant did not seek Aviva’s approval in accordance with s.24(1.1) of the Schedule before incurring the expenses for the reports by Dr. Hoffman and Mr. Kumove. The fees charged by Dr. Hoffman and Mr. Kumove do not fall within the specified exceptions⁴ to the approval process. Accordingly, the claims for Dr. Hoffman’s report dated September 1, 2005 and Mr. Kumove’s report dated May 5, 2005 are barred pursuant to s.24(1.1) of the Schedule.⁵

Issue 2: Whether the Applicant’s Claims for Psychological Treatment, Prescriptions and Rehabilitation Counseling are Barred Because she Failed to Submit Treatment Plans to Aviva as Required by s.38 of the Schedule

Background:

The Applicant did not submit treatment plans to Aviva for psychological counseling, prescriptions or rehabilitation counseling. The issue is, what is the consequence of her failure to submit treatment plans to Aviva for the aforementioned items?

Law:

Section 38,⁶ contained in Part X of the Schedule, sets out the procedure an insured must follow to claim medical and rehabilitation benefits from his or her insurer. At the relevant time, s.38 of the Schedule provided:

(1.1) An insured person shall submit an application for a medical or rehabilitation benefit to the insurer before incurring any expense in respect of the benefit or an assessment …

(2) An application under this section ... must include ...

(a) a treatment plan prepared by a member of a health profession; and

(b) a statement by a health practitioner approving the treatment plan referred to in clause (a) and stating that he or she is of the opinion,

i. that the expenses contemplated by the treatment plan are reasonable and necessary for the insured person’s treatment or rehabilitation ...

The treatment plan is a form that is approved by the Superintendent of Insurance.⁷

Background:

The following information, which is required in a treatment plan, was not provided to Aviva: (a) particulars of the treatment; (b) the identity of the treatment providers; (c) specialty of the treatment provider; (d) duration of the treatment; (e) treatment goals; (f) outcome evaluation methods; (g) barriers to recovery; (h) conflict of interest declaration; (i) cost of the psychological treatment⁸; (j) cost of the prescriptions expenses.⁹ Although the Applicant submitted that the “form may be different, but the content of the message remains the same,” this is clearly not the case based on all the information that was omitted from the reports.

Aviva’s Explanation of Benefits Payable dated November 3, 2003 in respect of Dr. Wong’s treatment makes no reference to the requirement to submit a treatment plan. Aviva’s letter dated September 26, 2005 in respect of Dr. Brian Hoffman and Mr. Kumove’s treatment makes no reference to the requirement to submit a treatment plan.

Insurer’s Duty:

Aviva has a statutory duty under s.32(2)(c) of the Schedule to “promptly provide the person with information to assist the person in applying for benefits.” Under s.268.3(2) of the [Insurance Act]¹⁰, I must consider any guideline issued by the Superintendent of Insurance. The Superintendent’s Guideline 2/96 states that insurers must:

Inform claimants about the kind of accident benefits that are available under the SABS (i.e., the Schedule), let claimants know all the procedures to be followed and documentation needed when applying for benefits.

Consequences of Failure to Submit a Treatment Plan:

It is not fair to allow Aviva to rely on the Applicant’s failure to submit a treatment plan when it has not complied with its duty to assist her by promptly advising her that it required a treatment plan in respect of psychological treatment, the prescriptions and the rehabilitation counseling.

According to the Report of Mediator, Aviva raised for the first time the Applicant’s failure to submit treatment plans during the mediation conducted on July 10, 2006. The Applicant was represented by legal counsel at mediation and should have understood that Aviva was relying on its right to receive treatment plans. The Applicant should have submitted a treatment plan for any proposed services after July 10, 2006. Consequently, the Applicant can proceed to arbitration on claims for psychological treatment, prescriptions and rehabilitation counseling incurred before July 10, 2006 although she did not submit treatment plans for those services because Aviva did not advise her that it required treatment plans. The Applicant cannot proceed to arbitration for psychological treatment, prescriptions and rehabilitation counseling incurred after July 10, 2006 since she did not submit treatment plans for those services when she knew that Aviva was relying on its right to receive treatment plans.¹¹

Issue 3: Whether the Applicant is entitled to a Copy of The Accident Benefits File From the Date of the Accident up to April 10, 2006 (i.e., the Date of her Second Application for Mediation)

The Applicant requests a copy of the accident benefits file from the date of the accident up to the date of her second Application for Mediation to support her allegation that Aviva’s adjusters advised her they would consider funding vocational assistance and re-training. In the Applicant’s reply submissions, she indicates that Aviva’s intent was expressed at the first mediation and following. Aviva’s position is that what occurred in a mediation is confidential and inadmissible¹² and that the Applicant is not entitled to any of the documents in Aviva’s file after she filed the first Application for Mediation.

The dividing line for production of documents from an insurer’s file is generally the filing of the Application for Mediation.¹³ This is known as the “bright line” that “reflects a presumption, which is rebuttable, that after that date (the insurer’s) focus might reasonably shift to preparing for litigation.”¹⁴

The first Application for Mediation was filed with the Commission on August 24, 2004. Income replacement benefits were in dispute at the first mediation and were settled on a full and final basis. The second Application for Mediation was filed with the Commission on April 10, 2006. Medical, rehabilitation, and s.24 expenses were in dispute in the second Application for Mediation.

The onus of proof rests with the party asserting privilege, namely, Aviva.¹⁵ “An applicant seeking production from an insurer’s records must demonstrate some reasonable basis for its relevance to the issues before the arbitrator.”¹⁶

After the settlement of the first mediation and before the second Application for Mediation, there were no outstanding claims and consequently no reasonable contemplation of litigation and no basis to seek protection for documents in Aviva’s file generated during that period.

Because evidence regarding what occurred at a mediation cannot prejudice a party’s subsequent position,¹⁷ Aviva shall produce to the Applicant all adjuster’s log notes for the period October 30, 2002 to April 10, 2006, excluding: (a) reserve information;¹⁸ (b) the adjuster’s notes and any other documents dealing with income replacement benefits for the period August 24, 2004 (i.e., the date of filing of the first Application for Mediation) to the settlement of the first mediation; and (c) documents pertaining to the first mediation.

If Aviva withholds any note or document on the basis of privilege, Aviva shall provide the Applicant with a description and summary of that note or document, together with the basis for the claim of privilege, within 45 days of the date of this decision. If a dispute arises as to whether any information is protected by privilege, counsel can arrange a resumption of the pre‑hearing to obtain a ruling. If a ruling is necessary, Aviva should forward the document(s) in question to my attention.

Issue 4: Aviva’s Internal Manuals, Policies and Other Documentation Setting Out its Policy, if any, to Refuse to Lump out Future Medical and Rehabilitation Benefits

Applicant’s Position:

The Applicant requested copies of Aviva’s internal manuals, policies and any other documentation setting out its policy to refuse to lump out future medical and rehabilitation benefits. She thinks that Aviva is unwilling to lump out insureds future medical and rehabilitation benefits and that this policy is an act of bad faith. The Applicant submits that she needs finality in her case and requires job re-training and that a reasonable lump sum payment for physical, psychological and pharmacological treatment will allow her to cope with her ongoing activities of life.

The Applicant further submits that having her “beholden” to Aviva’s cycle of denial, assessments, “and battling through FSCO or other venues ... (is) not in her best interests.” Furthermore, if Aviva is required to produce these documents to her, the Applicant thinks Aviva may have to produce them in other claims files as well, and this would encourage Aviva to act in a more sympathetic and understanding manner towards its insureds.

Aviva’s Position:

According to Aviva, it does not have a “blanket policy” with respect to lumping out claims. Aviva further submits that even if such a policy existed, it is not relevant because there is no requirement in the Schedule that requires it to “lump out” claims.

Conclusion:

There is no requirement in the Schedule that requires insurers to “lump out” claims. In fact, the benefits scheme is based on periodic payments and payment of expenses as they are incurred. Whether or not Aviva has a policy of “lumping out” claims is not relevant to the issues in dispute in this arbitration.

EXPENSES:

The parties made no submissions with respect to the expenses of this preliminary issue hearing. Since the success of the parties was mixed, they may wish to consider bearing their own expenses. If, however, the parties cannot agree on the issue of entitlement or amount of the expenses of this preliminary issue proceeding, they may request a determination of these issues in accordance with Rule 79 of the Dispute Resolution Practice Code – Fourth Edition.

August 3, 2007

Maggy Murray

Arbitrator

Date