Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2008 ONFSCDRS 149

Appeal P07-00013

OFFICE OF THE DIRECTOR OF ARBITRATIONS

COSECO INSURANCE CO./HB GROUP/DIRECT PROTECT

Appellant

and

CINDY BRODHECKER

Respondent

Before:

David Evans

Representatives:

Pradeep B. Pachai for Coseco Insurance Company

J. A. Michael Wolfe for Ms. Brodhecker

Hearing Date:

January 14, 2008

APPEAL ORDER

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

Paragraph 5 of the Arbitrator's March 30, 2007 order is rescinded and replaced with:
Pursuant to subsection 46(2) of the SABS-1996, Ms. Brodhecker is entitled to interest calculated from May 27, 2005 on post-termination benefits at $100 a week until August 14, 2006, then calculated based on an additional $100 a week for pre-termination benefits and the amounts claimed in the caregiver expenses summary for the post-termination benefits until October 19, 2006. Interest is owed at the statutory weekly maximum of $350 for all benefits from then on.

September 15, 2008

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Coseco appeals from the arbitrator's order increasing Ms. Brodhecker's caregiver benefits and awarding interest on the increased benefits.

II. BACKGROUND

Ms. Brodhecker was injured in an accident on May 20, 2003. Beginning December 1, 2003, she received weekly benefits pursuant to s. 13 of the SABS-1996¹ for the caregiver services provided to her three children by her mother, Patricia Woolcott. On May 19, 2005, Coseco terminated the weekly benefits of approximately $100. The arbitrator found Ms. Brodhecker was entitled to past and ongoing benefits of $350.²

Coseco appeals the arbitrator's finding that for ongoing and outstanding benefits as well as the benefits that had already been paid, Ms. Brodhecker was entitled to $350.00 a week. I note that the Application for Arbitration claimed ongoing caregiving benefits from May 24, 2005 at $100 a week, as confirmed at the initial pre-hearing of May 3, 2006. On July 28, 2006, the issue of increasing the quantum, including that of the payments already made, was added at a resumed pre-hearing. In a letter dated July 31, 2006, counsel for Ms. Brodhecker claimed an additional $4,800 for the period up to May 20, 2005, stating "I do not think that $200 per week is an unreasonable amount for providing care giving to three children, one of which is autistic. Thereafter, we are of the opinion that the weekly amount should be $350.00." In fact, at the hearing Ms. Brodhecker claimed $240 during school weeks and $300 during break weeks for the later period.³

The hearing proceeded on September 25, 26 and 27, 2006. Coseco submits that it was during closing arguments that the arbitrator asked whether she had discretion to award more than the amount claimed. Ms. Brodhecker subsequently filed a motion dated October 5, 2006, to increase the past and ongoing quantum to the statutory maximum, which was followed by Coseco's response and Ms. Brodhecker's ultimate reply.

The arbitrator did not address the motion in her decision. Instead, the arbitrator stated that the invoices submitted by Ms. Brodhecker were not determinative of the reasonable necessity of the caregiving expenses that had been incurred by her, as it was for an arbitrator to decide the amount following consideration of the evidence.

The arbitrator accepted that Ms. Brodhecker had not claimed the full amount to which she was entitled. She accepted the evidence of Ms. Woolcott set out in her receipt of September 17, 2006, that her initial invoices dealt only with her care of one autistic child, whereas between December 1, 2003 and May 16, 2005 she provided care to all three children. She also further accepted the testimony of Ms. Brodhecker and Ms. Woolcott that the only compensation for the services Ms. Woolcott had been provided since December 1, 2003 was living rent-free in the basement of Ms. Brodhecker's home. The arbitrator accepted the testimony of Ms. Brodhecker that her fear of Coseco's termination of the benefit influenced her valuation of her mother's services.

In that regard, the arbitrator considered two in-home occupational therapy assessments that recommended different levels of assistance. The arbitrator noted that even the lower level still exceeded the statutory maximum. The arbitrator found that Coseco was not prejudiced by the claim for the additional amount, as it had the benefit of the two reports, adding that "[b]oth of the occupational therapists assessed a need for caregiving services which, at an unskilled hourly rate, exceeded the maximum allowable for the three children. Neither should Ms. Woolcott be prejudiced nor Coseco benefit from Ms. Brodhecker's undervaluation of her mother's services out of fear that the benefit would be terminated."⁴

The arbitrator concluded that Ms. Brodhecker had incurred caregiving expenses of $350.00 weekly, less amounts paid by Coseco, ongoing from December 1, 2003.

With respect to interest, the arbitrator stated, without providing reasons, "Ms. Brodhecker is entitled to interest on all overdue caregiving benefits commencing May 25, 2005, pursuant to subsection 46(2) of the Schedule."

III. ANALYSIS

Coseco submits that the arbitrator erred when she stated "[t]he invoices submitted by [Ms. Brodhecker] are not determinative of the reasonably necessary caregiving expenses which have been incurred. That, in the absence of agreement between the parties, is for an arbitrator to decide following consideration of the evidence." Coseco submits if it cannot rely on the invoices, then it cannot know the case it has to meet, which is unfair.

I agree that the parties are entitled to know the case they have to meet. However, the arbitrator's statement has to be understood in the context of her finding that the invoices did not reflect the evidence before her of the actual value of the services provided by Ms. Woolcott and that this undervaluation arose through the actions of the insurer. Seen in that light, these findings underpin the arbitrator's decision and answer the objections raised by Coseco.

Coseco submits that it was unfair of the arbitrator to raise the issue of a further increase in the weekly benefits at the end of the hearing. It submits that the subsequent motion was essentially brought at her suggestion, and that she then did not even discuss the motion in her decision. However, I am not persuaded that this amounted to an error. Here, Coseco had a chance to respond to the motion, so I am not persuaded that the process was unfair.

Furthermore, considering the difference between the amounts claimed at the hearing and what the arbitrator found owing, I am not persuaded that Coseco would have presented its case much differently. Accordingly, I do not see any undue prejudice to Coseco in the specific circumstances of this case.

Coseco submits that the only evidence in favour of increasing the benefits was that of the occupational therapists, which did not suffice to show that the caregiver expenses were incurred. However, the arbitrator had evidence upon which to make her findings, and it is not my role to weigh the evidence. As noted by the arbitrator, the reports of the occupational therapists strongly suggested that Ms. Woolcott was providing more caregiving services than were being claimed. That is, as I understand it, the arbitrator found that the services were actually being provided by Ms. Woolcott, and thus the benefits were actually being incurred.

I am also not persuaded that the arbitrator's decision puts adjusters in an impossible situation. This was a very fact-specific case where the applicant under-reported the claim due to her understanding of the insurer's position and what could happen if she increased her claim. I do not see the decision as having any broader implications than that.

Accordingly, this aspect of Coseco's appeal is dismissed.

Coseco submits that it was unfair to require the insurer to pay interest on amounts it did not know were going to be claimed. The arbitrator's failure to provide reasons for her decision on this point gives me difficulty. This is, after all, a claims-based system, and Coseco had based its payments on the claims in the invoices provided. It is difficult to see how the benefit was overdue if Coseco was paying based on those invoices. Admittedly, the arbitrator found that Ms. Brodhecker undervalued her mother's services for fear of benefit termination. However, that fear was no longer relevant after termination. Ms. Brodhecker could have claimed higher amounts, and eventually she did so, but only a few weeks before to the hearing. Furthermore, Ms. Brodhecker did not advise that she was seeking the statutory maximum until October 5, 2006. As a result, the increased benefits claimed could not have been overdue, as required by s. 46(1) of the SABS-1996, until after notice was given, and interest is only payable on the overdue amount from the date the amount became overdue [s. 46(2)].

The following statement by the arbitrator also seems relevant to this issue, since it sets out the limitations in the information available to Coseco, which should be reflected in the interest order:

This arbitration is an example of a case which required a hearing. The reports available to Coseco in May 2005 did not capture the extent to which Ms. Brodhecker's depression and chronic pain disorder restricted her participation in her activities of daily life. I, unlike Coseco's adjuster, had the advantage of hearing the testimony of Ms. Brodhecker, her husband and her mother. It was their oral evidence that illuminated the impact of the disability on Ms. Brodhecker's daily life.

Accordingly, paragraph 5 of the arbitrator's order with respect to interest is rescinded and replaced with an order on the following basis. I note that the benefits that were owed post-termination were initially claimed at $100 a week, so interest is owed at $100 a week from May 27, 2005 on those post-termination benefits until August 14, 2006, two weeks after counsel's letter.⁵ Interest then runs based on an additional $100 a week for the pre-termination benefits, and the amounts claimed in the caregiver expenses summary for the post-termination benefits. Interest is only owed at the statutory maximum for all benefits from October 19, 2006, two weeks after the date of the motion.

If there is a problem calculating the above or in determining expenses, a further hearing can be arranged.