Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2008 ONFSCDRS 20

Appeal P06-00030

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ANTHONY FERNANDES By his Power of Attorney for Property, Albert Fernandes Appellant

and

CERTAS DIRECT INSURANCE COMPANY Respondent

BEFORE: Director’s Delegate Lawrence Blackman

REPRESENTATIVES: Ms. Donata Di Iorio for Mr. Fernandes Mr. Todd J. McCarthy for Certas Direct Insurance Company

HEARING DATE: February 5, 2008

APPEAL ORDER

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

The appeal is dismissed and Arbitrator Ashby’s order dated August 25, 2006 is confirmed.
If the parties are unable to agree on the legal expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).

February 14, 2008

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

The parties agree that Mr. Anthony Fernandes (the “Appellant”) was catastrophically injured in a motor vehicle accident on September 3, 2000. As a result of his injuries, Mr. Fernandes applied to his first party motor vehicle insurer, Certas Direct Insurance Company (the “Respondent”), for benefits payable under the Schedule.¹

The parties agree that as a result of the accident, Mr. Fernandes requires attendant care pursuant to section 16 of the Schedule. The parties dispute the monthly quantum of attendant care benefits to which Mr. Fernandes is entitled. The Respondent maintains that the appropriate monthly amount is the $2,028.49 it currently pays to Extendicare Rouge Valley and the $1,920 it previously paid Rockcliffe Long Term Care Facility. The Applicant submits that he is entitled to $5,474.74 per month, commencing February 5, 2001, in accordance with a Form 1 dated February 22, 2003 prepared by Ms. J. Greenspan, an occupational therapist (the “Greenspan Form 1”).

Section 16 of the Schedule addresses entitlement to attendant care benefits. Subsection 16(4) states that the monthly amount payable by the attendant care benefit shall be determined in accordance with Form 1, the latter being entitled an “Assessment of Attendant Care Needs.”

Following a three-day arbitration hearing, Arbitrator Ashby (the “Arbitrator”) determined in her August 25, 2006 decision that Mr. Fernandes was entitled to an additional monthly attendant care benefit of $37.10 ongoing from February 5, 2001, together with interest in accordance with subsection 46(2) of the Schedule. The Arbitrator found, after consideration of the evidence before her, that only this modest amount was reasonable and necessary, as required by subsection 16(2) of the Schedule, in addition to the monies being paid by the Respondent to the said care facilities.

Both parties appealed this decision.

The Applicant’s Notice of Appeal submitted that the Arbitrator erred in law in failing to appreciate the significance of the Greenspan Form 1 in light of the wording of subsection 16(4) of the Schedule that the monthly amount payable by the attendant care benefit shall be determined in accordance with Form 1. Succinctly, the Appellant’s main argument is that as Mr. Fernandes had a Form 1 and the Respondent did not, the Appellant should been successful at the arbitration hearing.

Certas, in its cross-appeal, submitted that the Arbitrator erred in law in ordering attendant care benefits paid pursuant to both clauses 16(2)(a) and 16(2)(b), that is, allowing recovery for an aide or attendant in addition to the expenses being paid to the long term care facilities. In light of the appeal decision in ING Insurance Company of Canada and Bellavia (FSCO P06-00010, December 15, 2006), on the consent of both parties, the cross-appeal has been withdrawn on a without costs basis.

II. BACKGROUND

The remaining matter, therefore, is the Appellant’s appeal. Mr. Fernandes argues that the Arbitrator erred in law in:

(a) not accepting the evidence of the Greenspan Form 1, being the only properly completed Form 1 before her;

(b) failing to order payment of the entire $5,474.74 claimed in accordance with subsection 39(6) of the Schedule on the basis that the Respondent failed to comply with its obligation to refer Mr. Fernandes to a designated assessment centre (“DAC”) assessment, as required by subsection 39(4) of the Schedule; and,

The Respondent responds that:

(a) the appeal does not raise a question of law, but rather, challenges findings of fact made by the Arbitrator as to the Appellant’s additional attendant care needs;

(b) a Form 1 cannot bind an arbitrator;

(c) the Respondent’s alleged failure to arrange a DAC assessment was not before the Arbitrator and cannot now be raised on appeal; and,

(d) it is agreed that the Appellant requires “around the clock” attendant care. The only issues before the Arbitrator were (1) whether the Appellant’s needs were being met at the long term care facility being funded or whether additional care was being provided by the Appellant’s family, (2) whether such additional care was reasonable and necessary, and if so, (3) whether the additional care was payable under the Schedule.

III. ANALYSIS

(a) Does the Appellant seek to add new issues to this proceeding?

Subsection 283(1) of the Insurance Act, R.S.O. 1990, c. I.8 (as amended) now restricts internal appeals at the Financial Services Commission of Ontario to questions of law.

In AXA Insurance Company and Kernaghan (FSCO P07-00018, February 4, 2008), I stated that:

The restriction of appeals to matters of law reflects, in my view, legislative recognition that judicial resources are limited, that deference should be given to the skills and expertise of first-level adjudicators and that the need for a speedy, simplified and inexpensive dispute resolution system necessitates a narrowed basis for appeal. This 1996 legislative change confirms that arbitrations are not dress rehearsals; appeals are not a “second kick at the can.”

This appeal raises a further concern, namely “arbitration by ambush.”

There is no evidence before me that the issues advanced in appeal regarding section 39 of the Schedule or the co-payments were raised at any time before or during the arbitration hearing.

Rule 56.3 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”) provides that:

Unless the Director orders otherwise, an appeal will only include issues that were the subject of the arbitration proceeding or dealt with in the arbitration order being appealed.

The Report of Mediator, issued August 28, 2003, is silent regarding the section 39 and the co-payment issues. The Application for Arbitration received by the Commission on April 25, 2004 is likewise silent, as is the pre-hearing letter dated October 24, 2004.

Transcripts of the arbitration hearing were not ordered. Other than what is set out in the arbitration decision, I have no evidence of what the parties identified in their opening statements as being in issue, what was addressed in oral evidence (including that of Mr. Albert Fernandes, who brings this proceeding on behalf of his father, and Ms. J. Calderone, the Respondent’s senior litigation advisor, both of whom would presumably have had relevant information concerning the section 39 issue, if it was raised) or what was argued in final submissions. The Exhibits filed do not provide any assistance in this regard.

The Arbitrator’s August 25, 2006 twelve-page decision is silent regarding the section 39 and the co-payment issues. The Arbitrator sets out the issues in dispute before her as entitlement to and the quantum of additional attendant care benefits, both issues being pursuant to section 16 of the Schedule, as well as entitlement to interest and a special award. The part of the decision pertaining to a special award states that “Mr. Fernandes was silent on the issue.” This is rather curious considering the Appellant’s submission in this appeal that the Respondent’s alleged failure to follow the procedural safeguards under subsection 39(6) of the Schedule created a “moral hazard” that should be avoided on public policy grounds.

More curious is that the Appellant’s Notice of Appeal, received by the Commission September 28, 2006, mentions neither section 39 of the Schedule nor co-payments as a ground for appeal. It is only in his written submissions dated September 10, 2007 (more than a year after the arbitration decision) that the Appellant, for apparently the first time, raises the section 39 and co-payment arguments.

In response to my question during oral submissions whether these issues were raised before the Arbitrator, the Appellant’s counsel, who was not counsel at the arbitration hearing, replied that she had no evidence in that regard. The Respondent submitted that neither of these questions was before the Arbitrator. The Appellant, in both written and oral submissions, stated that the “issue of the interplay between co-payments and the SABS was briefly dealt with in submissions by both counsel.” What exactly was in issue is not clear. In any event, submissions are not evidence. There is no assertion that the subsection 39(6) issue was addressed at the hearing.

In Brady and Personal Insurance Company of Canada (FSCO P98-00017, November 26, 1998), (then) Director’s Delegate Draper said:

Second-guessing one’s strategy after reading a negative decision may be common, but generally does not provide grounds for rescinding the decision or reopening the hearing.

In Allstate Insurance Company of Canada and Arabpour (FSCO P96-00078, March 13, 1997), the arbitration decision was rescinded on the basis that the arbitrator had decided an issue that was never raised. Director’s Delegate Draper stated that:

The principles of fundamental justice and fairness require that a party be given a reasonable opportunity to meet the case against it . . . Because it was unaware that its compliance with the Settlement Regulation was being questioned, Allstate had no opportunity to address this issue through evidence or submissions. In my opinion, this was fatal to the decision . . .

In that particular case, the Director’s Delegate concluded that there should be a new arbitration hearing before a different arbitrator to deal with a limited issue pertaining to the Settlement Regulation.

The appeal hearing herein was originally scheduled for February 1, 2008, and was put over to February 5, 2008 to accommodate the Appellant’s counsel. On the earlier date, I asked both counsel to reflect on my jurisdiction under Rule 56.3 of the Code. I also asked the Appellant to consider what specific remedy was being sought in this appeal.

At the resumption, the Appellant did not argue (1) that there was jurisdiction to refer this matter back to Arbitrator Ashby or another arbitrator for a determination of the section 39 and co-payment issues, which would allow for procedural fairness, and (2) that it would be proper to do so in the circumstances of this case, with or without terms. Rather, the Appellant simply submitted that I find that the Arbitrator erred in law and that I overturn her decision and award Mr. Fernandes attendant care benefits of $5,474.74 per month, commencing February 5, 2001. The Appellant saw no issue of procedural fairness. Regarding Rule 56.3 of the Code and raising new issues, the Appellant submitted that the issue of attendant care before the Arbitrator subsumed the section 39 and the co-payments issues.

The onus is on the Appellant to establish that the Arbitrator erred on a question of law. The Appellant has failed to persuade me that either the section 39 or the co-payment issue was raised at the arbitration hearing. I find that the Appellant is arguing, in essence, that the Arbitrator erred in failing to consider evidence that was not presented and failing to decide issues that were not put before her and to which the Respondent did not have an opportunity to respond. I find that is not an error of law. I find that section 39 of the Schedule, as set out below, provides a potentially alternate means of entitlement to attendant care benefits in the absence of meeting the requirements of section 16. This required the issue to be identified and advanced by a party certainly at, and presumably prior to, the arbitration hearing.

(b) Section 39 of the Schedule

The parties agree that the applicable legislation is the Schedule that was in place at the time of this September 3, 2000 motor vehicle accident.

Subsection 39(4) of that Schedule provides that if an insurer determines that an insured person is not entitled or is no longer entitled to receive an attendant care benefit, the insurer is required to have the insured person assessed by a DAC within a strict, short time line. Subsection 39(6) provides that if a DAC assessment is required under subsection 39(4) of the Schedule, the insurer shall pay the insured person the attendant care benefit pending receipt of the DAC report.

Subsection 39(5) of the Schedule, however, provides that despite subsection 39(4), an insurer is not required to arrange a DAC assessment if more than 104 weeks have elapsed since the accident, unless the insured person has not been assessed by a DAC since the accident or at least 52 weeks have elapsed since the insured was last assessed by a DAC. The Greenspan Form 1 is dated February 22, 2003, which is more than 104 weeks after the September 3, 2000 motor vehicle accident.

The argument in this case would be that if subsection 39(4) applies and if the Respondent did not arrange a DAC assessment as required, the Appellant is entitled to ongoing monthly attendant care benefits of $5,474.74 commencing February 5, 2001 as claimed, regardless of whether the Appellant met the subsection 16(2) reasonable and necessary requirements of the Schedule.

In Enrique Mendez et al. and AXA Insurance Canada (FSCO A96-001355, January 25, 2000), a decision which preceded the hearing herein by almost six years, Arbitrator McMahon stated that:

I agree . . . that, where an insurer simply ignores the pay pending and assessment provisions of the Schedule, it can expect to pay for treatment that is legitimately pursued and is not clearly unreasonable.

In Pintucci and Jevco Insurance Company (FSCO A97-000755, January 7, 1999), Arbitrator Palmer found that the insurer had acted improperly in terminating the supplementary medical benefits before obtaining a DAC report and ordered the insurer to pay for the treatment obtained prior to the release of the DAC report notwithstanding her finding that Mr. Pintucci’s ongoing back problems were not related to the accident. Arbitrator Palmer stated that:

It is important to the integrity of the operation of the Schedule that the parties comply with its terms. Prompt, continuing access to reasonable and necessary treatment, even while a dispute is underway, is a hallmark of the system...Insurers cannot flout the terms relating to the provision of and payment for supplementary medical and rehabilitation benefits and substitute in their stead adjustment procedures that they find more convenient or suitable to their purpose...

In Mendez, Arbitrator McMahon further stated that:

In ordering the insurer to pay for treatments notwithstanding her ultimate finding that they were not necessitated by the accident, Arbitrator Palmer was influenced by the Court of Appeal’s decision in Bapoo v. Co-operators General Insurance Company (1997), 36 O.R, (3d) . . . After citing Mr. Justice Laskin’s comment in Bapoo that “avoiding unjust or unreasonable results is an essential part of the court’s task in interpreting statutory language,” Arbitrator Palmer went on to say that “in the face of Jevco’s noncompliance with the Schedule” it would not be a “reasonable and just outcome” if the applicant was “responsible for the cost of treatment he pursued in good faith at the recommendation of his doctor and chiropractor, yet which, ultimately, he has not proven was necessitated by the accident.”

The Appellant submits that the Arbitrator’s mention of only the Greenspan Form 1 in her decision means that there was no other Form 1. The absence of another Form 1 could only mean that the Respondent had failed to require Mr. Fernandes to be assessed by a DAC, as there was no evidence in the decision of any other explanation such as refusal by the Appellant to attend (or the exceptions provided by subsection 39(5) of the Schedule). The failure of the Respondent to arrange a DAC assessment, by itself, entitled the Appellant to the relief sought.

The Appellant’s submissions are, in effect, that I make the aforesaid findings of fact. It is highly questionable that this is the role of the Director or a Director’s Delegate. It is even more questionable that findings of fact can be made not on evidence but on submissions, suppositions and speculation.

Accordingly, this ground for the appeal must fail.

(c) Co-Payments

The Appellant submits that the $2,028.49 per month paid by the Respondent to Extendicare Rouge Valley and the monthly amount previously paid to Rockcliffe Long Term Care Facility are not attendant care benefits, but rather, are medical benefits. In this regard, the Appellant relies on Arbitrator Murray’s decision in Haimov and ING Insurance Company (FSCO A05-002734, May 9, 2007), released after the Appellant’s Notice of Appeal. The Appellant, in his written submissions, submits that Haimov clarified the co-payments issue.

In Haimov, the catastrophically impaired applicant was seeking, amongst other things, the maximum attendant care benefit of $6,000 a month, ongoing from May 31, 2006, in addition to the $1,500 a month paid by ING as a co-payment to the Baycrest Centre for Geriatric Care, a long term care facility. An issue in dispute was whether the $1,500 co-payment would be encompassed in the $6,000 maximum.

In addressing the co-payment issue put before her, Arbitrator Murray found that under section 10 of Ontario Regulation 552, a co-payment is the chronic care patient’s contribution towards accommodation and meals. Form 1 does not provide for accommodation and meals. Accordingly, the insurer’s co-payment on behalf of its insured was not an attendant care benefit paid pursuant to section 16. Hence, Mr. Haimov was entitled, as an interim benefit, to the full $6,000 a month claimed for attendant care in addition to the $1,500 co-payment which was determined to be hospital services coming under paragraph 14(2)(a) of the Schedule.

In the case before me, the Arbitrator found that an additional $37.10 per month (in addition to the approximately $2,000 per month being paid by the Respondent) was reasonable and necessary in accordance with subsection 16(2) of the Schedule. Given this result, there is no issue of the maximum monetary limits for attendant care being exceeded, wherein the reasoning in Haimov would be relevant.

In any event, at the end of his final submissions, the Appellant submitted that the $5,474.74 sought included the amounts paid by the Respondent as co-payments.

(d) Form 1

The Appellant submits that the only evidence before the Arbitrator concerning the appropriate amount of attendant care benefits pursuant to a properly completed Form 1 was Ms. Greenspan’s, which stated that monthly care allowance costs of $5,474.74 was reasonable and necessary. There was no contrary Form 1 entered in evidence before the Arbitrator.

In oral submissions, the Applicant argued that the Respondent, by not having a contrary Form 1, had accepted the Greenspan Form 1. The Appellant argued that as subsection 16(4) of the Schedule provides that the monthly amount payable by the attendant care benefit shall be determined in accordance with Form 1, the Arbitrator erred in law as there was no other Form 1 upon which to base her decision. The Appellant argued that it was not his onus to argue against himself, and that the Respondent could not ignore the legislation and put the onus on the Appellant.

The Appellant did agree with the Respondent that a Form 1 does not bind an arbitrator.

I find that the onus was on the Appellant to establish, on a balance of probabilities, that the attendant care sought was reasonable and necessary, as required by subsection 16(2) of the Schedule.

I agree with the Respondent that the Arbitrator did a careful analysis in concluding that other than the amount of $37.10 per month for management of Mr. Fernandes’ financial affairs and clothing care, the further attendant care sought by the Appellant was neither reasonable nor necessary. The Arbitrator, in addition to the Greenspan Form 1, considered the evidence, of amongst others, Ms. K. Atwater and Ms. S. Clarke, personal support workers employed by Extendicare Rouge Valley, in deciding that the care Mr. Fernandes was receiving from the latter facility, and previously from Rockcliffe Long Term Care Facility, satisfied the standards of reasonably necessary attendant care.

I agree with Arbitrator Skinner, in McKnight and Guarantee Company of North America (FSCO A02-000299, October 28, 2003), that subsection 16(4) of the Schedule:

. . . requires the benefit to be paid in accordance with the amounts set out in the Form 1, only once entitlement to the benefit has been established . . .

Subsection 16(2) of the Schedule contemplates that an attendant care benefit is to be paid for reasonable and necessary expenses incurred. The Form 1 identifies attendant care needs, but does not constitute evidence that expenses have been incurred.

Given the lack of applicability of subsection 39(6) for the reasons stated above, I find that it was insufficient for the Appellant to be successful in his claim merely because the only Form 1 mentioned by the Arbitrator in her decision was the Greenspan Form 1 in the monthly amount of $5,474.74.

Accordingly, I find that the Arbitrator did not err in law. Therefore, the appeal is dismissed, and the decision of Arbitrator Ashby, dated August 25, 2006, is confirmed.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Code.