Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 156

FSCO A08-002256

BETWEEN:

KATHRYN V. SCOTT

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: Edward Lee

Heard: August 25 and 26, 2009, in Ottawa, Ontario.

Appearances: Ronald S. Petersen for Ms Scott Pat Peloso for Dominion of Canada General Insurance Company

Issues:

The applicant, Kathryn V. Scott, was injured in a motor vehicle accident on September 17, 2002. She applied for and received statutory accident benefits from Dominion of Canada General Insurance Company (“Dominion”), payable under the Schedule.¹ Ms Scott also sought payment for a series of medical examinations she underwent to determine if she had suffered a catastrophic impairment. The parties were unable to resolve their dispute through mediation, and Ms Scott applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Ms Scott entitled to payments of $18,073.24 for the cost of examinations, pursuant to Section 24 of the Schedule?

2. Is Dominion liable to pay Ms Scott’s expenses in respect of the arbitration under Section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?

3. Is Ms Scott liable to pay Dominion’s expenses in respect of the arbitration under Section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?

4. Is Ms Scott entitled to interest for the overdue payment of benefits pursuant to Section 46(2) of the Schedule?

Result:

1. Ms Scott is not entitled to payments of $18,073.24 for the cost of examinations, pursuant to Section 24 of the Schedule.

2. Ms Scott is not entitled to interest for the overdue payment of benefits pursuant to Section 46(2) of the Schedule.

The applicant, Ms Kathryn Scott, was injured in a motor vehicle accident on September 17, 2002. She sought a first determination for catastrophic impairment and filed an OCF-19 (Application for Determination of Catastrophic Impairment)² dated December 23, 2004 with Dominion. In response, Dominion sent Ms Scott a letter dated February 18, 2005, and an OCF-9 (Explanation of Benefits Payable)³, informing her that they did not feel she was catastrophically impaired and that they wished to have her assessed at a DAC centre.

The CAT DAC assessments were performed by Work Wise Occupational Assessment Centre in August 2005. These CAT DACs⁴ determined that Ms Scott was not catastrophically impaired.

Dominion alleged that it sent an OCF-9⁵ dated October 28, 2005 to Ms Scott informing her of this decision, but Ms Scott denied receiving this document.

In the meantime, Ms Scott was also involved in tort litigation regarding the same accident. She was represented by the law firm of Lang Michener for both her accident benefits and tort files. In January 2007, she underwent a series of further assessments conducted by CEMED Inc. (CEMED) to determine if she was catastrophically impaired. These assessments took place in January 2007, and determined that Ms Scott was indeed catastrophically impaired.

Ms Scott then filed a second OCF-19 (Application for Determination of Catastrophic Impairment), dated February 14, 2007.⁶ The form clearly indicates that this was a “reapplication” for a catastrophic determination. CEMED also sent a letter to Dominion dated March 12, 2007⁷ enclosing the five reports of the medical assessments conducted by CEMED.⁸

Dominion responded to Ms Scott by letter dated March 27, 2007⁹, informing her that they had received the CEMED assessments, but were still unconvinced that she was catastrophically impaired. They arranged to send Ms Scott to a series of Insurer’s examinations at LifeMark Assessments.

The LifeMark assessments were conducted in June 2007, but because of problems with methodology, were unable to determine whether Ms Scott was catastrophically impaired. By letter¹⁰ dated October 3, 2007, Dominion informed Ms Scott that there was a need to send her to further assessments.

Ms Scott informed Dominion by letter¹¹ dated November 1, 2007 that she would not be attending further assessments, and requested a response to her application for a determination of catastrophic impairment.

Soon after, Ms Scott was deemed to be catastrophically impaired by Dominion.

The issue to be decided in this arbitration is whether Ms Scott is entitled to payments of $18,073.24 for the cost of the assessments and examinations conducted by CEMED.

ANALYSIS OF EVIDENCE:

Did Ms Scott seek prior approval for the CEMED assessments?

The first question to be addressed in this arbitration was whether Ms Scott sought approval for the CEMED assessments before undergoing them.

Ms Barbara Grant, adjuster for Dominion, testified unequivocally that Dominion never received an OCF-22 (Application for Approval of an Assessment or Examination) in regard to the CEMED assessments.

Ms Scott testified that neither she nor her counsel ever sent such a document to Dominion. There is no evidence that an OCF-22 was ever submitted to Dominion in regard to the CEMED assessments.

Despite the lack of an OCF-22, Counsel for Ms Scott seemed to suggest that Ms Scott sought or tried to seek verbal approval for the CEMED assessments during telephone conversations she had with Ms Grant.

Ms Scott testified that she had engaged in a series of “heated” conversations with Ms Grant wherein she advised Ms Grant of the CEMED assessments. Nevertheless, Ms Scott admitted she could not remember when these conversations occurred, or whether she ever mentioned CEMED’s name. Ms Scott also testified that the decision to retain CEMED had been made several months before January 2007, but Ms Grant had not been informed of this decision. When asked whether she had requested that Dominion fund the CEMED assessments before they were done, Ms Scott replied that she had not asked, but added that “Ms Grant did not tell me.”

In response, Ms Grant testified that she had engaged in conversations with Ms Scott, including one conversation on March 27, 2007, wherein Ms Scott stated that she had arranged assessments in Toronto that were part of the litigation process. Ms Grant stated that she then informed Ms Scott that she could not discuss such matters because they were part of the tort process.

Overall, I found that Ms Scott’s testimony was unreliable in regard to her telephone conversations. She admitted her memory deficits. She kept no written notes of her discussions. She could not remember when conversations had taken place, and she was unsure of what she had said. At times, she contradicted herself or gave ambiguous or evasive responses. At one point she testified that she had asked for approval of the assessments, but on further questioning she also testified that she felt she could not ask for approval because Ms Grant had been unreceptive.

Further, even if I accepted that approval for an assessment could be obtained in a form other than through an OCF-22 (and I am not making that determination), I do not find that Ms Scott made a verbal request for approval to Dominion before the CEMED assessments took place.

Nor was I convinced that any other written request for approval was made to Dominion before the assessments took place. In submissions, Ms Scott’s counsel suggested that Dominion had received notice of the assessments by way of a “transparency” letter sent to Dominion, and referenced in a letter¹² from Lang Michener to Dominion.

Ms Grant denied ever receiving a transparency letter. No such letter formed part of the documentary record. No one testified on behalf of CEMED. I am not convinced that any such letter, even if it had been relevant, was ever sent to Dominion.

Therefore, I find that Ms Scott did not submit an OCF-22 for the CEMED assessments. I find that Ms Scott did not seek approval for the CEMED assessments before they took place.

THE LAW:

The relevant provisions of the Schedule are as follows:

Cost of Examinations

24. (1) The insurer shall pay the following expenses incurred by or on behalf of an insured person:

25. Reasonable fees charged by a health practitioner for preparing an application under section 40 for a determination of whether the insured person has sustained a catastrophic impairment.

26. Reasonable fees, other than fees referred to in any of paragraphs 1 to 10, that are charged by a member of a health profession or a social worker for conducting an assessment or examination and preparing a report if the assessment or examination is reasonably required in connection with a benefit that is claimed or in connection with the preparation of a treatment plan, disability certificate, assessment of attendant care needs or application for the determination of a catastrophic impairment, and,

i. the assessment or examination relates to ancillary goods or services described in section 37.2 and is contemplated by a treatment confirmation form submitted in accordance with section 37.1,

ii. the insured person applied for approval of the assessment or examination either in a treatment plan submitted under section 38 or by way of a separate application submitted under section 38.2, or

iii. the insurer approved the expense or the approval of the insurer is not required by reason of subsection (1.2). O. Reg. 546/05, s. 3 (1).

(1.1) Despite subsection (1), an insurer is not required to pay for an assessment or examination referred to in subparagraph 11 ii of subsection (1) if the expense for the assessment or examination is incurred,

(a) before the insurer approves the expense;

(b) before the insurer receives the report of an examination under section 42, if the insurer requires the insured person to be examined under that section; or

(c) before the insurer receives the report of a designated assessment, in the case of an application for approval of an assessment or examination under section 38.2, if the insured person is required to undergo a designated assessment. O. Reg. 546/05, s. 3 (1).

(1.2) Despite subsection (1.1), the prior approval of an insurer is not required for the following:

6. An assessment or examination for the purposes of determining if an insured person has a catastrophic impairment, if the insured person is hospitalized or is in a long-term care facility at the time of the assessment or examination.

Assessment or Examination after Denial of Benefits

42.1 (1) In this section,

“original provider” means, in respect of an insured person, the member of a health profession who, in accordance with this Regulation, approved the treatment plan, prepared the assessment of attendant care needs, completed the disability certificate or prepared the application under section 40, as applicable, that was submitted to the insurer with respect to the insured person. O. Reg. 546/05, s. 21.

(2) This section applies in respect of an insured person if the following conditions are satisfied:

1. An examination of the insured person was conducted under section 42 and the insurer gave to the insured person a copy of the report of the examination and the insurer’s determination.

2. The insurer’s determination is,

i. that the insured person is not entitled to benefits, if the examination related to a claim for benefits, or

ii. that the insured person does not have a catastrophic impairment, if the examination related to an application under section 40.

3. The examination under section 42 was not related to,

i. a claim for ancillary goods or services referred to in section 37.2, or

ii. an application under section 38.2 for approval for an assessment or examination.

(3) The insurer shall pay fees in accordance with this section for an assessment or examination of the insured person and for the preparation of a report of the assessment or examination if the following conditions are satisfied:

1. The assessment or examination and the report of the assessment or examination are limited to the portions of the report of the examination under section 42 with which the insured person does not agree and that are relevant to the denial of the claim or application.

2. The assessment or examination is conducted by one or more members of a health profession who are authorized under this section to conduct the assessment or examination.

3. If the insured person has sustained a catastrophic impairment or the examination under section 42 relates to whether the insured person has sustained a catastrophic impairment, the assessment or examination under this section is conducted and the report provided to the insurer not more than 80 business days after the day the insurer gave the insured person notice of its determination.

ARGUMENTS OF COUNSEL:

What is the consequence of the lack of prior approval for the CEMED assessments?

Ms Scott’s argument:

Counsel for Ms Scott was of the opinion that prior approval was not required for the CEMED assessments. He argued that the assessments fell squarely within Section 24(1)(7) of the Schedule, and that the only applicable test was whether they were “reasonable fees … for preparing an application under Section 40 for a determination of whether the insured person has sustained a catastrophic impairment.”

Alternatively, he argued that Section 24(1)(11)(ii) was not relevant to the present case. He suggested that the decision of Tan and Royal & SunAlliance¹³ (relied upon by Dominion), was distinguishable as Tan dealt with a situation where the insured had submitted an OCF-22. In the instant case, no OCF-22 had been submitted by Ms Scott. Therefore the Tan decision could not operate to deprive his client of her entitlement to recover the fees for her examinations.

Third, Counsel for Ms Scott argued that even if I determined that Section 24(1)(11) was applicable to the present case, Section 24(1.1)(b) would apply, as an examination under Section 42 had already been done. No further approval of the CEMED assessments was thus necessary.

Fourth, he argued that Section 42.1(3), dealing with assessments or examinations after a denial of a benefit, was also applicable as the CEMED assessments were in rebuttal to Dominion’s examinations. Further, it was not Ms Scott’s fault that she had not provided the rebuttal report within the 80 day delay required by this provision because Dominion had never informed her of that requirement.

Finally, Counsel for Ms Scott argued that Dominion could not rely on technical defences such as the lack of prior approval for the CEMED assessments because Dominion had not first discharged its obligation to act in good faith and to provide information to Ms Scott about her claim.¹⁴

Counsel asserted that Dominion failed in its duty in several ways. First, the CAT DACs performed by Work Wise were insufficient, and Dominion never provided Ms Scott with an OCF-9 in regard to her first application for a determination of catastrophic impairment. Second, Dominion had not verbally engaged Ms Scott when Ms Scott attempted to discuss the CEMED assessments with Dominion. According to Counsel, the consumer protection objective of the legislation precluded Dominion from “hiding” behind these provisions of the Schedule.

Dominion’s argument:

In response, Dominion argued that prior approval for the CEMED assessments was indeed required and that Section 24(1.1) was a complete defence in this matter.

Counsel for Dominion argued that Section 24(1)(11) was applicable to the present case. This section lists three disjunctive categories. As Ms Scott did not fall into category (i) or (iii), she would have to find herself within Section (ii), which requires her to have submitted an OCF-22. As she never submitted an OCF-22, she could not benefit from Section 24(1)(11)(ii).

Further, even if Ms Scott had submitted an OCF-22, Section 24(1.1)(b) was not applicable to Ms Scott’s case. According to Dominion, Section 24(1.1)(b) referred only to Insurer’s examinations. The CEMED assessments were not Insurer’s examinations and could not be considered under Section 24(1.1)(b). Therefore, 24(1.1) was a complete answer to the claim.

Finally, Dominion argued that the requirement for prior approval was more than a mere technical defence. The Tan decision was directly on point and should be followed. In Tan, the arbitrator ruled that an OCF-22 submitted ten days after the assessments in question had been conducted did not meet the requirement for prior approval. The arbitrator held that the Insurer was not required to pay for the assessments.

ANALYSIS:

I do not agree with Ms Scott’s primary argument that prior approval for the assessments was unnecessary because the CEMED assessments fell under Section 24(1)(7) of the Schedule. I do not accept the proposition that the only criterion to be considered was the reasonableness of the fees for the assessments.

A straightforward reading of Section 24(1)(7) leads me to conclude that this section only relates to the reasonable fees charged “… for preparing an application under Section 40 for a determination of whether the insured person has sustained a catastrophic impairment.” For instance, this would be the fee charged for the preparation of an OCF-19 itself (Application for Determination of Catastrophic Impairment), such as the one prepared by Dr. Taverniti¹⁵ and submitted to Dominion.

To conclude otherwise would render Section 24(1)(11) meaningless. Section 24(1)(11) includes reasonable fees “… other than fees referred to in any of paragraphs 1 to 10 …” for conducting an assessment or examination and preparing a report, reasonably required in connection with preparing an application for the determination of a catastrophic impairment.

To my mind, these are exactly the type of fees sought by the applicant as the CEMED reports followed assessments and examinations that were reasonably required in connection with an application for the determination of catastrophic impairment.

Once it is determined that the CEMED assessments fall under Section 24(1)(11), it is then necessary to see if those assessments fall under any of subparagraphs (i) or (ii) or (iii) of Section 24(1)(11).

These subparagraphs list the three situations wherein an Insurer would be required to pay for those assessments.

I find that the applicant does not fall within the ambit of Section 24(1)(11)(i) as this paragraph only relates to ancillary goods or services described in Section 37.2 (referring to ancillary goods or services in respect of an impairment to which the Pre-approved Framework Guideline applies).

I also find that the applicant does not fall under Section 24(1)(11)(iii). This paragraph only applies if the Insurer had approved the expense or if the approval of the Insurer was not required by reason of Section 24(1.2). In the present case, it is clear that Dominion had not approved the CEMED assessments. Under the exception of Section 24(1.2), an Insurer’s approval is not required in certain circumstances. Of the seven subparagraphs of Section 24(1.2), Section 24(1.2)(6) is the only applicable provision. This provision states that approval for an assessment or examination for the purposes of determining if an insured is catastrophically impaired is not required if “… the insured person is hospitalized or in a long-term care facility at the time of the assessment or examination.”

In the present instance, there was no evidence that Ms Scott was in long-term care facility or hospitalized at the time of the CEMED assessments. Therefore, she does not fall within the exception of Section 24(1)(11)(iii).

The final condition in Section 24(1)(11)(ii) requires that Ms Scott “… applied for approval of the assessment or examination either in a treatment plan submitted under section 38 or by way of a separate application submitted under section 38.2.”

I have already determined that Ms Scott never applied for the approval of the CEMED assessments as part of a treatment plan submitted under Section 38, or by way of a separate application under Section 38.2 (which would have taken place through the submission of an OCF-22).

Therefore Ms Scott cannot bring herself under any of the provisions which might require Dominion to pay reasonable fees for the assessments and examinations she undertook at CEMED.

Counsel for Ms Scott argued alternatively that even if prior approval had not been sought, Ms Scott was aided by Section 24(1.1)(b). Again, I am not persuaded by this argument. The wording of Section 24(1.1) stipulates that no recourse may be had to Section 24(1.1)(a), 24(1.1)(b) or 24(1.1)(c), unless there had first been an application for approval of an assessment or examination under Section 24(1)(11)(ii). This is a condition precedent to trigger Section 24(1.1)(b). In the present case, Ms Scott never made an application for approval. Therefore, even if Counsel’s interpretation of Section 24(1.1)(b) was correct, Ms Scott could not avail herself of it.

Counsel for Ms Scott further argued that if none of these proceeding sections were helpful, recourse still could be had to Sections 42.1 and 42.1(3) of the Schedule.

Again, I am unable to agree with Ms Scott’s argument. First of all, Section 42.1 only came into force on March 1, 2006. The first application for catastrophic determination was made by Ms Scott on February 8, 2005, and the refusal (OCF-9) was dated October 28, 2005. At the time of this first denial, the Section 42.1 “rebuttal” provisions had not yet been enacted. Nothing in the legislation suggests that these provisions were to be applied retroactively. Therefore, I do not find that the CEMED assessments can be considered “rebuttal” reports to the assessments that were done as a consequence of Ms Scott’s first application for a determination of catastrophic impairment.

The second application for catastrophic determination was submitted by Ms Scott on February 14, 2007. The CEMED assessments were performed in January 2007.

The procedure to claim payment for “rebuttal reports” is set out in Section 42.1 and may be invoked if certain conditions are satisfied pursuant to Section 42.1(1). The relevant provisions are Sections 42.1(2)(1) and 42.1(2)(2). These subsections require that (1): a Section 42 examination of the insured has been conducted, and a copy of the report of that examination and the Insurer’s determination has been given to insured; and (2): the Insurer must have determined that the person does not have a catastrophic impairment.

The Section 42 examinations done by LifeMark Assessments were conducted in May and June of 2007, but as late as October 2007, Dominion had not yet made a determination of the issue. Dominion communicated to Ms Scott in October 2007¹⁶ that there were problems with the LifeMark assessments and that further assessments were required.

Therefore, I find that Section 42.1 can be of no help to Ms Scott as the CEMED assessments were completed long before the Insurer made a determination in regard to Ms Scott’s impairment. Similarly, Section 42.1(3)(3) requires that a “rebuttal” report be provided to the Insurer no more than 80 days after the day the Insurer gave the insured person notice of its determination.

Finally, Counsel for Ms Scott argued that the consumer protection objective of the Schedule precluded Dominion from relying on the “technical” defences raised in the present arbitration. Counsel argued that Dominion failed in its duty to provide complete information to Ms Scott in regard to the dispute resolution process and her recourses. In particular, Counsel submitted that the CAT DAC performed by Work Wise was insufficient, and that the OCF-9 (Explanation of Benefits)¹⁷ was never sent to Ms Scott following this initial denial.

I am not convinced that this argument is relevant to the present dispute. Even if (and I am making no such finding) the initial Work Wise CAT DAC had been insufficient, that insufficiency would have no influence on the outcome of the present application for the payment of the CEMED assessments. The insufficiency of the original Work Wise CAT DAC might have been challenged as part of the dispute resolution process, but Ms Scott did not do so, despite being represented by Lang Michener at all relevant times. Ms Scott had knowledge of the Insurer’s decision concerning her first application for a catastrophic determination, having admitted that she had discussed the denial and the Work Wise reports in her telephone conversations with Ms Grant.

Further, even if Ms Scott had not received the OCF-9 in question (and I am making no such finding), the result of her not receiving that initial OCF-9 would have been an extension of the two-year limitation period during which she could commence a mediation proceeding, evaluation, court proceeding or arbitration concerning the first denial of her application for a determination of catastrophic impairment. It would not influence her current dispute regarding entitlement to the payment of the CEMED assessments.

Counsel also suggested that Ms Grant should have engaged Ms Scott in conversation about the CEMED assessments, and Ms Grant was delinquent in her duty to provide information and knowledge about the processes involved in undergoing the assessments.

Again, assuming that Counsel is correct concerning the extent of the Insurer’s duty to provide information (and I am making no such finding), I do not find that this would influence my decision on entitlement to the cost of the CEMED assessments. The evidence in regard to the telephone conversations between Ms Scott and Ms Grant did not convince me that Ms Scott ever mentioned the CEMED assessments before they were undertaken. There was no communication that would have averted the Insurer to the fact that the insured was considering undergoing the CEMED assessments before she undertook them. Nor do I accept Ms Scott’s assertions that she only received “strategic advice” from Lang Michener in her dealings with Dominion. I am convinced that she was represented by Lang Michener during all relevant periods.

In the present case, I agree with the reasoning in the decision of Tan and Royal & SunAlliance. That case involved a similar set of facts except that the applicant in Tan did indeed file an application for the approval of an assessment. The assessment was conducted ten days before approval was sought. The arbitrator held the following:

The language utilized in subsection 24(1.1) is clear and unambiguous. The reasonableness (or lack of reasonableness) of the assessment or examination appears to be immaterial where subsection 24(1.1) applies. I note that the Licata and Gore Mutual decision relied upon by the Applicant was made under the previous version of section 24 and not the current version. I therefore do not find it to be of assistance in deciding this application. It appears to me that, under the current version of section 24, if an insured person incurs an expense for an assessment prematurely, the reasonableness of that assessment will no longer be a relevant consideration.

The present version of Section 24 of the Schedule differs from the version discussed in Tan, but the principle holds true. I find the language utilized in Sections 24(1) and 24(1.1) to be clear and unambiguous. Simply put, Ms Scott failed to seek approval for assessments as she was required under the Schedule. Because she incurred those fees before obtaining approval, the Insurer is not required to pay those fees.

PRELIMINARY MATTER:

One preliminary question was raised at the commencement of the hearing. Ms Scott sought to amend the cost of the Section 24 examinations from $18,073.24 to $23,073.24. Because of the ultimate disposition of this application, it is not necessary for me to address this preliminary question.

EXPENSES:

The parties made no submissions on expenses. If they are unable to resolve this issue, they may request an expense hearing before me in accordance with the procedure outlined in the Dispute Resolution Practice Code.

November 13, 2009

Edward Lee Date Arbitrator

ARBITRATION ORDER

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 156

FSCO A08-002256

BETWEEN:

KATHRYN V. SCOTT

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

Under Section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Ms Scott is not entitled to payments of $18,073.24 for the cost of examinations, pursuant to Section 24 of the Schedule.

2. Ms Scott is not entitled to interest for the overdue payment of benefits pursuant to Section 46(2) of the Schedule.

November 13, 2009

Edward Lee Date Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Tab 3
3. 3Tab 4
4. 4Tab 7
5. 5Ex R-1, Explanation of Benefits Payable
6. 6Tab 13
7. 7Tab 14
8. 8Tabs 8-12, reports of medical practitioners commissioned by CEMED
9. 9Tab 15
10. 10Tab 17
11. 11Tab 24
12. 12Tab 28
13. 13Tan and Royal & Sun Alliance Insurance Company of Canada, (FSCO A04-000656, November 29, 2004)
14. 14Horvath v. Allstate Insurance, [2006] O.F.S.C.I.D. No. 92, Smith and Co-Operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, Khazzaka (c.o.b. E.S.M. Auto Body) v. Commercial Union Assurance Co. of Canada, 2002 CanLII 45018 (ON CA), [2002] O.J. No. 3110, Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595 and Monks v. ING Insurance, 2005 CanLII 21689 (ON SC), [2005] O.J. No. 2526
15. 15Tab 13
16. 16Tab 18
17. 17R-1