Jason Baker v. ING Insurance Company of Canada, 2009 ONFSCDRS 40

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

Neutral Citation: 2009 ONFSCDRS 40

FSCO A08-000194

BETWEEN:

JASON BAKER

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before: Eban Bayefsky

Heard: December 16, 2008 in London, Ontario.

Appearances: Brian Murphy for Mr. Baker James D. Allingham for ING Insurance Company of Canada

Issues:

The Applicant, Jason Baker, was injured in a motor vehicle accident on April 5, 2002.

He applied for and received statutory accident benefits from ING Insurance Company of Canada (“ING”), payable under the Schedule.¹ ING denied Mr. Baker’s claim for the cost of a future care cost analysis, dated October 19, 2006. The parties were unable to resolve their disputes through mediation, and Mr. Baker 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:

Is Mr. Baker entitled to payment of the cost of a future care cost analysis, by Ms. Yvonne Pollard, dated October 19, 2006, in the amount of $986.82, with interest, pursuant to section 24 of the Schedule?
Is ING liable to pay a special award, pursuant to section 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Mr. Baker?
Is either party entitled to their expenses of the arbitration, pursuant to section 282(11) of the Insurance Act?

Result:

ING shall pay to Mr. Baker $986.82 for the cost of a future care cost analysis, by Ms. Yvonne Pollard, dated October 19, 2006.
The parties indicated that they would attempt to resolve the issues of interest, a special award and expenses. I remain seized on these matters should the parties be unable to resolve them.

EVIDENCE AND ANALYSIS:

Background

The accident occurred on April 5, 2002. At that time, the relevant legislation was the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended to Ontario Regulation 482/01. The parties proceeded on the basis that the Schedule as it stood at the time Mr. Baker applied for the disputed future care cost assessment (namely, February 10, 2006 – Ontario Regulation 403/96, amended to Ontario Regulation 281/03) was the appropriate legislative framework within which to consider the parties’ respective rights and obligations. I agree with this approach. It conforms to one of the basic rules governing the temporal application of legislation, namely, that, subject to potential retrospective application, new legislation is presumed to have an immediate effect if it is not retroactive and does not interfere with vested rights.² The Schedule, as amended to Regulation 281/03, therefore, governs the issues in this case.

Pursuant to section 24(1) of the Schedule, an insurer is required, in part, to pay reasonable fees charged by a health professional for conducting an assessment and preparing a report, if the assessment and report were reasonably required in connection with a benefit claimed or the preparation of a treatment plan, and the insured person submitted the expense for approval under a treatment plan under section 38 or submitted an application for approval of an assessment under section 38.2.

On behalf of Mr. Baker, Ms. Yvonne Pollard, a certified life care planner, submitted an Application for Approval of an Assessment or Examination (an “OCF-22”), dated February 10, 2006, in respect of an “Assessment of Future Care Costs/Housekeeping/Home Maintenance” in the amount of $986.82.

Pursuant to section 38.2(1) of the Schedule, as Ms. Pollard’s OCF-22 was not provided as part of a treatment plan, it needed to comply with the provisions of section 38.2. Section 38.2(2) states, in part, that an OCF-22 must include a statement by a health professional that the assessment is “reasonably required in relation to a benefit.” Ms. Pollard signed Part 3 of her OCF-22, entitled “Signature of Regulated Health Professional,” certifying that the “services contemplated are reasonable for the assessment…of the applicant.” In Part 5 of the OCF-22, entitled “Provisional Clinical Information,” the health professional is asked to “[d]escribe the details of the assessment requested and the rationale for it,” in response to which Ms. Pollard wrote “Assessment of Future Care Costs/Housekeeping/Home Maintenance….Based upon medical documentation indicating client may need assistance in future…potential for deterioration.”

On February 13, 2006, ING responded with an Explanation of Benefits Payable by Insurance Company (an “OCF-9”) denying payment of the cost of the proposed Future Care Cost report. ING set out the basis of its denial in a letter dated February 13, 2006, as follows:

Please be advised that it is the position of ING Insurance that this is not a reasonable or necessary expense that is contemplated by the Statutory Accident Benefits Schedule (SABS) and as such, is not subject to an OCF 22 form (or a DAC). That is, the obligation of an accident benefit insurer is to fund reasonable and necessary present medical and rehabilitation needs on an incurred basis. As a result, we are not in a position to fund a Future Care Cost Report.

We would also draw your attention to “Minassian versus Halifax” Arbitration decision which indicated that reports for the purposes of tort (i.e. for settlement or dispute resolution) are not the subject of SABS coverages and therefore, not recoverable. It is our position that a Future Care Cost report is for purposes of settlement and therefore, not SABS recoverable.

(emphasis in original)

Pursuant to section 38.2(7) of the Schedule, if an insurer determines that it is not required to pay for the assessment applied for by the insured, the insurer is required to have the insured assessed by a Designated Assessment Centre (a “DAC”) under section 43.

By letter dated February 27, 2006 from his solicitor, Mr. Baker disputed ING’s denial of the cost of the Future Care Cost report and requested that the matter be referred to a DAC. Counsel stated as follows:

….Mr. Baker’s intention before the collision was to continue working for Canada Bread as a relief driver, then buy a franchise and become an owner/operator….He would rather train now instead of investing in a bread delivery franchise which he would ultimately be unable to sustain in the future because of his injuries. As a result, vocational retraining is necessary and a labour market survey may be required as well. The purpose of Ms. Pollard’s report is to assess these matters.

On April 18, 2006, Mr. Baker’s counsel wrote ING, indicating that he had not received a response to the February 27, 2006 correspondence and stating as follows:

Given that you have failed to provide notice to the designated assessment centre within five days of this request as required by s. 43(1) of the SABS, you are now required under s. 43(12) to pay for the cost of Ms. Pollard’s assessment. We will be advising Ms. Pollard to proceed and submit her invoice to you.

Section 43(1)1 states that, where a DAC is required under the Regulation, the insurer shall notify the DAC within five business days. Section 43(12) states, in part, that, if an insurer fails to give the notice required under section 43(1), it shall pay for the goods and services that were to be the subject of the DAC assessment.

On April 19, 2006, ING responded to this correspondence as follows:

We would draw you [sic] attention to our letter of February 13, 2006….Our position remains unchanged on this matter and no funding will be available for this Future Care Cost Report.

Ms. Pollard proceeded to conduct her assessment on August 22, 2006 and issued her report on October 19, 2006. Ms. Pollard noted that Mr. Baker’s solicitors had requested that her firm “complete an Occupational Therapy Assessment focusing on analysis of the client’s anticipated needs should he require to undergo right knee arthroscopic surgery at a future date (as per the letter from Dr. R. Giffin dated September 9, 2005)….” Dr. Giffin, an orthopaedic surgeon, had reported as follows:

The injuries Jason Baker sustained in the motor vehicle accident will lead to some permanent impairment of his right knee. Presently he is functioning fairly well with his chronic posterior cruciate ligament insufficiency and early degenerative changes involving his medial aspect of his knee. To date the osteotomy or realignment procedure has been successful in returning Jason back to his previous line of employment. His current disability or limitations in activity are not presently limiting his ability to participate in his job; however, the degenerative changes in Jason’s knee likely will progress over time. This in turn may lead to greater disability in the future which may impact on his ability to continue with his current line of employment. The timing of the deterioration is somewhat unpredictable but likely would occur over 15 or 20 years. Although no further surgical procedures are currently scheduled, Mr. Baker may require a repeat arthroscopic debridement at some time in the future and possibly may require a total knee replacement in his 50’s. In short, although Mr. Baker’s short term prognosis appears quite good his long term prognosis remains somewhat guarded.

The Parties’ Submissions

At the hearing, ING maintained that, in order to be entitled to the cost of Ms. Pollard’s report, Mr. Baker was required to establish under section 24(1) that the report was “reasonable” and that it was “reasonably required in connection with a benefit.” ING submitted that the report was not reasonable because it pertained to various assistive devices, services and treatments Mr. Baker might require upon his turning fifty years of age (roughly fifteen years after the time the report was prepared). ING also noted that the report’s recommendations pertained to items to which Mr. Baker’s entitlement had already expired under the Schedule, given that he was not catastrophically impaired, or would expire well before he reached fifty years old (namely, attendant care, housekeeping and home maintenance, medical treatment and devices, transportation and medications).

ING submitted that Mr. Baker had failed to comply with section 24(1) because he had not submitted an application for approval of an assessment under section 38.2, and that this was by virtue of the fact that Ms. Pollard’s OCF-22 had not stated that the proposed assessment was “reasonably required in relation to a benefit” as required by section 38.2(2)(c). ING, therefore, maintained that it was not required to refer the matter to a DAC pursuant to sections 38.2(7) and 43 (since Mr. Baker had not complied with sections 38.2 and 24(1)) and that Mr. Baker was not entitled to the cost of Ms. Pollard’s report pursuant to sections 43(1) and 43(12) (by virtue of any failure of ING to refer the matter to a DAC in a timely fashion).

ING referred to the appeal decision of Halim v. Security National Insurance Co. (FSCO P07-00035, August 8, 2008) in which the Director’s Delegate stated the following:

The Respondent submits that all of the pre-requisites of paragraph 24(1)3 must be met before an insurer is required to refer an application for approval of an assessment to a DAC. The difficulty with this argument, in part, is that paragraph 24(1)3 includes as a pre-requisite that the assessment must be reasonably required. If an insurer could withhold referring a matter to a DAC because it was not satisfied that the assessment was reasonably required, then no application would be referred to a DAC, notwithstanding that a main purpose of the DAC assessment is to independently and expertly opine on the question of reasonableness.

In my view, the pre-requisites to be met before a matter is referred to a DAC are set out not in paragraph 24(1)3, but rather in subsection 38.2(2) of the Schedule. The latter sets out a minimum screening process, including conflicts of interest and, most importantly for the purposes of this case, that the health professional who is to conduct the assessment or examination state that the assessment or examination is reasonably required in relation to a benefit.

….As stated, I find that clause 38.2(2)(c) of the Schedule sets out the basis upon which an insurer may exclude applications which manifestly need not be referred to the time and expense of a DAC assessment, such as the psychological assessment herein. There is absolutely no requirement in clause 38.2(2)(c) that the benefit must already have been claimed. Rather, the provision simply requires that the medical professional state, in my view either explicitly or with sufficient particularity, that the assessment or examination is “reasonably required in relation to a benefit.”

If I am incorrect regarding the pertinent pre-requisite provision, I do not see any restriction in paragraph 24(1)3 itself against the benefit being claimed prospectively, which would allow an insured person to seek approval from an insurer prior to incurring possibly unnecessary debt.

Such an interpretation, allowing reasonable investigation into possible further treatment to be claimed as a specific benefit under the Schedule would still allow, as stated in Tan, for an insurer to “make a reasoned decision about whether or not to approve an expense under section 24.” More importantly, such an interpretation is consistent with the general rehabilitation theme of the Schedule, as specifically highlighted in subsection 43(8) regarding medical and rehabilitation expenses. The latter provision expressly requires a DAC to “include recommendations relating to the future provision of goods and services to the insured person for his or her treatment and rehabilitation.”

The OCF-22 regarding the proposed FCA does not meet even the bare minimum screening requirements of clause 38(2)(c). Rather than referencing any statutory benefit under the Schedule for which the FCA may be reasonably required, the form merely states, in broad terms, that the “results of the assessment can be used by the claimant’s insurer and treating health care facility to modify the claimant’s treatment regime to facilitate recovery and to determine eligibility for benefits.” Accordingly, the Arbitrator’s decision regarding the FCA is confirmed.

There is no pre-requisite in either clause 38.2(2)(c) or subsection 24(3) of the Schedule that an insured must be incurring additional expenses for replacement services before a referral to a DAC must be made under subsection 38.2(6).

To allow the Respondent to now argue reasonableness in the absence of the DAC referral is to eviscerate the intent of subsection 38.2(6) in obtaining an independent and expert opinion regarding reasonableness, as well as ignoring the requirements of subsection 43(10) that it is the DAC which shall state whether an expense in respect of the assessment is payable under section 24. Where an insurer fails to meet the requirements regarding a DAC referral once the minimum screening requirements of subsection 38.2(2) are met, it is deemed to accept that the assessment is reasonably required.

ING submitted that, as in Halim, Ms. Pollard’s OCF-22 did not meet the minimum screening requirements of section 38.2(2)(c). Mr. Baker responded that the OCF-22 was sufficiently detailed to satisfy section 38.2(2)(c), and that, in any event, any deficiency in that regard had been remedied by his counsel’s February 27, 2006 letter regarding the purpose of the Future Care Cost analysis. Mr. Baker also noted that, contrary to the basis on which ING denied payment of the report (in its February 13, 2006 correspondence), there was no need that the proposed report pertain to “present medical and rehabilitation needs on an incurred basis.” Finally, Mr. Baker pointed out that the report addressed medical and rehabilitation expenses that had not yet expired under his policy.

Findings

As indicated in Halim, one of the main purposes of the DAC system is to provide a process for independently assessing the reasonableness of disputed medical services and treatments. This echoes the comments in M.D. and Halifax Insurance Company (FSCO P00-00049, May 16, 2001) in which it was held that DACs play a “pivotal role,” namely, “to take the dispute out of the back-and-forth of competing partisan reports by providing an impartial assessment.” Consequently, as stated in Halim, the question of whether an insurer is required to send a disputed assessment to a DAC does not revolve around the insurer’s view of the reasonableness of the assessment under section 24(1), but rather whether a health professional has provided a statement that the assessment is “reasonably required in relation to a benefit” under section 38.2.

ING maintains that Ms. Pollard did not state with sufficient clarity that the proposed assessment was reasonably required in relation to a benefit. I disagree. I do not find the OCF-22 to have been as general as the statement in the case of Halim. I do not find it necessary that the statement essentially reproduce the statutory language under section 38.2(2)(c). In any event, Ms. Pollard signed Part 3 of the OCF-22 certifying that the services contemplated were reasonable for the assessment of Mr. Baker. Part 5 of the OCF-22 also simply asks that the health professional “[d]escribe the details of the assessment requested and the rationale for it.” I find that Ms. Pollard’s statement (concerning an assessment of Mr. Baker’s future care costs, housekeeping and home maintenance based on medical information of the possibility of deterioration and the need for future assistance), while somewhat general, was sufficiently detailed to convey the nature of the assessment and its purpose. While not necessary to my determination, I find that, based on its February 13, 2006 denial letter, ING appreciated the nature and rationale for the proposed assessment. In these circumstances, I need not address the question of whether the February 27, 2006 letter from Mr. Baker’s counsel did, or could, remedy any deficiency in the OCF-22.

ING suggested that Ms. Pollard’s OCF-22 was not reasonable because it referred to benefits for which Mr. Baker’s statutory entitlement had expired. While this appears to have been true in respect of housekeeping and home maintenance benefits, it was not necessarily the case for future care costs. This could refer to a variety of benefits, including medical and rehabilitation benefits, for which Mr. Baker’s entitlement would not expire until 2012. ING suggested that the validity of the OCF-22 (and specifically the question of whether it contained a statement of reasonableness “in connection with a benefit”) could be determined on the basis of the report ultimately produced. In my view, however, the process set out under the Schedule is not retrospective in effect. The issue is whether the OCF-22 (at the time it was prepared) was sufficient to trigger the DAC process, and (as suggested by Halim) this involves the question of whether the OCF-22 fulfilled the requirements of section 38.2(2)(c), not whether the insurer considered the proposed assessment reasonable or whether the recommendations ultimately made were reasonable (at least, without the DAC process having been engaged).

Ms. Pollard’s OCF-22 referred to an “assessment of future care costs” based on medical information which suggested that Mr. Baker may require assistance arising from possible deterioration in his condition. I do not find it was necessary for Ms. Pollard to specify the particular benefits that might be covered by “future care costs.” I find it reasonable to infer that this referred to at least medical and rehabilitation benefits. I note in this regard that ING responded to the OCF-22 on this basis (denying the assessment on the premise that the medical and rehabilitation benefits were not to be incurred until well into the future).

I further find that ING did not properly interpret Dr. Giffin’s report (upon which the OCF-22 was based) since Dr. Giffin did not state that the anticipated deterioration in Mr. Baker’s condition would occur in 15 to 20 years, but rather over 15 to 20 years. Dr. Giffin also stated that Mr. Baker’s long term prognosis was guarded. The OCF-22 simply refers to the medical information on the potential for deterioration in Mr. Baker’s condition; it does not state that Mr. Baker might have medical needs after undergoing surgery in 15 to 20 years. ING denied the assessment on the basis that the medical and rehabilitation needs would be incurred well into the future and that the proposed assessment was for the purpose of “tort (i.e. for settlement or dispute resolution).” It is unclear what ING meant by tort/settlement/dispute resolution. In either case, I find that ING provided a questionable basis upon which to deny the proposed assessment, but, at the very least, that it ought to have sent the matter to a DAC for an independent review of the reasonableness of the future care cost analysis.

Similarly, as indicated in Halim, there is no requirement under section 38.2(2)(c) that the proposed assessment be in respect of benefits already claimed or incurred. ING may have denied Ms. Pollard’s assessment on this basis since it stated that an insurer’s obligation was to fund “present” medical and rehabilitation needs on an “incurred basis.” To the extent that this was ING’s position, I find that it was wrong in law. I also note that, contrary to the position it took at the motion, ING did not state that they were denying the future care cost assessment on the basis that Mr. Baker’s entitlement to benefits had expired. Thus, even if ING could refuse the proposed assessment simply on the basis of its reasonableness, I find that its denial was based on an overly narrow reading of the OCF-22 and Dr. Giffin’s report, as well as a misstatement of the process for assessing entitlement under the Schedule. This further supports the conclusion that, having received Ms. Pollard’s OCF-22, ING ought to have referred the matter to a DAC in the usual course. Once the DAC had opined on the reasonableness of the proposed assessment, the parties would have the opportunity to resolve the matter or pursue it to a final determination through the dispute resolution process.

Pursuant to Halim, as ING failed to refer the matter to a DAC, it is deemed to have accepted the assessment as reasonably required, and, pursuant to sections 43(1) and (12) of the Schedule, must pay for the cost of the assessment.

At the motion, the parties indicated that they would attempt to resolve the issues of interest and a special award, following my decision on the substantive issue. I remain seized on these matters should the parties be unable to resolve them.

EXPENSES:

The parties indicated that they would attempt to resolve the issue of expenses. If required, they make submissions on this matter in accordance with the procedure set out in Rule 79 of the Dispute Resolution Practice Code.

April 7, 2009

Eban Bayefsky Date

Arbitrator