Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 57

Appeal P08-00032 and P08-00032C

OFFICE OF THE DIRECTOR OF ARBITRATIONS

Mr. M

Appellant/Cross-Respondent

and

WAWANESA MUTUAL INSURANCE COMPANY

Respondent/Cross-Appellant

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. M represented himself

Mr. Ian D. Kirby for Wawanesa Mutual Insurance Company

HEARING DATE:

May 5, 2009

APPEAL ORDER

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

The appeal and cross-appeal herein are dismissed and the Arbitrator’s decision dated July 28, 2008 is confirmed.
The stay issued herein is lifted and the Respondent shall pay the Appellant, as ordered by the Arbitrator, the sum of $7,028.58, plus interest calculated in accordance with section 46 of the Schedule.
If the parties are unable to agree on the legal expenses of these appeals, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).

May 19, 2009

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

As a result of his injuries sustained in an August 5, 2003 motor vehicle accident, the Appellant, Mr. M, applied to his first-party automobile insurer, Wawanesa Mutual Insurance Company (“the Respondent”) for statutory accident benefits payable pursuant to the Schedule.¹

A seven-day arbitration hearing was held before Arbitrator Renahan (the “Arbitrator”) in April 2008.

The Arbitrator’s July 28, 2008 decision dismissed the Appellant’s claims for income replacement benefits (“IRBs”) after January 10, 2004, medications claimed pursuant to section 14 of the Schedule and assessments claimed pursuant to section 24 of the Schedule. The Arbitrator found that the amount of any potential IRB for the Appellant was zero. The Arbitrator awarded the Appellant, pursuant to section 14 of the Schedule, $7,028.58 for treatment provided by Canadian Active Rehabilitation Centre (“Canadian Active”), plus interest in accordance with section 46.

The Arbitrator’s November 13, 2008 expense decision ordered, pursuant to subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8 (as amended), that each party should bear their own expenses of the arbitration proceeding.

In his Notice of Appeal, received by the Commission on August 28, 2008, under the heading “Reasons for the Appeal,” the Appellant indicated an unspecified problem with his former counsel. He also stated that he had proof regarding his IRB entitlement, enclosing copies of cheques from Rush Taxi and “Eleven Eleven Taxi & Lemousine” (sic) (“Eleven Eleven”), as well as noting that he had a witness who could prove his pre-accident employment. The Appellant stated that he knew that he had done something that was not correct, but did so only for the sake of his children.

The Respondent’s September 18, 2008 Response to Appeal argued that the Appellant appeared

to be solely challenging the Arbitrator’s findings of fact, specifically the Appellant’s pre-accident employment status. The Respondent submitted that the Arbitrator, having the advantage of hearing the witnesses, after a thorough review of the documentary evidence in light of the oral testimony concluded that the Appellant had failed to present credible and reliable evidence regarding his pre-accident employment and that he had not met his burden of proof of establishing that he was substantially disabled from returning to work.

The Respondent submitted that there was no explanation why the Appellant had not produced the new evidence at arbitration. The Respondent asked this appeal be rejected, with costs.

The Respondent’s Cross Appeal, received September 4, 2008, expanded by written submissions of December 18, 2008, pertained to two treatment plans of Canadian Active dated November 10, 2003 and January 7, 2004, in the amounts of $3,734.58 and $3,294 respectively.

The Respondent submitted that the Arbitrator found that apart from Canadian Active, all other health practitioners who inquired of the Appellant were told that he did not find the treatment at Canadian Active helpful. The only practitioner who thought that the Appellant benefited from this treatment was Canadian Active’s treating chiropractor. The Respondent had paid $7,756.40 towards Canadian Active’s total account of $15,685.45.

The Respondent requested that the Arbitrator’s order of payment of $7,028.58 for services provided by Canadian Active plus interest, based on a technicality, be set aside. It further requested a stay of the Arbitrator’s order pending the appeal as it would otherwise be prejudiced in likely being unable to recover such payments if successful on appeal. The Respondent submitted that there was no evidence the Appellant had paid for these treatments or that Canadian Active was demanding or actively pursuing payment.

The Appellant’s October 27, 2008 Response to the Cross-Appeal stated only that:

They should be paying for my medical bills because I was treated by them. I think

[that’s] why we have insurance policy in case we get hurt [or] disabled to be treated by the doctors or [specialists].

My September 9, 2008 letter inquired of the parties whether these appeals should be combined.

On the written consent of the Respondent, having received no response from the Appellant, by letter dated October 8, 2008 I combined these proceedings in accordance with Rule 30 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”) on the basis that they arose out of the same arbitration decision, there were issues in common and that combining the appeals would lead to the most just, quickest and least expensive result.

My letters of September 9 and October 8, 2008 noted the Respondent’s request for a stay and asked that the Appellant include in his Response to the Cross-Appeal (initially due October 6, 2008) any arguments he may have in this regard.

Receiving no objection from the Appellant to the Respondent’s request, my November 7, 2008 letter granted an interim stay, giving both parties a further opportunity to provide written arguments whether the stay should continue. I noted that subsection 283(6) of the Insurance Act provided that an appeal did not stay an arbitrator’s order, unless decided otherwise, and cited Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000) that a stay of such an order is the exception, rather than the rule. I also noted that in determining whether a stay should be granted, the following applicable considerations set out in Canadian Home Assurance Company and Scavuzzo, (OIC P-000626, May 18, 1992):

the bona fides [that is, the good faith] of the appeal;
the substance of the grounds for appeal; and,
the hardship to the respective parties if the stay is granted or refused.

I asked the parties to include in their written submissions how these considerations applied in this case, as well as provide more expansive arguments regarding the other appeal issues.

My December 22, 2008 letter stated that regarding the Appellant’s appeal, notwithstanding written reminders and the Appeals Administrator’s telephone reminders, the Appellant’s written submissions (which were due on November 13, 2008) had not been received. The Respondent’s December 18, 2008 letter stated that it saw no reason to deviate from the requirement for written submissions and that no explanation has been offered by the Appellant.

I provided the Appellant a final deadline of January 12, 2009 to serve and file his written

arguments as to the error or errors of law upon which he argued that the Arbitrator’s decision should be reversed, as well as serve and file his written submissions regarding the Respondent’s cross-appeal, including the stay request. I indicated that should the Appellant fail to provide his written submissions as required, Rule 58.1 of the Code provided that the appeal could proceed in the absence of required documents. Rule 34, however, set out possible terms where a party failed to comply with an established time line.

While Rule 34 pertained to arbitration, Rule 1.2 of the Code provided that where something was not specifically provided for in the Code, the practice may be decided by referring to similar Rules in the Code. I indicated that possible terms included, but were not restricted to (1) limiting the scope of oral argument (2) excluding documents (3) drawing an adverse inference and (4) denying a party its legal costs of a proceeding and/or ordering a party to be responsible for the other party’s legal costs, either by interim order or upon the conclusion the appeal.

By letter dated January 13, 2009, I noted that the Commission had received on January 12, 2009 the Appellant’s January 6, 2009 document entitled “Written Submissions,” the body of which stated only that:

I have written before to Ian that if a service was done on the insured person by a medical treatment which is should be covered by the insurance company so I think this problem should be solved by the insurance company & the Canadian Active Rehabilitation and as I know that the insurance company (Wawanesa Ins.) should be covering the insured person medical bills.

It was difficult to see how this could be considered to be written submissions. Regarding the stay request specifically, the Appellant had not addressed the criteria set out in my November 7, 2008 letter. As the Appellant’s written submissions had been requested for several months, it was now time to move forward. Pursuant to Rule 58.1 of the Code, I allowed the Appellant’s Appeal to proceed, but on the following conditions, subject to any further or other order of an appellate officer:

The Appellant’s Notice of Appeal referred to new written and oral evidence. Delegate McMahon, in Budd and Personal Insurance Company of Canada, (FSCO

P99-00032, January 8, 2000), adopted the following criteria in Palmer v. The

Queen, [1980] l S.C.R. 759, regarding the introduction of fresh evidence on appeal:

The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial;
The evidence must be credible, in the sense that it is reasonably capable of belief;
The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial; and
The evidence must be such that, if believed, it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.

I was not satisfied that a basis had been established by the Appellant to allow fresh evidence, most importantly, why the evidence had not been adduced at the arbitration hearing. Accordingly, I held that no fresh evidence, either in written or oral form, would be allowed in these appeals.

The Appellant’s appeal was restricted to the grounds set out his Notice of Appeal.
An award of legal expenses under Rule 75 of the Code would consider, amongst other criteria, the conduct of any party that tended to prolong, obstruct or hinder the proceeding, especially if an adjournment was required.
The stay of the Arbitrator’s July 28, 2008 order that the Respondent pay the Appellant $7,028.58, plus interest, would continue. Applying the criteria in Scavuzzo, I saw no evidence of lack of good faith in the cross-appeal, the Respondent having detailed its grounds for appeal. The Appellant argued only that if a medical service was provided, it should be covered by the insurer.

The Arbitrator’s order, relating to treatment plans he found did not help or address the Appellant’s problems, found the benefits payable on the technical basis of the Respondent’s late response. The Arbitrator found (and the Appellant did not dispute) that the Respondent was not aware of the treatment plans on the date the response time was found to begin to run. Further, the Appellant did not dispute the Respondent’s alleged prejudice should the stay not be granted.

II. ANALYSIS

Subsection 283(1) of the Insurance Act, echoed by Rule 50.1 of the Code, limits a party to an arbitration to appealing an arbitrator’s order on a question of law.

The Appellant, whom the Arbitrator noted arrived in Canada in 1975 at age 11, did not request the assistance of an interpreter in these appeals and there was no indication at the oral hearing of any such need.

The Appellant’s appeal was essentially of the Arbitrator’s findings of fact. At the oral appeal hearing, the Appellant sought to introduce further fresh evidence, consisting of:

An interim, without prejudice, parenting agreement dated March 2, 2009.
The decision of the Social Benefits Tribunal, dated April 14, 2009, ordering that income support be paid to the Appellant in accordance with section 17 of O. Reg. 222/98.
An April 16, 2009 covering letter from Ministry of Community and Social Services granting the Appellant’s appeal.

In accordance with Budd, I did not allow this documentation into evidence. I was not persuaded as to the relevance of this documentation, produced for the first time at the appeal hearing, nor was I persuaded that it would, when taken with the other evidence adduced at the arbitration hearing, be expected to affect the result. While it was unfortunate that the Appellant and his wife had separated, this was not relevant to the issues in appeal. That the Appellant had been successful in a separate tribunal with separate criteria was not relevant to this proceeding.

At the oral appeal hearing, the Appellant voiced his displeasure with his prior legal representatives, his doctor who testified at the arbitration hearing, the Respondent and the Arbitrator’s July 28, 2008 decision. The Appellant noted his high level of pain and stress, his marital separation and the loss of his children, his lack of familiarity with the law, his mother’s death from cancer and his sleepiness caused by medication.

The Appellant also raised, for the first time, his objection to the cross-appeal being filed late, that

while he had to file his Notice of Appeal on the 30^th day following the Arbitrator’s decision, the Respondent filed its Cross-Appeal on or about the 37^th day. At the oral hearing, exercising my discretion pursuant to subsection 283(3) of the Insurance Act, I extended the time for filing the cross-appeal as (1) the delay was short, being approximately a week past the thirty-day time limit (2) this issue was raised by the Appellant for the first time at the oral appeal hearing, eight months after the Cross-Appeal had been filed, and (3) the Appellant had been given extensions regarding his written submissions under Rule 54 of the Code, as well as other time lines.

Regarding the Appellant’s appeal, the Respondent noted that the decision in Lombardi and State Farm Automobile Insurance Company, (FSCO P01-00022, February 26, 2003) distinguished between finding of facts made in the complete absence of supporting evidence and findings of fact made with insufficient evidence. Lombardi held that while in "the first case, the error is properly characterized as an error of law, and hence reviewable . . . [in] the second, it is no more than an error of fact, that is not reviewable." I agree with the Respondent that it is not the purpose of an appeal to second guess an arbitrator’s assessment of the evidence, especially determinations of credibility.

The Arbitrator found the Appellant’s allegation that he worked full-time for Eleven Eleven before the accident not true. Holding that it was likely that the Appellant worked part-time for his brother-in-law for odd jobs both before and after the accident, the Arbitrator found that he not could determine either how much work or the nature of any work the Appellant did in the year before the accident. The Arbitrator concluded that the Appellant had failed to both establish the essential tasks of his employment and that he was substantial disabled from returning to work.

These findings were not made in the complete absence of supporting evidence. Regarding the Appellant’s pre-accident employment, which was the basis of the Appellant’s appeal, the Arbitrator set out the following foundation for his finding:

(a) The Appellant gave inconsistent evidence as to the day he started working, whether he was employed or self-employed and the days he worked.

(b) The Respondent’s telephone conversations with the principals of Eleven Eleven

were to the effect that they would not confirm that the Appellant worked there full-time or his salary. The principals of Eleven Eleven (being the Appellant’s brother and brother-in-law) did not appear as witnesses, the Appellant’s explanation as to their absence changing through the course of the hearing.

employment did not change to reflect income or loss of income.

(d) Although the Appellant’s wife testified as to the cultural importance of her husband supporting his spouse and that this was the Appellant’s first full-time job, she had

little knowledge of the particulars of his employment.

(e) When confronted with his admitted lies to Metro Housing (that he “had no employment or other income whatsoever in 2003,” being the year of the August 5th accident) and Revenue Canada, and whether he was telling the truth at the hearing, the Appellant testified, more than once, that he justified lying in order to get money to survive.

The Respondent submitted that the Arbitrator’s findings regarding the medication claim (that the problem pre-dated and had nothing to do with the accident) and the section 24 assessments (performed three years after treatment ended without any evidence the Appellant’s treating doctors had ever read these reports) were supported by factual findings. More fundamentally, I find that the Arbitrator’s orders in this regard were not mentioned by the Appellant in his Notice of Appeal or in ensuing eight months up to the oral appeal hearing. My January 13, 2009 letter restricted the Appellant’s grounds for appeal to those set out in his Notice of Appeal. I was given no basis upon which to amend that order.

Accordingly, the Appellant’s appeal of the Arbitrator’s July 28, 2008 decision is dismissed. Neither party appealed the Arbitrator’s November 13, 2008 expense decision.

Regarding its cross appeal, the Respondent stated that it accepted all the Arbitrator’s factual findings in his July 28, 2008 decision and that its appeal was only with respect to a question of law. The Respondent submitted that the Arbitrator found it responsible for payment of the November 10, 2003 and January 7, 2004 Treatment Plans pursuant to subparagraph 38(8)1.ii and paragraph 38(8.2)2 of the Schedule, specifically that the Respondent’s May 20, 2004 Explanation of Benefits Payable was outside the prescribed time lines and, therefore, the cost of the plans was payable.

The Respondent argued that given the Arbitrator’s finding of fact the Respondent was not aware of the treatment plans in question until it received them through the mediation process (which, according to the Report of Mediator in Exhibit 6, concluded April 15, 2004, with an amendment dated May 21, 2004), it was an error of law to find that the Respondent’s May 20, 2004 denial of benefits was outside the time lines of the Schedule and that it was required to pay the accounts pursuant to paragraph 38(8.2)2, all of the services under the treatment plans having been rendered by the time of the May 20, 2004 denial.

The Respondent submitted that it would be especially inappropriate for it to be required to pay for the two treatment plans in the unique circumstances of this case:

(a) The Arbitrator found that the treatment provided was neither reasonable nor necessary.

(b) The Arbitrator found that the treatment did not help the Appellant or address his problems.

(c) The Arbitrator found that the Respondent was not aware of the two plans until mediation, by which time the treatment had been provided. Accordingly, the Respondent has been held accountable for treatment plans it did not know existed.

(d) Once aware of the two treatment plans, the Respondent moved expeditiously in disputing the treatment and arranging a medical/rehabilitation Designated Assessment Centre (“DAC”) that found that the treatment neither reasonable nor necessary.

(f) A medical/rehabilitation DAC prior to the two treatment plans had indicated that no further treatment was required other than one or two educational sessions regarding a home-based exercise program.

(g) In response to Canadian Active’s remitting of invoices pursuant to the two treatment plans, the Respondent provided an immediate response that the treatment plans had been exhausted and that new treatment plans should be sent. The Respondent confirmed that it did not specifically request that Canadian Active send new treatment plans (which would indicate to Canadian Active that the Respondent had not received the November 10^th or January 7^th Plans), but that this was implied.

The Respondent noted the Arbitrator’s finding that the Respondent’s various letters and Explanation of Benefits Payable sent prior to May 20, 2004 did not conform to the notice requirements of the Schedule, specifically not advising what goods and services contemplated by the two disputed treatment plans the Respondent would pay. The Respondent agreed that the notices did not comply with the Schedule, but only because it did not know that the November 10^th and January 7^th Treatment Plans existed.

The Appellant responded that Canadian Active’s treatment helped temporarily relieve his pain.

Subsection 38(7) of the Schedule provides that on receiving an application, an insurer shall promptly determine whether it is required to pay for the goods and services contemplated by the treatment plan. In the absence of a disclosed conflict of interest, paragraph 38(8)1 requires an insurer to give the insured notice of what goods and services contemplated by the treatment plan it will pay or what goods and services it will not pay. Clause 38(8.1)(a) states that the subsection 38(8) notice shall be given within 14 days after the insurer receives the application.

Paragraph 38(8.2)2 of the Schedule mandates that if an insurer fails to give notice under paragraph 38(8)1 in accordance with subsection 38(8.1), the insurer shall pay for all goods and services under the treatment plan that relate to the period starting the day after the day the insurer was required to give the notice and ending on the day the insurer gives the notice.

The Arbitrator, as noted, made a finding of fact that the Respondent was not aware of the two treatment plans in question until the mediation process. The Arbitrator made a further finding of fact that Canadian Active sent the five pages of each treatment plan to the Respondent by fax on November 12, 2003 and January 28, 2004. As noted, the Respondent does not dispute any of the Arbitrator’s findings of fact. The latter finding of fact was supported by the Arbitrator as follows:

… Exhibit 13 is the first page of a treatment plan. Only the bottom half of the printed date on the top is visible. The date appears to be "04-10-08 13:49." Below this are the printed words "MESSAGE CONFIRMATION Nov-12-2003 02:46 PM WED." Exhibit 14 is the first page of a Treatment Plan. Again, only the bottom half of the printed date on the top is visible and again it appears to be "04-10-08 13:49." Below this are the printed words "MESSAGE CONFIRMATION JAN-28-2004 06:30 PM WED." The fax number on each is the same as the fax number Wawanesa set out in its Explanation of Benefits Payable forms. The Message Confirmation section includes "Page: 005" and "Results: [O.K.]." The Treatment Plan form is five pages long.

The Arbitrator did not make a specific finding as to when the Respondent “received” the treatment plans. As noted, the time lines of clause 38(8.1)(a) (and, hence, the statutorily mandated consequences of paragraph 38(8.2)2 of the Schedule) run from the date the “insurer receives the application.”

The Respondent stated that the term “receives” is not defined and it could find no case law as to what constitutes “receipt.” The Respondent indicated that it was not clear why it was not aware of the treatment plans in question until mediation, that is, whether the treatment plans had been mislaid, had “disappeared in the vapour” or whether there was some other explanation.

The Respondent did not wish to establish an overarching principle that a document sent by fax with a confirmation notice should not be deemed to have been received, but rather that the specific circumstances of this case, noted above, should be determinative. The Respondent agreed that it might be appropriate to have the Arbitrator or a different arbitrator determine when the two treatment plans were “received.”

The Concise Oxford Dictionary of Current English (Eighth Edition, Clarendon Press, Oxford, 1990) defines “receive,” in part as follows:

acquire; be provided with or given … 3. accept delivery of (something sent). 4. have conferred or inflicted on one …

The Arbitrator made an explicit finding in his decision that:

Under paragraph 38(8.2)2, Wawanesa was required to pay for all services provided under the treatment plans until it gave notice that it would not pay. Wawanesa did not give notice until after Canadian Active Rehabilitation had provided the services. Therefore, Wawanesa must pay for those services, $3,734.58 for services rendered under the November 10, 2003 treatment plan, and $3,294 for services rendered under the January 7, 2004 treatment plan.

Implicit in this finding is that the two treatment plans found to be sent to the Respondent on November 12, 2003 and January 28, 2004 were also received by the Respondent on those days. In this regard, there was significant evidence in support, as noted by the Arbitrator, the message confirmations including the Respondent’s fax number set out in its Explanations of Benefits Payable. Such an implicit finding is consistent with the above definition of “receive,” including being “provided with or given.” With the implicit finding that the treatment plans were received by the Respondent, the statutory consequences of non-compliance followed.

This case differs from cases which considered provisions of the Schedule that did not specify the consequences of non-compliance. In Mileevsky and General Accident Assurance Co. of Canada, (FSCO A99-000740, June 15, 2000), Arbitrator Joachim held that she was not satisfied that:

… the failure to provide written reasons for the refusal to pay the treatment set out in the second treatment plan means that General Accident must pay for the disputed treatment. The Schedule does not mandate such a consequence.

Arbitrator Joachim’s decision was cited in Gray v. Pilot Insurance Company, 2006 CanLII 22118 (ON S.C.), where Lederman J., in response to the plaintiff’s assertion that the insurer had waived its rights to challenge that the plaintiff was catastrophically impaired, stated that:

The SABS is silent as to the consequences of missing the timelines set out therein. The SABS imposes no sanctions for failure to meet the timelines. There is nothing in the Schedule to suggest that failure to adhere to the 30 day period, for example, results in a claimant being deemed to be catastrophically impaired.

I stated in Lionti and Security National Insurance Company c/o Monnex Insurance Management Inc., (FSCO A99-000823, December 27, 2000) that:

Subsections 38(1) and (2) set out certain mandatory requirements on an applicant. Subsection 32(2) sets out certain mandatory requirements on the insurer. Neither provision, however, sets out the precise consequences of a breach of the respective requirements … Section 32 does not state that benefits are automatically payable where the insurer does not assist the insured person in applying for benefits.

In this present case, paragraph 38(8.2)2 specifically mandates the consequences of the insurer’s

breach. The Respondent does not argue otherwise. Specifically it does not argue that notwithstanding non-compliance with paragraph 38(8.2)2, any insurer can still dispute an

insured person’s entitlement to benefits on the basis of reasonableness or necessity.

A major purpose of the Schedule is the expeditious determination of entitlement by the insurer and the expeditious payment of requisite benefits. The above provisions are consistent with that purpose. In this case, with clarification of the question of “receipt” (there being no finding of fact by the Arbitrator that the Respondent had communicated in its correspondence to Canadian Active that it had not received the treatment plans), the Respondent’s additional arguments of reasonableness and necessity, the treatment not helping the Appellant and the opinions of prior or subsequent DACs do not take this case out of those captured by paragraph 38(8.2)2 of the Schedule.

Accordingly, I am not persuaded that the Arbitrator erred in law. The Respondent, in failing to give notice under paragraph 38(8)1 of the Schedule in accordance with time lines of clause 38(8.1)(a), was liable under paragraph 38(8.2)2, to pay for all goods and services under the two treatment plans from the day after the day the Respondent was required to give the notice and ending on the day the Respondent gave notice, found by the Arbitrator to be $7,028.58.

Accordingly, the Respondent’s cross-appeal is dismissed. The Arbitrator’s July 28, 2008 decision is, therefore, confirmed. The stay issued herein is now lifted and the Respondent shall pay the Appellant, as ordered by the Arbitrator, the sum of $7,028.58, plus interest calculated in accordance with section 46 of the Schedule. For any necessary clarification, the stay held in abeyance payment of the Arbitrator’s order, not the accrual of interest.

III. EXPENSES

If the parties are unable to agree on the legal expenses of these appeal proceedings, an expense

hearing may be arranged in accordance with Rule 79 of the Code.