Ms. V v. Allstate Insurance Company of Canada, 2009 ONFSCDRS 88

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

Neutral Citation: 2009 ONFSCDRS 88

FSCO A06-001161

BETWEEN:

Ms. V

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before: Suesan Alves

Heard: March 25, 26 and 27, 2008 in Hamilton, Ontario.

Appearances: David Hayward for Ms. V Ian D. Kirby for Allstate Insurance Company of Canada

Issues:

Ms. V was injured in a motor vehicle accident on September 24, 1996. In this arbitration she claims the cost of psychological treatment and interest payable under the Schedule.¹ She also claims a special award and her expenses under the Insurance Act, R.S.O. 1990, c. I.8 as amended, (“the Act”). Allstate disputes all of Ms. V’s claims and claims its arbitration expenses.

The issues in this hearing are:

Is Ms. V entitled to receive a medical benefit for psychological treatment in the amount of $4,410 claimed pursuant to section 36 of the Schedule?
Is Ms. V entitled to interest for the overdue payment of benefits pursuant to section 68 of the Schedule?
Is Allstate liable to pay a special award pursuant to subsection 282(10) of the Act because it unreasonably withheld or delayed payments to Ms. V?
Which party is liable to pay the other’s expenses in respect of the arbitration under section 282(11) of the Act?

Result

Ms. V is entitled to receive a medical benefit for psychological treatment in the amount of $4,410.
Ms. V is entitled to interest for the overdue payment of benefits pursuant to section 68 of the Schedule, commencing February 19, 2004.
Allstate is liable to pay a special award in the amount of $5,000 pursuant to subsection 282(10) of the Act because it unreasonably withheld or delayed payments to Ms. V.
If the parties are unable to agree on expenses, they should follow the procedure set out in section 79 of the Dispute Resolution Practice Code—Fourth Edition, Updated October 2003.

EVIDENCE AND ANALYSIS

Background

Ms. V was injured in motor vehicle accidents which occurred on January 23, 1991, September 24, 1996, December 3, 1996 and October 3, 2003. Ms. V’s claims as a result of the 1991 accident are governed by Bill 68; those as a result of the September 1996 accident are governed by Bill 164; those from the December 1996 accident by Bill 59 and those from the 2003 accident by Bill 198. Allstate is Ms. V’s statutory accident benefits insurer in relation to three of these accidents — the one which occurred in 1991, and the two in 1996.

In 1997, Ms. V and Allstate had an earlier dispute concerning her entitlement to psychological treatment as a result of both 1996 accidents. That dispute was resolved following a DAC assessment in 1998.

This arbitration deals with Ms. V’s claim for psychological treatment submitted to Allstate in February 2004. Ms. V claims she requires this treatment as a result of the motor vehicle accident which occurred on September 24, 1996.

Allstate disputes that the treatment claimed results from that accident or that it is reasonable or necessary. Allstate submits that if Ms. V requires treatment, it is due to various distressing life events or to subsequent motor vehicle accidents. Allstate submits that such treatment would be payable at a lower rate and perhaps by another insurer.

For the reasons which follow, I conclude that Ms. V is entitled to the treatment claimed as a result of the September 24, 1996 accident on substantive and procedural grounds. I also conclude that the treatment should be paid at the rate claimed, and that Ms. V is entitled to interest and a special award.

Entitlement to psychological treatment

To succeed on a substantive basis, Ms. V must establish that she sustained an impairment as a result of the September 24, 2006 accident, required psychological services as a result and that the cost of the treatment is reasonable and necessary.²

Pre-accident condition

At the time of the 1991 accident, Ms. V was a homemaker who was self-employed part-time as a seamstress. Ms. V was initially referred to see Dr. J. Schneider, psychologist by her family physician in 1993, as she had chronic pain and was experiencing a prolonged recovery from the 1991 motor vehicle accident. Dr. Schneider treated her between May 1993 and February 1994. With his assistance, and that of a chiropractor and of a physiatrist, Ms. V was able to return to work as a part-time seamstress in March 1994. In July 1996, she began doing this work on a full- time basis.

Based on Dr. Schneider’s opinion, I find that at the time of the September 1996 accident, Ms. V had largely recovered from the pain and psychological distress from the 1991 accident. I also accept his opinion that Ms. V’s 1991 injuries left her more vulnerable to developing pain and emotional distress on subsequent re-injury.

The 1996 accidents

The Applicant’s evidence

At the time of the September 24, 1996 motor vehicle accident, Ms. V was in her mid-forties and married with two children, aged 11 and 14. She was self-employed full-time as a seamstress and clothing designer, and was a homemaker responsible for home maintenance activities, including shovelling snow and mowing the lawn.

Following the September 1996 accident, Ms. V. experienced severe pain in the area of her tailbone, mostly on her right side, which was worsened by prolonged sitting. She was again unable to work as a seamstress, as that work required prolonged sitting. In addition, the pain in her right elbow, right knee and the problems she experienced with her right hand interfered with her ability to operate a sewing machine and manipulate garments. Ms. V also suffered intense pain in the back of her head which would come, go, and last about half a day, and sharp pain below her right shoulder blade.

Ms. V was again unable to do her housework and home maintenance chores; her marital difficulties were again exacerbated and she again experienced psychological distress. In November 1996, Ms. V began seeing Dr. Schneider on a fresh referral from her family physician. Dr. Schneider diagnosed her as suffering from severe anxiety and a severe agitated depression, secondary to her pain and inability to work.

Dr. Schneider reported that Ms. V has consistently attributed the majority of her pain and difficulties to this September 24, 1996 accident. In his opinion, Ms. V’s pain was temporarily exacerbated by the injuries she sustained in subsequent accidents; however, the September 1996 accident is primarily responsible for her continuing chronic pain problems, activity limitations, vocational difficulties, marital breakdown, depression, anxiety and consequent need for treatment. In his opinion, Ms. V’s pain, depression and anxiety have all continued without remission since September 1996. Since this accident she has been unable to return to her work as a seamstress, and do heavier household chores and outdoor maintenance.

Following the accident on December 3, 1996, Ms. V developed pain in her shoulders, which extended down both arms, and generalized back pain with pain extending down her right leg. She also continued to experience the pain she had as a result of the September 24, 1996 accident. Ms. V experienced further psychological distress following the December 1996 accident—at times she had suicidal thoughts; and had at least one full blown panic attack.

In Dr. Schneider’s opinion, by about December 1997 the impact of the December 1996 accident had waned and Ms. V’s pain complaints were those which originated with the September 1996 accident.

The 1996 accidents

The Insurer’s evidence

Allstate relies on the psychiatric insurer examination it obtained in relation to the earlier 1997 treatment dispute in this arbitration. Dr. X. Kirkpatrick, psychiatrist assessed Ms. V in January and December 1997 in relation to her treatment needs as a result of both 1996 accidents. She authored four reports and testified at the hearing. In her opinion, Ms. V was a poor historian and was malingering. Dr. Kirkpatrick testified that this was malingering with the intent to obtain financial gain. Dr. Kirkpatrick opined that Ms. V’s presentation was not consistent with a primary mood or anxiety disorder; that she had not derived any significant benefit from psychotherapy and that further psychological treatment sessions were neither indicated nor required.

In January 1997, Dr. Sawa, a neurologist, examined Ms. V on behalf of Allstate. He opined that while it was difficult to say how much of her symptoms were attributable to the September 1996 accident as opposed to the December 1996 accident, “It is clear that she was having symptoms of a fairly severe nature following the first motor vehicle accident and she felt that she was only about 20% better by the time she had the second motor vehicle accident in December. It would seem then that the majority of her symptoms are probably attributable to the first [September 24, 1996] motor vehicle accident, and perhaps 25% of her symptoms are due to the second [December 3, 1996] motor vehicle accident …”³

DAC assessment

In 1998, Dr. J. H. Ennis, a psychiatrist and social worker conducted a psychiatric assessment as part of a disability DAC and as a medical and rehabilitation DAC, to determine whether it was reasonable and necessary for Ms. V to receive psychological treatment as a result of both 1996 accidents, and if so, at what frequency and duration.

In Dr. Ennis’ opinion, Ms. V was an unreliable historian. He concluded that Ms. V met the diagnostic criteria for benzodiazepine abuse, major depression, marital dysfunction and a pain disorder associated with psychological factors. He opined that Ms. V’s somatoform pain disorder was disabling, and her “experience of pain has rendered her functioning impaired in regards to activities related to her family and to her work.” In his opinion, the September and December 1996 accidents exacerbated a pre-existing underlying somatoform pain disorder, which was substantially disabling, and both 1996 accidents exacerbated her pre-existing condition.

Dr. Ennis authored reports in May and November 1998. He disagreed with Dr. Kirkpatrick’s opinion that Ms. V was malingering. In his opinion, the better diagnosis was a pain disorder associated with psychological factors, including significant cognitive distortions about her bodily sensations, in addition to an anxious and depressed mood.

Dr. Ennis opined that Ms. V required psychological treatment to address her pre-existing injuries and syndromes exacerbated by the motor vehicle accidents of September and December 1996. In his opinion, she would benefit from weekly treatment sessions to enhance her coping strategy for chronic pain, anxiety, depressed mood and for functional reactivation. He recommended an initial course of 16 sessions and an additional 16 sessions if she was making progress.

Although the 1997-1998 treatment dispute was resolved in Ms. V’s favour as a result of the DAC assessment, her circumstances made frequent treatment sessions difficult and there was a hiatus in her treatment with Dr. Schneider. In 1998 she worked while retraining at night. In 1999 she worked both full-time and part-time for economic reasons and saw Dr. Schneider on seven occasions.

The 1997- 2003 period

Ms. V testified that she never recovered from her September 1996 injuries. By November 1997, she began to look at alternative career possibilities as she had been unable to return to work as a seamstress. Dr. Schneider opined that Ms. V has strong mechanical interests, enjoys building things and working with tools, has “a strong work ethic and is a perfectionist.” Together, Ms. V and Dr. Schneider developed a plan in which she would retrain to become a welder, because she would be able to work standing up and so avoid the pain she experienced while sitting. This plan required Ms. V to find a job which would generate sufficient income to fund her training to become a welder.

Despite her continuing pain and headaches, between 1998 and 1999, Ms. V worked as a hostess at a restaurant, by day, standing for the most part, and earned the necessary funds to pay for her training. At night she took courses to become a welder. She obtained a certificate to do flat welding. In May 1999, she began working full-time as a welder. She also continued to work part-time as a hostess. I find these are remarkable achievements.

Ms. V testified that before seeing Dr. Schneider she had pain and was unable to work. As a result of her treatment with him she became able to work although she continued to experience pain.

In the summer of 2000, Ms. V contacted Dr. Schneider with a view to resuming treatment. Dr. Schneider reported to Allstate on August 26, 2000, that Ms. V remained severely depressed both on clinical evaluation and on psychometric testing, and continued to harbour suicidal thoughts as well as feelings of low self-worth and hopelessness. She continued to struggle with frequently intense chronic pain, and with marital disintegration in which her accidents had played a significant role. In Dr. Schneider’s opinion, Ms. V would need continuing psychological treatment and support for the foreseeable future. Ideally, this would be in sessions at least once every two weeks, probably over a 5 year period or more, depending on future events, which could not be foreseen.

Between September 2001 and October 1, 2003, Ms. V’s treatment was again interrupted by various life events. Allstate submits that Ms. V’s life events during this period were of greater psychological significance than the two 1996 motor vehicle accidents and that it is not reasonable to attribute her need for treatment to the 1996 accidents.

In August 2001, Ms. V’s teenaged daughter was injured while riding as a passenger on a motorcycle, and her leg was amputated. Her daughter’s stump has been painful and problematic—it has become infected, nerves have regrown and she has required further surgery and care. Ms. V provided care for her daughter while continuing to work as a welder.

Dr. Schneider and Ms. V both acknowledge the significant emotional distress she experienced as a result of her daughter’s injuries. In Dr. Schneider’s opinion, the main effect of her daughter’s accident on Ms. V was likely an increased vulnerability to subsequent physical and psychological injuries. It also added to her difficulties in managing her household chores and in pursuing her own rehabilitation.

There were other distressing events in Ms. V’s life during this period. Ms. V divorced her husband at his request; her father passed away; there were structural changes at her employer and she experienced job insecurity.

I accept that this period was a difficult one for Ms. V. However, her need for five years of treatment as a result of the September 1996 accident had been identified by Dr. Schneider in August 2000, before the 2001 to 2003 events took place. The fact that those events occurred does not negate her need for treatment in relation to past issues.

2003 accident

Ms. V entered into a settlement with Allstate in relation to past benefits, leaving open her claims for future medical and rehabilitation benefits. Based on her discussions with Allstate for further treatment, Ms. V understood that Allstate agreed to pay for treatment with Dr. Schneider for a year, and contacted Dr. Schneider to resume treatment. The messages she left with his office, which form part of his file, are consistent with Ms. V’s understanding that such an agreement had been reached. Allstate disagrees that such an agreement was reached.

Ms. V’s next session with Dr. Schneider took place on October 2, 2003. That evening on her way to work she was involved in another motor vehicle accident.

Dr. Schneider reported that the October 2, 2003 accident made Ms. V’s pre-existing problems temporarily worse, but did not contribute qualitatively new symptom complaints. In his opinion, within a few months of this accident, her complaints were very similar to those she had before the accident. I accept his opinion.

Allstate submits that there is evidence which supports its position that Ms. V’s 2003 accident is the cause of any need for psychological treatment. In this regard, Allstate relied on a July 2004 report from Dr. R. Giammarco, a neurologist who assessed Ms. V in relation to her complaints of chronic daily headaches following her 2003 accident, at the request of her treating physiatrist.

Dr. Giammarco diagnosed Ms. V with cervicogenic headaches related to muscular tension, which might also have some vascular features. Allstate submits that according to Dr. Giammarco’s report, Ms. V had a full recovery from her previous accidents and most of her difficulty was the result of the 2003 accident. To the extent that the evidence of Dr. Giammarco conflicts with the opinion of Dr. Schneider, I prefer the evidence of Dr. Schneider, as he treated Ms. V at various times between 1993 and 2004 with respect to her ongoing complaints of pain including her complaints of chronic headaches. For these reasons, I am not persuaded that Ms. V’s claim for psychological treatment in 2004 should be attributed to the 2003 accident.

The 2004 treatment dispute

Having rejected Allstate’s position that Ms. V’s need for treatment claimed in 2004 should be attributed to various life events or to the 2003 accident, I will now deal with the question of whether Ms. V required psychological treatment as a result of the September 1996 accident in 2004.

Between October and November 2003, Allstate paid for Ms. V’s treatment with Dr. Schneider. However, it did not pay his invoice in February 2004. In April 2004, it asked Ms. V to sign authorizations for the release of her OHIP records and for the release of clinical notes and records from health practitioners as she had been involved in an accident in 2003. She promptly complied. Allstate informed Dr. Schneider, but not Ms. V that it would not pay for further treatment. Dr. Schneider saw Ms. V for a further five sessions between August 19, 2004 and November 11, 2004. Ms. V learned of Allstate’s refusal to pay during a treatment session, when she asked Dr. Schneider whether he had heard from Allstate. She suspended treatment because she did not want to run up a debt.

Three years and eight months after Ms. V’s February 2004 request for psychological treatment, Allstate arranged an insurer’s examination by Dr. R. Notkin, psychiatrist to determine if it was reasonable and necessary for her to have undergone counselling with Dr. Schneider between December 2003 and November 2004.

Dr. Notkin reported to Allstate on October 4 and 11, 2007. He opined that it was not reasonable and necessary for Ms. V to have obtained that treatment as a result of the 1996 accidents. Indeed, he was hard pressed to specify what if any need there is for counselling and the reason she might require counselling. He requested further documentation. This was provided, but did not cause Dr. Notkin to alter his conclusions.

Analysis & Findings

Most of the assessors who have seen Ms. V describe her as an unreliable historian. I accept this is the case; however, I am not persuaded that this is due to dishonesty on her part. She has been involved in several motor vehicle accidents and has been subjected to numerous stressors. Her unreliability as a historian should also be seen in light of her pain disorder and in light of Allstate’s delay in having her assessed.

I agree with the submission of counsel for the Applicant that Allstate’s assessments are like bookends to the dispute. Ms. V claimed psychological treatment in February 2004. Dr. Kirkpatrick had assessed her in 1997, more than seven years before this dispute arose. The first assessment Allstate arranged in relation to the present dispute was conducted by Dr. Notkin, three years and eight months after the dispute arose.

I reject Dr. Kirkpatrick’s opinion that Ms. V had not benefited from psychotherapy with Dr. Schneider. In 1994, Ms. V was able to return to part-time work as a seamstress with the assistance of psychological treatment and physical therapies. As detailed earlier at page 8 of this decision, with Dr. Schneider’s assistance, Ms. V was able to plan a retraining program, work to fund her tuition, obtain a welding certificate and obtain employment.

I reject Dr. Kirkpatrick’s opinion that Ms. V was malingering. I reject the opinions of Drs. Kirkpatrick and Notkin, that Ms. V did not require treatment. I prefer the opinions of Drs. Ennis and Schneider that Ms. V has a somatoform pain disorder which is disabling. Dr. Ennis opined that this condition pre-dated the 1996 accidents and was exacerbated by the 1996 accidents. However, in light of Ms. V’s return to part-time employment in March 1994, I prefer Dr. Schneider’s evidence that Ms. V had largely recovered at the time of the September 1996 accident.

Based on Dr. Schneider’s opinion, I find that Ms. V sustained physical and psychological impairments in the September 1996 accident which continued into 2004 and beyond.⁴ I find that Ms. V required psychological treatment to address her anxiety, depression, chronic pain and her activity and vocational limitations as a result of that accident.

I prefer and accept Dr. Schneider’s opinion that Ms. V’s need for psychological treatment largely stemmed from the September 1996 accident, that her condition had been temporarily exacerbated by subsequent accidents. In the case of the December 1996 accident, that exacerbation lasted until December 1997, and in the case of the October 2003 accident, for several months. As a treating practitioner who saw Ms. V before and after each of the 1996 accidents, he is well positioned to opine on this question.

As late as June 2005, Allstate responded to many of Ms. V’s claims for treatment by using Bill 164 Explanation of Assessment Forms which referred to the September 1996 accident and used the claim number for that accident. While not determinative, those documents suggest that Allstate’s position in this arbitration—that Ms. V’s need for treatment should be attributed to the December 1996 or October 2003 accidents and that any treatment awarded should be paid at Bill 59 rates— is at odds with its response to her claim.

I will now deal with the question of whether the treatment claimed was reasonable and necessary.

Reasonable and necessary treatment

In Violi and General Accident Assurance Co. of Canada (FSCO P99-00047, September 27, 2000) Director’s Delegate Draper, as he then was, held that to qualify for prolonged treatment the Applicant must show the treatment goals are reasonable, goals have been met in the past and the overall cost was reasonable taking into account both degree of success and availability of other treatment alternatives.

The Insurer did not present other treatment alternatives for consideration. I accept Dr. Schneider’s opinion that Ms. V required psychological treatment to address her depression fuelled by chronic pain, occupational limitations, economic hardship, insurer stresses and to optimize her adjustment in the face of chronic pain and future uncertainties.

Dr. Schneider opined that behavioural management of Ms. V’s pain was of particular importance because she was working with semi-automated machinery and could potentially be injured if her judgment, co-ordination or motor speed was impaired. Her employer required her to report medications, and she did not dare to take strong pain medication for fear that it might jeopardize her employment. I accept Dr. Schneider’s opinion.

Ms. V testified that she believed she could lose her job if her employer learned of her injuries. She based this belief on her observation that people who were injured at work would go on compensation, then, just before Christmas, her employer would announce a shortage of work, a layoff, and the people who had filed claims for compensation would be gone.

Dr. Schneider appears to appreciate Ms. V’s psychological make-up. Ms. V has formed a therapeutic relationship with him and has worked with him in the past to address her problems with chronic pain, anxiety and depression. I would be loathe to disturb a treatment relationship, particularly one that works, which she sees as helpful and which has helped her respond to chronic pain in the past.

In August 2006, Dr. Schneider opined that Ms. V had had chronic pain for almost four years since her September and December 1996 accidents, and that statistically her prognosis for recovery after that amount of time is quite small. I find that even if a full recovery is unlikely, the relief of Ms. V’s pain is nevertheless a valid treatment and rehabilitation goal.

I reached a similar conclusion in relation to physical pain in Violi and General Accident Assurance Co. of Canada (FSCO A98-000670, August 20, 1999) and this approach was upheld on appeal. In Kennelly and Wawanesa Mutual Insurance Company (FSCO A99-000139, January 21, 2000), Arbitrator Baltman, as she then was, held that the principle espoused in Violi applies equally to mental suffering and psychological treatment designed to alleviate that distress: “Supportive care that relieves pain, be it physical or emotional, and therefore improves function, is a legitimate medical and rehabilitative goal.” I agree with those reasons and find that Ms. V’s psychological treatment was both reasonable and necessary to minimize the effect of accident related impairments on her emotional and physical functioning and to optimize her adjustment in the face of chronic pain

Amount of the benefit

Section 36 of the Schedule provides for the payment of the reasonable cost of treatment.

Initially, Dr. Schneider invoiced Ms. V’s treatment at the rate of $180 per hour, the rate negotiated between the Ontario Psychological Association and the Insurance Bureau of Canada in 2001, until that agreement expired on December 31, 2003.

Thereafter, Dr. Schneider invoiced at $195 per hour, the rate recommended by the Ontario Psychological Association Fees Guide for 2004.⁵ Allstate submits that the cost per session should be reduced to $126 per hour, which it submits is the rate prescribed under the Guidelines. I reject that submission for the following reasons.

Counsel filed a brief containing four Guidelines issued by the Superintendent pursuant to section 268.3 of the Insurance Act, namely No. 2/01; No. 05/03; 01/04 and 06/04. I find none of these Guidelines apply to Ms. V’s case. The first of these, No. 2/01, The Psychology Assessment and Treatment Guidelines, apply to psychological services provided to accident victims on or after March 31, 2001. However, those Guidelines expired on December 31, 2001.

Even if the Guidelines had not expired before Ms. V’s 2004 claim for treatment, I find Ms. V’s circumstances take her outside of the scope of those Guidelines. This is because the recommended treatment is beyond 24 weeks from the date of the accident and the complexities of her case exceed those which are addressed by the Guidelines.

The latter three Guidelines, namely Superintendent’s Guidelines No. 05/03, No. 01/04 and 06/04 all state that they have been issued for purpose of various Bill 59 expenses. I find they are of no application to Ms. V’s claim because hers is a Bill 164 claim.

In the absence of an applicable Guideline, I find that the usual and customary rate payable for psychological services should be that set by the Ontario Psychological Association Fees Guide for 2004. Dr. Schneider has been registered as a psychologist in Ontario since 1975. I find that the $195 per hour rate charged by Dr. Schneider to be reasonable. For these reasons, Allstate shall pay Ms. V’s treatment at the rate which Dr. Schneider billed, of $195 per hour.

I have concluded that Ms. V’s need for treatment in 2004 results from the September 1996 accident. Her December 1996 accident exacerbated her need for treatment for a period of time. The cost of treatment claimed in this arbitration is covered by Bill 164 benefits. As Ms. V cannot recover more than the cost of the treatment, there is no need to address her additional entitlement under other Schedules in my reasons. The subsequent accidents do not relieve Allstate of its obligations under the Bill 164 Schedule as a result of the September 1996 accident. For these reasons, I find Ms. V is entitled to payment of the treatment recommended by Dr. Schneider.

Procedural entitlement

If I am wrong about Ms. V’s entitlement to psychological treatment on a substantive basis, then I find that Ms. V would be entitled to payment of the treatment she claims on a procedural basis. This is because under section 36 of the Schedule the treatment claimed was payable pending resolution of the dispute.

In determining what consequences should flow from an insurer’s failure to pay medical and rehabilitation benefits pending resolution of the dispute as required by the Schedule, arbitrators have consistently ordered payment for treatment for procedural and social policy reasons even where the Applicant does not succeed on the merits, in the interest of avoiding an unjust or unreasonable result, because of the statutory goal of ensuring prompt and timely payment for necessary medical services.

In Pintucci and Jevco Insurance Company (FSCO A97-000755, January 7, 1999), Arbitrator Palmer stated:

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.

Thus, on a substantive as well as on a procedural basis, I find Ms. V entitled to be paid the benefits she claims.

Procedural issues

The Treatment Plan issue

Allstate submits that there were two procedural problems with the Applicant’s claim which she cannot overcome. Firstly she failed to submit a treatment plan, which is a mandatory step. I reject that submission. This was a Bill 164 claim and there is no requirement that a treatment plan be submitted under this Schedule.

The Collateral benefits issue

The second issue which Allstate raised was with respect to collateral benefits. Ms. V’s informed Allstate that while she had collateral benefits from her employer, that policy expressly excluded coverage for any treatment which was required as a result of a motor vehicle accident.

Eventually Ms. V retained counsel, who obtained a copy of the policy. I accept that through inadvertence, a copy of the policy was not provided to Allstate until the first day of the hearing. When produced, the policy confirmed that Ms. V had accurately described its provisions, and as a result, Allstate was not entitled to a deduction for any collateral benefits.

Allstate submits that until it was shown the policy, it was under no obligation to pay the benefit claimed. This was a one liner submission in response to Ms. V. Ms. V’s submission that she was entitled to a special award. However, if Allstate is correct that it was under no obligation to pay the benefit until the first day of the hearing, this would also have an impact on whether interest and a special award would be payable.

Section 75(13) of the Schedule states that “No payment is required for that portion of an expense referred to in Part VII, that is reasonably available in respect of the insured person under any insurance plan or law or under any other plan or law.”

Part VII of the Schedule deals with supplementary medical benefits. Section 36(4) of the Schedule states that “Subject to subsection (5), clause 39(11)(b) and subsection 39(12) the insurer shall pay an expense under subsection (1) pending resolution of a dispute relating to the expense in accordance with sections 279 to 283 of the Insurance Act.”

I have been unable to find a case which deals with the issue of the interrelationship between entitlement to a benefit payable pending resolution of the dispute, the collateral benefit provisions and the interest provisions of the Schedule.

In interpreting a statute and its provisions, the Supreme Court of Canada has adopted the following principle from Driedger’s Construction of Statutes, 2nd ed. in Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998]1 S.C.R. 27 and more recently in Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

That approach was also adopted by Elisabeth Sachs, the then Director of Arbitrations in the case of Morin and The Personal Insurance Company of Canada (OIC No. P-000468, February 26, 1993).

I find that it is possible to interpret the pay pending dispute and the collateral benefits provisions harmoniously by interpreting them temporally. Thus, despite any dispute as to collateral benefits, the insurer’s immediate obligation is to pay the full amount of the benefit pending resolution of the dispute. If it does so, no issue arises with respect to interest. The dispute as to collateral benefits is sorted out at a later time, by a substantive determination of entitlement, by agreement of the parties or by adjudication before an arbitrator or a judge. This approach is consistent with the statutory goal of prompt and timely payment for supplementary medical and rehabilitation benefits.⁶

Arbitrators have described the pay pending dispute provisions as “an overriding principle of the Schedule”⁷ and stated that the prevention of “any delay of an insured’s access to a restricted range of goods and services, is the paramount legislative concern.”⁸ The legislative intention has also been described as a “radical departure from traditional principles [and] is the clearest indication possible of the legislature’s desire to ensure immediate access to supplementary medical and rehabilitation treatment funded by the auto insurers of the Province.”⁹

Arbitral jurisprudence makes it clear that the “pay pending dispute” provisions are to be interpreted literally. Insurers must pay for treatment pending resolution of the dispute where the dispute concerns whether someone was the occupant of a vehicle;¹⁰ which accident caused the need for treatment; where there is a dispute as to whether the treatment is attributable to some cause other than the motor vehicle accident;¹¹ where treatment can no longer be provided;¹² in cases where the insurer has a conflicting opinion from its expert on whether the services are reasonable¹³, in cases where there is a dispute as to the cost of treatment as to the actual amount owing;¹⁴ or as to the necessity of the treatment.¹⁵

Arbitrators have concluded that “Implicitly, the result of this approach is that some persons will receive benefits for which they are ultimately determined to have no entitlement. This is the ‘cost’ of ensuring that those applicants who are ultimately successful do not suffer in the interim.”¹⁶

In my view, it is entirely consistent with the goals of the legislation and arbitral jurisprudence that the pay pending dispute provisions would be given primacy in relation to the collateral benefits provisions, and that medical benefits should be paid in full by an insurer pending resolution of the dispute, even where there is a dispute as to collateral benefits.

In an ideal world the issue would not arise. Insured persons would have a copy of all collateral benefits policies at their fingertips and promptly provide them to insurers, and insurers would promptly pay benefits which are payable pending resolution of the dispute.

For these reasons, I am not persuaded that the collateral benefits provisions of the Schedule permitted Allstate to delay payment of the benefits or that they pose a procedural bar to Ms. V’s recovery of interest or a special award.

Interest

Ms. V claims interest on overdue benefits from February 19, 2004, which is fourteen days after Allstate received Dr. Schneider’s invoice dated January 31, 2004. Section 39.1 of the Schedule provides that a medical benefit becomes overdue if payment is not mailed or delivered 14 days after the insurer receives an application for the benefit. Section 68 of the Schedule provides that “If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly.”

In the case of Primmum Insurance Co. and Totic ( P03-00033, July 26, 2004) Director’s Delegate Evans considered whether the obligation to commence paying interest arises when the application form is submitted or whether it arises when all the supporting documentation is received. Delegate Evans held that except in rare cases, such as Trendle and Economical Mutual Insurance Company (OIC P96-00009, July 11, 1996), in which, “the applicant fabricated invoices and actively concealed the fact he worked after the accident.” Interest begins to run when the form is submitted.

In this case, Ms. V claims interest from fourteen days after her psychologist submitted an invoice to Allstate. I find Allstate received the invoice on February 5, 2004, for the reasons given by Delegate Evans in Totic, I conclude that Allstate is obliged to pay Ms. V interest on overdue benefits at the rate of 2 per cent per month compounded monthly as prescribed by section 68 of the Schedule, commencing February 19, 2004.

Special award

Ms. V submits that Allstate unreasonably withheld and delayed payment of the benefits and seeks a special award at the maximum allowable rate. Allstate submits no special award is payable.

Section 282(10) of the Insurance Act requires an arbitrator to make a special award where he or she concludes that an insurer unreasonably withheld or delayed payment of benefits, and gives an arbitrator the discretion with respect to the amount of the award. The maximum payable as a special award is “50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.”

I find that Allstate both unreasonably delayed and withheld payment of Ms. V’s psychological treatment in the amount of $4,110. I find Allstate failed to comply with its obligations to pay the benefit pending resolution of the dispute as required by section 36 of the Schedule; failed to respond to her claim for treatment within 14 days as required by section 38 of the Schedule; delayed in arranging an insurer examination, and failed to schedule a DAC assessment at all, and thus deprived her of a timely neutral assessment to which she was entitled under the Schedule.

In Mendez and AXA Insurance (Canada) (FSCO A96-001355, January 25, 2000) Arbitrator McMahon stated:

In ordinary circumstances, the time for the insurer to challenge the necessity or reasonableness of a treatment program is during the currency of the program, not months or even years after the fact. … The supplementary medical and rehabilitation provisions are designed to ensure two things: one, that the insurer can assess the treatment programs while they are being conducted, and two, that the insured person obtains financial assistance to pursue those treatments until they are assessed. A timely assessment is critical to the proper functioning of the system. A positive assessment guarantees ongoing funding pending a ruling by a trier of fact. A negative finding puts the insured person on notice that they are personally exposed to the cost of ongoing treatment. The insured person can then make an informed decision about continuing with the treatment. (Emphasis in original)

Assessments undertaken after the fact, or worse still, a decision not to undertake any DAC assessments, deprives the parties of the timely guidance that underpins the whole system, and exposes each party to responsibility for significant treatment expenses that could have been avoided.

A mitigating factor is that Allstate paid for some treatment with Dr. Schneider, albeit before the current dispute arose. In my, view interest is not a mitigating factor.

I accept that the October 2003 motor vehicle accident occurred close in time to the submission of the February 2004 invoice for treatment. Initially, Allstate requested various clinical notes and records and health records to clarify the issue. Ms. V promptly signed all authorizations. Allstate obtained the records with the exception of those from one of Ms. V’s health practitioners who had died. Allstate informed Dr. Schneider that it would not pay for psychological treatment, but did not communicate this to Ms. V.

Allstate did not move promptly to obtain opinion evidence to clarify the causation issue; instead it waited for more than 3 years. Allstate also did not schedule a DAC assessment which might have resolved the dispute. No-one testified from Allstate to explain its failure. Section 39 of the Bill 164 Schedule, the legislation which Ms. V submits is applicable, and section 38 of the Bill 59 Schedule, the legislation which Allstate submits is applicable, required Allstate to arrange a DAC assessment in relation to the current treatment dispute. However, Allstate did not make those arrangements.

In 1998, following receipt of the reports of Dr. Kirkpatrick’s insurer examination, Allstate took the position that it would not pay for any further treatment, and this gave rise to the earlier treatment dispute. On that occasion, it fell to Dr. Schneider to remind Allstate of its obligations to arrange a medical and rehabilitation DAC. Dr. Schneider testified that even after the favourable DAC assessment in 1998, Allstate denied a psychological treatment invoice from him dated November 24, 1999.¹⁷

In the context of Allstate’s earlier denial of Ms. V’s psychological treatment and the resolution of that dispute by a DAC assessment, Allstate’s failure to arrange a DAC assessment in relation to this second dispute for psychological treatment is not understandable.

Aggravating factors are that a number of arbitration decisions have been issued which detail the process an insurer must follow in relation to claims for medical benefits which are payable pending resolution of the dispute. Arbitral jurisprudence on the literal interpretation to be given to the payment of benefits payable pending resolution of the dispute is longstanding. Arbitrators have held that psychological treatment should be provided early rather than late;¹⁸ Ms. V’s psychological vulnerability; that the benefits were outstanding for years; and the need for deterrence, particularly when benefits which are payable pending resolution of the dispute have been withheld earlier in the claim are also aggravating factors.

In Argirovski and Allstate Insurance Company of Canada (A98-000816, March 14, 2000), Allstate’s unreasonable withholding of payment for Mr. Argirovski’s psychological treatment attracted a special award of 25 percent of the amount to which Mr. Argirovski is entitled, together with interest on all amounts owing (including unpaid interest) at 2 percent per month, compounded monthly, from May 1997, as the benefits became payable under the Schedule.

In Smith and Allstate Insurance Company of Canada (FSCO A97-001789, July 4, 2001) Allstate refused to pay psychological treatment pending resolution of the dispute even after a DAC assessment concluded that she required treatment. Arbitrator McMahon imposed a special award of $3,000 inclusive of interest in relation to outstanding treatment of approximately $5,000.

Those cases and others were decided several years before this hearing. Although the interrelationship between the pay pending obligation and the collateral benefits provisions was novel, this issue was only raised at the hearing; it was not stated as a reason for the denial of benefits in any Explanations of Assessments which were filed.

I find that Allstate unreasonably withheld or delayed the payment of all of the benefits Ms. V claimed in this arbitration. A conservative estimate of the maximum special award is $9,900.¹⁹ In the circumstances of this case, I find that I should exercise my discretion and order Allstate to pay Ms. V a special award in the amount of $5,000.

Expenses

If the parties are unable to agree on expenses, they should follow the procedure set out in section 79 of the Dispute Resolution Practice Code—Fourth Edition, Updated October 2003.

June 29, 2009

Suesan Alves Arbitrator

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