Franco Carbone v. State Farm Mutual Automobile Insurance Company, 2010 ONFSCDRS 146

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2010 ONFSCDRS 146

Appeal P10-00008

OFFICE OF THE DIRECTOR OF ARBITRATIONS

FRANCO CARBONE

Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. Sergio Grillone for the Appellant, Mr. Franco Carbone

Mr. Robert S. Franklin for the Respondent, State Farm Mutual Automobile Insurance Company

HEARING DATE:

December 8, 2010

APPEAL ORDER

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

1. The Arbitrator’s March 30, 2010 Order is rescinded.

2. The issue of the Appellant’s entitlement to payment of the January 15, 2007 rebuttal report of Omega Medical Associates is remitted to arbitration for a new hearing.

3. If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested within thirty days of this decision, accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as written submissions regarding entitlement to and/or the quantum of such legal expenses as are in dispute.

December 20, 2010

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

The Appellant, Mr. Franco Carbone, was injured in a motor vehicle accident on April 10, 2002. As a result, he applied to his first-party automobile insurer, the Respondent, State Farm Mutual Automobile Insurance Company, for statutory accident benefits payable under the Schedule.¹

The issue put before Arbitrator Kowalski (the “Arbitrator”), by written and telephone submissions, was whether the Appellant was entitled to payment of $20,242.82 for a January 15, 2007 Catastrophic Impairment (“CAT”) rebuttal report coordinated by Dr. H. Becker of Omega Medical Associates (“Omega”) and claimed pursuant to subsection 42.1(3) of the Schedule. Specifically in dispute was whether the Appellant was late in providing the rebuttal report to the Respondent and, hence, not entitled to payment of the report under paragraph 42.1(3)3.

There is no disagreement that on July 4, 2006, Dr. Becker completed an OCF-19 Application for Determination of Catastrophic Impairment on behalf of the Appellant. As a result, the Respondent requested, and the Appellant underwent, an insurer’s medical examination (“IME”) under section 42 of the Schedule.

The parties agree that on October 13, 2006, the Respondent sent the IME report to Dr. Becker at his Omega office. The letter is copied to the Appellant’s counsel. By letter dated October 25, 2006, Dr. Becker’s assistant at Omega requested from the Respondent documentation provided to the IME examiners. Omega’s letter states that it awaited a prompt response so that it “may prepare our Rebuttal response within the required 80 business days (from October 13, 2006).”

On November 3, 2006, based on a review of additional documentation, the Respondent sent an IME addendum report to the Appellant himself, copied to his counsel and to Dr. Becker. The

Respondent indicated the addendum did not change the opinion in the original IME reports.

By letter dated January 22, 2007, the Appellant’s counsel requested of the Respondent that it pay housekeeping and attendant care benefits as Omega’s January 15, 2007 report deemed the Appellant catastrophically impaired.

The Respondent wrote the Appellant’s counsel February 9, 2007 that it was not in receipt of the referenced January 15, 2007 Omega report. On February 15, 2007, the office of the Appellant’s counsel wrote the Respondent enclosing “another copy” of the report, stating that Omega had advised having previously sent the report and invoice. On July 5, 2007, the Appellant’s representatives again sent the Respondent the rebuttal report and invoice, saying they were under the impression the report had been sent directly to the Respondent in January 2007, until Omega’s advice on July 5th of the still outstanding invoice.

On August 10, 2007, the Respondent sent the Appellant an OCF-9, Explanation of Benefits. The document noted that under paragraph 42.1(3)3 of the Schedule, the assessment or examination is payable in accordance with this section if the report is provided to the insurer not more than “80 business days after the day the insurer gave the insured person notice of its determination.” The Respondent denied payment of the rebuttal report because it “was received beyond 80 business days and is not payable.” No other reason is given for the denial of the claim.

Mediation failed to resolve this dispute between the parties. Accordingly, the Appellant applied for arbitration at the Financial Services Commission of Ontario (the “Commission”) seeking payment of Omega’s January 15, 2007 rebuttal report.

In her March 30, 2010 decision, the Arbitrator found the Omega rebuttal report due on February 7, 2007. On the evidence presented, she was not persuaded that the rebuttal report was provided to the Respondent within the requisite 80 business days or that the Appellant had provided a reasonable explanation for the delay. Accordingly, the Appellant’s claim was dismissed.

The Arbitrator found that although the Appellant’s January 15, 2007 letter referenced the existence of the rebuttal report, there was no evidence the report or even the invoice had been provided to the Respondent. The Arbitrator further found that the Appellant led no evidence as to why he, or his counsel, was under the impression that Omega had sent the rebuttal report to the Respondent. Rather, the Arbitrator found that this was simply a bald assertion.

The Arbitrator also found that there was no evidence the IME addendum report delayed the preparation or completion of the rebuttal report, constituted a new consideration or, as conceded by the Appellant, changed the results of the first IME report.

II. ANALYSIS

Section 42, which is within Part X of the Schedule, is entitled “Assessment or Examination after Denial of Benefits.”² The relevant paragraphs, 42.1(3)1-3, provide that:

42.1(3) The insurer shall pay fees in accordance with this section for an assessment or examination of the insured person and for the preparation of a report of the assessment or examination if the following conditions are satisfied:

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

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

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

Subsection 31 of the Schedule, that is also in Part X of the Schedule, states that:

31(1) A person's failure to comply with a time limit set out in this Part does not disentitle a person to a benefit if the person has a reasonable explanation.

The Appellant submits that the Arbitrator erred in not calculating the due date for the rebuttal report in accordance with the Schedule, including not properly considering the effect of the IME addendum, and in incorrectly applying the test for what is a reasonable explanation under subsection 31(1). The Appellant argues that even taking February 7, 2007 as the due date for the rebuttal report, a February 15, 2007 receipt date was, at worst, six business days late.

The Appellant raises a new argument on appeal, that the paragraph 42.1(3)3 time line runs from the date the Respondent gave the Appellant notice of its determination, and there is no evidence when the Respondent gave such notice. The Appellant argues that while the Respondent provided its section 42 IME report to the Appellant, it did not provide an OCF-9 (Explanation of Benefits Payable) setting out its determination in response to Dr. Becker’s OCF-19 Application for Determination of Catastrophic Impairment.

I note that section 42.1 mandates that an insurer shall pay the fees for an insured’s report in response to its own IME report if, specifically under paragraph 42.1(2)1 and subparagraph 42.1(2)2ii, the insurer has given the insured a copy of the IME report and the insurer’s determination that the insured person does not have a catastrophic impairment. Paragraph 42.1(3)3 sets a time limit for providing the rebuttal report as “not more than 80 business days after the day the insurer gave the insured person notice of its determination.” There is no mention in paragraph 42.1(3)3 of the date of service of the IME report.

To avoid requiring an insurer to be liable for unnecessary or superfluous expenses, paragraph 42.1(3)1 limits the rebuttal report to the portions of the IME report with which the insured disagrees and that are relevant to the denial of the claim. Subsection 42.1(10) states that an assessment or examination under this section shall only be used for the purposes of assisting in the resolution of a dispute in accordance with sections 280 to 283 of the Insurance Act, R.S.O. 1990, c. I.8. As noted below, the Respondent raised at arbitration both paragraph 42.1(3)1 and subsection 42.1(10) as defences to payment of the rebuttal account as submitted.

The essence of section 42.1, quite simply, is that if the insurer has accepted the CAT claim, then there is no need for a rebuttal report.

The Appellant did address the “80 day issue” in his written arbitration submissions. Under a heading entitled “80 day issue,” referencing Omega’s October 25, 2006 letter, he states that:

Dr. Becker advised that the report was due within 80 business days from October 13, 2006.

80 business days would have been February 8, 2007.

The Arbitrator repeats this on page four of her decision. She notes, in a brief footnote on that page, that she finds that the correct due date to be February 7, 2007. The Arbitrator does not say how she arrived at this date.

L.C. and Pafco Insurance Company Limited, (FSCO P02-00019, June 18, 2003) states that while disagreements as to the Arbitrator’s factual findings based on the evidence are questions of fact, not law, and are not appealable, “in some circumstances, the Arbitrator's application of the law to the evidence, or his inferences based on the evidence, may raise questions of law, or mixed fact and law.” In Mercier v. Royal & SunAlliance Insurance Comp. of Canada, (2004), 2004 CanLII 5551 (ON CA), 72 O.R. (3d) 94, the Ontario Court of Appeal stated that:

An appellate court is not to interfere in the findings of fact made by a trial judge absent a palpable and overriding error. The same standard of review applies to questions of mixed fact and law unless it is clear that the trial judge made some inextricable error in principle with respect to the characterization of the principle or its application in which case it may amount to an error of law and be subject to a standard of correctness. See Housen v. Nikolaisen 2002 SCC 33, (2002), 211 D.L.R. (4th) 577 (S.C.C.).

In this case, at arbitration, both parties and the Arbitrator took the Omega letter of October 25, 2006 as a correct enunciation of the law, namely, that the 80 business day time line ran from October 13, 2006. The significance of this date, as found by the Arbitrator at page two of her decision, is that on “October 13, 2006, State Farm sent its section 42 report to Dr. Becker.”

I find that the October 13, 2006 date of service of the IME report is not the start date contemplated by paragraph 41(3)3 of the Schedule from which the 80 business days began to run, and to find so, respectfully, was an error of law. In fairness to Dr. Becker, there is no evidence that he himself stated when the rebuttal report was due. Rather, Omega’s October 25, 2006 letter is signed by a person identified as his assistant.

Paragraph 42.1(3)3 sets out three specific requirements as to when the 80 business day time limit begins to run: (a) from the day notice is given by the insurer, (b) the notice given must have been to the insured person, and (c) the notice given must have been of the insurer’s determination.

First, I find that there is an error by the Arbitrator as to the date the Respondent gave notice to Dr. Becker. At footnote 2 of her decision, the Arbitrator states that the parties gave no evidence how the Respondent provided its section 42 assessment to Dr. Becker, whether by facsimile, mail or otherwise. She states that the parties’ submissions were that the IME report was provided to Dr. Becker on October 13, 2006.

Submissions are not evidence. As stated in Lombardi and State Farm Mutual Automobile Insurance Company, (FSCO P01-00022, February 26, 2003), a finding of fact made in the complete absence of supporting evidence “is properly characterized as an error of law, and hence reviewable.” On appeal, the parties agreed that the evidence before the Arbitrator was that Dr. Becker received the Respondent’s October 13, 2006 letter on October 16, 2006, as set out in Omega’s October 25, 2006 letter.

A difficulty in this case is that there is no indication that any documentation was marked as an exhibit. However, the parties agree that the documents they submitted with their written arbitration submissions should be deemed to be the arbitration exhibit evidence.

Second, and more critical, is the additional error as to who received notice from the Respondent. There is no finding in the Arbitrator’s decision that notice was given to the insured person. There is no dispute that Dr. Becker is not the insured person or that delivery on him was delivery on the insured. Paragraph 68(2.2)(a) of the Schedule specifically provides that delivery on a member of a health profession, otherwise authorized as a representative, is not service on the insured if the insured is represented at the relevant time by a solicitor or another authorized representative, as the Appellant was in this case.

Rebuttal reports do not exist for the purpose of an academic debate between the health practitioner signing the Application for Determination of Catastrophic Impairment and the authors of the IME CAT report. They exist at the option of the insured person in specific response to the insurer’s denial of his or her application in the context, as noted above, of resolving a dispute in accordance with the applicable provisions of the Insurance Act.

The Respondent’s October 13, 2006 letter is noted as copied to the Appellant’s counsel. The parties agree that notice to counsel was notice to the insured and that one could infer that counsel probably received the October 13th letter about the same time as Dr. Becker. Unfortunately, none of this is addressed in the Arbitrator’s March 30, 2010 decision.

Third, and most important, there is no evidence that the Respondent’s October 13, 2006 letter, or any other document before the Arbitrator, provided, in addition to the section 42 IME report, the Respondent’s determination that the Appellant did not have a catastrophic impairment.

IME practitioners may provide opinion evidence in their reports, within their area of expertise, as stated under subsection 42(1) of the Schedule, for “the purposes of assisting an insurer determine if an insured person is or continues to be entitled to a benefit under this Regulation.” IME practitioners do not make claims determinations. Under the Schedule, determinations as to entitlement are made by insurers. The distinction is clear. Section 40 of the Schedule, entitled “Determination of Catastrophic Impairment,” as an example, distinguishes between IME reports and insurer determinations:

(4) Within five business days after receiving the report of an examination under section 42, the insurer shall give a copy of the report and the insurer’s determination of whether the insured person’s impairment is a catastrophic impairment to the insured person and to the health practitioner who prepared the application under this section. O. Reg. 546/05, s. 18. [emphasis added]

Subsection 40(5) of the Schedule states that the “determination of the insurer shall specify the reasons for the insurer’s determination of whether the insured person’s impairment is a catastrophic impairment” [emphasis added].³

The distinction is likewise clear in section 42.1. Paragraphs 42.1(2)1 and 1(ii) require as a pre-condition to payment of a rebuttal report that the insurer has given the insured person a copy of the IME report and the insurer’s determination that the insured person does not have a catastrophic impairment. The Respondent’s October 13, 2006 letter, however, merely states that:

We enclose Catastrophic Impairment Section 42 Insurers Evaluation addressing Mr. Carbone’s application for Catastrophic Determination.

The Respondent’s November 3, 2006 letter simply states that:

We enclose Independent Medical Addendum report from Dr. Rado, Dr. Hershberg, Dr. Urovitz, Michelle Kaplan, and Dr. Ladosky-Brooks. They reviewed the additional documentation from William Osler Centre and it does not change their opinion based on their original reports. [emphasis added]

I find the author of this letter uses the correct terminology in terms of the IME reports, that they have rendered an “opinion.” There is no statement in the letter as to the insurer’s determination.

The Respondent argues that its October 13, 2006 letter was notice of its determination as the IME report addressed the Appellant’s CAT application, even though there may have been in its letter some equivocation or inexactness with wording of the Schedule. While the Respondent presented no case law for the proposition that an IME opinion is equivalent to an insurer’s determination, it submits that invariably insurers follow IME opinions.

The Respondent argues that certainly Dr. Becker treated its October 13, 2006 letter as the Respondent’s determination, as did the Appellant’s counsel throughout arbitration, and that it was a little late in the process to treat this as an issue. However, one notes that Omega’s October 25, 2006 letter, while expressly acknowledging receipt of the “Insurer’s Examination report,” is silent as to being in receipt of the Respondent’s determination.

In Turner v. State Farm Mutual Automobile Insurance Company, 2005 CanLII 2551, the Ontario Court of Appeal accepted that to terminate the weekly benefit and “trigger the two-year limitation period for the insured to contest that cancellation the insurer must, as a matter of law, give notice that is ‘clear and unequivocal’.” It would be inconsistent that an insurer’s “notice of its determination” under paragraph 42.1(3)3, which is equally part of this consumer protection legislation, should allow for equivocation. It would also be inconsistent with the distinction in the Schedule, as noted above, between an IME report and an insurer’s determination.

In any event, the Respondent’s own appeal submissions refer at paragraph 26 to the Appellant being notified not of the Respondent’s determination, but rather of “the s. 42 findings.” Likewise, paragraph 27 refers to the Appellant being advised of the “s. 42 findings.” At paragraph 28, the Respondent submits that if the Arbitrator had been asked to consider when the Appellant was notified of the “s. 42 findings,” there was sufficient evidence before her to make a finding that the Appellant was notified of the “s. 42 findings” on October 13, 2006.

Arbitrator Allen (as she then was) stated, in Thevaranjan and Personal Insurance Company of Canada, (FSCO A05-001820, August 24, 2006), that “[i]n the adversarial system, the parties are expected to read their expert reports critically and not simply rely on the conclusions in deciding how to adjust claims.” Insurers cannot simply rubber stamp their IME reports. I am not persuaded that IME reports are the equivalent of insurer determinations.

The Respondent argues, in the alternative, that if there was no insurer’s determination, then the rebuttal report cannot be payable. As the Respondent has not conceded that the Appellant is catastrophically impaired, this presumes that after an IME has been conducted, an insurer may ignore the subsection 40(4) requirement to provide its determination within five days of receiving the IME report, with the consequences of the insurer being able to ignore a CAT claim yet not being liable to pay for a rebuttal report.

However, the Latin maxim is qui tacet consentire videtur. He who is silent is considered as assenting. Thus, under subsection 40(4) of the Schedule, silence by the Respondent would denote assent to the Appellant’s CAT claim. Nevertheless, Gray v. Pilot Insurance Company, 2006 CanLII 22118 (ON S.C.) stands for the proposition that a CAT designation does not follow automatically from an insurer’s non-compliance with the time lines where there is a procedural error that did not cause any prejudice to the insured person.

However, this was not before the Arbitrator, whose decision was restricted to whether the Appellant complied with the time lines of paragraph 42.1(3)3 of the Schedule. Nor did the Respondent’s August 10, 2007 OCF-9 Explanation of Benefits cite either its approval of the CAT claim or its silence in this regard as the reason for denying payment of the rebuttal report. The only reason given was non-compliance with the paragraph 42.1(3)3 time line.

Thus, the Respondent argues that a party may not raise on appeal a point not argued at arbitration unless all relevant evidence is on the record. The Respondent submits that the parties essentially agreed at arbitration as a fact that the Respondent’s October 13, 2006 letter was its notice of determination and the 80 business days ran from that date. The Respondent cites Budd and Personal Insurance Company of Canada, (FSCO P99-00032, January 8, 2000), that:

In Sopinka and Gelowitz, The Conduct of an Appeal, Second Edition (Toronto: Butterworths, 2000), the authors note at page 63 that there is a general rule “that an appellant may not raise a point that was not pleaded, or was not argued in the trial court, unless all relevant evidence is on the record.” At page 64, the authors cite the British Columbia Court of Appeal decision in Block Bros. Realty Ltd. v. Boese (1988), 1988 CanLII 3011 (BC CA), 24 B.C.L.R. (2d) 178, as support for the proposition that an appellant seeking to raise such an issue, must prove beyond a reasonable doubt that all of the facts relevant to the new argument are before the appellate court.

Sopinka and Gelowitz also note, to the same effect, the Supreme Court of Canada in Perka v. R., 1984 CanLII 23 (SCC), [1984] 2 S.C.R. 232, that “[a] party cannot, however, raise an entirely new argument which has not been raised below and in relation to which it might have been necessary to adduce evidence at trial.”

The Arbitrator states, at page four of her decision, that the Appellant submitted at arbitration that the addendum was final notice of the Respondent’s determination. That is certainly consistent with the Appellant’s written arbitration submissions. However, the Appellant has maintained throughout that if it is found that the rebuttal report was late in being provided to the Respondent, discretion to extend the due date should be allowed under subsection 31(1) of the Schedule on the basis of a reasonable explanation having been provided by the Appellant.

The Appellant submits that the Arbitrator failed to follow the principles set out in Horvath and Allstate Insurance Company of Canada, (FSCO A02-000482, June 9, 2003), specifically that the Arbitrator failed to consider the credibility of the evidence, or balance the lack of prejudice to the Respondent, the hardship to the Appellant and whether it was equitable to relieve against the consequences of a failure to comply with the time limit.

The Appellant further submits that the Arbitrator failed to consider the tenor of Gray, noted above, especially its reference to section 10 of the Interpretation Act, R.S.O. 1990, c. I.11, now section 64 of the Legislative Act, 2006, c. 21, Sch. F, that every Act shall be deemed to be remedial and should receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.

In oral submissions, the Appellant argued that the explanation does not have to be perfect, only reasonable, and that one should apply the criteria in Horvath not as a checklist but as a whole, applying almost a “holistic approach.” Further, just because the evidence presented could have been better does not mean that it was not sufficient.

Subsection 283(1) of the Insurance Act restricts appeals from the order of an arbitrator to questions of law. Delegate Naylor stated in Kasap and Allstate Insurance Company of Canada, (OIC P96-00071, March 13, 1998), that “[i]t is well established that my role on appeal is not to second guess the arbitrator's evaluation of the evidence or substitute my own view of the weight to be attributed to it.”

I do not, however, accept the Respondent’s argument that the “reasonable explanation” ground of appeal should not be allowed because the Appellant failed to raise this issue at arbitration.

The Respondent’s own submissions at arbitration directly address section 31 of the Schedule and the principles in Horvath. The Respondent specifically argued that the 80 business days were not subject to section 31 and that no other provision in the Schedule or the Insurance Act extended that time line. The Respondent notes that neither party appealed the Arbitrator’s finding that strict compliance with the paragraph 42.1(3)3 time line could be excused by section 31.

Sopinka and Gelowitz, referenced in Budd above, also reference Donkin v. Bugoy, 1985 CanLII 45 (SCC), [1985] 2 S.C.R. 85, where the Supreme Court of Canada concluded that the lower court’s result was properly reviewable as the discretion granted by the legislation had been exercised under a misapprehension of the statute. In Standards of Review Employed by Appellate Courts, Second Edition (Edmonton: Juriliber, 2006), the authors state that:

The law requires the first tribunal to correctly instruct itself both on the governing law and on the details of the evidence before it. Mis-direction on either is an error of law reviewable on a concurrence (correctness) basis.”

In Pugh v. Pugh, 1979 CanLII 766 (BC CA), 17 B.C.L.R. 14, the British Columbia Court of Appeal stated that:

. . . this Court does not have an independent discretion and should only interfere with the exercise of discretion by the trial judge when clearly of the opinion that he acted on a wrong principle, or wrongly exercised his discretion in not giving sufficient weight to relevant considerations, or that, on other grounds, the decision might result in injustice.

Respectfully, I find that in exercising her discretion, the Arbitrator incorrectly instructed herself regarding paragraph 42.1(3)3 of the Schedule. She, in essence, amended the legislative wording 80 business days “after the day the insurer gave the insured person notice of its determination” to 80 business days “from the date of the insurer’s covering letter sending the medical practitioner who signed the OCF-19 Application for Determination of Catastrophic Impairment a copy of the section 42 insurer’s medical report.” I find that this misdirection is not an error of fact. It is an error of law.

As a result of this misapprehension, on the one hand, the correct start date of the paragraph 42.1(3)3 time line was not applied, the Appellant being held to his reliance on the bald, incorrect statement in Omega’s October 25, 2006 letter that the date the time line began to run was October 13, 2006, the date of the Respondent’s letter to Dr. Becker enclosing the IME report.⁴

On the other hand, discretion was not applied to extend the incorrect paragraph 42.1(3)3 end date, the latter, again, based on a misdirection of law. The reason for the Arbitrator declining to exercise her discretion was that she found only a bald statement by the Appellant that he had incorrectly believed Omega had sent the rebuttal report to the Respondent in January 2007.

However, as stated in Horvath, the test of a “reasonable explanation” has both a subjective and an objective test that should take account of both personal characteristics and a “reasonable person” standard. A “reasonable person” would question why the Appellant, if indeed he had no credible belief that Omega had sent its rebuttal report in January 2007 to the Respondent, while considering himself bound by the due date set by Omega, would take the time and effort to write the Respondent on January 22, 2007, well within the time line found by the Arbitrator, merely referencing, but not including the Omega report.

More curiously, the Appellant’s January 22, 2007 letter references both the exact date of the Omega report and the report’s conclusion, and asks for payment of certain benefits on the basis of that report. The Appellant then does nothing further until the Respondent’s reply more than two weeks later, dated two days after the February 7, 2007 due date found by the Arbitrator, saying that it was not in receipt of the Omega report.

However, none of this is addressed by the Arbitrator.

I find, following Pugh, that the Arbitrator’s exercise of discretion may result in an injustice, and should be rescinded. I say may result in an injustice because I do not know what, if any, other evidence the Respondent may have presented had paragraph 42.1(3)3 of the Schedule been properly addressed. It would be unjust to decide the issue of entitlement to the cost of the rebuttal report in the absence of the Respondent having a fair opportunity to present any evidence regarding the proper delivery of its notice of determination. Accordingly, this matter is returned to a new arbitration hearing for the correct paragraph 42.1(3)3 test to be applied.

The Respondent asks that in the event the Appellant is successful on appeal, its further submissions at arbitration be addressed, namely, that the amount claimed for the rebuttal report was excessive, redundant and unnecessary, the report was not limited to areas of disagreement as required by paragraph 42.1(3)1 of the Schedule, that the rebuttal report included charges outside the fees contemplated by section 42.1 and that the report was prepared to assist in a law suit and not for the purpose of assisting the parties in resolving any dispute at the Commission.

The Arbitrator held that there “is a mandatory payment of the benefit if the rebuttal report is received within 80 business days and implicitly, no requirement to pay the benefit if the report is provided to the insurer outside of the 80 business day time limit.” This appears to have been a misstatement, that the only requirement for payment is a timely response, as the Arbitrator later states that “I make no comment on the first two requirements [paragraphs 42.1(3)1 and 2], on the basis that, complied with or not, Mr. Carbone has not met the third requirement.”

I find that fairness also requires that the new arbitration hearing should also address afresh the Respondent’s alternative defences that were previously raised in arbitration to the claim for payment of the rebuttal report.

III. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated – September 2010) an expense hearing shall be requested within thirty days of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as written submissions regarding entitlement to and/or the quantum of such legal expenses, as are in dispute.

December 20, 2010

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Section 70 of the Legislative Act, 2006, c. 21, Sch. F, states, in part, that headings are inserted in an Act or regulation for convenience of reference only and do not form part of it.
3. 3Subsection 68(1) of the Schedule provides that except as otherwise permitted, all notices required under this Regulation shall be in writing.
4. 4The Arbitrator did not accept that the time line began to run afresh on November 3, 2007 when the Respondent sent the addendum IME report. In my view, the Respondent’s failure to provide its determination in its November 3, 2007 letter meant that the paragraph 42.1(3)3 time period was still not triggered.