Neutral Citation: 2010 ONFSCDRS 38 FSCO A08-001871

BETWEEN:

FRANCO CARBONE Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Jessica Kowalski Heard: By written submissions completed by June 30, 2009 and by telephone conference call on October 19, 2009. Appearances: Sergio Grillone for Mr. Carbone Robert S. Franklin for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Franco Carbone, was injured in a motor vehicle accident on April 10, 2002. He applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.¹ The parties were unable to resolve their dispute through mediation, and Mr. Carbone applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this hearing is:

Is Mr. Carbone entitled to payment of $20,242.82 for a CAT rebuttal report dated January 15, 2007 by Dr. Harold Becker of Omega Medical Associates?

Result:

Mr. Carbone is not entitled to payment for the cost of the CAT rebuttal report dated January 15, 2007.

Background and Chronology

In this proceeding, Mr. Carbone seeks payment for the cost of a rebuttal report prepared by Dr. Harold Becker of Omega Medical Associates, pursuant to section 42.1 of the Schedule in the amount of $20,242.82.

The following are the relevant facts:

On July 4, 2006, Dr. Harold Becker completed an OCF-19 on Mr. Carbone's behalf. As a result, Mr. Carbone underwent a section 42 assessment with respect to determination of catastrophic impairment.

On October 13, 2006, State Farm sent its section 42 report to Dr. Becker.² On October 25, 2006, Dr. Becker responded by fax, requesting documentation provided to State Farm's examiners so that he could prepare his rebuttal report. In his letter, Dr. Becker indicated that his report would be prepared within the 80 business days from October 13, 2006.

On November 3, 2006, State Farm sent an addendum to Mr. Carbone which it wrote was based on review of additional documentation from William Osler Centre. In their correspondence, State Farm noted that the addendum did not change the opinion contained in the original report.

Dr. Becker's rebuttal report is dated January 15, 2007 and is addressed to Mr. Carbone's counsel.

By letter dated January 22, 2007, Mr. Carbone's counsel wrote to State Farm:

Now that our client has been deemed catastrophically impaired, further to the report of Omega Medical Associates dated January 15, 2007, we request payment of all past housekeeping and attendant care benefits to which our client is entitled to date.

There is no suggestion in the letter that the report was attached. There is no reference to an invoice for the report or request for its payment.

On February 9, 2007, State Farm wrote back to Mr. Carbone's counsel that, "[f]urther to your letter of January 22/07 we are not in receipt of the Omega medical report dated January 15/07 which you refer to."

By letter dated February 15, 2007, Mr. Carbone's counsel's law clerk, Ms. Heather Orth, sent a copy of Dr. Becker's report to State Farm, with invoice attached. She enclosed a copy of the rebuttal report that she called "another copy", and wrote that "Omega have advised that they previously sent you the report along with their invoice (OCF-21)" for its preparation. No information as to the date or how Omega allegedly sent the report is articulated.

On July 5, 2007, Ms. Orth sent Dr. Becker's invoice to State Farm again. In that letter, Ms. Orth wrote that she was "under the impression" that the report had been sent to State Farm in January 2007 "until [Omega] called today about the outstanding invoice."

On August 10, 2007, State Farm sent Mr. Carbone an OCF-9 (Explanation of Benefits) Form denying payment of the report because "the report was received beyond 80 business days and is not payable."

Mr. Carbone's position

Mr. Carbone submits that, on October 25, 2006, Dr. Becker wrote to State Farm to say that the rebuttal would be completed within 80 business days from October 13, 2006. That, says Mr. Carbone, would make the rebuttal due no later than February 8, 2007.³ On January 15, 2007, before 80 business days had passed, Dr. Becker wrote to Mr. Carbone's counsel and set out his determination. That same day, Mr. Carbone's counsel confirmed with State Farm that Dr. Becker had found Mr. Carbone catastrophically impaired. On February 15, 2007, Mr. Carbone's counsel sent what he called "another copy" of Dr. Becker's report to State Farm.

Because State Farm sent an addendum on November 3, 2006, Mr. Carbone argues that the 80 day business deadline was moved (to March 1, 2007). He submits that State Farm had notice of the existence of the rebuttal report as early as January 22, 2007, and that it received the report, at the latest, when Mr. Carbone's counsel sent the report directly to State Farm's adjuster on February 15, 2007.

Mr. Carbone argues that the addendum is final notice from State Farm of its position that it "...gave notice of its determination" as prescribed by the Schedule, and that the addendum (notwithstanding that it did not change the determination given October 13, 2006) extends the deadline. Therefore, submits Mr. Carbone, since State Farm received a copy of the rebuttal on February 15, 2007, he was not late. Further, or in the alternative, Mr. Carbone argues that, since section 42.1 of the Schedule is silent on the consequences of meeting the 80 business day deadline, then even if he is found to have missed it, State Farm is still obligated to pay as they have suffered no prejudice.

Mr. Carbone made the following submissions in support of his position:

i. the statutory deadlines are in place to ensure efficiency and to prevent flouting of procedural guidelines, and not to allow an insurer to obtain a windfall;

ii. the Schedule is remedial in nature and not meant to be punitive. At worst, Mr. Carbone was five (business) days late;

iii. State Farm has failed to provide evidence that their position with regard to adjusting the file has been compromised by the delay; and that,

iv. State Farm has presented no legislative or common law reason to justify non-payment of the rebuttal report.

State Farm's position

State Farm argues that:

i. Mr. Carbone has failed to establish entitlement to the expense of the rebuttal report due to his failure to meet a time limit, which is one of the criteria required to show entitlement;

ii. the "relieving provision" found at section 31 of the Schedule does not apply to this case as Mr. Carbone has failed to show entitlement in the first place;

iii. the Insurance Act and the Schedule provide a complete code for determining a party's substantive rights. There is no provision within the Insurance Act or the Schedule that gives an arbitrator jurisdiction to find entitlement to pay the cost of a rebuttal report if it was received outside the 80 business day time limit set out in paragraph 3 of subsection 42.1(3) of the Schedule;

iv. the fees claimed for the rebuttal assessment and report are excessive and unnecessary and not payable because they are not "limited to the portions of the report of the examination under section 42 with which Mr. Carbone disagrees and that are relevant to denial of the claim or application" as required by paragraph 1 of subsection 42.1(3) of the Schedule.

v. A "slip" by a third party is not a reasonable explanation for the delay and that lack of prejudice to an insurer does not necessarily make an explanation reasonable.

Law and Analysis

In order to be entitled to the cost of the rebuttal report, Mr. Carbone must demonstrate that he meets the requirements set out in subsection 42.1(3), paragraphs 1-3, of the Schedule. With respect to the time limit in paragraph 3, I find that strict compliance with this time limit can be excused by section 31 of the Schedule, where an insured person can provide a reasonable explanation.

Subsection 42.1(3), and paragraphs 1-3, of the Schedule 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:

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.

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.

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.

Section 31 of the Schedule provides as follows:

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.

(2) Subsection (1) does not apply to the time limits set out in section 51.

I am not persuaded on the evidence presented that the rebuttal report was provided to State Farm within the required 80 business days. Nor am I satisfied that Mr. Carbone provided a reasonable explanation for the delay.

Rebuttal report not provided to State Farm in accordance with Schedule

I am limited to the facts of this particular case and the evidence that the parties have put before me. There was no evidence of how, when, whether or by whom the rebuttal report was provided to State Farm before Mr. Carbone's counsel sent what was termed "another copy" on February 15, 2007, and there is no evidence on which I am persuaded to make a finding that the delay was reasonable. The gaps in evidence beg speculation. Although section 15 of the Statutory Powers Procedure Act (the "SPPA") provides that a tribunal can admit as evidence any relevant document or other thing whether or not given or proven under oath or affirmation, Mr. Carbone failed to provide any evidence upon which I can find that he had a reasonable explanation for not providing the report to State Farm in time.

Mr. Carbone argues that, on January 15, 2007 (the date of Dr. Becker's report), his counsel advised State Farm of Dr. Becker's determination as set out in that report. Mr. Carbone's counsel wrote to State Farm requesting payment of all past housekeeping and attendant care benefits due to Mr. Carbone, "now that [he] has been deemed catastrophically impaired." Apart from a reference to the report's existence, there is no evidence that the report or even the invoice was provided with that letter to State Farm.

In response to State Farm's February 9, 2007 letter denying receipt of the report, on February 15, 2007 Ms. Orth wrote to State Farm that "Omega have advised that they had previously sent the report" directly to State Farm, together with an invoice.

With his submissions, Mr. Carbone included a copy of the OCF-21 (Invoice) prepared by Dr. Becker on January 15, 2007. That copy contains no fax header on the document that might confirm that it had been faxed. In Schedule "A" to his application for arbitration, Mr. Carbone included a copy of the OCF-21 that does have a fax transmission header showing it was faxed on January 16, 2007 from "Work Able Centres Inc." The OCF-21 is a three-page document. The first page is fax-stamped as "P.003" – presumably page 3 of a fax transmission. Pages two and three of the OCF-21 are fax-stamped as "P.004/056" and "P.005/056", respectively (pages four and five of 56 pages transmitted). The rebuttal report itself is 51 pages long.

Does the fax-stamp confirm transmission to State Farm? Nowhere in Mr. Carbone's materials is the accompanying fax cover letter, which, presumably, would be pages one and two of the 56 page fax transmission. There is no question that it was sent to Mr. Carbone's counsel. There is no document, receipt or transmission journal, however, that might have confirmed a transmission to State Farm. I find this a gap in the evidence that has not been addressed, and on which I cannot merely speculate. Mr. Carbone has shown no proof that it was provided, by his counsel or Dr. Becker or otherwise, to State Farm within the time required. Nor has Mr. Carbone adduced any evidence from Ms. Orth or Omega to establish communication between them confirming Omega's purported advice that they sent the report.

No reasonable explanation

Notwithstanding the fact that Ms. Orth's letter of February 15, 2007 suggested that Omega had "advised" that they had previously sent the rebuttal long with their invoice, by July 5, 2007 she was writing that she had simply been "under [that] impression."

Mr. Carbone led no documentary, affidavit or other evidence to explain the inconsistent statements and alleged advice set out in Ms. Orth's letters. Not only has Mr. Carbone not provided evidence to support the alleged advice by Omega that they had sent the report directly to State Farm, but he has provided no evidence on which to find that Ms. Orth had a reasonable belief that it had been done. By July 5, 2007, did Omega tell Ms. Orth differently, or did she infer from Omega's request for payment that the report had not been sent? What led to Ms. Orth's (mistaken) impression on February 15, 2007 and what had Omega told her on July 5, 2007? What had Omega told Ms. Orth when they "advised" her, as she wrote on February 22, 2007, that the report had been sent to State Farm in January 2007?

Although a misunderstanding might give rise to a reasonable explanation for the delay, and therefore excuse it, Mr. Carbone adduced no evidence that explains why Ms. Orth believed on February 22, 2007 that "Omega have advised" that they had already sent the report to State Farm, and nothing to explain why Omega's alleged comments to Ms. Orth were so different on July 5, 2007. There is simply a bald assertion in a letter on February 15, 2007 that Omega had sent the report to State Farm, and another on July 5, 2007 that it had not. Put simply, there was no evidence before me of any communication with Omega that would have led Mr. Carbone or his counsel, even if erroneously, to believe that Omega had actually sent the report to State Farm and nothing to explain Ms. Orth's comments on July 5, 2007 in order to find a reasonable explanation for the failure to provide the report in time or to support that she had had a reasonable belief that it had been done.

With respect to the addendum, there is no evidence that the addendum delayed the preparation or completion of Dr. Becker's rebuttal report or that it necessitated additional time for Dr. Becker's rebuttal report to be completed. Mr. Carbone concedes that the addendum did not change the results of the insurer's original report. Dr. Becker completed his report before the 80 business days had passed, notwithstanding that he had received an addendum. The report having been completed in time, it appears the addendum had no prejudicial effect. Depending on its nature, it is conceivable that the addendum might give rise to a reasonable explanation for an insured person's delay in providing a rebuttal report to an insurer in the required time. Alternatively, the addendum itself might warrant a rebuttal. In this case, however, there is again no evidence that the addendum gave rise to a change in the insurer's determination or that it left Dr. Becker without sufficient time to complete his report. By his own submission, Mr. Carbone notes that the addendum did not change the results of the insurer's original report, but argues that it constitutes a "new consideration" (as opposed to a "determination"), and therefore that the 80 days should run from the date of the addendum. If this were the case, then the rebuttal would not be late. There is simply no evidence before me that the addendum constituted a "new consideration", as Mr. Carbone suggests, or that it altered the section 42 report.

I disagree with Mr. Carbone's submission that there is no cogent legislative reason to deny payment of the Omega invoice. On the contrary, the language of the Schedule is clear. Subsection 42.1(3) mandates payment by the insurer so long as the conditions set out therein are met. The third condition is that the report itself is to be provided to the insurer no later than 80 business days after the insurer gave the insured person notice of its "determination." The statute is clear: the report - not notice of the report or its existence - must be provided to the insurer within the 80 business days. Likewise, the Schedule identifies the day the insurer gives notice of its determination as the starting point from which the 80 business days are counted, and not from a new consideration or addendum. The legislature had occasion to put its mind to the timelines set out in subsection 42.1 when it doubled the time for an insured person to provide a report in the case of catastrophic impairment to 80 business days after notice of the insurer's determination, compared with the 40 business days allowed in the case of non-catastrophic impairments, set out at paragraph 4 of subsection 42.1 of the Schedule.

Mr. Carbone relies on the decision in Gray v. Pilot Insurance Company.⁴ I agree with State Farm's submission that that case is distinguishable from the instant case. In Gray, the issue was whether there was a deemed determination of catastrophic impairment due to the insurer's failure to attend in a timely fashion to the application for catastrophic impairment. The court ruled that there is no provision in the Schedule which provided for such a result. Mr. Justice Lederman ruled that he would not deem entitlement in the absence of any statutory direction. This is different from the instant case where 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.

There is no provision in the Schedule that provides for payment of a section 42 catastrophic rebuttal report outside of the 80 business days. There is an implicit statutory direction regarding entitlement to the benefit which flows directly from non-compliance with the time lines set out in the Schedule: implicitly, if the time line is not met, the benefit is not payable (unless the insured person can provide a reasonable explanation).

Conclusion

Mr. Carbone has failed to establish entitlement to the expense of the rebuttal report due to his failure to meet a time limit, which is one of the criteria required to show entitlement. He has not provided a reasonable explanation that would trigger subsection 31(1) and cure the delay.

Assuming that Mr. Carbone has met the first two requirements (at paragraphs 1 and 2 of subsection 42.1(3)), he would still have to prove that the report was provided to State Farm within 80 business days of the date that State Farm gave Mr. Carbone notice of its determination. I make no comment on the first two requirements, on the basis that, complied with or not, Mr. Carbone has not met the third requirement. He has not proved that he is entitled to the cost of the rebuttal report and the application is accordingly dismissed.

Expenses:

The parties made no submissions with respect to expenses. I recommend that the parties resolve the issue of expenses between themselves. In the event that they are unable to do so, they may bring the matter before me in accordance with Rule 79 of the Dispute Resolution Practice Code.

March 30, 2010

Jessica Kowalski Arbitrator

ARBITRATION ORDER

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

The application for arbitration is dismissed.