Neutral Citation: 2010 ONFSCDRS 73

FSCO A08-001142

BETWEEN:

SUBASHINI YOGESVARAN

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: Joyce Miller

Heard: Written submissions were received on February 5, 2010.

Appearances: Alexander Voudouris for Ms. Yogesvaran Robert S. Franklin for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Subashini Yogesvaran, was injured in a motor vehicle accident on May 13, 2007. She applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.¹ State Farm terminated weekly income replacement benefits on January 16, 2008 and housekeeping benefits on January 2, 2008. The parties were unable to resolve their disputes through mediation, and Ms. Yogesvaran applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Is Ms. Yogesvaran entitled to a special award pursuant to subsection 282(10) of the Insurance Act?
Is Ms. Yogesvaran entitled to her expenses in this arbitration?

Result:

Ms. Yogesvaran is not entitled to a special award pursuant to subsection 282(10) of the Insurance Act.
I may now be spoken to on the issue of expenses. If the parties wish to add supplementary submissions to the expenses from the preliminary hearing, they should contact the Case Administrator within 10 days of receipt of this decision to set up dates for supplementary submissions.

BACKGROUND

An arbitration of four days was set to commence before me on July 6, 2009. The issues in dispute were as follows:

Is Ms. Yogesvaran entitled to receive a weekly income replacement benefit of $360.50 from January 16, 2008 and ongoing pursuant to section 4 of the Schedule?
Is Ms. Yogesvaran entitled to receive medical benefits for the following expenses claimed pursuant to section 14 of the Schedule? i. $1,533.36 for active rehabilitation and massage provided by Dr. Chad Hefford, OCF-18 April 22, 2008; and ii. $922.68 for same provided by Dr. J. Goldin, OCF-18 July 31, 2008.
Is Ms. Yogesvaran entitled to payments of $100 per week for housekeeping and home maintenance services from January 2, 2008 pursuant to section 22 of the Schedule? Also in dispute is the amount of housekeeping paid between September 2, 2007 and January 2, 2008.
Is Ms. Yogesvaran entitled to payments for medical reports under section 24 of the Schedule? (To be added after mediation) i. $2,200, orthopaedic report of Dr. A.M. Wylie, OCF-22 September 2, 2008; ii. $2,411.50, chronic pain assessment, Dr. A. Gagliano, OCF-22 July 28, 2008; and iii. $1,800, TMJ assessment, Dr. Barry Berman, OCF-22 May 8, 2008.
Is State Farm liable to pay Ms. Yogesvaran's expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Is Ms. Yogesvaran liable to pay State Farm's expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Is Ms. Yogesvaran entitled to interest for the overdue payment of benefits pursuant to section 46(2) of the Schedule?

At the commencement of the arbitration, counsel for Ms. Yogesvaran raised a preliminary issue as to whether State Farm failed to comply with section 37 of the Schedule when terminating Ms. Yogesvaran's income replacement benefits and housekeeping benefits and, if so, what is the consequence? In addition, Ms. Yogesvaran's counsel asked that a special award be added to the issues.

The arbitration was adjourned to December 14, 2009, to deal with the preliminary issue by written submissions. I issued my decision on November 26, 2009 with the following result:

State Farm failed to properly terminate Ms. Yogesvaran's income replacement benefit on January 16, 2008 and housekeeping benefits on January 2, 2008. Consequently, State Farm is required to pay an income replacement benefit from January 17, 2008 to date with interest and ongoing until the benefits are terminated in accordance with section 37 of the Schedule. In addition, State Farm shall pay housekeeping benefits with interest from January 3, 2008 to May 13, 2009.

After my decision was issued, the parties advised that there remained only two issues for arbitration – the special award issue and expenses.

SPECIAL AWARD ISSUE

The Law

Section 282(10) of the Insurance Act provides as follows:

(10) If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 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.

Arbitrator Bujold, in the case of Brazier and RBC General Insurance Co., summarized the general principles guiding the inquiry into whether an insurer's conduct warrants a special award. Some of the main considerations are summarized as follows:

an insurer is not held to a standard of perfection in responding to a claim, that an insurer's claims decision is to be judged on the basis of the information available at the time, and not from hindsight, and that an insurer is not to be found unreasonable just because an arbitrator concludes its claims decision was wrong;²
A special award is not granted merely because the insurer incorrectly interpreted or failed to comply with a provision of the Schedule; if that were the case, a special award would be granted to every successful applicant. An insurer can come to the wrong conclusion without having acted unreasonably. To merit the granting of a special award, there must be something more – unreasonable conduct on the part of the insurer;³
the question of whether an insurer's delay or failure in paying a benefit is "unreasonable" is fact driven and highly dependent on the arbitrator's view of the evidence;⁴
unreasonable conduct does not need to amount to "bad faith" or "wilful misconduct";⁵
in considering a special award, the conduct of both parties should be considered;⁶
the sort of conduct that would constitute "unreasonable" behaviour in withholding or delaying payments includes "excessive, imprudent, stubborn, inflexible, unyielding or immoderate" behaviour;⁷
an insurer's failure to act promptly where there has been a change or clarification of the law has formed the basis for a special award.⁸

EVIDENCE AND ANALYSIS:

Written submissions were received from both parties by February 5, 2010. After reviewing the submissions and supporting documentation, I find for the following reasons, Ms. Yogesvaran is not entitled to a special award.

Ms. Yogesvaran's submissions are twofold. One, Ms. Yogesvaran submits that State Farm did not have a reasonable or valid medical basis to terminate her benefits. Two, Ms. Yogesvaran submits that State Farm by not complying with section 37 had no right to terminate income replacement benefits and housekeeping and, by not properly terminating her benefits, State Farm had "unreasonably" withheld and delayed payment of the benefits.

It has been consistently accepted in numerous arbitration decisions since the 1993 decision in Plowright and Wellington Insurance Company that the type of conduct that would constitute "unreasonable" behaviour in withholding or delaying payments includes "excessive, imprudent, stubborn, inflexible, unyielding or immoderate" behaviour. In my view, Ms. Yogesvaran failed to show that State Farm's behaviour when it terminated her benefits amounted to being unreasonable as defined in Plowright.

Ms. Yogesvaran presented a paucity of evidence in support of her claim for a special award.

Of the 51 paragraphs presented in her written submissions, approximately 35 paragraphs dealt with presenting the medical evidence in support of Ms. Yogesvaran's position that at the time State Farm terminated her benefits she was substantially disabled from performing the essential tasks of her employment and carrying out her housekeeping duties. Approximately 2 or 3 short paragraphs referred to State Farm's medical evidence, cited out of context, to show that State Farm behaved unreasonably when it terminated her benefits.

While it is possible that at an arbitration hearing Ms. Yogesvaran, based on the medical evidence, may have proved on a balance of probabilities that her benefits should not have been terminated, I nevertheless find that Ms. Yogesvaran failed to show that State Farm's actions were unreasonable when it terminated her benefits.

Ms. Yogesvaran's relies on two sentences from a rebuttal report, dated July 17, 2007, by Dr. Oshidari, a physiatrist, as an example of State Farm's unreasonable behaviour in ignoring her medical evidence over its own section 42 insurer's examinations.

Ms. Yogesvaran points out that in his report Dr. Oshidari stated:

In general, we have to have objective findings in order to transfer that into structural abnormality and impairment or disability. If there is no structural abnormality, then from a physical point of view we cannot put any limitation of function on the individual.

At paragraph 39 of her submissions, Ms. Yogesvaran submits that Dr. Oshidari ignores the issue of pain and pain perception, chronic pain and possible psychiatric diagnoses. However, at paragraph 40 of her submissions, Ms. Yogesvaran states that "... Dr. Oshidari may be representing a certain school of thought... another reasonable medical school of thought is that even without objective findings, pain, absent of objective findings can be disabling..." [emphasis added]

In my view, what you have here is a disagreement on two "reasonable" medical perspectives. The fact that State Farm relied on a medical position that Ms. Yogesvaran did not agree with does not mean State Farm did not have a reasonable basis to terminate her income replacement benefit. The fact that State Farm chose to follow a medical opinion that, even Ms. Yogesvaran acknowledges is "reasonable" but not accepted by everyone, in my view, does not translate to unreasonable behaviour.

The other example that Ms. Yogesvaran relies on for unreasonable behaviour on the part of State Farm is that it accepted the results of the report of Janet Njelesani that Ms. Yogesvaran was not substantially disabled from carrying out her housekeeping duties while ignoring the fact that Ms. Njelesani recommended that Ms. Yogesvaran have formal education and assistive devices for carrying out her household duties.

In reading the full report, I do not find that State Farm's conclusion to terminate Ms. Yogesvaran's benefits was unreasonable. For example, in her report, Ms. Njelesani stated that during the assessment Ms. Yogesvaran "demonstrated full upper and lower extremity range of motion and strength during the physical testing and further demonstrated significant activity tolerances during functional testing to independently resume her housekeeping tasks by applying principles of task pacing as needed." This finding, as well as other findings and observations in the report, leads me to the conclusion that it was not unreasonable, i.e., "excessive, imprudent, stubborn, inflexible, unyielding or immoderate" behaviour on the part of State Farm when it terminated her housekeeping benefits.

I find that these two examples presented by Ms. Yogesvaran do not amount to showing "unreasonable" behaviour on the part of State Farm when it terminated her benefits. At best, after a full arbitration hearing, it may be shown that State Farm may have come to a wrong conclusion when it terminated Ms. Yogesvaran's benefits. A wrong conclusion, however, does not automatically translate into unreasonable withholding of a benefit.

The other argument provided by Ms. Yogesvaran for a special award was summarized in one paragraph in her submissions. Paragraph 50 stated:

In addition, State Farm did not comply with Section 37 and therefore improperly terminated Mrs. Yogesvaran's housekeeping and income replacement benefits without legal right.

As noted above, at the commencement of the arbitration hearing Ms. Yogesvaran raised a preliminary issue as to whether State Farm failed to comply with section 37 of the Schedule when terminating her income replacement and housekeeping benefits. In my decision I found that State Farm had failed to comply with section 37. However, I found that Ms. Yogesvaran had a recourse for State Farm's failure to properly terminate her benefits, namely, for its failure to comply with section 37, State Farm was ordered to pay these benefits from the date it terminated the benefits until it properly complied with section 37. This was irrespective of the fact of whether she met the substantially disabled test or not.

I agree with the reasoning in Melchiorre and Wawanesa, that a special award is not granted merely because an insurer incorrectly interpreted or failed to comply with a provision of the Schedule. It is possible that an insurer can come to the wrong conclusion without having acted unreasonably. There has to be something more than mere failure to comply with a provision.

Had my conclusion in the preliminary issue been based on the test of reasonableness, I would not have found that State Farm had behaved unreasonably, as the time from when the Insurer requested the section 42 and the lapse of the last disability certificate was not very significant.

My conclusion that State Farm owed Ms. Yogesvaran her benefits until it properly complied with section 37 was based on an interpretation of the legislation read as a whole. It mirrored subsection 37(2)(a) which states that if an insured did not provide a disability certificate within 15 days of the insurer's request, the insured forfeits any benefits that may be owed, until the disability certificate is provided.

Accordingly, for these reasons, I find that Ms. Yogesvaran failed on a balance of probabilities to prove that State Farm's termination of her benefits was unreasonable. I, therefore find that Ms. Yogesvaran is not entitled to a special award pursuant to subsection 282(10) of the Insurance Act.

EXPENSES

I may now be spoken to on the issue of expenses. If the parties wish to add supplementary submissions to the expenses from the preliminary hearing, they should contact the Case Administrator within 10 days of receipt of this decision to set up dates for supplementary submissions.

June 2, 2010

Joyce Miller Arbitrator

Date

Financial Services Commission of Ontario