Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2012 ONFSCDRS 31
FSCO A08-001173
BETWEEN:
COSTEL SICOE
Applicant
and
JEVCO INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Susan Sapin
Heard: January 17, 2012 at the offices of the Financial Services Commission of Ontario
Appearances: Sam C. Pitaro for Mr. Sicoe
Kerri P. Knudsen for Jevco Insurance Company
Issues:
The Applicant, Costel Sicoe, was catastrophically injured when, in an attempt to avoid a truck, he crashed his motorcycle into a tree on June 14, 2006. He applied for and received statutory accident benefits from Jevco Insurance Company (“Jevco”), payable under the Schedule.1 Mr. Sicoe was hospitalized after the accident until February 5, 2009, when he moved to Romania, where he lives with his parents. Mr. Sicoe was 38 years old at the time of the accident. There is no dispute that he continues to require round-the-clock attendant care provided by his family in Romania.2 The dispute in this hearing is limited to the hourly rate at which Jevco is required to pay for the attendant care it agrees Mr. Sicoe is entitled to receive, i.e. whether it should be paid at the Ontario minimum wage rate, or $1.30 per hour, the minimum wage in Romania.
Under section 39 of the Schedule, Jevco is required to pay for Mr. Sicoe’s attendant care according to prescribed hourly rates for three different levels of care, as set out in a standard Assessment of Attendant Care Needs form (“Form 1”), completed by a health care practitioner authorized by law to treat and assess Mr. Sicoe’s care needs resulting from his impairment.
The Form 1 states on its face that the level of basic supervisory care Mr. Sicoe’s family provides is paid at the hourly rate of $7.75.3 In September 2007, Jevco’s occupational therapist, Ms. Anne-Marie Lappano, conducted an attendant care needs assessment and calculated the cost to be $14,502.50 per month, of which $7,556.41 was for the care component provided by his family, based on the Ontario minimum wage of $7.75 as required by the Form 1.4
The maximum amount payable under the Schedule in the case of catastrophic impairment is limited to $6,000 per month for all three levels of care, even if the actual cost is more. Jevco began paying $6,000 per month effective September 8, 2007, the date of Ms. Lappano’s Form 1. There have been no further Form 1’s.
Three and a half years later,5 Jevco advised that effective July 1, 2010 it would continue to pay for all of the attendant care recommended by Ms. Lappano in the Form 1, but only at a rate equal to the minimum wage in Romania ($1.30 per hour), for a total of $1,596.10 per month. Mr. Sicoe claims he is entitled to the monthly maximum of $6,000.
The parties were unable to resolve their disputes through mediation, and Mr. Sicoe applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The preliminary issue is:
- How should the quantum of the monthly attendant care benefit be calculated in accordance with the Schedule?
Result:
- The attendant care benefit shall be calculated in accordance with the rates set out in the Form 1 dated September 17, 2007.
ANALYSIS:
The provisions of the Schedule requiring insurers to pay for attendant care services are both mandatory and precise. Under sections 16 and 39(18), insurers shall pay for expenses “incurred,” with the cost determined in accordance with Form 1:
16(2) The attendant care benefit shall pay for all reasonable and necessary
expenses incurred by or on behalf of the insured person as a result of
the accident . . .
(4) The monthly amount payable by the attendant care benefit shall be determined in accordance with Form 1.
39(16) An assessment of attendant care needs under this section in respect of accidents occurring on or after March 1, 2006 but before February 1, 2007 shall be in the form of and contain the information required in the “Assessment of Attendant Care Needs” dated December 31, 2005, as it read on March 1, 2006.
The Form is available on the website for the Financial Services Commission of Ontario.
Jevco does not dispute the amount or levels of attendant care required by Mr. Sicoe. It balks at paying his family the $7.75 per hour rate specified in the Form 1 for the supervisory care they provide. It argues that the only way to give meaning to the term “incurred” in section 16 is if Jevco is required to pay the actual cost of Mr. Sicoe’s care, which, in this case, would be minimum wage in Romania. Jevco submits this interpretation is supported by sections 16 and 39. It argues that, unlike the equivalent section 50 in the previous Schedule,6 which listed specific hourly rates, sections 16 and 39 are silent about rates. This, submits Jevco, is a substantive change indicating the legislature’s intention to allow for rates that reflect actual cost, rather than rates pre-determined by regulation.
Jevco reasons that if it is required to pay the hourly rate of $7.75 (Ontario minimum wage at the time of the accident), then Mr. Sicoe would benefit from a windfall, which is contrary to the purpose of the statutory accident benefits scheme.
I find Jevco’s arguments to be without merit for two main reasons. First, the Schedule is not “silent” on the issue of rates. Second, as pointed out by Mr. Sicoe, Jevco’s narrow interpretation of the term “incurred” is not consistent with the broad, remedial and purposive interpretation of that term well-established by this Commission and the courts. Jevco feels that Mr. Sicoe’s “unique” and “novel” circumstances merit a different interpretation. However, Jevco provided no compelling reasoning or case law to persuade me that I should depart from existing jurisprudence.
The “silence” argument
Contrary to Jevco’s assertion, a plain reading of ss. 50(6)2 of the previous Schedule and ss. 16(4) and s. 39 of the current regulation reveals no substantive difference that would signal a change in legislative intent from the one version to the other. True, subsection 50(6)2 did indeed specify that attendant care “described in Part II of Form 1” was to be paid at the minimum hourly wage prescribed under the Employment Standards Act, and actually listed hourly rates for Part I and Part III care.
But ss. 16(4) and s. 39 of the current Schedule are no less precise: not only does 16(4) mandate the use of the standard Form 1, but ss. 39(16)(17)(18) and (19) prescribe exactly which version of Form 1 is to be used, depending on the date of the accident, and where to find the right one —“on the website for the Financial Services Commission of Ontario.” 7
The four versions of Form 1 on the FSCO website are virtually identical except for the hourly rates they contain. The Form 1’s are updated and the hourly rates for attendant care increased from time to time by regulation8 and communicated to the public on the Commission’s website in the form of bulletins. The hourly rate for level 2 attendant care – the level Mr. Sicoe’s family provides - is increased consistently with the increase in the general Ontario minimum wage.9 The most recent Form 1 on the website, dated August 31, 2010, does not contain hourly rates but states: “Please refer to the hourly rates as set out in the Superintendent’s Guideline issued under s. 19(2)(a) of the SABS.” This change, obviously, is to eliminate the need to constantly update the Form 1 itself to stay current with changes in hourly rates. This is similar to ss. 50(6)2 of the former Schedule, which tied the hourly minimum wage rate to the Employment Standards Act.
The legislature’s efforts to remove any hint of uncertainty in calculating attendant care costs are plain to see. Every Form 1 requires the exact amount of care to be calculated right down to minutes per week for a wide range of very discrete activities, multiplied by the relevant hourly rate. Such minute precision leaves no uncertainty as to the amount and type of care required or its cost. I find this to be consistent with the intent of the legislature to provide benefits quickly and efficiently, at predictable cost, to the most vulnerable accident victims – those so catastrophically injured as to require increased and complex levels of care.
Given this degree of precision and control of costs insurers are mandated to pay, I fail to see how removing hourly rates from the text of a subsection in one version of a regulation, and including them in a mandatory standard form in a later version, is a “substantive” change signalling a change in legislative intent. What the legislature has done is made it simpler to ascertain cost at any point in time.
Mr. Sicoe cited a number of cases supporting his position that insurers are prohibited from contesting the hourly rates contained in the previous Schedule, and that arbitrators are bound by the deemed, and fixed, hourly rates stipulated therein. 10 I find these cases apply equally to the case at hand, and Jevco has no basis for disputing the hourly rates prescribed in the Form 1 completed on behalf of Mr. Sicoe.
The “incurred” argument
Jevco’s position is that the only way to give meaning to the term “all reasonable and necessary [attendant care] expenses incurred by or on behalf of the insured person” in ss. 16(2) of the Schedule is if “incurred” expenses means “actual” expenses.
The jurisprudence says otherwise.
As reiterated by Arbitrator Muir in one of the leading cases, McMichael and Belair Insurance Company, expenses for attendant care must meet three criteria only: they must be reasonable, they must be necessary, and the cost must be ascertained:
It is well-established that an applicant need not actually receive the items or services claimed in order to be entitled to an expense. To do otherwise would allow the insurer to set up the inability of an insured to pay for a benefit as a shield from its obligation under the policy of insurance. It is sufficient that the reasonableness and necessity of the service be established and that the amount of the expenditure can be established with certainty.11
[emphasis added.]
Arbitrator Muir’s decision on the meaning of “incurred” in the Schedule was upheld on appeal and affirmed by the Divisional Court. In its decision, the Court relied on an earlier decision in which it had had occasion to consider the meaning of the term “incurred” in depth, Smith (Committee of) v. Wawanesa Mutual Insurance Co.12
In Smith, the Court reviewed a number of cases dealing with “incurred” and with interpretive principles that apply to remedial statutory benefits. It concluded these cases yielded three general principles: One: the word “incur” is capable of both a narrow and a broad meaning. In the wider sense, “. . . the expenditure is incurred . . . as soon as it is known with certainty that it is necessary and its amount is ascertained;” Two: the provision should be construed contra proferentem, as coverage provisions should be construed broadly and exclusion clauses narrowly; and Three: a remedial and purposive interpretation suggests that unfairness would result from a narrow interpretation.
As noted, Jevco does not dispute that the services required by Mr. Sicoe are reasonable or necessary. And, as we have seen, sections 16 and 39 of the Schedule, the standard Form 1 integral to the Schedule, and various superintendent’s guidelines, together ensure that the amounts for attendant care expenditures are ascertained to the last penny.
The requirements for entitlement being met, there is nothing left for Jevco to argue, except that it is not “fair” that Mr. Sicoe should receive a “windfall,” which is essentially what Jevco is saying. Given that the actual cost of Mr. Sicoe’s attendant care is $14,502.50 per month, with $7,556.41 as the cost of the care provided by his family, and the maximum payable under the Schedule is $6,000, Jevco’s “windfall” argument is ridiculous.
In support of its argument that “incurred” expenses should mean actual cost, Jevco relied on two decisions, McKnight and Guarantee Company of North America13 and Fehringer v. Zurich Insurance Company14, neither of which support such an interpretation. The Fehringer decision does not, as alleged by Jevco, stand for the proposition that an arbitrator has discretion to order payment of an amount less than that set out in the Form 1, because in that case, the voluntary financial arrangements between the insured person and her care provider were not in dispute, and the arbitrator simply accepted them as reasonable.
The McKnight decision dealt with establishing entitlement to attendant care benefits, not cost, and the arbitrator clearly held that costs were to be calculated in accordance with Form 1. On the issue of entitlement itself, the decision is, in my view, based on a mistaken reading of an earlier decision. In any event it is contrary to later, and more persuasively reasoned decisions, discussed above.
I note that the most recent Attendant Care Hourly Rate Guideline, dated June 2010 and available on the Commission website, establishes the maximum expense that automobile insurers are liable to pay under the Schedule for attendant care services (for accidents after September 1, 2010).15 The Guideline also states that “Insurers are not prohibited from paying above the maximum hourly rates established in this Guideline.” It does not say, however, that insurers can pay less.
The Public Guardian and Trustee
At this time, Jevco pays Mr. Sicoe’s attendant care benefit of $6,000 per month to the Public Guardian and Trustee (PGT), which in turn pays it out on Mr. Sicoe’s behalf, allegedly in a lesser monthly amount. I was not presented with any evidence about the nature of the PGT’s role, or how much it pays for attendant care on Mr. Sicoe’s behalf.
Jevco argues that, at the very least, it should only be required to pay the PGT the lesser amount the PGT actually pays out for Mr. Sicoe’s attendant care, and not the full $6,000 it currently pays. To the extent that this is another variation of Jevco’s “actual cost” argument, above, I dismiss it for the same reasons. The Schedule sets out Jevco’s, not the PGT’s, legal obligation to pay attendant care benefits according to certain criteria and in certain amounts. I find I am bound by these hourly rates, and have no jurisdiction otherwise despite the circumstances.16
EXPENSES:
I exercise my discretion to award Mr. Sicoe his expenses incurred in this preliminary issue hearing.
March 13, 2012
Susan Sapin Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2012 ONFSCDRS 31
FSCO A08-001173
BETWEEN:
COSTEL SICOE
Applicant
and
JEVCO INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Jevco is required to calculate Mr. Sicoe’s attendant care benefit payable as set out in the Form 1 dated September 17, 2007.
March 13, 2012
Susan Sapin Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- The facts relevant to this preliminary issue are not in dispute and are contained in an Agreed Statement of Facts filed by the parties as Exhibit 1.
- The rate for Level 1 care, routine personal care, is $11.23 per hour, and for Level 3, complex health care, the hourly rate is $17.98.
- Ms. Lappano prepared two separate Form 1’s for this purpose, Exhibit 2, tab 3.
- March 24, 2011
- Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before December 1, 1996
- Subsections 39 (16)(17)(18) and (19) each refer to a specific Form 1 based on the date of the accident
- In this case, O. Reg. 63/08 made under the Insurance Act.
- See for example Bulletin A-03/08.
- Daly v. ING Halifax Insurance Co. 2006 CanLII 42548 (ON CA), [2007] I.L.R. 1-4568, 44 C.C.L.I. (4th) 3; Faerber-MacMillan and Allstate Insurance Co. of Canada (FSCO A99-000201, November 27, 2000), and Alvarez and Liberty Mutual Insurance Company (FSCO A98-000801, July 20, 2001)
- (FSCO A02-001081, March 2, 2005), affirmed on appeal: (FSCO P05-00006, March 14, 2006); and by the Divisional Court: [2005] O.F.S.C.D. No. 34
- 42 O.R. (3D) 44
- (FSCO A02-000299, October 28, 2003)
- (FSCO A99-000699, February 28, 2002)
- Superintendent’s Guideline No. 03/10
- See for example, Faerber-MacMillan, supra.```