Neutral Citation: 2012 ONFSCDRS 73

FSCO A10-003081

BETWEEN:

MAU BUI Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON A MOTION FOR INTERIM BENEFITS

Before: Arbitrator John Wilson

Heard: April 13, 2012, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Kelley Campbell for Mr. Bui Sven Macarenhas for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mau Bui, was injured in a motor vehicle accident on January 25, 2008. He applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ State Farm terminated benefits. The parties were unable to resolve their disputes through mediation, and Mr. Bui applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Mr. Bui has brought a motion, pursuant to section 67 of the Dispute Resolution Practice Code –Fourth Edition, for interim benefits to be paid to him pending the resolution of his dispute with State Farm.

In his Notice of Motion, Mr. Bui claimed immediate payment of the arrears, plus interest, of his income replacement benefits, together with a special award to compensate him for what he viewed as the unreasonable withholding of those benefits. He claimed entitlement due to his severely deteriorating financial situation and his family’s need for support, as well as his belief in the well-founded nature of his claim.

The issue on this motion is:

Is Mr. Bui entitled to interim benefits pursuant to section 279(4.1) of the Insurance Act?

Result:

State Farm shall pay Mr. Bui interim benefits.

EVIDENCE AND ANALYSIS:

Section 279(4.1) of the Insurance Act gives arbitrators the discretionary authority to make interim orders pending the final order in any matter. This is just such a request.

Mr. Bui, considering that an urgent situation currently exists, and finding that his financial resources are inadequate to address his current needs, has asked that State Farm be ordered to pay arrears of benefits, ongoing benefits and interest. In essence, Mr. Bui was looking for a preliminary determination and immediate payment of his claim against State Farm.

His claim rested on his dire financial situation, the finding of a mysterious previous report by the assessor who had supported the termination of benefits that seemed to contradict his official findings, and the ultimate strength of Mr. Bui’s claim for benefits.

State Farm resisted Mr. Bui’s claim on the basis that if there was any financial urgency, which was denied, the fault lay with Mr. Bui and his financial difficulties that pre-dated the termination of benefits and was not the fault of the Insurer. It also pointed to the delays caused by the rescheduling of the pre-hearing at the request of counsel for Mr. Bui and the nearness of the substantive hearing date, currently scheduled to be some three months after this motion.

As counsel identified at the hearing, there is some divergence amongst arbitrators as to the grounds for the granting of interim benefits in the arbitration process. As Arbitrator Killoran stated in Henry and Aviva Canada Inc.:

Many considerations have been relied on by arbitrators to determine entitlement to interim benefits. Principally, arbitrators have applied the prima facie test and that of urgency/necessity. A prima facie case is one in which a party provides evidence, which if unanswered and believed, is sufficient to render a reasonable conclusion in favour of entitlement. In Nguyen and State Farm Mutual Automobile Insurance Company of Canada, Arbitrator Wilson embraced a “look at the whole case” approach to awarding interim benefits.²

The “holistic” or “look at the whole case” approach³ to the award of interim benefits is not novel and owes much to Lord Denning’s own analysis of the criteria for mandatory relief which remains relevant:

the right course for a judge is to look at the whole case. He must have regard not only for the strength of the claim but also the strength of the defence, and then decide what is best to be done ... the remedy by interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules.⁴

An interim order is discretionary, made judicially on the evidence on motion of one of the parties. Where the claim was frivolous and had no chance of success no order would be made.

Interim benefits must be examined in the context of the social policy behind the accident benefit system, and whether a grant of interim benefits will favour those goals.⁵

Eberhard J., in Gill v. Zurich⁶, made the following comments on the purposes of the statutory accident benefit scheme:

I adopt the statement of purpose articulated by Arbitrator Mackintosh at page 12 in Edgar v. Wellington Insurance Co.[1994] O.I.C.D. No. 34 File A-005441 that SABS is remedial, that is to be interpreted in a broad and liberal way, and that its principal object is to provide a “fair and adequate income stream to those who are injured and disabled from work”. The victim is to receive an approximation of wages, and not be compensated more or less.

In Smith v. Co-operators⁷, Gonthier J. made the following comment:

There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance.

In Nguyen, I considered the balance of the evidence, potential success, urgency and need and the failure to respect the provisions of the Schedule, inter alia, while viewing no single element of the above as a specific pre-condition, the absence of which will necessarily lead to the rejection of an interim application for benefits. I see no reason to alter my approach in this matter.

Mr. Bui suffered head and other injuries in a motor vehicle accident and was taken by ambulance to hospital. A CT scan taken at the time showed subcutaneous soft tissue swelling, and Mr. Bui complained of headache, neck pain and lower back pain.

In the days following the accident, Mr. Bui complained of further headache, neck pain and lower back pain. His physician referred him for x-rays and physiotherapy.

Mr. Bui continued to complain of constant back pain, headaches, and left leg pain. He characterized himself as depressed at the time.

Mr. Bui was unable to continue to operate his business in the weeks following his accident, and he had to rely on his wife’s parents for support. In Mr. Bui’s opinion, the financial stresses following the accident lead to the breakup of his marriage.

Mr. Bui filed medical reports that, if believed, would justify an award of entitlement to income replacement benefits. He has been unable to return to any work, and the possibility of lucrative alternative employment is restricted by his limited English.

Following the breakdown of his marriage he moved back to British Columbia where he had close relatives and support.

Mr. Bui attended with a family physician in British Columbia, Dr. Yang, who ordered a CT scan of his back. The resulting report showed a mild left posterolateral disc bulge or small herniation at L4-5. It also recorded a moderate sized central and left posterior disc herniation at L5-S1 and mentioned a possible impingement of the nerve roots.

There followed a referral to an orthopaedic surgeon who found a herniated lumbar disc L5-S1 left side with sciatica and recommended back surgery.

By the summer of 2009 Mr. Bui’s complaints had not resolved. Nor had his financial problems. Although his new spouse was now working for a travel agency, they both moved in with his parents for support and shelter.

On August 20, 2009, Dr. Lee performed back surgery.

In November 2009, Mr. Bui underwent a full psycho-vocational assessment to determine if he was capable of working effectively at any jobs to which he was suited by reason of education training and experience.

The assessors noted Mr. Bui’s psychological and physical difficulties and concluded that it would be “difficult to envisage any occupation that would match his experience, which is limited to physically demanding manual labour occupations, or his education and training, which are also quite limited.”

The assessors found that Mr. Bui suffered from a complete inability to perform any occupation for which he would otherwise be capable, taking into account his education, training and experience, and found that the situation was related to the injuries arising from his motor vehicle accident.

At about the same time, an orthopaedic surgeon, Dr. Tommy Chan, opined that his “prognosis remains poor and unfavourable.” Likewise, in January, the family physician, Dr. Ting, completed a further disability certificate stating that Mr. Bui suffered from a complete disability to carry on a normal life.

The issue of an expert report by Dr. P.J. Kokan, the Insurer’s assessor, is also worthy of comment. This report was the basis for the Insurer’s denial of benefits.

The report from Dr. Kokan was released April 28, 2010. His ultimate conclusion was postponed until he had the opportunity to see the transferable skills analysis. However, he opined:

Though there is not [sic] medical contraindication of the claimant returning back to the lighter type of work at this time, I believe that his rehabilitation will be more successful if he were to be provided with the rehabilitation program, with the work conditioning and gradual return to work in the lighter capacity. The claimant has not reached the point of maximal improvement due to the lack of organized rehabilitation treatment at this time.

Another version of the same report, by the same physician, was found in the files of one of the treatment providers, presumably after having been forwarded there by the assessor. In this version, Dr. Kokan clearly concluded:

The insurer [sic] at this time is unable to engage in any employment for which he is reasonably suited by education, training or experience. He still has a mechanical discogenic lumbar pain radiating into the left leg. The symptoms will interfere with the heavy physical activities and plaintiff requires rehabilitation treatment with vocational counseling at this time.

The Insurer claimed to have no knowledge of this alternative report until it was provided by Mr. Bui’s counsel. If the alternative report were correct, Mr. Bui would have remained entitled to ongoing benefits.

It is noteworthy that the alternative report is consistent with the reports of Mr. Bui’s treating physicians and the assessments that he had received to date, including the vocational assessments.

What actually were the circumstances surrounding the mysterious and contradictory reports? Very little is known. If Dr. Kokan himself knows, his information was not made available.

Sopinka J.⁸ cited the following words of Lord Mansfield in Blatch v. Archer in support of the proposition that, in the absence of evidence to the contrary adduced by the defendant, an inference of causation may be drawn although positive or scientific proof of causation has not been adduced:⁹

It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.

Neither affidavit nor viva voce evidence was provided by State Farm in this context. It is also noteworthy that State Farm, to the date of the hearing, had not released its complete adjusting file as requested, prompting Mr. Bui to bring a further motion to that end.¹⁰

In the absence of explanation or information to the contrary, I may draw the inference that the “alternative report” is at least as correct a representation of Dr. Kokan’s findings as the report ultimately released.

While it is unnecessary at this point to make any finding as to why and in what circumstances the report was changed, the lack of answers does raise serious questions as to the handling of this case and whether the Insurer acted in good faith on the basis of all the available information.

The factors favouring an award of interim benefits in this matter are the urgency; the fact that Mr. Bui’s claim appears to be well-founded and not frivolous; the length of time that has passed since payments ceased, with no alternative cash-flow source; and the fact that, on a preliminary analysis at least, Mr. Bui is likely to be successful in his claim for income replacement benefits.

In particular, Mr. Bui’s financial situation was front and centre in this motion hearing. Mr. Bui produced credit card and loan statements that confirmed his dire straits. He was dependent on borrowing and gifts from family to keep from defaulting and to provide sustenance to his wife and family. Mr. Bui had no regular income stream, with the exception of his family’s charity.

The Insurer made much of the fact that some level of indebtedness appeared from Mr. Bui’s testimony, to pre-date the termination of income replacement benefits. Given the low level ($182.82 per week) of benefits being paid, an ongoing deficit in Mr. Bui’s finances would not be unanticipated.

I do not accept that Mr. Bui’s debt run-up has to be solely the responsibility of the Insurer’s actions for a claim to succeed. Common sense dictates that the lack of an alternative income stream will create a cash-flow crunch for anyone in Mr. Bui’s position. That amounts to a situation of urgent financial peril, whatever may be the ancillary causes.

On the basis of the information filed on this motion, and the testimony of Mr. Bui, I accept that he has a strong case for benefits, and is likely to succeed in arbitration.

The potential that the Insurer might be prejudiced by any inability of Mr. Bui to repay benefits is offset by both the urgency of this matter and the likelihood of success by Mr. Bui in this arbitration.

Although a relatively short time remains until the arbitration hearing, a substantial delay may yet be expected before the final order is issued. If an interim benefit is to serve as a life-line, it must be used in a timely manner, before the victim has drowned. Mr. Bui’s financial evidence seems to indicate that although he has not gone down for the third time, he is close.

I accept therefore that an interim income replacement benefit would be consistent with the aims of the Schedule in this matter.

Since this is an interim benefit, and the final hearing is approaching, I see no reason to determine all the issues set for the final arbitration hearing at this time.

Rather, instead of awarding all arrears of income replacement benefits since the stoppage, I order that State Farm pay an interim income replacement benefit of $185 per week, effective December 8, 2011, the date of the first pre-hearing, when this interim claim was first put forward. Payments shall be made until the final arbitration order dealing with the benefit is signed and delivered to the parties, unless otherwise varied by an arbitrator’s order.

Interest and Special Award

In my view, this award of interim benefits is designed to address Mr. Bui’s personal distress during the relatively brief run-up to the arbitration hearing. It does not finally determine ongoing benefits or provide the last word on entitlement and conduct, which can only be determined after a full arbitration hearing.

I decline to deal with interest at this time, as such will form part of the substantive hearing in three months’ time. Likewise, although the special award claim certainly appears not to be frivolous, it deserves to be dealt with on a full evidentiary record at the arbitration hearing, including the adjustor’s notes which were not available for this motion.

EXPENSES:

If the parties are unable to agree on the issue of the expenses of this motion, within the next 30 days, I may be spoken to briefly on that issue. To that end I would anticipate that any party claiming its expenses would immediately serve and file its bill of expenses.

May 9, 2012

John Wilson Arbitrator

Date

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