Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 99

Appeal P11-00025

OFFICE OF THE DIRECTOR OF ARBITRATIONS

PERSONAL INSURANCE COMPANY OF CANADA

Appellant

and

CHRISTOPHER HOANG (A MINOR BY HIS LITIGATION GUARDIAN, SAN TRIEU)

Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. Todd J. McCarthy for the Appellant, Personal Insurance Company of Canada

Mr. Robert M. Ben for the Respondent, Christopher Hoang (a minor by his Litigation Guardian, San Trieu)

HEARING DATE:

April 25, 2012

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 The Arbitrator’s September 29, 2011 decision is confirmed except for the quantum of the special award, which is rescinded. The question of the amount of the special award is referred back to arbitration.

2. If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79 of the Dispute Resolution Practice Code (Fourth Edition – Updated August 2011), an expense hearing shall be requested, as set out below, within thirty days of the date of this decision.

June 22, 2012

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

This is an appeal from the September 29, 2011 decision of Arbitrator Ashby (the “Arbitrator”) pertaining to the claims of the Respondent, Christopher Hoang (a minor by his Litigation Guardian, San Trieu), advanced under the Schedule.¹

On August 6, 2004, when he was six years old and going into Grade 1, Christopher was struck by a car. As a result, he sustained a catastrophic brain injury. The Respondent applied to the first-party automobile insurer, the Appellant, Personal Insurance Company of Canada, for accident benefits under the Schedule. The Appellant denied certain specific claims for rehabilitation benefits. In her decision, the Arbitrator ordered that the Appellant pay the Respondent:

1. $13,300.00 for tuition and related educational expenses for the 2008/2009 Bond Academy school year.

2. $30,193.90 for rehabilitation support worker (RSW) services.

3. Interest under subsection 46(2) of the Schedule on overdue payments.

4. A special award of $28,000.00, inclusive of interest, pursuant to subsection 282(10) of the Insurance Act, R.S.O. 1990, c. I.8.

In her subsequent March 23, 2012 decision, the Arbitrator fixed the Respondent’s legal expenses at $50,525.60, inclusive of HST.

The Appellant asks that the Bond Academy tuition award and the special award be set aside. In the alternative, it asks that if the Bond Academy tuition expenses are disallowed on appeal, the special award be reduced by the applicable ratio. The Appellant does not appeal the $30,193.90 allowed for RSW services or the legal expenses award.

As a preliminary matter, the Appellant asked that the Arbitrator’s September 29, 2011 order be stayed. The criteria for a stay are set out in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000). Weighing, in part, that it was not disputed that the appeal was brought in good faith versus the substance of the grounds for appeal provided at that point, considering the exceptional nature of a stay order under the Insurance Act and the legislative intent of a special award, I was not persuaded, in my December 23, 2011 preliminary appeal order, to exercise my discretion to stay the Arbitrator’s order.

II. THE PARTIES’ SUBMISSIONS

The Appellant submits the Arbitrator erred in awarding the Bond Academy expenses, as follows:

1. Entitlement to rehabilitation expenses is addressed in section 15 of the Schedule. For a benefit to be payable, it must be reasonable and necessary, incurred and undertaken.

Rehsi and Dominion of Canada General Insurance Company, (FSCO A06-002468, June 30, 2008), holds that there must be evidence that the benefit in question will reduce the effects of an accident-related disability.

It is insufficient, it is submitted, that the benefit claimed is simply helpful in some generic sense. The Bond Academy expense was neither reasonable nor necessary given the evidence that Christopher was performing above average in school and was integrated into his classroom. Thus, the requested benefit would not reduce the effects of an accident-related disability within the meaning of the Schedule.

2. The Arbitrator suggested that attendance at the Bond Academy would likely reduce the required RSW services. As the full amount for such services was awarded, the Bond Academy tuition can be neither reasonable nor necessary.

3. When an insured has been found catastrophically impaired, there is only a reservoir of $1,000,000 available for medical and rehabilitation expenses for an insured’s lifetime. That limited sum should not be expended on items less reasonable or less necessary. As future needs may be far more reasonable and necessary, the Bond Academy tuition is not payable by the Appellant as the Respondent did not pay the expense or incur any liability. Rather, Christopher continued to attend his current public school.

4. Section 15 also mandates that the benefit be “undertaken,” a more stringent requirement. In Belair Insurance Company v. McMichael, 2007 CanLII 17630 (ON SCDC), the Divisional Court addressed “incurred” in the context of attendant care. Attendant care does not include the further prerequisite of “undertaken.” Black’s Law Dictionary, 7th Ed. (St. Paul, Minn: West Group, 1999), defines “undertake” as to take on an obligation or task; give a formal promise/guarantee; act as surety for (another); make oneself responsible for (a person, fact, or the like). In this case, there was no evidence the tuition expenses were undertaken. Rather, Christopher did not undertake study at the Bond Academy as he was already in attendance at a public school.

5. The Bond Academy tuition does not come under paragraph 15(5)(g) of the Schedule as “vocational or academic training.” Therefore, to be recoverable, it must fall under the catch-all paragraph 15(5)(l), “other goods and services that the insured person requires.” The Respondent, it is submitted, did not require the Bond Academy.

The Appellant submits that the Arbitrator erred in granting a special award, as follows:

1. The Arbitrator failed to reasonably assess all of the available medical information, including Christopher’s remarkable recovery and the family dynamics that may have been a problem. The Arbitrator’s reasoning regarding the Appellant’s reliance on the medical report of Dr. E. MacNiven, a neuropsychologist, is simply a “red herring.”

2. There was no evidence that the Appellant failed to consider all of the available evidence or that it agreed that its medical experts were wrong, yet adhered to their opinion.

Rather, the evidence was clear that the Appellant considered all of the available evidence, including medical reports of both parties and the records of the treating medical and educational experts in assessing the submitted claims. The claims examiner specifically took into account that the Respondent was achieving great success at the end of his grade 7 year with As and Bs, and was receiving very positive comments from his teachers. Therefore, there was no basis for finding that the Appellant was stubborn, unyielding or unreasonable in its denial of the disputed benefits and, thus, there was no basis for a special award.

3. There is insufficient detail for the Appellant to know why it is subject to a special award, specifically, what aspects of the evidence from the Hospital for Sick Children or Bloorview Kids Rehabilitation Hospital made it unreasonable to have denied the claims. Rather, these records, as well as Christopher’s educational records, contained evidence justifying the denial of the disputed rehabilitation expenses.

4. It is insufficient for an Arbitrator to order a special award simply on the basis of preferring one set of experts over another and then condemn a party, in hindsight, for relying on its experts. This decision sets a dangerous precedent that every refusal by an insurer is stubborn and unreasonable and that any unsuccessful insurer will also face the routine sanction of a special award despite evidence supporting its denial.

The Appellant submits that, in any event, the Arbitrator erred in the quantum of the special award, for the following reasons:

1. The seven-step approach in Liberty Mutual Insurance Company and Persofsky, (FSCO P00-00041, January 31, 2003), was not followed, nor did the Arbitrator provide any rationale or reasons for the calculation of the $28,000 special award. Thus, the Appellant is at a loss as to how the special award was determined.

2. The benefits awarded by the Arbitrator under the Schedule total approximately $40,000. The $28,000 special award exceeds the maximum 50% allowed under the Insurance Act. In the alternative, the interest component of the special award has not been paid and is still in dispute. The Arbitrator should have waited for submissions on the calculation of interest before determining a special award. As the Arbitrator has retired, if a special award is found payable, this Appellate Officer should be seized with determining the amount of the special award, the precedent for which is found in Persofsky.

The Respondent submits, firstly regarding the Bond Academy expense, that:

1. A purposive and remedial interpretation requires that the legislation be read so as not to require an insured person to finance or pledge his or her credit to secure the very benefits for which they are insured. The case law is consistent that an expense, whether for medical, rehabilitation, attendant care or other services, may be “incurred” even where the expense was not actually paid or the service not received. It is sufficient to establish the reasonableness, necessity and amount of the benefit.

2. The Arbitrator found that Christopher’s family undertook an investigation of the appropriateness of the Bond Academy, raised the idea with his rehabilitation team and obtained their agreement. In any event, the purpose of the word “undertaken” in section 15 is simply to define the scope of what that provision will encompass.

3. McMichael did not interpret “incurred” differently in the context of rehabilitation expenses. Monks v. ING Insurance Company of Canada, 2008 ONCA 269, made no distinction between “incurred” and “undertaken,” stating:

There is no dispute that one of the pre-conditions to the receipt of accident benefits under the SABS is that the cost or expense in question be “incurred”. For example, ss. 14(2) and 16(2) of the SABS provide that medical and attendant care benefits must pay for “all reasonable and necessary expenses incurred by or on behalf of the injured person as a result of the accident” … and s. 15(2) states that a rehabilitation benefit must pay for “all reasonable and necessary measures undertaken” by the insured person. [emphasis in the original]

The Respondent was unable to enroll at the Bond Academy and benefit from its academic training without payment by the Appellant. The Respondent should not be penalized when the need existed and the benefit was properly payable. In accord with the remedial and purposive interpretation of the Schedule, it would be unfair for the Respondent not to be paid an otherwise reasonable and necessary expense. Otherwise, the Appellant could refuse payment and then say the issue is now moot as the school year has come and gone.

4. The Arbitrator held that because Christopher did not attend the Bond Academy due to the Appellant’s refusal, the claimed RSW services were properly payable.

5. It is not the Appellant’s function to act as gatekeeper, determining entitlement based on whether something may be more reasonable or necessary in the future.

Regarding the special award, the Respondent submits that:

1. The Arbitrator’s finding that the Appellant’s actions were unreasonable is a finding of fact. This finding of fact rests on the Arbitrator’s view of the evidence and is entitled to significant deference, provided there is an adequate evidentiary basis and the Arbitrator took into account all relevant evidence.

2. The Appellant gave no reasons for its benefit denial other than Dr. MacNiven’s report. The Arbitrator found that the Appellant blindly relied on the assessments of Drs. MacNiven, L.P. Tuff (neuropsychologist) and T. Dumitrascu (psychologist) notwithstanding the overwhelming and consistent medical information and opinions of the Respondent’s rehabilitation team. The Appellant’s failure to pay, given Christopher’s young age and the medical opinion the services were necessary for his progress, amounted to a stubborn refusal to pay a reasonable and necessary benefit.

3. Christopher’s family paid for rehabilitation support services even after the Appellant’s termination, as they observed deterioration in his behaviour without that assistance. Nonetheless, due to financial reasons, the family still had to reduce the level of those services.

4. Dr. E. McKinnon, a neuropsychologist, opined that Christopher would more efficiently and proactively realize his cognitive potential at the Bond Academy and benefit from its more supportive psychosocial environment in better establishing and maintaining friendships. Christopher’s challenges regarding abstract thinking and organizational skills were becoming more pronounced. His teacher reported that he was exhibiting immature behaviour that compromised his ability to make friends. The Arbitrator found that there was no evidence of suitable community programs for him equal to those at the Bond Academy.

The Appellant denied the Bond Academy tuition based on Dr. MacNiven’s insurer medical examination. The Arbitrator found it insufficient for the Appellant to merely state it was relying on that report, particularly given the weakness found in the report. Accordingly, there was more than adequate evidence to support the special award.

Regarding the amount of the special award, the Respondent submits that:

1. The Arbitrator provided sufficient indication how the special award was calculated. The Bond Academy award was $13,300 with applicable interest of $13,830.30. Rehabilitation support services were $30,193.90, plus interest of $42,842.30. The total award including interest was, therefore, $100,112.70. The Arbitrator’s lump sum award of $28,000 was approximately 28%, significantly less than the 50% maximum.

III. ANALYSIS

1. The Bond Academy

Under subsection 15(2) of the Schedule, the Respondent must establish, on a balance of probabilities, that the tuition and related expenses of admission to the Bond Academy were:

…reasonable and necessary measures undertaken by an insured person to reduce or eliminate the effects of any disability resulting from the impairment or to facilitate the insured person's reintegration into his or her family, the rest of society and the labour market. [emphasis added]

Subsection 15(5) provides that “the rehabilitation benefit shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for a purpose referred to in subsection (2)” (emphasis added). Subsection 15(5) then provides a specific list of expenses, including “other goods and services that the insured person requires” (with the exception, as modified by paragraph 17(1)(a), of a case manager). Paragraph 15(5)(g) sets out one of the permitted expenses as “vocational or academic training.”

At arbitration, the Appellant submitted that there was no jurisdiction to order tuition and related expenses of a private school as “academic” modifies vocational training in paragraph 15(5)(g), and cannot stand alone. The Arbitrator held that the Schedule must be interpreted in a purposeful manner and, in the context of this claim, paragraph 15(5)(g) must be interpreted as either vocational or academic training. The Arbitrator found no ambiguity in the language.

Sullivan and Driedger on the Construction of Statutes, Fourth Edition (Markham Ontario, Butterworths, Canada Ltd. 2002), at page 66, states that the “courts often declare that ‘and’ is conjunctive and ‘or’ is disjunctive.” However, to avoid absurdity, they must sometimes be read vice versa. I see no absurdity in the word “or” in paragraph 15(5)(g) being interpreted as disjunctive.

The evidence of Dr. McKinnon was before the Arbitrator that the Bond Academy was a “private school setting with a smaller teacher to student ratio as well as opportunities for additional and individualized support after school around homework and project completion.” I am not persuaded that the Arbitrator erred in law in finding that the Bond Academy benefit claim fell within paragraph 15(5)(g) of the Schedule as vocational or academic training.

The Arbitrator noted the evidence of Dr. D. L. MacGregor, a neurologist and paediatrician who conducted a defence tort assessment, that:

This child thus has significant cognitive and behavioural deficits as a result of this accident. He is showing satisfactory scholastic functioning at the present time however, he must be considered to be at very high risk – given the findings of bilateral frontal lobe contusions, for emerging deficits in frontal lobe functioning during his adolescent years …

From the point of view of treatment to date, I would only note that for a period of [sic] , this child was not provided with supports at school and that this undoubtedly – although on a mild level, created frustration for him and he has persistent behavioural difficulties with aggression and frustration. The current headaches which he experiences are as a result of fatigue and school stressors.

The Arbitrator accepted the evidence of Dr. J. VanDeursen, a psychologist, reflecting the opinion of the Respondent’s Team, that the Bond Academy provided programming that would sustain Christopher’s “academic success and assist him to deal with increasingly abstract academic work. As well, the extensive after-school programming which included swimming, an activity

that [Christopher] enjoys, would facilitate his developing friendships within his peer group.” ²

The Arbitrator thus found that:

… in the spring and summer of 2008 it was both a reasonable and necessary plan to have Christopher admitted to the Bond Academy for grade 5. Its smaller class size and after-school programming would have provided significant opportunities for Christopher to find more commonality with his peers and thus expand his social circle. There is no evidence that there were suitable community programs available for Christopher which would have equated with those offered by the Bond Academy. Socialization was a significant concern for the Team and this setting would have addressed those concerns more readily than the public school system.

Accordingly, there was evidence before the Arbitrator that Christopher’s satisfactory scholastic functioning was at risk and that the supports present at the Bond Academy would reduce his significant cognitive and behavioural deficits. To use the words of the Schedule, the Bond Academy would reduce the effects of Christopher’s disability and facilitate his reintegration into the rest of society. It is not the role of an appellate officer to rehear and weigh the evidence received at arbitration. Accordingly, I see no error in law in the Arbitrator’s finding that the Bond Academy benefit was reasonable and necessary.

Nor am I persuaded that the Arbitrator erred in law in failing to find that a limited pool of $1,000,000 for medical, rehabilitation and attendant care benefits rendered the “reasonable and necessary” threshold insufficient or that rehabilitation expenses are further limited to those that are most reasonable and necessary. To paraphrase the Court of Appeal in Kereluik v. Jevco Insurance Company, 2012 ONCA 338, such a restrictive interpretative result should not be countenanced, absent a clear intention by the legislature.

The Arbitrator stated in her decision that:

I agree with the opinions of various health care professionals that if Christopher were to attend the Bond Academy, it would have been necessary to obtain a focused and detailed plan of the integration of the school program with the treatment goals of the RSW services. This would likely reduce the cost of the RSW services. However, as he did not attend a private school, I find that Personal shall pay Mr. Hoang $30,193.90 for Rehabilitation Support Worker services ...

The Appellant’s argument regarding a duplication of benefits may have applied to reducing the level of rehabilitation support work services awarded. That award, however, is not appealed. Accordingly, I have no jurisdiction to address that finding.

Regarding the “incurred” requirement, the Appellant cited the Divisional Court in McMichael that an insured need not actually receive the item or service for it to be considered to be incurred. In Monks, the Ontario Court of Appeal cited Wawanesa Mutual Insurance Co. v. Smith (Committee of), (1998), 1998 CanLII 18861 (ON CTGD), 42 O.R. (3d) 441 (Div. Ct.), that a “purposive and remedial interpretation requires that the legislation be read so as not to require an insured person to finance, or to pledge her credit, in order to secure the very benefits for which she is insured.”

In Smith, Campbell J., for a unanimous court, stated, after reviewing the authorities:

The “incurred” cases and the interpretive cases yield three principles.

First, although capable of a narrow meaning, the word ‘incur’ is capable also of the wider meaning of “run into”, “render oneself liable to”, “bring upon oneself”, or “be subject to”. There is a wider sense in which the expenditure is incurred within the time limit as soon as it is known with certainty that it is necessary and its amount is known.

Second, the provision should be construed contra proferentem, the coverage interpreted broadly and the time limitation narrowly.

Third, a remedial and purposive interpretation suggests that unfairness would result from a narrow interpretation. As Osler J. pointed out in MacDonald the narrow interpretation penalizes the insured who lacks the money or the credit to pay, or become legally obligated to pay for, the insured services. As the motions judge pointed out in this case,

…if the defendant’s position were correct it would allow those persons who could pay for services in advance to be in a much better position to recover than those who could not.

This, as a matter of policy, would be totally unfair …

For these three reasons, I conclude that an insured, in order to incur an expenditure within four years within the meaning of the standard policy, need not actually receive the items or services or spend the money or become legally obliged to do so. It is sufficient if the reasonable necessity of the service or item and the amount of the expenditure are determined with certainty before the end of four years. It is a question of fact in each case, whether the requisite degree of certainty has been established.

The Court of Appeal, in Monks, concluded that:

… It is well-established that insurance coverage provisions are to be interpreted broadly, while coverage exclusions or restrictions are to be construed narrowly, in favour of the insured … to the extent that the word “incurred” as used in the SABS restricts the coverage available to Ms. Monks under her ING policy, it must be assigned a narrow meaning.

Moreover, a broad interpretation of the word “incurred” under the SABS is consistent with the policy objective that accident victims promptly receive the statutory accident benefits to which they are entitled under the Act and their automobile insurance policies. It also prevents an insurer from benefitting from an insured’s lack of financial resources. As Wilson J.A. observed in Coombe at p. 736: “The legislation was designed for the protection of the insured and should be construed in the way most favourable to him.”

Similar reasoning was provided by Arbitrator Baltman, in Kennelly and Wawanesa Mutual Insurance Company, (FSCO A99-000139, January 21, 2000):

Wawanesa maintains that it would be unfair to make them pay for a service which can no longer be provided, and which therefore provides no benefit to Ms. Kennelly.

This is not only wasteful, it argues, but it amounts to a windfall for Ms. Kennelly.

While at first glance there is some logic to this argument, if allowed it would undermine the statutory goal of prompt and timely payment for necessary medical services. Insurers might deny payment of needed services with impunity, believing that an arbitrator will not later order them to pay for the treatments, however reasonable, because they can no longer be of benefit to the applicant …

Nor am I persuaded that this amounts to a windfall for Ms. Kennelly. She was deprived of a service that she was entitled to by statute. The termination of therapeutic support delayed her recovery, increased her frustration over her impairments, and caused her to lose some of the gains she had made over the previous year. Moreover, the insurer has had the benefit of these monies throughout the time that they should have been dispensed to Ms. Kennelly.

For all these reasons, I find that the expenses in question were incurred.

Subsection 14(2) of the Schedule states that the insurer shall pay, in respect of a medical benefit, all reasonable and necessary expenses “incurred by or on behalf of the insured person as a result of the accident for” a list of designated items. Subsection 16(2) of the Schedule provides that the attendant care benefit payable by the insurer shall be for all “reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for” for specified items.

Sullivan and Driedger state, at page 162, that it “is presumed that the legislature uses language carefully and consistently so that within a statute or other legislative instrument the same words have the same meaning.” I find that the above case law pertaining to the word “incurred” applies equally, for the reasons set out in those cases, to subsection 15(5) that the “rehabilitation benefit shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for a purpose referred to in subsection (2).”

The rehabilitation measures to be paid under subsection 15(2) of the Schedule are modified not only by “reasonable and necessary,” but also by the objective of reducing or eliminating “the effects of any disability resulting from the impairment or to facilitate the insured person’s reintegration into his or her family, the rest of society and the labour market.” Regarding the requirement that the measures be “undertaken,” the Arbitrator found that:

… the family undertook to investigate the appropriateness of the Bond Academy program by taking a tour with Christopher. The parents raised the idea with the Team. The Team agreed with the plan but also obtained its consulting Neuropsychologist's endorsement before submitting the requisite Treatment Plan. Dr. Rumney of the Holland Bloorview Kids Rehabilitation Hospital was also consulted, and he deferred to the Team’s opinion. I find that these measures are more than sufficient to meet the requirements of the subsection.

The modern principle of statutory interpretation, as set out in Sullivan and Driedger, emphasizes the importance of purposive analysis. Thus, as stated at page 195 of that test, “in so far as the language of the text permits, interpretations that are consistent with or promote the legislative purpose should be adopted, while interpretations that defeat or undermine legislative purpose should be avoided.”

Similar to the reasoning of Campbell J. in Smith regarding “incurred,” the word “undertaken,” although capable of a narrow meaning, is also capable of a wider meaning. This would include “entered upon,” as set out in the Concise Oxford Dictionary of Current English, Eighth Edition (Clarendon Press, Oxford, 1990), and entered upon for the specific legislative purpose. Giving a narrow meaning to “undertaken,” such as obligated for or completed, inconsistent with the broader meaning of “incurred” given by the Court of Appeal, whose decision on that point is binding on a Commission adjudicator , undermines the remedial legislative purpose, as set out in Monks, that “accident victims promptly receive the statutory accident benefits to which they are entitled.”

There was an evidentiary basis for finding that the Bond Academy, having been investigated, recommended by treating experts and submitted by the Respondent to the Appellant as offering opportunities not available elsewhere to address the effects of Christopher’s specific accident related disability, was a rehabilitation measure undertaken or entered upon for the legislative purpose set out in subsection 15(2) under the Schedule.

Accordingly, I am not persuaded that the Arbitrator erred in law in finding that the Bond Academy tuition was reasonable and necessary, incurred and undertaken. This part of the appeal is, therefore, dismissed.

2. The Special Award - Entitlement

Subsection 282(10) of the Insurance Act provides that if the arbitrator finds that an insurer has unreasonably withheld or delayed payments, in addition to awarding the benefits and interest to which the insured person is entitled under the Schedule, the arbitrator shall award a lump sum as a special award. Thus, if a finding of unreasonable withholding or delay is made, the award is mandatory. The quantum of the award, within the statutory limits (that are set out later in this decision), is discretionary.

Arbitrator Palmer, in Plowright and Wellington Insurance Company, (OIC A-003985, October 29, 1993), stated that:

“Unreasonable” behaviour by an Insurer in withholding or delaying payments can be seen as behaviour which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate.

In her decision, the Arbitrator stated that:

I find that Personal’s reliance on the assessments of Dr. MacNiven, Dr. Tuff and Dr. Dumitrascu in the face of the overwhelmingly consistent opinions and reasoning of the Team and the other professionals who followed Christopher, amounts to an unreasonable disregard of the available information relating to the two rehabilitation benefits.

Regarding the submitted Bond Academy treatment plan, the Arbitrator found that:

1. The Appellant’s September 5, 2008 log note (incorrectly noted as 2009 in the decision) indicates a concern that Christopher was currently undergoing a tort neuropsychological assessment and that the Appellant “cannot conduct 2 neuropsych’s in such a short period of time.” The log notes state that both the Respondent’s counsel and the tort defence expert agreed to the latter commenting on the submitted plan. Nonetheless, on the advice of counsel, the Appellant decided not to proceed in this manner.

The four psychologists who testified at arbitration stated that generally neuro-psychological or psychological testing should not be conducted more than once in a year. This is to avoid a “practice effect” undermining the validity of the test results. The Arbitrator held that there was “an inordinate amount of neuropsychological testing that undermines the validity of the tests administered after those of Dr. McKinnon.” Dr. McKinnon’s neuropsychological report is dated May 26, 2008. Dr. MacNiven’s neuropsychological assessment was conducted September 12, 2008, nine days after the tort defence assessment of Dr. MacGregor.

2. The Appellant’s October 10, 2008 log note states that the raw test data from the tort defence medical examination would not be available for six to eight weeks. Dr. MacNiven could provide a report as long as it was clear that it was preliminary and an addendum added once the raw test data scores were available. The Arbitrator found that the raw test data in question was not provided.

3. Dr. MacNiven and Dr. Tuff testified that the “practice effect” undermining the validity of the test results can be minimized by administering different tests. Dr. McKinnon testified that in attempting to minimize the practice effect, Dr. MacNiven administered tests that were not standardized for children the Respondent’s age. The Arbitrator found that Dr. MacNiven had compromised the reliability of her testing by administering tests not standardized for the Respondent’s age group.

The Arbitrator concluded that:

It is the responsibility of the insurer to adjust a file in the utmost good faith. Blind acceptance of a report that purports to give a basis for denial does not fulfill this obligation. Particularly when the decision maker believes the report upon which she relies is a preliminary report, knew or ought to have known that the testing administered by Personal's examiner was “too close” to ongoing testing, and some of the tests were not standardized for Christopher's age group.

In Rocca and AXA Insurance Company, (FSCO P99-00020, August 1, 2000), Delegate Naylor held that:

A finding that the insurer’s actions were unreasonable is a finding of fact, resting to a large extent on the arbitrator's view of the evidence. However, while such a finding is given a great deal of leeway on appeal, it must have an adequate evidentiary basis and take into account all relevant evidence.

Regarding the Bond Academy treatment plan, the Arbitrator reproduced the Appellant’s October 16, 2008 OCF-9 that sets out the reasons for denying the benefit claim as follows:

We have received the Insurer Examination report. Based on this report, you are not entitled to the Medical and Rehabilitation benefit.

Re: Bond Academy Tuition for Grade 5 for 2008-2009 recommended by Dr. VanDeursen. Total cost $12,800, plus books & uniform of $500.

Please refer to our letter of today's date and the Insurer Examination report of Dr. MacNiven dated October 16, 2008.

No other documentary evidence setting out the Appellant’s reasons for denial were referenced by the Appellant. A representative of the Appellant testified at the arbitration hearing. This oral evidence was not provided, nor was it referred to on appeal. Legal submissions speculating as to the basis upon which the Appellant may or must have reached its decision to deny benefits is not a substitute for evidence.

Given the Appellant’s articulated reliance only on Dr. MacNiven’s report regarding the Bond Academy, its log entries as to the expert’s testing being administered too close to other ongoing neuropsychological testing and Dr. MacNiven’s report being only preliminary pending the receipt of raw test data that was not received, there is an evidentiary basis for the Arbitrator’s finding that the Appellant’s denial of the Bond Academy treatment plan was unreasonable.

In any event, the Appellant’s submissions as to Christopher’s prior academic success and his past (disputed) socialization and integration into classroom activities disregard that the Bond

Academy claim was not premised on Christopher having failed in his prior schooling.

Rather, the concern (as set out in the Respondent’s medical reports noted in part above, and echoed in the Appellant’s own tort defence report of Dr. MacGregor, at page 21) was that Christopher’s academic success was at risk and there was greater potential for more significant behavioural problems as he matured and dealt with increasingly abstract academic work and matters of judgment.

Accordingly, there was evidence before the Arbitrator supporting a finding that the Appellant was taking a “blinkered,” or, to cite Plowright, a stubborn, inflexible, unyielding or immoderate response to a pro-active recommendation for a child who had sustained, in the words of Dr. MacGregor, “significant cognitive and behavioural deficits as a result of this accident.”

Regarding the RSW services, the Arbitrator noted that the Appellant relied upon the evidence of Dr. Tuff, a neuropsychologist, and Dr. Dumitrascu, a psychologist. The Arbitrator found that the Appellant unreasonably denied these benefits based on the Respondent’s young age, catastrophic impairment and the “prodigious support from the treating health professionals, including those not on Christopher’s Team, for the involvement of an RSW.”

Arbitrator Seife, in Maas and State Farm Mutual Automobile Insurance Company, (OIC A-015935, October 16, 1996), stated that:

In my view, when considering termination of benefits, an insurer must not rely selectively on reports that tend to support termination. It must consider the totality of the evidence available to it.

In Thevaranjan and Personal Insurance Company of Canada, (FSCO A05-001820, August 24, 2006), Arbitrator Allen further stated that:

In 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 … However, they are not expected to be able to prejudge the evidentiary value of a report or the performance of an expert witness before they are tested in a legal proceeding. It is most often the case that the worth of an expert report or witness is only appreciated through the rigours of the adversarial process ... I find a party should not be penalized or faulted, as the Applicant's counsel suggests, for having gone ahead to a hearing, under these circumstances, with expert evidence they have generated to support their case, no matter how weak in retrospect this evidence turned out to be.

In this case, however, the Arbitrator further found that the reports of Drs. Tuff and Dumitrascu failed to deal with the occupational therapy and speech therapy elements of the RSW treatment plans. The Arbitrator stated that this was “understandable as such treatment is not within their sphere of expertise.” There is no submission that the Arbitrator misapprehended the evidence in this regard.

The Arbitrator noted that Dr. MacNiven stated in her report that speech language therapy falls outside of her professional capacity as a neuropsychological consultant. It is difficult to see how denying treatment plans by relying on reports that do not and/or cannot opine on significant aspects of the plans, experts being restricted to giving opinion evidence that is related only to matters within their areas of expertise, is a reasonable withholding of those benefits.

Under subsection 283(1) of the Insurance Act, appeals from the order of an arbitrator are restricted to questions of law. I am not persuaded the Appellant has met its onus on appeal that the Arbitrator’s finding regarding entitlement to a special award was an error of law.

3. The Special Award - Quantum

Subsection 282(10) of the Insurance Act provides that the maximum special award shall be:

… 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.

The sum of $28,000 awarded by the Arbitrator, rather than a more rounded amount, would seem to indicate a possible weighing of factors. However, no analysis is provided. It may be that the award reflects, in some manner, the maximum monetary amount of the special award that would be allowed under subsection 282(10). However, that is not stated. In any event, the parties disagree on the calculation of the maximum special award, specifically the interest components.

It may be the Arbitrator had in mind particular case law and, on that basis, weighed the relevant criteria of special awards granted in similar circumstances. The pertinent considerations would include relating the particular facts of the case to the underlying purposes of the legislation, such as the speedy payment of benefits, proportionality, a need for deterrence and any mitigating factors. However, there is no review of the applicable principles or of the case law other than that the insurer’s conduct need not be egregious to be unreasonable, nor should an insurer be held to a standard of perfection. In setting the quantum of the special award, the Arbitrator simply states:

Personal’s conduct requires a significant award which I fix at $28,000.00 inclusive of considerations of interest.

R. v. Walker, 2008 CSC 34, citing R. v. Sheppard, 2002 SCC 26, held that:

Sheppard holds that “[t]he appellate court is not given the power to intervene simply because it thinks the trial court did a poor job of expressing itself” … Reasons are sufficient if they are responsive to the case’s live issues and the parties’ key arguments. Their sufficiency should be measured not in the abstract, but as they respond to the substance of what was in issue. The “trial judge’s duty is satisfied by reasons which are sufficient to serve the purpose for which the duty is imposed, i.e., a decision which, having regard to the particular circumstances of the case, is reasonably intelligible to the parties and provides the basis for meaningful appellate review of the correctness of the trial judge’s decision” … The duty to give reasons “should be given a functional and purposeful interpretation” and the failure to live up to the duty does not provide “a free-standing right of appeal” or “in itself confe[r] entitlement to appellate intervention” (para. 53).

In Rocca, Delegate Naylor stated that “it is important that the parties are given an explanation both of the basis of a finding that benefits were unreasonably withheld and the factors taken into

account in fixing the amount of the award.”

It is difficult to see how the one sentence provided specific to the quantum of the award makes it reasonably intelligible to the parties on how the counterbalancing relevant considerations were weighed in determining the specific award, or why $28,000 was appropriate versus some possibly significantly different amount in an entirely different range of award. Nor does it provide for meaningful appellate review, The argument that the special award is, or may have been based on 28% of an argued (rather than an agreed or determined) maximum award available, well below the 50% maximum, is simply speculative, there being no mention in the decision as to even an approximate maximum special award.

Accordingly, giving a “functional and purposeful” interpretation to the duty to give reasons, the quantum of the special award is set aside.

The Arbitrator ordered interest payable pursuant to subsection 46(2) of the Schedule. The parties disagree as to the specific amount of interest that is payable. Rule 65.6 of the Schedule provides that an “adjudicator may at any time clarify a decision or order that contains a misstatement, ambiguity or other similar error.” Given, in part, that interest is still in dispute on the basis evidently of some ambiguity or unanswered, underlying additional question in the decision at first instance, it is appropriate to also refer the issue of the quantum of the special award back to arbitration.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79 of the

Dispute Resolution Practice Code (Fourth Edition – Updated August 2011), an expense hearing shall be requested within thirty days of the date of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, services received and the costs, as well as submissions regarding entitlement to and the quantum of such legal expenses.

June 22, 2012

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. 2The multi-disciplinary team consisted of a case manager, psychologists, a speech therapist, an occupational therapist and a representative of the Respondent’s school.