Commission des services financiers de l’Ontario

Neutral Citation: 2013 ONFSCDRS 53

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, Mr. Christopher Hoang (a minor by his Litigation Guardian, San Trieu)

HEARING DATE: By written submissions received by November 15, 2012

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, and Rule 65.6 of the Dispute Resolution Practice Code (Fourth Edition, Updated August 2011):

The June 22, 2012 appeal decision is confirmed.
Varying Rule 79 of the Code, as allowed under Rule 81.1, an expense hearing shall be requested, as set out below, within sixty days of the date of this decision, if the parties are unable to agree on legal expenses.

April 30, 2013

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

The Respondent, Christopher Hoang, was born on March 7, 1998. On August 6, 2004, when he was six years old, the Respondent was struck by a car. His right ankle was pinned beneath the wheel of the vehicle. He lost consciousness at the accident scene and was absent vital signs with a Glasgow Coma Scale score of 3 out of 15. He was given cardiopulmonary resuscitation at the accident scene.

A September 30, 2008 defence medical report of Dr. D. MacGregor, a specialist in paediatrics and neurology, was in evidence before the Arbitrator. Dr. MacGregor noted that the Respondent had a documented moderate to severe closed head injury, now designated as catastrophic. The Respondent presented with significant cognitive and behavioural difficulties as a result of the accident. Dr. MacGregor concluded, in part, that the Respondent:

… 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. The array of difficulties which could be experienced will extend from additional executive type difficulties with problem-solving and judgment to more significant behavioural problems …

The Arbitrator’s September 29, 2011 decision ordered that the Appellant pay the Respondent:

$13,300.00 in tuition and related educational expenses for the 2008 to 2009 Bond Academy school year.
$30,193.90 for rehabilitation support worker services.
Interest under subsection 46(2) of the Schedule¹ on overdue payments.
A special award of $28,000 inclusive of interest, pursuant to subsection 282(10) of the Insurance Act, R.S.O. 1990, c. I.8.

My June 22, 2012 appeal decision confirmed the Arbitrator’s decision except for the quantum of the special award, which was rescinded on the basis that no analysis had been provided as to how the amount was determined. The Arbitrator’s decision regarding the Respondent’s entitlement to a special award was, however, upheld. The question of the amount of the special award was referred back to arbitration.

Rule 56.4 of the Dispute Resolution Practice Code (Fourth Edition, Updated August 2011), (the “Code”) provides that the appeal record includes, if filed, the transcript of the arbitration hearing. Neither party referenced the transcripts in their written appeal submissions. At the start of the oral appeal hearing, I identified the documents before me and asked for confirmation as to what constituted the appeal record. Neither I nor counsel noted any arbitration transcripts.

During oral submissions the Appellant submitted that in denying the benefits in issue, it had carefully considered all of the evidence. I inquired as to where in the evidence support for this submission was to be found. The Appellant’s response was that there was no evidence that it had not carefully considered all of the evidence in denying the disputed benefits. Arbitration transcripts were not referenced during the oral submissions.

In my June 22, 2012 decision, I stated:

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.

On July 6, 2012, I wrote the parties that in preparing for oral submissions in a different appeal, I found that the transcripts from this arbitration hearing had been inadvertently administratively misfiled with correspondence received the same day in the other appeal file.

I noted that Rule 65.6 of the Code provides that an adjudicator may at any time clarify a decision or order that contains a misstatement, ambiguity or other similar error. My June 22, 2012 decision contained a misstatement that while the transcripts were not referenced by either party in written or oral submissions, the transcripts had been filed by the Appellant.

In submissions on September 4, 2012, both parties agreed that Rule 65.5 of the Code allowed me, in fully determining whether the Arbitrator had erred in law in granting a special award, to now consider the filed arbitration transcripts. A timeline for additional written submissions was set. The parties indicated that they did not require an opportunity to provide additional oral submissions.

II. ANALYSIS

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

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

The Appellant argues that in light of the transcripts and other evidence at arbitration, the characterization that it was blinkered, stubborn, inflexible and unyielding in its adjusting, is unfair. It submits that insurers are required to remain open to additional information as it comes forward. If there is evidence the Appellant did so, then there can be no basis for a special award even if the Arbitrator disagreed with the Appellant’s ultimate decision not to pay a claim.

In Melchiorre and Wawanesa Mutual Insurance Company, (FSCO A05-000491 and A05-000492, December 22, 2006), upheld on appeal (FSCO P07-00014, April 25, 2008), Arbitrator Feldman stated that an insurer had a responsibility, in part, to “carefully consider all of the available information, giving appropriate weight to that information in a fair and even-handed manner” as well as “reassess the validity of the claim as new information is received.” I agree.

The Appellant submits that the Arbitrator did not note in her decision the evidence of Mr. H. Movios, a claims advisor who testified on behalf of the Appellant. Mr. Movios took over responsibility for this file in August or September 2009 from Ms. A. Kool. The Appellant argues that with the benefit of the transcript, including Mr. Movios’ oral testimony, it was inconsistent for the quantum of the special award to have been reversed, but not the award itself.

In cross-examination, Mr. Movios confirmed a September 8, 2010 e-mail from the Respondent’s representative, addressed to Mr. Movios, inviting a representative of the Appellant as well as Dr. L. Tuff, who conducted a psychological Insurer Medical Examination (“IME”), to meet the treating rehabilitation team to discuss the denied treatment plans. The letter expressed concern that the Respondent’s ability to control his classroom behaviour was slipping as his mental resources were increasingly being expended in meeting the more complex curriculum demands.

Mr. Movios testified at page 647 of the May 2, 2011 transcript that “we decided not to attend because Dr. Tuff has already rendered his opinion and considered all medical advice or reports up to and including his opinion.”

A November 23, 2010 letter to Mr. Movios from the Respondent’s counsel followed, advising that Mr. Movios and Dr. Tuff could have full contact with the treating practitioners who had made strong recommendations for ongoing rehabilitation support worker (RSW) services that the Appellant had denied. A supporting DVD was provided. Mr. Movios testified at page 649 of the transcript that he has not looked at the DVD. The DVD included:

A September 29, 2010 interview with Ms. B. Huisman, the Respondent’s case manager since 2006. Ms. Huisman critiqued the IME and stated that the denial of benefits was placing the Respondent’s progress in jeopardy.
A September 27, 2010 interview with Ms. C. Kalkanis, a Rehabilitation Support Worker. Ms. Kalkanis commented on the severe impact of removing services on the Respondent’s education and development of social relationships.
A September 27, 2010 interview with Mr. P. McCormack, Director – Elements Support Services. Mr. McCormack commented on the Appellant having interrupted the treatment plan at least twice and the significant negative impact that it had on sustaining past gains with the Respondent.
A September 27, 2010 interview with Ms. N. Zaraska, an occupational therapist who had been working with the Respondent since 2004. Ms. Zaraska commented on the negative impact of the benefit denials and the interruption of services on the Respondent and on his parents.
An October 1, 2010 interview with Ms. P. Young, a speech language pathologist who had worked with the Respondent since October 2004. She commented, in part, that the lack of RSW support had led to setbacks for the Respondent.
An October 1, 2010 interview with Dr. L. Dong, the Respondent’s treating clinical and school psychologist since October 2006. Dr. Dong commented on the negative impact of inconsistent services.
An October 4, 2010 interview with Ms. L. MacAuley, the Respondent’s grade-seven home room teacher and a special education co-ordinator. She stated that the Respondent required a lot of concrete direction and noted other challenges the Respondent faced in his present schooling. She, in part, expressed concerns regarding his future schooling as curriculum demands increased. Ms. MacAuley stated that she could see the Respondent’s marks dropping and that he would be struggling without support.
A September 28, 2010 interview with Dr. E. McKinnon, a clinical neuropsychologist who had been working with the Respondent since early 2008, who commented on what she described as repeated denials of benefits impacting on the trajectory of progress.
An October 8, 2010 interview with Dr. J. VanDeursen, a treating psychologist with the Respondent’s family, who commented on the Appellant’s refusal to provide services recommended by the full rehabilitation team. Dr. VanDeursen stated that repeated requests that errors in the IMEs be corrected had been ignored and the Appellant had simply accepted the Respondent’s youthful comments that there were no problems and that any difficulties were due to his parents.
An October 1, 2010 interview with the Respondent’s mother as to the impact on the family of the loss of services.

At page 649 of the transcript, Mr. Movios was asked whether the DVD was something he should have reviewed in considering whether the treatment plans should be approved. He answered:

A. In retrospect, perhaps that’s something I could have reviewed.

Q. Because you want to have all the information in front of you when making a decision. Right?

A. Correct.

Q. Regardless of the source. Right?

A. Correct.

Q. And in fact you want to weigh all the information, and people that are working directly with Christopher in his rehab might be a very good source of information about his needs, wouldn’t they?

A. Correct.

The Arbitrator’s September 29, 2011 decision noted that Ms. Kool, Mr. Movios’ predecessor on this file, did not testify at the arbitration hearing. The Arbitrator stated that as Mr. Movios did not make the decision with respect to the tuition and related expenses, his evidence was of no assistance. The Arbitrator noted the DVD the Respondent had provided to the Appellant, but placed no weight on it on the basis that the statements therein were unsworn and untested. The Arbitrator stated that where a rehabilitation team member’s DVD statement referred to areas dealt with in their reports and the reports had been admitted into evidence, she relied on those written reports.

I have difficulty with these comments. The DVD was marked by the Arbitrator as part of Exhibit “8.” The written medical reports, also entered as exhibits by the Arbitrator, were no more sworn or tested than the oral DVD statements. In addition, as stated by Arbitrator Feldman in Melchiorre, an insurer has a responsibility to adjust a file in a fair and even-handed manner and to reassess the validity of the claim as new information is received. That ongoing obligation does not end with the issuance of an OCF-9 Explanation of Benefits.

Mr. Movios assumed carriage of this file in the late summer of 2009. The September 8 and November 23, 2010 letters noted above were addressed to Mr. Movios. Mr. Movios was called as a witness by the Appellant at the arbitration hearing regarding the continuing disputed claims.

The Appellant’s October 25, 2008 OCF-9 denying the Bond Academy tuition claim relied on the October 16, 2008 IME report of Dr. E. MacNiven, psychologist. My June 22, 2012 appeal decision noted the Arbitrator’s findings that provided an evidential basis for a special award regarding the denial of the Bond Academy claim, including:

The inordinate amount of neuropsychological testing undermined Dr. MacNiven’s neuropsychological assessment, conducted nine days after Dr. MacGregor’s neuropsychological tort defence assessment.

Mr. Movios acknowledged that the Appellant’s log notes indicated that the Respondent’s counsel contacted the Appellant a week before Dr. MacNiven’s IME, advising of the overlap in assessments. At page 608 of the transcript, Mr. Movios testified that having two neuropsychological assessments in such a short time period could skew the testing.

At page 616, Mr. Movios testified that he had no reason to quarrel with Dr. McKinnon’s opinion that it was inappropriate to have three neuropsychological assessments within one year. While the Appellant advised that Dr. MacNiven would conduct a psychological examination, not a neuropsychological assessment, Dr. MacNiven’s October 16, 2008 report has the title “Neuropsychological Assessment Report.”

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 and that 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. At page 611 of the transcript, Mr. Movios testified that he did not see anything preliminary about Dr. MacNiven’s 2008 report. Nor could he recall an addendum being provided upon consideration of the raw test data.

The Respondent submits that Mr. Movios’ evidence that the Appellant had considered the Respondent’s school report cards in its denial disregarded that the Bond Academy claim was premised not on the Respondent’s past school performance but, as echoed in Dr. MacGregor’s defence medical-legal report, that the Respondent’s future academic success was at risk, that there was greater potential for more significant behavioural problems as he matured and would be required to deal with increasingly abstract academic work and matters of judgment. This was also stated by Ms. MacAuley, the Respondent’s home room teacher, in the DVD provided to Mr. Movios which he testified he had not reviewed.

In denying the RSW services claimed, the Appellant relied upon Dr. Tuff 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.”

At page 624 of the transcript, Mr. Movios noted that what the Appellant had wanted to see was a legitimate rehabilitation strategy, not just supervising the Respondent on outings. At page 628, he testified that he was subsequently persuaded that there was a rehabilitation purpose in place that was not merely supervisory in nature. However, notwithstanding his leaning towards approving the RSW plan, as the Appellant’s concerns had been met, Mr. Movios testified that the Appellant wished to get a further opinion from Dr. Tuff.

Mr. Movios testified at page 641 of his cross-examination that he had not been permitted to attend the regularly scheduled rehabilitation team meetings. Mr. Movios testified that he understood that his predecessor on the file, Ms. Kool, had attended these meetings and that the meetings were a good source of information. Mr. Movios thought that the log notes might indicate the refusals. However, particulars were not provided and the Appellant’s counsel declined the opportunity given to him by the Arbitrator to re-examine Mr. Movios.

Citing D’Costa v. Mortakis, 2000 CanLII 5676 (ON CA), Barath and Bacsek (1975), 1975 CanLII 586 (ON HCJ), 11 O.R. (2d) 531, (Div. Court) and Industrial Tanning v. Reliable Leather Sportwear Ltd., [1953] O.W.N. (C.A.), affirmed 1955 CanLII 407 (SCC), [1955] 2 D.L.R. 284 (S.C.C.), the Appellant argues that a finding of fact may be set aside if the trier of fact disregarded relevant evidence.

Mr. Movios’ examination-in-chief largely pertained to the approximately $243,000 Mr. Movios testified the Appellant had paid for the Respondent’s medical and rehabilitation claims and some $19,000 for IMEs. However, as stated by the Appellant’s counsel at page 582 of the transcript, the parties were at the arbitration hearing “not because of what [the Appellant has] paid but because of what the company has indicated it will not pay,” namely, certain RSW services and tuition at the Bond Academy.

The Appellant argues that if anyone was being unfair it was Dr. VanDeursen, who admitted to being an advocate for the services he urged upon the Appellant. The Appellant further critiques Dr. VanDeursen’s statement that he never interviewed the Respondent, that the OCF-18 Treatment and Assessment Plan was submitted in isolation from the other file material and that a small class size is often a helpful feature, but not necessarily the answer.

The Appellant also critiques Dr. McKinnon’s opinion that a child of ten would not be able to form the necessary judgment to determine his best interests from a clinical point of view, as well as her agreement that she would be concerned about parents who were pushing their children too hard and that the Respondent had an “excellent level of recovery … since this tragic and serious brain injury.”

However, in his examination-in-chief, starting at the bottom of page 583, Mr. Movios gave the following as the reasons for the Appellant’s denial of the benefits in dispute:

Q. But when you ultimately refuse RSW and Bond Academy private school tuition, you do so obviously on the basis of the s. 42 assessments but do you consider anything else? Do you just simply take the information, the OCF 18’s supported by certain assessors, order up your IE’s, get their opinions and say, “Ah-hah, now we can deny?” Is that how you do it, Mr. Movios?

A. No.

Q. No? Well how do you do it then?

A. Well I mentioned earlier we submit all our medicals, including everything that is written by the other doctors that formed their opinion about these issues that are forwarded to Dr. Tuff, and then on the weight of Dr. Tuff’s report, as well as considering the previous medical report about rehab support, Dr. MacNiven, we – the company made a decision to accept that they held more weight.

No objection was made as to the form of the first question above, asked as part of the examination-in-chief.

However, this evidence is contradicted by Mr. Movios’ testimony in cross-examination that upon receiving Dr. Tuff’s report, the Appellant decided it was not necessary, with or without Dr. Tuff, to accept the invitation to discuss the disputed claims with the Respondent’s rehabilitation team. Nor, as claims advisor responsible for this file, did Mr. Movios look at the DVD that included statements from the Respondent’s case manager, rehabilitation support worker, occupational therapist, speech language therapist, treating psychologists and home room teacher.

This is hardly consistent with the Appellant’s submission that it remained open to additional information as it came forward.

The Appellant argues that when Mr. Movios’ evidence is considered in light of the admissions by Drs. VanDeursen and McKinnon, there was not “a sufficient evidentiary basis for making the special award that the Arbitrator did.” Thus, the special award was an error in law and should be set aside, as in State Farm Mutual Automobile Insurance Company and Henry, (FSCO P12-00006, October 1, 2012). However, in Henry the special award was rescinded on the consent of both parties as part of a settlement of $500,000 for the tort claim and $150,000 for accident benefits, with no portion of the settlement being allocated for a special award.

The Respondent cites Rocca and AXA Insurance Company, (FSCO P99-00020, August 1, 2000), that a finding that an insurer’s actions are unreasonable is a finding of fact that must be given a great deal of leeway on appeal. Delegate Naylor stated that while under the Insurance Act “findings of fact are not appealable, they must have an adequate evidentiary foundation.”

Subsection 283(1) of the Insurance Act restricts appeals from the order of an arbitrator to questions of law.

The Divisional Court decision in State Farm Mutual Automobile Insurance Company and S.R. et al., 2013 ONSCC 2086, states that to “constitute an error of law, there would have to be a complete absence of evidence from which the inferences could be drawn. Consistent with the Divisional Court, Delegate Evans, in Young and Liberty Mutual Insurance Company, (FSCO P03-00043, June 20, 2005), cited Delegate McMahon in Lombardi and State Farm Mutual Automobile Insurance Company, (FSCO P01-00022, February 26, 2003), that:

… errors of law include findings of fact made in the complete absence of supporting evidence, made on the basis of conjecture, or made on the basis of a misapprehension of the evidence caused by a misdirection on a legal principle. The vital distinction is between a conclusion that there was “no evidence” to support a finding and a mere “insufficiency of evidence.”

Further, an appellate delegate hearing the question of a special award de novo and substituting his or her discretion for that of an arbitrator is contrary to Certas Direct Insurance Company v. Gonsalves, 2011 ONSC 3986.

Having considered the parties’ further submissions regarding the transcripts filed, I am not persuaded that there is a complete absence of evidence to support the Arbitrator’s finding that the Appellant unreasonably withheld payments and, pursuant to subsection 282(10) of the Insurance Act, was liable to pay a special award. I am persuaded, if it is necessary to find so, that there is an adequate evidentiary foundation for a special award. I am further persuaded that the evidentiary foundation has been enhanced upon consideration of the transcript evidence and, specifically, Mr. Movios’ testimony in chief and on cross-examination.

Accordingly, pursuant to Rule 65.6 of the Code, my June 22, 2012 decision having contained a misstatement regarding the transcripts and having now considered that evidence and the parties’ additional submissions that now address that evidence, I confirm my earlier decision.

As noted above, the issue of the quantum of the special award is referred back to arbitration.

III. EXPENSES

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