Financial Services Commission of Ontario

Commission des services financiers de l'Ontario

Neutral Citation: 2013 ONFSCDRS 96

Appeal P13-00014

OFFICE OF THE DIRECTOR OF ARBITRATIONS

BELAIR INSURANCE COMPANY INC. Appellant

and

LENWORTH SCARLETT Respondent

BEFORE: David Evans

REPRESENTATIVES: Philippa Samworth for Belair Insurance Company Inc. Nicole Corriero and Alex Voudouris for Mr. Lenworth Scarlett

HEARING DATE: By written submissions received by June 17, 2013

PRELIMINARY APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

On consent, this appeal of Arbitrator Wilson's decision of March 26, 2013 is accepted.
On consent, a determination of the expense issues arising from the Arbitrator's decision is stayed pending the outcome of the appeal.
On consent, the arbitration hearing, scheduled for September 9 to 12, 2013, is adjourned pending the outcome of the appeal.
The Arbitrator's order that Mr. Scarlett is not subject to the Minor Injury Guideline is stayed, pending the outcome of the appeal.

August 1, 2013

David Evans Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Belair Insurance Company Inc. appeals Arbitrator Wilson's March 26, 2013 preliminary issue order that Mr. Scarlett is not precluded from claiming medical and rehabilitation expenses beyond the $3,500 limit set by the Minor Injury Guideline, the MIG.¹

The Minor Injury Guideline is a guideline issued by the Superintendent of Financial Services pursuant to section 268.3 of the Insurance Act to limit medical and rehabilitation benefits in the case of a minor injury.

II. BACKGROUND

Mr. Lenworth Scarlett was injured in a motor vehicle accident on September 18, 2010. He was not covered by OHIP at the time of the accident, so he sought medical and rehabilitation treatment through the accident benefit system. He applied for and received statutory accident benefits from Belair, payable under the SABS–2010.²

Belair took the position that Mr. Scarlett's injuries fell within the MIG criteria and limited his benefits accordingly, although, including medical assessments, it has paid out $5,240.84. As the Arbitrator noted, Mr. Scarlett "maintained that although he indeed suffered strains sprains and whiplash related injuries, he also suffered from pre-existing conditions and subsequent psychological disabilities that take him out of the MIG constellation."

The Arbitrator found that, although the MIG is incorporated into the SABS, "it remains a non-binding interpretative aid in deciding specifically whether Mr. Scarlett comes within the MIG." He found that Mr. Scarlett did not come within the MIG.

Accordingly, the Arbitrator ordered that "Mr. Scarlett is not precluded from claiming housekeeping, attendant care, as well as medical and rehabilitation expenses, beyond the $3,500 limit within the Minor Injury Guideline."³

III. STAY

As was stated in Allstate Insurance Company of Canada and Torok, (FSCO P01‑00021, May 29, 2001), the criteria for accepting an appeal of an interim order "include the apparent strength of the appeal, the importance or novelty of the issue raised, and whether rejecting the appeal or hearing it will prejudice either party." This preliminary issue decision is the first to consider the effect of the MIG issued for the purposes of the SABS. The parties agree that this appeal should be accepted.

The parties also agree that the arbitration hearing scheduled for September 9-12, 2013 be adjourned, that the expenses of the preliminary issue hearing be stayed pending the outcome of the appeal, and that the appeal hearing be scheduled for September 10, 2013.⁴

Belair seeks a stay of the Arbitrator's order that Mr. Scarlett's claims are not limited by the MIG.

Subsection 283(6) of the Insurance Act, R.S.O. 1990, c I.8, provides that "[a]n appeal does not stay the order of the arbitrator unless the Director decides otherwise." In Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), Director's Delegate McMahon adopted the following criteria in determining whether a stay should be granted:

The bona fides of the appeal;
The substance of the grounds for appeal; and
The hardship to the respective parties if the stay is granted or refused.

Mr. Scarlett submits that this appeal is not brought bona fides but rather is "an extension of their improper treatment of Mr. Scarlett to date." However, there is no evidence that Belair is improperly pursuing its appeal or filed its appeal for any improper purpose. While Belair's treatment of Mr. Scarlett may be the subject of a special award, I find the appeal is brought bona fides.

The criteria of the substance of the grounds for appeal and the relative hardship to the parties overlap with the criteria for admitting preliminary issue decisions in the first place.

With respect to the substance of the appeal, it is necessary to review the law and the Arbitrator's findings in some detail.

In s. 3(1) of the SABS, '"minor injury' means one or more of a sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and includes any clinically associated sequelae to such an injury." Guideline, in turn, is defined as including "a guideline, including the Minor Injury Guideline, issued by the Superintendent under subsection 268.3 (1) of the Act and published in The Ontario Gazette." Finally, "Minor Injury Guideline" means a guideline

(a) that is issued by the Superintendent under subsection 268.3 (1.1) of the Act and published in The Ontario Gazette, and

(b) that establishes a treatment framework in respect of one or more minor injuries.

With respect to the Act, while s. 268.3(1) is the general power given to the Superintendent to issue guidelines, s. 268.3(1.1) is specific to the MIG:

The Superintendent may issue guidelines setting out the treatment, services, measures or goods applicable in respect of types of impairments for the purposes of payment of a medical or rehabilitation benefit provided under the Statutory Accident Benefits Schedule, and such guidelines may include conditions, restrictions and limits with respect to such treatment, services, measures or goods.⁵

Subsection 268.3(2) provides that "a guideline shall be considered in any determination involving the interpretation of the Statutory Accident Benefits Schedule." The Arbitrator noted that, in light of s. 268.3(2), the MIG is non-binding,⁶ citing Ligocki v. Allianz Insurance Co. of Canada, 2010 ONSC 1166.⁷

With respect to the medical and rehabilitation benefits under the SABS, s. 18 sets out the monetary limits. Subsection 18(1) provides a maximum of $3,500 in respect of an insured person who sustains an impairment that is predominantly a minor injury. Subsection 18(2) provides an exception where a health practitioner "determines and provides compelling evidence that the insured person has a pre-existing medical condition" that would prevent maximal recovery if only the $3,500 is available. The term "compelling evidence" reappears in s. 38(3)(c)(i)(B) for claims for medical and rehabilitation benefits other than benefits payable under the MIG, as it requires a treatment and assessment plan to include a statement that, in the case of a minor injury, "based on compelling evidence provided by the health practitioner, the insured person does not come within the Minor Injury Guideline because the insured person has a pre-existing medical condition that will prevent" maximal recovery if only the $3,500 is available.

As for the MIG, section 3 provides that "Subject to the exception in Section 4 below, an insured person's impairment comes within this Guideline if the impairment is predominantly a minor injury." Section 4 then amplifies the exception for pre-existing conditions in s. 38(3)(c)(i)(B) of the SABS, setting out how the "compelling evidence" should be provided, stating that the "vast majority of pre-existing conditions" should not exclude an impairment from the MIG, and noting that the evidence will be suitably compelling "only in extremely limited circumstances."

The Arbitrator concluded that the MIG's requirement for "compelling evidence" from the claimant's health practitioner concerning special circumstances that would take the claimant outside the MIG was not binding, and did not displace the common-law onus on the insurer to demonstrate that the claimant came within the MIG. As part of doing so, he looked at the French version of the MIG, focusing on its use of "preuve convaincante" to translate "compelling evidence." He stated "that the only way to reconcile the English and French versions of the Guideline with regard to the provision of 'compelling evidence' would be to interpret both provisions as an exhortation to medical practitioners and other stakeholders to provide credible, or convincing evidence if they wish to ensure that an insured is to be treated as being outside of the MIG."

The Arbitrator found that "although the Guideline is incorporated by reference into the Schedule, it remains a non-binding interpretative aid in deciding specifically whether Mr. Scarlett comes within the MIG" and, after noting the hierarchy of legislation discussed in literature about the construction of statutes, he had "no doubt that the advisory nature of the Guideline has not been altered by its incorporation in the Schedule." Accordingly, "The decision or not to treat an insured either within the Minor Injury Guideline or not should be made on the basis of credible medical evidence and not on speculation."

The Arbitrator went on to conclude that "in the absence of clear legislative direction that would override the existing jurisprudence as to burden of proof, it remains the Insurer's burden to prove any exception to or limitation of coverage on the civil balance of probabilities. In this case, that burden has not been met."

The Arbitrator then examined the medical evidence and found that "While there is no doubt that Mr. Scarlett suffered soft tissue injuries, it is not at all clear that he also did not suffer from any other conditions that were neither soft tissue injuries nor the sequelae thereof, or that the sum of his injuries from the accident was minor in nature."

The Arbitrator also raised the issue of s. 233 of the Insurance Act regarding statements allegedly made by Mr. Scarlett during an insurer's examination that he had no psychological issues and did not require psychological treatment. The Arbitrator wrote that "the Insurer's conclusions raise questions as to whether section 233 of the Insurance Act was taken into account by the Insurer when it relied on Mr. Scarlett's alleged statements in refusing benefits. Section 233, of course, is the provision that forbids an insurer from relying on any statement by an insured in defence of a claim for benefits unless that statement is contained or embodied in the written and signed application for benefits."

The Arbitrator concluded that "When the totality of [Mr. Scarlett's] injuries is assessed, they come outside of the MIG."

Belair raises issues of law about these points. It submits that the Arbitrator erred in concluding that the burden of proof of whether an insured falls within the MIG is on the insurer and not the insured. It submits that he erred in concluding that the MIG is informational and non-binding only, despite having found that it is incorporated by reference into the SABS and despite the requirement in s. 268.3 that a guideline shall be considered in determining statutory accident benefits.

Belair also submits that, in addition, it was deprived of appropriate due process in the appeal.

For instance, Belair notes that while the Arbitrator focused on the translation of "compelling evidence" as "preuve convaincante" in the French version of the MIG, the Arbitrator did not consider the translation of the same phrase as "preuves probantes" in the SABS itself in s. 18(2) and s. 38(3)(c)(i)(B). As for due process, it submits that it was not provided an opportunity at or after the hearing to make submissions on the relevance of the French version.

With respect to s. 233 of the Act, Belair submits that the Arbitrator erred in finding that it prevents the insurer from taking into account statements made by an insured to an assessing doctor. Again, it submits that it was denied the opportunity to make submissions on that point.

Belair goes on to list a number of cases as well as secondary sources on which the Arbitrator relied but about which the parties were not invited to comment:

Calverley v. Gore District M.F. Ins. Co., [1959] O.J. No. 662 (CA)
Bater v. Bater, [1950] 2 All E.R. 458
Hanes v. Wawanesa, 1963 CanLII 1 (SCC), [1963] S.C.R. 154
MacIntosh v. Manulife Financial, [2012] O.J. No. 386 (OSCJ)
Florence Mining Co. v. Cobalt Lake Mining Co., [1909] O.J. No. 196 (CA)
Sullivan on the Construction of Statutes (Fifth edition), Toronto: LexisNexis Canada
R. v. St. Lawrence Cement Inc., 2002 CanLII 45010 (ON CA), 60 O.R. (3d) 712 (CA)
R. v. Summers, 2013 ONCA 147
Ligocki, cited above

Belair submits that "By taking it upon himself to raise these arguments, consider these arguments, review law not provided to him or commented on by the parties and then to accept his own arguments … the Arbitrator failed to properly hear the case," depriving Belair of its right to make full submissions.

Mr. Scarlett submits that the appeal is without merit and that "As Mr. Scarlett's injuries clearly took him out of the MIG … much of Arbitrator Wilson's reasoning constitutes Obiter, which surely is not what Belair's appeal is about, and not what a stay should be based on."

However, as already noted, this is a novel issue, the parties agreed that the appeal should be heard, and in light of the points made by Belair that I have partially summarized above, I am persuaded that Belair has raised substantive reasons for the appeal.

Turning to hardship, Mr. Scarlett submits that he has not received any monies towards attendant care or housekeeping, nor received physiotherapy since March 2012 or any psychological counseling. However, he also notes that the decision does not require Belair to pay anything, but simply allows him to request payment of certain benefits without consideration of the MIG, and "Belair, of course, would be entitled to conduct its IEs in accordance with the SABS…"

Belair submits that this is its point. It notes that most of Mr. Scarlett's claims – non-earner benefit, housekeeping, and attendant care – are not subject to the MIG. Regarding the current medical and rehabilitation benefits under dispute, their reasonableness and necessity still have to be determined. As for hardship, Belair submits that "Mr. Scarlett returned to work sometime prior to this attendance on Dr. Pilowsky in January of 2013… Dr. Pilowsky notes that Mr. Scarlett began working with 'Mega City' once he obtained his work permit." Rather, Belair seeks to avoid costs thrown away because, in the absence of a stay, Mr. Scarlett would be able to file further OCF-18s seeking treatment. In that case, Belair would likely seek s. 44 insurer examinations, the costs of which would not be recoverable.

As noted above, the appeal hearing is scheduled for September 10, 2013. Considering the very short time frame to the appeal hearing and that I will endeavor to issue my decision as soon as possible afterward, and that in the interim Mr. Scarlett would not be entitled to any benefits in any event, I do not find the hardship issue outweighs the bona fides and the substance of the appeal. Accordingly, the stay is granted.

I will leave the matter of legal expenses of the appeal to the conclusion of the appeal process.