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

Neutral Citation: 2014 ONFSCDRS 31

FSCO A12-000300

BETWEEN:

BRITTNY MCDONALD

Applicant

and

AVIVA CANADA INC.

Insurer

Before: Susan Sapin

Heard: April 22 and 23, 2013, in Thunder Bay, Ontario.

Appearances: Christopher Hacio for Ms. McDonald Marie Clemens for Aviva Canada Inc.

Issues:

The Applicant, Brittny McDonald, was injured in a motor vehicle accident on January 7, 2008. At the time of the accident, she was twenty years old and working as an apprentice hairstylist in Dryden, Ontario, a small community of 8,000 people, about a four-and-a-half hour drive from Thunder Bay. She had just completed the 2000 apprenticeship hours required to become a licensed hairstylist in Ontario, after a year of beauty school courses, but had yet to write her certification exams. Due to her injuries, which included a herniated disc that did not respond to conservative treatment and was eventually surgically removed in April 2010, Ms. McDonald was no longer able to work as a hairstylist.

Ms. McDonald applied to Aviva Canada Inc. (“Aviva”) for vocational retraining under s.15 of the Schedule by way of a Treatment Plan (OCF-18) submitted on her behalf by her family doctor in January 2009, requesting funding for (presumably one of) two community college programmes: a two-year Business Accounting Programme and a three-year Business Administration Programme. Included with the Treatment Plan were a description of the programmes and tuition costs.

Aviva denied the Treatment Plan and sent Ms. McDonald for an Insurer’s Examination (“IE”) in March 2009 with an orthopaedic surgeon who opined that Ms. McDonald would not require retraining if she had surgery to her back. On that basis, Aviva maintained its denial of the Treatment Plan, but nevertheless paid for tuition and books for two college upgrading courses in November 2009 after Ms. McDonald submitted receipts for them.

In March 2010, Ms. McDonald advised Aviva that she had decided to become a teacher and had been accepted into a four year combined Bachelor of Arts and Education degree at Lakehead University in Thunder Bay, beginning in September 2010. She asked Aviva to pay the cost of tuition. Aviva said it would only fund the college programme. Ms. McDonald did not submit a new Treatment Plan for the university course, nor did Aviva request one.

Ms. McDonald had surgery in April 2010 and went ahead with her plans for university. She enrolled at Lakehead and completed the first two years of the degree programme by the spring of 2012 at her own expense, relocating to Thunder Bay during the school year to do so. She did not continue in September 2012 because she could not afford the remaining two years.

In her Application for Arbitration, Ms. McDonald claims from Aviva approximately $40,000 in expenses for tuition, books and living accommodation in Thunder Bay for the four-year university programme as a rehabilitation measure under s. 15 of the Schedule.¹ Aviva refuses to pay for the cost of a university degree on the basis that Ms. McDonald did not submit a Treatment Plan (OCF-18) for it under s. 38 of the Schedule. Eventually, on May 1, 2012, after Ms. McDonald mediated her claim, Aviva paid the full tuition cost of $8,202 for the three-year community college programme Ms. McDonald never attended, taking the position it is not liable for anything more.

Ms. McDonald did not submit a formal Treatment Plan specifically for the university teaching degree until April 16, 2013, the week before this preliminary issue hearing. She tendered a second, more complete version at the hearing on April 22.

Preliminary issue:

The preliminary issue to be determined is:

Has Ms. McDonald failed to comply with section 38 of the Schedule with respect to the four-year university programme at Lakehead University, and, if so, what are the consequences?

Result:

Ms. McDonald did not provide Aviva with a Treatment Plan with respect to university expenses under s. 38 of the Schedule until April 22, 2013. The consequences are that she is not barred from proceeding to arbitration for expenses incurred before October 4, 2012, when Aviva first advised her it was relying on her failure to submit a Treatment Plan as a reason for denying her claim.
Aviva is liable for expenses for university tuition fees, books and educational materials for the first two years of the four-year university programme, as calculated by the parties.
Ms. McDonald is entitled to interest on overdue amounts of 2 per cent per month, compounded.
Ms. McDonald is entitled to a special award, to be calculated by the parties in accordance with this decision.
Ms. McDonald is entitled to her expenses of this preliminary issue hearing.

REASONS:

Submissions of the Parties:

Aviva relies on s. 38(1.1) of the Schedule, which states that an insurer is not required to pay for any rehabilitation expenses incurred before the insured person submits a Treatment Plan that meets the requirements of s. 38. It argues that, as Ms. McDonald did not submit a Treatment Plan for her university expenses before she incurred them, the matter ends there, and she is not entitled to proceed to arbitration on the merits of her claim. In the alternative, Aviva argues that a university teaching degree is not a necessary and reasonable rehabilitation measure for Ms. McDonald under s. 15 of the Schedule.

Ms. McDonald’s position is that Aviva should not be allowed to rely on her failure to submit a Treatment Plan to defeat her claim because it never advised her it required a Treatment Plan for her university expenses until October 4, 2012, when it filed an amended Response to her Application for Arbitration, well after she had already completed two years of the four-year university course and after she had incurred the expenses. Ms. McDonald argues that Aviva failed in its obligations under s. 32 of the Schedule to assist her to apply for benefits, and in its obligations as her first party insurer to adjust her claim with utmost good faith. Consequently, she submits, she should not be barred from arbitrating her claims on the merits, and furthermore that the full cost of the university degree is a reasonable rehabilitation measure under s.15 of the Schedule, which Aviva should pay.

I find Ms. McDonald’s failure to submit a Treatment Plan for the four-year university degree until April 22, 2013 is not a bar to her proceeding to arbitration on the issue of whether or not the expenses claimed up to October 4, 2012 are reasonable and necessary. I further find that Aviva is liable to pay for the cost of university tuition fees and books Ms. McDonald incurred for her first two years at Lakehead as a reasonable and necessary rehabilitation measure, for the reasons set out below.

Failure to comply with s. 32(2)c

I find Aviva cannot rely on Ms. McDonald’s failure to submit a Treatment Plan under s. 38 to defeat her claim, when it failed in its own obligations under s. 32(2)(c) of the Schedule to assist her in a meaningful way to apply for the vocational rehabilitation benefits she could be entitled to under s.15 of the Schedule. In that respect I agree with the reasoning of Arbitrator Renahan in Beaman and Guarantee Insurance Company of Canada.²

In this case, in meeting its obligations under s. 32(2)(c) and s.15, I find Aviva should have, and failed to: advise Ms. McDonald that if she wanted Aviva to fund a university education she should submit a further Treatment Plan for it; assist her to obtain vocational counselling once it became clear Ms. McDonald was unsure about what retraining to take; and either assist Ms. McDonald to obtain a vocational assessment, or conduct one of its own, in a timely fashion.

Aviva concedes for the purpose of this preliminary issue hearing that Ms. McDonald is not able to work as a hairdresser due to her physical injuries and that some form of retraining is necessary. I find this was the case a year after the accident in January 2009, when Dr. Dahmer, her family doctor, submitted a Treatment Plan on her behalf to Aviva, in which he opined that a two or three-year college business programme would be a reasonable and necessary rehabilitation measure. He recommended a further round of conservative treatment with a steroid epidural for her herniated disc, to enable increased physiotherapy, but advised that if there was no improvement, Ms. McDonald would be a candidate for surgery in the form of a discectomy.

Aviva denied this Treatment Plan and sent Ms. McDonald for an insurer’s examination (“IE”) with an orthopaedic surgeon, Dr. G. Porter, to determine if the Treatment Plan was reasonable and necessary.³ Dr. Porter agreed with Dr. Dahmer that Ms. McDonald had not reached maximum medical improvement and that she was a candidate for surgery. About the proposed retraining he concluded:⁴

In my opinion, without surgery she will have an ongoing impairment that might preclude the kind of work she is trained to do. If this were the case then the treatment plan would be reasonable. Otherwise, if she does have the surgery, the treatment plan in dispute is not reasonable or necessary.

On that basis, Kathie Reid, Aviva’s adjuster, sent Ms. McDonald an Explanation of Benefits dated April 20, 2009⁵ stating:

If you decide against surgery Dr. Porter agrees with Dr. Dahmer’s recommendations and we are prepared to provide funding for your college education.

However, if you decide to have surgery he does not agree with the treatment plan and we are not prepared to provide funding for the treatment plan.

Under the circumstances, this was not a reasonable or helpful response from Aviva in many respects. Dr. Porter’s prognosis was speculative. Surgery was still premature as not all treatment options had been exhausted, and its outcome uncertain.⁶ A microdiscectomy is considered major — and specialized — back surgery. Dr. Porter noted the likely lengthy wait time for such surgery in Ontario, going so far as to suggest Ms. McDonald explore options in the United States. The surgery would require a recovery period of at least six months. In other words, it would be quite some time before Aviva’s commitment to “provide funding for [a] college education” would be realized, if at all.

Also, I find that Dr. Dahmer’s Treatment Plan was for tuition expenses only. I find it misleading that Aviva would respond with a (conditional) agreement to fund a “college education,” which is arguably a broader term that could include books, materials and living expenses for an out-of-town programme.

Finally, Aviva did not address the issue of whether or not a “college education” was a necessary and reasonable measure from a strictly vocational point of view. In that respect, Aviva failed to properly assess the claim on its merits in a timely manner.

This is a significant omission, when one considers the particularly broad range of rehabilitation benefits available under s.15. They include reasonable and necessary measures to “reduce or eliminate the effects of any disability . . . or to facilitate the insured person’s reintegration into his or her family, the rest of society and the labour market.” Many of these benefits are not of a strictly medical nature, and include, for example: home and vehicle modifications; life skills training; family, social rehabilitation and financial counselling; and, of particular importance to Ms. McDonald: employment counselling; vocational assessments; and vocational or academic training. Furthermore, with respect to reintegrating the insured person into the labour market, the insurer is required to consider the person’s personal and vocational characteristics.

The tenor of the ongoing correspondence between the parties entered into evidence in this hearing, and Ms. McDonald’s testimony, indicates to me that neither party was really clear about what Ms. McDonald was entitled to in terms of rehabilitation benefits, the proper procedures for claiming them, or Aviva’s first-party responsibilities towards its insured.

Mr. Hacio, counsel for Ms. McDonald, responded to Ms. Reid on April 28, 2009, advising that his client did not want to wait several years before she could have surgery to start retraining; that she was considering several vocational alternatives, including becoming an accountant; and that she had not received any vocational counselling. Mr. Hacio inquired whether Aviva would pay for a vocational assessment.

These were valid concerns to which Aviva should have responded. Given Ms. McDonald’s youth, her limited and relatively specialized pre-accident formal education and work experience in a small-town setting, and the potential lengthy wait for surgery whose outcome was uncertain, I find it unreasonable that Aviva would expect Ms. McDonald to simply wait around without exploring vocational alternatives or engaging in educational upgrading in the meantime.

I find that at the very least, at this point, Aviva should have advised Ms. McDonald that she was entitled to submit a request for a vocational assessment under s. 15(f) of the Schedule, and how to go about doing so, as part of its obligation to assist her in applying for benefits under s. 32(2)(c). Aviva should also have advised her she should submit a new Treatment Plan if her plans had changed, as well as the consequences to her if she failed to do so. As Aviva was on notice that Ms. McDonald was considering “several vocational alternatives,” Aviva should have advised her that she was entitled to vocational counselling and how to apply for it. There was no evidence that Aviva did any of these things.

These obligations to Ms. McDonald are part of Aviva’s obligations both under the Schedule and as a first-party insurer charged with the duty of utmost good faith to its insured. They exist independent of whether an insured person is represented.

Ms. Reid’s June 16, 2009 response to Mr. Hacio’s April 28, 2009 letter and his request for funding for a vocational assessment fell short of these obligations.⁷ She merely reiterated her previous position, that Aviva would provide funding for Ms. McDonald’s education only if she chose to forego surgery. Ms. Reid did not respond to Mr. Hacio’s request for a vocational assessment. Nor did she advise that if Ms. McDonald’s vocational plans had changed, she should submit a new or revised Treatment Plan. On the evidence before me, I find this approach was neither prudent nor reasonable.

Mr. Hacio repeated his request for a vocational assessment five months later in a letter to Ms. Reid dated November 13, 2009.⁸ He also advised that Ms. McDonald was attending classes at Confederation College and submitted receipts for tuition for two courses and books totalling $829.40. Ms. Reid paid this amount on November 27, 2009,⁹ apparently reversing her position that Aviva would only pay for retraining expenses if Ms. McDonald decided against surgery.¹⁰

Finally, on December 4, 2009 Ms. Reid wrote to Mr. Hacio that Aviva would consider covering the cost of a vocational assessment.

I was not presented with any evidence that Ms. McDonald went ahead with a vocational assessment of her own. The only assessment in evidence was one conducted by Aviva as part of a multidisciplinary post-104 s. 42 insurer’s examination in March 2011, for the purpose of determining Ms. McDonald’s entitlement to ongoing income replace benefits (“IRBs”), more than three years after the accident.¹¹ No explanation was provided for this delay. That report concluded that Ms. McDonald would require only one year of vocational education or retraining for employment comparable in status and remuneration to her pre-accident occupation as a hairdresser. By that time, Ms. McDonald had almost completed the first two years of the university programme.¹² I note that this assessment was not commissioned to address the reasonableness or necessity, vocationally, of the college programmes Ms. McDonald identified or the teaching degree she was pursuing, and Aviva has never relied on the conclusions contained in this report in any of its refusals to pay for Ms. McDonald’s university expenses.

Application of s 38

In this case, Aviva advances — and has adhered to in adjusting Ms. McDonald’s claim — a literal and narrow interpretation of the provisions of s. 38(1.1), that an insurer is not liable to pay for a rehabilitation expense that was incurred before the insured person submits a Treatment Plan. I find Aviva cannot rely on such a narrow interpretation of s. 38 to defeat Ms. McDonald’s claim, for two reasons. Firstly, as detailed above, it failed under s. 32(2)(c) to comply with its obligations to inform and assist Ms. McDonald to apply for a number of rehabilitation benefits she could have been entitled to under s. 15 in a timely fashion. Secondly, in the factual circumstances of this case, Aviva’s interpretation would undermine the purpose of s. 38.

Section 38 of the Schedule sets out a detailed procedure for insured persons to claim medical and rehabilitation benefits and for insurers to assess whether they are necessary and reasonable. Insured persons normally submit claims to their insurers via a standard “Treatment Plan (OCF-18),” form, printable from the FSCO website.

The procedures set out in s. 38 are there to ensure claims are assessed promptly and fairly on their merits, so that needed benefits can be obtained and disagreements between the parties about what is reasonable and necessary resolved without delay. They also ensure both parties are aware of what the costs will be, and whether they will be paid, before they are incurred. This is so that the parties can make informed decisions about treatment or rehabilitation, and neither party is surprised or prejudiced by the other’s position.

In this case, Aviva has not demonstrated that it has suffered any prejudice at the hands of Ms. McDonald due to the lack of a Treatment Plan. I find it was well aware that Ms. McDonald wanted to attend university instead of college in September 2010 at least six months beforehand when, on March 20, 2010, Mr. Hacio sent Ms. Reid a copy of Lakehead’s Offer of Admission to Ms. McDonald together with the academic fees for 2009-2010, explaining that Ms. McDonald would be unable to provide the exact amount of the tuition fees for the 2010 academic year until she accepted the university’s offer of admission. Mr. Hacio explained that Ms. McDonald was unable to accept the offer until Aviva confirmed it would pay the tuition costs. Finally, Mr. Hacio advised, “time is of the essence,” and requested an early response from Aviva.

As noted above, Ms. Reid’s April 6, 2010 response did not advise that Ms. McDonald should submit the expenses on a new Treatment Plan, but instead attempted to hold her to her original choice, in the absence of any objective information about whether such a vocational choice was reasonable:

As per the Insurer Examination Report (March 6, 2009) and the Explanation of Benefits (OCF-9) dated April 20, 2009 Aviva did agree to provide funding for Brittny’s college education if she decided against surgery.

The funding was based on a pricing sheet from Confederation College provided by Brittny. At that time her intentions were to enroll in a 3 year Business Administration Program.

Although Brittny has now decided to attend university in lieu of college we are only prepared to provide funding based on the 3-year Business Administration College Program.¹³

I find this response to be inadequate and arbitrary for two reasons. Firstly, without the benefit of any vocational assessment to assist it in determining whether university, the three-year college programme, or any other course of study was a reasonable rehabilitation measure in terms of suitability or cost, and in the absence of any vocational assistance to Ms. McDonald at that point, I find Aviva had no valid substantive basis to refuse Ms. McDonald’s claim for university tuition expenses. Secondly, Aviva did not advise Ms. McDonald it was relying on the s. 38(1.1) requirement for a Treatment Plan – the position it takes in this hearing – as a reason for refusing her claim. Had it done so, Ms. McDonald could have submitted one and Aviva could have properly assessed its reasonableness and necessity with a timely vocational assessment. I find Aviva cannot claim it has suffered any prejudice by the lack of a Treatment Plan when it failed to advise of the need for one, and when it knew the nature and cost of Ms. McDonald’s plans well in advance.¹⁴

As has been well-established in the jurisprudence since the Supreme Court of Canada decision in Smith v. Co-operators General Insurance Co.¹⁵ consumer protection is one of the main objectives of automobile insurance law, and requires insurers to provide complete and correct information in a straightforward language comprehensible to unsophisticated persons about procedural matters. In Horvath and Allstate Insurance Company of Canada¹⁶, and again in Bhada and Security National Insurance Company/Monnex Insurance Mgmt. Inc.,¹⁷ Arbitrator Leitch applied the principles articulated in Smith in the context of the insurer’s obligation under section 32(2)(c) to provide information to assist the person in applying for benefits.

More recently, in Anthonypillai and Security National Insurance Company/Monnex Insurance Mgmt. Inc.,¹⁸ Arbitrator Bujold relied on the principles articulated in these decisions in determining that Security National could not deny caregiver benefits to Mrs. Anthonypillai under s. 35(13) of the Schedule for the period before she submitted a Disability Certificate, because it did not communicate to her the consequences of failing to do so – that, without a reasonable explanation for the delay in submitting the Disability Certificate, she could be permanently disentitled from receiving the benefit for the period of the delay.

I agree with Arbitrator Bujold’s reasoning. Although that case and the cases cited therein dealt with time limits, I find the principles apply equally to the case before me, where, under s. 38, an insurer is not required to pay for a rehabilitation expense incurred before a Treatment Plan is submitted. At no time did Aviva advise Ms. McDonald that it required a Treatment Plan or the consequences to her of failing to provide one.

Although as a general rule a procedural failing or defect on the part of an insurer does not lead to an automatic entitlement to a benefit – the insured person must still establish, on a balance of probabilities, that she qualifies for the benefit – in this case, I find Aviva cannot rely on Ms. McDonald’s failure to submit a Treatment Plan to prevent her from proceeding to arbitration on that point.

Aviva’s Obligation to Pay

The parties presented arguments and limited evidence about whether Ms. McDonald’s claim for funding for university expenses, including tuition, books, transportation, accommodation and living expenses in Thunder Bay are a necessary and reasonable rehabilitation measure under s. 15.

On the limited evidence before me, in the circumstances of this case, I find there is no dispute that retraining is necessary, and that Ms. McDonald has established, on a balance of probabilities, that two years of university tuition and expenses for books already incurred are a reasonable expense.

Costs limited to two years’ tuition only

I find Ms. McDonald’s claim for university expenses is limited, in this preliminary issue hearing, to the two years’ tuition expenses and cost of books already incurred.¹⁹ In her first Treatment Plan submitted in January 2009, the request was for tuition expenses only. Aviva paid the expenses for two college courses and books submitted by Ms. McDonald, indicating Aviva was prepared to pay for books and tuition. Aviva also paid the $160 for the Ontario University Applications Fee when Ms. McDonald submitted the receipt for it. Once Ms. McDonald decided to attend Lakehead University, Mr. Hacio wrote to Aviva in March 2009 and asked it to confirm it would pay the university tuition expenses. A second letter dated July 23, 2010 asked Aviva to pay $6,189.54 for courses at Lakehead. Neither letter mentions any other costs.²⁰ Finally, Ms. McDonald’s June 2010 Application for Mediation indicates she was only claiming the cost of tuition, estimated at $7,000 per year.²¹

There is no evidence that Ms. McDonald ever requested, or expected Aviva to pay the full cost of the four-year university degree, including accommodation, living costs and transportation, until the actual mediation itself, conducted in April, 2011. According to the mediator’s report, Ms. McDonald estimated the total cost at $40,000.

Limiting Ms. McDonald’s claim to two years’ tuition and expenses for books is consistent with the overall purpose and principles that underlie s.38(1.1) as explained above, and is a fair balancing of the parties’ interests in this case, without either party suffering undue surprise or prejudice, or benefitting from an arbitrary windfall.

The expenses are a reasonable rehabilitation measure under s. 15

I find that Ms. McDonald has established, on a balance of probabilities, that tuition and books for two years are a reasonable rehabilitation measure under s. 15, considering the criteria under ss. 15(2),(3) and (4). In Ms. McDonald’s case, the most important element is that the rehabilitation measure — in this case, vocational or academic retraining — should facilitate her reintegration into the labour market. To that end, ss. 15(3) and (4) require that the measures enable Ms. McDonald to engage in employment that is as similar as possible to employment in which she engaged in before the accident, or, if that is not possible, to lead as normal a work life as possible. The measures must take into account her personal and vocational characteristics.

Ms. McDonald’s evidence on these points was limited, subjective, and largely hearsay. However, in the absence of any evidence from Aviva to the contrary, I accept Ms. McDonald’s evidence that hairdressing suited her personal and vocational characteristics, and that she chose it as an occupation because it allowed her to be independent, creative and to work directly with people. She testified that she hoped to one day use her entrepreneurial skills to open her own beauty salon, with people working for her, rather than work as an employee.

With respect to Ms. McDonald’s occupational interests and personality profile, Aviva’s vocational IE also identified these characteristics, depicting Ms. McDonald as “oriented toward structured and methodical work activities that allow her to communicate with and help others:” that she would “prefer to function in a leadership role while working relatively independently;” and that she was a “socially outgoing, helpful and generous person, who may have some difficulties with self-discipline, organization and planning.”²²

Despite this information, a “transferable skills analysis comparison search” conducted by Mr. Martin, purportedly restricted to Ms. McDonald’s strength level, returned ten occupations deemed comparable to Ms. McDonald’s pre-accident employment in terms of status and remuneration. I find none of these jobs reflect Ms. McDonald’s personal or vocational characteristics. Four of these occupations were clerical, a category of work in which Ms. McDonald testified she had no interest whatever. Regarding manicurist/pedicurist, hair replacement technician and cosmetician, Mr. Martin’s report states that Ms. McDonald’s ability to cope with the physical demands associated with those occupations was “undetermined.”²³ I accept Ms. McDonald’s testimony that she could not physically do the work of a pedicurist and that, as a manicurist, she could not earn as much as she could have as a hairstylist.

I find the vocational assessment did not identify any occupations that satisfied the criteria in s. 15. Either they did not take into account Ms. McDonald’s personal or vocational characteristics, or she physically could not do the work. Although they might be similar to her pre-accident occupation in terms of status and remuneration, they do not take into account the fact that Ms. McDonald was still an apprentice at the time of the accident, earning $10,000 to $15,000 annually. I accept Ms. McDonald’s evidence that, not only was she not working a full schedule, she had not yet reached her full earning potential. The suggested occupations also did not take into account that her work as a hairstylist was incentive-based, as she could work on commission and earn tips. Although there was no independent evidence to corroborate Ms. McDonald’s belief that she could earn $80,000 per year as the owner of her own salon, I find her belief that her income would grow as her experience and reputation increased, doing work she enjoyed, was a reasonable one.

It is clear from Mr. Martin’s report that one factor that went into selecting alternate occupations was the amount of education or retraining they would require, based on the amount of training Ms. McDonald had engaged in to become a hairstylist and his assessment of her aptitudes. Mr. Martin determined that Ms. McDonald’s general learning ability score predicted “likelihood of success in formal training programs less than two years in duration,” and particular occupations were considered with that in mind. However, he acknowledged that “this prediction should however be interpreted with caution in view of her heightened level of test anxiousness while completing the aptitude test.” Given that Ms. McDonald was close to successfully completing her second year at Lakehead at the time of the assessment, I find Mr. Martin could just as well have added the caveat that Ms. McDonald had already successfully completed almost two years of a university programme leading to a teaching degree, thus proving she was capable of more than her test scores would suggest.

In other words, Mr. Martin selected occupations based in part on an underestimation of Ms. McDonald’s learning abilities and her rehabilitation potential. I find his conclusion, that “vocational retraining for suitable employment that is in keeping with the status of her pre-accident employment . . . could be completed in one year or less, which is comparable to the length of time she spent in formal hairstylist training, and would likely restore her pre-accident earnings,” is simply wrong. For one thing, under s. 15, it is not the length or cost of vocational retraining that must be comparable to the insured person’s pre-accident training, it is the result of the retraining that must meet the test: an occupation that is as similar as possible to the pre-accident occupation, or alternatively, one that allows the insured person to lead as normal as life as possible. ²⁴ Depending on the nature of the person’s impairments, achieving those goals could cost more in terms of time and money than the person’s original training, and still be reasonable.

The fact that no similar jobs that Ms. McDonald can actually do have been identified, does not relieve Aviva of the obligation to pay for reasonable measures to reintegrate her into the labour market through retraining for employment that will allow her to lead as normal a work life as possible.

In this case, Ms. McDonald has found, and actively pursued, an occupation that she feels meets the s. 15 criteria and that she would be able to engage in from a physical and vocational point of view – teaching. Although I agree with Aviva that teaching is not an occupation that is qualitatively “as similar as possible” to hairstyling, because of the length and depth of training required, and the cost of same, nevertheless, in this particular case, and in the absence of any identified suitable alternative occupation, I find Ms. McDonald’s goal is a reasonable rehabilitation measure, and Aviva is obligated to assist her in achieving it, to a reasonable degree.

Under the circumstances, I find assisting Ms. McDonald to a reasonable degree means paying, at the very least, for the cost of two years’ tuition and books (including any other educational materials required for the courses) that she has already incurred, less the $8,202 Aviva has already paid. The parties shall calculate and agree on this amount.

Interest

Ms. McDonald is entitled to interest under the Schedule at the rate of 2 per cent per month from the date the benefits are overdue. As the $8,202 already paid was only paid on May 1, 2012, the parties will need to take this into account in calculating the amount of interest payable.

Special Award

Under s. 282(10) of the Insurance Act,²⁵ if an arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of 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.

I find Aviva has withheld and delayed payments to Ms. McDonald because of its unreasonable conduct, which I have identified as follows:

Not fulfilling its obligations under s. 32(2)(c) and as a first party insurer acting with utmost good faith to advise Ms. McDonald of the range of rehabilitation measures available to her under s. 15, or to assist her to apply for them in a timely fashion;
Making Ms. McDonald wait an unreasonably lengthy amount of time for the (uncertain) outcome of surgery before it would agree to pay for any vocational retraining;
First refusing to pay for retraining if Ms. McDonald went ahead with surgery, then changing its mind and agreeing to pay, without explanation; then not being clear about what expenses it would agree to pay for in terms of “funding;”
Not advising Ms. McDonald to submit a Treatment Plan for university expenses, or of the consequences of her failing to do so, once it was aware she was planning to pursue that avenue;
Not providing any vocational counselling or a timely vocational assessment;
Not providing her with any meaningful vocational rehabilitation assistance, essentially leaving her to her own devices;
Not once providing a substantive reason for refusing to pay for her university expenses;
Basing its refusal to pay on the lack of a Treatment Plan, but not advising her of this reason until October 4, 2012, when it raised it as a defence to her claims in its Amended Response to her Application for Arbitration, six months after she had incurred expenses for two years of university;
Failing to consider and apply all of the relevant criteria in s. 15 for reintegrating Ms. McDonald into the labour market.

I find this conduct merits a special award. Aviva provided no meaningful vocational assistance to Ms. McDonald for almost four years after the accident, in effect leaving her to go it alone, and then attempted to acquit itself of any further obligation to her with a “good faith” payment of $8,202. I accept Ms. McDonald’s evidence that Aviva’s refusal to assist her with her university costs, while at the same time terminating her income replacement benefit, caused her financial hardship. On the evidence before me, I find Aviva did a very poor job of communicating with Ms. McDonald about what she was entitled to, and although the fact that she was represented by counsel may have played a part, it does not relieve Aviva of its obligations. Although Aviva’s conduct does not amount to bad faith, nor a maximum special award of 50%, I find its unexplained unwillingness to reach out and assist Ms. McDonald by simply advising her to submit a new Treatment Plan, so that it could fairly address the reasonableness of a university degree as a rehabilitation measure, demonstrates a certain intransigence on its part.

I find a special award of 35% of benefits owing for two years’ tuition, books and educational materials to be reasonable in the circumstances. I leave it to the parties to calculate the amount owing in accordance with s. 282(10) and remain seized in the event they cannot agree on the amount based on their calculations.

EXPENSES:

The parties did not argue the issue of expenses before me. The parties should attempt to resolve their claims for the expenses of this preliminary issue hearing by reviewing Rules 75 to 79 of the Dispute Resolution Practice Code. If the parties are unable to resolve the issue of expenses, either party may request, within 30 days of receipt of this decision, that I determine the matter by way of written submissions from the parties.

February 21, 2014

Susan Sapin Arbitrator

Date