Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2015 ONFSCDRS 80
Appeal P14-00021 and P14-00041V
OFFICE OF THE DIRECTOR OF ARBITRATIONS
MOTOR VEHICLE ACCIDENT CLAIMS FUND
Appellant/ Respondent on Cross-Appeal and Variation
and
COLIN VELEY
Respondent/ Appellant on Cross-Appeal and Variation
BEFORE:
David Evans
REPRESENTATIVES:
Jeffrey Neinstein for Mr. Veley Marie Sydney for the Motor Vehicle Accident Claims Fund
HEARING DATE:
November 3, 2014
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- The appeal of the Arbitrator’s order dated May 5, 2014 is allowed. Paragraph 1(b) of the Arbitrator’s order is revoked, and the following substituted:
(b) Mr. Veley’s attendant care needs are $9,432.25 per month for the period after June 30, 2011.
- Paragraph 1(c) is added to the Arbitrator’s order:
(c) Mr. Veley is not entitled to payment of any further attendant care benefits for the period of June 2011 to February 12, 2014.
The issue of determination of the appropriate collateral benefit deduction to be made for the settlement of the AXA insurance claim is returned to arbitration. On an interim basis, from December 2012 to present and ongoing, it is ordered that incurred monthly attendant care expenses submitted to and payable by the Fund shall be reduced by $1,124.67, pending a further or other finding by an arbitrator.
Mr. Veley’s cross-appeal and variation application are dismissed.
If the parties cannot agree on the legal expenses of this appeal, an expense hearing shall be requested, as set out below, within forty-five days of this decision.
April 20, 2015
David Evans Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
The Motor Vehicle Accident Claims Fund appeals the decision of Arbitrator Ahlfeld dated May 5, 2014, in which she ordered the Fund to pay Mr. Veley a fixed amount of attendant care benefits under s. 19 of the SABS‑20101 from June 2011 to December 2012. Mr. Veley cross-appeals the Arbitrator’s refusal to order those benefits prior to June 2011. Both parties appeal the Arbitrator’s orders regarding allowable deductions for collateral benefits. Finally, Mr. Veley seeks a variation order extending the benefits past December 2012.
II. BACKGROUND
On December 28, 2010, Mr. Veley was in a motor vehicle accident that hospitalized him until February 4, 2011. Despite serious problems with his left arm, he saw no specialists or any other practitioners after his release, nor did he initially claim accident benefits. On June 30, 2011, he sustained T4 paraplegia in a second accident that put him in rehabilitation until October 2011. He did immediately claim accident benefits for the 2011 accident: AXA Insurance paid $6000 in monthly attendant care benefits (ACBs) after his discharge from rehabilitation.
The effect of the combined injuries of the accidents was determined to be a catastrophic impairment with a whole person impairment of 58% and a loss of use of the left arm.
Mr. Veley’s accident benefit claims history is tangled, as he did not claim accident benefits for injuries arising from the 2010 accident until after the 2011 accident. Only in January 2012 did Mr. Veley advise the Fund of his claim for accident benefits in relation to the 2010 accident.
In December 2012, AXA settled his 2011 accident benefits claim.
Mr. Veley claimed the maximum $6000 ACBs2 from the Fund. He appeals the Arbitrator’s finding that denied him benefits for the period before the 2011 accident and reduced them thereafter for a period because of the AXA collateral payments.
The Arbitrator found no benefits were owed for the period prior to the 2011 accident. She found that Mr. Veley had not provided any proof, whether through invoices, affidavits or testimony, that attendant care services were incurred, as required by s. 3(7)(e) of the SABS. Further, she found the exception in s. 3(8) to the requirement that an expense be incurred inapplicable because she found that the Fund never unreasonably withheld or delayed payment: both subsections are discussed below. Mr. Veley appeals on the basis that s. 3(8) applies for the period even before the Fund heard of the accident, so unincurred expenses must be paid at the statutory maximum.
For the period after the June 2011 accident, the Arbitrator reviewed the evidence and the various Form 1s, the documents entitled “Assessment of Attendant Care Needs” referred to in s. 19(2) of the SABS: this subsection provides that the amount of a monthly attendant care benefit is determined in accordance with the Form 1. She assessed Mr. Veley’s attendant care needs at $9,432.25 per month. Subsection 19(1) in turn provides that ACBs shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for services provided by an aide or attendant, for instance. However, instead of determining what was actually incurred by Mr. Veley, the Arbitrator found that Mr. Veley was entitled to the maximum $6000 per month (subject to deduction for the AXA payments), “notwithstanding that his actual incurred expenses was less.” In reaching this conclusion, she relied upon Henry v. Gore Mutual Insurance Company, 2013 ONCA 480. The Fund appeals this order on the basis that it is not liable to pay unincurred expenses because the Arbitrator misapplied Henry.
Regarding the deductions for collateral benefits, the Arbitrator found that for the period up to the December 2012 settlement, when AXA was paying $6000 a month in ACBs, the Fund was liable for the difference, or $3,432.25 per month. Mr. Veley appeals this order on the basis that no deductions for the AXA collateral payments should be allowed. As for the period after December 2012, the Arbitrator found she could not go behind the settlement, so nothing related to the lump sum settlement was deductible. The Fund appeals that order.
Finally, Mr. Veley brings a variation application because the Arbitrator’s order only deals with benefits up to December 2012. Mr. Veley submits that the Arbitrator’s failure to deal with the period thereafter was simply an oversight, as she established Mr. Veley’s needs for the period from the 2011 accident without any time limitation and she clearly dealt with the period after December 2012 by denying the Fund deductions for collateral payments after that date.
III. ANALYSIS
With respect to the Fund’s appeal of the order that it pay a set amount based on the Form 1, I note that the Form 1 assessment of attendant care needs only establishes the maximum benefit available, and not the actual benefit payable, in any given month. The general principle regarding attendant care benefits was stated by Director’s Delegate Makepeace in Allstate Insurance Company of Canada and Da Rosa et al, (FSCO P04-00033, May 25, 2006): “Unlike weekly benefits, which are ongoing regular payments intended to compensate for disability and maintain an income stream, … attendant care benefits are provided on a claim by claim basis to pay for services the claimant needs as a result of the accident.”
Thus, the benefit payable for any given month depends on what expenses were incurred, and is subject to other limits and qualifications. As Director’s Delegate Blackman pointed out in Toronto Transit Commission Insurance Company Limited and Marcus, (FSCO P14-00005, September 19, 2014), even an applicant with a catastrophic impairment “is not entitled, under any circumstances, to an attendant care benefit greater than $6,000 a month even if every single entitlement criterion, including reasonableness, necessity, causation and the expense having been incurred has been met and even if a higher amount is set out in the Form 1.” [Emphasis added.] Furthermore, subject to the exception discussed below, s. 19(1) provides that ACBs shall pay for all reasonable and necessary expenses that are incurred by or on behalf of the insured person. As for the meaning of “incurred,” s. 3(7)(e) of the 2010 SABS provides that “an expense in respect of goods or services” is not incurred unless:
(i) the insured person has received the goods or services to which the expense relates;
(ii) the insured person has paid the expense, has promised to pay the expense or is otherwise legally obligated to pay the expense;
(iii) the person who provided the goods or services:
(A) did so in the course of the employment, occupation or profession in which he or she would ordinarily have been engaged but for the accident, or
(B) sustained an economic loss as a result of providing the goods or services to the insured person.
As stated in Marcus, s. 3(7)(e) means that benefits are not limited to strict indemnification of expenses actually paid. However, it also means that it is no longer good law, subject to the exception for unreasonable withholding or delay in s. 3(8), that an insured person need not actually have received the goods or services to which the expense relates, or not have paid, promised to pay or be otherwise legally obligated to pay the expense to be entitled to payment of the benefit: “To decide otherwise would render clause 3(7)(e), and subsection 3(8), of the 2010 Schedule meaningless.”
Accordingly, what is payable are the expenses that meet the three requirements in s.3(7)(e), including being incurred. The Arbitrator found that Mr. Veley never met those requirements for the period before the second accident, so the only way the Fund could be required to pay for unincurred expenses is if s. 3(8) applies. The exception regarding incurred expenses in s. 3(8) provides that, in a dispute at FSCO, if an arbitrator finds that an expense was not incurred because the insurer unreasonably withheld or delayed payment of a benefit in respect of the expense, the arbitrator may deem the expense to have been incurred.
The Arbitrator found that the Fund never unreasonably withheld or delayed payments to Mr. Veley, so s. 3(8) does not apply before – or after – the second accident, and no expenses may be deemed to have been incurred.
Therefore, the Arbitrator correctly found that the Fund owed nothing for the period preceding the 2011 accident because Mr. Veley had not proved that the expenses were incurred or that they should be deemed to be incurred due to unreasonable withholding or delay in payment. Similarly, her finding means that the exception does not apply after the 2011 accident either.
Mr. Veley submits that the Arbitrator erred in first looking to see whether or not expenses were incurred. However, that is what is required in the legislation.
Mr. Veley submits that he is entitled to the entire $6000 because he sustained an economic loss. However, the test in s. 3(7)(e)(iii)(B) is whether the nonprofessional service provider sustained an economic loss, not whether the insured sustained an economic loss. The Arbitrator never found that the nonprofessional service providers suffered any economic loss, so that essential condition for payment of their services was never met at any point, whether before or after the second accident.
Mr. Veley submits that the Arbitrator erred in finding that the insurer did not act unreasonably. However, that is a question of weighing the evidence. The Arbitrator had the evidence before her, duly considered it, and reached her conclusions. There is no basis for me to intervene.
Mr. Veley submits that the requirement in s. 3(8) is only that a benefit be delayed. That is, the subsection refers to an expense that “was not incurred because the insurer unreasonably withheld or delayed payment…” He submits that the “unreasonably” only applies to “withheld.” It would mean that any delay in making payments would relieve the insured of proving expenses were incurred. I find this interpretation illogical, ungrammatical and impractical. Accordingly, I find the Arbitrator did not err in her interpretation and application of s. 3(8).
As for the period after the second accident, I find that the Arbitrator erred in finding that the Fund is liable to pay Mr. Veley a set amount since the second accident, notwithstanding that his actual incurred expenses were less. I find that she misapplied Henry v. Gore Mutual.
Henry dealt with the definition of “incurred” in the 2010 SABS already set out, and in particular the requirement that, in the case of nonprofessionals providing services, an expense is only incurred if the nonprofessionals “sustained an economic loss as a result of providing the goods or services to the insured person.” The Court of Appeal found that this test was a threshold test, so once a service provider sustained any economic loss, the entire value of the service provided was payable, not just the service provider’s actual economic loss.3 However, what the Arbitrator said here was that if even one service set out in the Form 1 was provided, then the entire amount in the Form 1 was payable to the statutory limit, whether or not the expense was actually incurred. These are different things and requires the payment of even unincurred services. Henry only required payment of incurred services, not unincurred ones. And as already noted in the citation from Marcus above, paying for unincurred expenses where s. 3(8) does not apply would render s. 3(7)(e) and s. 3(8) meaningless. The Arbitrator misconstrued the meaning of Henry. I find that she had no basis on which to order payment for unincurred services since she had already found s. 3(8) was inapplicable. I find this was an error of law.
Mr. Veley submits that the appeal decision in Marcus stands for the proposition accepted by the Arbitrator here, namely that if any Form 1 services are incurred, the entire Form 1 amount is payable up to the statutory maximum. However, as already noted in the passage from Marcus, Delegate Blackman stated that it is no longer the law that an insured person need not actually have received the goods or services to which the expense relates. Rather, he confirmed that the services in that case were provided as in the Form 1 but were payable at the Form 1 rates, even though less was actually paid.
In the result, the Fund owes no ACBs up to the time of the hearing. There is nothing owing for nonprofessional service providers, and the Fund has paid for the services provided by professional service providers. The first evidence of expenses being incurred is when Mr. Veley started receiving services from Partners in Community Nursing in April 2013, expenses that the Fund paid. The Fund submits that it actually overpaid by reimbursing the actual rates charged ($50-$68 per hour) and not the Form 1 rates ($10-$19 an hour), since Marcus states that services are payable at the Form 1 rates.
Beyond that, the Fund would have been entitled to a deduction for the AXA payments both before and after the settlement of AXA’s accident benefit claim in December 2012.
Regarding the deduction for the AXA benefits, the Arbitrator correctly applied s. 47(2), which provides that payment of an attendant care benefit “is not required for that portion of an expense for which payment is reasonably available to the insured person under any insurance plan.” Mr. Veley was receiving payments for ACBs from the AXA insurance plan, thus meeting the requirement for payments available under “any insurance plan.” The Arbitrator also correctly applied Monks v. ING Insurance Co. of Canada, 2008 ONCA 269, to find that both insurers were liable up to the monthly maximums and total maximums under each legislative regime. However, as already discussed, the expense has to be incurred, and the deduction is from that portion of the expense for which payment was available. Only if the expenses totaled more than $6000 for the period up to December 2012 would the Fund have been liable to pay anything.
Mr. Veley submits that the deduction is not available because the Arbitrator determined the Form 1 amount only in relation to the 2010 accident. However, the Arbitrator was quite clear in her decision that she was making a global assessment based on the effect of both accidents on Mr. Veley. She found that Mr. Veley is entitled to receive the benefits that are reasonable and necessary from both of the policies and then assessed his overall needs on that basis.
I will momentarily turn to the variation application regarding the period after the settlement of December 2012 onwards because it ties in to the deduction issue. The Arbitrator’s order for ACBs only deals with the period up to December 2012 and does not refer to ACBs thereafter.
Mr. Veley filed an Application for Variation/Revocation and submits that the order should be varied to provide as follows:
1 c) The Applicant is entitled to attendant care benefits, in the amount of $9,432.25 a month from January 2013 to date and ongoing, subject to a maximum monthly benefit payable of $6,000.00.
While Rule 61.4(c) provides that an application for variation/revocation may be rejected if “it is in respect of an order that has been appealed, and the appeal is pending,” I accepted the application in these circumstances.
I find the Arbitrator meant to say that ACBs were available and payable from the date of the second accident, since she considered whether the AXA payments were deductible after the lump sum settlement after December 2012, and she also applied Hill to find Mr. Veley was entitled to ongoing benefits. Thus, in the body of her decision, she found Mr. Veley’s attendant care needs to be $9,432.25 per month for the period of June 30, 2011 “to present,” meaning presumably the date of the hearing. I note that the Fund does not dispute that Mr. Veley’s needs arising from both accidents are at the amount assessed by the Arbitrator and that the assessment is protected by s. 287 of the Insurance Act until further order. However, for the reasons already discussed, there can be no blanket order for ongoing payments in a set amount without regard to whether the expenses were actually incurred. The variation application as it reads is therefore denied.
Returning to the deduction issue, I find that any ongoing payments are also subject to a deduction for the AXA payments even after the December 2012 settlement.
I find the Arbitrator incorrectly denied the Fund any deductions after the December 2012 AXA settlement. As noted above, the Arbitrator correctly relied on the Monks decision to find that benefits received from one insurer were set off from those received by the other. However, the court in Monks also allowed a deduction based on the annuity amount received after a lump sum settlement. There is no reason that would not apply here, as Mr. Veley agrees that at least a portion of the settlement was structured resulting in an annuity. Therefore, some portion of the annuity is deductible, although the parties disagree on the amount. The Fund proposes a figure of around $1800 a month, and Mr. Veley one of around $1100. Unfortunately, Mr. Veley did not reveal the settlement details until after the arbitration hearing, and the details were contained only in appeal submissions. Accordingly, the fact-determination issue of the details of the settlement and how to arrive at the appropriate amount of the deduction will have to be returned to arbitration.
Pending that further arbitration, on an interim basis I will use the calculation of the annuity provided by Mr. Veley of $1,124.67. An order will go that from December 2012 to present and ongoing, incurred monthly attendant care expenses submitted to and payable by the Fund shall be reduced by $1,124.67, pending a further or other finding by an arbitrator.
In conclusion, the Arbitrator did not err in finding that Mr. Veley was not entitled to ACBs prior to the second accident and that his benefits after the accident up to December 2012 were subject to deduction. Mr. Veley’s cross-appeal on those points is disallowed. The Arbitrator did err in finding that Mr. Veley is entitled to a set benefit without regard to incurred expenses after the second accident and that the Fund is not entitled to any deductions after December 2012. The Fund’s appeal on those points is allowed. A blanket order for ACBs regardless of the expenses incurred is inappropriate, so the variation application is denied. A further hearing will be held to determine the amount of the deduction pursuant to the AXA lump sum payment that can be made for expenses incurred after December 2012, and in the interim a monthly deduction of $1,124.67 will be applied.
IV. EXPENSES
If the parties cannot agree on the legal expenses of this appeal, the time for either party to request an appeal expense hearing under the Dispute Resolution Practice Code is extended to forty-five days from the date of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as submissions on such entitlement and/or quantum expense issues as are in dispute.
April 20, 2015
David Evans Director’s Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule — Effective September 1, 2010, O. Reg. 34/10, as amended.
- See s. 19(3)(1)(ii).
- As discussed in Marcus, the SABS was revised to enforce a payment cap in this situation, but that is not relevant for this case.