John Cook v. RBC General Insurance Company, 2015 ONFSCDRS 96

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 96

Appeal P14-00038

OFFICE OF THE DIRECTOR OF ARBITRATIONS

JOHN COOK

Appellant

and

RBC GENERAL INSURANCE COMPANY

Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Ms. Samia M. Alam for the Appellant, Mr. John Cook Ms. Anju Sharma for the Respondent, RBC General Insurance Company

HEARING DATES:

March 30, 2015 and April 20, 2015

APPEAL ORDER

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

1. Upon an arbitrator adding catastrophic impairment as an issue in the arbitration proceeding, paragraph 1 of the Arbitrator’s September 18, 2014 order is rescinded and replaced by an order that the Respondent, RBC General Insurance Company, shall pay the Appellant, John Cook, $6,780 as interim legal expenses under subsection 282(11.1) of the Insurance Act.

2. An appeal expense hearing shall be requested, as set out below, within sixty days of the date of this decision.

May 4, 2015

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

The Appellant, Mr. John Cook, was injured in a motor vehicle accident on March 4, 2011. As a result, he applied to his first-party automobile insurer, the Respondent RBC General Insurance Company, for statutory accident benefits under the 2010 Schedule.¹

The parties came before Arbitrator Mutch (the “Arbitrator”) for a determination of the Appellant’s motion for an order that the Respondent pay the Appellant the sum of $12,960 to fund a catastrophic impairment (CAT) assessment. The Arbitrator’s September 18, 2014 order dismissed the Appellant’s motion.

In his decision, the Arbitrator held:

1. The funding of a rebuttal CAT assessment was most properly characterized as an interim expense rather than an interim benefit.

2. Accordingly, the criteria in Bernicky and Guardian Insurance Company of Canada, (OIC A-006268, July 6, 1994) applied on whether to grant interim expenses.

3. Applying the first criterion in Bernicky, there was no question there was a bona fide issue of whether the Appellant was catastrophically impaired.

4. Applying the second criterion, the cost of a second CAT assessment approximately as thorough as the Respondent’s $15,280 CAT assessment was a reasonable and necessary expense for the conduct of the arbitration hearing.

5. Applying the last criterion in Bernicky, the Appellant had extremely limited financial resources and was not able to fund the full cost of the proposed CAT assessment.

6. Although an award of interim expenses of at least some of the claimed expense was warranted in this case, this was prevented by subsections 18(3) and (5) of the 2010 Schedule. Subsection 18(5) placed the Appellant under the clause 18(3)(a) $50,000 cap for both treatment and assessments in non-catastrophic cases. It was uncontested that the Respondent had paid the Appellant over $50,000 in medical and rehabilitation benefits.

7. The Legislature did not provide for this situation where the very question of whether an insured person could claim more than $50,000 in medical and rehabilitation benefits was in issue. The matter now stood in a state of inertia, contrary to the remedial nature of the legislative scheme. The Respondent making a voluntary payment towards the cost of the Appellant’s rebuttal CAT assessment would help banish that state of inertia.

My December 18, 2014 preliminary appeal order exercised my discretion under Rules 50.2 and 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014), to accept this appeal from the Arbitrator’s September 18, 2014 preliminary decision.

The Appellant argues that the Arbitrator erred in law in:

1. Misapplying and/or improperly restricting his discretion under subsection 279(4.1) of the Insurance Act to make interim orders pending the final order, as follows:

(a) Finding that the monetary limits of clause 18(3)(a) of the 2010 Schedule apply to subsection 279(4.1) of the Insurance Act. Section 18 of the 2010 Schedule is limited to medical and rehabilitation benefits. Catastrophic Impairment is not a benefit. Therefore, any claim for a CAT determination cannot be encompassed by section 18.

(b) Even if the clause 18(3)(a) monetary limit applies, the Arbitrator erred in failing to exercise his authority under subsection 279(4.1) of the Insurance Act, as in Boyd and St. Paul Fire & Marine Insurance Company, (FSCO A14-005186, November 13, 2014), to award, pending CAT determination, an amount higher than the section 18 monetary limit.

(c) Holding that his decision was contingent on determining whether the Appellant was seeking payment of a benefit or an expense. Subsection 279(4.1) applies broadly to all interim orders. The Arbitrator erred in not applying the criteria in Ioannidis and Canadian General Insurance Group, (OIC A97-001551, December 15, 1997) to award both interim benefits and expenses. As the Ioannidis and Bernicky criteria are similar, a further arbitration hearing is not necessary to determine interim entitlement.

(d) Failing to consider the substantive nature of rebuttal reports. The legislative intent in the 2010 Schedule was not to eliminate funding for rebuttal reports but rather the procedure by which it is sought. The Arbitrator erred in not finding that procedural fairness required granting the requested relief. Without the requested funding the Appellant will be unable to challenge the Respondent’s CAT reports or its decision to deny a higher threshold level of benefits allowed under a CAT designation.

(e) The Arbitrator erred in finding that the Appellant’s claim came under section 18 rather than section 25 of the 2010 Schedule. Paragraph 25(1)(5) requires that the insurer pay reasonable fees incurred by an insured person for a section 45 CAT determination. Clause 25(5)(a) allows payment of $2,000 for any one assessment or examination and for preparing reports in connection with it.

While the Appellant’s CAT rebuttal report expenses have not been incurred as defined by clause 3(7)(e) of the 2010 Schedule, the subsection 3(8) exemption applies that the expense should be deemed to have been incurred because the Respondent unreasonably withheld payment by (1) failing to advise the Appellant that the CAT reports were required to be funded under section 18 and allowing those expenses to be exhausted; and (2) failing to reconsider its position.

2. In the alternative, the Appellant submits that the Arbitrator erred in finding that the monetary maximum in subsection 18(3) of the 2010 Schedule for benefits applies to interim expense awards under subsection 282(11.1) of the Insurance Act.

While subsection 282(11) of the Insurance Act (the general expense provision) has an incurred requirement, awards of interim expenses under subsection 282(11.1) does not. The purpose of an interim expense award is to allow a party financial assistance pending the final conclusion of a matter whether or not that expense has been incurred. In most cases, the request for an interim expense is made because a party is unable to carry an expense that is necessary for the conduct of the litigation. This is precisely upon which/ the Bernicky criteria are premised.

Had the Legislature intended for the “incurred” principle to apply to interim expenses it would have expressly said so in subsection 282(11.1). However, it did not.

Further, subsection 282(11.1) of the Insurance Act gives adjudicators the discretion to establish terms and conditions of the interim award for funding. Where there is any conflict between the Insurance Act and any monetary limit in the Code, the Insurance Act must prevail. Regardless, Rule 81.1 of the Code gives arbitrators discretion to waive compliance with or deem inapplicable any rule.

The Respondent submits:

1. The Arbitrator properly exercised his discretion under subsection 279(4.1) and properly characterized the Appellant’s motion as a request for interim expenses. Therefore, the Arbitrator, correctly, did not apply the Ioannidis criteria pertaining to interim benefit awards. In any event, the Appellant failed to meet the Ioannidis test for interim benefits in establishing neither a prima facie case nor urgency or necessity.

However, if Ioannidis is found to apply, then as the Arbitrator did not comment on the criteria from that case, the matter would have to return to arbitration.

2. The issue of CAT determination is distinct from that of funding for CAT assessments. Boyd is distinguishable as it pertains to ongoing attendant care benefits, not a one-time claim for funding of assessments and reports.

3. Paragraph 25(1)(5) of the 2010 Schedule only applies to section 45 applications for CAT determinations, not CAT rebuttal reports.

4. There is no present statutory basis or substantive right for an insured to have rebuttal reports paid, unlike under paragraph 42.1(3)(3) of the prior 1996 Schedule². This change was made for a deliberate purpose. The 2010 Schedule reduced medical and rehabilitation benefits from $100,000 to $50,000 and included assessments and reports in that restricted amount. This demonstrates a clear legislative intent to limit the benefits payable.

5. Subsection 282(11) of the Insurance Act requires legal expenses to have been incurred to be awarded. The Appellant is not entitled to interim legal expenses because they have not been incurred. Antony and RBC General Insurance Company, (FSCO A05-000898, January 23, 2006), held that “[e]xpense awards are primarily intended to partially compensate a party for the costs incurred over the course of the dispute resolution process.” The same principle applies to interim expenses awards.

Arbitrator Manji, in Bernicky, held that “an interim award of expenses incurred in respect of an arbitration proceeding” [emphasis added] was appropriate in the enumerated circumstances. The new definition of “incurred” in paragraph 3(7)(e) of the 2010 Schedule must now be applied.

The Respondent has acted in good faith. It considered the new reports furnished by the Appellant and provided medical addendums. It has also provided the Appellant with continuing information about how much he had left in benefits. Accordingly, the subsection 3(8) exemption to the incurred pre-requisite does not apply.

6. Regardless of how the Appellant’s request for an interim award is categorized, the exhausted $50,000 monetary cap in clause 18(3)(a) of the 2010 Schedule applies:

(a) The Legislature is presumed to avoid stylistic variation, using language carefully and consistently so that within a statute the same words have the same meaning and different words have different meanings (Driedger on the Construction of Statutes, 3^rd Edition, Butterworth’s, Toronto 1994, at page 163). The words assessment and examination are used in both paragraph 25(1)(5) pertaining to the cost of examinations and in the subsection 18(5) restriction on payments. Accordingly, subsection 18(5) applies to paragraph 25(1)(5).

(b) The maxim expressio unius est exclusion alterius (the expression of the exclusion of another) applies. Subsection 18(5) specifically excludes section 44 (insurer medical assessments) and subsection 7(4) (reports calculating income) fees and expenses. If the Legislature had intended to exclude the cost of CAT Assessments from clause 18(3)(a), it would have expressly done so, which it has not.

(c) If the interim expenses sought by the Appellant are legal expenses under subsection 282(11.1) of the Insurance Act, they are for the purpose of conducting assessments and examinations and, therefore, are captured by subsections 18(3) and 18(5) of the 2010 Schedule.

(d) To order payment of monies above the clause 18(3)(a) $50,000 cap is tantamount to determining catastrophic impairment without having a hearing on the matter.

II. ANALYSIS

I will address the Appellant’s arguments in turn.

1. Subsection 279(4.1) of the Insurance Act

(a) Categorization of the interim relief sought

Subsection 279(4.1) of the Insurance Act provides:

The Director and every arbitrator appointed by the Director may make interim orders pending the final order in any matter before the Director or arbitrator.

Subsection 282(11.1) of the Insurance Act states:

The arbitrator may at any time during an arbitration proceeding make an interim award of expenses, subject to such terms and conditions as may be established by the arbitrator.

Claims for expert reports, including assessments or examinations necessary for that purpose, are potentially payable as interim legal expenses under subsection 282(11.1) of the Insurance Act or under subsection 279(4.1) as an allowable interim benefit. Arbitrator Baltman, in B.M. and State Farm Mutual Automobile Insurance Company, (FSCO A97-000928, January 18, 2000), held:

An expenditure may have more than one purpose. Although the F.A.E. [Functional Abilities Evaluation] was used to assess Ms. M., it was also obtained to support her claim and any resulting litigation. In any case, I find it was a reasonable and necessary expenditure, as it contained a useful job analysis and made sensible recommendations. I allow the entire amount.

In Lacroix and Elma Mutual Insurance Company, (FSCO A99-000158, February 12, 2002), I noted that it is not unusual for the cost of medical reports to be advanced, in the alternative, as a legal disbursement.

The provision in the 2010 Schedule under which the Appellant seeks an interim order of benefits is paragraph 25(1)(5). It states:

25(1) The insurer shall pay the following expenses incurred by or on behalf of an insured person:

(5) Reasonable fees charged for preparing an application under section 45 for a determination of whether the insured person has sustained a catastrophic impairment, including any assessment or examination necessary for that purpose.

The Respondent concedes that the Appellant’s January 10, 2013 OCF-18s (Treatment and Assessment Plans) for payment of the $12,960 for a CAT assessment were submitted prior to the Appellant’s July 24, 2013 OCF-19 Application for Determination of Catastrophic Impairment. The January 10, 2013 OCF-18s could potentially be seen as being encompassed by paragraph 25(1)(5) as reasonable fees for preparing a section 45 CAT application.

However, the Arbitrator specifically found that the motion’s “objective is to provide Mr. Cook with sufficient evidence to rebut the RBC CAT assessment.” Director Draper held in M.D. and

Halifax Insurance Company, (FSCO P00-00049, May 16, 2001):

An assessment arranged for the purpose of challenging the DAC [Designated

Assessment Centre] through the dispute resolution process is better viewed as a

litigation expense, recoverable through negotiation or as arbitration or court costs.

I am not persuaded, in the specific circumstances of this case, that the Arbitrator erred in finding the relief sought to be interim legal expenses under subsection 282(11.1) of the Insurance Act and not interim benefits under subsection 279(4.1).

(b) Subsections 18(3) and (5) of the 2010 Schedule

Section 18 of the 2010 Schedule is entitled “Monetary Limits Re Medical and Rehabilitation Benefits.” However, section 70 of the Legislation Act, 2006, c. 21, states:

Tables of contents, marginal notes, information included to provide legislative history, headnotes and headings are inserted in an Act or regulation for convenience of reference only and do not form part of it.

Subsections 18(3) and (5) of the 2010 Schedule state:

(3) The sum of the medical and rehabilitation benefits paid in respect of an insured person who is not subject to the financial limit in subsection (1) [$3,500 minor injuries] shall not exceed, for any one accident,

(a) $50,000; or

(b) if the insured person sustained a catastrophic impairment as a result of the accident, $1,000,000.

(5) For the purposes of subsections (1) and (3), medical and rehabilitation benefits payable in respect of an insured person include all fees and expenses for conducting assessments and examinations and preparing reports in connection with any benefit or payment to or for an insured person under this Regulation, other than,

(a) fees in connection with any examination required by an insurer under section 44; and

(b) expenses in respect of a report referred to in subsection 7(4).

[Emphasis added]

Subsection 7(4) is an exception to subsection 18(5). Subsection 7(4) pertains to expenses for preparing a report calculating an insured person’s income from employment or self-employment. Subsection 7(4) has nothing to do with medical or rehabilitation benefits. One asks why, if subsection 18(5) is, as the Appellant argues, limited to medical and rehabilitation expenses, the Legislature took the time to put in an exception that has nothing to do with such expenses.

I agree with the Respondent that the clause 18(3)(a) $50,000 monetary cap does extend beyond strictly medical and rehabilitation expenses. However, subsection 18(5) does not cover all fees and expenses for conducting assessments and examinations and preparing reports. Rather, there are two general qualifications:

(1) the fee or expense is in connection with any benefit or payment; and

(2) the benefit or payment is under this Regulation, meaning the 2010 Schedule.

(c) Catastrophic Impairment is not a benefit or payment

Catastrophic impairment, by itself, is a threshold, not a benefit. As I stated in Bains and RBC General Insurance Company, (FSCO P09-00005, June 3, 2010):

A finding of catastrophic impairment, by itself, provides no compensation to an insured person. It simply opens the door to a higher threshold of possible benefit entitlement. An insured found catastrophically impaired must still meet the entitlement criteria to each benefit claimed.

As the Respondent submits, this appeal does not determine catastrophic impairment. Rather, the Appellant claims payment under paragraph 25(1)(5) of the 2010 Schedule of the cost of assessments or examinations for preparing a section 45 CAT application. However, the fee or expense sought is still with regard to a threshold determination, not in connection with any benefit or payment. Accordingly, subsections 18(3) and (5) do not apply.

Without giving reasons, the Arbitrator presumed that subsections 18(3) and (5) applied to reports and assessments regarding CAT determinations. The Arbitrator gave a very good reason why those provisions should not apply, namely, that in this case “the very question of whether [Mr. Cook] can claim more than the $50,000 in medical and rehabilitation benefits hangs in the balance.” I am persuaded that the Arbitrator erred in not following his own reasoning.

I am also persuaded that the Arbitrator erred in law in applying subsections 18(3) and (5) to an award of interim legal expenses under subsection 282(11.1) of the Insurance Act. A provision of the Insurance Act is clearly not under “this Regulation” which, as noted, means the 2010 Schedule.

(d) Ioannidis and Boyd

In Boyd, Arbitrator Sapin ordered interim attendant care benefits under subsection 279(4.1) pending a decision by an arbitrator on whether the applicant met the test for catastrophic impairment. Following, in part, Ioannidis, Arbitrator Sapin found, amongst other things, that “Mrs. Boyd has presented sufficient evidence, on a balance of probabilities, that her case for catastrophic impairment has a reasonable chance of success.”

I agree that an interim award of benefits dependent on an insured person being catastrophically impaired may be granted prior to a final determination of catastrophic impairment. However, one of the pre-requisites for such an interim order is that a prima facie case is established of catastrophic impairment. In this case, such a finding was not made by the Arbitrator, only, applying Bernicky, that a bona fide issue had been raised.

The Appellant’s July 24, 2013 OCF-19 Application for Determination of Catastrophic Impairment is solely under clause 3(2)(e) of the 2010 Schedule:

subject to subsections (4), (5) and (6), an impairment or combination of impairments that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more impairment of the whole person;

Attached to the Appellant’s Application for Determination of Catastrophic Impairment is an April 1, 2013 letter from Dr. A. Greenspoon stating that the Appellant likely has a combination of impairments that, in accordance with the American Medical Association’s Guides results in 55 per cent or more impairment of the whole person. Dr. Greenspoon, however, does not explain how he reaches that conclusion by the actual application of the Guides.

The Appellant’s arbitration factum at paragraphs 35 to 37 argues there is a prima facie case for catastrophic entitlement because (1) causation is not disputed (2) he has been followed by doctors (3) he has complied with all treatment recommendations (4) the Respondent has paid benefits, and (5) the opinions of his treating health care providers would carry more weight than the Respondent’s assessors who have only seen him for an hour.

However, the Appellant argues at paragraph 37 that he “still requires funding for his catastrophic rebuttal reports in order to respond to the impairment ratings and analysis of the IE CAT assessors.” Given that the basis of this appeal is that the Appellant presently cannot establish a case for 55% Whole Person Impairment, it is difficult to see at this time a prima facie case for catastrophic impairment or the Boyd decision assisting the Appellant.

(e) Clause 25(5)(a) of the 2010 Schedule

As noted, paragraph 25(1)(5) requires that the insurer pay reasonable fees incurred by an insured person for a preparing a section 45 CAT application. Clause 25(5)(a) provides:

Despite any other provision of this Regulation, an insurer shall not pay,

(a) more than a total of $2,000 in respect of fees and expenses for conducting any one assessment or examination and for preparing reports in connection with it, whether it is conducted at the instance of the insured person or the insurer … [Emphasis added]

The Respondent argues that paragraph 25(5)(a) of the 2010 Schedule restricts the Appellant to $2,000 for his entire CAT assessment. This, it submits, is reasonable as the Appellant has only a psychological and post-traumatic stress disorder and, therefore, only a psychological report is relevant. The Respondent maintains that it arranged additional assessments only because the Appellant’s OCF-19 checked off 55% Whole Person Impairment as the basis for his CAT designation.

The Respondent has paid $15,280 for its own CAT assessment. The monetary restrictions of clause 25(1)(a) apply equally to assessments, examinations and ensuing reports forthcoming at the instance of insurers. By its own argument, either the Respondent has violated the 2010 Schedule or the Appellant has an equally valid reason for exceeding the $2,000 maximum.

However, subsection 25(5)(a) provides a maximum of $2,000 for conducting any one assessment or examination and for preparing connected reports. If multi-disciplinary assessments or examinations are conducted, each separate assessment or examination or the preparation of a report in connection with same would have a $2,000 cap.

Paragraph 25(1)(5) requires that the paragraph 25(1)(5) expense be incurred. Incurred is now defined in the 2010 Schedule at clause 3(7)(e). Subsection 3(8) provides an exception where the insurer unreasonably withheld or delayed payment of a benefit in respect of the expense.

The Respondent’s May 7, 2014 letter to the Appellant is attached as Exhibit “J” to the July 18, 2014 affidavit of Mr. Stephen B. Macaulay. The letter states that the $50,000 medical/ rehabilitation limit of $50,000 has been exhausted by payment of $45,051.11 in medical/ rehabilitation benefits and $5,043.65 in the cost of examinations.

The Affidavit of Mr. Paul Barrafato, sworn July 1, 2014, states at paragraph 103 that he verily believes that the Respondent’s continued CAT denial precludes the Appellant “from an opportunity to obtain appropriate medical and attendant care.” It is presently difficult to see the Respondent’s payment of medical/rehabilitation benefits as an unreasonable withholding of funding for $12,960 in medical reports.

(f) Subsection 279(4.1) summary of findings

I conclude regarding subsection 279(4.1) of the Insurance Act:

(1) Interim benefits for medical reports may potentially be awarded under subsections 279(4.1) and 282(11.1) of the Insurance Act.

(2) I am not persuaded that the Arbitrator erred in the specific circumstances of this case in determining that the Appellant’s requested relief was properly viewed as a legal expense under subsection 282(11.1) of the Insurance Act.

(3) If the interim relief sought at this time had been better determined to come under subsection 279(4.1) of the Insurance Act, the monetary limits under clause 18(3)(a) under the 2010 Schedule would not apply as the CAT determination fee or expense sought was not “in connection with any benefit or payment” but rather in connection with a threshold determination.

(4) It is difficult seeing that the Appellant met the criteria in Ioannidis or Boyd in establishing a prima facie case of 55% or more impairment of the whole person.

(5) If the Appellant had met the Ioannidis criteria, he would not be limited to $2,000 for the entire multi-disciplinary assessment under paragraph 25(5)(a) of the 2010 Schedule.

(6) It is difficult seeing that the Appellant having established a case for applying the subsection 3(8) exception to the “incurred” requirement.

2. Subsection 282(11.1) of the Insurance Act

The Arbitrator, in determining the Appellant’s entitlement to interim expenses, applied the criteria in Bernicky. Bernicky specifically pertains to an award of interim legal expenses under subsection 282(11.1) of the Insurance Act. The Respondent agrees that Bernicky applies to an award of interim legal expenses. The Respondent agrees the Arbitrator gave no reason for applying subsections 18(3) and (5) of the 2010 Schedule to subsection 282(11.1).

The Respondent agrees that a rebuttal report, if not payable under the 1996 Schedule, could be claimed as a legal disbursement. It argues, however, that the Appellant’s request is for assessments and examinations. Therefore, they are now captured under subsection 18(5) of the 2010 Schedule that covers “assessments and examinations.” Accordingly, the Respondent submits that the clause 18(3)(a) monetary cap under the 2010 Schedule applies to post 2010 subsection 282(11.1) interim legal expenses under the Insurance Act.

However, the Respondent agrees that the 2010 amendments did not change the actual wording of subsection 282(11.1) of the Insurance Act. Consistent with the absence of any amendment to subsection 282(11.1), subsection 18(5) is restricted to “all fees and expenses for conducting assessments and examinations and preparing reports in connection with any benefit or payment to or for an insured person under this Regulation” [emphasis added].

I find that the maxim expressio unius est exclusion alterius (the expression of the exclusion of another) applies. By limiting subsection 18(5) to any benefit or payment “under this Regulation” the provision excludes payment of legal expenses under the separate and superior Insurance Act.

In the alternative, the Respondent notes the general expense provision of subsection 282(11) of the Insurance Act that states:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations. [Emphasis added]

The Respondent argues that the “incurred” requirement in subsection 282(11) should be read into subsection 282(11.1), especially after the 2010 amendments that introduced a new definition of “incurred.” The Respondent concedes that applying clause 3(7)(e) would wipe out interim awards of legal expenses under the Bernicky requirements, other than those deemed to be “incurred” under subsection 3(8) of the 2010 Schedule.

However, the subsection 3(8) exception only applies to unreasonably withholding or delay of a benefit. Legal expenses are not a benefit under the Schedule but are payable under the Insurance Act. Hence, the exception would not apply.

Again, I find the maxim expressio unius est exclusion alterius applies. The Legislature, by requiring subsection 282(11) expenses to have been incurred excludes that requirement by its silence in that regard in subsection 282(11.1) interim legal expenses. That is reinforced by the incurred amendment in the 2010 Schedule not being made in the Insurance Act.

Arbitrator Manji, however, in Bernicky in the context of interim award of legal expenses, did speak of expenses incurred in respect of an arbitration proceeding for medical documents. Respectfully, a pre-requisite of “incurred” conflicts with the Bernicky criterion that the insured person is “unable to carry the expenses claimed.”

However, if there were a prerequisite of “incurred” in subsection 282(11.1), it would not be the 2010 Schedule definition but that enunciated in Monks v. ING Insurance Company of Canada, 2008 ONCA 269:

The courts, however, have rejected a narrow construction of the word “incurred” as used in accident benefits schedules. In Belair Insurance Co. v. McMichael (2007), 2007 CanLII 17630 (ON SCDC), 86 O.R. (3d) 68, [2007] O.J. No. 1972 (Div. Ct.), at para. 24, [page703] when considering the meaning of “incurred” in the context of the attendant care provisions of the SABS, the Divisional Court cited with approval the following statement in Wawanesa Mutual Insurance Co. v. Smith (Committee of) (1998), 1998 CanLII 18861 (ON SC), 42 O.R. (3d) 441, [1998] O.J. No. 5058 (Div. Ct.), at paras. 38-39:

A purposive and remedial interpretation requires that the legislation be read so as not to require an insured person to finance, or to pledge her credit, in order to secure the very benefits for which she is insured. . . .

I conclude that an insured . . . need not actually receive the items or services or spend the money or become legally obliged to do so. It is sufficient if the reasonable necessity of the service or item and the amount of the expenditure are determined with certainty before the end of [the specified time limit under the applicable benefits schedule]. [Emphasis added]

As noted, the expense in this case is determined with certainty at $12,960. The Arbitrator found that a CAT assessment approximately as thorough as the Respondent’s $15,280 CAT assessment was a reasonable and necessary expense for the conduct of the arbitration hearing.

In oral submissions, contrary to its written submissions, the Respondent argued that as the Appellant initially sought these payments as OCF-18 Treatment and Assessment Plan expenses, the Arbitrator erred in not finding them to be claimed as interim benefits under the Schedule (and hence under the subsection 18(3) monetary cap).

As found above, I am not persuaded that the Arbitrator erred, as the Respondent states in paragraph 82 of its written appeal submissions, reiterated at paragraph 111, in properly characterizing “the Appellant’s request as a request for interim expenses.” Nor am I persuaded that allowing an interim payment of legal expenses is tantamount to determining catastrophic impairment without a hearing on the matter. Rather, to allow an interim of award of legal expenses is to allow a meaningful hearing on the issue.

3. Is Catastrophic Impairment an issue in this proceeding?

As stated, Bernicky applies to interim award of legal expenses.

The Arbitrator appears to have proceeded on the basis that catastrophic impairment was an issue in the arbitration proceeding before him. Indeed, at the initial appeal hearing the Appellant confirmed the arbitration hearing had been adjourned from March 2015 to February 2016 to allow him, if successful on appeal, to obtain his CAT assessments prior to the rescheduled hearing date. This was not contradicted by the Respondent.

However, the May 27, 2014 arbitration pre-hearing letter in this matter does not note catastrophic impairment as an issue in dispute. A July 16, 2014 Report of Mediator noting “other issues” in dispute is followed by a September 12, 2014 Application for Arbitration that includes CAT determination as an issue. The Appellant, in an accompanying letter, states that should the Respondent not agree to add the further issues, a filing fee would be delivered. However, the arbitration file does not note any further developments in the subsequent seven months.

I resumed the appeal hearing to address the present status at arbitration of the issue of CAT determination. I was advised that the May 27, 2014 pre-hearing list of arbitration issues has not been amended. The Appellant indicated that a further mediation had failed in February 2015 regarding attendant care and housekeeping benefits dependent on a CAT determination. The Appellant indicated he would seek to add all of the additional issues to the present arbitration.

The Respondent now argues that the cart is leading the horse, that any award of interim legal expenses regarding CAT determination prior to CAT determination being an issue in dispute in this proceeding is premature.

This matter has dragged on long enough. There is no reason to rehear the identical motion for interim relief once CAT determination is added as an issue at arbitration. Rather, I am making any award of interim legal expenses conditional upon an arbitrator adding catastrophic impairment as an issue in the arbitration proceeding.

4. The Quantum of Interim Legal Expenses

The Appellant’s requested expenses, as set out by the Arbitrator, are:

Psychological assessment by Dr. Gouws $ 2,000.00

Neurological assessment by Dr. Rathbone $ 2,000.00

OT Assessment by Ms. Dyk $ 2,000.00

File Review and Summary by Dr. Koch $ 2,000.00

Essential Clinical Tasks $ 1,800.00

Collating Assessors Reports $ 1,800.00

HST on all approved Treatment Plans $ 1,360.00

TOTAL $12,960.00

Subsection 282(4) of the Insurance Act states that the arbitration shall be conducted in accordance with the procedures set out in the regulations. Section “F” of the Code includes the Schedule to R.R.O. 1990, Reg. 664 (the “Expense Schedule”) made under the Insurance Act. The Expenses Schedule states, at subsection 5(5):

The amount of the expenses paid by or on behalf of the insured person or the insurer to an expert for the preparation of a report may be awarded, to a maximum of $1,500.

On consent, the Appellant provided a letter decision in R.J. and Dominion of Canada General Insurance Company, (FSCO A12-001233, July 12, 2013). Arbitrator Wilson stated that while he has significant discretion to alter provisions of the Code, “there is no such wriggle room with regard to legislative provisions.” He continued:

The limitation of the cost of assessments is contained in a duly proclaimed regulation which I have no jurisdiction to amend or suspend. In addition, the delegation to the regulation of the power to set limits to such expenses is specifically providing in the [Insurance] Act.

However, in the context of the Schedule as a consumer protection scheme and to achieve fairness and an even playing field, Arbitrator Wilson allowed “funding of seven different stages of reports, totaling $10,500,” as “the only plausible method of proceeding, given the hard limits on reports set out in the Act and the regulations.”

I am persuaded that subsection 5(5) of the Expense Schedule allows for payment of up to $1,500 per report. The same expert may be entitled up to $1,500 for each separate report he or she may prepare. I am not persuaded that subsection 5(5) allows the same report to be broken up into stages such as “essential clinical tasks” or “collating” as a means of getting around “the hard limits on reports set out in the Act and the regulations.”

The Appellant seeks interim payment of reports by Dr. Gouws, Dr. Rathbone, Ms. Dyk and Dr. Koch (the latter being a file summary). The amount claimed for these reports, including “Essential Clinical Tasks” and “Collating Assessors Reports,” is $11,600, or $2,900 per report. That is above the $1,500 limit in subsection 5(5) of the Expense Schedule for the preparation of a report.

The Respondent argues that the question of the quantum of the reports payable was not determined by the Arbitrator and, therefore, that question should go back for his determination.

I am not persuaded sending this matter back to arbitration is necessary or required. Neither did the Appellant. I find that the Appellant is restricted to $6,000 for four separate reports, with the further question of HST. The Arbitrator held that the cost of a second CAT assessment as approximately as thorough as the first was a reasonable and necessary expense for the conduct of the arbitration hearing. The cost of the Respondent’s CAT reports was $15,280, more than twice what I have allowed. $6,000 certainly does not exceed the Arbitrator’s parameters.

The parties did not provide any case law on whether the $1,500 maximum per report includes HST. In Clipperton and Zurich North America Canada, (FSCO A97-001771, June 25, 2002), Arbitrator Evans (as he then was), succinctly held that once the maximum for a disbursement is reached, no further amount is payable for GST.

However, Arbitrator Muir, in Kennedy and Traders General Insurance Company, (FSCO A02-001715, October 22, 2004), held:

At the expense hearing, the parties were agreed that Mrs. Kennedy was entitled to be reimbursed to a maximum of $1,500 for the report of David Antflick and not the $3,156.50 on the account. The parties were not in agreement about whether this maximum figure includes GST. I find that the maximum amount for expenses set out in section 5 of the Schedule to Regulation 664 are maximums exclusive of GST. There is no obvious correct answer to this issue, however if the legislature had intended that they be inclusive of GST, it would have been easy enough to make that explicit. Drafted as it does, the provision affords some level of certainty over what this regime can speak to, leaving whatever levies another regime might impose to be determined in accordance within those parameters. Accordingly, Mrs. Kennedy is entitled to be reimbursed in the amount of $1,605.00, including GST for this report. [Emphasis added]

I prefer Arbitrator Muir’s approach. I find that it is supported by the Expense Schedule itself. Subsection 4(4) of the Expense Schedule provides that a party may be awarded “out-of-pocket expenses incurred in furtherance of the arbitration, appeal, variation or revocation hearing.” Subsection 4(5) provides, as a separate recovery, any “applicable taxes paid in respect of the expenses referred to in this section.”

The cost of reports is an out-of-pocket expense. Subsection 5(5) of the Expense Schedule limits expense awards paid “to an expert for the preparation of a report.” Applicable taxes are payable to the government in respect of these expenses. I am not persuaded that HST is encompassed in the subsection 5(5) cap on expert reports. Accordingly, I find that the Appellant is entitled to an interim award of $6,780, inclusive of HST.

III. EXPENSES

If the parties cannot agree on the legal expenses of this appeal, amending Rule 79.1 of the Code as allowed by Rule 81, either party may request an appeal expense hearing, as requested, within sixty days of the date of this decision.

The request for an appeal expense hearing 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.

May 4, 2015

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 2The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.