Financial Services Commission of Ontario
Neutral Citation: 2016 ONFSCDRS 155
FSCO A13-003892
BETWEEN:
YING AL CHEN
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before: John Wilson
Heard: November 16 and 17, 2015, at the offices of the Financial Services Commission of Ontario in Toronto
Appearances: Adam J. Ezer for Mr. Chen Mouna Hanna for State Farm Mutual Automobile Insurance Company
Issues:
The Applicant, Ying Al Chen, was injured in a motor vehicle accident on February 22, 2010. He applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Chen applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Although Mr. Chen referred claims for income replacement benefits, attendant care, medical benefits, housekeeping and home maintenance and claims for the expenses of examinations to arbitration, everything but the medical claim for the orthotics and the claim for a family and social assessment was dropped by counsel for Mr. Chen at the outset of the hearing, without notice to the other party.
The substantive issues actually addressed in this hearing are:
Is Mr. Chen entitled to payment for a family and social assessment dated June 30, 2010 in the amount of $2413.72?
Is Mr. Chen entitled to receive a medical benefit for custom orthotics in the amount of $990.00?
Mr. Chen also claimed interest on any outstanding amounts, while both parties claimed their respective arbitration expenses.
Other claims were referred to arbitration by Mr. Chen but not addressed by him at the hearing.
Result:
Mr. Chen is not entitled to payment for a family and social assessment dated June 30, 2010 in the amount of $2,413.72.
Mr. Chen is not entitled to receive a medical benefit for custom orthotics in the amount of $990.00.
EVIDENCE AND ANALYSIS:
Allegations of Systemic Misconduct
Although this arbitration is about accident benefits claimed by Mr. Chen personally, in the background is the issue of his choice of treatment providers and assessment facilities following the accident. The Custom Orthotics in issue were supplied by Pacific Assessment Centre as was the Family and Social Assessment. The claims for other assessments were put forward in connection with the Fairview Assessment Centre. The other treatment providers related to claims advanced in the Application for Arbitration were the Toronto HealthCare Clinic and Fairview Assessment Centre.
By way of context, at the time Mr. Chen underwent treatment and assessments, a significant number of Ontario insurers were enjoying strained relations with both Pacific and Fairview. These insurers, including State Farm, had suspicions that the modus operandi of the clinics was such that billings by those facilities were often not congruent with either the services rendered to insureds or the need for and justification of those services.
At the very least, the strained relationship between the treatment facilities and State Farm goes a long way towards explaining why these claims were not paid and why the claims ended up being referred to arbitration.
This hearing however, is not about the operations of Pacific or Fairview. It is about whether certain discreet claims advanced by Mr. Chen meet the factual and legal tests to be found payable by State Farm.
At no time did State Farm accuse Mr. Chen of misleading or defrauding his insurer, As a result I refused to accept in evidence letters from a law firm engaged by an Ontario insurer related to the alleged nefarious practices of certain service providers in dealing with insurance companies including, apparently, State Farm as irrelevant and offending the long-standing rule against evidence of propensity. (see Thorpe v. Chief Constable of the Greater Manchester Police [1989] 2 All E.R. 827 (C.A.) . Even if relevant, the proposed evidence was not sworn and the makers were not available for cross-examination. In no way could they be accepted for the truth of their contents as proposed by counsel for the Insurer. Even if the Insurer`s theory was that the clinics routinely engaged in fraudulent behaviour, by failing to specifically raise that issue, failing to give notice to the other party, and once raised, to substantiate those allegations through credible, admissible evidence, State Farm has failed to create the necessary foundation for the consideration of any such argument.
Purported withdrawal of claims
Mr. Chen, through his counsel, has decided unilaterally only to advance those claims, at the hearing which, in his opinion, are deemed payable by the Schedule due to the failure of the insurer to respond to treatment plans within the time specified by the Schedule.
Rule 70.1 of the Dispute Resolution Practice Code deals with withdrawal.
At no time prior to the hearing did Mr. Chen take any steps under the Rule to withdraw any of the issues he had referred to arbitration. Nor did he ask or obtain the Insurer’s consent for the withdrawal of any issues. Mr. Chen did not seek leave to withdraw. He simply announced it as a fait accompli.
Rule 70.1 acknowledges an arbitrator’s discretion to accept a withdrawal, but the use of the permissive “may” in the Rule confirms that the exercise of this discretion is not mandatory. Given the last second attempt to withdraw, the failure to even request consent or leave and the large number of issues that Mr. Chen left on the plate until the commencement of the hearing, I found that the purported last minute withdrawal was an abuse of the hearing process and declined to exercise my discretion to permit it.
Since, however, no evidence was called on those “withdrawn” issues, it goes without saying that they are simply dismissed. They remain important, however, when the issue of expenses for the hearing is addressed.
Jurisdiction of Arbitrator.
In the context of the remaining claims, Mr. Chen specifically challenged my jurisdiction to review any claims that, in his mind, became payable due to the deemed approval provisions of the Schedule.
Firstly my jurisdiction in this arbitration arises under section 282(1) of the Insurance Act. It was triggered when Mr. Chen filed an Application for Arbitration referring his disputes with the Insurer to statutory arbitration under the Act. The Application for Arbitration was dated September 23, 2016 and is included in the record of this arbitration.
Accordingly, once the various issues in dispute were referred to arbitration, the Director or his delegate appointed an arbitrator to hear the matter, as required by the Act. Once an arbitrator is appointed, that arbitrator “shall determine all issues in dispute, whether the issues are raised by the insured person or the insurer”.
Consequently, since Mr. Chen referred the issues to arbitration, having previously been subject to a failed mediation, and since they remain in dispute, I have not only the jurisdiction but an obligation under s 279(4) of the Insurance Act to deal with the disputes referred to me for arbitration. Having chosen the arbitration forum, Mr. Chen has acknowledged the jurisdiction of the arbitrator appointed in that forum to deal with all of the issues raised by both sides.
“Deemed approval” of claims
Implicit however in Mr. Chen’s argument about jurisdiction is the question of whether, if it is found that the Insurer did not respond to the treatment plans in a timely manner, I can go behind any deemed approval and judge the treatment plans on their merits: whether they are reasonable and necessary under the statute.
Mr. Chen does not believe it is possible for an arbitrator to consider the merits of a benefit once there is a “deemed approval.” Such a benefit would be simply payable and may not be revisited for any reason, inside or outside of this arbitration.
Payments of medical benefits under the Schedule are covered by various sections, including section 15 which sets out the primary entitlement for such benefits:
15(1) Subject to section 18, medical benefits shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for,
(a) medical, surgical, dental, optometric, hospital, nursing, ambulance, audiometric and speech-language pathology services;
(h) other goods and services of a medical nature that the insured person requires, other than goods or services for which a benefit is otherwise provided in this Regulation. O. Reg. 34/10, s. 15 (1).
Section 25 of the Schedule also provides for the payment of certain other medically related assessment expenses occasioned as a result of a claim for accident benefits. Indeed section 25(1)(3)(ii) is the only part of the Schedule that specifically refers to matters “deemed payable by the insurer”.
Section 25(3)(ii) by its use of the phrase “deemed by this Regulation to be payable” also raises the question of just what the relation of a “deemed approval” is to the primary qualifications for a benefit contained in section 15 without providing any specific direction. Otherwise expressed, once a matter is deemed to be approved, can an insurer ever validly resist paying the benefit?
As explained in this decision, subject to the “pay pending” provisions of the Insurance Act, there may well be situations where an insurer can resist payments of deemed approved plans, or to recover such payments where the payment is made pending resolution of the dispute between the Insurer and the Insured.
At the very least the use of “deemed” to describe a situation where a benefit becomes payable due to an insurer’s delay, reflects a certain ambivalence of meaning. According to Black’s Law Dictionary, “deem” can mean:
- To treat (something) as if (1) it were really something else, or (2) it has qualities that it doesn't have [less than] although the document was not in fact signed until April 21, it explicitly states that it must be deemed to have been signed on April 14 [greater than].
To consider, think, or judge [less than]
According to Ruth Sullivan (Ruth Sullivan, Driedger on the Construction of Statutes (3rd ed. 1994), the use of the word “deems” can mean the creation of a legal fiction, regardless of the truth of the matter, to create a legal presumption, to declare the law or to simply confer jurisdiction.
When, as used here, applied in the sense of “deemed payable” it is best understood as a legal presumption that is in play:
The purpose of a presumption is to establish something as a fact without the benefit of evidence. Presumptions are rebutted by tendering evidence that tends to show that the presumption is false ...
Implicit in such use of “deems” is the opportunity to present evidence displacing any presumption, an opportunity that would be congruent with “pay pending” rather than Mr. Chen’s vision of “deemed approval”.
Section 38 of the Schedule sets out the manner and timing by which an insurer must respond to a treatment plan and the circumstances where a treatment plan or other benefit may be deemed payable by an insurer and is the “deemed approval” that Mr. Chen relies upon in this matter to justify immediate payment by the Insurer:
(8.2) If the insurer fails to give a notice under subsection (8) in accordance with subsection (8.1), the following rules apply:...
- In the case of a notice under paragraph 1 of subsection (8), the insurer shall pay for all goods and services provided under the treatment plan that relate to the period starting on the 11th business day after the day the insurer received the application and ending on the day the insurer gives the notice described in paragraph 1 of subsection (8).
Reading any provision of the Statutory Accident Benefits Schedule in isolation is a dangerous and potentially misleading practice. Taken by itself, section 38(8.2), which provides for the payment of treatment plans when the Insurer has not responded appropriately within the time-limits, might indeed suggest that the amount covered by a treatment plan is simply and finally payable without further justification and without recourse. That, at least, is Mr. Chen’s interpretation.
This provision, dealing with what could be characterized as mandatory interim payments by insurers or as “pay pending” dispute by the Insurer, does not contain any wording that would necessarily foreclose a substantive challenge to otherwise mandated payments. It is in pith and substance a timing provision and does not speak to whether there is recourse, or indeed whether there is any interaction with the substantive provisions giving rise to the benefit. Read narrowly as reflecting the timing of an interim payment, section 38(8.2) does not necessarily conflict with the substantive entitlement provisions of section 15.
In addition, it should be noted that the “deemed approval” provisions relied upon by Mr. Chen in this matter are found not in the legislation itself, but in the subsidiary legislation, the Schedule, adopted by a regulation under the Insurance Act. It is important then to interpret the deemed payment sections of the Schedule in the context of the overall scheme set out in the Insurance Act.
Clearly certain involuntary payments by insurers pending arbitration are at the core of the accident benefit scheme. Section 282(3) of the Insurance Act provides for last offer payment pending final resolution while section 268(8) provides the statutory framework for other pay pending provisions in the Schedule.
Admittedly, the Schedule itself is less and less coherently drafted, with each new iteration. Indeed, as in this case, some provisions have the potential to contradict others. Nonetheless, its provisions still must be interpreted, “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”. (Driedger quoted in Rizzo v. Rizzo Shoes Ltd. 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27)
This approach is not new. Its roots trace back to the fundamentals of common law jurisprudence.As Lord Coke stated in the Lincoln College Case (1593) 3 Co. Rep. 58b:
The office of a good expositor of an Act of Parliament is to make construction on all parts together, and not of one part only by itself; nemo enim aliquam partem recte intelligere potest antequam totum iterum atque iterum perlegerit.
We should not then look at the deemed approval section in isolation but rather interpret it in the light of the scheme as a whole including the primary legislation, that of the Insurance Act itself.
We also have to look at the greater context of the Schedule. It is an insurance contract as well as a piece of legislation; a contract of indemnity to cover named expenses incurred under the terms of the contract. What it is not is a lottery for treatment providers where the prize is the deemed approval of a meritless treatment plan.
In this case the contractual terms contained in the insurance contract include Section 15 which sets up the precondition that the claimed expenses be “reasonable and necessary” before an insured can claim indemnity from an insurer.
Certainly neither the Schedule nor the Act include words specifically overriding the provisions of section 15 which could well have been included if there was a clear intention for it to prevail over the substantive entitlement provisions.
While previous iterations of the Schedule were clearer when they dealt with deemed approvals, and frequently included a specific reference to payment “pending resolution of the dispute”, (see for example Section 6(7) of the earlier (OMPP) Schedule) section 56 of the Legislation Act stands for the proposition that no inference as to legislative intention should be drawn from the omission of those words in the current legislation.
The provisions of the Insurance Act, which govern the Schedule provide specifically for the review of benefits that are deemed payable. Section 268(8) reads:
268(8) Where the Statutory Accident Benefits Schedule provides that the insurer will pay a particular statutory accident benefit pending resolution of any dispute between the insurer and an insured, the insurer shall pay the benefit until the dispute is resolved.
Pierre-André Côté in The Interpretation of Legislation in Canada reminds us that in cases where there is divergence between statutes and regulations “solution to conflict inevitably implies a study of the enabling statutes”.
It should be noted that, in addition to the issue of the statutory preconditions for entitlement to a benefit, the Schedule also provides for a series of different reasons for an insurer to resist payment. These include for material misrepresentation, the failure to apply for benefits in a timely manner, and the failure to attend an insurer’s examination after proper notice.
As well, the invalidity of a policy of insurance or the commission of a criminal act could serve to limit the obligation to pay specific benefits. Mr. Chen’s view of “deemed approval” would not allow such exceptions.
Indeed one of the potentially absurd policy consequences in this case would be a situation where unscrupulous treatment providers could actually be rewarded for overwhelming an insurer’s claims processing by filing excessive and meritless plans in the hope that the insurer would be unable to respond to one or more in the limited time set for a response.
It would be a departure from the pay-pending jurisprudence and the scheme of the Act, not to mention some of the underlying principles of insurance law if courts or arbitrators were now to rule that an error in timing by an insurer now gave rise to an irrevocable payment to an insured, irrespective of the equities or any subsequent substantive determination of entitlement. I find that section 38(8.2) relates to timing of a payment only and is a pay pending provision as provided for in section 268 of the Insurance Act.
Ordering certain payments pending dispute not only fits the legislative scheme but also meets the legislative mandate of getting key treatment into the hands of insureds who need it, without compromising the integrity of the scheme.
That said, if Mr. Chen properly filed the treatment plans, and did not receive the appropriate reply within the time set by the Schedule, then he should have received the payment in full of those expenses in the time-frame mandated by section 38(8), and not have had to wait for this arbitration for an insurer to be obliged to do so. That is the essence of pay-pending.
While State Farm would have been wrong to withhold payment if Mr. Chen had established that it had not responded in a timely basis to his claim, the appropriate remedy for that failure would have been either an interim order of payment pending a final decision, and/or a special award if that payment was unreasonably withheld.
Entitlement to Benefits
Unlike the situation in Lin & State Farm Mutual Automobile Insurance Company (A12-007466, June 23, 2015) the Insurer in this matter has not conceded that the sending and receipt of the treatment plans took place in the time-frame alleged by Mr. Chen and in conformance with the Schedule. Consequently, Mr. Chen still has the ultimate burden of proving that the treatment plans were properly submitted and received for any deemed payment provision to be applicable.
Even if I am incorrect and the pay pending provisions of the Schedule are final and not subject to review, I would find that Mr. Chen has not proven either the fact of submission or the timing of the disputed treatment plans.
Mr. Chen testified at the hearing. He, however, had little or no recall of the issuance or delivery of treatment plans in his name. His evidence was of little probative value.
Psycho-Social Assessment & Orthotics
No representative of the treatment provider, who might have participated in the creation and filing of treatment plans testified at the hearing. Other than Mr. Avie Davis, who briefly testified about his (apparently much regretted) psycho-social assessment, there was no witness put forward by Mr. Chen who might confirm that the plans were properly sent and received by the insurer in a timing and sequence to allow for the deemed approval to take place. Mr. Davis was of little help to Mr. Chen on this issue.
While volumes of evidence have been filed, including numerous documents which might be treatment plans, only fourteen documents were actually made exhibits. Once again, while on their face the documents may have supported the theory that proper submissions of the claim were made, no witness either identified the exhibits or what was done to ensure that the documents were properly filed with the Insurer.
Certainly a review of the Auto Insurance Standard Invoices contained in Exhibits 7 or 8 does not lead to any inference other than that the documents were apparently created by Pacific Assessment and signed by a person using the name of Don Sut.
An apparent fax confirmation note at the top of the page in which the fax number is obscured does little to reassure me that the document was indeed properly faxed to the insurer in support of Mr. Chen’s claim.
It is trite law that an applicant such as Mr. Chen has the burden of proving on the balance of probabilities that he is entitled to the benefits claimed. Without further evidence, whether oral or written, confirming that the treatment plans indeed qualified for deemed approval, I cannot accept that Mr. Chen is entitled to payment of the benefits for that reason.
Having regard to whether or not Mr. Chen meets the substantive criteria for payment of the benefit, I am also unsatisfied as to the sufficiency of the evidence proffered by Mr. Chen as to the reasonableness of the treatment and examinations proposed.
With regard to the provision of the custom orthotics, Mr. Chen clearly had little recall of the event and the circumstances surrounding the prescribing of these devices. Nor was he certain about whether they were provided or indeed whether he needed them. Once again I found his testimony to have little probative value.
The actual treatment providers who recommended the custom orthotics did not testify and the supporting documents, including the OCF-21 completed by Pacific, which does little more than list the cost and the name of the person recommending the provision of orthotics, are not particularly helpful in establishing that the orthotics were reasonable and necessary.
As noted before, Mr. Avie Davis testified on behalf of Mr. Chen in support of Mr. Chen’s claim for payment for a family and social assessment. Mr. Davis was not a strong witness, since his knowledge of the filling out of the OCF21 was limited. He had in fact delegated the signature of the form although it went out under his name, something that Mr. Davis appeared to regret in hindsight.
It goes without saying that Mr. Davis had no insight into the process of filing the claim for the assessment with the Insurer and could provide no probative evidence that the appropriate forms were completed by the facility and received by the Insurer in the time-frame alleged.
Nor was Mr. Chen’s own evidence of much help since he recalled little of the process. Mr. Chen was under the impression that the examination was carried out at home, while the documentation suggests otherwise. The form itself appears to list symptoms that Mr. Chen never had or denied ever having. At best the examination seems to have been poorly executed and of little utility to either Mr. Chen or his recovery. At worst it was a mere charade serving to churn the file and generate income for the assessors.
I find that the charge for the family assessment is neither reasonable nor necessary to Mr. Chen’s recovery and not payable by the Insurer whether or not the Insurer responded within the time-lines suggested by the Schedule.
The treatment plan for orthotics is also poorly supported. While Mr. Chen with some prompting appeared to recollect receiving some orthotic supplies, his hesitation was evident. It was clear that he had little recall of the process of obtaining the orthotics, even if his recollection was correct.
He was unable to provide any information about the assessment of the need for the orthotics or the filing of the treatment plan and the billing of his insurer for the services rendered.
Orthotics, according the Canadian Oxford Dictionary are:
1.A moulded insert for a shoe etc. designed to improve posture and gait 2. An artificial external device as a brace or splint serving to prevent or assist relative movement of the limbs.
Mr. Chen filed a document under the heading of Pacific Assessments titled “confirmation of orthotic dispensing.” It is signed by a meaningless scrawl under “patient signature” with what appeared to be “J.Weekes” listed as “clinician. No “clinician” testified as to the need for such services.
Mr. Chen proffered no other witness with any knowledge of the claims process who could confirm that the correct documents were sent to the Insurer in a timely manner. In the absence of corroborating evidence, I have no idea whether the supposed fax confirmation reflects the sending of the documents in question and as to whether the fax number indicated was even that of the claims department of State Farm.
Certainly there is no evidence that the Insurer ever approved the supply of orthotics.
There is no other evidence, beyond the treatment plan and associated documents, on the record, of injuries relating to the foot or a gait-related problem in the documents submitted by Mr. Chen. Nor did Mr. Chen speak of such injuries in his testimony, something which may be consistent with the fact that there is no record of an attendance with his family physician at all, let alone one related to foot complaints.
The sole evidence filed justifying the provision of orthotics is Exhibit 11, the pre-printed “recommendation for custom-made orthotics” which checked off, inter alia, “toe out” under gait. Nowhere does the form attempt to relate the claimed dysfunctions to Mr. Chen’s motor vehicle accident.
The fact that the form is pre-printed by Pacific, with check-off boxes, together with its lack of specificity and the fact that Mr. Chen confirmed that his wife was also prescribed orthotics raise questions as to whether the prescribing of orthotics by Pacific was just routine procedure or whether it actually was intended to address Mr. Chen’s accident-related issues.
I also have no evidence as to the expertise of Dr. Weekes in prescribing orthotics and as to whether such was within the scope of practice of a chiropractor.
Certainly Dr. Jeff Weekes, whose name appeared on the treatment plan would have known as much as anyone about the transaction and could have assisted, had he been made available to testify. His absence meant that the best evidence was not available to the tribunal, and I draw an unfavourable inference from Mr. Chen’s failure to call Dr. Weekes on this issue.
In summary, I have found that there is no credible proof that either treatment plan at issue in this arbitration was deemed approved by reason of the Insurer’s delay in responding to it, or that either proposed treatments were reasonable and necessary and arose due to the subject motor vehicle accident.
Consequently I dismiss these two claims together with the six other claims included in the Application for Arbitration which were neither withdrawn nor proceeded with at arbitration.
EXPENSES:
State Farm was successful on all issues referred to arbitration and would presumptively be entitled to its expenses following the dictum that costs follow the cause. The Expense Regulation however allows an arbitrator to diverge from this rule in certain circumstances enunciated therein.
If the parties are unable to agree on the disposition of expenses, then any party claiming expenses shall, within 21 days of this decision, submit brief submissions together with a costs outline, failing which each party will bear his or her own expenses.
May 30, 2016
John Wilson Arbitrator
Date
Financial Services Commission of Ontario
Neutral Citation: 2016 ONFSCDRS 155
FSCO A13-003892
BETWEEN:
YING AL CHEN
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990 c. I.8 as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Ontario Regulation 664, as amended, it is ordered that:
Mr. Chen’s claims are dismissed in their entirety.
If the parties are unable to agree on an order of expenses, then any party claiming expenses shall within 21 days of this decision submit brief expense submissions together with a costs outline, failing which each party will bear his or her own expenses.
May 30, 2016
John Wilson Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.