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

Neutral Citation: 2016 ONFSCDRS 261

FSCO A12-005384

BETWEEN:

LYNDA FEDERICO

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

Before:

Arbitrator Lynda Tanaka

Heard:

In person at ADR Chambers on July 29, 2016

Appearances:

Mr. David S. Wilson for Ms. Lynda Federico

Mr. Jonathan Schrieder for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Ms. Lynda Federico, was injured in a motor vehicle accident on December 22, 2007 and sought 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 the Applicant, through her representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8.

The Arbitration was heard before Arbitrator Huberman on May 6 and 7 and June 20, 2014, with written submissions following. The Hearing was adjourned in May because of the unavailability of a witness and evidence was completed on June 20, without that witness testifying. Following written submissions, Arbitrator Huberman determined, in a decision dated January 6, 2015, that two treatment and assessment plans that had been denied were reasonable and necessary, being

a) a treatment and assessment plan, dated October 25, 2010, prepared by Tru-Path Occupational Therapy Services Ltd. for occupational therapy services in the amount of $15,053.03 (“OCF-18 2010”) and

b) a treatment and assessment plan, dated October 25, 2011, prepared by Natalie Zaraska for occupational therapy assessment in the amount of $1,365.70 (“OCF-18 2011”).

However, Arbitrator Huberman further determined that the Applicant was not entitled to a special award because State Farm unreasonably denied or delayed payment of benefits pursuant to s. 282(10) of the Insurance Act.

State Farm did not file an Appeal from the decision of Arbitrator Huberman on the issue of the treatment plans but the Applicant appealed the decision on the special award. Director’s Delegate David Evans determined, in a decision dated January 21, 2016,² that the issue of entitlement to, and, depending on that determination, the amount of a special award should be returned to Arbitration for redetermination. This decision deals with the special award claimed by the Applicant.

The issues in this Hearing are:

Is the Applicant entitled to a special award pursuant to s. 282(10) of the Insurance Act?
Is either party entitled to its expenses of the Arbitration to rehear the issue of the entitlement to a special award?

Result:

The Applicant is not entitled to a special award pursuant to s. 282(10) of the Insurance Act.
If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

EVIDENCE AND ANALYSIS:

LEGISLATIVE FRAMEWORK AND CASE LAW

With respect to the claim for a special award, s. 282(10) of the Insurance Act requires that an Applicant first establish that the Insurer has unreasonably withheld or delayed payments. It provides for recovery of up to 50 per cent of the amount to which the insured person was entitled at the time of the award (including unpaid interest on overdue payments) and recovery of interest on that total amount at an increased rate of interest. The Applicant has the onus to prove her entitlement to a special award.

It is well established that ‘unreasonable’ in this section means excessive, imprudent, stubborn, inflexible, unyielding or immoderate behaviour.

State Farm provided five cases that it says have application to this claim:

Maas and State Farm Mutual Automobile Insurance Company, Appeal P96-00080, by Director’s Delegate Draper, dated December 8, 1997;
Plowright and Wellington Insurance Company, A-003985, by Arbitrator Palmer, dated October 29, 1993;
Liberty Mutual Insurance Company and Persofsky, Appeal P00-00041, by Director of Arbitrations Draper, dated January 31, 2003;
Johnston and AXA Insurance (Canada), A04-002670, by Arbitrator Bujold, dated October 23, 2008; and
D.M. and Portage La Prairie Mutual Insurance Co., A12-005533, Arbitrator Huberman, dated August 15, 2014.

The Applicant also relies on the Plowright decision and Persofsky decisions, together with other cases where special awards have been made to Applicants.

In the Maas case, the Director’s Delegate was dealing with appeals from an Arbitrator’s decision to grant a special award with the Insurer arguing that there should have been no special award, and the Applicant complaining that the amount was too low. The Arbitrator granted a special award because the Insurer had relied on medical assessment reports without much apparent regard for the view of the treating physicians and therapists, and the adjuster attempted to influence one of the assessors by an incorrect statement in the referral letter. A finding of unreasonableness is highly dependent on the Arbitrator’s view of the evidence.

In the Plowright case, the Insurer had terminated income replacement benefits and rehabilitation therapy when it obtained videotape surveillance evidence showing the Applicant moving furniture while claiming to have such a bad back that he could not do his job as a heavy equipment operator. On closer review, it appeared that the Applicant had only moved light pieces of household goods while other men carried the heavy pieces, such as a refrigerator and dressers. Before terminating the benefits, the Insurer sent the videotape to a doctor for review. In his report, the doctor did not conclude that the video surveillance was such overwhelming evidence of malingering or inappropriate activity that the Applicant was obviously substantially able to perform his occupation, but rather he asked for a telephone discussion. The adjuster did not follow up with the doctor. The adjuster also had a report from another assessor concluding that the Applicant would not be able to return to his work as a heavy equipment operator on a full-time basis, and that he would have to wait six months to a year to try driving one of the machines. The Arbitrator ordered that a special award was appropriate, and held that the Applicant had been treated with suspicion by the Insurer who should be working as a partner with the Applicant, his family doctor, and other health care professions in the rehabilitation of the Applicant.

In the Johnston case, the Arbitrator had held that the Insurer acted unreasonably in not advising the insured that a recent Appeal decision gave the insured rights to increased income replacement benefits, in taking several months to adjust the income replacement benefits claim without explanation, and in not paying the amount of income replacement benefits that its own assessor found to be owing to the Insured. The Arbitrator applied the Persofsky decision as to the relevant considerations as to the amount of the special award.

In the D.M. case, Arbitrator Huberman determined that the Applicant had sustained a catastrophic impairment. D.M. claimed a special award by reason of the withholding or delaying of the designation of catastrophic impairment. Arbitrator Huberman held that an Insurer merely being wrong does not support a special award. Rather, an Insured is required to use sound and moderate judgement when determining whether or not to pay a benefit.³

In Amoa-Williams and Allstate Insurance Company of Canada,⁴ Arbitrator Sapin refused a special award where she found that the Insurer had not violated any section of the Schedule. She also found that there was nothing improper in an Insurer wanting to meet with an Insured in the course of adjusting the file.

I was also provided with the decisions of Arbitrators and the Courts with respect to the various claims arising from a 2006 accident involving this Applicant’s husband including one for a special award.⁵ The Arbitrator granted a special award on the basis of allegations that State Farm had inappropriately assessed its own reports and failed to keep an open mind with respect to the Insured’s reports. State Farm was found to have unreasonably terminated income replacement benefits and housekeeping benefits despite its own assessors’ opinions that the Insured was unable to work and would have difficulty with various tasks.

In Melchiorre and Wawanesa Mutual Insurance Company,⁶ the Arbitrator set out examples of what is included in the duty of good faith owed by the Insurer to an insured person. The duty includes treating the Insured in a fair manner, and that means conducting a reasonable investigation of the information presented to it, approaching the claim with an open mind and assessing it fairly, and being aware of the current state of the law. The Arbitrator found that the duty to act reasonably and fairly required the Insurer: to understand the criteria applicable to a particular case so that the Insurer asks the right questions and identifies the information it requires to properly assess the claim; to not treat the insured person as a potential adversary; to carefully consider all available information and to give appropriate weight to that information in a fair and even-handed manner; to identify additional information that may exist that would assist in adjusting the claim and to notify the Insured of any additional information the Insurer reasonably requires; to ensure that the person responsible for assessing the claim makes their own decision, free from undue influence by others who may not owe the same duty of care; and to re-assess the validity of the claim as new information is received.

In Singh and Commercial Union Assurance Company (FSCO A99-001160), Arbitrator Miller found that a special award was appropriate where the Insurer terminated income replacement benefits even though there was consistent medical evidence from its own and the Insured’s doctors that she was suffering from severe depression, anxiety and stress, including one opinion that she needed to be treated as an in-patient and that she could not return to meaningful employment. Arbitrator Miller found that the failure to consider medical evidence received after the benefits were terminated and the failure to re-evaluate the claim was unreasonable.

In Fimiani and Liberty Mutual Insurance Company (FSCO A97-001518), Arbitrator Muir held that the Applicant was entitled to a special award because the Insurer refused to accept her condition of ongoing pain, and relied on a DAC assessment by a chiropractor who could not assess the pain condition. The Insurer refused to reassess its position after objective evidence was discovered by her doctor that validated the Applicant’s complaints of pain.

In Gabremichael and Zurich Insurance Company (FSCO A97-002061), Arbitrator Wilson held that the Applicant was entitled to a special award. Two reports by assessors retained by the Insurer found that the Applicant was not disabled as a result of the accident either from a psychiatric or physiological view point. The Arbitrator found that both reports were flawed and that other assessors retained by the Insurer, including two psychologists and a psychiatrist, confirmed the Applicant’s physicians’ diagnosis that she was suffering from clinical depression caused by the accident. The Arbitrator found evidence in letters sent by the Insurer, as well as in the notes of the adjuster, that the Insurer was prepared to consider every cause for the symptoms except the accident. The Arbitrator found that the Insurer proceeded selectively taking the potentially favourable elements from any reports and ignoring anything that did not support its position.

In J.W. and Canadian General Insurance Group (FSCO A96-001645), Arbitrator Makepeace found that the Applicant was entitled to a special award. The Insurer paid benefits, then stopped them, and then reinstated them but did not pay the benefits from the gap period. This case stands for the proposition that an Insurer will not face a special award just because an Arbitrator finds, with the benefit of hindsight, that the Insurer got it wrong. The test is whether the Insurer gave reasonable consideration to all the information then available to it in assessing a claim. A report that justifies termination of benefits does not entitle an Insurer to disregard all evidence supporting the claim. There were several reports supporting disability for the periods and none disputing it in the relevant period.

EVIDENCE

Exhibit books which had been marked Exhibits 1, 2 and 3 in the Hearing before Arbitrator Huberman were marked as Exhibits 1, 2 and 3 respectively in this re-hearing. The parties filed written submissions and copies of the transcripts of the Hearing prior to July 29, 2016. On that day, the parties’ representatives presented oral argument based on the written submissions they had filed with Arbitrator Huberman, the written submissions for this Hearing, the evidence in the form of Exhibits 1, 2 and 3, and the transcripts of the testimony of the witnesses who had appeared at the Hearing before Arbitrator Huberman, including the evidence of the Applicant. The parties are agreed that I am bound by the findings of Arbitrator Huberman that the two treatments plans were reasonable and necessary, and therefore that State Farm erred in denying approval of those treatment plans. Otherwise I have jurisdiction to make the findings of fact needed to deal with the special award claim.

The parties agree that the amount of benefits to which the Applicant was entitled under the two treatment plans is $16,418.73 and the interest on that amount is $26,711.73. Those amounts have been paid by State Farm. The interest rate used was 2% compounded monthly, and that is the interest rate that would be used to calculate the special award in the event that I find that one should be made.

The parties are also agreed that, in the event that I find that State Farm did unreasonably delay or deny benefits, a further Hearing day will be necessary if the parties cannot agree on the calculations of the special award.

The two treatment plans dealt with medical benefits for occupational therapy—the OCF-18 2010 for therapy and the OCF-18 2011 for an assessment by an occupational therapist.

After the accident, the Applicant was diagnosed with a WAD II whiplash, lumbar spine strain, sternocostal strain, and headaches.⁷

Chronology of Medical Reports

A considerable number of assessments by health care practitioners, including doctors and psychologists, were undertaken in the course of the adjusting of the accident benefits file, and the reports from the assessors were provided to me in the Exhibits. The Applicant retained Paramount Rehabilitation Centre Inc., which provided a range of physiotherapy and massage therapy and assessments.

It appears that both parties sought the advice of psychologists concerning the Applicant’s impairments because of the accident. The Applicant retained Dr. Knolly Hill who first submitted an assessment of her in his Psychological Assessment and Treatment Plan Preparation Report (“Hill Report”) and in an OCF-18 in March 2008,⁸ within six months of the accident. In the OCF-18, Dr. Hill identifies adjustment disorder with both anxiety and depressed mood, and he recommends 12 one-hour cognitive therapy treatments to achieve pain reduction. In the Hill Report, Dr. Hill expanded on his opinion, finding that the Applicant met the DSM-IV Diagnostic Criteria for an Adjustment Disorder with both Anxiety and Depressed Mood, and that she required at least 12 sessions of therapy to address her anxiety and depression and depressive hopelessness, as well as cognitive behavioural therapy aimed at her fear of driving, pain management, and sleep restoration intervention, together with physiotherapy. Dr. Hill authored a further OCF-18 treatment plan in September 2008,⁹ which essentially repeats the treatment proposal, goal and support of his first OCF-18.

State Farm retained Health Impact Inc. to provide various Insurer’s Examinations in 2008, including psychological assessments by Dr. David Prendergast, Psychologist, dated July 29, 2008¹⁰ and September 25, 2008¹¹ (paper review only). State Farm also secured reports by an orthopaedic surgeon in July 2008¹² concerning the Applicant’s claims for income replacement benefits and housekeeping and home maintenance benefits. With respect to the Applicant’s functioning after the accident, State Farm obtained an Occupational Therapy In-Home Assessment by Danielle Reich, dated July 14, 2008,¹³ and an Independent Physiotherapy Examination Report by Sherri Correiro, dated July 16, 2008.¹⁴

In 2010, counsel for the Applicant obtained a Neurological Assessment Report, dated August 23, 2010, from Dr. Elaine McKinnon, Psychologist.¹⁵ At the time of her examination of the Applicant, she recorded that the Applicant spoke of:

her uncertainty, stress and distress surrounding the challenges of what she describes as a “now truly handicapped family…

..complicated by both her husband and daughter’s involvement in motor vehicle accidents that have left them with some significant and debilitating physical injuries. Despite her efforts to ‘be positive’, Ms. Federico confirmed that ‘some days it just gets to you’ and it is clear that she is overwhelmed by the level of responsibility that has fallen on her within this family system.¹⁶

Although State Farm’s Insurer’s Examination Reports, commissioned in 2008, would have been available to the Applicant, Dr. MacKinnon was apparently not provided with them. She recites in her report that the only relevant psychological report was that of Dr. Knolly Hill. Dr. MacKinnon recommended that an occupational therapist work with the Applicant to develop and implement strategies to more effectively organize and manage her time, as well as to address her issues with organization and inattentiveness, and to devise strategies for better managing her pain symptoms with respect to environmental and personal accommodations. Dr. MacKinnon noted that the therapy that the Applicant was receiving had not resulted in the progress the Applicant wanted, and she referred the Applicant to Dr. Julie Hill, Psychologist. Dr. Julie Hill commenced treatment of the Applicant in October 2010 and produced treatment plans in August and October 2010, and a report, dated June 24, 2013.¹⁷

Further information on the Applicant’s psychological condition was secured by State Farm in the form of a paper review of an OCF-18 submitted by the Applicant’s treating psychologist, Dr. Julie Hill. The review was done by Dr. Godwin K. Lau, Psychologist, who concluded that the OCF-18 requesting a driving assessment was reasonable and necessary. He referred to the conclusions of both Dr. Prendergast’s assessment and Ms. Reich’s In-Home Occupational Therapy Assessment referred to above in arriving at his opinion.

With respect to occupational therapy, on the retainer of the Applicant, Tru-Path Occupational Therapy provided a report by Lisa Duffus, OT, dated October 25, 2010. Ms. Duffus authored OCF-18 2010. In addition, the Applicant secured a report by Sandy Sarkissian, OT, dated November 22, 2013.

In response to the OCF-18 2010, State Farm obtained an Occupational Therapy In-Home Assessment, dated February 25, 2011, by Marlene Morse (“Morse Report”)¹⁸ and, in response to the OCF-18 2011, a Psychological Paper File Review Report by Dr. G. Challis, Psychologist, dated December 6, 2011 (“Challis Report”).¹⁹

The Applicant also relies on a Functional Capacity Evaluation Report, dated January 26, 2009, by Atila Balaban, an exercise physiologist,²⁰ and on the OCF-3, medical reports and clinical notes and records of the Applicant’s family doctor, Dr. R.G. Lake, dated December 29, 2009 and May 15, 2013.²¹

The Applicant was seen at the Outpatient Head Injury Clinic of St Michael’s Hospital. Included in the Exhibits was a report by Dr. Zeeshan Waseem, MD, FRCPC,²² who saw the Applicant because she was having trouble with headaches in August 2011, at the same time as she was being treated by Dr. Julie Hill with relaxation and sleep hygiene therapy. Dr. Waseem notes in his report that he provided her “with a note for occupational therapy for cognitive rehabilitation and they (St. Michael’s) would try to get her occupational therapy privately in the community.”

The Applicant was also seen by Dr. Donna Ouchterlony of the same clinic in November 2011. Dr. Ouchterlony wrote in her report to the Applicant’s family doctor:²³

She [the Applicant] has tried many treatments for her headaches and all of them have failed. At this point, it is very difficult to know which way to go with her. I am ordering a sleep study and we are filling out a treatment plan for an occupational therapist.

Dr. Ouchterlony reported on January 24, 2012 that the Applicant’s headaches and dizziness were better. She was seeing an occupational therapist and the sleep study was yet to be done.²⁴ The sleep study was done by Dr. Nicholas Vozoris, MHSC, MD, at the same clinic in March 2012, and the analysis indicated no sleep apnea and only limited evidence of hypersomnolence secondary to a possible head injury, other symptoms being lacking.²⁵ Dr. Vozoris recommended the Mindfulness Meditation Program, which the Applicant said that she would be interested in attending.²⁶ By May 2012, the Applicant was no longer regarded as doing well, and medication to address her headaches and ongoing sleep problems was recommended by both Dr. Ouchterlony and Dr. Vozoris.²⁷

SUBMISSIONS OF THE PARTIES

Submissions of the Applicant

The Applicant’s argument focuses on two reports which the Applicant says State Farm should not have relied on to deny the treatment plans: the Morse Report and the Challis Report.

Mrs. Morse included the following in her report (p. 12):

Ms. Federico stated that functionally she is able to complete all of her pre-accident personal care, housekeeping/home maintenance and employment tasks on a “good day’”. The claimant stated that she was having a “good day” on the day of this assessment…

…The claimant reported her main issue was just being overwhelmed with all the piles of “paperwork” and “stuff” that “needs to be dealt with”. Ms. Federico reported that she has difficulties dealing with the backlog of incomplete tasks and is unsure where to begin to tackle all that is need to be completed.

In her analysis and conclusions (pages 15 to 16), Mrs. Morse again referred to the Applicant’s report that she is able to independently complete all of her pre-accident personal care, housekeeping and home maintenance and employment tasks if she is having a good day or good week. She notes that Ms. Federico received education in pacing and work simplification during her treatment by Paramount Rehabilitation Centre in 2008.

The Applicant submits that State Farm should not have relied on the Morse Report to deny the OCF-18 2010 for several reasons, including the errors contained in it. First, the Applicant submits that Mrs. Morse listed the medical information that was in her possession and omitted the 2010 report by Dr. Elaine McKinnon. Also, she misquoted the information contained in the MacKinnon Report, specifically that the medical documentation indicated that the Applicant had returned to all her pre-accident activities by the end of 2008. According to the Applicant, Mrs. Morse does not identify what reports she is relying on for that statement, and the lack of reference to the MacKinnon Report is an important omission, given that she had the psychology report by Dr. Knolly Hill. The Applicant says that it was unreasonable for State Farm to accept the Morse Report uncritically because, while she may have omitted to consider certain of the reports, State Farm had them all and should have been aware of the gaps in the Morse Report and the errors in her handling of the retainer. On review of the “Medical Documents Reviewed” section of Mrs. Morse’s Report, however, I note that the Neuropsychological Assessment Report of August 23, 2010 by Dr. MacKinnon is the fifth bullet point on page 2 of the Morse Report, and the OCF-22 for a neuropsychological assessment, dated February 11, 2010, is the sixth bullet. Clearly Mrs. Morse had the documents authored by Dr. MacKinnon and reviewed them, and the criticism of Mrs. Morse on this ground is unwarranted.

The Applicant submits that State Farm erred in relying on the Challis Report which also contains errors. The primary error alleged is the way Dr. Challis deals with the Morse Report. Dr. Challis conducted a paper review of documents to determine whether or not to recommend the OCF-18 2011 as reasonable and necessary. He concluded it was not, relying in part on Mrs. Morse’s conclusion which he described this way at p. 5 of his report:

An OT Assessment completed by Marlene Morse, OT dated February 25, 2011 determined that the claimant “is able to return to independently complete all her pre-accident personal care, housekeeping/home maintenance and employment tasks.

He also noted on the same page:

She has received education in pacing and work simplification…the use of proper body mechanics, energy conservation and task modification techniques is encouraged.

The Applicant submits that the error here was in Dr. Challis not noting that the Applicant’s ability to independently complete personal care, housekeeping and home maintenance and employment tasks was not uniform but rather varies depending on good days and bad days, as noted by Mrs. Morse. The Applicant submits that his failure to appreciate the unevenness in her functioning was the reason Dr. Challis did not conclude that there was a need for clinical intervention.

The Applicant also submits that, no later than 30 days before the Hearing before Arbitrator Huberman, State Farm had all the medical information necessary to reassess whether or not the denials were appropriate. The Applicant submits that State Farm’s attitude towards the Applicant was adversarial and that no amount of additional medical evidence from the Applicant would have led to State Farm reversing its position of denial of the benefits. Specifically, the Applicant relies on the evidence by the State Farm adjuster in which he describes the Challis Report as “he gave us an opinion that was supporting.”²⁸

Further, the Applicant asks me to draw an adverse inference from the fact that Mrs. Morse was not called as a witness, even though the Hearing was adjourned to facilitate her being called.

The Applicant says that the unreasonable behaviour of State Farm begins with the receipt of the Morse Report. The medical evidence and non-medical evidence in support of the treatment plans was described by Arbitrator Huberman as “overwhelming” and the Applicant submits that State Farm, in not agreeing to approve the two treatment plans prior to the Hearing, acted egregiously given the medical evidence that State Farm had by that time. The Applicant submits that the failure to concede that the two treatment plans were reasonable and necessary at that stage indicated an inflexible attitude on the part of State Farm, which continued in its opposition to these treatment plans until Arbitrator Huberman’s Decision was issued.

The Applicant submits that there is evidence of the inflexibility in State Farm’s adjusting of the file in the Reasons of Arbitrator Huberman which set out State Farm’s position put forward at the conclusion of the evidence in the Hearing before him. The Applicant submits that it was unreasonable for State Farm to make the arguments it did to Arbitrator Huberman; specifically, it was inflexible to argue that:

the OCF-18 2010 should be denied because its purposes of pain reduction and return to activities of normal living had been met, since the Applicant had already returned to her activities of normal living;
the proposed medical treatment would have been duplicative of treatment and education that the Applicant had received some two years earlier than the OCF-18 2010;
the complaints of feeling overwhelmed had not been made to another assessor;
the activities of normal living included returning the Applicant to a job that no longer existed;
there were causation issues concerning the link between the 2010 and 2011 complaints and the 2007 accident; and
the Applicant’s evidence was suspect because of credibility issues.

The inflexibility was also allegedly shown in State Farm’s written submissions to Arbitrator Huberman, in which State Farm continued to rely on the Morse Report, describing it as a “strong” opinion, even though it had received rebuttal reports by another occupational therapist, Sandy Sarkissian, dated November 22, 2013²⁹ (“Sarkassian Rebuttal Report”). Indeed the State Farm witness admitted that it had never provided Mrs. Morse with the Sarkissian Rebuttal Report which was obtained in response to the Morse Report.³⁰

The Applicant submits that an inquiry into when State Farm got the information as to the impairments that made the OCF-18 2010 and OCF-18 2011 reasonable and necessary was not relevant because even when they got the full information prior to the Hearing, they still did not approve the OCF-18s. The Applicant submits that, even if I find that the unreasonable conduct of State Farm only commenced when all the evidence was in at the Hearing, I must still make a special award. The Applicant says that I do not need to find a pattern of conduct – one instance is enough to support such an award; rather, the Applicant says that State Farm was constantly denying the treatment plans from the period of the Morse Report to the Hearing date.

With respect to the chronology of the claim and the period of early 2009 until the OCF-18 2010, the Applicant says that State Farm should have sent the Applicant for an assessment to determine if the impairments from the accident had calmed down or whether the present impairments are related to the accident. She relies on the MacKinnon Report that says that the impairments in late 2010 related to the accident. She says that State Farm could not rely on Morse for the answer to the causation issue because she was not qualified to provide that opinion – rather, State Farm needed a medical opinion.

Submissions of State Farm

State Farm submits that there should be no special award because its decisions in adjusting the file were all based on the independent assessments of Ms. Federico including medical opinions.

Further, State Farm submits that I do not have to accept the characterization of the evidence in support of the treatment plans as overwhelming. It submits that relying on its assessors was not immoderate or unreasonable conduct. It denies that it has treated the Applicant in an adversarial way, and relies on the approval of other treatment plans for medical and rehabilitation treatment, totalling $31,708.00, that provided her with treatment.

State Farm submits that for conduct to be unreasonable, there has to be a pattern of conduct. It submits that just because the assessors’ reports did not withstand the scrutiny of the Arbitrator does not mean that the Insurer acted unreasonably in relying on them in the course of adjusting the file. It says that there are many cases where there are flaws in the medical reports on which the Insurer has relied but no award has been made. The errors in such a report must jump out.

State Farm says that at the time the treatment plans were submitted, there was considerable evidence that the Applicant’s ability to function on a day to day basis had returned. She had returned to her two jobs and returned to her personal care by January 2009.³¹ Dr. MacKinnon notes her level of activity in her report on page 14 of 17 as follows:

At the time of our assessment, Ms. Federico was continue (sic) to work as a supply teacher on essentially a full time basis although she acknowledged that she could not always mange (sic) a full week of work. She was also continuing to manage the administrative responsibilities of the family’s business but with considerable difficulty.

Further, the family doctor, Dr. Lake, routinely noted the lack of objective findings to support the Applicant’s complaints, as early as August 6, 2008 and again on June 15, 2009.³² State Farm points to the Hill Report of March 25, 2008 in which Dr. Knolly Hill reported that the Applicant had returned to work as a teacher but not as often or as efficiently as before the accident (p. 10), and that she presented with coherent thinking and no significant difficulties in attending to and answering questions, recalling past information or using her working memory (p. 2). In addition, Dr. Prendergast, in his report in July 2008, observed that her overall demeanour was remarkable in that she showed no objective signs of emotional turmoil, such as tearfulness or agitation as one would expect of high-anxiety Applicants, and he found no signs of any significant disruption of cognitive functioning, but there were signs of embellishment of cognitive problems on the psychometric testing (p. 5).

State Farm points to the gap between the treatment plans approved to late 2008 and the timing of the submission in 2010 of the OCF-18 2010 and of the much later submission of the OCF-18 2011.

State Farm submits that being wrong in the handling of the treatment plans is different than being unreasonable.

ANALYSIS

I have considered the elements of the obligations owed by an Insurer to an Insured as set out in the Melchiorre decision, as follows:

treating the Insured in a fair manner,
conducting a reasonable investigation of the information presented to it,
approaching the claim with an open mind and assessing it fairly,
being aware of the current state of the law including understanding the criteria applicable to a particular case,
identifying the information it requires to properly assess the claim,
not treating the insured person as a potential adversary,
carefully considering all available information and giving appropriate weight to that information in a fair and even-handed manner,
identifying additional information that may exist that would assist in adjusting the claim,
notifying the Insured of any additional information the Insurer reasonably requires,
ensuring that the person responsible for assessing the claim makes their own decision, free from undue influence by others who may not owe the same duty of care, and
re-assessing the validity of the claim as new information is received.

The claim for a special award in this matter arises from a failure to approve medical benefits requested after the gap of many months identified by State Farm between the assessments by its assessors in July 2008 and the submission of the OCF-18 2010. In this regard, it differs from some of the cases cited to me which involved a termination of benefits based on Insurer’s assessments. In those cases, the Insurers were changing their determinations of entitlement to ongoing benefits from ones in favour of entitlement to benefits to denials. In this case, there was no such change. The obligation of the Insurer to act fairly remains the same, and the obligation remains on the Applicant to prove by evidence given to their Insurer that she has an entitlement to the benefit.

This case also differs from other cases in that the Insurer here did not have conflicting reports by its own assessors.

The history of the two treatment plans in question is important. I disagree with the Applicant’s submission that an inquiry into when State Farm got the reports and the context of the review of the reports is not relevant. Dr. MacKinnon’s Report of August 2010 started the process of the submission of the two treatment plans, but the weight to be given to this report is significantly undercut by the failure of the Applicant to give Dr. MacKinnon the 2008 psychological reports of Dr. Prendergast and other assessors’ reports. If Dr. MacKinnon did in fact have those reports, then the error in not treating them as relevant is hers, but this still undermines the weight to be put on her report. In those circumstances, it was not unreasonable for State Farm to have questions as to the reliability of the recommendation by Dr. MacKinnon, and therefore the underlying foundation for the OCF-18 2010 and OCF-18 2011.

In addition, the paragraph quoted above from Dr. MacKinnon’s report as to the Applicant being overwhelmed arguably establishes that the Applicant’s condition in 2010 was impacted significantly by the intervening post-accident event of her daughter’s disability, as well as by her husband’s existing disability. While the Applicant was able to cope with two jobs before her own accident and regained function after treatment in 2008, the relevant question must be one of causation: was her deteriorating condition in 2010 attributable to her own accident or to other events post-accident and to the whole family’s situation? This causative concern is supported by the reports of the Brain Injury Clinic in 2011 and 2012 (referred to above), where there were references to the overall situation of the family. The Applicant focused on Mrs. Morse’s inability, by virtue of her qualifications, to provide an opinion on causation. But in my view, the onus lies on the Applicant to establish the causation link. Arbitrator Huberman was satisfied that the causation link was sufficiently established on the evidence before him to find that the treatment plans were reasonable and necessary, but the Applicant has not established that the link was so obvious that State Farm was unreasonable in rejecting its own assessors’ opinions and in not accepting the Applicant’s experts’ opinions.

The Applicant submits that it was unreasonable of State Farm to rely on Mrs. Morse’s opinion because of an error in the statement of the retainer. The Applicant says that Mrs. Morse was retained to assess the OCF-18 2010 on the wrong basis: whether or not it was appropriate for and consistent with the severity of the injury suffered by the Applicant. While that reference appears at p. 6 of her report, at p. 15 in her conclusions and analysis section, Mrs. Morse says that the purpose of the assessment was to determine whether the OCF-18 2010 was reasonable and necessary. Therefore it cannot be said that Mrs. Morse was misdirected as to her task.

The Applicant relies heavily on the omission by Dr. Challis of the reference to good days and bad days from Mrs. Morse’s report. I find the criteria of “good days and bad days” to be problematic within the legislative scheme. The Schedule does not address the issue of entitlement to benefits on the basis of how many good days or bad days an Applicant has. Rather, the tests are described in terms of “substantial inability” or “complete inability”, and the focus is on functionality. Inherent in “substantial” is that there is still some ability even with the injuries suffered, but the word “substantial” also indicates that the Applicant is not deprived of benefits for having some ability. In terms of the treatment plans, the test is “reasonable and necessary”, but within that test there is a broad discretion of an Arbitrator to determine what is reasonable and what is necessary. Therefore I am not prepared to find that the Insurer was unreasonable in not identifying the significance of the citing of the conclusions of the Morse Report in the Challis Report.

The elements of the duty to act fairly include ensuring that the assessor has the relevant reports. Mrs. Morse stated in her report that no documentation was provided to explain the requested treatment and that she attempted unsuccessfully to contact Lisa Duffus, OT, the author of the OCF-18 2010. Ms. Duffus had submitted a report to support the OCF-18 2010. No explanation was given as to why this report was not provided to Mrs. Morse at the outset or as follow-up; nor was there any evidence that the Applicant tried to press the adjuster to address this defect when she saw the Morse Report.

The Applicant alleges that State Farm has been inflexible in its assessment of new information as it was generated, but in my view, the request for an assessment in 2011 through the OCF-18 2011 did not put the Insurer on notice that there was new information that it should consider for the purpose of reassessing the denial of the OCF-18 2010. Rather, it supported the argument that the Insurer was correct that there was not an adequate foundation for the OCF-18 2010 prepared by Ms. Duffus. The use of a different health care practitioner for the OCF-18 2011 also implies that the Applicant knew that the OCF-18 2010 was not properly supported. In my view, there were mistakes made by the adjuster in the process of ensuring that Mrs. Morse had the Duffus Report together with the OCF-18 2010, but the process followed by the Applicant in submitting the OCF-18 2011 would reasonably support the Insurer’s conclusion that the opinion of Ms. Duffus was not sufficient to support the OCF-18 2010 treatment plan, and that it had been correct to deny that OCF-18. I do not accept the Applicant’s submission that the Insurer was inflexible and unreasonable in relying on the Challis and Morse Reports in the context of the process the Applicant had followed. The psychologists comment consistently in their reports on the ability of the Applicant to function and such comments would support a conclusion that she had returned to her jobs effectively.

With respect to whether or not the Insurer acted unreasonably in considering reports secured by the Applicant later in the course of the Arbitration process, I find that the Applicant has not established sufficient evidence of unreasonable conduct. The treatment plans submitted in 2010 and 2011 dealt with occupational therapy treatment. As noted above, in 2012, the Brain Injury Clinic was apparently struggling to find a solution to the Applicant’s headaches. After the sleep study failed to show any cause, the recommendation was for Mindfulness Meditation, not more occupational therapy as was requested in the OCF-18 2010.

A special award is not a prize for the successful party in the Arbitration, won solely owing to that success. Each party must assess their risks of potential success at the Hearing based on the information it has at any particular point of time. While I accept that there were options for the Insurer on receipt of its assessors’ reports, and on the receipt of reports generated by the Applicant in pursuing its rights to Arbitration, I do not accept that the Insurer was unreasonable in not reversing itself on the denial of benefits at the point when it finally had all the medical reports the Applicant would rely on at the Hearing. Arbitrator Huberman chose strong words to describe his view of all the evidence. He had the benefit of the detailed and tested evidence of the Applicant, something State Farm did not have until the Hearing. The Arbitration outcome was significantly influenced by the credibility findings by Arbitrator Huberman. Such findings are notoriously difficult to predict, even after all the evidence is in. I agree that there were opportunities for early resolution of this matter, once the Applicant provided its full disclosure of the medical evidence on which it intended to rely at the Hearing. I do not find, however, that I have sufficient evidence to establish that the actions of the Insurer were unreasonable in its consideration of that material at each step in the process.

I agree with State Farm’s submission that being wrong is different than being unreasonable, and I find that the factual basis of this case is distinguishable from the cases cited to me where a special award was made. My conclusion to deny a special award is consistent with the circumstances dealt with by Arbitrator Makepeace in the J.W. and Canadian General Insurance Group case and the D.M. case, cited above. Therefore, I dismiss the claim by the Applicant for a special award.

EXPENSES:

This re-hearing of the claim for a special award arises from the Applicant’s success in its Appeal of Arbitrator Huberman’s decision. I have dismissed the Applicant’s claim for a special award in this re-hearing. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

October 3, 2016

Lynda Tanaka Arbitrator

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