Neutral Citation: 2016 ONFSCDRS 275 FSCO A15-003115

BETWEEN:

(PAUL) JOHN INGARRA Applicant

and

WESTERN ASSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Arbitrator Thérèse Reilly

Heard: In person at ADR Chambers on August 25, 2016

Appearances: Ms. Alissa Goldberg for Mr. (Paul) John Ingarra Ms. Lora Castellucci for Western Assurance Company

Issues:

The Applicant, Mr. (Paul) John Ingarra, (“Mr. Ingarra” or “the Applicant”) was injured in a motor vehicle accident on August 28, 2004, and sought accident benefits from Western Assurance Company (“Western” or “the Insurer”) payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation and Mr. Ingarra, through his representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issue in this Hearing is:

Are the Treatment and Assessment Plan for $1,042.67 for chiropractic treatment dated August 28, 2014 prepared by BodyWorx Vitality Inc. (the “OCF-18”), and an invoice relating to an OCF-21 for two chiropractic sessions for $111.80 dated October 21, 2014 provided by Maple Health Care and Rehab (the “OCF-21”), “incurred” expenses within the meaning of the Schedule?

Result:

The Treatment and Assessment Plan for $1,042.67 for chiropractic treatment, dated August 28, 2014, prepared by BodyWorx Vitality Inc. (the “OCF-18”), and an invoice relating to an OCF-21 for two chiropractic sessions for $111.80, dated October 21, 2014, provided by Maple Health Care and Rehab (the “OCF-21”), are “incurred” expenses within the meaning of the Schedule.

EVIDENCE AND ANALYSIS:

The Hearing proceeded with both parties agreeing that the sole issue for determination at the Hearing is whether the OCF-18 and the OCF-21 are incurred expenses. No witnesses were called. The parties presented oral submissions as to their respective positions. The Applicant maintains both are incurred under section 18(1)(a) of the Schedule prior to the end of the applicable 10-year period and as such, the Insurer is liable for payment. The Applicant maintains this position although treatment related to the OCF-18 was not provided and treatment related to the OCF-21 was received after the 10-year period.

The Insurer denies that the OCF-18 and OCF-21 are incurred. Treatment related to the OCF-18 was not provided within the 10-year period. Treatment relating to the OCF-21 was approved in November 2013, but actual treatment was not provided until September 16 and 26, 2014, which were after the expiry of the 10-year benefit period. As neither was provided to the Insurer within the benefit period, the Insurer maintains neither is incurred and it is not obliged to pay for either expense.

The parties agree that: 1) the applicable version of the Schedule is Ontario Regulation 403/96 for the period December 24, 2013 to June 12, 2015; 2) the OCF-18 and OCF-21 are reasonable and necessary; and 3) the 10-year limitation period to incur the treatments in issue ended on August 28, 2014. The sole issue for consideration is whether the treatment plans were incurred before the expiration of the 10-year period.

It was agreed by the parties that the issues of a Special Award and expenses will be addressed separately by the parties.

Agreed Statement of Facts

An Agreed Statement of Fact was filed. The parties agreed on the following facts:

On August 28, 2004, the Applicant was a passenger involved in a motor vehicle accident. At the time, he was 16 years old.
The Applicant’s claim for statutory accident benefits from Western was reported on October 8, 2004.
On or about August 12, 2014, a Treatment and Assessment Plan (OCF-18) was prepared by BodyWorx Vitality Inc., requesting $1,042.67 for chiropractic treatment; specifically, 16 counts of “soft tissue of the chest and abdomen therapy” plus taxes. This OCF-18 was submitted through HCAI on August 20, 2014.
Mr. Ingarra has not yet received any treatment from BodyWorx as per the OCF-18 submitted.
On August 28, 2014, Western denied the OCF-18 on the basis that no medical or rehabilitation benefit is payable for more than 10 years after the accident, and that the 10-year limitation period had been reached.
On or around October 6, 2014, an Auto Insurance Standard Invoice (OCF-21) in the amount of $111.80 was submitted for two chiropractic sessions provided by Maple Health Care and Rehab. The OCF-21 referred to the OCF-18 approved on November 19, 2013 for 12 chiropractic sessions. The Applicant underwent one course of treatment on September 16, 2014 and another on September 26, 2014. At this time, Mr. Ingarra has received all 12 treatments; there are no outstanding invoices other than the $111.80 in dispute.
On October 21, 2014, Western Assurance Company denied payment of this OCF-21 on the basis that no medical or rehabilitation benefit is payable for more than 10 years after the accident and the 10-year limitation period had been reached.
The above noted issues were mediated and failed on January 29, 2016.

Applicable Statutory Language

Section 18(1)(a) of the Schedule reads as follows:

(1) No medical or rehabilitation benefit is payable for expenses incurred,

(a) more than 10 years after the accident, in the case of an insured person who was 15 years of age or more at the time of the accident; or

(b) after the insured person attains 25 years of age, in the case of an insured person who was less than 15 years of age at the time of the accident.

(2) No attendant care benefit is payable for expenses incurred more than 104 weeks after the accident.

(3) Subsections (1) and (2) do not apply in respect of an insured person who sustains a catastrophic impairment as a result of the accident.

Applicant’s Position

The Applicant advances three main arguments in favour of its position that the expenses were incurred prior to the 10-year limitation period.

First, the Applicant maintains the disputed expenses were all “incurred” prior to the expiration of the 10-year limitation period, pursuant to the definition adopted by the Ontario Court of Appeal in Monks v. ING Insurance Company of Canada.² The Court of Appeal in Monks adopted the definition of “incurred” from Smith (Committee of) v. Wawanesa Mutual Insurance Company,³ which was cited with approval by the Ontario Divisional Court in McMichael v. Belair Insurance Company:⁴

[A]n insured...need not actually receive the item 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.]

Pursuant to this definition, an Applicant is not legally obligated to spend money or receive the items/services in question. The Court in Smith⁵ looked at the wording in the then-current version of the Standard Automobile Policy that required the Insurer to pay for all medical and rehabilitation expenses that were incurred within 4 years of the date of the accident. The Court in Smith stated:

“It is sufficient if the reasonable necessity of the service or item and the amount of the expenditure are determined with certainty.” It is a “question of fact in each case, whether the requisite degree of certainty has been established.”

Second, the Applicant relies on a broad interpretation of the word “incurred”. In Monks,⁶ the Court of Appeal stated the Courts “have rejected a narrow construction of the word “incurred” as used in accident benefits schedules.” The Applicant maintains a broad interpretation is the standard for interpretation of the term “incurred”. Further, it is a well-established principle of insurance law that “coverage provisions are to be interpreted broadly, while coverage exclusions or restrictions are to be construed narrowly, in favour of the insured” and is consistent with the policy objectives under the Schedule.⁷

In Hoang (Litigation Guardian of) and Personal Insurance Company of Canada,⁸ the Applicant had been injured in a motor vehicle accident on August 6, 2004. The relevant Schedule under consideration in Hoang was the same as this matter. In that decision, Director Delegate Blackman affirmed the decisions of both Monks and Smith with regard to the definition of incurred, and the application for Judicial Review dismissed.

Given the applicable definition of incurred, the Applicant maintains it is immaterial that the actual treatments were not received or received by the Applicant after the 10-year limitation. The actual expense was incurred well before the limitation period and, as such, the Insurer has a duty to provide this benefit.

Test of Certainty

The Applicant maintains the expenses in issue meet the two-part test as defined in Monks and applied in Smith. As conceded by the parties, the expenses are reasonable and necessary, and this is not in issue. As to the second part of the test, the parties must be certain as to the amount of the expenditure with reasonable certainty. The Applicant asserts the amounts in question are reasonably certain. The dollar amounts associated with the OCF-18 and OCF-21 are clearly outlined on the forms submitted to the Insurer. The Applicant maintains this is consistent with the decision in Lafratta and Allstate Insurance Company of Canada,⁹ in which an OCF-22 like the OCF-18 states a dollar amount, which was and is sufficient for the Insurer to establish with reasonable certainty the amount of the expense.

In Lafratta, the treatment plan had been submitted on March 30, 2010, exactly 10 years after the accident. Lafratta adopted the definition of “incurred” from Monks and found that the disputed OCF-22 contained “sufficient information” and that the Insurer could “determine with certainty the requested expense”. Arbitrator Gueller found that the expense was incurred prior to the expiration of the limitation period in accordance with sections 14(1) and 18(1) of Reg. 403/96. Section 14(1) related to the payment of medical benefits for individuals impaired in a motor vehicle accident. Section 18(1) related to the duration of payment for medical, rehabilitation, and attendant care benefits.

Third, the Applicant maintains the cases cited by the Insurer (set out below) are not relevant as they refer to wording in various sections of the Schedule which are significantly different from the wording of section 18(1). In the cases cited by the Insurer, such as Hope v. Canadian General Insurance,¹⁰ the wording in the decision was based on the words found in a predecessor Regulation and not “incurred” as found in section 18.

Insurer Submissions

The Insurer submits that the treatment and services related to the benefits in dispute were incurred after the expiration of the 10-year benefits coverage period, and hence the Insured is not entitled to payment. No treatment has been provided under the OCF-18. Moreover, although the OCF-21 was approved in November 2013, the treatment was not received until September 2014, after the 10-year period.

The Insurer submits that section 18 of the Schedule ought to be given a narrow interpretation based on the clear and unambiguous language provided by the Legislature. It is submitted that section 18 specifically limits an Insured’s entitlement to medical and rehabilitation benefits for non-catastrophic injuries to 10 years from the date of the accident. An interpretation to the contrary would produce absurd consequences where an Insurer would be required to expend its resources indefinitely for non-catastrophic injuries.

The Insurer relies on the Hope case, a Court of Appeal decision that considered the legislative intent behind the 10-year benefit period set out by the Schedule. The Court concluded that the grammatical and ordinary meaning of section 6(1)(f), which the Insurer maintains is language that is now section 18, was clear—if a medical or rehabilitation benefit is incurred after the 10-year period, the expense is not payable. Specifically, the Court stated that:¹¹

The insurer’s obligation to pay reasonable expenses is triggered when those expenses result from an accident and that result occurs within ten years of the date of the accident. If an expense arises out of one of the services or treatments described in ss. 6(1)(a) to 6(1)(f) [now section 18], but that service or treatment is supplied beyond the tenth anniversary of the accident, then on a plain reading of the operative words it cannot be said that the expenses resulted within the benefit period. In my view, the language of s. 6(1), and particularly the phrase “benefit period,” connotes payment of expenses for a fixed period of time, and not potentially for the rest of an insured’s life where those expenses can be established with certainty within a fixed period of time.

The Hope decision was applied in Ritchie and Economical Mutual Insurance Company,¹² where the Applicant sought various medical and rehabilitation expenses beyond the tenth anniversary of her accident, arguing for a broad and liberal interpretation favouring her view for continued insurance funding. Arbitrator Sampliner in Ritchie disagreed with the Applicant’s argument, stating that:¹³

[A]ccepting Ms. Ritchie’s position would abrogate or significantly modify the clear and unambiguous ten-year medical and rehabilitation coverage that the Court (in Hope) found the Schedule provides. An insured would only need estimates, expert opinion or invoices proving the continuing necessity and reasonableness of the services in order to qualify an expense for coverage beyond the ten-year period.

Arbitrator Sampliner further stated that an exception¹⁴ to the time-limited coverage could be established if “1) the treatment or service was necessary and reasonable, commencing within the coverage time; 2) can be characterized as a single treatment or service, and not as a series; and 3) is integral to the completion of the service or treatment such that it concludes within a concise and reasonable time period after the expiration of the applicable coverage period.” The Insurer states the exception has not been applied in subsequent case law.

Other cases relied on by the Insurer include:

Gottwald and State Farm Mutual Automobile Insurance Company,¹⁵ in which Arbitrator Rogers ordered that the Insured was precluded from entitlement to medical and rehabilitation benefits for services or treatment that were supplied beyond the tenth anniversary of her accident. Arbitrator Rogers emphasized that “[t]he Court’s finding [in Hope] is clear. Section 6 [now section 18] limits recovery to service or treatment supplied before the tenth anniversary of the accident.”

In Perth Insurance Company and Shmuel,¹⁶ an Appeal of the Arbitrator’s Order was allowed and it was held that the Insured was not entitled to receive payment for the medical and rehabilitation benefits claimed because it could not be determined when the treatment had been provided to the Insured. Director Delegate Evans concluded that an Insurer must only pay for those goods and services provided under the treatment plan.

In Huang and State Farm Mutual Automobile Insurance Company,¹⁷ Arbitrator Schnapp opined that he followed the analysis in Perth in concluding that the treatment in question had not been provided and therefore the Insured was not entitled to payment of the treatment plan in dispute.

The Insurer also submitted that the expenses in issue do not meet the exception criteria outlined in Ritchie. The treatment sought was incurred outside of the coverage time, and consisted of a series of treatment that would not be concluded within a concise time period and after the expiration of the applicable coverage period.

Lastly, the Insurer maintains the Hope decision is the case that is to be followed. The cases cited by the Applicant involved catastrophic injuries and were to be read in that context. The legislative intent is to provide more expansive coverage of benefits for an Insured that is catastrophically injured. The Insurer states that the interpretation as found in Hope is applicable to cases involving non-catastrophic injuries, and maintains the wording is not significantly different than the wording found in this case.

Analysis

I accept the applicable statutory interpretation of the term “incurred” adopted by the Court of Appeal in Monks, which provides that:¹⁸

It is well-established that insurance coverage provisions are to be interpreted broadly … to the extent that the word "incurred" as used in the SABS restricts the coverage available … it must be assigned a narrow meaning.

Moreover, a broad interpretation of the word "incurred" under the SABS is consistent with the policy objective that accident victims promptly receive the statutory accident benefits to which they are entitled under the Act and their automobile insurance policies. It also prevents an insurer from benefitting from an insured's lack of financial resources.¹⁹

Second, based on Monks and Smith, and the wording of section 18(1), the relevant test of “incurred” is as defined in the Monks case and as applied in Smith. In the Monks case, the relevant wording that was interpreted read:

… the insurer must pay for all reasonable and necessary expenses incurred by or on behalf of an injury as a result of a motor vehicle accident.

The Court of Appeal cited Smith and concurred that the Applicant need not actually receive the item or service or spend the money or become legally obliged to do so. It was 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.

In this case, the amount of the OCF-18 and OCF-21 expenditures could be determined with certainty before the end of the specified time limit under the applicable benefits Schedule. The Applicant argues both expenses meet the reasonable certainty test. I concur. The amounts in question are reasonably certain. The dollar amounts associated with the OCF-18 and OCF-21 were clearly outlined on the forms submitted to the Insurer. The OCF-21 was in fact approved by the Insurer prior to the end of the ten-year period. Consistent with the decision in Lafratta, both the OCF-18 and OCF-21 state a dollar amount, which is sufficient, for the Insurer to establish with reasonable certainty the amount of the expense.

The wording of the section in issue in the Smith case is similar to the wording in this matter. In Smith, the wording at issue was:

… the Insurer must pay for all reasonable and necessary expenses incurred within 4 years from the date of the motor vehicle.

The specific issue addressed was whether the party must have received the service to be paid by the Insurer. The Court held no. The Court after a full review of cases states:²⁰

There is a wider sense in which the expenditure is incurred within the time limit as soon as it is known with certainty that it is necessary and its amount ascertained.

In the Smith case, the expense was certain prior to the expiration of the ten-year period, but was actually carried out afterwards. The Court on Appeal upheld it was incurred.

The Court in Smith also indicated that adopting a narrow interpretation of the word “incurred” would lead to unfairness, and penalizes the Insured who lacks the money to pay for Insured services. It states:²¹

It would allow those persons who could pay for services in advance to be in a much better position to recover than those who could not. This, as a matter of policy, would be totally unfair.

Equally important, the Insurer has relied on the Hope case. I concur with the Applicant that the wording in the Schedule that was under consideration in the Hope case differs considerably from the wording at issue in this case. The wording in Hope was as follows:

Section 6 (1) The Insurer will pay …. all reasonable expenses resulting from the accident within the benefit period.

The Court went on to state that entitlement to an expense required that it be reasonable, must result from the accident and must result within the benefit period (being ten years):²²

The insurer’s obligation to pay reasonable expenses is triggered when those expenses result from an accident and that result occurs within ten years of the date of the accident. If an expense arises out of one of the services or treatments described in ss. 6(1)(a) to 6(1)(f) [now section 18], but that service or treatment is supplied beyond the tenth anniversary of the accident, then on a plain reading of the operative words it cannot be said that the expenses resulted within the benefit period. In my view, the language of s. 6(1), and particularly the phrase “benefit period,” connotes payment of expenses for a fixed period of time, and not potentially for the rest of an insured’s life where those expenses can be established with certainty within a fixed period of time.

In our case, as in Smith, the wording focusses on “incurred” expenses within a certain period of time. In Hope, section 6(1) refers to expenses resulting during a benefit period. The Court found the language to be very different, and although it acknowledged Smith, the Court did not comment on the merits of the Smith decision. It went on to explain that the language in Smith, which spoke of “incurred”, allowed an Insured to recover expenses that could be determined with certainty within 4 years from the date of the accident, even if those expenses related to services or treatments provided beyond the 4-year period. The Court noted that the language in section 6(1) is entirely different from that of the prior Regulation. The prior Regulation spoke of incurred expenses. Section 6(1) refers to “resulting during a benefit period”. Cases that have interpreted the wording in the predecessor Regulation, such as Smith, would not assist in the interpretation of section 6(1).²³

In our case, I agree with the Applicant that there is a difference in the wording of the section as it appears in section 6(1) as interpreted in the Hope case and the wording applicable in section 18 (1) and as interpreted in Monks and Smith. I find the Hope case is distinguishable. The language in section 18(1) refers to incurred expenses and not expenses resulting during a benefit period. The line of cases in Monks and Smith are thus the most helpful in interpreting the wording in issue in this proceeding.

The Insurer relies on Huang, a decision of Arbitrator Schnapp. This case is also distinguishable in that one of the expenses in that case had not even been submitted to the Insurer. Evidence was also lacking on whether the 4 medical treatments in issue were ever received and a different provision of the Schedule (Section 38) was under consideration. That is not the case here.

The Court in Hope stated that the interpretation of cases on “incurred” would, as in the Smith case, allow an Insured to recover expenses that could be determined with certainty within 4 years from the date of the accident, even if those expenses related to services or treatments provided beyond the 4-year period.²⁴ The same analogy and reasoning applies in this case to the OCF-18 and OCF-21. I find the expenses were incurred and payable by the Insurer.

Moreover, although factually cases involving catastrophic injuries have been relied on in support of the positions outlined herein, I find the cases cited by the parties and as discussed herein do not define “incurred” on the basis of whether an Applicant was or was not catastrophically injured. The relevant criterion considered by the courts appears to be the wording in the relevant Schedule, statutory interpretation and legislative intent. I do not agree that the Hope case is the case to be followed.

The Insurer argued further that the treatment relating to the OCF-18 does not meet the exception criteria outlined in Ritchie. In light of my findings, it is not necessary to consider this point.

EXPENSES:

The parties agreed to discuss this issue separate from this decision.

October 17, 2016

Thérèse Reilly Arbitrator

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:

The Treatment and Assessment Plan for $1,042.67 for chiropractic treatment, dated August 28, 2014, prepared by BodyWorx Vitality Inc. (the “OCF-18”), and an invoice relating to an OCF-21 for two chiropractic sessions for $111.80, dated October 21, 2014, provided by Maple Health Care and Rehab (the “OCF-21”), are incurred expenses within the meaning of the Schedule.