Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 22 FSCO A16-001732

BETWEEN:

ESTATE OF ROMNEY ABEL Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Lynda Tanaka

Heard: By written submissions and in-person at ADR Chambers on November 17, 2016

Appearances: Mr. James Armstrong for the Estate of Romney Abel Ms. Leanne Zawadzki for State Farm Mutual Automobile Insurance Company

Issues:

Mr. Romney Abel (now deceased) was injured in a motor vehicle accident on June 6, 2008 and sought accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ His Estate commenced Mediation and subsequently Arbitration proceedings after his death. The Applicant in this case is the Estate of Romney Abel (“Applicant” or “Estate”), and through its representative, it applied for Arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended (“Insurance Act”).

At the Pre-Hearing in this matter, held July 11, 2016, Arbitrator Savage ordered a Preliminary Issue Hearing “to determine whether some of the treatment plans are statute barred because Arbitration was not applied for within the required two year period from dates of denial, and whether any of the issues in dispute fail due to the fact that there are no outstanding balances owed on the treatment plans, and further due to the decease of Mr. Abel” (“Pre-Hearing Order”).

State Farm brought a Motion and filed materials including an Affidavit of Laura Emmett, a partner in the law firm representing State Farm, sworn June 6, 2016 (“Emmett Affidavit”). The Applicant filed responding materials in which it challenged my jurisdiction to make the Order requested, on the basis of the procedure followed by State Farm in requesting the Motion for dismissal, the lack of notice of its position that the Arbitration proceeding was an abuse of process, frivolous and vexatious, and its change of position from that taken in the Response to the Application for Arbitration (Form E) filed. At the Hearing, the Applicant withdrew those procedural objections. The process set out in the Pre-Hearing Order clearly provided ample notice to the Applicant of State Farm’s position, and the Estate had full opportunity to argue the points it raised.

State Farm included, in its written submissions, statutory authority for the Order it has requested, and the Applicant chose to rely on substantive defences and not to question my authority to make the Order. I am satisfied based on the materials provided that I have jurisdiction.

State Farm agreed in oral submissions that its argument that the proceedings are a nullity because of lack of authority was effectively answered by the production of the death certificate, and the Order of the Superior Court of Ontario that the litigation with respect to the accident could be continued by Romney Abel’s widow as Litigation Administrator.

With these modifications, the issues in this Preliminary Issue Hearing are thus as stated in the Notice of Motion:

1. Should the Application for Arbitration be dismissed on the grounds that it is frivolous, vexatious and/or commenced in bad faith?

2. Alternatively, should the Application for Arbitration be dismissed as the statutory preconditions for commencing the Arbitration have not been met?

3. Is either party liable to pay the expenses of this Preliminary Issue Hearing?

Result:

1. The Application for Arbitration is dismissed on the grounds that it is frivolous, vexatious and/or commenced in bad faith.

2. Even if I did not find as above, the claims for medical benefits for an OCF-18 dated January 17, 2013, for $2,968.60 by Dr. David Rawson of Nutan Joy for a TMJ assessment, x-rays and orthotic devices² (“OCF-18 Rawson #1”), and for an OCF-18 dated July 24, 2013, for $1,590.00 by Dr. David Rawson of Nutan Joy for TMJ treatment (“OCF-18 Rawson #2”), are dismissed as being statute-barred.

3. 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:

Legislation

State Farm relies on the Schedule and the Dispute Resolution Practice Code (“Code”) for its arguments. Rule 68 of the Code provides that an adjudicator may dismiss a proceeding without a Hearing where the proceeding is frivolous, vexatious or is commenced in bad faith. Rule 65 of the Code provides that an adjudicator will determine the issues before him or her and make an Order subject to such terms as he or she considers just, and may make such Order or give such directions as he or she considers proper to prevent an abuse of process.

Section 14 of the Schedule provides:

(1) The insurer shall pay an insured person who sustains an impairment as a result of an accident a medical benefit.

(2) The medical benefit shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for…

(h) other goods and services of a medical nature that the insured person requires.

Other provisions of s. 14 speak of professional services “rendered to an insured person”.

Each of the treatment plans in dispute here are medical treatment plans that would be captured under s. 14.³

The limitation periods at issue are contained in the Insurance Act and the Schedule. Section 281.1(1) of the Insurance Act requires that a Mediation or Arbitration be commenced within two years after an Insurer’s refusal to pay the benefit claimed. Where a Mediation is conducted, an insured person has 30 days to apply for Arbitration. An insured person has 90 days after the Report of Mediator to commence Arbitration. Reading the provisions of the legislative scheme as a whole, so long as an insured person applies for Mediation within two years of an Insurer’s refusal to pay the benefit claimed, the insured person can initiate a court action or Arbitration in respect of the dispute (s. 51 of the Old SABS and s. 56 of the SABS 2010⁴).

Decision

The following facts are not contested:

1. Romney Abel (“Abel”) died January 9, 2015, survived by his wife and son.

2. Abel received statutory accident benefits from State Farm prior to his death, but some medical and rehabilitation benefits were denied by State Farm.

3. Abel’s wife, Susan Abel, is a co-plaintiff in the tort litigation arising from the same accident that was instituted in the Superior Court of Ontario in 2010, and the action has been ordered to continue with Susan Abel as Litigation Administrator for the Applicant, as well as Litigation Guardian for their son.⁵

4. Prior to his death in January 2015, Abel had not commenced any Application for Mediation, Arbitration or court action for the statutory accident benefits that are the subject of the claims in this Arbitration.

5. An Application for Mediation was commenced June 2, 2015, but no Mediation was held because of scheduling difficulties. A failed Mediation was consented to and the issued report was dated January 7, 2016.⁶

6. The Application for Arbitration was commenced February 24, 2016 for claims for medical benefits and a special award, as well as interest and costs.

7. The treatment plans denied were the following:

a) OCF-18, dated January 17, 2013, for $2,968.60 for services by Dr. David Rawson (Nutan Joy) for a TMJ assessment, x-rays and orthotic devices⁷ (“OCF-18 Rawson #1);

b) OCF-18, dated August 1, 2014, for $1,037.98 for services by Dr. Lisa Lee (McDonald and Bryant) for psychotherapy, mental health testing and a progress report (“OCF-18 Lee”);

c) OCF-18, dated October 31, 2013, for $786.06 by Gloria Gilbert (Downtown Clinic) for craniosacral therapy (“OCF-18 Craniosacral Therapy”);

d) OCF-18, dated July 24, 2013, for $1,590.00 by Dr. David Rawson (Nutan Joy) for TMJ treatment (“OCF-18 Rawson #2”);

e) OCF-18, dated August 10, 2014, for $1,518.66 by Ron Jones (Downtown Clinic) for personal training sessions (“OCF-18 Personal Training #1”);

f) OCF-18, dated July 14, 2014, for $4,051.36 by Gloria Gilbert (Downtown Clinic) for physiotherapy and acupuncture (“OCF-18 Physio”); and

g) OCF-18, dated August 19, 2014, for $1,518.66 by Gloria Gilbert (Downtown Clinic) for personal training⁸ (“OCF-18 Personal Training #2”).

However, it was agreed that OCF-18 Rawson #2 is in fact an OCF-21, an invoice⁹ for $5,435.00, and that the services represented were included in the services proposed in OCF-18 Rawson #1, which was partially denied.

It was agreed that OCF-18 Personal Training #1 and OCF-18 Personal Training #2 are duplicates in terms of the services to be offered, and therefore there is only one claim for $1,518.66 for that service.

There is no balance owing for services provided with any of the treatment providers. The Applicant produced a letter from the Downtown Clinic, dated in June 2015,¹⁰ indicating a small balance owing to one of the providers, but State Farm’s letters sent in August 2015 and January 2016 indicated no balance owing to any of the providers.¹¹ Until this Preliminary Issue Hearing, State Farm understood that it had paid for all the services that it had approved and all that had been provided.

At oral argument, counsel for the Applicant revealed for the first time that Abel had incurred the services that were denied in OCF-18 Rawson #1, and that Abel had paid for the OCF-18 Rawson #2 invoice out of his own pocket. However, he has submitted no documentary proof to that effect and had not earlier disclosed this fact.

The services in the other treatment plans have not actually been provided to Abel. Unless the Applicant is successful in obtaining an Order approving one of the treatment plans, there can be no basis for a special award for unreasonably delaying or denying the benefits.¹² The particulars of that claim are that State Farm’s denial of the services, particularly psychological counseling, was heavy-handed and unreasonable.¹³

The Application for Mediation was not filed until June 2, 2015, five months after Abel’s death on January 9, 2015.¹⁴

State Farm had independent assessments conducted by a dentist, a psychologist and a physiotherapist to advise it with respect to the treatment plans in issue. The section 44 reports generated as a result of those assessments were relied on by State Farm in its denials and partial denials of the treatment plans.

Issue 1 - Should the Application for Arbitration be dismissed on the grounds that it is frivolous, vexatious and/or commenced in bad faith?

State Farm submits that the Application for Arbitration is frivolous and vexatious and an abuse of process because it lacks any potential for success. State Farm submits that Abel’s death means that the services cannot be given as designed and proposed in the treatment plans. Further, Abel’s death raises a real risk that the Applicant will be unable to discharge its onus to establish that the treatment plans are reasonable and necessary because Abel will not be able to testify. In this case, only OCF-18 Rawson #1 could possibly result in an Order approving payment for past services because it is alleged that Abel paid for the services himself prior to his death.

State Farm relies on the fact of Abel’s death as the end of any obligation for it to pay for ongoing treatment under the denied OCF-18s. It says it gave clear and unequivocal denial of the benefits, and no steps were apparently taken during Abel’s life to challenge the denials (i.e. to have the issues mediated and arbitrated as to whether or not the treatment plans were reasonable and necessary). The Applicant bears the burden of proving that the services are reasonable and necessary, and if there is no evidence regarding the merits of the claims, the claims should be dismissed.¹⁵ The best evidence of that would be the evidence of Abel, who is not alive to give it.

State Farm also relies on the limitation period under s. 281.1(1) of the Insurance Act with respect to OCF-18s Rawson #1 and #2 for TMJ therapy, over two years after April 25, 2013, the date of the denial of OCF-18 Rawson #1. State Farm takes the position that OCF-18 Rawson #2 is also statute-barred as it is, in essence, the same claim as the OCF-18 Rawson #1, and the invoice was not properly submitted in accordance with the Schedule.

State Farm relies on a series of cases dealing with the issues of what is a frivolous or vexatious application and what constitutes an abuse of process. Vexatious litigation includes situations where the conduct of a party is egregious, and also situations where the Arbitrator has no power to grant the relief sought.¹⁶ It also includes situations where no reasonable person can possibly expect to obtain the relief.¹⁷

To find that an Arbitration is frivolous, an Arbitrator must be satisfied that the application was groundless and had little prospect of success when it was filed. To come to that conclusion, the Arbitrator must assess the merit of the claims, and State Farm has referred me to cases where Arbitrators have done that.¹⁸

Arbitrators have found that a proceeding should be dismissed as an abuse of process where an Applicant has failed to attend a number of Insurer assessments as required under s. 44 of the Schedule (formerly s. 42)¹⁹ or where a limitation period barred the claim from proceeding.²⁰

State Farm cites a line of cases that address the situation of an Estate proceeding with claims, including DiGiovanni²¹ and K.M..²² In DiGiovanni, the Estate sought to continue with claims for caregiver benefits, despite the fact that the insured person had died. The Director’s Delegate held:

Clearly Mrs. DiGiovanni suffered an impairment in the accident - she died. The real issue is whether in any meaningful sense, Mrs. DiGiovanni can be said to be still impaired and entitled to ongoing benefits. Looked at in that way, the estate’s argument is absurd.

Most SABS-1996 benefits are payable to the insured person…The requirement that the insurer shall pay an insured person a benefit is repeated for the following benefits: ...medical [s. 14(1)]; rehabilitation [s. 15(1)]… It is not at all obvious that the insurer owes an ongoing duty to pay benefits after the insured person dies.

By way of contrast, death [s. 25] and funeral [s. 26] benefits are payable in respect of an insured person who dies as a result of an accident. They are not payable to the deceased. This is consistent with s. 279(3) which deems those claiming death and funeral benefits to be insured persons for the purposes of dispute resolution…

I can see no basis on which to treat caregiver benefits differently from income replacement, non-earner, medical, rehabilitation, or attendance care benefits. They terminate on the insured person’s death…

The Director’s Delegate carefully distinguishes those benefits that are payable to an insured person and those payable to others. With respect to dependent care benefits, the legislation clearly states that no payment is required after the insured person dies because those payments go to persons other than the insured person, and therefore specific wording to terminate it was required. The logical extension is that where benefits are payable to the insured person, the entitlement ends with the person’s death.

In K.M., a claim was brought for housekeeping and home maintenance benefits, and the Arbitrator refused to Order them because the Applicant could neither incur expenses for housekeeping and home maintenance nor have them incurred on her behalf. K.M. was four years old at the time of the accident, and was an insured person who received death benefits under the policy. The Insurer refused to pay benefits for expenses incurred in caring for K.M. required because her mother had been killed in the car accident. The Arbitrator held that death was not an impairment within the meaning of the Schedule, and it is a question of fact whether the death of a parent may give rise to an impairment for a minor dependant. The Arbitrator pointed out that only four sections of the Schedule (as it read at the time of the accident in 1996) did not state that an insured person must suffer an impairment for benefits to be payable: funeral benefits, death benefits, damage to clothing, etc., and cost of examinations.

The Arbitrator held:

Furthermore, a contextual analysis of the Schedule as a whole makes it clear that benefits are payable in order to reduce or eliminate an impairment…it would be inconsistent with both the plain language and the overall structure of the Schedule to award the type of care benefits claimed by the Applicant under any of the sections above, where the benefits do not reduce or eliminate an impairment sustained by her as a result of the accident…

To ignore the plain words of the statute by eliminating impairment as a precondition to receipt of benefits renders all of the above carefully created components of the statutory accident benefits scheme redundant. It also undermines the purpose of the Schedule, which is to provide insured persons with benefits promptly, at a reasonable cost, and in an administratively manageable fashion. Such an outcome could not have been intended by the drafters of the Schedule.²³

The Applicant says that Abel’s death does not end the issue of whether or not the denied treatment plans should be approved as reasonable and necessary. The Applicant says that it is not claiming ongoing benefits, but rather payment for past benefits incurred prior to Mr. Abel’s death. Its position, in essence, is that the obligation that the treatment be incurred by the insured person does not mean that the insured person must be alive to take the treatment after the Arbitration concludes. It relies on case law that has held that treatment plans can be deemed incurred if they are found by an Arbitrator to be reasonable and necessary as at the date of the denial.²⁴

The Applicant submits that it is not required to prove that the medical and rehabilitation benefits are reasonable and necessary to avoid having its Application for Arbitration dismissed because it would be absurd to require proof of the Applicant’s entire case prior to the actual Hearing on the merits. No case law was provided where an Arbitrator made such a finding in circumstances comparable to this case.

The Applicant submits that State Farm’s Motion must fail because it has the onus to prove that the application for benefits is frivolous, vexatious or an abuse of process; the Applicant does not have the onus to prove it is not. The Applicant submits that the material in support of the Motion is deficient because State Farm has only submitted its own assessments and a brief summary of them, and has not referred to the Applicant’s medical records and treatment records. Therefore, State Farm has not established that the treatment plans are not reasonable and necessary.

The Applicant distinguishes this case from those relied on by State Farm because in those cases the dismissals arose from a failure of the Applicant to attend the Pre-Hearing or Arbitration Hearing, or to follow a preliminary Order of the Arbitrator. The Applicant submits that the Summary Judgment provisions of the Rules of Civil Procedure have no applicability to Arbitrations. The Applicant submits that this is not even a Motion for a Preliminary Order under Rule 67 of the Code. The Applicant submits that this Motion to dismiss without a full Hearing is a new procedure created by State Farm.

These latter submissions of the Applicant concerning the process are patently unsupported and unsustainable. The Pre-Hearing Order specifically provided for a Preliminary Issue Hearing by way of written submissions including Affidavit evidence, followed by oral submissions.

In order to obtain an Arbitrator’s Order reversing the denial of a treatment plan for medical or rehabilitation treatment, an Applicant must establish that the treatment was reasonable and necessary (as of the date of the plan) and that it was incurred. The Applicant’s submissions are based on a line of cases for the proposition that the word “incurred” is to be interpreted broadly²⁵—that the Applicant need not have actually received the services proposed in order to be entitled to an expense. The Applicant submits that an insured person need only establish that the reasonable necessity of the services and the amount of the expenditure are determined with certainty before the end of a time limit. The logic behind this interpretation is to prevent an Insurer from receiving a windfall due to the insured person’s lack of resources to pay for denied treatment.

The Applicant submitted that, in this line of cases, Insurers sought to defeat claims for benefits because the services had not been incurred and to take advantage of the Applicants’ limited resources. But I note that this would have defeated the purpose of the legislation to protect consumers, because in each case the Applicant remained alive and able to take advantage of those services, if and when a positive Order was made by an Arbitrator.

In response to the cases relied on by State Farm with respect to Estates pursuing claims under the Schedule, the Applicant relies on the decision of the Director’s Delegate in Toronto Transit Commission and Marcus (Estate of).²⁶ In that case, the Applicant applied during his lifetime for attendant care benefits. He was incurring attendant care costs pursuant to a written contract at the time of his death. The Insurer disputed the quantum of the costs. An Arbitration was held respecting whether or not the attendant care benefits should be paid on the basis of the calculation of the benefit in the Form 1, or on the basis of the actual cost incurred. The accident occurred in November 2010 and the case therefore was to be determined under the SABS 2010. The Form 1 amount was $6,569.29 per month, and the amount actually paid to the nurse who provided the attendant care was $1,820.00 per month.

As the Director’s Delegate found in that case:

It is not argued in this appeal that Mr. Marcus did not receive the goods or services to which the attendant care expense relates, the first “incurred” requirement under clause 3(7)(e). It is not argued that Mr. Caldito did not provide the attendant care services in the course of the employment, occupation or profession in which he would ordinarily have been engaged, but for the accident…The Appellant concedes, at least implicitly, that through payment, promise of payment or otherwise by legal obligation, Mr. Marcus received the full-time attendant care recommended…in the Form 1.²⁷

The Director’s Delegate in Marcus set out at length the legislative history and case law on the interpretation of “incurred”, and the balancing of the interests of insureds and Insurers and the need to be mindful of windfalls that might be the result of interpretation of the statute either way. He grounded his decision in the jurisdiction provisions of s. 279(1) of the Insurance Act, which gives Arbitrators the jurisdiction to determine disputes in respect of any insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled. The obligations on Insurers are to pay the accident benefits to the insured person. In my view, Marcus stands for the proposition that where an insured person dies before the conclusion of the process commenced to resolve the dispute, the Estate is entitled to continue those claims.

But the underlying flaw to the Applicant’s argument is the futility of the process. Even if an Arbitrator finds the plans were reasonable and necessary and incurred (though not actually received), the Order that is issued is one approving the treatment plan. The approval requires that the Insurer pay invoices submitted by service providers after the services have been supplied. No funds go to the Applicant. In this case, the treatments cannot be given. The insured person cannot be restored by treatment to resume his normal activities of daily living or to be relieved of his pain due to his impairments.

I find that the principles in the cases relied on by State Farm with respect to whether or not this Arbitration should be dismissed as frivolous, vexatious or an abuse of process can and should be applied to the facts of this case.

The facts readily distinguish Marcus from this case, which is more akin to the fact situation in DiGiovanni.²⁸ While the Applicant states that it is not claiming payment for ongoing benefits, but rather for payment of past benefits incurred prior to Abel’s death, in my view, that is not the correct interpretation of the facts. The Applicant is requesting an Order approving the denied treatment plans. The invoices submitted by the service providers would then be paid, if in fact the services were reasonable and necessary and provided. That cannot happen as Abel is deceased. Therefore, any policy basis for protecting insureds by a broad interpretation of “incurred” is irrelevant to determining the issue of the consequences of the death of the insured person prior to the commencement of the process with respect to a dispute.

I recognize that Abel was impaired as a result of the accident. I also recognize that by only partially approving the OCF-18s in question, or alternatively denying them entirely, State Farm has not had to pay the benefits to which Abel might have been entitled if he had survived to instruct his counsel to pursue the benefits. It is not enough however to simply submit OCF-18s. I agree with the reasoning in K.M. and DiGiovanni that the benefits sought do not (and cannot) reduce or eliminate the impairments suffered by Abel as a result of the accident, and that his death terminates the claims for the benefits denied.

The Applicant argues that an Arbitrator could order the payment of the quantum of the treatment plans to the Estate. This argument confuses entitlement determined by an Arbitrator with what frequently occurs in a settlement, where, in return for a release, an Insurer agrees to pay a lump sum to an Applicant.

An Arbitrator’s jurisdiction is only to resolve the disputes as to entitlement and quantum within the requirements of the Schedule. Even if an Arbitrator approves a treatment plan as reasonable and necessary, the obligations on the Insurer to actually make a payment arise from the submission of the invoice for the treatment plan that was approved.

I find, therefore, that Abel’s death ends the dispute with respect to these treatment plans. The claims have no chance of success and are groundless, and therefore, the Application for Arbitration is frivolous and vexatious and an abuse of process.

There is no onus on State Farm now to show that the treatment plans are not reasonable and necessary, but rather to show that there is little likelihood of success.

It was agreed that two of the OCF-18s (for personal training) were duplicates and at least one of them should not proceed.

With respect to OCF-18 Craniosacral Therapy, State Farm agreed to pay $885.70 but rejected the balance of the claim of $1,671.76 on the basis that it represented:

administrative costs, overhead, and related costs, fees expenses charges or surcharges that have the result of increasing the effective hourly rates or the maximum fees payable for completing forms beyond what is permitted under the [Professional Services] Guidelines.²⁹

OCF-18 Craniosacral Therapy proposed services by a massage therapist (one of the types of providers specifically listed in the Appendix to the Guidelines).³⁰ The injuries to be treated were “problems related to lifestyle, injury of tendon at shoulder and upper arm level, Diplopia, Whiplash associated disorder [WAD2] with complaint of neck pain with musculoskeletal signs, disorder of visual pathways, unspecified, and disorders of vestibular function”. The goals were to “improve sleep hygiene, reduce headaches and jaw pain and increase energy level”. The functional goal was to “improve ability to participation in daily activities”. The bulk of the service cost was identified as “Therapy, multiple regions” for $1,200.00.³¹

The Applicant submitted orally that it was proceeding with the claim because the service provider was entitled to a higher level of payment than provided by the Guidelines because those services (craniosacral therapy) are not included or covered by the Guidelines. In essence, there appeared to be an admission that headings of service were used to disguise the effort to get higher rates for services, despite the clear wording of the Guidelines.

With respect to services not covered, the Guidelines specifically provide that “The amounts payable by an Insurer related to services not covered by the Guidelines are to be determined by the parties involved.”³² State Farm agreed to pay $885.70 for this therapy and denied the balance of the treatment plan.

In summary, the Applicant wishes to proceed with a claim for services which State Farm has paid for at the approved rate, provided by someone whose qualifications were as listed in the Guideline, but at a rate higher than approved by the Guidelines. In other words, the provider has been paid for the services but wishes to be paid more. I find that this claim is not properly made and is groundless in face of the clear wording of the Guidelines. The Applicant is attempting to do indirectly what it cannot do directly. The claim is therefore an abuse of process.

OCF-18 Lee was an August 1, 2014 treatment plan by Dr. Lisa Lee for psychotherapy, mental health testing and a progress report. Dr. Lee indicated that the injury and sequelae of the accident were pain and a depressive episode. She proposed 10 sessions of mental health therapy and one hour of psychological testing.

Abel was assessed by a psychologist, Dr. Peter Corbin, on behalf of State Farm in October 2014, to determine if OCF-18 Lee was reasonable and necessary. Dr. Lee had been meeting with Abel every four to six weeks. He had been assessed by Dr. Corbin in 2013. Dr. Lee’s report that apparently accompanied OCF-18 Lee was not included, but was quoted from Dr. Corbin’s report. Dr. Corbin’s report included his recommendation for five additional hours of therapy on top of the 46 hours Abel already had. He noted that the purpose of this treatment was, according to Dr. Lee, “mostly for relapse prevention”, but Dr. Corbin could find no data on which to base the prediction, because Abel had been meeting continuously with his psychotherapist for many years.³³ Dr. Corbin noted that it was likely that Abel had achieved, if not maximum medical improvement with respect to his psychological injuries, then very close to maximum medical improvements.³⁴ Dr. Corbin wrote:

Given that Mr. Abel appears to be relatively stable at this point it might be a good time to see how he fairs without psychotherapy, to see if, in fact, he can “stand on his own,” so to speak, without having to depend on the support of his psychologist, this being the goal, in any event, of any good psychotherapeutic relationship…³⁵

Dr. Corbin specifically indicated that if there was a significant change in psychological function for the worse, then the need to reinstate psychotherapy should be re-examined at that point.³⁶

Therefore, the claim in this Arbitration proceeding is for the unapproved portion of the total claim of $1,949.36. State Farm’s position is that it has established in evidence the grounds on which it denied part of the treatment. The Applicant chose not to provide any contrary evidence in response.

State Farm provided me with Dr. Corbin’s assessment, which prima facie supports the conclusion that the partial approval (and only the partial approval) was reasonable, and therefore the partial denial was also reasonable.

While the Applicant does not bear the onus to prove that the plans are reasonable and necessary at this stage, State Farm has raised issues of such significance that the Applicant should have responded meaningfully with information within its knowledge. It failed to do so.

The Application for Arbitration therefore is dismissed on the grounds that it is frivolous, vexatious and/or an abuse of process.

Issue 2 - Should the Application for Arbitration by dismissed as the statutory preconditions for commencing the Arbitration have not been met?

My finding on Issue 1 disposes of the matter, but I will also include my specific findings and reasoning in this regard. State Farm submits that OCF-18s Rawson #1 and #2 are statute-barred because they were denied more than two years prior to the Application for Arbitration.

The Applicant says that the limitation period does not apply because it expired at a time after the Applicant had died and when there was no representative. Counsel was unable to identify any case to support this proposition. I note that the last date of a treatment plan under any OCF-18 is August 19, 2014 (and that was the duplicate treatment plan for personal training). There was no explanation for the failure to pursue the denied accident benefits while Abel was alive, even though one of the denials had been outstanding since 2013. I note that the oldest from January 2013 was the one it is alleged he paid for personally. I find that the claims are statute-barred and cannot proceed.

I give little weight to the submission of counsel that Abel paid for the TMJ treatment that had been denied. Under the Code, productions of all relevant documents should have been made before now. In addition, the Applicant provided Affidavit evidence in this Preliminary Issue Hearing but, for some unknown reason, chose not to include whatever documentation it had to prove this expenditure. State Farm was unaware of any allegation that a payment had been made until the oral argument of this case, over two-and-a-half years after the Arbitration was commenced.

EXPENSES:

My determination of the preliminary issues results in the dismissal of the claims either as statute-barred or as frivolous, vexatious or an abuse of process. The Applicant and State Farm have both claimed costs against the other. 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 Code.

January 31, 2017

Lynda Tanaka Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 22 FSCO A16-001732

BETWEEN:

ESTATE OF ROMNEY ABEL 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 (“Insurance Act”), it is ordered that:

1. The Application for Arbitration is dismissed on the grounds that it is frivolous, vexatious and/or commenced in bad faith.

2. Even if I did not find as above, the claims for medical benefits for an OCF-18 dated January 17, 2013, for $2,968.60 by Dr. David Rawson of Nutan Joy, for a TMJ assessment, x-rays and orthotic devices (“OCF-18 Rawson #1), and for an OCF-18 dated July 24, 2013, for $1,590.00 by Dr. David Rawson of Nutan Joy for TMJ treatment (“OCF-18 Rawson #2”), are dismissed as being statute-barred.

3. 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.

January 31, 2017

Lynda Tanaka Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended. Also referred to as “Old SABS”.
2. 2Exhibit R, Emmett Affidavit, claimed in the amount of $6,813.60 and partially approved to $3,845.00.
3. 3I note here that some of the benefits claimed were classified as rehabilitation benefits and in error.
4. 4The Statutory Accident Benefits Schedule – Effective September 1, 2010, Ontario Regulation 34/10, as amended. Also referred to as “SABS 2010”.
5. 5Responding Motion Record, Affidavit of Thomas McKinlay (“McKinlay Affidavit”), sworn July 6, 2016, Exhibit B, Order entered February 12, 2015.
6. 6Paras. 8 to 13, Emmett Affidavit.
7. 7Exhibit R, Emmett Affidavit, claimed in the amount of $6,813.60 and partially approved to $3,845.00.
8. 8The OCF-18s listed were attached as Exhibits to the Emmett Affidavit, together with the OCF-9s and documents sent by State Farm in support of its denial.
9. 9OCF-21, Exhibit U, Emmett Affidavit.
10. 10Exhibit E, McKinlay Affidavit.
11. 11Exhibit I, Emmett Affidavit.
12. 12Section 282(10), Insurance Act.
13. 13Application for Arbitration, Exhibit B, Emmett Affidavit.
14. 14Para. 8, Emmett Affidavit.
15. 15Franks and Aviva Canada Inc. (FSCO A04-001639, July 6, 2005), at p. 4.
16. 16Firin and State Farm Mutual Automobile Insurance Company (FSCO A13-000293, March 16, 2015), at p. 4.
17. 17Luskin and Personal Insurance Company of Canada (FSCO A06-001216, October 1, 2007), at p. 8.
18. 18Firin and State Farm, op cit; Fedoseev and RBC General Insurance Company (FSCO A05-002435, December 6, 2006).
19. 19A.A. and Dominion of Canada General Insurance Company – 2 (FSCO A08-001205, November 27, 2009).
20. 20Ponnampalam and State Farm Mutual Automobile Insurance Company (FSCO A11-004759, July 25, 2012).
21. 21DiGiovanni and AXA Insurance (Canada) (FSCO Appeal P03-00034, December 1, 2004).
22. 22K.M. (Minor) and General Accident Assurance Co. of Canada (FSCO A98-001030, November 28, 2000).
23. 23Ibid., at pp. 9 and 10.
24. 24The Applicant also relies on s. 3(8) of the SABS 2010.
25. 25Monks v. ING Insurance Company, 2008 ONCA 269, at para. 49; McMichael and Belair Insurance Company Inc. (FSCO A02-001081, March 2, 2005), at pp. 66-67.
26. 26FSCO Appeal P14-00005, September 19, 2014.
27. 27At p. 14.
28. 28DiGiovanni and AXA Insurance (Canada) (FSCO Appeal P03-00034, December 1, 2004).
29. 29Exhibit T, Emmett Affidavit, at p. 3 of the Professional Services Guidelines No. 02/03.
30. 30Ibid., at p. 4 and OCF-18 Craniosacral Therapy, at p. 5.
31. 31Ibid., OCF-18 Craniosacral Therapy, at pp. 2- 4.
32. 32Ibid., at p. 2.
33. 33Exhibit S, Emmett Affidavit, OCF-9, at p. 9, Psychology Report of Dr. Peter Corbin, Registered Psychologist.
34. 34Ibid., at p. 8.
35. 35Ibid.
36. 36Ibid.