Coachman Insurance Company v. Suvisiny Sivananthan, 2018 ONFSCDRS 102

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2018 ONFSCDRS 102

Appeal P17-00087

OFFICE OF THE DIRECTOR OF ARBITRATIONS

COACHMAN INSURANCE COMPANY Appellant/Respondent

and

SUVISINY SIVANANTHAN Respondent/Appellant

BEFORE: Delegate Jeffrey Rogers

REPRESENTATIVES: Mr. Jono Schneider, solicitor for Ms. Sivananthan Mr. Michael Vrantsidis and Ms. Jennifer Beresford, solicitors for Coachman

HEARING DATE: April 19, 2018

APPEAL ORDER

Under section 283 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 Regulation 664, R.R.O. 1990, as amended, it is ordered that:

1. Coachman’s appeal is allowed in part.

2. Ms. Sivananthan’s appeal is moot.

3. The Arbitrator’s order is rescinded and replaced with the following:

1. Coachman shall pay Ms. Sivananthan an income replacement benefit (IRB) based upon a weekly base amount of $255.71, from December 4, 2013, until such time that Coachman gives Ms. Sivananthan the notice required by s. 36(4)(b) of the Schedule.

2. Coachman shall pay Ms. Sivananthan the cost of the following:

• $2,200 for services as set out in OCF-23 dated December 28, 2013

• $1,206.53 for services as set out in OCF-18 dated April 7, 2014

• $200 for a disability certificate dated May 16, 2014

• $3,089.00 for services as set out in OCF-18 dated November 1, 2014

• $1,234.58 for services as set out in OCF-18 dated February 9, 2015.

3. Coachman is precluded from taking the position that Ms. Sivananthan sustained impairments to which the Minor Injury Guideline applies.

4. Coachman shall pay Ms. Sivananthan interest for the overdue payment of IRBs and the benefits referred to in paragraph 2 above.

5. Coachman shall pay Ms. Sivananthan her expenses of the arbitration.

6. Coachman shall pay Ms. Sivananthan a special award with regard to the IRBs and the other benefits ordered to be paid in paragraph 2 above.

7. If the parties cannot agree on the quantum of expenses of the arbitration an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

4. The issues of whether Ms. Sivananthan meets the disability tests for IRBs and for non-earner benefits are remitted for re-hearing.

5. The issue of the amount of the IRB payable, after deducting post-accident income, is remitted for re-hearing.

6. If the parties cannot agree on the amount of interest payable, that issue is remitted for re-hearing.

7. The issue of the amount of the special award is remitted for re-hearing.

8. The issues of entitlement to the following benefits, including a special award, are remitted for re-hearing:

• Payment for an In-Home Assessment, dated March 26, 2014

• Payment of $1,245.64 for services as set out in OCF-18 dated February 24, 2014

• Payment of $3,396.10 for services as set out in OCF-18 dated May 16, 2014

9. Neither party is entitled to expenses of Ms. Sivananthan’s appeal.

10. If the parties are unable to agree about expenses of Coachman’s appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

May 8, 2018

Jeffrey Rogers Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Both parties appeal the Arbitrator’s order of November 17, 2017. The Arbitrator awarded Ms. Sivananthan all of the accident benefits she claimed, plus interest, expenses and a special award. After issuing the order, the Arbitrator amended it to allow Coachman to deduct Ms. Sivananthan’s post-accident income from her income replacement benefits (IRBs).

Coachman submits that the Arbitrator erred by ordering payment of benefits, based only upon technical breaches of the Schedule¹. With regard to IRBs, Coachman submits that the Arbitrator erred in fixing the amount of Ms. Sivananthan’s weekly base entitlement and in failing to calculate the net amount to be paid, after deducting post-accident income. With regard to the special award, Coachman submits that the Arbitrator erred by failing to fix the award with precision.

In her appeal, Ms. Sivananthan submits that the Arbitrator erred by amending his order, without getting any submissions from her on whether the order should be amended.

For the reasons that follow, I conclude that the Arbitrator correctly ordered payment of medical benefits and IRBs, where the order was based upon Coachman’s complete failure to respond to Ms. Sivananthan’s claims. The order cannot be supported, where payment is based upon what the Arbitrator considered to be an improper response. The Arbitrator also erred in failing to precisely determine the amount of IRBs payable, after deducting post-accident income. Therefore, the issue of the amount of IRBs payable must be re-heard. As a result the question of whether the Arbitrator erred in amending his order to allow deduction of post-accident income is moot. The Arbitrator also erred in ordering Coachman to pay Non-Earner Benefits (NEBs) without knowing that the conditions for entitlement to payment will be met at the time when payments will become due.

The Arbitrator correctly concluded that Coachman unreasonably delayed or denied payment of the benefits that survive this appeal, therefore his order for payment of a special award stands. However, the Arbitrator erred in failing to fix the amount of the award with precision. Therefore, the question of the amount of the special award is remitted for re-hearing.

II. BACKGROUND

Ms. Sivananthan, was injured in an automobile accidents on November 27, 2013 and, shortly after that, she was injured in another automobile accident on April 16, 2014. She applied for and received statutory accident benefits from Coachman. Coachman took the position that Ms. Sivananthan’s injuries in each accident fell within the Minor Injury Guideline (MIG) and did not pay for certain medical benefits she claimed. Coachman also did not pay Ms. Sivananthan IRBs and/or NEBs. Ms. Sivananthan applied for arbitration after mediation did not resolve the dispute.

The issues that came before the Arbitrator were:

• Whether Ms. Sivananthan’s injuries fell within the MIG

• Whether she was entitled to IRBs of $400 a week, or some lesser amount, as a result of her impairments from the 1^st accident, from one week after the accident, and ongoing

• Whether she was entitled to NEBs as a result of her impairments from the 2^nd accident, from 26 weeks post-accident and ongoing

• Whether she was entitled to payment for certain treatment

• Whether she was entitled to payment for an In-Home Assessment and preparation of a Disability Certificate, and

• Whether she was entitled to a special award.

Coachman called no witnesses at the arbitration hearing. Ms. Sivananthan testified on her own behalf and she called one medical expert.

The Arbitrator found that Coachman committed several breaches of its obligations under the Schedule, justifying a special award. He ordered Coachman to pay the highest possible special award, in an undetermined amount. He ruled that Coachman is precluded from taking the position that Ms. Sivananthan’s injuries fall within the MIG. He fixed the quantum of IRBs at $255.71 per week and he ordered Coachman to pay IRBs, from one week after the 1^st accident and ongoing. The Arbitrator also ordered payment of ongoing NEBs, with the caveat that Ms. Sivananthan cannot collect the NEBs as long as she continued to receive the IRBs. The Arbitrator also ordered Coachman to pay for all of the claimed treatment, for the In-Home Assessment and for the Disability Certificate. He reasoned that Coachman is liable to pay Ms. Sivananthan her “full expenses” of the arbitration. He ordered payment of expenses, in an amount to be determined.

After initially issuing the order without deductions for Ms. Sivananthan’s post-accident income, the Arbitrator amended it to allow Coachman to deduct that income, but he did not fix the net amount payable.

Except for the In-Home Assessment, which the Arbitrator found to be “useful” and therefore reasonable and necessary, the Arbitrator made no explicit finding that Ms. Sivananthan met the relevant entitlement tests. He did not consider the effect of the Court of Appeal decision in Stranges v. Allstate Insurance Company of Canada². There, the Court ruled that the insured person still had to prove entitlement to the claimed IRBs, although the insurer had breached the Schedule by giving an invalid denial.

On January 8, 2018, I granted Coachman’s request for a stay of the Arbitrator’s order. My order was based upon the apparent strength of the appeal, because the Arbitrator did not consider the effect of Stranges in making his rulings. As will be seen in my analysis, the result turns upon considering Stranges, and the particular language of the breached sections of the Schedule.

III. ANALYSIS

Ms. Sivananthan submits that the Arbitrator’s failure to consider Stranges does not matter, because he also ruled that she met the relevant entitlement tests. I will address that first, and then the remaining issues in the order of the conclusions listed below. I conclude that the Arbitrator based all awards upon technical breaches, with no analysis of the entitlement tests, except with regard to the In-Home Assessment. I conclude that the Arbitrator’s analysis of the reasonableness and necessity of this assessment is flawed.

I conclude that despite failing to consider Stranges, the Arbitrator correctly ruled that the effect of Coachman’s failure to respond to Ms. Sivananthan’s claims for IRBs and NEBs, is that it is required to pay IRBs. However, the Arbitrator erred in failing to precisely fix the amount of IRBs payable, when the issue was a live one before him. The Arbitrator also erred in ordering that Coachman must pay NEBs when it stops paying IRBs.

I conclude that, despite failing to consider Stranges, the Arbitrator correctly ruled that the effect of Coachman’s complete failure to respond to submitted treatment plans is that it is required to pay for the services provided under the relevant treatment plans, and Coachman is precluded from taking the position that Ms. Sivananthan is subject to the MIG.

The Arbitrator found that Coachman did not pay $2,200 claimed for treatment under the MIG regarding the 1^st accident, and did not pay $200 for preparation of a disability certificate regarding the 2^nd accident. I conclude that, despite failing to consider Stranges, the particular language of the Schedule supports the Arbitrator’s conclusion that Coachman is required to pay these amounts.

The Arbitrator found that Coachman failed to respond to all treatment plans, except for two of them. The Arbitrator ruled that Coachman must pay for a treatment plan in the amount of $1,245.64 because Coachman responded by scheduling an insurer examination to assess the reasonableness of the proposed treatment, when it had no right to do so. I conclude that the Arbitrator erred in this finding and therefor his order cannot be supported.

The Arbitrator found that Coachman responded to a treatment plan in the amount of $3,396.10, but must nevertheless pay, simply because it failed to schedule another insurer examination, after Ms. Sivananthan did not attend the first one scheduled. I conclude that the Arbitrator erred in ruling that Coachman must pay for this plan.

I conclude that the Arbitrator correctly ruled that Coachman unreasonably withheld or delayed payment of the benefits that survive the appeal, but the Arbitrator erred by fixing the award as a percentage, without knowing how much he awarded. Therefore, the issue of the amount of the special award must be remitted for re-hearing.

I conclude that the Arbitrator’s award of expenses, apparently based upon Ms. Sivananthan’s success at the arbitration, should not be disturbed, because she remains largely successful following the appeal.

As a result of my ruling regarding post-accident income in Coachman’s appeal, Ms. Sivananthan’s appeal is moot. In the circumstances, this result means that neither party was successful, so neither party is entitled to expenses of that appeal.

The Arbitrator did not consider entitlement tests

I reject Ms. Sivananthan’s submission that the Arbitrator ruled that she met the relevant entitlement and he did not base entitlement on Coachman’s breaches alone. The Arbitrator himself stated otherwise. As noted above, there is one exception which I will address later. But here is what the Arbitrator said about medical benefits:

I have found as a fact that the Insurer failed entirely to comply with the notice requirements set out in subsections 38(8) and 38(9). The consequences of this failure are clearly and unequivocally set out in subsection 38(11) and include two specific results which are completely on point with what I must decide pertaining to all of the treatment plans herein. Firstly, the Insurer is prohibited from taking the position that the person’s impairments fall within the MIG. Secondly, the Insurer is required to “pay for all goods, services, assessments and examinations described in the treatment and assessment plan that relate to the period starting on the 11th business day after the day the insurer received the application and ending on the day the insurer gives a notice described in subsection (8).”³

Here is the reason the Arbitrator gave for awarding IRBs:

I find that she did submit a completed OCF-3 Disability Certificate which medically confirmed her entitlement to IRBs and that the Insurer properly received it. I also find that Coachman did not comply with section 36(4) of the Schedule because it did not (a) pay the specified benefit; (b) give the applicant a notice explaining the medical and any other reasons why the insurer does not believe the applicant is entitled to the specified benefit and, if the insurer requires an examination under section 44 relating to the specified benefit, advising the applicant of the requirement for an examination; or, (c) send a request to the applicant under subsection 33(1) or (2).

The consequence of the procedural errors set out in the above paragraph are clearly and unequivocally set out in section 36(6) as follows: “If the insurer fails to comply with subsection (4) or (5) within the applicable time limit, the insurer shall pay the specified benefit for the period starting on the day the insurer received the application and completed disability certificate and ending, if the insurer subsequently gives a notice described in subsection (4)(b), on the day the insurer gives the notice.” I find that no such notice has ever been given to Ms. Sivananthan either directly or through her counsel. Accordingly, there is nothing further required of me to determine that Ms. Sivananthan has been eligible to receive an Income Replacement Benefit in the amount of $255.71 per week from December 4, 2013 to present and ongoing⁴.

The same technical breach was the reason the Arbitrator gave for awarding NEBs:

On the other hand, section 36(4) of the Schedule was again not complied with by the Insurer. I searched through the documents provided in the Insurer’s Arbitration Brief and could not find any documentation pertaining to the notice requirement set out in section 36(4) and I have to conclude that no such notice was ever issued with regard to this second date of loss. This created an ongoing regulatory obligation for Coachman to pay this benefit commencing October 15, 2014⁵.

While there might have been evidence before the Arbitrator to support the conclusions Ms. Sivananthan proposes, the Arbitrator engaged in no analysis of it. He was not required to accept the expert evidence Ms. Sivananthan presented, just because Coachman provided no rebuttal. The Arbitrator’s only reference to the evidence is as follows, where he found that Ms. Sivananthan’s injuries from the accidents materially contributed to her pain symptoms and severe insomnia:

Remarkably, though, the Insurer chose to call no medical experts at the hearing and the medical evidence submitted by the Applicant through her medical expert, Dr. S. W. Joeseph Wong, a physiatrist and chronic pain specialist, went uncontroverted. He stated quite unequivocally that the pain symptoms and severe insomnia Ms. Sivananthan experiences began with the first accident we are dealing with and were exacerbated by the second, which is sufficient for me to find the test of “material contribution” to be satisfied⁶.

Further, the Arbitrator purported to apply the “material contribution” test for causation. That was an error. Three appeal decisions have now confirmed that the correct causation test is the “but for” test⁷. However, the Arbitrator’s choice of the wrong test hardly matters in view of the other omissions relevant to causation. The Arbitrator did not consider the impact of the injuries Ms. Sivananthan sustained in two subsequent automobile accidents and a subsequent workplace accident⁸. The Arbitrator also made no assessment of how Ms. Sivananthan’s pain and insomnia related to her entitlement to the benefits she claimed.

To be excluded from the MIG, Ms. Sivananthan had to prove that she sustained accident-related impairment that was not “predominantly a minor injury”, or that a pre-existing condition preventing her from achieving maximal recovery if subject to the $3,500 limit. The Arbitrator made no ruling on these matters in finding that Ms. Sivananthan was excluded from the MIG.

To be entitled to the claimed medical benefits Ms. Sivananthan had to prove that the proposed treatment was reasonable and necessary. The Arbitrator did not rule on why any of the proposed treatment was reasonable and necessary.

To be entitled to IRBs for the first 104 weeks, Ms. Sivananthan had to prove that her accident-related impairments prevented her from engaging in the essential tasks of her pre-accident employment. After that, she had to prove that her impairments prevented her from engaging in any employment for which she was reasonably suited by training, education and experience. The Arbitrator made no ruling on any of these matters. We do not know what were the essential tasks of Ms. Sivananthan’s pre-accident employment, what was her training, education or experience, and what activities her accident-related impairments precluded.

To be entitled to the claimed NEBs Ms. Sivananthan had to prove that the accident caused her to suffer a complete inability to carry on a normal life. The Arbitrator made no ruling on this issue. As I noted above, with a minor exception, the only basis for the Arbitrator’s awards was Coachman’s breaches of the Schedule.

I now turn to one instance where the Arbitrator purported to address the entitlement test.

The In-Home Assessment

The Arbitrator’s order for Coachman to pay Ms. Sivananthan the cost of this assessment does not state how much is to be paid. It is therefore unenforceable. It states:

Ms. Sivananthan is entitled to payment for the cost of an Occupational Therapy Assessment, including a Form 1 – Assessment of Attendant Care Needs, dated March 26, 2014 provided by Allied-Med Trauma Evaluations.

The actual cost of this assessment does not appear anywhere in the decision. Coachman’s appeal on this issue might well be moot. Ms. Sivananthan has not appealed on this issue. From the material I received, it appears that the amount charged is $2,401.25. Section 25(5)(a) of the Schedule limits the Arbitrator’s jurisdiction to awarding $2,000. I will nevertheless deal with Coachman’s appeal.

Coachman sent the treatment plan that requested this assessment for a paper review and then denied payment on the grounds that the proposal was to assess entitlement to attendant care benefits which were not available because Ms. Sivananthan was subject to the MIG.

The Arbitrator criticized this decision. He noted that “the assessment was described in the OCF-18 as dealing with issues other than just attendant care and, when completed at the Applicant’s expense, contained significant findings pertaining to Ms. Sivananthan’s activities of daily living and recommendations concerning assistive devices.⁹” The Arbitrator was apparently unaware that s. 25(2) precludes entitlement to any In-Home Assessment for an insured person who has sustained a “minor injury”. So Coachman’s denial turned upon where the assessment was to be conducted, and not upon what was being assessed. However, Coachman’s subsequent conduct means that it cannot maintain its position that Ms. Sivananthan sustained a “minor injury”. That brings into play the Arbitrator’s other findings regarding the assessment.

He concluded as follows:

I find the paper review to have been defective and accept the validity of the assessment as provided by the Applicant at her own expense. I consider it appropriate, therefore, to require Coachman to make restititution (sic) to Ms. Sivananthan for this specific assessment plan, as it certainly can be seen to be useful and hence I deem it to have been reasonable and necessary¹⁰.

The Arbitrator determined reasonableness with no reference to what the Schedule deems to be reasonable. I have already noted that the cost exceeds the maximum that could be awarded. So, the Arbitrator must not have considered whether the cost was reasonable. The Arbitrator justified the award because the assessment dealt with things beyond attendant care. But, except for assessments of attendant care needs, s. 25.3 only requires payment of reasonable fees for assessment in three circumstances:

….if any one or more of the goods, services, assessments or examinations described in the treatment and assessment plan have been:

i. approved by the insurer,

ii. deemed by this Regulation to be payable by the insurer, or

iii. determined to be payable by the insurer on the resolution of a dispute described in subsection 280 (1) of the Act.

The Arbitrator did not expand on why he thought the assessment was “useful”. There is nothing in the record to show that the assessment was useful for assisting either Ms. Sivananthan or Coachman in determining entitlement to any claimed or potentially claimed benefits.

I reject Ms. Sivananthan’s submission that the assessment is reasonable and necessary because it relates to potential treatment. The Arbitrator did not make that finding and there is no reference to treatment in the assessment. There is no real explanation of the basis for the Arbitrator’s award. The order in this regard is therefore rescinded and the question of Ms. Sivananthan’s entitlement to payment for this assessment is remitted for re-hearing. I now turn to the Arbitrator’s awards which were based upon Coachman’s breaches.

Do breaches support deemed entitlement?

All of the Arbitrator’s other awards, including his conclusion regarding a special award, are based upon Coachman’s breaches of various provisions of the Schedule. The Arbitrator saw no difference between the various breaches. He deemed benefits payable wherever he found a breach. As noted above, the Arbitrator did not consider the effect of Stranges, and the decisions that followed its principle. The breaches fall into three categories:

• Complete failure to respond to treatment plans and claims for IRBs and NEBs.

• Improper response to MIG claims, and

• Improper response to treatment plans

I will address them in that order.

(a) Complete failure to respond to treatment plans and claims for IRBs and NEBs.

The Arbitrator’s awards of most treatment plans, and of IRBs and NEBs was based upon Coachman’s complete failure to respond to the claims. Stranges establishes the principle that insured persons are not entitled to accident benefits just because insurers breach their obligations in responding to claims. In that case, the insurer gave an invalid denial of IRBs that were being paid at the time. The Court of Appeal rejected the argument that the consequence of the invalid denial was that the insured person was entitled to payment of IRBs until given a valid denial. The Court stated:

The inadequacy of the refusal notice did not entitle the respondent to payment of benefits in perpetuity until proper notice was given or a proper DAC assessment was carried out. The respondent was still required to prove that she was entitled to the continued payment of IRBs because of her continued substantial inability to perform the essential tasks of her employment. Moreover, in this case no question of an expired limitation period arises¹¹.

The Stranges principle was applied in several Commission appeal decisions, without limiting it to its facts¹². I adopted that approach in Agyapong and Jevco Insurance Company¹³. I ruled that Mr. Agyapong was not entitled to the NEBs and housekeeping and home maintenance benefits he claimed, just because the insurer failed to respond to his claims. Mr. Agyapong sought judicial review of my decision, arguing that Stranges should be limited to its facts. The application was dismissed (Agyapong v. Jevco Insurance Company et al, 2018 ONSC 878). The Court stated:

The Applicant submits that, once he complied with his obligations under s. 35(2) of the SABS by submitting an application and an OCF-3 which described injuries that on their face entitled him to NEB or HH payments, his entitlement to such benefits was presumed or deemed until Jevco demonstrated otherwise, which Jevco failed to do until March 30, 2011 in respect of the NEB claim. In other words, the insurer must “pay first, challenge later”….

I do not agree and find the Arbitrator’s finding on this issue to be reasonable for the following reasons.

First, s. 35(3) is silent on the consequences of an insurer’s failure to comply with the provisions therein. There is nothing in the plain meaning of that provision that compels the result proposed by the Applicant. Second, there is nothing in Stranges that limits the operation of the principle therein in the manner proposed by the Applicant. In my view, the principle in Stranges is equally applicable to the present circumstances¹⁴.

Stranges has been distinguished in one Commission appeal decision. In Green and Belair Insurance Company Inc.¹⁵, Delegate Feldman followed the established “deemed approval” approach to insurers’ failure to respond to submitted treatment plans and to applications for assessments or examinations. Delegate Feldman distinguished Stranges and he ruled that “For consumer protection, subsection 38.2(9) of the Schedule must be given its plain meaning.¹⁶”

That subsection of the relevant Schedule (Old SABS)¹⁷reads as follows:

If the insurer does not refuse the application under subsection (4) but fails to give the notice as required under subsection (6), the insurer shall pay for all assessments and examinations to which the application relates.

I noted Delegate Feldman’s reference to “plain meaning” in my decision in Agyapong. In its decision in Agyapong, the Divisional Court did not specifically mention Green, but it picked up the same language. The essence of the Court’s decision is that: “There is nothing in the plain meaning of that provision that compels the result proposed by the Applicant.”

In my view, Agyapong preserves the approach to treatment that Delegate Feldman took in Green. Further, because of subsequent changes to the Schedule, Agyapong does not rule out the Arbitrator’s conclusions in this case regarding NEBs and IRBs. That is because there is a determinative difference between the Old SABS that applied in Agyapong and the one that applies here (New SABS).

The insurer’s obligation to respond to claims for IRBs and NEBs was set out in s. 35(3) of the Old SABS. It is found in s. 36(4) of the New SABS. Those sections are almost identical.

35(3) Within 10 business days after the insurer receives the application and completed disability certificate, the insurer shall,

(a) pay the specified benefit;

(b) send a request to the insured person under subsection 33 (1) or (1.1); or

(c) notify the insured person that the insurer requires the insured person to be examined under section 4

36(4) Within 10 business days after the insurer receives the application and completed disability certificate, the insurer shall,

(a) pay the specified benefit;

(b) give the applicant a notice explaining the medical and any other reasons why the insurer does not believe the applicant is entitled to the specified benefit and, if the insurer requires an examination under section 44 relating to the specified benefit, advising the applicant of the requirement for an examination; or

(c) send a request to the applicant under subsection 33 (1) or (2).

However, s. 36(6) of the New SABS now contains a specific consequence for an insurer’s failure to respond. As you can see below, s. 36(6) uses language similar s. 38.2(9) of the Old SABS, the “deemed approved” provision which was applied in Green:

s. 38.2(9)

If the insurer does not refuse the application under subsection (4) but fails to give the notice as required under subsection (6), the insurer shall pay for all assessments and examinations to which the application relates.

s. 36(6)

If the insurer fails to comply with subsection (4) or (5) within the applicable time limit, the insurer shall pay the specified benefit for the period starting on the day the insurer received the application and completed disability certificate and ending, if the insurer subsequently gives a notice described in subsection (4) (b), on the day the insurer gives the notice

There was no provision like s. 36(6) in the Old SABS. That section now imposes the consequence of payment where an insurer fails to respond to an application for specified benefits. IRBs and NEBs are specified benefits, as defined in s. 36(1). The plain meaning of s. 36(6) is that an insurer must pay IRBs and NEBs where it fails to respond to an application, and it must continue to do so until it responds. I reject Coachman’s submission that s. 36(6) should be interpreted as simply setting a time limit for responding. That approach deprives s. 36(6) of meaning because s. 36(4) already establishes the time limit.

I also reject Coachman’s submission that imposing the consequence of payment is inconsistent with the decision in Green. One of the reasons Delegate Feldman gave for distinguishing Stranges was that the facts in Green could not lead to “an insured person receiving a potentially limitless windfall as a result of some technical breach by an insurer¹⁸”. I agree that the consequence of Coachman’s breach is more significant that in Green, but s. 36(6) must nevertheless be given its plain meaning. Further, there is no “limitless windfall”. Coachman could limit its exposure at any time by simply curing its breach. It has apparently chosen not to do so.

I conclude that, despite his failure to consider Stranges, the Arbitrator correctly ruled that the effect of Coachman’s failure to respond to Ms. Sivananthan’s claims for IRBs and NEBs is that it is required to pay those benefits.

Two other provisions affect the Arbitrator’s order for payment of IRBs and NEBs. The Arbitrator ordered Coachman to pay ongoing IRBs, and he ruled that Ms. Sivananthan is also entitled to receive NEBs but she cannot collect NEBs while she continues to receive IRBs. The Arbitrator based this conclusion on s. 12(2) of the Schedule. That section requires deduction of “other income replacement assistance” from NEB entitlement. It sets the entitlement to NEBs at “$185 for each week …less the total of all other income replacement assistance, for the same week.” The Arbitrator thought that “other income replacement assistance” included the IRBs he ordered. He reasoned that no NEBs could be payable because the IRB payment would reduce the NEB to zero. That was incorrect.

“Other income replacement assistance” is defined in s. 4(a) and 4(b) of the Schedule. The definition only requires deduction of “any gross weekly payment for loss of income that is received by or available to the person as a result of the accident.” The definition does not include IRBs payable as a result of another accident:

“other income replacement assistance” means, in respect of an insured person who sustains an impairment as a result of an accident,

(a) the amount of any gross weekly payment for loss of income that is received by or available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan, other than,

(i) a benefit under the Employment Insurance Act (Canada),

(ii) a payment under a sick leave plan that is available to the person but is not being received, and

(iii) a payment under a workers’ compensation law or plan that is not being received by the person because the person has elected under the workers’ compensation law or plan to bring an action and is not entitled to the payment, and

(b) the amount of any gross weekly payment for loss of income, other than a benefit or payment described in subclauses (a) (i) to (iii) that may be available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan but is not being received by the person and for which the person has not made an application.

The Arbitrator could have ordered payment of both IRBs and NEBs, because the claims arose from different accidents. Even if IRBs were deductible, the Arbitrator did not take into account section 12(3), which increases the weekly NEBs entitlement to $320, where more than 104 weeks have elapsed since the onset of the disability. Because of this increase, Ms. Sivananthan’s NEBs exceeded her weekly entitlement to IRBs on the date of the Arbitrator’s order. However, Ms. Sivananthan has not appealed this aspect of the Arbitrator’s order, so his order stands regarding no payment of NEBs.

The result is that Ms. Sivananthan’s entitlement to ongoing IRBs and NEBs is governed by s. 36(6) and not by s. 12(2). Section 36(6) requires payment where the insurer fails to respond, but the payment only continues until the insurer responds. There is no time limit on compliance. Therefore, Ms. Sivananthan is only entitled to payment until “the insurer subsequently gives a notice described in subsection (4)(b)”.

With the exceptions I have noted, the Arbitrator found that “Coachman failed entirely to respond to Ms. Sivananthan directly or through her counsel with regard to all of the OCF-18s pertaining to treatment…¹⁹” This ruling brings the Arbitrator’s rulings regarding treatment squarely within the “deemed approved” approach applied in Green. The relevant provision in the New SABS dictates the same result. Subsection 38(11) states as follows:

If the insurer fails to give a notice in accordance with subsection (8) in connection with a treatment and assessment plan, the following rules apply:

1. The insurer is prohibited from taking the position that the insured person has an impairment to which the Minor Injury Guideline applies.

2. The insurer shall pay for all goods, services, assessments and examinations described in the treatment and assessment plan that relate to the period starting on the 11th business day after the day the insurer received the application and ending on the day the insurer gives a notice described in subsection (8).

The result of removal from the MIG and payment for the incurred treatment, is the consequence imposed by the plain meaning or subsection 38(11). Therefore, although the Arbitrator did not consider Stranges, he correctly ruled that Ms. Sivananthan is entitled to payment of the relevant OCF-18s, and that she did not sustain impairments to which the MIG applies.

(b) Improper response to MIG claims

The Arbitrator awarded $2,200 for treatment under the MIG and $200 for preparation of a disability certificate. These claims are submitted under s. 40 of the Schedule. Section 40(4) states:

If the person also submits a completed and signed application under section 32 and the insurer accepts the claim for benefits, the insurer shall, within 30 days of receipt, pay every invoice for goods and services described in section 15 or 16 that are provided in accordance with the Minor Injury Guideline.

That section required Coachman to pay for the proposed services, upon being invoiced for them. The Arbitrator found that these expenses were incurred and unpaid. There is no reason to disturb the Arbitrator’s ruling that Coachman must pay.

(c) Improper response to treatment plans

The Gibson Wellness Centre (Gibson) provided treatment to Ms. Sivananthan with regard to both accidents. The initial opinion it provided was that she was subject to the MIG with regard to each accident. Claims for treatment under the MIG are submitted by way of a treatment confirmation form (OCF-23) pursuant to s. 40 of the Schedule. Gibson submitted an OCF-23 regarding the 1^st accident, claiming treatment in the amount of $2,200. Then it submitted a treatment plan (OCF-18) recommending further treatment in the amount of $1,245.64. Coachman did not pay for this treatment. Instead, it scheduled an insurer examination to assess its reasonableness.

The Arbitrator ruled that Coachman had no right to schedule this examination since: “These two treatment plans combine to total $3,445.64, which is just below the MIG Guideline requirement for automatic medical treatment in the amount of $3,500.00 in cases of minor injury.”²⁰ However, the Arbitrator misunderstood the process. Coachman was required to pay the $2,200 upon being invoiced for the services provided under the OCF-23, but it had the right to assess the reasonableness of the services proposed under the OCF-18. The Arbitrator was correct in noting that the total cost of treatment for minor injuries is limited to $3,500. But the “automatic” availability under the MIG is $2,200. Gibson followed the required procedure in submitting the claim beyond $2,200 by way of an OCF-18, and Coachman had the right to assess the reasonableness of these services by scheduling an insurer examination.

Section 18(1) of the Schedule illustrates this point. It states:

The sum of the medical and rehabilitation benefits payable in respect of an insured person who sustains an impairment that is predominantly a minor injury shall not exceed $3,500…, less the sum of all amounts paid in respect of the insured person in accordance with the Minor Injury Guideline.²¹

Section 18(1) sets a limit of $3,500 for medical and rehabilitation benefits in respect of an insured person who sustains an impairment that is predominantly a minor injury. But this section also makes it clear that there is treatment available within the $3,500 minor injury limit, after completing treatment under the MIG.

I reject Ms. Sivananthan’s submission that the Arbitrator’s ruling is correct because Coachman still had not paid the $2,200, when it requested the assessment regarding the OCF-18. That fact could support an argument that Ms. Sivananthan has a reasonable excuse for not attending the examination. There is nothing in the Schedule that requires an insurer to pay benefits in those circumstances.

Since Coachman did not breach the Schedule in scheduling the examination, and that was the only basis for the Arbitrator’s order for payment, the Arbitrator’s order must be rescinded and the question of Ms. Sivananthan’s entitlement to payment for this treatment must be remitted for re-hearing.

Gibson also submitted an OCF-18 in the amount of $3,089.00, dated November 1, 2014, recommending treatment regarding the 2^nd accident. The Arbitrator found that Coachman properly responded to this plan by giving Ms. Sivananthan a notice requiring her to attend an examination. About two days before the scheduled date, counsel for Ms. Sivananthan informed Coachman that she was ill with the flu. She was therefore unable to attend and a re-scheduled date was requested.

Coachman told Ms. Sivananthan that it would accommodate her request upon receiving an explanation of how a person knows that they will be sick with the stomach flu, two days prior to a scheduled assessment. The Arbitrator found Coachman’s response to be unreasonable. The Arbitrator found that “the only appropriate response should have been for the adjuster to reschedule the assessment.” He ruled that “The Insurer clearly breached the Schedule in this instance.” He gave no other reason for ordering payment of this treatment plan.

There is no reference in the decision to any specific provision in the Schedule that Coachman breached. One could speculate that the Arbitrator concluded that Coachman breached s. 44(9)(2.i) by failing “to make reasonable efforts to schedule the examination for a day, time and location that are convenient to the insured person”. More importantly, there is no reference to any provision in the Schedule that mandates payment in the event of the impugned conduct. As I explained in my analysis of Stranges and the cases that follow its principle, an insurer’s breach of its obligations under the Schedule does not automatically result in payment of the benefits at issue. Payment is required only where the particular language of the Schedule dictates that result. Therefore, the question of Ms. Sivananthan’s entitlement to payment for this treatment plan must also be remitted for re-hearing.

Quantum of IRBs

Quantum of IRBs was a live issue in the arbitration hearing. As the Arbitrator described the issue, Ms. Sivananthan claimed $400 per week, or some lesser amount. The Arbitrator somehow concluded that all he was required to decide was the weekly base amount, with no deduction for post-accident income. He stated:

It should be noted at the outset of this section that what I have been asked to decide upon is strictly initial entitlement as of December 4, 2013, at the 7 day mark after the first date of loss, to Income Replacement Benefits (IRBs), and the weekly quantum thereof. I will not be making any ruling pertaining to continuance of these benefits or post-accident income issues other than to order the standard “to present and ongoing” clause if, applicable²².

At the hearing, the Arbitrator told Coachman that its only option was to pay the weekly base amount and to then make an application to the Licence Appeals Tribunal to recoup any overpayment. Despite his reasons stating that he “will not be making any ruling pertaining to continuance of these benefits or post-accident income issues”, the Arbitrator did make an order requiring Coachman to pay IRBs, from December 4, 2013, and ongoing. As you know, the order was first issued without any deduction for post-accident income, and then it was amended to allow Coachman to deduct an unspecified amount.

I reject Ms. Sivananthan’s submission that the only issue before the Arbitrator was her weekly base amount. That is not what she asked the Arbitrator to decide. She asked for an order for payment of IRBs of $400 per week, or some lesser amount, from one week post-accident, and ongoing. She could not then require the Arbitrator to ignore her post-accident income. The Arbitrator erred in accepting that position.

At the arbitration, Coachman claimed that it lacked the information to determine Ms. Sivananthan’s IRB entitlement. The Arbitrator found that there was enough information available and he found that Coachman’s refusal to calculate the weekly base amount was unreasonable. He accepted the calculation Ms. Sivananthan’s accountant made and he fixed the weekly base amount at $255.71. There was also evidence before the Arbitrator regarding Ms. Sivananthan’s post-accident income. She admitted to earning $1,350 in 2015, and $36,201 in 2016. In 2016, her earnings far exceed the total amount deductible from her IRBs. If she earned that income evenly throughout the year, no IRBs would be payable for that year.

I repeat, Coachman submits that the Arbitrator erred in fixing the weekly base amount, and Ms. Sivananthan submits that the Arbitrator erred in ordering a deduction for post-accident income.

The Arbitrator’s finding regarding the weekly base amount is a finding of fact. Under s. 283(1) of the Insurance Act, appeals are limited to “a question of law”. The leading case on the interpretation of s. 283(1) is Lombardi and State Farm Mutual Insurance Company²³. As discussed in that case, an error of law is a finding of fact made in the complete absence of supporting evidence, based on conjecture, or arising from a misapprehension of the evidence that is caused by a misdirection on a legal principle.

Similarly, in Truong and Lumbermens Mutual Casualty Company/Kemper Group²⁴, Delegate Makepeace held that:

… the test for error of law ‘is whether the decision was based on a material finding of fact that was not supported by the evidence such that a reasonable tribunal acting judicially and properly directed in law could not have made the finding in question.’

An arbitrator must give adequate reasons to justify findings of fact. In Kanareitsev v. TTC Insurance Co.,²⁵ the Divisional Court set out the factors to be considered in determining the adequacy of an adjudicator’s reasons. They are:

• Did the adjudicator set out the findings of fact?

• Did the adjudicator set out the principal evidence upon which the findings are based?

• Did the adjudicator address the major points in issue? and

• Did the adjudicator set out and reflect consideration of the main relevant factors?

I find that the Arbitrator did not commit any of the errors identified in Lombardi and Kanareitsev when he fixed the weekly base amount. There was ample evidence to support the Arbitrator’s conclusion. There was no conjecture or misapprehension. There was no misdirection on a legal principle. The Arbitrator clearly set out his findings and his reasons for making them.

Ms. Sivananthan’s entitlement to IRBs is based upon her employment status at the time of the 1^st accident. She earned employment income from a catering business she owned. She was also employed by a 3^rd party as a cook. The critical information required to calculate “the weekly base amount” of Ms. Sivananthan’s IRB under s. 7(2) of the Schedule, is her “gross weekly employment income”. Ms. Sivananthan provided the relevant income tax returns and T4 slips.

Section 4 of the Schedule sets out the formula for calculating “gross weekly employment income”. Because of Ms. Sivananthan’s circumstances of employment, the information required was her gross employment income in the 52 weeks before the 1^st accident. The relevant period was therefore November 28, 2012 to November 27, 2013. Ms. Sivananthan’s accountants made some assumptions in calculating her income for this period. They assumed that the income her corporation earned in 2012 was earned evenly throughout the year, and they assumed that no income was eared after the accident. The report refers to other assumptions, but they are about post-accident income and are not relevant to income for this period.

In accepting the accountant’s calculations, the Arbitrator stated that the accountants made only one assumption: that there was no post-accident income from Ms. Sivananthan’s corporation. Despite this inaccuracy, I find no error by the Arbitrator in accepting the accountant’s opinion. Kanareitsev imposes a standard of deference regarding findings of fact. It does not require perfection. The Court noted at paragraph 32 that while the arbitrator in that case “may not have engaged in a detailed analysis of each and every aspect of the major points in issue, her reasons refer to the principal evidence she relied upon and provide a justification for her conclusions.”

Here, the Arbitrator did not mention the assumption regarding income earned evenly throughout 2012, but that income was peripheral to the calculation of “gross employment income”. The Arbitrator found that Ms. Sivananthan provided the information she could provide. There was no evidence to show that the accountant’s assumptions were unreasonable, or that another reasonable assumptions could be made. I find no error in the Arbitrator’s ruling regarding Ms. Sivananthan’s “weekly base amount”.

However, that was not the only fact that the Arbitrator had to decide in order to make an order for payment of IRBs. Section 7(3) allows an insurer to deduct post-accident income from the weekly base amount, according to the formula set out in that section. This was the main obstacle that Coachman identified in calculating the IRB payable to Ms. Sivananthan. Despite having evidence in that regard before him, the Arbitrator made no findings about the net amount payable. The result is that the Arbitrator made a vague order which his “correction” failed to clarify. I find that the Arbitrator erred by declining to decide the issue before him. The Arbitrator’s order for payment of IRBs is therefore rescinded and the issue of the net amount payable is remitted for re-hearing.

Special Award

Section 282(10) of the Insurance Act gives an arbitrator jurisdiction to order an insurer to pay a special award, in addition to the benefits and interest to which an insured person is entitled. The award is contingent upon finding that the insurer has unreasonably withheld or delayed payments. The award is up to 50% of the benefits, plus interest owing.

There are two elements to making a special award: finding of unreasonable conduct, and fixing the amount of the award. The Arbitrator found that Coachman unreasonably withheld or delayed payments to Ms. Sivananthan. He ordered Coachman to pay the maximum special award.

Jurisprudence establishes that the maximum award is reserved for the most egregious conduct. The Arbitrator did not explain why Coachman’s conduct reached that threshold. His award cannot be justified for that reason alone. But there is a further reason. The Arbitrator did not know how much he awarded. He did not know how much was owed for benefits and for interest. He simply made the order as a percentage. That approach was rejected in the appeal decision in Liberty Mutual Insurance Company and Persofsky²⁶, which set the standard for fixing special awards that has since been endorsed in numerous appeal decisions.

Persofsky interpreted s. 282(10) as follows:

A plain reading of s. 282(10) supports Liberty Mutual’s position. It states that the arbitrator is to award “a lump sum” if he or she finds that the insurer has unreasonably withheld or delayed payments. In my opinion, this requires a fixed amount or, at a minimum, an order that can be readily converted into a fixed amount²⁷.

I do not accept Ms. Sivananthan’s submission that the amount of the award can be readily converted into a fixed amount. Ms. Sivananthan hired an accountant to do the calculation after the hearing. Counsel admits that he could not do the calculation himself. Certainly, neither the Arbitrator nor the parties knew what penalty was imposed when the order was made. In my view, Persofsky requires that the Arbitrator know the amount awarded with a fair degree of precision. Otherwise, the order is arbitrary.

The Arbitrator found the following conduct by Coachman to be unreasonable, with regard to the benefits that survive the appeal:

• Failing to use the available information to calculate weekly IRBs

• Failing to respond to the claim for IRBs

• Failing to respond to claims for treatment

I am satisfied that the Arbitrator correctly concluded that Coachman must pay a special award because of its complete failure to respond to the treatment plans that survive this appeal, and its complete failure to respond to Ms. Sivananthan’s claim for IRB. The issue of the amount of the special award is remitted for re-hearing.

A special award can only be attached to benefits owed at the time it is made. Therefore the Arbitrator’s order is rescinded as it relates to the treatment plan in the amount of $1,245.64, the treatment plan in the amount of $3,089.00, dated November 1, 2014 and the In-Home Assessment. I note that the Arbitrator made no finding that Ms. Sivananthan was in fact too ill to attend the assessment that she did not attend regarding the treatment plan of November 1, 2014. The question of entitlement to a special award regarding these benefits is remitted for re-hearing. Since nothing is payable for NEBs, no special award can flow from the Arbitrator’s findings in this regard.

IV. EXPENSES

(a) Expenses of the Arbitration

The Arbitrator ordered Coachman to pay Ms. Sivananthan her expenses of the arbitration, in an amount to be determined. The order was presumably based upon Ms. Sivananthan’s success. The result of the appeal is that Ms. Sivananthan remains largely successful in the arbitration, so I see no basis for disturbing the Arbitrator’s order. I note that the Arbitrator’s finding that Coachman is liable to pay “full expenses” in no way increases the jurisdiction conferred by the Expense Regulation and the Dispute Resolution Practice Code.

(b) Expenses of the Appeals

At the hearing, I informed the parties that my ruling in Coachman’s appeal with regard to the Arbitrator’s failure to consider post-accident income would render moot Ms. Sivananthan’s appeal. Ms. Sivananthan nevertheless made oral submissions regarding the expenses of her appeal, and I later received written submissions from Coachman. Both parties claim entitlement to expenses.

Having told the parties during the hearing that he would not consider post-accident income, the Arbitrator amended his order to do just that. He described the amendment as a correction of a typographical error, error of calculation, or similar error. It was not that kind of correction. This was a substantive change, given the Arbitrator’s position on post-accident income, as stated to the parties at the hearing and in his reasons. The Arbitrator lacked jurisdiction to amend the order in this way, and he should have refused to do so. Compounding the error, the Arbitrator did not receive any submissions from Ms. Sivananthan before amending the order. That was a breach of the rules of procedural fairness. Ms. Sivananthan had little option but to appeal. Nevertheless, the outcome in the appeal is that the issue is moot.

I find success to be the only relevant criterion to determining entitlement to expenses. I view the result to be neither party having been successful. I therefore find that neither party is entitled to expenses of Ms. Sivananthan’s appeal.

The parties were not ready to make submissions on the expenses of Coachman’s appeal. If they are unable to agree, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

V. THE APPEAL ORDER

Because the result of the appeal requires many changes to the Arbitrator’s order, I have chosen to rescind it in its entirety, and to replace it with an order that moves this matter forward.

May 8, 2018

Jeffrey Rogers Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 22010 ONCA 457
3. 3At page 14
4. 4At pages 18 and 19
5. 5At page 20
6. 6At page 7
7. 7State Farm Mutual Automobile Insurance Company and Sabadash, FSCO P16-00029, September 18, 2017; Mohammad and Allstate Insurance Company of Canada, FSCO P17-00006, December 19, 2017; A.G. and Wawanesa Mutual Insurance Company, FSCO P16-00044, February 12, 2018
8. 8Further automobile accidents in January 2015 and February 2017, and a workplace accident in October 2016
9. 9At page 10
10. 10At page 10
11. 11At paragraph 10
12. 12See Zupnik and State Farm Mutual Automobile Insurance Company (FSCO P15-00037, September 16, 2016), State Farm Mutual Automobile Insurance Company and Yogesvaran (FSCO P09-00042, October 28, 2010), Galarneau and Allstate Insurance Company of Canada (FSCO P13-00031, May 27, 2015), Hill and Jevco Insurance Company (FSCO P13-00017, October 1, 2014)
13. 13(FSCO P16-00014, December 16, 2016)
14. 14At paragraphs 15-18
15. 15(FSCO P15-00007, November 16, 2016)
16. 16At page 18
17. 17The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
18. 18At page 19
19. 19At pages 9-10
20. 20At page 7
21. 21For a more detailed analysis, see Clancy and Aviva Canada Inc. (FSCO P17-00008, October 19, 2017)
22. 22At page 15
23. 23(FSCO P01-00022, February 26, 2003)
24. 24(FSCO P03-00007, March 9, 2004), at Page 4
25. 252008 CanLII 26262 (ON SCDC), [2008] O.J. No. 2132
26. 26FSCO P00-00041, January 31, 2003
27. 27At page 17