Neutral Citation: 2018 ONFSCDRS 103

FSCO A08-000007

BETWEEN:

A.B. Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

Before: Arbitrator Charles Matheson

Heard: Written Submissions completed on May 7, 2018 and a teleconference on May 11, 2018

Appearances: Mr. J. Raphael, Lawyer, for Ms. A.B. Mr. T. McCarthy, Lawyer, for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Ms. A. B. (the “Applicant”), was injured in a motor vehicle accident on July 18, 2005. She applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (the “Insurer”), payable under the Schedule.¹

In my decision dated May 3, 2018, I found that the Applicant was entitled to an income replacement benefit (“IRB”) of $81.63 per week commencing November 13, 2008, and that the Applicant had suffered a catastrophic impairment in accordance with the Schedule as a result of the July 18, 2005 accident. The original hearing arbitrator had separated out the special award issue from the hearing until after the issue of causation had been decided. The parties were then invited to submit further arguments in writing.

The issues in this hearing are:

Is the Insurer liable to pay the Applicant a special award in accordance with subsection 282 (10) of the Insurance Act R.S.O. 1990, c.I.8, and if so, what is the amount?
Which party is liable for the expenses associated with the arbitration?

Result:

The Insurer is liable to pay the Applicant a special award of 35% of the owing IRB total and its interest of 2% compound interest.
Although neither party made submissions on expenses, they have made the undertaking to turn their minds to this issue as well as the quantum of interest owing due to the IRB award. Should the parties become unable to resolve these issues, they shall subsequently schedule an Expense Hearing in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

Arguments

The Applicant argues that under the circumstances of this case, she is seeking the maximum special award relating to both the IRB and catastrophic impairment claims payable with interest.

The Applicant argues that jurisdiction derives from s. 282(10) of the [Insurance Act]² which reads as follows:

(10) If the arbitrator finds that an Insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the Insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

Catastrophic Impairment

I shall first look at the claim for a special award based upon the catastrophic impairment.

The Applicant argues that the Insurer’s behaviour has been stubborn, excessive, imprudent, inflexible, unyielding and immoderate.

The Applicant argues that the Insurer has ignored the totality of the evidence, and has been unfair in its determination of entitlement of benefits, which has resulted in unreasonable withholding and delay in payments.

The Applicant argues that the Insurer had the opportunity to obtain valid test results and conduct a catastrophic assessment in accordance with the Guides³, but chose not to, thus demonstrating stubborn, excessive, imprudent, inflexible, unyielding and immoderate behaviour.

The Applicant argues that her most significant claim is for attendant care benefits as set out in the report of Nir Tamir, Occupational Therapist, dated April 21, 2014⁴, where the attached Form 1 suggests a monthly amount of $3,848.65 for attendant care.

The Applicant relies in-part, on s. 45(6) of Regulation 34/103 reads as follows:

If an insured person is determined to have sustained a catastrophic impairment as a result of an accident, the insured person is entitled to payment of all expenses incurred before the date of the determination and to which the insured person would otherwise be entitled to payment under this Regulation by virtue of having sustained a catastrophic impairment.

The Insurer argues that a special award does not automatically flow from a finding of entitlement for any benefits for which the Applicant is entitled. The behaviour of the Insurer must justify the imposition of a special award. In this case causation was a legitimate issue and because the arbitrator rejects the Insurer’s position is not in itself a reason to make a special award.

Finally during the teleconference the Insurer argues that a special award requires a monetary finding of an entitled benefit which is overdue. In this case, the Applicant has only been found to be catastrophically impaired. The entitlement to other expenses, such as attendant care, has not been decided or agreed to by the parties.

I note that the parties agreed that pre-104 weekly benefits for attendant care and house keeping were paid out prior to the hearing, and that entitlement for any other benefits would have to flow from a finding of a catastrophic determination.

In my view, I am unable to assign or assess a lump sum percentage to any amount for benefits that flow from a catastrophic impairment determination as entitlement may not necessarily flow at 100% of the monthly or weekly policy limits.

In my view, my catastrophic determination is only a gateway, or threshold for future benefits, and not an automatic entitlement for any benefits. A positive finding of an entitlement for a specified benefit creating an overdue amount, is the prerequisite requirement prior to a special award being made.

Therefore I am unable to assign a monetary amount and hence I cannot make a special award based solely on the catastrophic determination.

Income Replacement Benefits

The Applicant argues that the Insurer recognized the Applicant’s inability to work up to the 104 week mark by paying out the IRB benefit from the outset of the case, then however the Insurer then proceeded to conduct a series of Insurer’s examinations stretching from 2006 to August 22, 2008 in order to determine whether the Applicant qualified for either pre or post-104 week IRB.

The Applicant points out the incorrect actions taken by the Insurer, in that all the Insurer’s assessors including psychiatrists and the Applicant’s family doctor, claimed in their respective reports that the Applicant was unable to work. The only exception was Dr. Rashid, who issued an addendum report on August 22, 2008, at the behest of the Insurer. Now some 11 months after his in-person evaluation he changed his mind and came to a neutral conclusion due to inconclusive results, and then gave these findings a negative connotation. As such based on this one inconclusive report the Insurer terminated the Applicant’s IRB. The Applicant asserts that a second in-person assessment should have been done to clear up any ambiguities that may have led to Dr. Rashid’s inconclusive conclusion.

This set of circumstances gave rise to a preliminary issue hearing where the arbitrator found that State Farm had not followed the Schedule and made several technical breaches of the Schedule during the termination of IRB benefits.

The Applicant further argues that Dr. Rashid was unaware of the Applicant’s complete medical file. Not only were the family doctors clinical notes and records excluded, but also Dr. Gnam’s report dated September 26, 2007, Dr. Meschino’s report dated January 5, 2008 and Dr. Luczac’s report dated April 24, 2008; all of which concluded that the Applicant was unable to return to work or had a complete inability to return to work.

The Applicant points out that Dr. Luczac (psychiatrist) was one of the Insurer’s assessors for a catastrophic impairment assessment. His report was released in between Dr. Rashid’s two reports. This report concluded that the Applicant was moderately impaired and was unable to work and more importantly, makes a finding that the current motor vehicle accident was the cause of her impairment. The Applicant argues that the significance of ignoring this report was compounded when the Insurer did not continue to adjust the IRB claim even after it received a rebuttal report from the Applicant’s treating psychiatrist Dr. Meschino⁵ dated December 10, 2008. Even after the condemning findings of the preliminary issue hearing arbitrator, the Insurer has not resumed adjusting the IRB claim.

The Applicant contends that the Insurer ignored the totality of the medical information which continued to be provided by various specialists, all of which concluded that the Applicant could not return to work. This list includes Almuth Weigeldt’s (treating therapist) report dated July 3, 2009⁶, Dr. Mecshino’s report dated July 20, 2009⁷, Dr. B. Alpert’s (IE orthopedic surgeon) report dated November 16, 2009⁸, Dr. Doxey’s IE psycho-vocational report dated March 21, 2010⁹, and finally Dr. Rosenblat’s catastrophic assessment report dated March 31, 2014¹⁰.

Finally the Applicant raises the question: how could the Insurer agree to admit the Applicant into an in-patient mental health treatment facility for 60 days in 2011, and not recognize that the Applicant could not work? The Applicant points to the Insurer’s reliance on Dr. Zakzanis’s inconclusive catastrophic assessment report dated July 7, 2011¹¹, to deny a catastrophic impairment designation. This demonstrates the Insurer’s stubborn, excessive, imprudent, and inflexible behaviour toward the Applicant. This was further exacerbated by not allowing the doctor to re-examine the Applicant in order to attain valid test results. The Applicant submits that an objective Insurer reviewing the totality of the evidence would have come to a different conclusion than State Farm did in this case.

The Insurer argues that the issue of causation was a legitimate concern of the Insurer in denying both the catastrophic determination and the Applicant’s IRB claim. In all the evidence, expert and otherwise, viewed as whole could have supported either party’s position on causation. This alone makes granting a special award in this case unfair and inappropriate. The Insurer submits that granting a special award in this case would effectively make it appropriate to grant a special award each time causation is determined in favour of the Applicant. The Insurer argues that granting a special award in these circumstances would amount to be an error in law.

The Insurer argues that the findings in the preliminary issue hearing that the non-compliance with s. 35, 37 and 42 of the Schedule is not relevant to a special award.

The Insurer argues that if and when benefits are found to be owing, interest on overdue amounts in the amount of 2% compounded monthly should be considered appropriate compensation for any delay or denial in the delivery of accident benefits.

The Insurer relies on the review of the totality of evidence during the arbitration to conclude that the causation issue was a reasonable one. In particular, under cross-examination Dr. Rosenblat admitted that without having been in an accident, the failure of a perpetrator of sexual abuse to accept responsibility or be held accountable, family members engaging in manipulation and encouragement of the victim to forgive and forget about the abuse, can alone cause a person such as the Applicant to spiral into drug and alcohol abuse, major depressive disorder and post-traumatic stress disorder, as well as exacerbate symptoms of all of those conditions.

The Insurer argues that I should take judicial notice of the “Me Too” movement, in that the mental health impact on victims of sexual abuse by people in authority and the devastating effects on the victim who is forced to be silent on the abuse. Therefore, the Insurer argues that it must be concluded that the Insurer assumed a legitimate position on causation in this tragic case, and in these circumstances it would be unfair to the Insurer, and an error in principle, if a causation determination in favour of the Applicant ultimately attracted a special award.

Decision

I remain unconvinced by the Insurer that causation was as close a call as it argues, and that the findings of an arbitrator within a preliminary issue hearing are irrelevant to the awarding of a special award.

In my view of the whole case including the preliminary issue findings, had the Insurer acted to obtain valid, concrete test results and conclusive interpretations by their respective medical examiners within their subsequent reports and testimony, the Insurer would have been in a better position to argue that it would be unfair to the Insurer and an error in principle for a causation determination in favour of the Applicant to ultimately attract a special award.

In my view this Applicant was clearly identified by the Insurer’s own psychiatric catastrophic assessor Dr. Luczac, in April 2008, as meeting the classic definition of what has been commonly known as a “thin skulled” Applicant, where he states the following;

She is unable to work…

In summary [ the Applicant] shows a number of impairments resulting from a combination of factors including pre-disposing factor, e.g., prior history of emotional trauma, depression, anxiety, chronic pain (related to previous MVA, endometriosis and “fibromyalgia”), and precipitating factor, the subject MVA, that have resulted in Class III (moderate) impairment…¹²

(Underlining my emphasis)

In my view, the definition of a “thin skulled” Applicant is met when “pre-disposing factors” were of a serious enough nature to be diagnosable, but did not rise to the level where they impeded her daily functioning. There was no evidence that the Applicant was on a downward spiral at the time of the accident. All the evidence suggests that the Applicant would have continued living a productive self-supporting life style, but for the accident. Dr. Luczac points out that “precipitating factors” (the subject MVA) has resulted in a Class III (moderate) impairment. It is not surprising that over time, without the correct supports, the Applicant would continue to deteriorate.

In my view, the Insurer relied on incomplete and inconclusive report findings for both the IRB and catastrophic impairment determination. It continued to rely on these incomplete outlier reports despite an abundance of newer contemporaneous and conclusive medical reports all reporting conclusions in favour of the Applicant. This clearly demonstrates the Insurers stubborn, excessive, imprudent, inflexible, unyielding and immoderate behaviour. In my view, this pattern of behaviour is not remedied by the normal 2% interest penalty for delay or denial of an accident benefit. The Insurer unreasonably withheld payments, hence a special award is justified.

For the reasons above, I find that the Insurer is liable to pay the Applicant a special award of 35% of the owing IRB total and its interest of 2% compounded interest.

Expenses:

Although neither party made submissions on expenses, they have made the undertaking to turn their minds to this issue as well as the quantum of interest owing due to the IRB award. Should the parties become unable to resolve these issues, they shall subsequently schedule an Expense hearing in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

Charles Matheson Arbitrator

Date

Financial Services Commission of Ontario