Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2018 ONFSCDRS 109

Appeal P16-00081

LYNDA FEDERICO Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Respondent

BEFORE: Edward Lee

REPRESENTATIVES: David S. Wilson for Ms. Federico Jonathan Schrieder for State Farm

HEARING DATE: March 28, 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:

The decision and order of Arbitrator Tanaka dismissing Ms. Federico’s claim for a special award is rescinded in its entirety.
The issue of entitlement to, and depending on that determination, the amount of a special award is returned to arbitration for redetermination before a different arbitrator.
If the parties are unable to agree as to expenses of this appeal, a determination may be requested in accordance with the Dispute Resolution Practice Code.

Edward Lee Director’s Delegate

May 30, 2018

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This matter involves the SABS–1996.¹

Lynda Federico (“the Appellant”), appeals an order of Arbitrator Tanaka (“the Arbitrator”) issued on October 3, 2016, in which the Arbitrator determined that the Appellant was not entitled to a special award.

II. BACKGROUND

The Appellant was injured in a motor vehicle accident on December 22, 2007. She applied for and received statutory accident benefits from State Farm Mutual Insurance Company (“State Farm”). Disputes arose between the parties and the Appellant applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The Appellant appeared before Arbitrator Huberman in the summer and fall of 2014 and claimed entitlement to two treatment plans (one dated 2010 and a second dated 2011), and to a special award. Arbitrator Huberman determined that the Appellant was entitled to the two treatment plans and interest, but found that she was not entitled to a special award.

The Appellant then brought an appeal, seeking to overturn Arbitrator Huberman’s decision solely on the issue of the special award.

The appeal was heard by Delegate Evans, who ruled as follows:

Both at arbitration and on appeal, Ms. Federico set out a number of reasons why she feels the evidence warranted a special award. For instance, she submits that State Farm uncritically relied on Ms. Morse’s report. However, the Arbitrator did not deal with any of that evidence specifically but gave boilerplate reasons that could apply equally to any case.

Furthermore, it is not possible to see from the context of the decision why a special award would be denied without more discussion. In that regard, I note that the Arbitrator stated that the “overwhelming weight of the medical and non-medical evidence supports a conclusion that at the time of the submissions of the OCF-18s, dated October 25, 2010 and October 25, 2011, Ms. Federico had not returned to her pre-accident status and she was in need of Rehabilitation Benefits, including occupational therapy, as a result of her accident-related injuries.” It is difficult to square that finding with the finding that State Farm did not improperly fail to consider the totality of the evidence. [Emphasis mine]²

Delegate Evans allowed the appeal because of the insufficiency of Arbitrator Huberman’s reasons in regard to the special award claim. No other part of the decision was overturned or modified by Delegate Evans. He ruled as follows:

Accordingly, paragraph 3 of the arbitrator’s [Huberman’s] decision dismissing Ms. Federico’s claim for a special award is rescinded. The issue of entitlement to and, depending on that determination, the amount of a special award is returned to arbitration for redetermination before a different arbitrator.³

The issue of entitlement, and possibly the amount of a special award, was thus returned to Arbitrator Tanaka, who as mentioned, determined that the Appellant was not entitled to a special award.

The Appellant seeks now to overturn the decision of Arbitrator Tanaka in regard to denial of the special award.

III. ANALYSIS

Arbitrator Tanaka was tasked to determine nothing other than entitlement to a special award, and the amount of that award, if any. She heard no new evidence at her hearing, but was provided with the exhibits filed before Arbitrator Huberman and transcripts of that hearing, which included the testimony of State Farm’s adjuster, called to testify concerning the special award.

Arbitrator Tanaka appeared to recognize that she was bound by Arbitrator Huberman’s decision that the two treatment plans were reasonable and necessary, but she also stated that she had jurisdiction to make findings of fact needed to deal with the special award claim.⁴

In this regard, I find that Arbitrator Tanaka could validly make findings in regard to whether the insurer had unreasonably withheld or delayed the payment of a benefit, but she was bound by all other findings of fact made by Arbitrator Huberman in his decision, and not just Arbitrator Huberman’s conclusions in regard to the two treatment plans. Those factual findings of Arbitrator Huberman were neither overturned nor modified by Delegate Evans. Delegate Evans did not direct Arbitrator Tanaka to undertake a re-hearing of all the issues that had been before Arbitrator Huberman. Apart from the narrow issue of the special award, Arbitrator Huberman’s findings were res judicata, and Arbitrator Tanaka had no authority to modify or overturn them.

Further, any finding of fact made by Arbitrator Tanaka would have to be based on the evidence that Arbitrator Huberman heard at his hearing, which would include all the written documentation in the record of that hearing, and the transcript of the vive voce evidence of that hearing.

(a) Did Arbitrator Tanaka commit errors of law in her analysis of the evidence?

In her decision, Arbitrator Tanaka made numerous findings of fact that appeared to be conclusions she reached that were based on pure speculation, and unsupported by any evidence or argument that had been presented to Arbitrator Huberman at his hearing. She also made findings of fact that were contradictory to some of Arbitrator Huberman’s findings.

These findings made in the absence of evidence, or based on her own speculation amounted to errors of law. Further, findings made by Arbitrator Tanaka that contradicted findings of Arbitrator Huberman and were outside the narrow jurisdiction conferred to her by Delegate Evans, also amounted to errors of law.

I have determined that Arbitrator Tanaka committed errors of law (as described above) repeatedly through the course of her decision, and they were of sufficient gravity to lead me to rescind all of Arbitrator Tanaka’s decision and order. Rather than enumerate all the errors, I will highlight some examples.

(i) Arbitrator Tanaka’s discussion and determination relating to causation

In his decision, Arbitrator Huberman made these findings regarding the evidence before him and causation:

I find that the overwhelming weight of the medical and non-medical evidence supports a conclusion that at the time of the submissions of the OCF-18s, dated October 25, 2010 and October 25, 2011, Ms. Federico had not returned to her pre-accident status and she was in need of Rehabilitation Benefits, including occupational therapy, as a result of her accident-related injuries. This evidence includes the records/evidence of …, and Dr. Elaine McKinnon, Psychologist. I accept this evidence and give it considerable weight.⁵ [Emphasis mine]

Arbitrator Huberman found this evidence was “overwhelming,” and concluded that “at the time of the submission” of those plans, the Appellant needed the treatment in question, “as a result of her accident-related injuries.”

At his hearing, Arbitrator Huberman specifically noted State Farm did not challenge Dr. McKinnon’s evidence that the Appellant was struggling with chronic pain, and emotional adjustment issues, as well as persisting neurocognitive sequelae as a direct result of injury sustained in the accident.⁶ Further, there was no evidence from State Farm that causation had been an issue at any time in their decision to deny the treatment plans.

Despite these findings of Arbitrator Huberman, and the lack of evidence to suggest causation was ever a consideration of the insurer, Arbitrator Tanaka addressed causation in her decision:

While the Applicant was able to cope with two jobs before her own accident and regained function after treatment in 2008, the relevant question must be one of causation: was her deteriorating condition in 2011 attributable to her own accident or to other events post-accident and to the whole family’s situation? This causative concern is supported by the reports of the Brain Injury Clinic in 2011 and 2012 (referred to above) where there are references to the overall situation of the family.⁷ [Emphasis mine]

Here the Arbitrator committed several errors of law. First, as noted, the causation issue had already been determined by Arbitrator Huberman, who held that at the time of the submission of the plans, there was overwhelming evidence that the treatment plans were reasonable and necessary because of the motor vehicle accident.

Second, there was no evidence in any of the materials or testimony that the insurer ever relied on or even considered the documents from the Brain Injury Clinic⁸ referred to by Arbitrator Tanaka. State Farm’s adjuster did not testify that they had relied on these documents to withhold or delay a benefit. Instead, the OCF-9’s (Explanation of Benefits forms)⁹ state that the two treatment plans were denied because of the section 44 reports of Ms. Morse (dated February 10, 2011¹⁰) and Dr. Challis (December 6, 2011).¹¹

Neither of these two reports mentioned the documents from the Brain Injury Clinic referred to by the Arbitrator, although Ms. Morse’s report does include Dr. McKinnon’s observations about the changes in the Appellant’s family situation. Nonetheless, neither of these reports, which formed the basis of State Farm’s denial, suggested the motor vehicle accident was not the cause of the injuries. The denials were based on the report-writers’ conclusions that the Appellant had returned to her pre-accident levels of functioning.

In undertaking her analysis, Arbitrator Tanaka did more than ignore the findings of causation of Arbitrator Huberman. She speculated and found reasons for denying a claim that were not presented in evidence before Arbitrator Huberman. This was an error of law sufficient to lead me to overturn her decision.

(ii) The use of different health care providers for the two Treatment Plans

Later in her decision, Arbitrator Tanaka analyzed the two treatment plans of 2010¹² and 2011¹³ (both of which were found to have been “overwhelmingly supported by medical and non-medical evidence at the time of their submission” by Arbitrator Huberman), and made this criticism:

The Applicant alleges that State Farm has been inflexible in its assessment of new information as it was generated, but in my view, the request for an assessment in 2011 through the OCF-18 2011 did not put the Insurer on notice that there was new information that it should consider for the purpose of reassessing the denial of the OCF-18 2010. Rather, it supported the argument that the Insurer was correct that there was not an adequate foundation for the OCF-18 2010 prepared by Ms. Duffus. The use of a different health care practitioner for the OCF-18 2011 also implies that the Applicant knew that the OCF-18 2010 was not properly supported. [Emphasis mine]

Arbitrator Tanaka provided no statutory or jurisprudential authority for her proposition that using different health care practitioners for different treatment plans implies that the earlier treatment plan had not been properly supported. Further, there was no evidence that the Insurer ever shared the Arbitrator’s concern about the use of different health care providers. The Arbitrator simply appeared to be attributing her own thought processes to the insurer, in absence of any evidence that the insurer ever held the same considerations. This, too, constitutes an error of law.

(iii) The Arbitrator’s critique of the McKinnon Report

Arbitrator Tanaka repeated this error of law when she reviewed Arbitrator Huberman’s assessment of the probative value of the psychological report prepared by Dr. McKinnon:¹⁴

Dr. MacKinnon’s Report of August 2010 started the process of the submission of the two treatment plans, but the weight to be given to this report is significantly undercut by the failure of the Applicant to give Dr. MacKinnon the 2008 psychological reports of Dr. Prendergast and other assessors’ reports. If Dr. MacKinnon did in fact have those reports, then the error in not treating them as relevant is hers, but this still undermines the weight to be put on her report. In those circumstances, it was not unreasonable for State Farm to have questions as to the reliability of the recommendation by Dr. MacKinnon, and therefore the underlying foundation for the OCF-18 2010 and OCF-18 2011.¹⁵ [Emphasis mine]

Arbitrator Huberman had determined Dr. McKinnon’s report was credible,¹⁶ and had included it as part of the “overwhelming weight” of medical evidence that supported the Appellant’s claim.

Not only was Arbitrator Tanaka bound by these findings, but the deficiency she cited (that the Prendergast report had not been given to Dr. McKinnon) was not referenced in any of the evidence before Arbitrator Huberman. There was no evidence presented by State Farm or State Farm’s witness that they had shared this concern about Dr. McKinnon’s report.

In fact, State Farm based its denial on the Morse Report¹⁷, and that report’s only criticism of the McKinnon report concerning medical documentation was the following:

Unfortunately there is limited medical documentation explaining the claimant’s course of rehabilitation from the later portion of 2008 until August 2010.¹⁸ [Emphasis mine]

The insurer examinations of Dr. Prendergast are dated July 29, 2008 and September 25, 2008.¹⁹ Therefore, they would not have been relevant to the concern mentioned in the Morse report which only refers to limited documentation “from the later portion of 2008 until August 2010.”

Once again, the Arbitrator erred in law by attributing her own thought processes and concerns to the Insurer in the absence of evidence.

(iv) The Morse and Challis Reports

The last example I will cite is the Arbitrator’s discussion of the Morse²⁰ and Challis²¹ reports.

The Appellant argued at appeal and at first instance that it was unreasonable for the Insurer to have relied on the Challis Report because its author had misquoted sections of the Morse Report and based his conclusions on an incorrect version of the report.

Specifically, the Morse report stated that the Appellant had different levels of functioning depending on whether she was having “a bad day or a bad week.”²² Dr. Challis cited from the Morse Report, but omitted all mention of the words, “bad days or a bad week.”

Arbitrator Huberman critiqued and rejected the Morse report as follows:

In my view, Ms. Morse’s report does not support a conclusion, as contended by State Farm, that Ms. Federico returned to her pre-accident medical status, her normal activities, her personal care tasks, or her employment, when she is having a bad day or a bad week. I find that the past/pertinent medical history, the relevant medical documentation, and the observations and findings contained in Ms. Morse’s report do not support her conclusion that “the OCF-18 in question is not considered reasonable or necessary as the goals for the treatment plan are for pain reduction and return to activities of normal living.” I disagree with Ms. Morse’s conclusion and give it little weight.²³[Emphasis mine]

Arbitrator Huberman also criticized the Challis report for misquoting and incorrectly editing Ms. Morse’s report by omitting the words, “on a bad day or a bad week”:

I do not accept Dr. Challis’ opinion that the OCF-18, dated October 25, 2011, is not reasonable or necessary. I give his evidence little weight. His evidence is inconsistent with the preponderance of probabilities and is unreasonable in the circumstances of this case. Dr. Challis is a psychologist, not an occupational therapist. His expert opinion was not founded on a factual foundation which was proved to my satisfaction according to the appropriate standard of proof, as indicated above. He misquoted Ms. Morse and reached his conclusions based on his incorrectly edited version of her report. His evidence is not persuasive when compared and contrasted with the testimony of Ms. Federico and the voluminous medical evidence presented in this proceeding.²⁴ [Emphasis mine]

In the face of these binding determinations, Arbitrator Tanaka embarked on her own analysis of the criteria of “good days and bad days” within the legislative scheme and whether a person who reported such functioning had demonstrated a “substantial or complete inability.” She also considered the broad discretion of an arbitrator to determine what is reasonable and necessary.²⁵

Despite Arbitrator Huberman’s criticisms of the Mores and Challis reports, Arbitrator Tanaka concluded that she was “… not prepared to find the Insurer was unreasonable in not identifying the significance of the citing of the conclusions of the Morse Report in the Challis Report.”

Nevertheless, there was no evidence from State Farm that it had ever applied Arbitrator Tanaka’s analysis or reasoning about “good days and bad days” when it assessed the Challis and Morse reports. There was no evidence this thinking had factored into State Farm’s decision to deny the treatment plans in question. Nor was there any need for the Arbitrator to examine the meaning of “substantial or complete inability.”

Once again, it appears the Arbitrator simply substituted her own concerns and attributed her own thoughts processes and conclusions to State Farm in the absence of evidence. Given these errors of law, I am rescinding the entirety of the Arbitrator’s decision, and returning the issue of the special award and its amount, if any, to a different arbitrator.

IV. EXPENSES

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