ZB v. PAFCO, 2019 CanLII 94047

Licence Appeal Tribunal

Citation: ZB v. PAFCO, 2019 CanLII 94047 Date: July 29, 2019 File No.: 18-003523/AABS

In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.

Between:

ZB Appellant

and

PAFCO Respondent

Decision

Panel: Christopher A. Ferguson, Adjudicator

Appearances: For the Applicant: Gordon W. Harris, Counsel For the Respondent: Peter Durant, Counsel

Heard: In Writing on: November 26, 2018

Reasons for Decision

Overview

1The appellant ZB was involved in an automobile accident on September 10, 2014 and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010¹ (the ''Schedule''). She applied to the Licence Appeal Tribunal – Automobile Accident Benefits Service (“the Tribunal”) for dispute resolution when the respondent, Allstate², denied her claim.

2Allstate has raised a preliminary issue that could prevent the Tribunal from hearing ZB’s appeal of its decision to refuse her claim for medical benefits. It asserts that ZB is statute-barred from appealing its refusal to pay the disputed benefits, because ZB failed to commence her appeal to the Tribunal within two years of the date that her claim was refused, as required by s. 56 of the Schedule.

3ZB was struck by a taxi as a pedestrian. The right side of her face smashed into the pavement.

4The substantive issues are two claims by ZB which were partially approved by Allstate.

Issues

5The preliminary issue to be decided by the Tribunal is whether ZB is statute-barred from proceeding with her appeal of Allstate’s refusal to pay disputed medical benefits.

Substantive Issues

6The substantive issues to be decided by the Tribunal are:

1. Is ZB entitled to medical benefits in the amounts of: a. $6,980.00 for septorhinoplasty recommended by Dr. Selig Krajden in a treatment plan (“OCF-18”) submitted on March 29, 2016, denied (partially approved) on April 21, 2016? b. $9,240.00 for scar revision recommended by Dr. Krajden in a treatment plan submitted on March 29, 2016, denied (partially approved) on April 21, 2016?

Result

7ZB is not barred from commencing her appeal before the Tribunal. Accordingly, I determined the substantive issues.

8ZB has met the onus on her to prove that the disputed OCF-18s are reasonable and necessary. Her appeal is allowed and the claimed benefits are payable with interest at the prescribed rate.

Analysis

Preliminary Issue – Limitation Period

9Under s. 56 of the Schedule, an appeal of an insurer’s denial of a benefit must be commenced within two years after the insurer’s refusal to pay the amount claimed. The two years is called the “limitation period.”

10If an appeal is determined to have been filed beyond the two-year limitation period prescribed by s. 56, then the Tribunal cannot hear it. The appeal is said to be “statute-barred.”

11For an insurer to be able to rely on the limitation period in s.56, it must provide the applicant a valid explanation of benefits that states a clear and unequivocal denial, it must give reasons for the denial, and it must provide a description of the dispute resolution process.³

12“Unequivocal” means “clear, plain; capable of being understood in only one way, or as clearly demonstrated; free from uncertainty, or without doubt …” A denial notice must be “in straightforward and clear language, directed towards an unsophisticated person.”

13Allstate sent ZB two explanations of benefits, one on April 21, 2016 and a second on March 3, 2017. At issue here is which denial triggered the limitation period.

The Respondent’s Position

14Allstate submits:

i. It issued a clear and unequivocal denial of ZB’s claim for the disputed benefits on April 21, 2016, as required by law, stating its position that the treatment plans were not reasonable and necessary. It submits that the limitation period was triggered on that date.

ii. ZB took no steps to appeal or dispute its denial until May 21, 2018 more than two years after Allstate’s refusal to pay.

iii. ZB provides no evidence of a bona fide intention to appeal within the prescribed limitation period. She waited two years and two months (per Allstate) to commence his appeal.

iv. Allstate urges me to apply a plain reading of s.56. ZB was late in commencing her appeal, with no excuses.

ZB’s Position

15ZB submits:

i. The limitation period began on March 3, 2017, when Allstate issued a second explanation of benefits partially approving the disputed claims after reconsidering them.

ii. ZB argues that imposing a statute bar in this matter “solves nothing” and would be impractical, because ZB can simply submit fresh claims for treatment of permanent, disfiguring facial scars that are not going to wane with time.

Preliminary Issue Findings

16I find that ZB’s appeal is not statute barred.

i. In its denial of March 3, 2017, Allstate clearly reconsidered and changed its decision of April 21, 2016 – albeit partially – about the disputed claims, based on an insurer’s examination (IE) outlined below. Its denial dated March 3, 2017 clearly sets out ZB’s two year appeal period and does not mention any previous decision. In in my reading it gave ZB no reason to believe that her limitation period was any less than two years from that date.

ii. Allstate’s explanation of benefits dated March 3, 2018 was sufficiently unclear to persuade me that ZB was misled, however inadvertently, into thinking that the two years for appeal ran from March 3, 2018. This is because the letter does not clearly reiterate or refer to the denial of April 21, 2016 or warn ZB that her appeal period ran from that date. I contrast that with language in the same package of documents (i.e. the March 3, 2018 package) that clearly warns the insured that working with the insurer to settle the dispute does not extend the limitation period. The language in Allstate’s denial of March 3, 2017 undermines the contention that its initial denial was final, and would induce, in my view, a reasonable person to believe that the earlier denial was being reconsidered. I find that this made the original denial unclear and equivocal, and that in fact it was this denial notice that triggered ZK’s limitation period.

Substantive Issues: Treatment Plans

17Sections 14 and 15 of the Schedule provide that an insurer is only liable to pay for medical expenses that are reasonable and necessary as a result of the accident. The applicant bears the onus of proving on a balance of probabilities that any proposed treatment or assessment plan is reasonable and necessary.⁴

18ZB relies on the report and recommendations of Dr. Selig Krajden, plastic and reconstructive surgeon, dated March 3, 2016. Dr. Krajden interviewed ZB and examined her physically on February 16, 2016.

19In his report, Dr. Krajden:

i. opines that ZB meets the threshold established by s.266(1)(a) of the [Insurance Act]⁵ for permanent serious disfigurement. ZB has reached maximum medical recovery (MMR) from the injuries causing this disfigurement, making remedial modalities as the means to mitigating their effect;

ii. attributes all of ZB’s scarring and associated functional impairments (such as impaired facial expression) directly to the accident, noting no evidence of any pre-existing conditions;

iii. cannot conclude whether or not ZB’s nasal deformities were caused by the accident, a pre-existing condition or some combination thereof;

iv. recommends a number of modalities directed at the facial scarring:

a. lifelong use of an SPF 50 sunscreen to check further deterioration of facial scarring (at about $250.00 per month adjusted for inflation);

b. multiple laser treatments using a variety of wavelengths; and conjunctionally,

c. plastic surgical scar revision and post-operative Botox™ injections

v. gives a prognosis of a “modest 25-50% improvement in the appearance of ZB’s facial scarring if these treatments are provided, noting that “even with an optimal response to these proposed treatments, ZB’s post-traumatic facial scarring would still be considered a permanent facial disfigurement which may act as a lifelong reminder of the … accident.”

vi. notes that these treatments are not a covered benefit under the Ontario Health Insurance Plan (OHIP) and would have an approximate total cost of $8,000.00 plus applicable taxes;

vii. confirms that ZB is a candidate for septorhinoplasty to improve external appearance of her nose and to improve the patency (i.e. the openness and non-obstruction) of the nasal airway, noting that this treatment would not be fully covered under OHIP and would have an estimated cost of $6,000.00 plus applicable taxes.

20Dr. Krajden authored the disputed OCF-18s.

21ZB also submits the IE report of Dr. A. Freiberg, plastic surgeon, who examined ZB on February 17, 2017. In his report, Dr. Freiberg expressly concurs with the diagnoses of Dr. Krajden. Further, while agreeing with Dr. Krajden that the cause of ZB’s nasal deformities was difficult to determine with certainty, Dr. Freiberg opined that “the worsening of air entry on the right side is probably due to blunt trauma, as the claimant hit the ground on the right side.”

22Dr. Freiberg found:

i. proposed multiple laser treatments are reasonable and necessary, noting “limited success with this type of scar” (as did Dr. Krajden);

ii. plastic surgical scar revision is reasonable but may not be necessary “as the cutaneous portion of the scar is quite narrow and of acceptable discoloration”;

iii. post-operative Botox™ injections were not reasonable and necessary “mainly because the claimant's forehead wrinkles are naturally very deep, as demonstrated while frowning, and the absence of frontalis muscle function underlying the scar is very localized.”;

iv. the overall cost of the OCF-18 proposing these treatments was excessive in part because while the scar over ZB’s forehead “is of concern both physically and psychologically”, the “scar below the chin is of no concern to [ZB] and she does not want treatment.”

v. the disputed OCF-18 proposing septorhinoplasty was partially reasonable and necessary – with lack of costing information being an issue; the septorhinoplasty is necessary to improve the breathing complaints, while the rhinoplasty portion of the septo-rhinoplasty treatment is reasonable and commonly done together in most cases.”

Substantive Issue Findings

23I agree with Allstate that the onus is on ZB to show that the cost of any proposed treatment plans is reasonable. However, once costs have been addressed and supported with evidence, they can be accepted as reasonable unless the insurer/respondent provides persuasive rebuttal evidence.

24I find that a letter of Dr. Krajden dated July 12, 2018 provides an adequate breakdown of costs for the proposed treatments in both OCF-18s. It itemizes elements of treatment costs, such as anesthesiologist and nursing fees, and it specifies the number and cost of procedures such as dermabrasion and micro-needling with platelet-rich plasma (both part of scar excision). It notes where OHIP does and does not cover procedures. In my view, it meets the concerns of Dr. Freiberg and Allstate’s submissions with respect to cost breakdown and provides Allstate enough information to ensure that it doesn’t overpay for any procedures.

25My reading of Allstate’s submissions is that they provide no evidence that the costs quoted by Dr. Krajden are unreasonable. Allstate’s objections to costs actually seem more based on its position that specific treatments are not reasonable and necessary.

26I find that, on a balance of probabilities, the treatments recommended by Dr. Krajden are reasonable and necessary for the reasons already stated above.

27I adopt the conclusions of Dr. Krajden on the necessity for the recommended treatments (noting the physicians’ convergence on diagnosis) because:

i. Dr. Krajden and Dr. Freiberg agree that a septorhinoplasty is necessary – Dr. Freiberg’s reservations were about costing details.

ii. Dr. Krajden and Dr. Freiberg agree that laser treatments are necessary.

iii. Dr. Krajden and Dr. Freiberg agree that plastic surgical scar revision is reasonable. Dr. Freiberg does opine that it may not be necessary for reasons that strike me as highly subjective: Dr. Freiberg’s equivocation persuades me to favor Dr. Krajden’s evidence on this point.

iv. While Dr. Freiberg opined that the Botox™ injections weren’t necessary, his opinion did not address Dr. Krajden’s recommendation of Botox™ in the context – injections in conjunction with scar revision – proposed. I find that it would be imprudent to separate this aspect of recommended treatment from the other components without more direct, on-point evidence that the effect of scar revision would not be diminished by excluding it.

v. I did not find Dr. Freiberg’s statement that ZB did not want treatment for the scar on her chin to be credible. I find it more likely true that ZB, as her submission states, placed a higher priority on her forehead scars and was more anxious to have them addressed. I find no good reason to exclude ZB’s chin scars from treatment.

28The rebuttal arguments by Allstate fail to persuade me on a number of points:

i. Allstate’s characterization of at least a part of nose surgery as “merely cosmetic” is a misleading attempt to trivialize the proposed procedure. Allstate does not dispute disfigurement as an injury warranting accident benefits coverage, nor does it dispute Dr. Krajden’s opinion respecting ZB’s permanent serious disfigurement. It does not persuade me to deny ZB’s right to coverage on this basis.

ii. Allstate argues that ZB “has not produced medical evidence as to why a ‘modest 25-50% improvement in the appearance of the scarring’ is reasonable and necessary”. I think ZB has, in the report and OCF-18s of Dr. Krajden, addressed this issue. In addition, Dr. Freiberg opined that laser therapy was reasonable and necessary despite “limited success with this complex type of scar”, leading me to believe that improvements need not be ideal to be considered reasonable and necessary. The respondent provides no evidence or argument on the issue of how much improvement to a condition is necessary to establish that it is reasonable and necessary: I will go along with the medical experts in this case and reject the respondent’s “degree of improvement” argument.

iii. Allstate raised causation issues with respect to ZB’s nose. It is apparent from the evidence that ZB acknowledged some degree of pre-existing nasal condition to the examining physicians. However, the accident need only be a cause, not the sole or predominant cause of an impairment for entitlement to be established. Dr. Krajden opined that ZB’s nose-related breathing difficulties may have been exacerbated by the accident. Dr. Freiberg opined, as noted above that ZB’s pre-existing breathing difficulties were likely worsened by the trauma to the right side of her face in the accident. I find that it is more likely than not that the accident was a cause of ZB’s breathing difficulties and that rectifying this is a goal of the proposed septorhinoplasty.

Conclusion

29Allstate’s request to bar ZB’s appeal from proceeding is denied.

30The OCF-18s claimed by ZB are reasonable and necessary.

31ZB is entitled to interest on overdue payments at the prescribed rate.⁶

Footnotes

1. 1O.Reg. 34/10
2. 2The parties refer to the insurer as “Allstate”; accordingly, so do I.
3. 3Smith v. Co-operators, 2002 SCC 30, submitted by The Cooperators.
4. 4Scarlett v. Belair, 2015 ONSC 3635
5. 5Insurance Act, RSO 1990, c.I.8
6. 6Section 51 of the Schedule sets out the criteria for assessing and awarding interest on overdue payments.