Arbitrator Awards Benefits in Light of Questionable Treatment by Insurance Company - Thangarajah and State Farm

July 28, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Arbitrator Awards Benefits in Light of Questionable Treatment by Insurance Company - Thangarajah and State Farm

Ongoing Attendant Care Benefits: ordered benefits for $600 monthly; ordered special award for unreasonably withholding and delaying payments; Insurer not reasonable; insurer unable to explain basis of denial

Date of Decision: June 12, 2017
Heard Before: Adjudicator Marshall Schnapp

ISSUES

1. Is Mr. Thangarajah entitled to an Order for ongoing attendant care benefits in the amount of $6,000.00 per month from September 18, 2013 to date and ongoing?
2. Is State Farm liable to pay a Special Award because it unreasonably withheld or delayed payments to Mr. Thangarajah?
3. Is either party entitled to its expenses of the Hearing?
4. Is Mr. Thangarajah entitled to interest for any overdue payment of benefits?

Result:

1. Mr. Thangarajah is entitled to an Order for ongoing attendant care benefits at $6,000.00 per month from September 18, 2013 to date and ongoing.
2. State Farm is liable to pay a Special Award because it unreasonably delayed payments to Mr. Thangarajah.  The amount will be determined after further submissions are filed.
3. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code (“the Code”).

Mr. Thangarajah requested that the issue of a Special Award be added as an issue to the Arbitration Hearing.  State Farm’s position was that this issue should not be added or heard at this time.

The Arbitrator noted that there is significant authority that regardless of when an Insured raises the issue of a Special Award it should be added, as long as it does not violate natural justice and procedural fairness, and the insured has time to properly respond to the issue.  In this case, the Applicant provided State Farm with a letter, dated August 29, 2016, advising that the issue of Special Award would be raised.  The Applicant repeated it in emails, dated October 21, 2016 and October 26, 2016, and set out particulars in an email, dated December 1, 2016.

State Farm submitted that there was no notice of adding the issue of a Special Award until August 2016, and the issue was not raised during a Pre-Hearing on November 3, 2016. State Farm argues allowing this claim would result in a denial of natural justice, and would be unfair as since it would not be in a position to respond to all the allegations being made due to such short notice.

The Arbitrator considered the motion and determined that the issue of the Special Award may be added to the Arbitration Hearing.  Past decisions on adding this issue support the decision, as well as the plain wording of s. 282(10).  The issue of a Special Award is an inherent jurisdiction of the Hearing Arbitrator.  The Arbitrator also allowed for the hearing of the evidence on the Special Award, which would mainly consist of State Farm’s adjuster providing testimony, to take place in January 2016.  This would allow more time for State Farm to prepare and deal with all the particulars of the claim for Special Award, thus ensuring that the principles of natural justice and procedural fairness were being adhered to in this matter.

The Arbitrator heard from Mr. Thangarajah and on his behalf from his wife, Ravikuladevi Jeyanathan, and his daughter, Geeththa Jeyanathan.  Ms. Maraj, a catastrophic (“CAT”) claims advisor, provided evidence on behalf of State Farm.

Mr. Thangarajah takes the position that he is entitled to an Order for ongoing attendant care benefits, and to a Special Award due to State Farm unreasonably withholding benefits.

State Farm takes the position that while Mr. Thangarajah is presently entitled to attendant care benefits, he is not entitled to such an Order for "ongoing" or "continuing" attendant care benefits into the future.  State Farm also takes the position that it did not unreasonably withhold or delay benefits to Mr. Thangarajah.

On September 18, 2013, Mr. Thangarajah was a 57-year-old passenger on a two-level bus when it was stuck by a Via train.  As a result of the accident, Mr. Thangarajah sustained significant physical and psychological injuries.  As of April 2016, State Farm accepted that as a result of the accident, Mr. Thangarajah sustained a CAT impairment as defined by the Schedule, as documented by State Farm’s comprehensive medical report, dated April 28, 2016. 

The Arbitrator reviewed all of the evidence submitted and found that Mr. Thangarajah has established that State Farm unreasonably withheld or delayed payments of his benefits.  The Arbitrator drew an adverse reation when State Farm did not call their adjuster  to give evidence specifically being that the testimony would likely not have been helpful to State Farm in supporting that its adjusting decisions were reasonable.

The Arbitrator was puzzled by the overall position State Farm has taken in this matter, noting it began paying some of the benefits a few months before the start of the Hearing, and with respect to some of the other benefits in dispute, payments were made after the start of the Hearing, but State Farm continues to maintain the position, that payment of these benefits was not an admission that the benefits were required to be paid, but rather because they were not worth going to Arbitration over.  The Arbitrator noted that State Farm has paid $243,980.30 in benefits, which appears rather significant, and thus found the testimony that it was paid because it was not worth going to Arbitration over questionable.

With respect to the attendant care benefits, the evidence demonstrated that Mr. Thangarajah’s wife provided proof of economic loss on or about October 24, 2014.  Mr. Thangarajah’s former counsel provided specific information and documentation pertaining to economic loss.  It was documented that Mr. Thangarajah’s wife was providing attendant care services, and prior to the accident, she had been providing child care services to three children, but since the accident, had been unable to continue doing so.  State Farm was also provided documentation evidencing invoices and payments made for her services during 2013 as well as her 2013 Notice of Assessment.

The Arbitrator was not persuaded by State Farms’s testimony that this documentation was insufficient to prove an economic loss.  State Farm testified that when they first read the letter, they believed Mr. Thangarajah’s former counsel was just enclosing information for child care services.  The Arbitrator found that if State Farm found after reviewing the October 24, 2014 letter that it failed to prove an economic loss, it should have written back to Mr. Thangarajah’s former counsel to explain why it was taking that position.  The Arbitrator noted with both the invoices and payment documentation in its possession, State Farm could have made inquiries to substantiate the economic loss.  State Farm never made a request to Mr. Thangarajah’s wife to provide information on what she was earning at the time of the accident or what she was earning after the accident.  The Arbitrator thus finds that State Farm acted in a manner that was imprudent, stubborn, and inflexible with respect to this issue of economic loss, and thus unreasonably delayed payments of Mr. Thangarajah’s attendant care benefits.

Mr. Thangarajah claims State Farm unreasonably delayed payments for some medical benefits, consisting of massage, physiotherapy and chiropractic treatment.  These benefits were claimed in treatment plans submitted in June and July of 2014.  All of these benefits were paid by State Farm in the amount of $6,444.75, plus interest of $2,069.62, a few months prior to the start of the Hearing in late 2016.  When asked about why these treatments had been denied, a number of answers were provided, all of which seemed to be incorrect. State Farm admitted they were unable to advise if denials were reasonable without all of the information in front of their representative to review.

With respect to the treatment plans for prescriptions that were submitted in 2014 and 2015, again, State Farm decided to pay with interest a portion of those benefits very close to the start of the Hearing, and the remainder after the Hearing commenced.  The testimony was that it was reasonable not to approve and pay these treatment plans as some of the medications being claimed were being taken by Mr. Thangarajah prior to the accident.

On the basis of the evidence and testimony the Arbitrator found State Farm unreasonably delayed payments for Mr. Thangarajah’s medical benefits – both physical treatment and prescriptions.  State Farm was unable to explain why the treatment plans were not approved.  However, as of April 26, 2016, State Farm was in possession of its CAT Impairment Determination Executive Summary Report. The Arbitrator noted the following findings of this report:

• During the subject accident, he injured his left knee, both shoulders and his lower back.
• Subsequent to the accident, he has been diagnosed with a left shoulder full-thickness supraspinatus tear, as well as right shoulder full-thickness subscapularis tear. There is a diagnosis of left knee ACL tear and medial meniscus tear on record.
• He has been diagnosed with chronic pain, PTSD and depression post-accident
• An internal medicine specialist, noted that Mr. Thangarajah was diagnosed with diabetes, type II and Crohn's disease prior to the subject MVA, and that both conditions were well-controlled. However, post-MVA, both conditions deteriorated significantly.  Pre-MVA, his diabetes was well-controlled with medications and diet; his diabetes worsened after the MVA and he now requires insulin.
• Post-MVA, Mr. Thangarajah was hospitalized after fainting in the washroom due to a rectal bleed. Pre-MVA, his Crohn's/Ulcerative Colitis was well controlled with sulfasalazine; however, he now requires immune modulators, Remicade and diet control post-MVA for management of his condition.

In the Arbitrator’s view, after State Farm was in receipt of the above report, it clearly had a duty to reassess Mr. Thangarajah’s file and specifically look into the benefits that had been denied.  It is clear that given the injuries he sustained, and his condition as of April 2016, all of the benefits should have been paid and it was not reasonable for State Farm to maintain their denials.  It is my finding that State Farm acted in a manner that was imprudent, stubborn, and inflexible with respect to the medical benefits being claimed, and thus unreasonably delayed payments of Mr. Thangarajah’s medical benefits.

With respect to the amount of the Special Award payable, the Arbitrator requested more information.

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It is important that you review your accident benefit file with one of our experienced personal injury / car accident lawyers to ensure that you obtain access to all your benefits which include, but are limited to, things like physiotherapy, income replacement benefits, vocational retraining and home modifications.