Insurer Fails to Meet Procedural Obligations

February 08, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Ferawana and State Farm- Medical Benefits; cost of medical benefits; cost of examinations not covered; injured party has not shown insurer failed to meet proedural obligation; insured has contradictory evidence, poor recall and is unreliable witness

Ferawana and State Farm

Decision Date: 2016-08-29
Heard Before: Adjudicator Isabel Stramwasser

REASONS FOR DECISION

Samir Ferawana was injured in car accident on May 28, 2011. He applied received statutory accident benefits from State Farm , however, when disputes arose concerning his entitlement to benefits and the parties were unable to resolve their disputes through mediation Mr. Ferawana applied for arbitration at the FSCO.

The issues in this arbitration are as follows:

1. Is Mr. Ferawana entitled to the following medical benefits?
   1. $70.00 for a therapy ball recommended by Physio Active Rehab in a treatment plan dated August 18, 2011
   2. $1,877.00 for prescribed activities, exercises and modalities recommended by Heartland Wellness Clinic in a treatment plan dated November 7, 2013
   3. $1,541.60 for prescribed activities, exercises and modalities recommended by Heartland Wellness Clinic in a treatment plan dated October 7, 2014
   4. $2,294.20 for psychological treatment recommended by Dr. JM in a treatment plan dated May 2, 2014
2. Is Mr. Ferawana entitled to the cost of the following examinations?
   1. $1,979.36 for a psychological assessment recommended by Dr. JM (psychologist), Dr. SG (psychologist) and PB (M.Ed. in counselling psychology) in a treatment plan dated April 8, 2014
   2. $1,950.80 for a chronic pain assessment recommended by Dr. IW (physician) and Dr. RM (chiropractor) in a treatment plan dated April 14, 2014
3. Is State Farm prohibited from taking the position that Mr. Ferawana has an impairment to which the Minor Injury Guideline (“MIG”) applies?
4. Is State Farm liable to pay a special award because it unreasonably withheld or delayed payments to Mr. Ferawana?
5. Is Mr. Ferawana entitled to interest for the overdue payment of benefits?
6. Is State Farm liable to pay Mr. Ferawana’s expenses in respect of the arbitration or is Mr. Ferawana liable to pay State Farm’s expenses in respect of the arbitration?

Result:

1. Medical benefits:
   1. Mr. Ferawana is entitled to a medical benefit in the amount of $70.00 for a therapy ball recommended by Physio Active Rehab in a treatment plan dated August 18, 2011.
   2. Mr. Ferawana is not entitled to a medical benefit in the amount of $1,877.00 for prescribed activities, exercises and modalities recommended by Heartland Wellness Clinic in a treatment plan dated November 7, 2013.
   3.  Mr. Ferawana is not entitled to a medical benefit in the amount of $1,541.60 for prescribed activities, exercises and modalities recommended by Heartland Wellness Clinic in a treatment plan dated October 7, 2014.
   4. Mr. Ferawana is not entitled to a medical benefit in the amount of $2,294.20 for psychological treatment recommended by Dr. JM (psychologist) in a treatment plan dated May 2, 2014.
2. Cost of examinations:
   1. Mr. Ferawana is not entitled to the cost of an examination in the amount of $1,979.36 for a psychological assessment recommended by Dr. JM (psychologist), Dr. SG (psychologist) and PB (M.Ed. in counselling psychology) in a treatment plan dated April 8, 2014.
   2. Mr. Ferawana is not entitled to the cost of an examination in the amount of $1,950.80 for a chronic pain assessment recommended by Dr. IW (physician) and Dr. RM (chiropractor) in a treatment plan dated April 14, 2014.
3. State Farm is prohibited from taking the position that Mr. Ferawana has an impairment to which the MIG applies.
4. State Farm is not liable to pay a special award to Mr. Ferawana.
5. Mr. Ferawana is entitled to interest for the overdue payment of the therapy ball.
6. Mr. Ferawana is liable to pay 75% of State Farm’s expenses in respect of the arbitration.

EVIDENCE AND ANALYSIS:

In order for Mr. Ferawana to establish that he is entitled to a medical benefit or a cost of examination, he must prove that State Farm failed to meet its procedural obligations. Failing that, he must establish causation, prove that his impairment is not “minor” as defined by the MIG and demonstrate that the benefit he requests is reasonable and necessary.

Upon review of the evidence the Arbitrator found that State Farm failed to meet its procedural obligations. As a result, it is required to pay for certain benefits regardless of whether Mr. Ferawana established causation, whether his impairment was outside the MIG or whether the benefits were reasonable and necessary. There are two consequences for a breach of procedure under subsection 38(11). First, the insurer is prohibited from taking the position that the MIG applies. Second, the insurer shall pay those benefits that relate to a certain timeframe.

State Farm’s breach of the ten-day deadline for responding to the therapy ball plan triggers the mandatory payment provisions under subsection 38(11)(2). In order to be payable, the therapy ball must “relate” to the period starting 11 business days after State Farm received the plan and ending at least two months later when (or if) State Farm made a proper denial. In my view, and absent evidence to the contrary, a therapy ball could have been used for treatment at any time during that period. As a result, the Arbitrator concluded that the therapy ball relates to the requisite timeframe.

State Farm argues that a minor procedural non-compliance with the Schedule does not automatically entitle an applicant to the disputed benefit. According to State Farm, an applicant still has to show that the request was reasonable and necessary. The Arbitrator rejected the argument. If correct, it would render the mandatory requirements of subsection (11) meaningless. The payment regime is mandatory and the tribunal has no jurisdiction to carve out exceptions. Consequently, there is no need to proceed with an analysis of whether Mr. Ferawana’s claim for the August 2011 therapy ball was reasonable and necessary.

State Farm is not liable under subsection 38(11) for the other plans. Having found that State Farm failed to meet its procedural obligations with respect to the therapy ball treatment plan, it follows from subsection 38(11)(1) that State Farm is prohibited from taking the position that Mr. Ferawana has an impairment to which the MIG applies. The Arbitrator considered the extent of that prohibition.

On a plain reading of the statute, an insurer that breaches a procedural obligation with respect to one treatment plan is barred from making a MIG determination on all treatment plans. The wording in clause 1 of subsection (11) refers broadly to “impairment” and not to any particular treatment plan. There is no definition of “impairment” in the statute to suggest that the word be restricted to a particular treatment plan or plans. The references to a particular treatment plan in subsection (11) are to the notice requirement and to the payment provision — not to the MIG prohibition.

This interpretation is internally consistent with the rest of the subsection. Had the legislature intended for the remedy in part (1) to apply to just one treatment plan, it would have so specified. In fact, the legislature did so specify at part (2), which refers to just one treatment plan, “[t]he treatment and assessment plan.” It is consistent with the purpose of the MIG for the legislature to require that, if a company makes a MIG determination, it do so as soon as possible. It is also consistent with the purpose of the MIG to prohibit an insurer from raising the MIG at all on a claim if it fails to do so at the outset. These results are in harmony with the stated objectives of the MIG, namely, to speed access to rehabilitation for persons who sustain minor injuries and provide certainty around cost and payment for insurers and regulated health professionals.

It is also consistent with the nature of the MIG for a prohibition to apply to the whole claim and not just to one plan. When an insurer makes a MIG determination, it does not apply to just one treatment plan, it applies to the whole claim. Specifically, when an insurer says that an individual’s impairment is subject to the MIG, that person’s coverage for the entire claim is subject to the $3,500.00 limit referred to in section 18(1) of the Schedule. A plain reading of the statute is compatible with the context of the subsection, the purpose and nature of the MIG and also with the purpose of the statute as consumer protection legislation.

State Farm argues that the interpretation advanced by Mr. Ferawana is absurd, but the Arbitrator disagreed. His interpretation makes logical sense on a plain reading of the statute and is coherent with the spirit and purpose of the MIG and the statute. Mr. Ferawana’s interpretation is reasonable and so it cannot be described as absurd.

There are significant gaps in the medical records, yet Mr. Ferawana says that his symptoms more than two years after the accident were caused by the accident. Mr. Ferawana failed to establish causation between the accident and injuries, therefore State Farm is not liable to pay for the five remaining treatment plans in dispute. The Arbitrator was unable to link the car accident in 2011 with the benefits sought more than two and a half years later.

Credibility was at issue in these proceedings. As was evident in the records and in Mr. Ferawana’s testimony, he was a poor historian. For example, in his statement to State Farm in 2011, he did not know his current address, where he had been living for two years. After noting the Applicant’s report of pain on a scale of 1 to 10, Dr. AM, neurologist, wrote in 2015 that he “believes this client not to be reliable regarding VAS of pain intensity.” Mr. Ferawana’s testimony at the arbitration was obscured by lack of memory and lack of accuracy, such as when he failed to respond clearly to questions about how many children he had or their ages. He was evasive and argumentative on cross-examination, despite repeated warnings that he refrain from answering a question with a question and that he not argue with counsel.  

Mr. Ferawana gave numerous contradictory accounts about his symptoms and medical history. He told State Farm in September 2011 about a prior car accident, overseas, but by the time he met Dr. P in 2014 and Dr. M in 2015, he denied any prior accident. He also told State Farm in 2011 and the insurer’s examiner Dr. Peterkin in 2014 that the reason he did not drive in Canada before or after the accident was that he did not speak English, adding to Dr. Peterkin that he had no difficulty being a passenger in a car. Yet, he told Dr. JM and Dr. M that he was tense and anxious being a driver or passenger in a car. Mr. Ferawana also gave conflicting accounts about his abilities before and after the accident.

In their testimony, both the Applicant and his wife said that he was limited in his activities of daily living after the accident, adding that Mr. Ferawana went from full-time to part-time studies after the accident. However, they did not provide detail about the change in hours and this evidence was not corroborated with school records or with medical evidence that any change in hours was due to the accident. In addition, Mr. Ferawana gave irreconcilable accounts about his psychological and physical symptoms to his many medical professionals.

Mr. Ferawana’s poor recall and his conflicting statements made him an unreliable witness. The Arbitrator gave little weight to his evidence.

About Deutschmann Law

Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us at 1-519-742-7774.

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.