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Federico and State Farm https://www5.fsco.gov.on.ca/AD/5688
The Arbitrator found, at 24, that “[a] Psychological Paper File Review Report of Dr. G. Challis, Psychologist, forms the basis of State Farm’s position that the OCF-18, dated October 25, 2011, is not reasonable or necessary.”
Arbitrator Huberman gave little weight to the Challis report, for the following reasons. The Challis report was inconsistent with the preponderance of probabilities and unreasonable in the circumstances. Dr. Challis was a psychologist commenting on occupational therapy. He based his conclusions on his incorrect restatement of the evidence. Dr. Challis’ opinion was not persuasive when contrasted with the “voluminous” evidence in the proceeding.
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 (page 25).
Despite the findings of Arbitrator Huberman, State Farm also submits that it did not unreasonably deny the disputed plans because it reviewed the reports of Dr. Knolly Hill, Mr. Balaban, Dr. Challis and Ms. Reich. However, at page 19 of his reasons, Arbitrator Huberman accepted and gave considerable weight to the evidence of Dr. Knolly Hill and Mr. Balaban and found that their evidence supported the reasonableness and necessity of the treatment in dispute. In addition, at page 20, Arbitrator Huberman found that the Balaban report “does not clearly suggest that Ms. Federico has returned to her pre-accident status.” In addition, Arbitrator Huberman gave little weight to Dr. G. Challis’ Psychological Paper File Review Report of December 6, 2011 and found it inconsistent with the preponderance of probabilities and unreasonable in the circumstances. The Arbitrator found it unreasonable that Dr. Challis was a psychologist commenting on occupational therapy. Arbitrator Huberman found that Dr. Challis based his conclusions on his incorrect restatement of the evidence. The arbitrator also found that Dr. Challis’ opinion was not persuasive when contrasted with the “voluminous” evidence in the proceeding.
I find that State Farm’s decision to withhold benefits in this case was unreasonable for the three following reasons, any of which I consider sufficient to justify a special award.
1. The medical evidence “overwhelmingly” supported the treatment plans
First, at the time State Farm denied both treatment plans in dispute, it had strong medical evidence to support them. Arbitrator Huberman described the evidence in support of the plans as “overwhelming” at that particular time. I agree and adopt that finding as my own.
I find that State Farm acted unreasonably in this case because it did not give due regard to what Arbitrator Huberman described as the “voluminous” evidence in support of the two treatment plans in dispute. When adjusting a claim, an insurer does not have to agree with the majority of medical opinions. However, it must duly consider those medical opinions. The evidence does not show that State Farm took steps to reconsider the requests for treatment after receiving overwhelming evidence that the requested treatment plans were reasonable and necessary.
2. State Farm relied on two unreliable reports
Second, State Farm relied on two reports that a reasonable, unbiased adjuster would have considered unreliable. It relied on the Morse report to deny the October 2010 treatment plan and relied on the Challis report to deny the October 2011 treatment plan. However, the Morse report did not support its own conclusions and the Challis report misquoted the Morse report on a material matter. Arbitrator Huberman provided detailed explanations of the problems with both reports. I agree with those explanations and adopt them as my own.
State Farm acted unreasonably in this case because it based its denials on the error-ridden medical opinions of Morse and Challis. A close reading of the Morse and Challis reports would have enabled a reasonable adjuster to conclude that they had errors. A reasonable adjuster critically reviews the insurer’s own medical reports and does not simply adopt their conclusions. A reasonable adjuster also looks at a report’s reasons and assesses whether they support its conclusions.
3. State Farm did not reconsider its decision in light of new information
Third, it was unreasonable for State Farm to continue to deny the claim without assessing new information as it was received. The evidence compels the conclusion that, once State Farm received the Morse and Challis opinions denying the two claims, it chose to remain indifferent to whatever further evidence it received. State Farm seems to have proceeded selectively, taking the favourable elements from the Morse and Challis reports and ignoring what Arbitrator Huberman described as the “voluminous” evidence not supportive of its position.
In particular, State Farm did not reconsider the validity of the claim after receiving the report of Ms. Sandy Sarkissian on November 22, 2013. Although Ms. Sarkissian pointed out errors and omissions in the Morse report, State Farm apparently had no second thoughts. Ms. Sarkissian’s report did not provoke State Farm to any further medical or occupational evaluation of Ms. Federico’s capabilities.
State Farm maintained its position even after Ms. Federico filed this application for arbitration and the insurer heard her arguments at mediation and in the arbitration proceedings. Unlike, for example, the claims adjuster in the Erickson case (Erickson at page 5), the adjuster who testified in this case did not indicate that, based on the evidence at the hearing, the insurer was no longer disputing the treatment plans. I agree with Senior Arbitrator Rotter in Erickson that “[a] reasonable insurer would satisfy itself that its position was still correct, and make every effort to evaluate the merits of the insured’s position before proceeding to a hearing” (at 11). State Farm did not meet that standard of reasonableness in this case. Indeed, State Farm did not change its mind until it was compelled to do so by the decision of Arbitrator Huberman.
I conclude that withholding the two treatment plans was unreasonable, not because State Farm should have allowed the benefits, but because it did not properly adjust the claim. This case is by no means an example of how to properly adjust accident benefits. Rather, I find State Farm’s conduct in adjusting the two disputed benefits stubborn, immoderate, imprudent and inflexible. By this conduct, State Farm put itself in the position of being unable to make a reasoned decision about the two requests for benefits.
The evidence leads me to conclude that State Farm unreasonably withheld payments to Ms. Federico of the two treatment plans in dispute, contrary to s.282(10) of the Insurance Act, and that, as a result, the insurer must pay a special award on both benefits claimed.