Neutral Citation: 1994 ONICDRG 94
File No. A-007053
ONTARIO INSURANCE COMMISSION
BETWEEN:
THA HUU DINH
Applicant
and
PAFCO INSURANCE COMPANY LIMITED
Insurer
DECISION
Issues:
The Applicant, Tha Huu Dinh, failed to attend a medical examination that was scheduled by Pafco Insurance Company Limited ("Pafco") according to section 23(2) of Ontario Regulation 6721. The physician assessed a "no-show" fee of $250.00. Pafco recovered this expense by deducting $250.00 from Mr. Dinh's ongoing weekly benefits.
The issue in this hearing is:
Is Pafco entitled to recover the "no-show" fee by reducing Mr. Dinh's ongoing weekly benefits?
Mr. Dinh also claims interest on any outstanding amounts owing, and his expenses incurred in the hearing.
Result:
An arbitrator has no jurisdiction to allow an insurer to set off a "no-show" fee from an applicant's accident benefits. Under the Insurance Act and the Schedule, Mr. Dinh is entitled to the $250.00 that was deducted from his weekly benefits, plus interest calculated according to section 24 of the Schedule.
Mr. Dinh is entitled to his expenses related to the arbitration, calculated according to Ontario Regulation 664, Dispute Resolution Expenses.
Hearing:
The hearing proceeded by way of written submissions, as follows:
The Applicant's written submissions, dated August 3, 1994, prepared by Michael J. Gillen, Barrister and Solicitor.
The Insurer's written response to the Applicant's submissions, dated September 6, 1994, prepared by Eric K. Grossman, Barrister and Solicitor.
The Applicant's written reply to the Insurer's response, dated September 8, 1994, prepared by Michael J. Gillen, Barrister and Solicitor.
Reasons for Decision:
1. The Background
Mr. Dinh was involved in a motor vehicle accident on December 18, 1992. He applied to Pafco for accident benefits, including weekly benefits under section 13 of the Schedule. Mr. Dinh received weekly benefits of $185.00 per week from December 25, 1992 to October 8, 1993.
According to section 23(2) of the Schedule, an insurer may require an insured person who is claiming weekly benefits to attend a medical examination:
23.--(2) In respect of claims under Part IV, the insurer may, on reasonable notice, require an examination of the insured person by a qualified medical practitioner, psychological advisor or chiropractor as often as it reasonably requires, and require an autopsy of a deceased insured person in accordance with the law relating to autopsies.
Section 23(2) allows an insurer to evaluate the applicant's claim for benefits through an examination by a medical practitioner of its choice. The medical practitioner is retained by the insurer and, according to section 23(4), the insurer is to "pay the cost of all . . . examinations and certificates under subsection (2)."
Pafco sent a letter, dated May 18, 1993, to Mr. Dinh's lawyer, Mr. Schwarz, advising him that four of his clients, including Mr. Dinh, had been scheduled to be examined on August 3, 1993, by Dr. Ezra Silverstein. The letter states:
We would also remind you that in the event that your clients do not show up for their independent medical examinations, the cancellation fee will be deducted from a future accident benefits cheque.
Mr. Schwarz wrote to Pafco on May 26, 1993, objecting to the choice of Dr. Silverstein and suggesting that the examination be done by a physician mutually agreeable to the applicants and the insurer. Pafco did not accede to this request.
On August 3, 1993, Mr. Dinh failed to attend the examination by Dr. Silverstein. He did not inform anyone that he would not be keeping the appointment, later stating that he was ill. For the purposes of this hearing, however, Mr. Dinh concedes that his failure to attend the examination was not reasonable.
Section 25 of the Schedule sets out the consequences of failing to attend a medical examination:
- No person may commence a mediation proceeding under section 280 of the Insurance Act in respect of benefits under this Schedule unless the requirements of section 22 have been satisfied and the insured person has made himself or herself reasonably available for any examination required under section 23.
Mr. Dinh failed to attend the medical examination on August 3, 1993, and, therefore, could not have applied for mediation. He had no need to apply for mediation, however, because Pafco continued to pay him weekly benefits.
Pafco was assessed a "no-show" fee of $250.00 by Dr. Silverstein as a result of Mr. Dinh's failure to keep his appointment. Nothing in the Schedule states who is responsible for paying a "no-show" fee. Pafco recovered its expense by deducting $250.00 from Mr. Dinh's weekly benefits cheque for the period from August 14, 1993 to August 27, 1993.
Pafco arranged for another medical examination and, on October 4, 1993, Mr. Dinh was examined by another physician. Mr. Dinh then applied for mediation with respect to the reduction of his weekly benefits. Because he had complied with section 23(2) of the Schedule by attending the second medical examination, Mr. Dinh was no longer precluded by section 25 from applying for mediation.
The dispute was not resolved through mediation and, therefore, Mr. Dinh applied for arbitration. The issue to be determined is whether Pafco is entitled to recover the "no-show" fee by reducing Mr. Dinh's weekly benefits.
2. Set-off
Pafco takes the position that it is entitled to set off the "no-show" fee against its obligation to pay accident benefits. Mr. Dinh submits that there is no authority for making him responsible for the "no-show" fee, or for reducing his weekly benefits in order to recover it.
In my view, it is not surprising that Pafco wants to recover the "no-show" fee. It properly scheduled an examination according to section 23(2) of the Schedule. Mr. Dinh failed to attend and acknowledges that he had no reasonable excuse for his absence. Further, it was foreseeable that Dr. Silverstein would charge a "no-show" fee, as anticipated in the letter from Pafco to Mr. Schwarz, dated May 18, 1993.
It was suggested that Mr. Dinh, through his lawyer, implicitly agreed to the recovery of the "no-show" fee by not responding to this aspect of Pafco's letter. I do not agree. Mr. Dinh was required by the Schedule to attend the examination. I am not prepared to treat his lawyer's silence as agreement that any "no-show" fee could be recovered from any future weekly benefits cheque at any rate of recovery.
The real issue is whether Pafco can set off the "no-show" fee against Mr. Dinh's continuing entitlement to weekly benefits. I accept Pafco's assertion that the courts routinely penalize plaintiffs who fail to attend a medical examination without reasonable excuse, despite the absence of a specific rule dealing with the consequences of non-attendance. The question, however, is whether arbitrators have the authority to adopt a similar approach.
Statutory decision-makers, including arbitrators under the Insurance Act, possess only the powers given expressly by the legislation, or arising by necessary implication. The Insurance Act establishes a dispute resolution system to deal with "disputes in respect of any insured person's entitlement to accident benefits or in respect of the amount of accident benefits to which the insured person is entitled." (section 279(1)). Arbitrators are given the authority to decide these disputes if they are not resolved through mediation, but are not given any other general authority with respect to the parties.
The Schedule sets out the rules governing entitlement to accident benefits and the calculation of those benefits. It specifically establishes grounds for disentitling an applicant from receiving benefits (section 17), amounts that can be deducted from the applicant's weekly benefits (section 13(3) and section 15), and the following amounts that the applicant must re-pay to the insurer:
benefits that were paid "through error or fraud" [section 27(1)];
weekly benefits to which the applicant was disqualified under section 17 of the Schedule [section 27(2)]; and,
weekly benefits to the extent that the applicant also received collateral benefits that are deductible under subsections 12(4) or 13(3) of the Schedule [section 27(3)].
Despite the broad regulation-making authority in paragraph 121(1)9 of the Insurance Act, nothing in the Schedule states that the applicant is responsible for a "no-show" fee, or that it may be recovered from ongoing benefits. Instead, section 25 specifically provides that the consequence of an applicant failing to attend a medical examination is that he or she is precluded from applying for mediation.
For these reasons, I am not persuaded that the "no-show" fee is a debt arising under the Schedule. I conclude, therefore, that the "no-show" fee is not within the arbitrator's statutory authority to determine the "insured person's entitlement to accident benefits or in respect of the amount of accident benefits to which the insured person is entitled."
I am also unable to conclude that the authority to deal with a "no-show" fee is necessarily incident to the arbitrator's statutory authority. In Reference Re National Energy Board Act (1986), 1986 CanLII 4033 (FCA), 19 Admin. L.R. 301 (F.C.A.)., the Federal Court of Appeal considered whether the National Energy Board had the authority to order costs, a power that was not specifically conferred by the legislation. In deciding that the National Energy Board did not have a costs power, the court considered:
whether the authority was required as a practical necessity for the Board to achieve the purpose for which it was created; and,
whether it is the type of authority that the Legislature would be expected to have specified in the legislation if it was meant to be conferred.
The arbitrator's role is to determine an applicant's entitlement to benefits under the Insurance Act and the Schedule. In my opinion, the authority to deal with "no-show" fees is not required as a practical necessity in order to perform this function. Further, I would have expected that if the legislative intention had been to make applicants financially responsible for failing to attend a medical examination, some guidance would have been provided similar to the provisions in section 27 of the Schedule dealing with the repayment of other amounts. As stated above, the legislation specifically states that an applicant who unreasonably fails to attend a medical examination is precluded from applying for mediation. In my view, an arbitrator should be slow to read in consequences beyond those specifically set out in the legislation.
I find myself in a position not unlike that faced by Ontario Provincial Court Judge Jones in Ontario (Director of Family Support Plan) v. Freyseng (1994), 1994 CanLII 7175 (ON CTPD), 18 O.R. (3d) 361 (Ont. Prov. Ct.). In that case, a law firm disputed a garnishment application on the basis that although it ordinarily would have owed funds to its former partner, he had stolen money from the firm's accounts, had been disbarred, and the law firm was suing him for a substantial amount of money. Judge Jones expressed sympathy for the law firm's position, but concluded that she had no jurisdiction as a Provincial Court judge to order the equitable relief of allowing the firm to set off its unliquidated damages.
Pafco referred to my decision in Melinda J. Upper and Canadian General Insurance Company, June 3, 1994, OIC File No. A-002855, as authority for the proposition that an arbitrator can allow an equitable set-off. First, I note that in Upper, no specific order was made requiring or authorizing the set-off. Second, the proposed set-off in Upper involved two amounts that are clearly within the arbitrator's authority to determine - weekly benefits and expenses. While it might be necessary for an arbitrator to deal with the set-off of different amounts owing under the Insurance Act and the Schedule in order to issue a sensible order, the same cannot be said of debts arising outside of this legislation.
I conclude, therefore, that nothing in the Insurance Act or the Schedule relieves Pafco from its obligation to provide full benefits to Mr. Dinh. Therefore, he is entitled to receive the $250.00 that was deducted from his weekly benefits, plus interest calculated according to section 24 of the Schedule.
This is not to conclude that Pafco has no claim against Mr. Dinh that arises outside of the Schedule. I simply have no authority to decide that issue.
3. Abuse of process
Pafco submitted, in the alternative, that the "no-show" fee should be recovered through an order under section 282(11.2) of the Insurance Act, which provides:
282.-(11.2) If an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration under section 14.
It was submitted that commencing this arbitration was an abuse of process because Mr. Dinh acknowledges that his failure to attend the medical examination was unreasonable. In my view, however, Mr. Dinh applied for mediation, and then arbitration, to deal with the proper consequences of his failure to attend the medical examination. He has raised a legitimate issue and, therefore, I do not believe that this proceeding can be characterized as frivolous, vexatious or an abuse of process.
4. Expenses
An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:
282 (11) The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.
The decision to grant expenses is discretionary, but arbitrators have consistently granted expenses unless the applicant's claim was fraudulent, manifestly frivolous or vexatious, or the Applicant's conduct unduly prolonged the proceedings.
It is somewhat tempting to penalize Mr. Dinh for his failure to attend the medical examination by denying him some or all of his expenses. It might be argued that his unreasonable behaviour led to the need for the arbitration hearing and, therefore, he should not recover his expenses. However, this arbitration dealt with Pafco's response to Mr. Dinh's non-attendance. It challenged the insurer's right to recover a "no-show" fee from an applicant's ongoing entitlement to benefits. This is a novel issue under the Schedule that has implications beyond Mr. Dinh's case.
In my opinion, Mr. Dinh appropriately used the dispute resolution process. He minimized the length and cost of the proceeding by suggesting that it proceed by way of written submissions. In all of the circumstances, I conclude that Mr. Dinh should be granted his reasonable expenses related to this arbitration.
Expenses are calculated according to Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 664, R.R.O. 1990. The parties are encouraged to reach an agreement as to the expenses. However, if an agreement cannot be reached, I remain seized of this matter and either party may apply for an assessment of the expenses.
Order:
Mr. Dinh is entitled to the $250.00 that was deducted from his weekly benefits, plus interest calculated according to section 24 of the Schedule.
Mr. Dinh is entitled to his expenses related to the arbitration, calculated according to Ontario Regulation 664, Dispute Resolution Expenses.
October 5, 1994
David R. Draper
Arbitrator
Date