Neutral Citation: 1995 ONICDRG 15

P-004685

ONTARIO INSURANCE COMMISSION

BETWEEN:

RAJENDRA RAMJEET

Applicant (Appellant)

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer (Respondent)

Before:

Elisabeth SachsDirector of Arbitrations

Counsel:

Michael Canning (for Applicant, Appellant)

Harry P. Brown (for Insurer, Respondent)

APPEAL DECISION

I. NATURE OF PROCEEDINGS

By Notice of Appeal filed January 18, 1994, the applicant Rajendra Ramjeet (the appellant), appeals from the decision on a preliminary motion of K. Julaine Palmer dated December 23, 1993 which determined an insurer may require an examination of an insured person under s.23(2) of Ontario Regulation 672¹ after the insurer has terminated weekly income benefits and that the section permits examinations of the insured person by more than one qualified medical practitioner. The appellant also appeals the refusal to grant him an interim order reinstating weekly income benefits pending the disposition of the arbitration hearing.

The parties made oral submissions on October 3, 1994. The arbitration hearing was scheduled to start January 23, 1995 and certain evidence to be tendered may have been affected by the outcome of this appeal. Accordingly a decision was issued by letter to the parties dated and effective on January 6, 1995. Subsequently, the arbitration proceedings were settled. The following are the reasons for decision on the appeal.

II. ISSUES

The issues raised are:

1. Is payment of weekly income benefits a condition precedent to an insurer requesting a medical examination under s.23(2) the Schedule?

2. Following a termination of benefits, can an insurer compel the insured person to attend a medical examination under the section?

3. Does an arbitrator have the power to make interim orders reinstating disputed benefits under the Insurance Act, R.S.O. 1990, c.I-8 as amended (the Act) as it stood before January 1, 1994?

III. SUBMISSION & ANALYSIS

Issue #1 - Payment as Condition Precedent

The appellant’s main argument is that by terminating his benefits, the respondent has “declared” the appellant no longer entitled to benefits and no longer considers him to be an “insured” within the meaning of s.224(1) of the Act².

That being the case, it is submitted the respondent cannot compel the attendance of the appellant at an examination scheduled under s.23(2) of the Schedule since only an “insured person” can be so compelled³. On the facts, the appellant states the arbitrator was wrong when she noted only weekly income benefits were terminated when in fact all benefits had been stopped. The appellant therefore claims he is “uninsured” as a result of this denial of all benefits. A condition precedent to the respondent’s rights under s.23 of the Schedule must be reinstatement, or continued payment of benefits.

The respondent counters that termination of benefit payments, whether weekly income or otherwise, does not “determine” entitlement or change the status of a claimant as an insured person. Shortly put, the argument is that once an insured is such by s.224 of the Act or the definition section of the Schedule, he or she is always an insured person for the purpose of making a claim. The respondent says entitlement to benefits and status as an “insured person” are separate issues, not tied together. In order to prove entitlement, an insured person (who is always such) must prove on the balance of probabilities that he or she meets the various tests in the Schedule to receive the benefits claimed. Therefore, an insured person may well be in a different category from an “entitled” person, who may be a spouse, dependent or other category by s.2 of the Schedule. If there is disagreement on entitlement, an arbitrator or court will decide that matter but it does not change the insured person’s status as an insured.

In my view, payment or not of weekly income or other benefits does not affect a claimant’s status as an insured person. Either persons are “insured” under the Act or the Schedule, or they are not. If a claimant is not an insured person, then no claim may be launched and entitlement is not an issue. However, a claimant who falls within the definition of insured person may indeed not be entitled to benefits for other reasons including he or she does not meet the statutory requirements to receive them. An insurer terminating a benefit payment, whether for good reason or subsequently established inadequate reason, does not by that act change the status of the claimant.

As a result, I find s.23(2) of the Schedule applies to the appellant as an insured person notwithstanding the cessation of benefit payments by the respondent. Unlike some of the “pay pending dispute” payments which cannot be stopped unilaterally, weekly income benefits which are the subject the pending arbitration are not so circumscribed. The respondent, in answering a Part IV Benefits Claim, does not need to reinstate or continue those payments in order to avail itself of the Schedule’s provisions.

Issue #2 - Compelling Attendance

The appellant argues the respondent should not be able to compel his attendance at a medical examination after stopping benefit payments because the respondent should have properly evaluated the claim before the initial termination. If the respondent wanted further investigations or was not sure whether the appellant was entitled to benefits, it should have paid them until it was certain. Here, the appellant notes the respondent did not ask for further medicals until more than seven months after the termination.

The appellant also submits that requiring more examinations is prima facie evidence of bad faith on the part of the respondent. If the respondent believed it lacked, or had conflicting, information it should have paid benefits while attempting to ascertain its final position. The appellant states the respondent must live with the current evidence on termination or pay; it cannot simply stop payments and then get more evidence through the mechanism of s.23(2). Moreover, the appellant argues that by using this method, an insurer who has already demonstrated its bad faith also prevents a claimant from exercising his or her right to mediate under s.25 of the Schedule as the section restricts the right to do so if a person has not made him or herself reasonably available for an examination.

The respondent says good faith is not the point here. If it is determined the respondent should have paid benefits and conducted itself in a manner that may be found to be unreasonable in withholding them, or engaged in unfair or deceptive business practices, there are other remedies available. In the former situation, an arbitrator may make a special award penalizing the insurer, and in the latter the Director may report the insurer to the Superintendent of Insurance for further action. If the arbitrator finds the demand by an insurer to attend a medical examination in order to reinstate benefits was unreasonable, the special award is available, however nothing compels an insurer to pay pending dispute or disposition of that issue.

Section 23(2) has a requirement of reasonableness. It is clear to me a claimant may indeed resist attendance in an examination because in his or her view it is an unreasonable requirement in the circumstances. This not unusual argument has been made in several cases. In Scott v. T.T.C. (Markel Insurance), the questions of whether an examination is reasonably required and a claimant has appropriately refused it were canvassed in some detail. In this case, the appellant throughout sent the respondent updated medical information in an effort to persuade it to reinstate benefits. Indeed, those efforts proved partially successful insofar as the respondent determined the evidence was now so conflicting that it needed, before the arbitration, its own expert opinion to come to a final decision. While I understand the concern the respondent, as it were, sat on its hands for a substantial period of time, I do not believe the arbitrator was incorrect in finding this was not an action taken in bad faith. I am not prepared to overturn the arbitrator’s findings of fact on the evidence before her on the motion, except to note I do not read her decision to say the respondent was requesting medical information when the appellant was the one providing it. I find, notwithstanding the able argument of Mr. Canning on this point, the insurer can compel the attendance of the claimant at a medical examination notwithstanding the termination of benefits.

Issue #3 - Interim Orders

The appellant argues a combined reading of the Act and the Statutory Powers Procedure Act, R.S.O. 1990, c.s-22 implicitly gives the arbitrator the jurisdiction to make interim orders reinstating benefits pending a hearing to determine a claimant’s entitlement to them. The reasoning is that an arbitrator is required to determine “all issues in dispute”⁴ and no time limit is imposed as to when those issues arise, i.e. at any time before the hearing. The 1994 amendments to the Act⁵ simply codify these inherent powers.

The respondent answers by indicating there was no evidence before the arbitrator to determine entitlement on an interim basis. This is a factual issue. The respondent also states the jurisdiction of an arbitrator is limited by the statute and cannot be enlarged to give him or her more power than explicitly granted. The words “issues in dispute” mean the ultimate issues, being entitlement to benefits or quantum, and not interim payment where those issues have not been determined. This is not the same, the respondent argues, as a determination of corollary or ancillary issues for example, whether a matter was settled in mediation and is now brought forward to arbitration. Unless the issue is collateral or preliminary, the respondent says there is no inherent jurisdiction to make interim awards of benefits.

Arbitrator Palmer, at page 8 of the decision, states any order made must be “related to determining the issues, not pending a decision on those issues”. I agree. Before the arbitrator is a question of this appellant’s entitlement to weekly income benefits. From it will flow, if necessary, a determination of the benefit amount if the appellant is entitled. Under the law that existed when the arbitrator heard this motion, no authority existed to make an interim weekly benefit reinstatement order as it was neither preliminary nor collateral to the disposition of the very issues sought to be arbitrated.

Issue #4 - Other Grounds of Appeal

Although the above were the principal arguments, in his Reasons for Appeal the appellant notes the arbitrator concluded the respondent had sufficient medical information in March, 1993 to terminate the appellant’s weekly income and rehabilitation benefits. I find no reference to this in the arbitrator’s decision except for the statement that on the documentary evidence, she could not find the respondent had breached its duty of good faith.

The appellant also alleges the arbitrator found the respondent was the party seeking further medical information after terminating benefits. In the decision, the only reference is the arbitrator’s statement that information “flowed to the insurer throughout the period after the termination”. I do not see this as a finding the respondent actively requested medical information and it is common ground it did not do so. These two additional grounds are not sufficient to overturn the decision.

IV. EXPENSES

While the appellant was not successful in this appeal, he raised issues which are fundamental to the determination of when and in what circumstances an insurer might require the attendance of a claimant at a medical examination under the Schedule. The appeal was not brought frivolously nor with undue delay. The appellant is entitled to his expenses of the appeal which may, if the parties cannot agree, be assessed upon written submissions to be filed with the Registrar.

V. ORDER

1. The appeal from the decision on a preliminary motion of Arbitrator Palmer dated December 23, 1993 is dismissed.

2. The appellant is entitled to his expenses of this proceeding.

February 28, 1995

Elisabeth Sachs

Director of Arbitrations

Date

APPENDIX 1

Cases Referred To

Doyle Clinic Ltd. v. Newton, 1943 CanLII 324 (ON CA), [1943] O.W.N. 411

Rees v. Pilot Insurance Company (1987), 1987 CanLII 9936 (ON HCJ), 26 C.C.L.I. 127

Scott v. T.T.C. (Markel Insurance), (OIC File No. A-001116)

Toronto v. Toronto Railway, 1918 CanLII 487 (ON SCAD), [1920] 44 O.L.R. 308

Footnotes

1. 1Before January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. As of that date it became the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994. The term “Schedule” herein refers to O.Reg. 672.
2. 2s.224(1):”insured” means a person...who is entitled to statutory accident benefits under the contract whether or not described therein as an inusred person.
3. 3s. 23(2):”...the insurer may...require an examination of the insured person as often as it reasonably requires...”
4. 4Sections 20(2); 279(4) and 282(3) of the Act.
5. 5Section 279(4.1) of the Act.