Ile Beros v. Allstate Insurance Company of Canada, 1997 ONICDRG 188

Ontario Insurance Commission

Neutral Citation: 1997 ONICDRG 188 OIC A96-001606

Between: Ile Beros, Applicant and Allstate Insurance Company of Canada, Insurer

Decision on a Preliminary Issue

Issues:

The Applicant, Ile Beros, was injured in a motor vehicle accident on February 13, 1996. He applied for and received statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule¹. Allstate terminated weekly income replacement benefits on April 23, 1996, and disputed the amount of the weekly benefit claimed by Mr. Beros. The parties were unable to resolve their disputes at mediation sessions held on August 19 and September 25, 1996, and Mr. Beros applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended on October 8, 1996. Mr. Beros failed to attend two Insurer Medical Examinations (IME) on October 11, 1996 and August 27, 1997 and Allstate brought this preliminary motion to argue he was therefore precluded from proceeding to arbitration.

1. What are the consequences of the Applicant's failure to attend two medical examinations arranged by Allstate?

2. Does the Applicant's failure to comply with production orders and undertakings given at the pre-hearing discussion amount to an abuse of process, and, if so, should the application be dismissed?

Result:

1. The arbitration will proceed on December 2, 1997 on the issue of ongoing entitlement to benefits and Mr. Beros is precluded from relying on any information or document relevant to this issue unless he provides such to the Insurer no later than November 7, 1997.

2. The Applicant's conduct does not amount to an abuse of process and he may proceed to arbitration on the issue of the quantum of benefits on the conditions specified in the Order.

Hearing:

The preliminary issues hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario on August 12th, 1997 and resumed via teleconference on September 3, 1997. Those present at the hearing, and the exhibits filed are listed at the end of this decision.

Introduction

At the pre-hearing discussion held on April 7, 1997, both quantum and ongoing entitlement to weekly income replacement benefits were identified as issues to be determined at the arbitration hearing. The Insurer took the position at the pre-hearing discussion that Mr. Beros was precluded from proceeding to arbitration on the issue of entitlement because he failed to attend an insurer's medical examination (IME). Subsequent to the pre-hearing, conference Mr. Beros failed to attend a second IME. The Insurer takes the same position with respect to the second examination and argues, in the alternative, that the application for arbitration should be dismissed because Mr. Beros' failure to comply with production orders and undertakings amounts to an abuse of process.

What are the consequences of the Applicant's failure to attend two IMEs?

Section 65 of the Schedule gives an insurer the right to require a medical examination of an insured person "as often as reasonably necessary." The onus is on the insurer to establish that its request was reasonably necessary and that it made reasonable efforts to schedule the examination at a time convenient to the insured person.

The consequences of failing to attend a reasonably necessary IME depend on whether the non-attendance occurs before or after mediation has commenced.

Prior to mediation, section 71.1 of the Schedule and subsection 280(2) of the Insurance Act operate together to deny access to the dispute resolution process:

71.1. No insured person shall commence a mediation proceeding under section 280 of the Insurance Act unless he or she,

(c) has made himself or herself reasonably available for an examination under Section 65.

281(2). No person may bring a proceeding in any court or refer a matter to arbitration unless mediation has first been sought and has failed.

If mediation occurred prior to the section 65 request to attend an examination, which it had in this case, the plain wording of section 71.1 cannot be construed so as to deny an applicant access to arbitration. After mediation, the consequences of failing to attend are determined according to general principles necessary to ensure a fair and adequate hearing. This view is expressed in the appeal decision of F.S. and Belair Insurance Company Inc., ( June 11, 1996,) OIC P96-00039, which is discussed below.

I find that the first medical examination scheduled for October 11, 1996, was not reasonably necessary. No evidence was presented at the hearing as to why the Insurer thought it was reasonably necessary, the nature of the injuries, what previous investigations, if any, had taken place, the purpose of the examination, or about which aspect of the claim it related to. Furthermore, there was no evidence that the Insurer made any effort to schedule this examination at a time convenient for Mr. Beros. Having found that this examination was not reasonably necessary, I find that no consequences attach to Mr. Beros' failure to attend.

A second IME was scheduled for August 27, 1997, some four months after the prehearing conference. At that point, ongoing entitlement to income replacement benefits was clearly identified as an issue and the examination was intended to address that issue. The Insurer had not thus far obtained an independent medical evaluation of the claim and, in addition, was having particular difficulty obtaining disclosure of medical and other information. Orders and undertakings made at the prehearing with respect to medical information had not been complied with. Given that a hearing is scheduled to begin December 2, 1997, and considering the prejudice to the Insurer of responding to the Applicant's claim without the benefit of its own medical evaluation, I find this IME in these particular circumstances to be reasonably necessary.

In F.S. and Belair, Director's Delegate Naylor said:

"After an applicant has accessed dispute resolution, the exercise of an insurer's right to require an examination and the consequences of any refusal to attend, are subject to the principles and rules of the applicant's chosen forum for adjudicating the dispute... In the arbitration process, the insurer's right to require an examination is subject to the general discretion of the tribunal to control its own processes in the context of the overall objectives of the system. These include adequate disclosure, settlement of cases and a fair, informed hearing of the issues remaining in dispute. These objectives are generally served by permitting insurers to arrange timely medical examinations, in appropriate cases. ( p.13)

I agree with the conclusion of the Director's Delegate that the Insurance Act and the Statutory Powers Procedures Act contemplate the making of orders for the purpose of conducting a fair hearing, including, among other things, the power to adjourn a hearing under section 21 of the SPPA for non-attendance at a medical examination "where it is shown to the satisfaction of the tribunal that the adjournment is required to permit an adequate hearing to be held."

Adjourning a hearing until such time as the Applicant makes himself available for a medical examination is not necessarily the only remedy, however, nor one I find particularly appropriate in this case. The Applicant cannot be located in spite of searches conducted by both his own counsel and the Insurer. His counsel advises that his client does not appear to be residing at his last known address and he has not heard from him since February of this year. It does not seem likely that notice of yet another IME would reach the Applicant. There is no benefit to anyone in delaying these proceedings any longer. I therefore order that the hearing proceed on December 2, 1997 on the issue of ongoing entitlement to income replacement benefits and that Mr. Beros will not be permitted to rely on any information or document relevant to that issue that he has not provided to the Insurer by November 7, 1997. This decision does not preclude the Insurer's right to request an IME should one be required as a result of information produced by the Applicant.

Does the Applicant's conduct amount to an abuse of process, and, if so, what are the consequences?

The prehearing arbitrator in this case ordered Mr. Beros' counsel to provide Mr. Beros' health card number and date of birth within seven days of the date of the prehearing letter. She also ordered him, on behalf of Mr. Beros, to request, and produce when obtained, certain documents from his Ministry of Community and Social Services file within four weeks of the prehearing.

Mr. Beros' counsel also undertook to produce employment-related documents in the possession of Mr. Beros within the same time period, to enable the Insurer to determine the correct amount of weekly income benefits.

No documents have been produced to date. Applicant's counsel last spoke to his client prior to the prehearing and has not been able to locate him since that time. Mr. Beros did not attend either the prehearing conference or this hearing of the preliminary issues. Also, he did not attend a meeting with an accountant in February, 1997, arranged by the Insurer with Mr. Carranza's consent.

The medical, tax and employment information that is the subject of the orders and undertakings are essential to a fair and adequate determination of the issues in dispute. In fact, no "hearing" would be possible without this information. The Insurer is quite clearly prejudiced by the Applicant's failure to disclose this information in a timely manner. The Insurer characterises the Applicant's conduct, including his failure to personally participate in the dispute resolution process or to instruct his counsel, as an abuse of process. The Insurer argues that the appropriate sanction for such conduct is dismissal of the Applicant's claim, and points to subsection 23(1) of the Statutory Powers Procedures Act as the foundation of an arbitrator's jurisdiction to do so:

23. (1) A tribunal may make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes.

There is no evidence before me to suggest an intention on the part of Mr. Beros to abuse the dispute resolution process or to suggest that his conduct is wilful. In the absence of any explanation whatsoever of his conduct, I do not find, at this point in the proceedings, that it amounts to an abuse of process. Even were I to find that Mr. Beros' conduct amounted to an abuse of process, it is not clear to me that I could, on procedural grounds alone, go so far as to dismiss a claim without a hearing on the merits in the face of subsection 282(3) of the Insurance Act, which requires that "The arbitrator shall determine all issues in dispute....."(emphasis added.) In any event, I find that the prejudice to the Insurer of the Applicant's failure to meet his obligations can be effectively addressed by other means.

Unfortunately, a fair and adequate hearing on the merits of Mr. Beros' claim on the issue of quantum of benefits will not be possible until Mr. Beros has complied in a timely manner with the production requirements made of him with respect to that claim. Until he does so, the Insurer's ability to properly evaluate or defend the claim is prejudiced.

The sanctions for failure to produce documents are found in Rule 32 of the Dispute Resolution Practice Code. Rule 32.5 provides:

"If a party fails to produce documents that an arbitrator considers necessary to the determination of the issues in dispute, the arbitrator may:

(a) draw an adverse inference against the party who failed to produce the document;

(b) deny expenses to the failing party in accordance with Rule 73; or

(c) make such other order as the arbitrator considers appropriate.

Pursuant to Rule 32.5 (c), I find that an appropriate sanction would be to require that the hearing of the application for arbitration with respect to the issue of the quantum of income replacement benefits proceed on December 2, 1997 and that Mr. Beros not be entitled to rely on any evidence at the hearing that is contained in the documents he was ordered to produce unless he produces these documents to the Insurer by November 7, 1997. This does not prejudice the Insurer's right to request an adjournment to allow an accountant to review the documents prior to a hearing.

Return of all or part of the Insurers assessment:

Subsection 282(11.2) of the Insurance Act allows an arbitrator to order an applicant to pay an amount up to the full amount of the insurer's assessment fee if the arbitrator finds that an application has been frivolous, vexatious or an abuse of process. As stated above, a finding that Mr. Beros' conduct amounts to an abuse of process is premature at this time, and I leave any decision concerning repayment of the Insurer's assessment fee to the hearing arbitrator.

Is the Insurer entitled to its expenses incurred in the arbitration pursuant to section 282(11) of the Insurance Act, R.S.O. 1990, Chapter I.8, as amended?

The Insurer asks for an interim award of its expenses of this preliminary issue hearing. Prior to November 1, 1996, section 282(11) of the Insurance Act did not permit an insurer to claim its arbitration expenses. This right was added by amendments contained in Bill 59 and in O. Reg. 464/96. Recent cases at the OIC (notably Pinto and General Accident Insurance Company of Canada, (April 10, 1997), OIC A96-001246) have held that the new expense provisions are prospective and so do not apply to applications for arbitration which were filed before November 1, 1996. Mr. Beros' application for arbitration was filed on October 8, 1996, prior to the amendments. I therefore find that the Insurer is not entitled to its expenses on an interim basis.

Reimbursement of cancellation fees paid by the Insurer for the two missed medical appointments

The issue of whether an arbitrator has the statutory authority to order an Applicant to pay a cancellation fee for a missed medical appointment was thoroughly reviewed by then Arbitrator Draper in Tha Huu Dinh and Pafco Insurance Company Limited (October 5, 1994), OIC A-007053. I adopt both the reasoning in that decision and the conclusion that I have no statutory authority to make such an award.

Order:

1. The hearing of the issue of ongoing entitlement to benefits will proceed on December 2, 1997. Mr. Beros is precluded from relying on any information or document relevant to this issue unless he provides such to the Insurer by November 7, 1997.

2. The hearing of the issue of the quantum of income replacement benefits will proceed on December 2, 1997. Mr. Beros will not be entitled to rely on any documents or evidence at the hearing that have not been provided to the Insurer by November 7, 1997.

3. Repayment of the Insurer's assessment is left to the discretion of the arbitrator at the hearing.

October 15, 1997

Susan Sapin Arbitrator

Appendix

Present at the Hearing:

Mr. Beros's Representative: Juan F. Carranza Barrister and Solicitor

Allstate's Representative: Todd J. McCarthy Barrister and Solicitor

Allstate's Officer: Douglas Morgan

There were no witnesses. The only exhibits are the Report of Mediator dated September 25, 1996 and the pre-hearing letter dated May 26, 1997, which form part of the arbitration record.

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents after December 31, 1993, and before November 1, 1996, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 635/94 and 781/94.