Neutral Citation: 1999 ONFSCDRS 101

FSCO A98-000104

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

WAYNE TALBOT

Applicant

and

LUMBERMENS MUTUAL CASUALTY COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Lawrence Blackman

Heard:

By telephone conference call on June 1, 1999. Abbreviated oral reasons only were given on June 1, 1999.

Appearances:

John Lockhart for Mr. Talbot Harry P. Brown for Lumbermens Mutual Casualty Company

Issues:

The Applicant, Wayne Talbot, was injured in a motor vehicle accident on February 27, 1994. He applied for mediation on or about April 9, 1996, seeking from Lumbermens Mutual Casualty Company ("Lumbermens"), inter alia, ongoing income replacement benefits payable under the Schedule.¹ Mediation held on May 23, 1996 failed to resolve the issues in dispute. Mr. Talbot applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Act") on January 14, 1998.

Mr. Talbot submits that he is substantially unable to perform the essential tasks of his pre-accident employment as a result of a broken clavicle. He relies on the medical evidence of Dr. Ogilvie-Harris, an orthopaedic surgeon and Dr. Braaten, his family doctor. Dr. Ogilvie-Harris' medical report was served on the Insurer by letter dated March 12, 1998. Dr. Braaten's report was served by letter dated May 29, 1998. Mr. Talbot subsequently saw Dr. Ogilvie-Harris on April 12, 1999. My understanding is that the purpose of this appointment was for an updated assessment as opposed to an inquiry into a new area of disability. Counsel for the Applicant indicated that he was having difficulty obtaining a further report from Dr. Ogilvie-Harris.

At the initial pre-hearing before me on April 21, 1998, the arbitration hearing was set to commence June 14, 1999. My April 22, 1998 pre-hearing letter indicates the Insurer's intention to call "an orthopaedic surgeon" as a witness. There is no notation, however, of any intent by the Insurer to set up an insurer's medical examination ("IE"). At the Insurer's request, the pre-hearing discussion was resumed before me on February 17, 1999 to deal with production issues. No indication was given by the Insurer at the second pre-hearing of its intent to set up an IE.

On May 25, 1999, Lumbermens faxed Mr. Talbot's counsel requesting that the Applicant (who lives in Port Dover on Lake Erie) attend an IE in Toronto on May 27, 1999, with Dr. Zeldin, an orthopaedic surgeon. The Insurer maintains that it has the right to obtain current information pertaining to the Applicant's claim. It would appear from the review of his file by Lumbermens' counsel, that the Insurer has never had Mr. Talbot examined by its own orthopaedic surgeon.

There was no indication, however, that the Applicant had ever previously refused to see an orthopaedic surgeon of the Insurer's choice.

Counsel for the Applicant responded to the IE request by indicating that reasonable notice had not been provided. Lumbermens then advised that Dr. Zeldin could see the Applicant on May 31, 1999 in Toronto. The Insurer advised that Dr. Zeldin's report would be available the day following the examination. The Insurer indicated that the Applicant would then have approximately two weeks to have the report reviewed. The Applicant declined to see Dr. Zeldin. Lumbermens now advises that Dr. Zeldin can see Mr. Talbot on either June 3 or June 8, 1999.

The Applicant declines to attend upon Dr. Zeldin on either date. Mr. Talbot states that the Insurer has not requested any medical assessment since a disability assessment by a Designated Assessment Centre ("DAC") was conducted on February 16, 1996 (and weekly benefits terminated that same month). The Applicant submits that he would be prejudiced by attending the now proposed IE as his "medical representatives will not have adequate time to formulate a response to any change in medical opinion prior to the hearing."

Counsel formulated the following question for determination:

Is the Insurer's request for a medical examination of Mr. Talbot by Dr. Zeldin on June 3 or 8, 1999 reasonable?

Result:

The Insurer's request for a medical examination of Mr. Talbot by Dr. Zeldin on June 3 or 8, 1999 is not reasonable.

EVIDENCE AND ANALYSIS:

Section 65 of the Schedule allows for IEs. It provides, in part, that:

65.-(1) An insurer may, for the purposes of Part VII, VIII or X and as often as reasonably necessary, give an insured person notice requiring the person to be examined by one or more persons specified by the insurer, each of whom is a member of a health profession or a person with expertise in vocational rehabilitation.

(2) An examination under subsection (1) shall be scheduled by the insurer and, for that purpose, the insurer shall make reasonable efforts to schedule the examination for a time that is convenient for the insured person and shall provide the insured person with reasonable notice of the examination.

The Applicant does not deny the Insurer's general right to have an orthopaedic surgeon of its choice examine him. I have no hesitation in agreeing that it is reasonable for the Insurer to have its own orthopaedic surgeon examine Mr. Talbot to properly adjust its file. I find it puzzling, however, that it took the Insurer more than five years to make this request. I have concerns, in the context of subsection 65(2) of the Schedule alone, as to the reasonableness of the rushed scheduling efforts and limited notice given to Mr. Talbot to attend in Toronto from Port Dover.

The reason for Lumbermens' present urgency is obvious: it seeks an expert report to defend the claim against it to be heard in two weeks time. The Insurer submits that it could not arrange an IE earlier because the Applicant has been slow in obtaining documentation from his employer, Northern Telecom, regarding his employment prior to the job he was performing at the time of the accident as well as post-accident job opportunities available to the Applicant. The Insurer maintains that the Applicant's occupation or employment is not restricted to the job actually performed by him at the time of the accident, but include all of the jobs either performed by Mr. Talbot since he started with Northern Telecom in 1964 or which might be available to him from Northern Telecom by reason of his education or training.

The Insurer submits that its letters of November 23 and December 4, 1998 indicate that production of this documentation was a pre-requisite to being able to conduct a proper IE.

The Insurer also argues that it has a right to an IE current to the hearing date. It relies in this regard on Arbitrator Palmer's decision in Ramjeet and State Farm Mutual Automobile Insurance Company (OIC A-004685, December 23, 1993), which states that:

. . . on the documentary evidence before me at the hearing of the preliminary motion, I find no evidence of any breach of the duty of utmost good faith by the Insurer. I find that medical information relating to the Applicant flowed to the Insurer throughout the period after the termination of his weekly income benefits, particularly after the pre-hearing conference in this matter. I find entirely plausible the Insurer's desire to obtain, prior to the hearing, current medical expert opinion from medical practitioners whose opinion it values. I find no evidence of unreasonableness in the requests of the Insurer, although (and counsel concedes this point) the requests came "somewhat late".

Appellate support for an insurer’s enforceable right to an IE subsequent to the commencement of mediation was first held by Director's Delegate Naylor in F.S. and Belair (OIC P96-00039A, June 11, 1996), who stated that:

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. The objectives are generally served by permitting insurers to arrange timely medical examinations, in appropriate cases . . . The Insurance Act and the Statutory Powers Procedure Act, R.S.O. 1990, Chap S.22, as amended, contemplate the making of orders, including the authority to make interim orders subject to conditions, to conduct a fair hearing: orders that balance the rights of both parties while safeguarding the interests of the party being examined. The arbitrator’s power includes the discretion, in appropriate cases, to refuse to adjourn a hearing to allow an insurer time to conduct a medical examination, where to do so would be unfair to the applicant.

It also includes the power, under section 21 of the Statutory Powers Procedure Act, to adjourn the hearing "to permit an adequate hearing to be held", in the event that an applicant has refused to attend a reasonably required examination. [emphasis added]

The Director’s Delegate further stated that:

Determining the appropriateness of a request for an examination requires a balancing of the interests of the parties, in the context of the particular facts. The timing of a request is a factor in considering its reasonableness; it becomes very important where it would delay the process. The closer a request is made to a hearing, the closer the scrutiny of its reasonableness, to ensure that there is no avoidable delay or that the insured’s preparation for the hearing is not prejudiced. Trial brinkmanship is not a feature of the dispute resolution process. In this case, Belair might have requested the examination somewhat earlier than it did. However, I do not believe that the delay was so serious as to render the request unreasonable. [emphasis added]

In this case, the Insurer's request for an IE comes less than three weeks prior to the start of the hearing, which is more than three years since any IE or DAC had been requested and more than a year after service of the Applicant's orthopaedic opinion. The request also comes more than a year after the first pre-hearing and more than three months after the second.

As stated by Director’s Delegate Naylor above, a tribunal has the general discretion to control its own process in the context of the overall objectives of the system. The general objectives of this system is reflected in section 1 of the Dispute Resolution Practice Code, which states that:

These rules will be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute.

I do not read the Ramjeet decision (which preceded F.S. and Belair by some two and a half years) as bestowing an insurer's right to IEs on the eve of an arbitration hearing. The citation noted above was merely the arbitrator's response to Mr. Ramjeet's submission that his insurer had breached its good faith duty by terminating weekly benefits without current medical information. I agree with Arbitrator Palmer's finding in that decision that insurers have a continuing right under the Schedule to IEs after terminating benefits. I do not, however, find this Insurer's IE request to be merely "somewhat late." I do find that to allow as a rule "last minute" IEs would defeat the intent of this dispute resolution process to encourage early investigation, early exchange of documentation and early resolution of disputes.

Lumbermens argues that it had a continuing desire to have the Applicant seen by an orthopaedic surgeon, as evidenced by the pre-hearing letter of April 22, 1998, but that its intent was frustrated by lack of production by the Applicant. It states that it communicated to the Applicant that lack of production was delaying it setting up an IE, either by an orthopaedic surgeon or someone else such as an occupational therapist.

I asked the Insurer for evidence that this intent was indeed expressed to the Applicant. The only letters forwarded to the Applicant in this regard according to the Insurer were those of November 23 and December 4, 1998. I see nothing in these letters that at all indicates that the Insurer was holding off arranging an IE, pending receipt of Northern Telecom's file.

Perfect production exchange, however, is not a pre-requisite to an IE (I note that section 71.1 of the Schedule does not prevent an insured from accessing mediation where the insured has failed to provide information required for an IE assessment, unlike DACs). In addition, an IE doctor is free to comment on additional information subsequently received and indeed, section 65 would allow further IEs, if reasonably necessary. In any event, I received no evidence as to why Mr. Talbot's own description of his various duties was insufficient. I do note, however, that in my March 10, 1999 pre-hearing letter I stated that I saw no basis for ordering production of the entire employer’s file back to 1964, ordering instead limited production from January 1, 1991.

I come to the unfortunate conclusion that what we are dealing with here is trial brinkmanship. As stated by Director’s Delegate Naylor, "trial brinkmanship is not a feature of the dispute resolution process." The Insurer states that it is prepared to waive the ten-day rule for delivery of any responding report by the Applicant. This is not surprising as the hearing arbitrator would have to waive the ten-day rule to allow in the IE report, even assuming the report is prepared by Dr. Zeldin, provided to the Insurer and served on the Applicant, all within twenty-four hours of either proposed date. I find realistically, that to allow Lumbermens IE request would likely result in an adjournment of the hearing. I find that to further delay this arbitration hearing after more than fifteen months have elapsed since the initial pre-hearing would be grossly unfair to the Applicant.

However, I find that F.S. and Belair holds that the reasonableness of an IE at this stage of the proceeding entails considering not merely questions of prejudice, but also systemic concerns, including early dispute resolution. Director’s Delegate Naylor’s comments would indicate that IE requests in this context must be scrutinized for being "appropriate" and it must be established, inter alia, that the IE request is timely and there has been no avoidable delay. I find that the present IE request is not timely and that the delay in requesting an orthopaedic IE rests with this Insurer and was avoidable. I, therefore, find Lumbermens specific request for an IE on June 3 or June 8, 1999 unreasonable. Accordingly, I would deny any request by the Insurer that this hearing be adjourned until Mr. Talbot attends for an IE with Dr. Zeldin.

EXPENSES:

Subsection 282(11) of the Insurance Act, R.S.O. 1999, c. I.8 (as amended), provides arbitrators with the authority to award all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations. Subsection 282(11.1) allows for interim awards of expenses.

Section 76 of the Dispute Resolution Practice Code allows an arbitrator to award an insured person an hourly rate for legal fees up to $150, "where the adjudicator is satisfied that a higher amount for legal fees to an insured person is justified." I find that the general systemic objectives of this forum noted above justify a higher legal rate.

Accordingly, I exercise my discretion to award Mr. Talbot his expenses of this motion at the maximum hourly rate of $150 for one hour of attendance at the motion and two hours of preparation for a total of $450.00 plus G.S.T., payable forthwith in any event of the cause.

June 4, 1999

Lawrence Blackman Arbitrator

Date