Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2000 ONFSCDRS 165

Appeal P99-00044

OFFICE OF THE DIRECTOR OF ARBITRATIONS

PRUDENTIAL OF AMERICA GENERAL INSURANCE COMPANY (CANADA)

Appellant

and

JANE CHAFE-MOOTE

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Deborah G. Neilson (for Prudential)

Monique R. Bennett (for Jane Chafe-Moote)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal is dismissed and paragraphs 1, 2 and 3 of the arbitration order dated August 6, 1999 are confirmed.
Paragraph 4 of the arbitration order, dealing with arbitration expenses, is the subject of appeal in a separate proceeding.
Jane Chafe-Moote is entitled to her reasonable appeal expenses, payable by Prudential of American General Insurance Company (Canada).

September 8, 2000

David R. Draper Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Prudential of America General Insurance Company (Canada) ("Prudential") appeals from an arbitration order dated August 6, 1999. It claims the arbitrator erred in concluding that it did not comply with s.65 of the SABS-1994¹ and, therefore, was not entitled to suspend Jane Chafe-Moote's benefits due to her non-attendance at two sets of medical examinations. Prudential also contests the arbitrator's order that it pay a special award at the maximum rate.

II. BACKGROUND

Mrs. Chafe-Moote was injured in an automobile accident on January 16, 1994. As a result, Prudential paid her various benefits under the SABS-1994, including weekly caregiver benefits under Part IV and housekeeping and home maintenance expenses under Part XIII. Over the years, Prudential required Mrs. Chafe-Moote to be examined by various medical professionals pursuant to s.65, which states as follows:

65.- (1) An insurer may, for the purposes of any of Parts II to VIII, X, XIII and as often as reasonably necessary, give any 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.

On December 5, 1997, Prudential scheduled the first set of examinations at issue in this appeal. It asked Mrs. Chafe-Moote, who lives in London, Ontario, to attend examinations in Toronto on February 19 and 20, 1998. According to Prudential, Toronto was chosen due to concerns expressed by Mrs. Chafe-Moote's husband, a doctor practising in the London area, about their personal matters being aired among his colleagues. The purpose of the examinations was to assess Mrs. Chafe-Moote's claims for ongoing caregiver benefits and various medical and rehabilitation expenses. She was to be seen by Dr. A. Ameis (physiatrist), Dr. S. Bacal (psychologist) and Dr. Urovitz (orthopaedic surgeon), and undergo a functional capacity evaluation.

Mrs. Chafe-Moote refused to attend. On January 22, 1998, more than a month after the examinations were scheduled but still almost a month before the examinations were to take place, her lawyer notified Prudential that she would not be attending. Along with this notification, Prudential was provided with a letter from Mrs. Chafe-Moote's therapist, Mr. Ike Lindenburger, objecting to the assessments. In his view, ample information was available from the more than twenty health professionals who already had been involved. Further, Mr. Lindenburger expressed concern about the impact of the ongoing legal disputes on Mrs. Chafe-Moote's health, suggesting that she and her family doctor needed some time to put the accident behind her.

Counsel for Prudential responded, asserting that the examination was needed to assess Mrs. Chafe-Moote's ongoing claims. In taking this position, she claimed that the last assessment by a Designated Assessment Centre ("DAC") was done in "early 1997" and, further, nothing in Mr. Lindenburger's letter suggested that the examinations posed any concern from a health perspective. Rather, his concern, as she understood it, was with the stress caused by the ongoing legal dispute.

After receiving this letter, Mrs. Chafe-Moote's lawyer asked Prudential to cancel the Toronto examinations and reschedule them for London, with his undertaking that he would "revisit the entire issue with my client." Prudential did not take this suggestion, at least not immediately.

The consequences of not attending an insurer's examination are set out in the following subsections of the SABS-1994, with caregiver benefits covered in s.65(5.1):

65.- (5) If the insured person fails or refuses to make himself or herself reasonably available for an examination under subsection (1), the insurer is not required to pay the benefits under section 16 or Part VII, VIII, X or XIII, as specified in the notice under subsection (1), until the person submits to the examination.

(5.1) If the insured person fails or refuses to submit to an examination under subsection (1), the insurer may withhold payment of the weekly benefits under Part II, section 15 or Part IV, V or VI until the person submits to the examination and, when the person submits to the examination, the insurer shall,

(a) resume payment of the benefit; and

(b) pay the benefits that were not paid.

Prudential suspended Mrs. Chafe-Moote's caregiver benefits two months after her non-attendance. In a letter dated April 16, 1998, she was notified of the suspension and that Prudential was seeking repayment of the amount charged by the assessors for her non-attendance ($2,193). Finally, the letter advised her that the examinations could be rescheduled, at which point her benefits would be reinstated pending the results.

The file remained active, with the parties dealing with various other claims, including a particularly contentious claims for dental expenses. When Prudential refused to pay some of the benefits claimed, Mrs. Chafe-Moote requested a DAC assessment of her medical and rehabilitation needs. This was done in April and May 1998, involving a dentist, physiatrist, physiotherapist and psychologist. As a result of the opinions expressed by the DAC, Prudential paid for dental treatment and psychological counselling.

In August 1998, Prudential scheduled the second set of insurer examinations. The arbitrator found that Mrs. Chafe-Moote received just over one week's notice that she was expected to attend the following appointments in London:

August 25, 1998 - Dr. Graham Turral for a psychological evaluation;
September 14 and 15, 1998 - Nancy Haston & Associates for a functional abilities evaluation;
September 18, 1998 - Dr. Fred Langer for an orthopaedic evaluation; and
An appointment to be scheduled by Rehability Occupational Therapy Inc. for an in-home occupational therapy assessment.

Although Prudential had already suspended Mrs. Chafe-Moote's caregiver benefits, it advised her that no further caregiver benefits or medical and rehabilitation benefits would be considered if she failed or refused to attend these examinations. Despite this warning, Mrs. Chafe-Moote refused to attend, taking the position they were not reasonably necessary.

The dispute then went to mediation. Although some issues were resolved, Mrs. Chafe-Moote's claims for caregiver benefits, housekeeping expenses, psychological services, prescription expenses and a gym membership were not. She applied for arbitration, asking that the question of the insurer examinations be addressed first. Although the pre-hearing letter suggests there were other issues in dispute, the hearing proceeded only on whether Prudential was entitled to suspend Mrs. Chafe-Moote's benefits based on her non-attendance at the examinations and, if not, whether it should be ordered to pay a special award.

In late April 1999, approximately one month after the pre-hearing and just over one month before the arbitration hearing started, Prudential made a lump sum payment of caregiver benefits for the period from April 1998 (when they were suspended based on Mrs. Chafe-Moote's non-attendance at the February 1998 examinations) to August 1998 (when she did not attend the second set of examinations).

The arbitrator released her decision in August 1999, accepting Mrs. Chafe-Moote's position. She found the length and number of examinations requested by Prudential excessive, particularly given the great deal of information from other sources consistently supporting Mrs. Chafe-Moote's claims. In the arbitrator's view, this was not a close call. She found that Prudential had treated Mrs. Chafe-Moote so inappropriately that it should pay a special award at the maximum rate. Finally, the arbitrator ordered Prudential to pay Mrs. Chafe-Moote's arbitration expenses.

Prudential appealed the arbitrator's order. On consent, the issue of arbitration expenses was referred back to the arbitrator for further submissions on the impact of a settlement offer made by Prudential. During the course of the appeal, the arbitrator released her decision on expenses, ordering Prudential to pay expenses and setting the amount. Prudential has appealed that order, although not in time to include it in this proceeding.

III. PRELIMINARY ISSUES

The Dispute Resolution Practice Code provides that, unless the Director orders otherwise, a preliminary or interim order cannot be appealed until all the issues in dispute have been finally decided. Upon receipt of Prudential's Notice of Appeal, I asked the parties to address this issue. After reviewing their written submissions, I accepted Prudential's contention that it was entitled to proceed. In stopping payment, it relied only on Mrs. Chafe-Moote's non-attendance at the medical examinations. Unlike some other cases, Prudential did not also stop payment under s.64 on the basis that Mrs. Chafe-Moote no longer met the disability test. As a result, the arbitrator's decision was a final decision that could be appealed without leave.

In its Notice of Appeal, Prudential asked that the parts of the arbitrator's order dealing with interest and the special award be stayed pending the outcome of the appeal. The general rule, established in s.283(6) of the Insurance Act and Rule 46.3 of the Dispute Resolution Practice Code, is that an appeal does not stay the arbitrator's order unless the Director orders otherwise. This is different from the Rules of Civil Procedure and the Statutory Powers Procedure Act, where the presumption is that an appeal stays the order. Therefore, the party asking for the stay has the onus of establishing why the general rule should not apply. The factors to be considered are outlined in Scavuzzo and Canadian Home Assurance Company, (May 22, 1992, OIC P-000626). They include the bona fides of the appeal, the apparent strength of the appeal, and the hardship to the parties if the stay is granted or refused.

While I was not persuaded that Prudential's appeal was sufficiently strong to justify staying the interest component of the order, I concluded that different considerations applied to the special award. In my view, the legislation is designed to protect the payment of benefits. This is consistent with other provisions in the Insurance Act and the SABS-1994 that strictly control the insurer's ability to stop paying benefits. The underlying consideration seems to be that accident benefits are meant to meet current needs and, therefore, should be paid when they are needed, not at the end of the process. The same cannot be said about a special award. It is a penalty imposed on the insurer, not a benefit intended to meet the insured person's current needs. Therefore, I applied a more lenient test for staying the special award, concluding that Prudential's appeal had sufficient strength that it should not be required to pay the special award pending the outcome of the appeal.

IV. ANALYSIS

This is a troubling case. Although the appeal raises some legitimate questions about insurer examinations, it is hard to imagine that the time and resources spent on this issue has benefited anyone. Prudential has steadfastly maintained that it had a right to insist on further medical examinations and acted reasonably in setting them up. Mrs. Chafe-Moote regards Prudential's actions as harassment, insisting that she has been thoroughly examined and should be left alone. This is the dispute that went before the arbitrator. It was largely fact-based: Did Prudential comply with s.65 of the SABS-1994 in requesting Mrs. Chafe-Moote to attend the examinations? To answer this question, the arbitrator considered whether the examinations met the requirements of s.65:

Were they "reasonably necessary," within the meaning of s.65(1)?
Did Prudential make reasonable efforts to schedule them at a convenient time for Mrs. Chafe-Moote and provide her with reasonable notice, as required by s.65(3)?

Despite the relatively narrow issue in dispute, the arbitration hearing was lengthy and contentious. The evidence was presented over three days, involving nine witnesses and voluminous exhibits. Oral submissions took place by telephone on a separate day. Looking at the decision as a whole, I am satisfied that the arbitrator made findings supported by the evidence and correctly applied the law to the facts as she found them. Prudential's specific arguments are dealt with below.

A. Non-attendance at the Examinations

At the appeal hearing, Prudential made essentially the same arguments with respect to both sets of examinations. This led to a great deal of repetition. I find it more convenient to deal with each argument once, referring to the specifics of the two sets of examinations only where necessary.

(1) Onus

The arbitrator held that the initial onus was on Prudential to establish on a balance of probabilities that the examinations were reasonably necessary. Prudential submits that this is wrong in law, citing an earlier arbitration decision — Sherkat and Co-Operators General Insurance Company, (OIC A95-000101, April 12, 1995). In that case, the arbitrator held as follows: "[t]he underlying presumption in the legislation is that a request for an examination is for the reasonable and proper purpose of assessing a claim. In my view, if the applicant does not find the request for an examination reasonable, the onus is on the applicant to show why it is not reasonable."

More recently, Farley J. approached the issue somewhat differently, distinguishing between cases, such as Sherkat, where the insurer is seeking its first examination and those involving multiple assessments. In Manolakos v. Royal Insurance, [1998] O.J. No. 2157, he held that "the onus is on the insurance company in such circumstances to demonstrate its request for such [a s.65 insurer examination] as reasonable in the circumstances (although this would be 'automatic' where there has never been an examination)." On the facts before him, he concluded that the insurer had failed to prove why it needed four more examinations, having already had the advantage of 10 assessments. The Court of Appeal upheld this decision, stating that it was not persuaded that Farley J. erred in concluding that the insured person had a reasonable excuse for not attending yet another medical examination.²

The ruling on onus in Manolakos may well be binding on Commission adjudicators. In any event, this was not a borderline decision in which onus played an important role. The arbitrator made strong findings in favour of Mrs. Chafe-Moote that would have prevailed even if the onus was on her to prove that the examinations were not reasonably necessary.

(2) Second-guessing the insurer's reasons

Prudential submits that the arbitrator erred in second-guessing its reasons for arranging the examinations. In support of this proposition, it relies on the early arbitration decision in Scott and Toronto Transit Commission, (OIC A-001116, September 4, 1992). The issue in that case was whether the insurer could require orthopaedic and psychiatric examinations under s.23(2) of the SABS-1990,³ the predecessor to the SABS-1994. In deciding that the insured person was obliged to attend, the arbitrator stated that it "is not for an arbitrator to 'second-guess' the actions or motives of the company in requiring a medical examination."

The arbitrator's comments must be read in context. As she also states, the legislation involves a balancing between the insurer's need for an effective opportunity to assess the claim on an independent basis and the insured person's right to privacy. This is why the insurer's right to require an examination is qualified — under the SABS-1990, an examination could only be scheduled "as often as it [the insurer] reasonably requires."

What the arbitrator held in Scott, correctly in my view, is that the section should not be read narrowly. Insurers should be given a reasonable opportunity to test the strength of the insured person's claims. This does not suggest, however, that its position cannot be challenged. As the arbitrator stated in Scott:

The issue is whether, in the circumstances of the case, the examination is reasonably required to effectively assess the nature and extent of the applicant's injuries. In making this determination, all the circumstances must be weighed. (p.18)

The insured person must be allowed to challenge the insurer's assertion that an examination is reasonably necessary. If he or she refuses to attend and the insurer responds by suspending benefits, the arbitrator must "second-guess" the insurer's view that the examination is reasonably necessary. In this case, the arbitrator's role was to weigh all the circumstances to determine whether the examinations were reasonably necessary for Prudential to effectively assess Mrs. Chafe-Moote's entitlement to ongoing caregiver benefits and various medical and rehabilitation expenses. In my view, that is what she did.

(3) Information available at the time

"Second-guessing" is only unfair if it is based on information not available to the insurer. While I accept Prudential's argument that the arbitrator should have focussed on the information it had when the decisions were made, I am not persuaded she did otherwise. The arbitrator found that at the time Prudential asked Mrs. Chafe-Moote to attend the examinations, and when it suspended her benefits, it had "a great deal of necessary information" from a variety of sources that largely supported her claims. Reviewing the record, I find ample evidence to support this finding.

The number and variety of claims advanced in this case added to its complexity. It is instructive, however, to focus on the main issue in dispute — weekly caregiver benefits. Prudential initially paid caregiver benefits on the basis that Mrs. Chafe-Moote met at least one of the tests in ss.18(1)3 and 18(2) of the SABS-1994:

a substantial inability to engage in the caregiving activities in which he or she engaged at the time of the accident [the "caregiver test"]; or
a partial or complete inability to carry on a normal life [the "normal life test"].

In December 1995, almost two years after the accident, Prudential scheduled an insurer examination with Dr. Sol Goldenberg. Among other things, he concluded that Mrs. Chafe-Moote was "unable to perform the essential tasks of her activities of daily living." Although his opinion did not precisely track the wording of either test, Prudential continued paying caregiver benefits.

Because Mrs. Chafe-Moote continued to qualify for caregiver benefits after 104 weeks, she had to decide whether to continue claiming caregiver benefits or switch to loss of earning capacity benefits under Part VI.⁴ She elected to continue under the caregiver provisions.⁵ The test for post-104-week entitlement is set out in s.18(4) of the SABS-1994. It provides that if the insured person was receiving benefits under the "normal life" test, not the "caregiver test," caregiver benefits are not payable unless he or she meets the "complete inability to carry on a normal life" test. However, if he or she qualified under the "caregiver test," the test remains the same — Does the insured person suffer a substantial inability to engage in the caregiving activities in which he or she engaged at the time of the accident?

Although not directly relevant to this appeal, there is some question about which test Mrs. Chafe-Moote has to meet. Prudential has taken the position that the "complete inability test" applies.⁶ Mrs. Chafe-Moote has argued, at least since September 1997, that she qualified for the first 104 weeks under the "caregiver test" and, therefore, this is the test she must meet.

Soon after Mrs. Chafe-Moote elected to continue under the caregiver provisions, Prudential scheduled insurer examinations with Dr. Robert Farley, an orthopaedic surgeon, and Dr. Tony Iezzi, a psychologist. Both addressed the "complete inability test." Although Dr. Farley found that Mrs. Chafe-Moote suffered from a partial disability based on her inability to cope with her pain, he did not believe she suffered from a complete inability to carry on her normal life. Similarly, Dr. Iezzi found that although Mrs. Chafe-Moote was experiencing marked emotional distress and functional and lifestyle impairment, it was his opinion that she did not meet the "complete inability test."

Based on the reports of Dr. Farley and Dr. Iezzi, Prudential notified Mrs. Chafe-Moote of its intention to terminate her caregiver benefits effective December 28, 1998. Mrs. Chafe-Moote responded by asking for a DAC assessment, as she was entitled to do under s.64 of the SABS-1994. Prudential met its obligations by arranging an assessment with Dr. Asha Bhardwaj, a physiatrist.

Dr. Bhardwaj set out her conclusions in a report dated April 29, 1997, including the following:

Jane Chafe-Moote is substantially disabled as a result of her automobile accident of January 16, 1994 and is unable to carry on her activities of normal life.
She continues to require home care help and help to look after her children.

Prudential was not satisfied that Dr. Bhardwaj had addressed the appropriate test. Therefore, it sent her a fax on May 7, 1997, asking her to clarify whether Mrs. Chafe-Moote suffered a complete inability to carry on a normal life as a result of the accident. This letter was not copied to Mrs. Chafe-Moote or her lawyer.

Dr. Bhardwaj responded on May 27, 1997, stating that "Jane Chafe-Moote has complete inability as a result of her automobile accident January 16, 1994 and is unable to carry on her activities of normal life." The emphasis is hers.

Still not satisfied, Prudential sent Dr. Bhardwaj copies of additional medical records, questioning her conclusion as follows:

Upon reviewing your Disability DAC report in which you indicated that Mrs. Chafe-Moote was substantially disabled and subsequently sent us an amendment stating that she was completely disabled from her daily activities of being a caregiver. I note in your report that Mrs. Chafe-Moote was able to drive her vehicle in city streets, the Med/Rehab DAC at St. Joseph Health Centre stated in their report that Mrs. Chafe-Moote was able to drive and do some groceries, further it stated that Mrs. Chafe-Moote mentioned that she can be active throughout the day provided she paced herself accordingly. In view of the above, I have difficulty in understanding why you would classify her as completely disabled. I would like to have your comment in this regard.⁷

Again, Mrs. Chafe-Moote and her lawyer were not sent copies of this letter. Two weeks later, when Dr. Bhardwaj did not respond, Prudential wrote again, asking for her response "without any further delay." This letter was copied to the Ontario Insurance Commission (now the Financial Services Commission), but not to Mrs. Chafe-Moote or her lawyer.

These letters are quite inappropriate. As I stated in Levey and Traders General Insurance Company, (P98-00035, February 25, 1999), this kind of one-sided contact undermines the DAC's neutrality. The best that can be said is that this was relatively early in the history of the DACs and, hopefully, more recent guidelines have helped end this practice.

Dr. Bhardwaj responded to Prudential's June 23^rd letter, apparently not yet having received the July 7^th reminder. She reported that after reviewing the additional reports, her conclusions remained the same, repeating the reasons given in her previous reports.

This case is reminiscent of Levey in another respect. Not only was Prudential's interaction with the DAC inappropriate, it did not give the reports a fair reading. Even assuming the "complete inability test" was the correct test, Dr. Bhardwaj left little doubt about her views. Nevertheless, Prudential continued to argue that she failed to clearly address the proper test, forcing them to set up further insurer examinations just five months later.⁸

If Prudential disagreed with Dr. Bhardwaj's conclusions, its option was to apply for mediation and, if necessary, proceed to court.⁹ Instead, it continued paying caregiver benefits without taking any steps to challenge Mrs. Chafe-Moote's entitlement through the dispute resolution process. Consequently, the only legitimate basis for scheduling further insurer examinations on caregiver benefits was that they were needed to assess Mrs. Chafe-Moote's ongoing entitlement — not to challenge Dr. Bhardwaj's opinion.

In my opinion, the arbitrator approached the issue correctly. She considered the extent to which Prudential required additional information and then weighed its interests against the intrusion that the proposed examinations would have on Mrs. Chafe-Moote. Given the many opinions generally supporting Mrs. Chafe-Moote's position and the lack of any indication that her condition had changed significantly since Dr. Bhardwaj's assessment, the arbitrator was justified in concluding that there was no need for the kind of multi-disciplinary, multi-day examinations proposed by Prudential.

Underlying Prudential's arguments is a sense that it was entitled to a fresh examination on each claim and regular examinations with respect to ongoing claims. This is an overly technical view of the legislation that could lead to endless and repetitive assessments. The arbitrator properly took a broader perspective, looking at all the circumstances and asking if the proposed examinations were reasonably necessary.

(4) Insurer examinations versus DAC assessments

Prudential claims that the arbitrator erred in failing to distinguish between insurer examinations and DAC assessments. Specifically, Prudential points to page 13 of the decision and the Appendix where the arbitrator refers to Dr. Newby's May 1998 assessment as an insurer examination, when it was part of a Med-Rehab DAC assessment. The importance of this error, Prudential submits, is that it undermines the arbitrator's critical finding that "the length and number of assessments and examinations it [Prudential] requested were excessive."

This argument has some merit. The record clearly shows that Dr. Newby did not conduct an insurer examination, but was part of the Med-Rehab DAC assessment team in both 1996 and 1998. Throughout the decision, the arbitrator correctly refers to Dr. Newby's 1996 assessment as part of a Med-Rehab DAC assessment. The problem is with respect to the 1998 assessment. On page 8, the arbitrator correctly identifies Dr. Newby's role as a DAC assessor. However, in reviewing the evidence of Dr. Harold Merskey, a psychiatrist, who felt that the length and number of examinations requested by Prudential was excessive, she states as follows:

Mrs. Chafe-Moote saw two psychologists, Dr. Newby and Dr. Iezzi, in December 1996 for psychological assessments. In Dr. Merskey's view, these assessments were redundant as she had attended an assessment with Dr. Helmes, a psychologist, on January 19, 1996. Mrs. Chafe-Moote also attended a medical rehabilitation DAC assessment with Dr. Potter on May 6, 1998 and then a further insurer examination with Dr. Newby on May 22, 1998. According to Dr. Merskey, Dr. Newby's assessment for six and a half hours made the psychiatric assessment scheduled for August 1998 unnecessary. (p.13, emphasis added)

This error is repeated in the Appendix, with Dr. Newby's May 1998 assessment listed as an insurer examination. The question is whether this error is sufficient to undermine the decision. In my opinion, it is not.

Looking at the transcript of Dr. Merskey's testimony, counsel for Prudential asked him about previous psychological assessments, including Dr. Newby's, without distinguishing between insurer examinations and DAC assessments.¹⁰ It was Mrs. Chafe-Moote's lawyer who made the distinction. In her re-examination, she specifically asked Dr. Merskey about Dr. Newby's DAC assessments.¹¹ He provided answers that are recorded on page 13 of the arbitration decision. It is not clear, therefore, that the error is anything more than a drafting mistake. Even if it is, however, I am not convinced it is sufficient to undermine her decision.

It is obviously important that arbitrators carefully review the information that is already available in determining whether the insurer reasonably needs a further examination. This will involve various considerations, including the purpose and scope of the assessments, when they were done and who did them. There is no question that DAC assessments are different from insurer examinations, although Prudential's interaction with Dr. Bhardwaj compromises its ability to make this argument with much force.

The importance of distinguishing the two types of assessments is that, as stated above, insurers are entitled to a reasonably opportunity to have the insured person's claims assessed by an expert of its choosing. This does not mean, however, that the availability of DAC assessments is irrelevant. They play an important part in the evaluation of claims under the SABS-1994 and, in my view, the arbitrator properly included them in her analysis.

Despite the detailed submissions of counsel, I am simply not persuaded that the arbitrator failed to make this distinction. Prudential suggests that the arbitrator's reference to "examinations it requested" and her criticism that Prudential "made little effort to coordinate its assessments and examinations" mistakenly treats the DAC assessments as insurer examinations. However, that is not how I read the decision. The arbitrator introduces the discussion with her finding that Prudential did not comply with s.65 of the SABS-1994 in scheduling either set of examinations. These are the examinations she is referring to. Her analysis, in my opinion, focusses on the appropriate question: Given the information already available, did Prudential reasonably require these examinations?

(5) Multi-disciplinary assessments

Prudential submits that the arbitrator erred in treating each examination in a multi-disciplinary assessment as a separate examination. My notes indicate that this argument only applies to the second set of examinations, although it is not clear why it is so limited. In any event, I find little merit in the argument.

The determination of whether an insurer examination is reasonably necessary is not based on a mathematical formula, allowing a certain number of assessments within a given time period. As stated earlier, all the circumstances must be considered. Lengthy, multi-disciplinary assessments generally provide more information and involve greater demands on the insured person. It was appropriate, therefore, for the arbitrator to consider the nature of the previous assessments in evaluating whether Prudential reasonably required a further assessment. Although it is not clear that Prudential is making this argument, I would add that the nature of the proposed examinations is also a legitimate consideration. The insurer must not only establish that it reasonably requires an examination, it must also show that the proposed examination or examinations are reasonably necessary.

(6) Adequacy of the notice

At page 14 of the decision, the arbitrator states as follows:

As well, section 65 of the Schedule requires that the Insurer make reasonable efforts to schedule the examination for a time that is convenient for the injured person. This was not done. The Insurer must provide reasonable notice, and in the case of the examinations scheduled for August 25, September 14, 15 and 18, 1998, this was not done. Prudential provided little more than a week's notice.

Prudential challenges this part of the decision, arguing that the adequacy of the notice was never raised as an issue. As I read this excerpt, it deals with both aspects of Prudential's obligation under s.65(2) of the SABS-1994 — making reasonable efforts to schedule the examination for a time convenient to Mrs. Chafe-Moote and providing her with reasonable notice of the examination. Based on her findings in the rest of the decision, I believe the arbitrator's comments about the convenience of the examination relates to the first set of examinations, while her comments about the adequacy of the notice refer to the second. The question is whether she exceeded her jurisdiction in dealing with issues that were not properly before her.

Parties are entitled to reasonable notice of the issues they need to address. I am not convinced, however, that Prudential was unaware of Mrs. Chafe-Moote's objection to the scheduling of the first set of examinations and the adequacy of the notice provided for the second set. Her counsel raised these concerns in her opening statement,¹² and in my view, the scope of the dispute is reflected in the arbitrator's broad statement of the issue: Did Prudential comply with section 65 of the SABS-1994 when it requested that Mrs. Chafe-Moote attend the examinations?

For these reasons, I am not persuaded that these issues were beyond the scope of the hearing. However, even if they were, this part of the decision is not critical to the outcome. The arbitrator refers to the convenience of the examinations and the notice provided to bolster her decision, not as the primary basis for concluding that Prudential was not entitled to suspend Mrs. Chafe-Moote's benefits under s.65(5) of the SABS-1994.

B. Special Award

The arbitrator's authority to order a special award is found in s.282(10) of the Insurance Act, which provides as follows:

282.— (10) If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

As stated above, the arbitrator ordered Prudential to pay a special award at the maximum rate on the basis that it unreasonably withheld or delayed payment of Mrs. Chafe-Moote's benefits. Prudential claims that the arbitrator erred in making this order when entitlement was never in issue. In its submission, benefits were simply being withheld under s.65 of the SABS-1994 pending Mrs. Chafe-Moote's attendance at an insurer examination. As a result, there was no finding of entitlement to which a special award could attach.

With respect, I find little merit in this argument. Section 282(10) is clearly meant to encourage the timely payment of benefits, as are various sections of the SABS-1994. A special award is payable if the insurer unreasonably withholds or delays payments. The amount of the special award is based on a percentage of the amount to which the person was entitled at the time of the award. In this case, however, entitlement was not in issue. The only basis for withholding benefits was Mrs. Chafe-Moote's non-attendance at the two sets of examinations. It follows, therefore, that if she was not in breach of s.65(5) of the SABS-1994, her entitlement continued and the special award can be calculated based on this entitlement.

Alternatively, Prudential submits that the arbitrator erred in ordering a special award with respect to the benefits withheld from April to August 1998 when these benefits were paid more than a month prior to the arbitration hearing.¹³ In previous arbitration and appeal decisions, Commission adjudicators have held that insurers cannot avoid a special award by paying benefits shortly before the arbitration hearing. While the wording of s.282(10) is somewhat problematic, I agree with this analysis. To hold otherwise would take delayed payments out of the equation, a result that clearly was not intended.

Prudential claims that this case is distinguishable from many of the decisions because it made the payment a month before the hearing, not just days before. While this is an arguable distinction, the arbitrator was entitled to consider the fact that Mrs. Chafe-Moote went without these benefits for approximately one year.

I accept that managing this kind of claim can be difficult. In my view, however, the arbitrator was justified in viewing Prudential's actions as unreasonable. As an example, Prudential did not help its position by dismissing the objections and concerns of Mrs. Chafe-Moote's doctors and therapists so summarily. As Farley J. said in Manolakos, the parties should remember that they owe each other the reciprocal obligation of dealing in utmost good faith.

Before the February 1998 examinations, Prudential heard from Mrs. Chafe-Moote's therapist, Mr. Ike Lindenburger, expressing serious objections to the proposed assessments. Its counsel chose to read this letter quite narrowly. While Mr. Lindenburger did not specifically state that the examinations would compromise Mrs. Chafe-Moote's condition, he clearly was concerned about the consequences of the ongoing legal dispute which, by implication, likely included Prudential's insistence on further examinations.

More seriously, when it suspended Mrs. Chafe-Moote's benefits and scheduled the second set of examinations, Prudential gave little weight to concerns about Mrs. Chafe-Moote's condition, including a letter from her family doctor, Dr. Michaele Fleming, objecting the "inappropriate, excessive and seemingly endless assessments." According to the arbitrator, Prudential's senior claims specialist testified that he was aware of the views of Mr. Lindenburger and Dr. Fleming, but was not worried about any threat to Mrs. Chafe-Moote's health and did not perceive any "grave risk."¹⁴

On appeal, Prudential submits that in August 1998, when it scheduled the second set of examinations, it knew that Mrs. Chafe-Moote had been able to attend assessments by a Med-Rehab DAC in May 1998. It argued that this supported its view that she could cope with further examinations. In its written submissions, it states:

In fact, the insurer's information by August of 1998 was that the insured was able to undergo the Med/Rehab DAC without any adverse consequences. Dr. Newby [a psychologist member of the DAC team] reported that the insured had elevated stress as a result f the assessment but, in fact, it was stated in Dr. Newby's report of May 5^th, 1998 that while there was evidence of more suicidal ideation, the insured was not judged to be imminently suicidal at the time of the assessment.

This submission was pursued in oral submissions, with counsel arguing that although Mrs. Chafe-Moote had a "panic attack" during the DAC assessment, she completed it without any suicide attempts. In closing, counsel submitted that when Prudential scheduled the second set of examinations, it knew she was not at "major risk" for suicide. With respect, this line of argument is inappropriate and insensitive in the extreme. Risks to the insured person's health or rehabilitation that fall well short of suicide may make an examination unreasonable, particularly if the need for additional information is marginal.

While I find no reason to interfere with the arbitrator's imposition of a special award, I have some concerns about the amount. In a recent appeal decision, Director's Delegate Naylor held as follows:

The higher end of the percentage scale should be reserved for especially egregious conduct on an insurer's part, without mitigating factors. It is important that the parties are given an explanation both of the basis of a finding that benefits were unreasonably withheld and the factors taken into account in fixing the amount of the award. (p.14)

In this case, the arbitrator clearly was not impressed with Prudential's action. It would have been helpful, however, if she had provided clearer reasons for imposing the maximum special award. Nevertheless, when the entire decision is considered, I conclude that there was a sufficient basis for her order and, therefore, it should not be disturbed.

V. APPEAL EXPENSES

Given the result and the issues involved, I have no hesitation in awarding Mrs. Chafe-Moote her appeal expenses, including the cost of transcripts. I am not persuaded, however, that Prudential should be ordered to pay an additional special award for pursuing this appeal.

If the parties are unable to agree on the amount, an assessment can be arranged, as set out in Rule 77 of the Dispute Resolution Practice Code.