Neutral Citation: 2001 ONFSCDRS 23

FSCO A00-000253

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

CARMEL NELSON

Applicant

and

LIBERTY MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A MOTION FOR INTERIM BENEFITS

Before:

Nancy Makepeace

Heard:

November 10, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto. Written submissions were completed on January 26, 2001.

Appearances:

Allan W. Chapnik for Ms. Nelson

Dwaine C. Burns for Liberty Mutual Insurance Company

Issues:

The Applicant, Carmel Nelson, was injured in a motor vehicle accident on October 28, 1998. She applied for and received statutory accident benefits from Liberty Mutual Insurance Company ("Liberty Mutual"), payable under the Schedule.¹ Liberty Mutual terminated weekly income replacement benefits on April 6, 1999. The parties were unable to resolve their disputes through mediation, and Ms. Nelson applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Ms. Nelson brought a motion pursuant to section 65 of the Dispute Resolution Practice Code — Third Edition ("the Code") for interim benefits to be paid to her pending the resolution of her dispute with Liberty Mutual. She also seeks further orders for production of documents beyond what was agreed and ordered produced at the pre-hearing conference held on July 20, 2000.

Liberty Mutual submits that this motion should be denied because of late production of documents, Ms. Nelson's failure to provide sufficient information to support her claim, and her refusal to attend an Insurer Examination ("IE") with a psychiatrist, Dr. J. P. Wyndowe, on October 24, 2000. Prior to the motion hearing, the parties reached an agreement with respect to an IE. Ms. Nelson agreed to attend a psychiatric IE with Dr. R. Hershberg on November 27, 2000, and Liberty Mutual agreed to reinstate her income replacement benefits on that date.

Following the hearing, Liberty Mutual advised that it had reinstated Ms. Nelson's benefits effective October 6, 2000, based on Dr. Hershberg's reports. Benefits were suspended on October 24^th and restored on November 27^th. The parties agreed that the only substantive issue in dispute in this motion is Ms. Nelson's entitlement to benefits on an interim basis between April 6, 1999 and October 6, 2000, and between October 24, 2000 and November 27, 2000.

The issues on this motion are:

Did Ms. Nelson refuse to make herself reasonably available for an Insurer Examination requested pursuant to section 42 of the Schedule?
Is Ms. Nelson entitled to interim benefits with interest, pursuant to section 279(4.1) of the Insurance Act, between April 6, 1999 and October 6, 1999, and between October 24, 2000 and November 27, 2000?
Is Ms. Nelson entitled to add a claim for a special award to the issues to be decided in the main hearing?
Is Ms. Nelson required to produce:

(a) the clinical notes and records of her family doctor, Dr. H.K. Nguyen, from the time Ms. Nelson arrived in Canada in 1993, and ongoing; and

(b) a decoded OHIP summary of services, from 1993 and ongoing?

Is Liberty Mutual required to produce a copy of its entire file with respect to Ms. Nelson's claim, including correspondence between the Insurer and Dr. Raghunan; Dr. Raghunan's Treatment Plans; a benefit payment history pertaining to Dr. Raghunan's treatment of Ms. Nelson; correspondence between the Insurer and Dr. Hershberg; adjusters' computer log notes and memos; transfer memos between adjusters; and protocols, internal guidelines or other policy documents for dealing with similar files?
Is Liberty Mutual required to produce its surveillance and investigation documents with respect to Ms. Nelson? Ms. Nelson seeks an order that such evidence is excluded from the hearing on the basis Liberty Mutual has failed to comply with Rule 37 of the Code.
Is Ms. Nelson or Liberty Mutual entitled to reimbursement from the other party for its expenses of this motion, pursuant to subsection 282(11) of the Act and the Expenses Regulation (Ontario Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 464/96)?

Result:

Ms. Nelson failed to make herself reasonably available for an Insurer Examination on October 24, 2000. Therefore, pursuant to paragraph 42(8)(a) of the Schedule, Liberty Mutual is entitled to suspend Ms. Nelson's income replacement benefit between October 24 and November 27, 2000.
Ms. Nelson is not entitled to interim benefits pending the outcome of the main proceeding in this matter, for the period between April 6, 1999, when benefits were terminated, and October 6, 2000, when benefits were reinstated.
I make no order with respect to the period after November 27, 2000.
Ms. Nelson may pursue her claim for a special award in the main hearing.
Ms. Nelson is required to produce Dr. Nguyen's clinical notes and records and a decoded OHIP summary of services from one year prior to the accident and ongoing. If these documents have not already been produced, production should be completed within 30 days of this decision.
Liberty Mutual is required to produce, within 30 days of this decision:

(a) correspondence between Liberty Mutual and Dr. Raghunan, any Treatment Plans he submitted on Ms. Nelson's behalf, and a benefit payment history pertaining to his services;

(b) correspondence between Liberty Mutual and Dr. Hershberg;

(c) a copy of its entire accident benefits file with respect to Ms. Nelson's claim, including adjusters' computer log notes and memos, and transfer memos between adjusters, except for documents for which it claims privilege, which documents must be identified along with the basis of the privilege claimed. These documents must be produced within 30 days of the release of this decision.

Liberty Mutual is not required to produce protocols, internal guidelines or other policy documents for dealing with similar files.
If Liberty Mutual intends to rely on surveillance and investigation evidence, it is required to comply with Rule 37 of the Dispute Resolution Practice Code - Third Edition within 30 days of the release of this decision.
The issue of expenses of this motion is reserved to the main proceeding.

Following the pre-hearing conference on July 20, 2000, Liberty Mutual agreed that Ms. Nelson's claim for housekeeping benefits, an issue first raised at the pre-hearing, may be determined by the arbitrator in the main proceeding.

EVIDENCE AND ANALYSIS:

Background to the Motion:

Ms. Nelson did not appear at the interim motion hearing. Based on the documentation filed, the following background facts appear to be undisputed.

Ms. Nelson was involved in a motor vehicle accident during the early hours of October 28, 1998, when the vehicle in which she was a passenger struck a deer on Highway 403. Prior to the accident, Ms. Nelson had worked full-time as a packer since February 1997. She was 28 years old at the time of the accident. She is married and has two young children.

Ms. Nelson reportedly went to work the morning after the accident. She left work after two or three hours and attended the emergency department at Credit Valley Hospital. No x-rays were taken, and she was discharged to the care of her family doctor, Dr. H.K. Nguyen, whom she saw later that day or the next day.² On November 13, 1998, about two weeks later, Dr. Nguyen prepared a Disability Certificate, listing Ms. Nelson's impairments as back pain, neck pain, headache and insomnia. Reported diagnoses were lumbar strain, cervical strain, and tension headache. Dr. Nguyen concluded that Ms. Nelson had sustained a Grade II Whiplash Associated Disorder ("WAD"), defined as "complaint of neck pain AND musculoskeletal sign(s) including decreased range of motion and point tenderness.³ Dr. Nguyen prescribed Robaxisil and Naprosyn, and referred Ms. Nelson for physiotherapy.

On January 19, 1999, Mr. James DeSerrano, a kinesiologist with Rehabilitative Ergonomics Inc., performed an Initial Functional Assessment of Ms. Nelson, at her home, at Liberty Mutual's request. He also conducted a Worksite Assessment on January 22, 1999. The Worksite Assessment report stated that Ms. Nelson's job was to pack plastic bottles into boxes, place the boxes on skids, and make and form the boxes. Physical demands included continuous standing and walking, lifting and carrying individual bottles (weighing ounces), empty boxes (weighing from ounces to one or two pounds) and full boxes (weighing between five and ten or twelve pounds). Ms. Nelson worked straight days on a "continental shift," described as rotating 12-hour shifts on a 3 days on, 2 days off schedule. However, Mr. DeSerrano was advised that the plant would change to 8-hour shifts as of February 1, 1999.

Mr. DeSerrano continued to follow Ms. Nelson's progress until July 5, 2000. His letters to Ms. Nelson's doctors and to Mr. David Wilson, her counsel, were copied to Liberty Mutual.

On February 16, 1999, Mr. DeSerrano sent Dr. Nguyen a reiteration letter concerning their meeting of February 11, 1999. Though the filed copies of Mr. DeSerrano's reiteration letters to Dr. Nguyen were unsigned, I was given no reason to believe they do not accurately reflect Dr. Nguyen's comments. According to Mr. DeSerrano, Dr. Nguyen said he approved of Ms. Nelson returning to work on February 1, 1999 with the following restrictions:

♦ Work 4 hours per day.

♦ No standing/walking greater than 1/2-hour at a time.

♦ No lifting/carrying greater than 5 lbs.

♦ No twisting/bending/stooping.

Mr. DeSerrano then related that he had met with the employer, who agreed to a work trial at modified hours, but stated they could not accommodate the restrictions on standing. Dr. Nguyen was unable to release Ms. Nelson to work on that basis. He agreed that Ms. Nelson should be referred to an active, goal-oriented treatment facility.

On March 3, 1999, Ms. Nelson was examined by Dr. Reuven Lexier, an orthopaedic surgeon, at the request of Liberty Mutual. In his report, dated March 5, 1999,⁴ Dr. Lexier concluded that Ms. Nelson's primary diagnosis was Grade I to Grade II whiplash. He found "no evidence of any orthopaedic pathology resulting in an impairment . . . as a result of the motor vehicle accident."

He stated he could not "account for her subjective complaints of pain in the neck, back, chest, abdomen or watery eyes as a result of the soft tissue injuries sustained in the motor vehicle accident." In particular, he did not feel her abdominal and gynecological complaints were accident-related, and he recommended that appropriate referrals be made. He concluded that Ms. Nelson could perform her child care and home maintenance tasks and "does not suffer an inability to perform the essential tasks of her pre-accident occupation as a packer . . . from an orthopaedic perspective."

Income replacement benefits were terminated based on Dr. Lexier's report. Ms. Nelson did not request a disability DAC assessment pursuant to subsection 37(4) of the Schedule.

Mr. DeSerrano met with Dr. Nguyen again on April 6, 1999, the same day Ms. Nelson's benefits were terminated. According to Mr. DeSerrano's letter, Dr. Nguyen made the following comments when informed of the results of Dr. Lexier's assessment:

♦ With regards to the recommendations in the IE report, you indicated you were not in agreement with the report, noting that an IE is an insurer's examination and [you] would expect the report to indicate a return to pre-MVA status.

♦ You indicated that the client was at risk of falling into a chronic pain situation, and therefore the psychological component of her pain complaints would need to be addressed if a return to normal function is to be expected.

♦ You indicated that the IE report likely did not address the chronic pain component of this client's injury profile.

♦ As such, with regards to the client returning to her pre-MVA activities of daily living (ADL's) and her work activities, you were unwilling to release the client back to these activities.

Dr. Nguyen also mentioned depression and mood swings during his meeting with Mr. DeSerrano, and he stated he would discuss a psychological evaluation when he next met with Ms. Nelson on April 8, 1999. Mr. DeSerrano's April 14, 1999 letter concerning his meeting with Dr. Nguyen is significant because it contains the first documented reference to Ms. Nelson having psychological problems.

Mr. DeSerrano's next letter was addressed to Mr. Wilson, who now represented Ms. Nelson, and included the following:

The undersigned [Mr. DeSerrano] arranged an appointment with the client on April 22, 1999 to discuss a referral to treatment at CBI. However, on the day of the scheduled appointment, the undersigned received a telephone call from the client's husband stating that they had retained a lawyer. Mr. Nelson cancelled the appointment, and provided the undersigned with your name and number.

According to Mr. DeSerrano, subsequent letters and telephone calls to Mr. Wilson went unanswered.

Mediation took place before a FSCO mediator between May 6 and June 16, 1999, but failed to resolve the dispute. Ms. Nelson then applied for arbitration.

According to Mr. DeSerrano's reiteration letter of August 3, 1999, Dr. Nguyen approved of a two-week work trial at that time, within the following restrictions:

♦ Work Monday to Friday, 4 hours per day.

♦ Limit standing to 30-minute intervals during the 4-hour workday.

♦ Limit lifting to the individual bottles at the height of the machine for loading or unloading purposes. No lifting of boxes of bottles is to be performed.

♦ No bending, crouching, or squatting below waist level.

Ms. Nelson would be reassessed after two weeks, with a plan to increase gradually to full duties. Dr. Nguyen now reportedly felt she could return to her full activities of daily living. However, Dr. Nguyen reported that he had referred Ms. Nelson to Dr. Maselle G. Virey, a psychiatrist, because of her "increasing pain behaviours" and "significant functional overlay."

Dr. Virey first met with Ms. Nelson on August 10, 1999. In her report to Dr. Nguyen, dated August 12, 1999, Dr. Virey noted that Ms. Nelson had been seeing Dr. Roy Raghunan, a psychologist, four times a month. Dr. Virey reported Ms. Nelson's complaints, including nightmares, irritability, sadness, fear of driving, forgetfulness, "voices talking to her," a feeling that people are watching her, and a feeling that the statue of the Virgin Mary in her church is watching her. Dr. Virey diagnosed Major Depression, and commented "there is a possibility of superimposed psychosis." Post-Traumatic Stress Disorder ("PTSD") was also diagnosed. Dr. Virey felt that all these conditions were related to the motor vehicle accident. She prescribed Serzone, and continued to see Ms. Nelson for supportive psychiatric care.

Dr. Nguyen prepared a report for Ms. Nelson's solicitors on August 16, 1999. After giving the dates of Ms. Nelson's 15 attendances since the accident, Dr. Nguyen stated,

I recommended that Mrs. Nelson to return to work on February 01, 1999 with certain restrictions. In my opinion, her back/neck injuries had improved sufficiently at that point to have a trial of modified work. However, her company did not provide her with a duty that would be suitable with my recommendation. Therefore, I advised her to continue with physiotherapy.

Mrs. Nelson has also complained of headache and symptoms suggestive of a depressive episode since April 1999. She has been treated with a[n] antidepressant, Luvox 50 mg once a day, with no significant improvement. I have arranged for Mrs. Nelson to see a psychiatrist, Dr. Virey on August 11, 1999.

In my opinion, Mrs. Nelson has begun to developed chronic pain syndrome and I have advised her again to return to modified work to prevent further aggravation of her symptomatology.

In a meeting on October 28, 1999, Dr. Nguyen reportedly told Mr. DeSerrano that as the workplace was unable to accommodate Ms. Nelson's restrictions, he did not recommend that she attempt a return to work. Dr. Nguyen felt Ms. Nelson was now developing a chronic pain syndrome. Ms. Nelson complained that she remained unable to perform her activities of daily living. Dr. Nguyen recommended that she continue to see Dr. Virey, and arranged for her to see a rheumatologist, Dr. Khan.

Mr. DeSerrano met with Dr. Virey on November 25, 1999. Dr. Virey returned Mr. DeSerrano's sign-back letters, with corrections. He confirmed the opinion he gave in his August 1999 report, and agreed with Dr. Nguyen that Ms. Nelson was unfit to return to any form of work, even modified work. He recommended that Ms. Nelson continue to see Dr. Raghunan or another psychologist providing cognitive therapy. Mr. DeSerrano relayed the opinions of Dr. Virey and Dr. Nguyen to Liberty Mutual by letter of December 15, 1999.

The next activity on Mr. DeSerrano's part was in May 2000, when he met with Dr. Nguyen again. Liberty Mutual had requested a referral to a neurologist, but Dr. Nguyen would not make the referral because Ms. Nelson was not reporting paraesthesia or other neurological complaints. Dr. Nguyen reiterated his view that her problem was chronic pain, and said this was a psychological rather than a physical impairment. Dr. Nguyen also advised that Ms. Nelson had cancelled the appointment with Dr. Khan. He confirmed that she was seeing Dr. Virey and Dr. Raghunan on alternate weeks. Finally, he recommended that Ms. Nelson attend the pain management program at Mount Sinai Hospital. Mr. DeSerrano relayed this information to Liberty Mutual by letter of May 25, 2000.

Mr. DeSerrano met with Dr. Virey again on June 5, 2000. At this time, Dr. Virey stated that Ms. Nelson had not shown any overall improvement since treatment had been initiated, and he gave a very guarded prognosis. He described her as "severely crippled (psychologically)" as a result of the accident. Symptoms of PTSD and depression included fatigue, dizziness, nausea, insomnia, nightmares and pain. Ms. Nelson had been tried on several anti-depressants. Dr. Virey recommended several talk therapy programs, but Ms. Nelson stated she could not attend because of child care issues. Dr. Virey agreed with Dr. Nguyen's recommendation that Ms. Nelson attend a pain management program.

Mr. DeSerrano's involvement in the file terminated at the request of Ms. Nelson's counsel in early July 2000.

Dr. Virey prepared a report for Mr. Wilson in July 2000 summarizing Ms. Nelson's treatment and progress. He reported that he was seeing Ms. Nelson twice a month, and had tried her on several anti-depressants. Ms. Nelson continued to resist his recommendation that she attend a talk therapy program. Of note, Ms. Nelson complained of a worsening of her psychiatric symptoms in December 1999, when a young male relative died in a car accident. She also told Dr. Virey that she

could not sleep for 4 days because her 5 year-old daughter fell from a swing and fractured her arm and had to undergo surgery at The Credit Valley Hospital. Consequently, Mrs. Nelson was feeling very upset.

Ms. Nelson continued to have symptoms of anxiety and depression, as well as medication side effects. Dr. Virey confirmed his diagnosis of "Refractory Major Depressive Disorder, which is a complication of her Post-Traumatic Stress Disorder, secondary to her accident of October 28, 1998." He concluded that Ms. Nelson was still substantially disabled from a psychiatric standpoint from performing the duties of her occupation.

Dr. Raghunan provided an Interim Psychological Report dated October 17, 2000. He found Ms. Nelson to be "frightened and depressed throughout the interview." He felt she was somatizing her pain - "unconsciously transferring her emotional distress into somatic complaints in addition to the pain she has been experiencing as a result of the medical condition arising from the accident in question."He also noted, as had Dr. Virey, that her description of some of her experiences appeared to reflect psychotic features, for example, she noted that she continues to smell the "'. . . blood and guts,' of the dead animal and that sometimes she believes that the 'spirit' of the dead animal hover[s] over her." Dr. Raghunan diagnosed Post-Traumatic Stress Disorder; Major Depressive Disorder, with some psychotic features; Pain Disorder Associated with Both Psychological Factors and General Medical Condition; Problems Related to the Social Environment; Injuries and Trauma arising from Motor Vehicle Accident. His treatment included relaxation therapy, cognitive therapy, ego building and desensitization therapy. However, Ms. Nelson plateaued, and Dr. Raghunan suggested supportive therapy may be necessary. He concluded that Ms. Nelson remained substantially disabled as a result of the accident, "and cannot perform the essentials of her daily activities." His prognosis was guarded.

In her affidavit, sworn on October 20, 2000, Ms. Nelson made the following statements:

Physically, I have daily headaches that last from 4-5 hours all day long. I have constant neck pain, every day. I have constant low back pain, also every day. I [have] chest and abdominal pain every few days for between a few hours and a day or two. I cannot tolerate walking or standing due to pain in both feet.
The pain causes dizziness and trouble sleeping. I have nightmares.
I just cannot do anything.
I am always sad, and nervous. I cannot stand noise. I have had trouble showing affection towards my children. I feel terrible guilt over the financial problems I have caused my family. It has all led to a strained relationship with my husband as well.
The result of these problems that causes me the greatest concern has been my inability to supervise and properly care for my children.

Ms. Nelson went on, in her affidavit, to relate two incidents where she felt she had not supervised her children adequately:

On June 6, 2000, my five year old daughter fell and broke her arm. It was twisted and swollen. I was not able to do anything for her. I did not call my husband at work. I did not call an ambulance. I do not know why. Luckily, my brother came by to pick up some mail. My daughter's treatment was only delayed for 15 minutes. She was taken immediately to hospital and they operated on her arm that same day.
Just three weeks ago my two year old son was jumping on a bed when he fell and hit his head. I did manage to comfort and calm him. I gave him some milk and put him down to sleep. When my husband came home two hours later and checked on him, he was still asleep, but his bed was covered in blood. It had come out his nose. I had not checked on him at all during that period.

The Request for an Insurer Examination:

The arbitration pre-hearing conference was held on July 20, 2000. On August 30, 2000, Liberty Mutual gave notice that it required Ms. Nelson to attend a psychiatric assessment with Dr. Wyndowe on October 24, 2000. Ms. Nelson, by her counsel, refused to attend, giving notice by letter of October 17, 2000. Mr. Chapnik submits that Liberty Mutual has long been aware of Ms. Nelson's psychological or psychiatric problems, and that the scheduling of the IE on the eve of Ms. Nelson's motion for interim benefits (November 10, 2000) would have foreclosed her opportunity to respond. Mr. Chapnik submits that Liberty Mutual is engaging in the sort of trial brinkmanship disapproved of by FSCO adjudicators in Belair v. F.S.⁵ and other decisions.⁶

The Insurer has had one IE performed, by Dr. Lexier, an orthopaedic surgeon, on March 3, 1999. At that time, Liberty Mutual had no reason to believe Ms. Nelson's claim had a psychological or psychiatric component. Subsequently, Ms. Nelson has attended Dr. Raghunan, a psychologist, and Dr. Virey, a psychiatrist, both of whom state she has a significant psychiatric or psychological impairment. Dr. Virey's first report was not produced until October 2000, and his second report was produced just prior to the motion hearing. Dr. Raghunan's only report was prepared about three weeks before the motion hearing, and the Insurer had been unable to obtain Dr. Raghunan's records at the time of the motion hearing.⁷ In these circumstances, I find that Liberty Mutual was entitled to have Ms. Nelson assessed by a psychiatrist of its choosing pursuant to section 42 of the Schedule. The question is whether the timing of the request was appropriate.

On April 6, 1999, the same day Ms. Nelson's benefits were terminated, Dr. Nguyen reportedly told Mr. DeSerrano that he disagreed with Dr. Lexier's report because it did not address the chronic pain or psychological component of her pain complaints. In that same meeting, he referred to depression and mood swings, and indicated he intended to refer Ms. Nelson for psychological evaluation. From then on, Dr. Nguyen and Dr. Virey focused increasingly on Ms. Nelson's chronic pain and psychological issues. All of Mr. DeSerrano's reiteration letters were copied to Liberty Mutual when received. Moreover, since at least August 1999, the Insurer has been paying for Ms. Nelson's treatment with Dr. Raghunan and Dr. Virey. I find that Liberty Mutual knew or reasonably should have known that Ms. Nelson claimed a psychological or psychiatric impairment soon after income replacement benefits were terminated on April 6, 1999, and certainly by the late summer of that year.

Mr. Burns submitted that Liberty Mutual arranged for the IE to follow the end of the 60-day period for completion of productions ordered at the pre-hearing (September 20, 2000). In fact, Mr. Chapnik did not complete productions on Ms. Nelson's behalf until October 6, 2000. Nevertheless, Liberty Mutual should not have required complete production from Ms. Nelson in order to recognize that it was obliged to enquire into the psychological or psychiatric aspects of her claim. When a psychiatric assessment was eventually received from Dr. Hershberg, Liberty Mutual reinstated Ms. Nelson's benefits. Liberty Mutual's delay in investigating this aspect of the claim is troubling.

If Ms. Nelson had attended the IE with Dr. Wyndowe, and an IE report had been produced on the eve of the motion hearing, I would have had to consider whether Ms. Nelson was unduly prejudiced by late production of the report, and whether it would be appropriate to exclude the report or adjourn the motion hearing in order to give her an adequate opportunity to respond. However, as the IE was requested before Ms. Nelson moved for interim benefits, I am not satisfied that it was intended to ambush Ms. Nelson in the interim benefits motion.

Accordingly, I find that on October 24, 2000, Ms. Nelson failed to make herself reasonably available for an Insurer Examination requested pursuant to section 42 of the Schedule. It follows that Liberty Mutual was entitled to stop payment of Ms. Nelson's benefits pursuant to paragraph 42(8)(a) of the Schedule.

Reopening the Hearing:

Ms. Nelson provided me with Dr. Hershberg's report and supplementary report after the motion hearing. Dr. Hershberg concluded that Ms. Nelson is substantially disabled because of chronic pain disorder, anxiety disorder (PTSD) and chronic depression. Liberty Mutual submitted that the reports are not relevant to the issues in dispute because they post-date the period in issue.

Rule 39.1 of the Dispute Resolution Practice Code - Third Edition gives an Arbitrator discretion to reopen a hearing.⁸ In Norton and Colonial Penn Insurance Company, Director's Delegate Naylor reviewed the criteria to be considered in exercising that discretion.⁹ In that case, the appellant argued that the arbitrator should have allowed the evidence in, and alternatively that the reports should be admitted on appeal.

Arbitrators have a broad discretion to reopen a hearing before their final order is issued. However, the decision to do so is not viewed lightly. As with the decision to admit new evidence on appeal, the exercise of the discretion to reopen a hearing involves balancing competing interests. The process must be finite. However, there must also be scope for including important developments that come into existence or come to light after the hearing or for admitting other information where a failure to do so would work an injustice.

Mr. Norton cited a number of cases that have looked at the factors guiding the admission of new evidence on appeal.¹⁰

For the most part, evidence that was not before the arbitrator will not be allowed on appeal unless the following conditions are met:

(i) the party could not have obtained the evidence by due diligence before the hearing;

(ii) the evidence must be reasonably capable of belief;

(iii) the evidence must relate to a potentially decisive issue, and if believed, when taken with the other evidence adduced at the hearing, be reasonably expected to have affected the result or be an important influence upon it.

I agree with that approach and apply it in this case.

On behalf of Ms. Nelson, Mr. Chapnik submitted that Dr. Hershberg's reports should be admitted because the assessment resolved Liberty Mutual's "only unanswered complaint about the motion for interim benefits," that is, that she had not attended an Insurer Examination with a psychiatrist. Mr. Chapnik also stated that he was content to file the reports without having an opportunity to cross-examine Dr. Hershberg or make submissions about the reports. He also noted that the reports "largely confirm Dr. Virey's reports."

The first criterion for reopening a hearing is whether the evidence could have been made available at the hearing. The Applicant's attempt to submit a favourable IE report after the hearing does not sit well in light of her refusal to attend for an IE before the hearing, which report might have been available at the time of the hearing. Moreover, Mr. Chapnik made no request at the hearing to reopen it to file Dr. Hershberg's report, probably for the good reason that he did not know what the report would say. Only when favourable reports were released did he decide to file them, which he then did without seeking the consent of counsel for Liberty Mutual and without moving to reopen the hearing under Rule 65 of the Dispute Resolution Practice Code - Third Edition. I do not find this an appropriate case for the exercise of my discretion to re-open the hearing. Accordingly, the reports are not admitted in the motion.

Interim Benefits:

Preliminary Issue

After the hearing on November 10, 2000, I received correspondence from the parties with respect to the scope of the issues in dispute in the motion hearing. In a letter dated November 13, 2000, Mr. Chapnik confirmed the parties' agreement that the Insurer would reinstate benefits on an interim basis upon the Applicant's attendance at the IE with Dr. Hershberg on November 27, 2000, and that the Applicant's entitlement to ongoing IRBs would be at issue in the hearing beginning March 26, 2001.

Mr. Burns responded on November 22, 2000, stating that while the Insurer would take Dr. Hershberg's report into consideration in determining the Applicant's entitlement to ongoing IRBs, the Insurer did not agree to pay ongoing interim benefits regardless of Dr. Hershberg's conclusions. Liberty Mutual subsequently reinstated Ms. Nelson's benefits on receipt of Dr. Hershberg's reports, and benefits continue to be paid. However, the Insurer has not committed itself to paying ongoing benefits until final resolution of the matter. Mr. Chapnik requested that I order payment of benefits on an interim basis pending the determination of the arbitration, and not just for the period prior to Ms. Nelson's attendance on Dr. Hershberg.

This matter has been complicated by the parties attempts to redefine the issues in dispute after the hearing. In order to provide some finality to the interim benefits motion, I restrict my order to the issues agreed by the parties at the motion hearing, namely, benefits between April 6, 1999 (when benefits were terminated) and October 6, 2000 (when benefits were reinstated further to Dr. Hershberg's reports), and between October 24, 2000 (when benefits were suspended because of Ms. Nelson's refusal to attend an Insurer Examination with Dr. Wyndowe) and November 27, 2000 (when she attended an IE with Dr. Hershberg and benefits were restored once again).

Criteria for Awarding Interim Benefits:

Section 279(4.1) of the Insurance Act gives arbitrators discretionary authority to make interim orders pending the final order in any matter. It does not specify the criteria for exercising this discretion. Arbitrator Manji considered the criteria for awarding interim benefits in Malabanan and Canadian General Insurance Company.¹¹

The criteria for the exercise of the arbitrator's authority in section 279(4.1) of the Act have been considered in a number of arbitration decisions. In Osbourne and Allstate Insurance Company and York Fire & Casualty Company¹² and Lucas and Dominion of Canada General Insurance Company,¹³ it was held that an interim order for the payment of benefits was appropriate where the applicant has established a prima facie case for entitlement to benefits. In Gomez and Pilot Insurance Company¹⁴ and Cobby et al. and Non-Marine Underwriters, Members of Lloyd s, London, England,¹⁵ the arbitrators ruled that an interim order for payment of benefits should normally be made only where the applicant has presented a convincing case for entitlement.¹⁶

The legislation does not set out criteria for the making of an interim order. However, an interim order, by its very nature, is intended to cover a short period of time between the making of the order and the final order. An application for an interim order must be heard in a summary fashion and the order must be made expeditiously. At the arbitration hearing, after a full hearing of all of the evidence, the arbitrator may well come to the conclusion that a substantially different order should be made.¹⁷ While arbitrators have the authority to order interim benefits to be repaid, in a significant number of cases, insurers will not be able to recover the interim benefits paid because the money will have been spent by the applicants. For these reasons I agree with my fellow arbitrators that an interim order should not be made on a routine basis.

I agree with the arbitrators in Osbourne and Lucas that one threshold criterion for an interim order should be that the applicant must put forward at least a prima facie case for entitlement. That is, the applicant must produce evidence, which if unanswered and believed, is sufficient to render reasonable a conclusion in favour of entitlement.

I would not go so far as to require an applicant to present a convincing case for entitlement on an application for an interim order for payment of benefits. I believe that, in most cases, it would be difficult for an applicant to present a convincing case without presenting his or her whole case. "Convincing" is defined in The Concise Oxford Dictionary¹⁸ as "...leaving no margin of doubt, substantial..." and "convincing proof" is defined in the Black's Law Dictionary¹⁹as "such as is sufficient to establish the proposition in question, beyond hesitation, ambiguity, or reasonable doubt, in an unprejudiced mind."

The summary nature of the procedure on an application for an interim order would make it difficult for an applicant to meet this standard.

I agree with the arbitrators in Osbourne and Lucas that financial need is not necessarily a criterion for the making of an interim order. However, given that the proper time for determining an applicant's entitlement to benefits is after a full hearing of all the evidence at an arbitration hearing, in my view, in addition to putting forward a prima facie case for entitlement, an applicant must demonstrate some need or necessity. In Osbourne, Arbitrator Palmer referred to a sense of urgency for the interim order to be made pending the final order. The need or necessity or sense of urgency need not be financial in nature.²⁰

In summary, I believe that an interim order for payment of benefits is appropriate (i) where the applicant has put forward a prima facie case for entitlement; and (ii) where the applicant has demonstrated some need or necessity or urgency for the interim order pending the final order.

Arbitrator Manji reaffirmed these principles in Ioannidis and Canadian General Insurance Company,²¹ adding that a blatant disregard of the Act or Schedule by the insurer might also give rise to an interim benefits order.

This is not a case where the insurer's conduct of the claim alone justifies an interim benefits award. Whether Liberty Mutual acted unreasonably in failing to reinstate benefits or make further enquiries after learning of the psychological aspect of Ms. Nelson's claim, and whether the Insurer's conduct merits a special award, are questions best left to the Arbitrator in the main proceeding, who will have the advantage of considering all the evidence. Accordingly, I find that Ms. Nelson's interim benefits motion turns on the merits of her claim.

I agree with Arbitrator Rotter's view that the term "prima facie" is ambiguous.²² Arbitrator Manji interpreted it to mean that the insured person must present "evidence, which if unanswered and believed, is sufficient to render reasonable a conclusion in favour of entitlement." [italics added] I prefer a stricter interpretation that is closer to the ordinary meaning of prima facie: "on its face" or "at first blush." Although I and other Arbitrators have used various terms to characterize the strength of the evidence required on an interim benefits application, in my view, the crux of the matter was best expressed by Arbitrator Rotter when she said,

The arbitrator hearing the [interim benefits] application must have a very positive view of the merits of the case for benefits. The arbitrator in Malabanan and Canadian General Insurance Company held that an applicant is not required to present a "convincing case," on an interim motion since that would entail a standard of proof leaving no margin of doubt, hesitation or ambiguity. I agree that a very high standard of proof leaving no margin of doubt cannot be required. An element of doubt, hesitation or ambiguity will always exist in the absence of a full hearing of all the evidence. Such an element may well persist even after a full hearing. However, after a full hearing, the arbitrator is only required to be persuaded on the balance of probabilities (the civil standard of proof).

I consider that, in the context of a motion for interim benefits, the standard of proof should be somewhat higher than at a hearing, in view of the fact that the evidentiary basis for the order is generally less than complete. On all the material presented, the arbitrator should find it not only reasonable, but also very probable, that an applicant will be found to be entitled to the benefits sought.

Arbitrator Bayefsky took the same approach in Kolonjari and Co-operators General Insurance Company:

In my view, the nature of interim benefit applications favours an interpretation more consistent with that set out in the Cripps decision. If questions of entitlement are normally to be heard after hearing all of the evidence, and if interim orders are only to be made in unusual circumstances and for short periods of time, then the onus on an applicant seeking interim benefits must be more than simply establishing a prima facie case (in which the applicant's evidence is essentially untested). I agree with the Cripps decision that an interim order must be made after "considering] the evidence of both sides," not simply the applicant's ("unanswered") evidence.²³

I agree with the approach taken by Arbitrators Rotter and Bayefsky, because it is more consistent with the nature of a motion for interlocutory relief, which is a discretionary and extraordinary remedy. In my view, the insured person must persuade the Arbitrator hearing the interim benefits motion that a favourable ruling is very probable.

The Use of Affidavit Evidence in Interim Benefits Motions:

Ms. Nelson relied on Boniface and Liberty Mutual²⁴ for the principle that the insured person need not testify in order for interim benefits to be granted. In that case, Arbitrator Killoran concluded that "there were such serious flaws with the DAC process that Mr. Boniface's benefits should be reinstated until a proper DAC has been conducted. The requirements of section 64, the stoppage of benefits provision in the Schedule, have not been met." She was clear that her subsequent conclusion that "Mr. Boniface has produced sufficient medical evidence to establish a strong prima facie case for entitlement to benefits" was obiter dicta. She made no comment on the fact that Mr. Boniface did not testify. I find that her decision must be understood in the context of the facts in that case.

Rule 65 of the Dispute Resolution Practice Code - Third Edition governs motion procedure at the Commission. Although it does not expressly set out any procedure for admitting affidavit evidence, Rule 65.5 says:

The adjudicator may determine the request on the basis of the documents and written submissions filed, or in such manner as the adjudicator considers appropriate.

In my view, it may be appropriate, in some circumstances, to determine an interim benefits motion based on affidavit evidence along with, in some cases, expert reports. For example, an Arbitrator may not need to hear from the insured person where the only issue is whether the insurer contravened the termination of benefits provisions in the Schedule, or where the only dispute between the parties relates to a legal or procedural issue²⁵ or an entitlement dispute arises from accounting issues relating to the calculation of benefits. There may also be cases where the expert medical reports are so persuasive that there is no need to hear from the insured person.

However, a party intending to rely on affidavit evidence should give notice to the other parties well in advance of the hearing, to ensure an effective opportunity to cross-examine on the affidavit or give notice that he or she will be required to testify at the hearing. Ideally, the consent of the other parties will be obtained.²⁶ There was no agreement in this case, and it was only the day before the motion hearing that Liberty Mutual was advised Ms. Nelson would not testify. Liberty Mutual was not given an opportunity to cross-examine Ms. Nelson.

It is not appropriate to proceed by way of affidavit in every interim benefits motion. Many insured persons claim they are disabled by soft tissue injuries, where the objective evidence of impairment may be inadequate to explain the degree of claimed impairment, and the experts disagree whether the insured person is disabled. The insured person's credibility is an important issue in these cases because her statements to doctors and oral evidence before the Arbitrator may be the only or the strongest evidence of disability. Viva voce evidence, including cross-examination, is essential to credibility assessment. As a practical matter, then, most insured persons must expect to give oral evidence in support of an interim benefits motion.²⁷

Entitlement to Interim Benefits:

Ms. Nelson has presented evidence that she remains disabled from returning to her pre-accident employment after April 6, 1999. In her affidavit, she stated that she suffers from constant neck and low back pain, headaches and recurrent chest and abdominal pain. She stated that the pain causes dizziness and trouble sleeping, and that she has nightmares. She also complains of feeling sad and nervous, being unable to show affection to her children, and feeling guilty about the financial strain her disability has caused her family. She says she "just cannot do anything," she cannot manage at home and could not manage at work. However, as Liberty Mutual was not given an opportunity to cross-examine Ms. Nelson, I am unable to rely on her affidavit.

Expert evidence in support of Ms. Nelson's claim came from Dr. Nguyen, Dr. Virey and Dr. Raghunan. Dr. Nguyen concluded that Ms. Nelson could return to modified work on a part-time basis as early as February 1, 1999, but when the employer stated it could not accommodate Ms. Nelson's inability to stand for more than half an hour at a time, Dr. Nguyen refused to release her to work. He reaffirmed that opinion in April 1999 after reviewing Dr. Lexier's report. Again in August 1999, Dr. Nguyen approved a two-week modified work trial within similar restrictions to those imposed in February. In October 1999, Dr. Nguyen diagnosed Chronic Pain Disorder. At no time has he concluded Ms. Nelson was able to return to her regular pre-accident employment. Dr. Virey and Dr. Raghunan agreed that Ms. Nelson suffers from depression and PTSD and remains disabled by her psychiatric impairment.

However, on balance, I am not satisfied the Applicant has made out a prima facie case for entitlement to income replacement benefits. Ms. Nelson suffered soft tissue injuries in the accident. As early as February 1, 1999, about three months after the accident, Dr. Nguyen felt she could return to modified part-time work. Psychological problems were not reported until April 1999, almost six months after the accident. I would like to have heard an explanation for Ms. Nelson's refusal to participate in talk therapy, and her cancellation of the consultation with the rheumatologist. Liberty Mutual also questions whether Ms. Nelson's psychological problems, especially her psychotic symptoms, were caused by the accident. Finally, I received almost no evidence about the essential tasks of Ms. Nelson's pre-accident occupation, and Drs. Virey and Raghunan focussed on her activities of daily living instead.

These factors do not preclude entitlement, but they do call for further evidence. This is exactly the kind of case where the insured person's credibility is a critical issue, but I was not given an opportunity to assess Ms. Nelson's oral evidence. Ms. Nelson may ultimately persuade an Arbitrator that she is entitled to ongoing income replacement benefits after April 6, 1999. Based on the evidence presented, I find Ms. Nelson has not made out a case for an interim benefits order.

Special Award:

Ms. Nelson claims a special award on the basis that Liberty Mutual failed to consider evidence of her psychological or psychiatric problems. Subsection 282(10) of the Act mandates a special award, in addition to benefits awarded, where "the arbitrator finds that an insurer has unreasonably withheld or delayed payments."

This issue was not identified in the mediation, the application for arbitration or the pre-hearing conference, but was first raised in the Applicant's Motion Record, filed on October 23, 2000. In Royal Insurance Company of Canada and Clark,²⁸ Director's Delegate Draper confirmed that "section 282(10) gives arbitrators the authority to impose a special award based on the evidence presented at the hearing, whether or not notice was given before the hearing." However, he emphasized that "the principles of natural justice and fairness required notice that [the insurer] was facing a special award order and a reasonable opportunity to respond." In that case, the possibility of a special award was not raised until the arbitrator issued her decision. Delegate Draper allowed the insurer's appeal on this point, finding that "[t]he arbitrator had the authority to raise the issue of a special award on her own initiative, but had to give Royal a reasonable chance to respond. Parties to arbitration hearings are asked to present their cases concisely and rely on documentary evidence where possible. It cannot be assumed, therefore, that evidence relevant to a special award will be led. For example, an adjuster's testimony may be unnecessary unless a special award is in issue."

In this case, I find that Liberty Mutual has been provided with reasonable notice that Ms. Nelson will seek a special award at the main hearing of this matter.

Productions:

Additional Medical Records:

At the pre-hearing conference, I ordered Ms. Nelson to produce a decoded OHIP summary of services from one year pre-accident and ongoing. I also ordered production of Dr. Nguyen's clinical notes and records for the same period. These documents were produced on October 6, 2000. Liberty Mutual now seeks Ms. Nelson's OHIP records and Dr. Nguyen's records from five years before the accident. This is the same request I declined at the pre-hearing conference. Liberty Mutual now renews the request based on reports from Dr. Raghunan and Dr. Virey indicating that Ms. Nelson has a serious psychiatric condition. Liberty Mutual submits that Dr. Virey's references to "psychotic features" or "a possibility of superimposed psychosis" indicate Ms. Nelson may have a serious underlying psychiatric condition. I understand these comments to be descriptive rather than diagnostic. Liberty Mutual concedes that the pre-accident medical reports produced to date do not reveal any pre-existing psychiatric condition. I am not satisfied the Insurer has made out a case for the probable relevance of additional medical records.

Surveillance and Investigation Evidence:

At the pre-hearing conference, I ordered the Insurer to produce surveillance evidence in accordance with the Commission's Guidelines, set out in Rule 37.1 of the Dispute Resolution Practice Code - Third Edition:

37.1 If a party intends to rely on any portion of surveillance or investigative evidence, including videotapes, photographs, reports, notes and summaries of surveillance observations or investigations, the party shall provide:

(a) the names and qualifications of the persons who secured the investigative or surveillance evidence, the dates, times and places where any surveillance or investigation was undertaken; and

(b) copies of all videotapes, photographs, reports, notes and summaries taken or prepared by anyone upon whose evidence the party intends to rely at the hearing.

In her affidavit, Ms. Nelson stated as follows (in paragraph 44):

Although the insurer advised of the name of the company that conducted the surveillance and provided a brief summary of the observations made, it failed to provide the names and qualifications of the person who secured the investigative or surveillance evidence, the dates, times and places where all surveillance was undertaken, and copies of all videotapes, photographs, reports, notes and summaries taken or prepared by anyone upon whose evidence the party intends to rely at the hearing.

Rule 37 does not set out any time lines for producing surveillance and investigation evidence. On behalf of Liberty Mutual, Mr. Burns stated at the motion hearing that the Insurer had not yet decided whether it would rely on any surveillance or investigation evidence. The Insurer would make that decision and serve the required documents at least 10 days before the hearing, in accordance with Rule 36.4, "Evidence and Witnesses:"

If a party intends to introduce documents that have not been filed, the party must file the document and the information required by these Rules and serve a copy on the other parties as soon as possible, but not less than 10 days before the first day of the hearing, or on such terms as the arbitrator considers appropriate.

As the italicized words indicate, Arbitrators are authorized to impose time lines that are more stringent than the ten-day service rule.²⁹ In this case, the parties agreed at the pre-hearing to make best efforts to comply with production undertakings and orders within 60 days of the pre-hearing (by September 20, 2000).

Mr. Chapnik asked that I order that any surveillance and investigation evidence be excluded from the main proceeding because of Liberty Mutual's non-compliance with these requirements. I find it more appropriate to order Liberty Mutual to produce the required documents under Rule 37.1 within 30 days of the release of this decision.³⁰ I will leave it to the Arbitrator hearing the main proceeding to determine the consequences of any non-compliance with this order.

Liberty Mutual's Claims File:

Mr. Chapnik requested the following documents from Liberty Mutual's claims file:

adjusters' log notes, in paper or electronic form;³¹
transfer memos between adjusters;
any protocols, internal guidelines or other policy documents for dealing with similar files;
correspondence between the Insurer, or its agents, and Dr. Hershberg, if not already produced; and
correspondence between the Insurer and Dr. Raghunan, Dr. Raghunan's Treatment Plans, and a payment history covering his fees.

Dealing with the last two requests first, subsection 42(7) of the Schedule requires an insured to provide the insured person with a copy of an IE report obtained under that section within seven days of receiving the report. In my view, this precludes any privilege arising with respect to an IE report, and it follows that the correspondence between an insurer and a medical assessor is producible. Even if these documents can be privileged, an insurer waives any privilege in choosing to rely on them. On either analysis, an insurer's correspondence with an IE assessor is producible.

The Insurer did not claim any privilege with respect to Dr. Raghunan, a treating psychologist whose fees are being paid by the Insurer. Any correspondence between Dr. Raghunan and the Insurer or its agents, if not already produced, should be produced.

The Commission routinely orders production of Treatment Plans and other third party form reports provided to the Insurer. These are prescribed forms under the Schedule, are often highly probative, and may not have been copied to the insured person. In the case of Treatment Plans, in particular, the process set out under section 38 of the Schedule starts out with an application for a medical benefit and Treatment Plan, and these forms are generally necessary for a full and fair hearing. Any treatment plans not already produced to the Applicant should be produced.

Benefit payment information is more easily obtainable by the insurer than the insured person, and providing a payment schedule for benefits paid out to a third party facilitates dispute resolution. The Insurer is ordered to produce this information.

Liberty Mutual claimed litigation privilege for documents prepared after the date of the application for mediation. FSCO adjudicators have accepted that in many cases, litigation privilege arises on the date of the application for mediation, although when litigation became the dominant purpose for preparing a particular document is a factual question that must be determined on a case-by-case basis.³² In this case, mediation commenced on May 6, 1999, one month after benefits were terminated.³³ Mr. De Serrano continued to submit reports to Liberty Mutual until July 2000.

A document is protected by litigation privilege if the dominant purpose for its preparation was anticipated litigation.³⁴ A document may be prepared for more than one purpose; only if the dominant purpose was litigation does the privilege arise. Moreover, the fact that litigation is anticipated does not mean the document was prepared for the dominant purpose of the litigation. Finally, in a given period during which litigation is anticipated, some documents may be prepared for the dominant purpose of litigation, and some for the purpose of assessing an ongoing claim. Commission adjudicators have affirmed that the insurer's continuing obligation to adjust an insured person's claim for ongoing benefits does not end with the termination of benefits or the insured person's application for mediation.³⁵ I find it likely that the Insurer's file after May 1999 includes both privileged documents prepared for the dominant purpose of litigation, and non-privileged documents prepared in the normal course of adjusting Ms. Nelson's ongoing claim.

Liberty Mutual submits that the non-privileged documents requested are not producible because Ms. Nelson has not established their relevance to the issues in dispute. The "threshold criteria" for production of non-privileged insurers' files has been the subject of a number of Commission cases. The request is usually made in connection with a special award claim, as it is in this case. In Leitgeb and Allstate,³⁶ Director's Delegate Draper revoked an Arbitrator's order for production of the insurer's internal memoranda prior to the date of the application for mediation. He was not convinced the order violated any privilege, but found it had no foundation because the insureds had not "advanced any particularized allegation of misconduct" by the insurer:

I am unable to accept the proposition that all aspects of the insurer's handling of a file become relevant as soon as a "claim" for a special award is advanced. In my opinion, that would be a distortion of the special award provision in section 282(10) of the Insurance Act.

The dispute resolution process is established to resolve "disputes in respect of any insured person's entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled." The focus of the arbitration, therefore, is on the applicant's entitlement to benefits, or the proper amount of the benefits. The basis for ordering a special award arises out of that inquiry. The special award provision does not expand the arbitration into a generalized inquiry into the insurer's conduct.

As a further corollory of the derivative nature of special awards, Director's Delegate Draper held that an Arbitrator can order a special award whether or not it was raised in mediation or at the pre-hearing, subject to the insurer being given adequate notice.³⁷

Delegate Draper returned to the issue in Belair Insurance Company and Candido.³⁸ The insurer appealed from the Arbitrator's order that it produce its notes, memoranda or other documents with respect to its decision to deny occupational therapy benefits. Apart from occupational therapy benefits, the insured person also claimed a special award, as well as income replacement benefits, attendant care benefits, and housekeeping and home maintenance benefits. The basis for the special award claim was an allegation that the insurer had ignored a report from its own neuropsychologist recommending that an occupational therapist be retained to assist the insured person. Delegate Draper relied on Rule 1.1 and Rule 46.2 of the Dispute Resolution Practice Code - Third Edition to reject the appeal.³⁹ He made the following comments about the merits of the insurer's appeal:

In this case, I am not persuaded that the appeal should be allowed to proceed. The prompt exchange of documents is one of the most important factors in resolving disputes. Therefore, I am reluctant to intrude. Further, I agree with Mrs. Candido that unlike the order in Leitgeb, the arbitrator's order is limited in scope and specifically relates to her claim for occupational therapy. Therefore, I am not prepared to interfere.

The issue was considered more recently in Allstate and Al-Obaidi.⁴⁰ In that case, an Arbitrator ordered production of the adjuster's notes prior to the date the insured person applied for mediation. The issues in dispute at the time of the pre-hearing were relatively narrow: claims for the cost of medical assessments and reports, treatment expenses, the cost of housekeeping and home maintenance services, as well as interest on arrears, arbitration expenses and a special award. The Arbitrator ordered production of all non-privileged notes, based on the insured person's request for a special award stemming from the insurer's "blanket denial of her assessment benefits under section 24." On appeal by the insurer, Director's Delegate Naylor concluded that the Arbitrator's order was overbroad:

Relevance is framed by reference to the issues being arbitrated. Rule 32.4 makes this explicit. There must be a reasonable relationship between the records sought and the dispute being arbitrated.

Delegate Naylor reaffirmed the principle established in Leitgeb, that "a bald assertion of a special award does not, in and of itself, entitle an insured to access the company's complete file." An Arbitrator's options included making a selective order, provided that the parties may bring before the Arbitrator any disputes about the scope of the order. In the case before her, she concluded there was "a sufficient connection between the log notes and the parameters of the dispute to warrant a production order," but limited the order to entries made after the insurer received notice of the expenses in dispute and before the commencement of the second mediation. She commented that "[g]iven the short time frame covered, it is reasonable to proceed on the basis that, notwithstanding the limited scope of the dispute, the log notes for this period, in their entirety, may well have some bearing on it."

A number of policy considerations have been advanced in favour of limiting production of non-privileged documents from an insurer's file. There is a concern that special award claims, and the production requests they engender, may divert scarce resources away from the central entitlement questions into collateral matters. Another concern is that because a special award claim, like an insurer's fraud allegation, goes to the conduct of a party, it tends to make settlement less likely. On the other hand, there may be a concern that an insured person with a weak entitlement claim might make a special award claim solely to encourage an insurer to offer a favourable settlement in order to avoid producing insurer documents or presenting oral evidence about its conduct of the file. These concerns are legitimate, but they are ultimately answered by reference to subsection 282(10) of the Act, which mandates an enquiry into the reasonableness of an insurer's conduct once entitlement is established.⁴¹ Short of adopting a bifurcated hearing process, the tensions arising from the relationship between entitlement and special award disputes are likely to be long-lasting.

Another concern is the confidentiality of the insurer's files. However, subsection 22(1) of the Insurance Act gives Commission adjudicators the same power to summon and enforce the attendance of witnesses, compel them to give evidence under oath and compel them "to produce documents, records and things" as the Ontario Superior Court has in the trial of civil actions. The legislature could easily have limited the power of Commission adjudicators to compel evidence from insurers, but chose not to do so. Presumably the legislature was content that an insurer's confidentiality interests are adequately protected by the common law privileges preserved by subsection 15(2) of the Statutory Powers Procedure Act.

As Arbitrators have often observed, introducing a court-like discovery process into the dispute resolution process would be inconsistent with the Commission's mandate to resolve disputes in "the quickest, most just and least expensive" way.⁴² However, the absence of a formal discovery process forces the parties to rely on document exchange as "one of the principal means of gathering relevant information."⁴³ Special award claims raise particular problems of document exchange because of factors discussed by Arbitrator Wilson in Nigro and State Farm:

A decision to pay or not to pay benefits involves an analysis by the Insurer of whether an applicant meets the statutory criteria for benefits. Necessarily such an evaluation will contain both objective and subjective elements.

Usually, the objective elements of a claim can be ascertained from documents such as the reports of physicians, or the claims documents themselves. Evidence of the subjective aspects of the adjustment of a claim is, however, more elusive.

When the internal decision-making of the Insurer is being impugned by an applicant, as in the case of a special award, it is next to impossible to present a case without access to the internal documents of the Insurer.

Nevertheless, in some circumstances, there may be good reasons not to order the production of relevant, non-privileged documents. As Delegate Naylor stated,

Relevance is a necessary, but not necessarily sufficient, requirement [for production]. In exercising the discretion to make an order, relevance and reasonableness are the guiding principles. The degree of relevance is weighed against other factors, such as the sensitivity of the information, the practicalities of compliance and the timing of the request.⁴⁴

The Insurer has not suggested, in this case, that the Applicant's request should be denied because of sensitivity, compliance or timing issues, and I am not satisfied that such concerns outweigh the relevance of the documents requested in this case. Ms. Nelson claims a special award based on Liberty Mutual's failure to investigate her psychological problems at the time of terminating her benefits or afterwards, when it received Mr. De Serrano's ongoing reports concerning this aspect of her claim. If she succeeds in establishing entitlement to benefits, the adjusters notes and internal memoranda are likely to be relevant to the Arbitrator's assessment of the Insurer's conduct of this aspect of the claim. It is trite law that a document is not necessarily admissible at the hearing just because it was ordered disclosed during the pre-hearing process; if Ms. Nelson does not succeed in her entitlement claim, the issue of a special award does not arise, and the documents from Liberty Mutual's file will not be relevant to any issue in dispute.

Accordingly, I find that the adjusters notes concerning Ms. Nelson's IRB claim are producible, apart from documents prepared after Ms. Nelson's application for mediation for the dominant purpose of anticipated litigation. I remain seized of this matter in the event the parties are unable to agree about the documents to be produced.

I am not satisfied that Liberty Mutual’s protocols, internal guidelines or other policy documents are likely to be relevant in this matter, and I do not order them to be produced.

EXPENSES:

The issue of Ms. Nelson's expenses of this motion is deferred to the main proceeding.

February 16, 2001

Nancy Makepeace Arbitrator

Date