Jose Hernandez v. Zurich Insurance Company, 2001 ONFSCDRS 91

Financial Services Commission of Ontario

Neutral Citation: 2001 ONFSCDRS 91

FSCO A96-001123

BETWEEN:

JOSE HERNANDEZ

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: David J. Evans

Heard: By written submissions received on May 9, May 18 and May 23, 2001.

Appearances:

William A. Garay for Mr. Hernandez

Kenneth Wright for Zurich Insurance Company

Issues:

The Applicant, Jose Hernandez, was injured in a motor vehicle accident on November 5, 1994. He applied for and received statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under the Schedule.¹ Zurich terminated weekly income replacement benefits effective February 27, 1996. As set out in greater detail below, the parties were unable to resolve their disputes through mediation, and Mr. Hernandez applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The matter proceeded to a hearing, an appeal, judicial review, and now is proceeding to a re-hearing. Zurich now seeks a stay of the re-hearing because Mr. Hernandez refuses to attend any further insurer examinations.

The preliminary issue is:

1. Should Mr. Hernandez' application for arbitration be stayed pending his attendance at the insurer examinations requested by Guardian?

Result:

1. The hearing is adjourned until Mr. Hernandez attends at an insurer's examination by Dr. Maureen Baxter.

EVIDENCE AND ANALYSIS:

Background:

This case is returning for a new hearing following a circuitous process. Mr. Hernandez was injured in a motor vehicle accident on November 5, 1994. After paying income replacement benefits (IRBs) for about a year, Zurich notified Mr. Hernandez that it intended to terminate benefits. Mr. Hernandez asked for a disability assessment by a Designated Assessment Centre ("DAC"). The January 1996 DAC included an assessment by Dr. Lynn MacGregor, physiatrist. Based on the DAC's conclusion that Mr. Hernandez was capable of performing the essential tasks of his pre-accident employment, Zurich terminated his IRBs effective February 27, 1996.

Mr. Hernandez applied for arbitration in July 1996, the arbitration hearing commenced in June 1997, and a decision was rendered in Mr. Hernandez' favour in August 1998.² On appeal, Director's Delegate Draper ordered a new hearing.³ A subsequent judicial review application was heard and dismissed by the Divisional Court on November 22, 2000.

One reason that the new hearing was ordered related to the testimony (or lack thereof) of Dr. Maureen Baxter, an orthopaedic surgeon who examined Mr. Hernandez on behalf of Zurich and provided a report in September 1995, ten months after the accident.

The matter came before me for a pre-hearing by teleconference on May 2, 2001. Mr. Hernandez still seeks ongoing income replacement benefits. More than four years have elapsed since any health practitioners have seen Mr. Hernandez, no additional medical reports have been served by Mr. Hernandez, and his counsel, Mr. Garay, stated at the pre-hearing that he will not be submitting any new medical evidence. I scheduled the hearing for four days in Ottawa starting on October 22, 2001.

At the pre-hearing, counsel for Zurich indicated that he wished to have further insurer examinations conducted by Dr. Baxter (the orthopaedic surgeon) and Dr. MacGregor (the physiatrist at the DAC) as well as obtain a further DAC. Mr. Garay indicated that he would not be sending his client to any insurer examinations or a DAC. Accordingly, this preliminary issue hearing was set, to proceed by written submissions. In its reply submissions, Zurich indicated that it also wished Mr. Hernandez to attend before a psychiatrist.

The Law:

Subsection 65(1) of the Schedule provides that an insurer may "as often as reasonably necessary" give an insured person notice requiring the person to be examined by one or more persons specified by the insurer, each of whom is a member of a health profession or a person with expertise in vocational rehabilitation. Section 71.1 also provides that an insured person shall not commence a mediation proceeding (and hence an arbitration proceeding) unless he or she "has made himself or herself reasonably available for an examination under section 65."

Mr. Hernandez objects that subsection 65(1) "only applies where there is ongoing payments being made by the insurer to the insured." That is clearly wrong. It is now trite law at the Commission (as set out, for instance, in the Belair⁴ case) that an insurer is not limited to requests for insurer examinations made before the termination of benefits or the commencement of mediation.

Mr. Hernandez submits that "the issue is simply whether or not Mr. Hernandez was entitled to income replacement benefits as at the date of the termination of such benefits." However, this statement is also clearly wrong, in light of the fact that Mr. Hernandez is making an ongoing claim for benefits. As pointed out by Director's Delegate Draper in the appeal decision, the arbitrator will be considering whether the evidence supports Mr. Hernandez' continuing entitlement up to the time of the hearing.

Mr. Hernandez submits that the Insurer is not seeking its examinations for the purpose of subsection 65(1), which in the words of Director's Delegate Naylor in Belair "is to enable an insurer to fairly and effectively assess a claim" for weekly benefits. Mr. Hernandez submits that the Insurer "is simply looking to have a further chance to obtain further (already biased) medical/health information to support its position that was not accepted at the original arbitration." However, I would think that the great length of time that has elapsed since the last insurer's examinations would mean that the Insurer's request for further examinations does fulfill the purposes of subsection 65(1).

Regarding the length of time since an insurer's examination, arbitrators have held that periods as short as 18 months have entitled insurers to further examinations: Kasperowicz.⁵ In Bogic,⁶

Arbitrator VanderBent wrote: "Where there is a claim for ongoing benefits, and a lengthy period of time has transpired since the most recent examination, it is fair, and hence reasonable for an insurer to request further examinations in order to evaluate an applicant's claim." Arbitrator Manji in Kasperowicz wrote that an insurer's ongoing right to require an insurer's examination "is important to an informed adjudication of an insured person's entitlement to benefits." Arbitrator Manji also noted that in her case, where the insurer had little current medical information" about the applicant, it was not in a position to confirm Mrs. Kasperowicz's assertion that there has been no changes in her physical or psychological condition" since the last reports some 18 months earlier. In Kasperowicz there were indications that the applicant's claim was an evolving one. However, in this case, between four and six years have passed since the examinations. I find that a case is an evolving one where the applicant seeks ongoing benefits and a long time has passed since the original examinations. In such a case, the insurer is entitled to current medical information, especially in light of Director Delegate Draper's holding in the appeal decision:

I note that the record includes repeated references suggesting that the only relevant question was whether Mr. Hernandez met the test for IRBs at the time they were terminated. This is troubling. In claims for ongoing benefits, arbitrators regularly consider whether the insured person was entitled to benefits at the time they were terminated and whether the evidence supports his or her continuing entitlement up to the time of the hearing. In my view, this is the proper approach.

In this case, where the reports are at least four years old, I find that up-to-date reports are relevant in determining any "continuing entitlement up to the time of the hearing." I agree with the submissions of Zurich that, given the lapse of time, it is reasonably necessary to conduct further examinations.

Turning to the examinations requested, I agree that there should be a further examination by Dr. Baxter. She has not seen Mr. Hernandez since 1995. Accordingly, the hearing is adjourned until Mr. Hernandez attends at an examination by Dr. Baxter.

However, I have great concerns about the other requests by Zurich. First, it seeks an order staying the hearing until Mr. Hernandez attends a further DAC — but a DAC is not an insurer's examination. As it is not an examination under section 65 of the Schedule, the insurer cannot obtain the stay requested. If a further disability DAC is available — and I was provided with no submissions or case law or citations of the relevant DAC guidelines on this point — then the parties will have to follow those protocols. Second, Zurich wishes one of the further examinations to be by Dr. MacGregor, who conducted the disability DAC. The DAC General Guideline #4, Ensuring Neutrality of the Designated Assessment Centre System (March 1999) states with respect to Post-DAC examinations that "once a DAC assessment is completed, the DAC assessor(s) are not permitted to...conduct a medical-legal assessment for either claimant or insurer." Accordingly, I find that Zurich is not entitled to an order adjourning the hearing because of Mr. Hernandez' failure to attend a further DAC or to attend before Dr. MacGregor.

As for the matter of the psychiatrist, that was only brought up by Zurich in its reply, and it provided no name of a psychiatrist. I am not prepared to make an order in blank.

That said, I can understand why Zurich would seek psychiatric and physiatric examinations. As I understand it, Zurich has not had such insurer examinations, whereas Mr. Hernandez called both a psychiatrist and a physiatrist at the hearing and apparently intends to recall them at the re-hearing. If Zurich proposes reasonable dates and times for examinations before a psychiatrist and a physiatrist, and Mr. Hernandez refuses to attend, I would certainly be prepared to revisit the issue.

Mr. Hernandez sought, as a pre-condition of any order adjourning the hearing for his failure to attend at insurer examinations, an order requiring Zurich to pay for further examinations and reports by Dr. Gillen (physiatrist), Dr. Juan E. Tejeda (psychiatrist), Dr. Juan Escudero (family practitioner), and a functional capacity assessor to respond to any further functional capacity assessment by Zurich.

However, the issue at this point is simply whether or not Mr. Hernandez' hearing is adjourned pending his attendance at a further insurer's examination. It is adjourned, so any right he has to interim expenses is currently moot. In any event, the submissions I have would hardly be sufficient to make such an order. I suggest that both parties make proper submissions and provide evidence on a motion for interim expenses should the adjournment of the hearing be lifted. They should also review the law on this point. For instance, Zurich suggested that expenses "are in the discretion of the arbitrator at the time of the arbitration hearing, not at this preliminary stage" because "this arbitration is proceeding pursuant to the 'old' rules." However, Mr. Hernandez would be seeking interim expenses pursuant to section 282(11.1) of the Insurance Act. This section applied as of January 1, 1994, so it applies to this proceeding.⁷ As to the relevant criteria for granting interim expenses to the applicant, the parties may wish to consider cases such as Adu-Agyei and Zurich Insurance Company.⁸

EXPENSES:

The parties made no submissions and I make no order as to expenses at this time.

June 19, 2001

David J. Evans Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 91

FSCO A96-001123

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOSE HERNANDEZ

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The hearing is adjourned until Mr. Hernandez attends at an insurer's examination by Dr. Maureen Baxter.

June 19, 2001

David J. Evans Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule "refers to the original O.R. 776/93, and "1995 Schedule "refers to O.R. 776/93 as amended.
2. 2Hernandez and Zurich Insurance Company (FSCO A96-001123, August 28, 1998), the "original decision."
3. 3Zurich Insurance Company and Hernandez, (FSCO P98-00045, April 12, 1999), the "appeal decision."
4. 4F.S. and Belair Insurance Company (OIC P96-00039A, June 11, 1996)
5. 5Kasperowicz and Royal Insurance Company of Canada (OIC A96-001306, May 29, 1997). I note that in Barreira and Allstate Insurance Company of Canada (FSCO A00-000079, June 30, 2000), Arbitrator Wilson did not consider a period of two years sufficient. However, that was in obiter, and unlike this case there had already been a finding of causation and disability in an earlier hearing.
6. 6Bogic and AXA Insurance (Canada), (FSCO A96-001192, April 30, 1999)
7. 7In fact, it applies to all existing arbitration proceedings after January 1, 1994, whether the proceedings were initiated before or after January 1, 1994: Bernicky and Guardian Insurance Company of Canada (OIC A-006268, July 6, 1994).
8. 8(FSCO A97-001546, June 16, 2000)