Neutral Citation: 2002 ONFSCDRS 40 FSCO A01-001065 Financial Services Commission of Ontario

Between: Anne McAllister (Applicant) and Economical Mutual Insurance Company (Insurer)

Before: Judith Killoran Heard: By telephone conference call on January 31, 2002.

Appearances: Linda Wolanski for Ms. McAllister Gordon L. Robson for Economical Mutual Insurance Company

Issues:

The Applicant, Anne McAllister, was injured in a motor vehicle accident on April 25, 1999. She applied for and received statutory accident benefits from Economical Mutual Insurance Company ("Economical"), payable under the Schedule.¹ Economical terminated weekly income replacement benefits on February 18, 2001. The parties were unable to resolve their disputes through mediation, and Ms. McAllister applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Insurance Act").

At the pre-hearing discussion held on January 31, 2002, Economical asked for production of all documents from Ms. McAllister's Standard Life disability file, which are in her counsel's possession. Ms. McAllister is engaged in litigation with Standard Life as a result of its denial of her claim for long-term disability benefits. Ms. McAllister agreed to produce all claim forms submitted to Standard Life but declined to produce the remainder of the file. Economical requested that Ms. McAllister list all documents in the file and note for each document the reasons for her refusal to produce the particular document. Ms. McAllister declined to do so.

The issue is:

Is Ms. McAllister required to produce any further documents from her Standard Life disability file?

Result:

Ms. McAllister is not required to produce any further documents from her Standard Life disability file.

Evidence and Analysis:

Ms. McAllister objected to disclosure of the contents of the Standard Life disability file, which are in her counsel's possession, on the grounds of lack of relevance and the deemed undertaking rule. Consequently, Ms. McAllister submitted that all the documents requested cannot be produced and in any case, lack relevance for this proceeding.

Economical made few distinctions between the types of documents that would likely be found in the disability file. It made submissions relating only to medical reports. Economical acknowledged that there should be a distinction between those medical reports which were prepared up to the time that Standard Life refused Ms. McAllister's application for benefits and those which were prepared or obtained later, in anticipation of, or during the course of, litigation. The deemed undertaking rule is codified in Rule 30.1.01(3) of the Rules of Civil Procedure which provides that all parties and their counsel are deemed to undertake not to use evidence or information obtained from documentary discovery, examination for discovery, inspection of property, or medical examinations other than for those proceedings in which the evidence was obtained. Therefore, all the documents in the disability file are not subject to the deemed undertaking rule. Many of the documents resulted from the initial handling of the file leading to the decision by Standard Life to refuse Ms. McAllister's application for long-term disability benefits. These documents would not be bound by the deemed undertaking rule.

There are exceptions to the deemed undertaking rule but the only applicable exception in the circumstances of this case is found in Rule 30.1.01(8) which states: "If satisfied that the interests of justice outweigh any prejudice that would result to a party who disclosed evidence, the court may order that subrule (3) does not apply to the evidence or to information obtained from it, and may impose such terms and give such directions as are just."

In my view, Economical's request for production of Ms. McAllister's entire Standard Life disability file has been made in the context of the dispute resolution process for an order requiring the insured to produce documents from a related civil action. As part of my authority as an arbitrator to control the process, I may exercise my discretion to order such production but only in compliance with principles respecting the use of evidence for certain collateral purposes.

Section 20 of the Insurance Act provides arbitrators with exclusive jurisdiction to exercise their powers to determine all questions of fact or law that arise in proceedings before them. In addition, section 22 of the Insurance Act grants arbitrators the same power as the Ontario Superior Court of Justice for the trial of civil actions to summon and enforce the attendance of witnesses, compel them to give evidence, and to produce documents, records and things.

The principle behind the deemed undertaking rule is a prohibition against collateral use. The prohibition against collateral use is designed to, among other things, protect the confidentiality and privacy of parties in the civil litigation process. In the case before me, the Insurer does not have the documents in its possession so there are no issues of misuse or deterrence. I agree in this regard with the Director's Delegate's reasoning in CAA Insurance Company (Ontario) and Sandhu² By dismissing the motion to compel production, I can control the inappropriate use of such documents. On the other hand, if I conclude that these documents are relevant, I may order production of the documents. However, in my view, such an order can only be made in the context of balancing competing interests for full disclosure while respecting issues of confidentiality and privacy.

In earlier cases at FSCO dealing with circumstances when production from a civil action was compelled, the arbitrators weighed the prejudice to the insured person if compelled to produce the documents compared to the prejudice to the insurer if access to the document were denied, using the criteria set out in Rule 30.1.01(8). The civil actions in question were related tort actions. In the case before me, the civil action relates to the denial of long-term disability benefits by a collateral benefits carrier.

I share Arbitrator Wacyk's concern, as expressed in J. V. and State Farm Mutual Automobile Insurance Company³ and Sandhu and CAA Insurance Company (Ontario),⁴ about ordering the production of defence medicals which may have the undesirable effect of allowing a doubling up of medical reports. With respect to discovery transcripts, an order compelling production allows a party to circumvent the lack of pre-hearing discovery in FSCO's process and do indirectly what the legislature chose not to allow directly, as well as give an unfair disadvantage to one party.

Economical has not persuaded me that any of the documents to be found in Ms. McAllister's disability file are relevant to this proceeding. Those medical reports prepared for the purpose of determining her eligibility for long-term disability benefits were prepared in the context of a particular test to be met. The disability tests set by disability carriers and those found in the SABS are different and require consideration of a different set of factors. As well, it is desirable to close the door to the possibility that the arbitration process becomes a battle of numbers. In Tanner v. Clark,⁵ Justice Browne agreed that granting a tort defendant who had already obtained three defence medicals the right to compel production of three medical reports from the accident benefits file was analogous to granting the defendant three additional defence medicals.

In the event that there are relevant documents in the Standard Life disability file, I have not been satisfied by Economical's submissions that there are compelling reasons to order their production. The Insurer is not prejudiced by the non-production of medical reports from the disability carrier's file but the dispute resolution process, and possibly the Applicant, are prejudiced by productions which may lengthen and complicate the arbitration proceeding. There is no compelling reason why the medical reports to which Economical is entitled under the SABS are insufficient. Ms. McAllister has attended a DAC and a DAC report has been produced. She has also attended a number of insurer's examinations and been the subject of surveillance by the Insurer. Economical has not persuaded me to exercise my discretion to order production of any portions of Ms. McAllister's Standard Life disability file.

For the reasons outlined above, I decline to order the production of any further documents from Ms. McAllister's Standard Life disability file.

March 1, 2002

Judith Killoran Arbitrator

Date

Arbitration Order