Neutral Citation: 2002 ONFSCDRS 6

FSCO A01-000175

BETWEEN:

EDDIE SHUNG

Applicant

and

ALLIANZ INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

David Leitch

Heard:

December 19, 2001, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Carolyn Amendola for Mr. Shung

William J. McCorriston for Allianz Insurance Company of Canada

The Applicant, Mr. Eddie Shung, was injured in a motor vehicle accident on April 4, 1997. He applied for but has been denied statutory accident benefits payable under the Schedule¹ by Allianz Insurance Company of Canada ("Allianz" or "the Insurer"). The parties were unable to resolve their disputes through mediation, and Mr. Shung applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Is Mr. Shung precluded by section 50(b) of the Schedule from proceeding to mediation (and hence arbitration) because he failed to make himself reasonably available for an examination required by Allianz under section 42?

Mr. Shung is precluded from proceeding to arbitration until he makes himself reasonably available for examination by Dr. Rajka Soric.

Mr. Shung's accident of April 4, 1997 involved a collision between the bicycle he was riding and a motor vehicle. The Ambulance Call Report states that he "was struck by a car traveling [sic] at 50 km/hr", that his "head hit roof and windshield smashing glass" and that he "was thrown 20-25 ft."² The emergency report at St. Michael's Hospital in Toronto indicates that Mr. Shung was not wearing a helmet at the time of the accident.³

In a statement to Allianz, made about two and a half weeks after the accident, Mr. Shung gave the following description of his injuries: "I have a head injury - memory problems, concentration problems and headaches. I have a broken right shoulder, broken left thumb, with 2 steel pins, my whole back is sore. I have bruised right ribs and my left ribs are broken. I am not sure how many...I have some staples in my head and cuts to my forehead."⁴

On May 5, 1997, Mr. Shung was admitted to the Day Treatment Unit at Riverdale Hospital where he came under the care of Dr. J.H. Somerville, a specialist in Rehabilitation Medicine. In a Treatment Plan submitted to Allianz dated June 2, 1997, Dr. Somerville listed Mr. Shung's impairments using abbreviations which the parties agreed can be translated as follows: "closed head injury and possible seizure, right scapula fracture, left thumb fracture, depression (suicidal ideation)."⁵ Under "estimated duration of disability", Dr. Somerville drew an arrow to the right.

Mr. Shung takes the position that he is catastrophically impaired as a result of the accident and that he is, therefore, entitled to case manager services benefits under section 17 of the Schedule. He also claims to suffer from a complete inability to carry on a normal life as a result of the accident and that he is, therefore, entitled to non-earner benefits under section 12 of the Schedule. Allianz has denied Mr. Shung's claims for both types of benefits. His entitlement to these benefits is the subject of an arbitration hearing set to begin on January 14, 2002.

Allianz alleges that Mr. Shung failed to make himself reasonably available for an insurer's examination by Dr. Rajka Soric, the Physiatrist-in-Chief of the Department of Rehabilitation Medicine at Mount Sinai Hospital, on April 14, 1998 and again on February 23, 1999. This issue arose before mediation and was the subject of mediation.⁶

The evidence establishes that Mr. Shung was first examined on behalf of the Insurer on April 3 and 4, 1998 by Dr. Paul L. Wang, a clinical psychologist who had previously examined Mr. Shung at the Riverdale Hospital. Mr. Shung attended this examination and Dr. Wang reported his findings to the Insurer.⁷

By letter dated March 23, 1998 to Mr. Shung⁸, with a copy to his representative, Mr. Joseph Pileggi of the law firm Thomson Rogers, Allianz required Mr. Shung to undergo a second examination on April 14, 1998 by Dr. Soric. By letter dated March 27, 1998, Mr. Pileggi acknowledged that Mr. Shung was to be examined by Dr. Wang and by Dr. Soric and confirmed that "we have relayed to his mother that he should attend both appointments."⁹However, Dr. Soric reported to the Insurer that Mr. Shung did not attend on April 14, 1998 and that he did not call to cancel the appointment.¹⁰

By letter dated December 23, 1998, Mr. Pileggi asked Allianz to "reschedule the Insurer's Examination with Dr. R. Soric" and undertook to "communicate the appointment to Mr. Kugelmass, the case manager, ensuring Mr. Shung [sic] attendance."¹¹ Accordingly, Allianz arranged for Mr. Shung to be examined by Dr. Soric on February 23, 1999. It confirmed this appointment by letter dated January 18, 1999 to Mr. Shung, with a copy to Mr. Pileggi, and by fax to Mr. Pileggi on February 22, 1999, the day before the appointment.¹² Nevertheless, Dr. Soric reported to the Insurer that Mr. Shung did not attend on February 23, 1999 and that he did not call to cancel the appointment.¹³

Counsel for the Applicant, Ms. Amendola, advances three arguments to excuse her client's failure to appear for examination by Dr. Soric on April 14, 1998 and February 23, 1999.

Argument 1: Inadequate notice

Section 42(2) of the Schedule requires the notice of an insurer's examination to "state the benefit to which the examination relates." The letter of March 23, 1998 advising Mr. Shung and Mr. Pileggi of the first appointment with Dr. Soric stated that "an evaluation of your disability and your claims for medical/rehabilitation benefits will be included in this assessment."¹⁴ The letter of January 18, 1999 advising Mr. Shung and Mr. Pileggi of the second appointment with Dr. Soric stated that "an evaluation of your disability will be included in this assessment."¹⁵

An arbitrator has observed that the notice requirement imposed by section 42(2) is "an important feature of the insurer examination process, because it allows an insured person who is reluctant to attend an examination to evaluate whether he wishes to continue to pursue an insurer for a specific benefit, or instead decline to attend an examination and thereby effectively choose to forego the insurer's payment of that benefit, either permanently or for a period of time."¹⁶ The arbitrator found that in the case before her it was not "clear from the [insurer's] letter whether the examinations relate[d] to any claims Mr. Avdalimov may have arising from the...accident."¹⁷

I assume, without deciding, that the arbitrator properly applied section 42(2) in this decision.¹⁸However, the concerns expressed by the arbitrator in that case are absent in the present case. The Insurer's letters in this case clearly identified Mr. Shung's disability as the subject, or one of the subjects, of Dr. Soric's examination. The issue of Mr. Shung's disability was, and remains, central to the determination of his entitlement to both case manager services and non-earner benefits. This fact would have been well known to Mr. Shung's representative, Mr. Joseph Pileggi. The evidence does not contain anything to suggest that Mr. Pileggi was unclear about the purpose of Dr. Soric's examination or that he was reluctant to subject his client to such an examination. On the contrary, Mr. Pileggi requested the rescheduling of the appointment with Dr. Soric. Moreover, I note that the Insurer used identical language in its letter of January 30, 1998 to Mr. Shung confirming the earlier appointment with Dr. Wang¹⁹, an appointment which Mr. Shung kept. I am not prepared to find a breach of section 42(2) on these facts.

Argument 2: Reasonable Excuse

Section 50(b) of the Schedule only precludes Mr. Shung from proceeding to mediation (and hence arbitration) if he failed to make himself "reasonably available" for examination by Dr. Soric. Mr. Shung's counsel submitted that he suffers from a "major psychotic disorder" and that, as a result, he was unable to attend an appointment with Dr. Soric unless accompanied by his mother. Ms. Amendola characterized Mr. Shung's failure to attend the first appointment as "innocent" and his failure to attend the second appointment as a consequence of his mother's unexpected unavailability to attend with him. In this latter regard, she relied upon a letter dated February 24, 1999 to Mr. Pileggi from Mr. Shung's case manager, Mr. Jack Kugelmass which reads, in its entirety, as follows:

I wanted to advise you that Mr. Shung did not attend the insurer requested examination with Dr. Soric as was planned for Feb 23, 1999. It was a surprise to me that he missed as I had made arrangements with his mother to take time off work to attend with Eddy. I had reinforced to Mrs. Shung the importance of her assistance with this task. When I called this morning to follow up, I spoke to Mrs. Shung. She indicated that there had been a family emergency in the United States that had required that she attend and that she had returned only on the 23rd in the evening, after the planned for appointment. The emergency had been so sudden that she did not have the time to alert Dr. Soric or myself of the change. She is calling Dr. Soric to-day with a view to setting up a new appointment.²⁰

For purposes of the present hearing, I accept without question Ms. Amendola's statement that her client was suffering from a serious mental disability during the two periods when he was to have attended before Dr. Soric. However, I also accept Mr. McCorriston's submission on behalf of the Insurer that Mr. Shung failed to prove the remaining elements of his reasonable excuse argument. Acknowledging the contents of Mr. Kugelmass's letter, the evidence entered fails to answer the following questions: why was Mr. Shung's mother not available for the first appointment with Dr. Soric? did she attend Mr. Shung's appointment with Dr. Wang earlier in April, 1998? was Mr. Shung's mother the only person who could attend his doctors' appointments with him? did anyone attend with Mr. Shung when he saw his own treating physicians? is it plausible that Mr. Shung's mother's departure for the United States was so sudden that she was unable to alert either Dr. Soric or Mr. Kugelmass? did Mr. Shung's mother call Dr. Soric on her return to set up a new appointment, as she told Mr. Kugelmass she would do? With respect to the last two questions, I note from the adjuster's log notes that Mr. Shung's mother was quite capable of initiating telephone communication with the Insurer.²¹ These questions may have had answers favourable to Mr. Shung, but since his mother did not testify to provide them, I reject Mr. Shung's reasonable excuse argument.

Argument 3: Dr. Soric's report is no longer reasonably necessary

Section 42(3) of the Schedule states that an "insurer may require examinations as often as is reasonably necessary." Ms. Amendola submits that it is no longer reasonably necessary for Mr. Shung to be examined by a physiatrist like Dr. Soric because the "physical ailments" and "fractures" he sustained in the accident healed long ago. Mr. Shung's ongoing health problems, she maintains, are entirely of a psychological nature. She further maintains that this view is shared by Allianz as reflected in its decision not to reschedule a third appointment with Dr. Soric but rather to schedule insurer examinations with a psychiatrist and a neuropsychologist.²²

This argument ignores the case law which directs me, as arbitrator, to give effect to the insurer's right to assess the nature and extent of the applicant's injuries by focussing on the information and circumstances at the time the insurer requested the examinations in question.²³ Allianz had obviously received at least Dr. Somerville's Treatment Plan dated June 2, 1997 by the time it arranged for Mr. Shung to be examined by Dr. Wang and Dr. Soric in April 1998. Given that this Treatment Plan identified both physical and psychological health problems of unknown duration, I find that Allianz was entirely within in its rights under section 42 of the Schedule in requesting these examinations and in rescheduling a second appointment with Dr. Soric when Mr. Shung failed to appear for the first appointment. These requests were all made prior to mediation. I specifically reject the suggestion, implicit in Ms. Amendola's argument, that her client was entitled to refuse to attend an insurer's examination that was reasonably requested prior to mediation in the hope that an arbitrator would later agree, with the benefit of hindsight, that such an examination was no longer reasonably necessary for the purposes of the hearing.²⁴

Furthermore, since this is only a preliminary issue hearing, I am extremely reluctant to accept Ms. Amendola's submission that the opinion of a physiatrist can no longer have any relevance for the issues to be arbitrated at the main hearing. I note that Dr. Somerville, a specialist in the field of Rehabilitation Medicine, concluded his May 26, 1997 report (to the referring doctor at St. Michael's Hospital) with the following observation:

To do a catastrophic assessment is rather difficult as I am sure you know it depends upon the Glasgow Coma Scale and then also a summation of the other injuries all being a percentage of the whole body. I will have to review the entire chart to determine whether he does fit into the catastrophic assessment but we will keep you posted.²⁵

This observation implies that doctors who specialize in Rehabilitation Medicine, as do both Drs. Somerville and Soric, are competent to form opinions about the existence of catastrophic impairment after examining injuries to all sites of the body, not just the head. Of course, I am not making any findings in this regard; that will be the responsibility of the hearing arbitrator based on the evidence presented. Nevertheless, I find that Dr. Somerville's observation identifies a potential, and therefore reasonable, nexus between the Insurer's choice of Dr. Soric and the catastrophic injuries Mr. Shung claims to have suffered as a result of the accident.²⁶

For these reasons, I conclude that the Insurer complied with the notice requirement imposed by section 42(2) of the Schedule, that Mr. Shung failed to make himself reasonably available for an insurer's examination within the meaning of section 50(b) of the Schedule and that Mr. Shung's examination by Dr. Soric was reasonably necessary within the meaning of section 42(3) of the Schedule. Accordingly, Mr. Shung is precluded from proceeding to arbitration until he makes himself reasonably available for examination by Dr. Rajka Soric. The arbitration hearing set for January 14, 2002 must, therefore, be stayed pending Dr. Soric's examination of Mr. Shung²⁷and the parties' receipt of Dr. Soric's report.

EXPENSES:

The preliminary issue which I have now decided was the subject of discussion at the pre-hearing on June 25, 2001. Mr. McCorriston and Ms. Amendola both attended the pre-hearing and Arbitrator Killoran's pre-hearing letter dated June 27, 2001 is addressed to them. It confirms the dates for the hearing, January 14 through 17, 2002. It also contains the following paragraph:

Allianz raised the preliminary issue of jurisdiction; that is, Allianz claimed that Mr. Shung was not entitled to proceed to mediation [and hence arbitration] due to his non-attendance at an IE exam as required by section 50 of the Schedule. The parties undertook to exchange information, discuss this issue, and inform the Commission as to whether this issue would proceed to arbitration.²⁸

The subsequent correspondence between the parties contains no reference to this issue until Mr. McCorriston's letter of November 19, 2001²⁹ addressed to Ms. Amendola, to the Case Administrator, Ms. Sita Welsh, and to the Acting Senior Arbitrator, Mr. Asfaw Seife. In this letter, Mr. McCorriston stated that Mr. Shung was, through Ms. Amendola, refusing to attend psychiatric and neuropsychological examinations Allianz had arranged for November 21, 2001 and November 27, 2001 with Dr. A. I. Margulies and Dr. Henry Berry, respectively. In fact, Mr. McCorriston had already informed the Commission of this refusal in an earlier letter dated November 8, 2001 to Ms. Amendola and Ms. Welsh in which he asked Ms. Welsh to reconvene the pre-hearing "for the purpose of obtaining an Order concerning Eddie Shung's attendance" at the psychiatric and neuropsychological examinations.³⁰ However, Mr. McCorriston made a different request in his letter of November 19, 2001. Now, for the first time since the pre-hearing on June 25, 2001, Mr. McCorriston referred to Mr. Shung's failure to attend for examination by Dr. Soric on April 14, 1998 and February 23, 1999 and then made the following request:

In the event Carolyn Amendola, counsel for Mr. Shung, advises that Mr. Shung will not in fact attend at the afore-noted examinations to be conducted by Dr. Margulies and Dr. Berry then the Insurer hereby requests that the preliminary issue determination [as identified in the paragraph of the pre-hearing letter quoted above] be scheduled to take place at the first available date in month of November or early December, 2001.³¹

In a further letter dated November 27, 2001 to Ms. Amendola and Ms. Welsh, Mr. McCorriston wrote:

Mr. Shung has continued to fail to cooperate.

The Insurer therefore requires the scheduling of a hearing to deal with the preliminary issue as set forth in the Report of Mediator dated December 1, 2000 and the report of pre-hearing [of] Arbitrator Killoran dated June 27, 2001.³²

On these facts, Ms. Amendola asks why Mr. McCorriston failed to raise the preliminary issue until less than two months before the hearing. She accuses him of trial brinkmanship and refers to the cases which condemn that practice.³³

As I pointed out to Ms. Amendola at the hearing, the trial brinkmanship cases involve late requests for insurer examinations, just prior to the hearing and well after mediation. In the present case, Mr. McCorriston dropped his request for an order relating to the psychiatric and neuropsychological examinations Allianz had scheduled for the end of November 2001 and replaced it with a request for an order precluding Mr. Shung from proceeding to arbitration by reason of his failure to attend the much earlier appointments with Dr. Soric. In determining that this failure precludes Mr. Shung from proceeding to mediation (and hence arbitration), I have done more than just determine the reasonableness of the Insurer's original request that Mr. Shung be examined by Dr. Soric. I have also determined that no arbitrator has jurisdiction to entertain Mr. Shung's claims until he makes himself reasonably available for examination by Dr. Soric.

I am not persuaded that a lawyer who makes a jurisdictional argument prior to the main hearing can be properly accused of trial brinkmanship. On its face, the purpose of such an argument is not to gain an advantage at the hearing but to destroy, at least temporarily, the legal foundation for any hearing and thus save both parties the expense of preparing for an aborted hearing. Of course, Ms. Amendola may well suspect, based on the timing and tenor of Mr. McCorriston's correspondence as set out above, that he is simply using the jurisdictional challenge to somehow force her client to submit to examinations by Drs. Margulies and Berry. But despite the Insurer's success on the jurisdictional front, the fact remains that the Insurer has neither sought nor obtained any relief with respect to Mr. Shung's refusal to be examined by Drs. Margulies and Berry.

I do, however, fully accept Ms. Amendola's submission that the Insurer's conduct in this case has unnecessarily delayed the hearing process. Had Mr. McCorriston requested a ruling on the preliminary issue at or soon after the pre-hearing and had that ruling been the one I have now made, Mr. Shung would have been required to govern himself accordingly. He may then have been able to obtain an earlier hearing date than is now possible. For this reason, I find that, despite the Insurer's success and in any event of subsequent proceedings, each party must bear its own expenses in relation to this preliminary hearing and in relation to any expenses occasioned by the stay of the hearing.

January 8, 2002

David Leitch Arbitrator

Date