Sandy Lavoie v. Liberty Mutual Insurance Company, 2003 ONFSCDRS 118

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 2003 ONFSCDRS 118

FSCO A02-001580

BETWEEN:

SANDY LAVOIE

Applicant

and

LIBERTY MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A MOTION

Before:

Beth Allen

Heard:

All written submissions were received by June 20, 2003.

Appearances:

Judith A. Hull for Mrs. Lavoie

Samuel M. Robinson for Liberty Mutual Insurance Company

Issues:

The Applicant, Sandy Lavoie, was injured in a motor vehicle accident on June 19, 1999. She applied for and received statutory accident benefits from Liberty Mutual Insurance Company ("Liberty Mutual"), payable under the Schedule.¹ Liberty Mutual seeks to rely on section 42 of the Schedule to require the Applicant to attend an insurer's examination. The Applicant submits that the Insurer failed to meet the notice requirements under section 42 and that the Insurer's examination is not reasonably necessary. The parties were unable to resolve their disputes through mediation, and Mrs. Lavoie applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this motion is:

1. Is Liberty Mutual entitled to rely on section 42 of the Schedule to require the Applicant to attend an insurer's examination?

2. Is the Applicant entitled to her expenses of this motion pursuant to subsection 282(11) of the Insurance Act?

3. Is Liberty Mutual entitled to its expenses of this motion pursuant to subsection 282(11) of the Insurance Act?

Result:

1. Liberty Mutual is not entitled to rely on section 42 of the Schedule to require the Applicant to attend an insurer's examination.

2. The Applicant is entitled to her expenses of this motion.

3. Liberty Mutual is not entitled to its expenses of this motion.

EVIDENCE:

Procedure:

The motion was scheduled by the pre-hearing arbitrator pursuant to Rule 67.8 of the Dispute Resolution Practice Code² (the "Code"). It proceeded by way of written submissions from the Applicant and the Insurer.

Section 42:

Section 42 of the Schedule sets out the obligations of insured persons and insurers when the insurer requests that an insured person attend an insurer's examination.

42. (1) For the purpose of determining whether an insured person is entitled to a benefit, except a funeral or death benefit, an insurer may give the insured person notice requiring him or her to be examined by one or more persons specified by the insurer, each of whom is a member of a health profession or a person with expertise in vocational rehabilitation.

(2) The notice shall state the benefit to which the examination relates.

(3) The insurer may require examinations as often as is reasonably necessary.

(4) The insurer shall make reasonable efforts to schedule the examination for a time that is convenient for the insured person and shall provide the insured person with reasonable notice of the examination.

(5) For the purpose of the examination,

(a) the insured person shall provide the person or persons who conduct the examination with such information as is reasonably necessary; and

(b) the insured person shall submit to any reasonable physical, psychological, mental and functional examinations requested by the person or persons who conduct the examination.

(6) The person or persons who conduct the examination shall prepare a report and provide a copy of the report to the insurer.

(7) An insurer that receives a report under subsection (6) shall provide the insured person with a copy of the report within seven days.

(8) If an insured person fails or refuses to submit to an examination required by the insurer under this section or fails to comply with subsection (5),

(a) the insurer may stop payment of the benefit related to the examination until the person submits to the examination or complies with subsection (5), after which time the insurer shall resume payment of the benefit; and

(b) no benefit is payable for the period after the giving of the notice under subsection (1) or the failure to comply with subsection (5) and before the insured person submits to the examination and complies with subsection (5).

Background:

The Applicant sustained injuries in a motor vehicle accident on June 19, 1999.

The substantive issues in dispute in this arbitration are the Applicant's entitlement to: post-104 weekly income replacement benefits; ongoing massage therapy and the cost of a mattress; housekeeping and home maintenance services; her arbitration expenses; and interest on any overdue amounts. Liberty Mutual seeks a repayment of benefits plus interest and its arbitration expenses from the Applicant.

The Applicant's income replacement benefits were terminated in June 2001 at the 104-week point pursuant to the opinions of the assessors in the October and November 2001 multi-disciplinary disability DAC ("Designated Assessment Centre") assessment.

The Applicant attended a DAC assessment and an insurer's examination (IE) to assess her entitlement to accident benefits during the 104-week period before the accident. The Applicant underwent a number of post-104 week DAC assessments: a disability DAC assessment by an orthopaedic surgeon, a clinical psychologist, a physical medicine and rehabilitation practitioner and an occupational therapist in October and November 2001; a med/rehab DAC by a physical medicine practitioner and a massage therapist in April 2002; a second med/rehab DAC by a physical medicine practitioner and a massage therapist in October and November 2002; and a third med/rehab assessment DAC by a physical medicine practitioner and a massage therapist in March 2003.

The Parties' Submissions:

Liberty Mutual did not file as evidence, and I do not have before me, a notice by Liberty Mutual to the Applicant, as required by subsections 42(1) and (2) of the Schedule, notifying the Applicant of the particulars of the IE it seeks the Applicant to attend.

As I understand it from the written submissions, at the pre-hearing discussion on April 2, 2003 Liberty Mutual made an oral request that the Applicant attend an insurer's examination to assist in clarifying the differences in opinion between various medical assessors. There is no reference in the pre-hearing report dated April 2, 2003 of any submissions by the parties on this matter.

Liberty Mutual accepts that the insurer has the burden to prove that its request for an IE is reasonably necessary in the circumstances. Liberty Mutual provides several bases upon which I should find Liberty Mutual's request for an IE to be reasonable.

Liberty Mutual submits that it has never conducted a post-104 week IE on the Applicant's entitlement to income replacement benefits. However, the Applicant has been assessed by her own doctors and has submitted medical evidence with regard to her post-104 employability.

Liberty Mutual also submits that there is evidence in the March 17, 2003 med/rehab DAC report that the Applicant's medical condition might have changed since the October/November 2001 disability DAC assessment.

Liberty Mutual further argues that a post-104 week IE would aid in clarifying the differences in opinion between the post-104 week DAC assessors and the Applicant's medical practitioners, as well as the discrepancies in opinions expressed with regard to the Applicant's employability in the post-104 disability DAC and the March 2003 med/rehab DAC.

Liberty Mutual attached a copy of the med/rehab DAC report dated March 18, 2003 to its submissions.

The Applicant made both procedural and substantive arguments to challenge Liberty Mutual's request for the Applicant to attend an IE.

The Applicant argues that Liberty Mutual failed to comply with the section 42 notice requirements. She submits that Liberty Mutual simply asked that the Applicant attend an IE without providing any specificity as to the type of assessment it requires. For this reason, Liberty Mutual cannot prove the IE is reasonable or necessary.

The Applicant made further submissions to indicate the substantive grounds upon which I should find the request for an IE unreasonable which, for the following reasons, I find I need not consider.

ANALYSIS AND FINDINGS:

I agree with the Applicant that Liberty Mutual's oral request for the Applicant to attend an IE failed to meet the basic notice requirements provided in section 42 of the Schedule. While section 42 does not expressly state that the notice is required to be in writing, I find this can be implied from the words in subsections 42(1) and (2). These subsections set out the particular information that should be contained in the notice - the identity and specialty of the health professional and the benefit to which the assessment relates. I find this suggests that for a notice to be sufficient to communicate this type of information to an insured, it should be in writing. In any event, I have little, if any, evidence as to what information was contained in Liberty Mutual's oral request. It appears from Liberty Mutual's written submissions on the motion that Liberty Mutual requested an IE to assess the Applicant's entitlement to post-104 week income replacement benefits. However, for obvious reasons, this would not constitute proper notice to the Applicant.

I adopt the ruling in the Avdalimov case³ where the arbitrator found the insurer's notice defective in a material respect because it did not set out the purpose for the examination or the benefit to which it related as required by subsection 42(2) of the Schedule. Avdalimov states, and I agree:

I find [the insurer] cannot reasonably rely on [the applicant's] failure to attend these examinations to bar [the applicant] from arbitration, stop payment of any benefit, or to absolve [the insurer] from payment of any benefit until he complies, because it is unknown as to what benefit or benefits the examination was intended to relate.

I find, as the arbitrator did in Avdalimov, that the purpose of the requirement that the insurer specify the benefit affected by the examination is to permit the insured person to be aware of the affected benefit and decide whether to attend the examination and pursue the insurer for the benefit, or not attend and forego the benefit.

I agree with the Applicant that under these circumstances it is not possible to determine whether the IE requested by Liberty Mutual is reasonably necessary. I therefore conclude that Liberty Mutual cannot rely on its oral request at the pre-hearing discussion on April 2, 2003 to require the Applicant to attend an IE.

EXPENSES:

I exercise my discretion under subsection 282(11) of the Insurance Act to award the Applicant her expenses incurred in this motion and to deny Liberty Mutual its expenses.

Rule 75 of the Code provides that an arbitrator can consider, among other factors, the parties' success or failure in the result and the conduct of the parties in the process. In allowing the Applicant her expenses, I considered that the Applicant was successful in this motion. I also took into account that Liberty Mutual's conduct fell far short of an acceptable standard in relation to its statutory obligation to provide proper notice to an insured person when seeking to adjust a claim. I find the Applicant is entitled to be compensated for the time and cost expended in relation to this motion.

August 1, 2003

Beth Allen

Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 118

FSCO A02-001580

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

SANDY LAVOIE

Applicant

and

LIBERTY MUTUAL 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. Liberty Mutual is not entitled to rely on section 42 of the Schedule to require the Applicant to attend the insurer's examination.

2. Liberty Mutual shall pay the Applicant her expenses of this motion.

3. Liberty Mutual is not entitled to its expenses of this motion.

August 1, 2003

Beth Allen

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.
2. 2(4th edition, May 31, 2001).
3. 3Avdalimov and CGU Insurance Company of Canada (FSCO A00-000433, May 25, 2001). See also Dhir and RBC General Insurance Company'(FSCO A01-000741, January 15, 2002)