Neutral Citation: 2003 ONFSCDRS 20

FSCO A01-001561

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

M.S.D.

Applicant

and

CITADEL GENERAL ASSURANCE COMPANY

Insurer

PRE-HEARING DECISION

Before:

Lawrence Blackman

Heard:

By telephone conference call on February 6, 2003. Written submissions received February 4, 5 and 6, 2003. Oral decision given February 6, 2003, with further written reasons to follow.

Appearances:

Mr. Karl Arvai for M.S.D. Ms. Sandra Monteiro for Citadel General Assurance Company

Issues:

The Applicant, M.S.D., was injured in a motor vehicle accident on November 24, 1998. She applied for statutory accident benefits from Citadel General Assurance Company ("Citadel"), payable under the Schedule.¹ Due to the very personal nature of certain facts of this case, I have decided to exercise my discretion and anonymize this proceeding.

In 2001, M.S.D. attended, as requested by Citadel, at two insurer medical examinations ('TMEs"), the first on April 27, 2001 with Dr. P. DeFeudis, psychologist, and the second on May 1, 2001 with Dr. M. Devlin, physiatrist.

The reports before Dr. DeFeudis included that of Dr. M.R. MacDonald, psychologist, dated March 2, 2001, which noted M.S.D.'s course of psychiatric treatment with Dr. K. Gisladottir, following a "powerful panic attack" in 1999. Dr. MacDonald's diagnoses were chronic pain disorder, a major affective disorder with depression, anxiety and panic, and symptoms of post-traumatic stress disorder.

After administering, amongst other tests, the Beck Depression and Anxiety Inventories and the Multidimensional Pain Inventory, Dr. DeFeudis considered as possible diagnoses a Dysthmic Disorder and Major Depressive Disorder, Prior History or, alternatively, a Major Depressive Disorder in Partial Remission. Dr. Devlin's diagnoses included a Chronic Pain Syndrome.

The parties presently dispute M.S.D.'s entitlement to ongoing income replacement benefits ("IRBs"). Following a failed mediation which concluded September 17, 2001, M.S.D. applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended, by Application received by the Commission December 4, 2001. The Insurer's Response, received January 11, 2002, noted, in part, that:

By letter dated December 20, 2001, the insurer, through counsel, has inquired with respect to whether the Applicant will make herself available for statutory medical examination(s) to determine her entitlement. To date, the Applicant and her counsel have failed or refused to respond to said letter.

A telephone pre-hearing discussion was held on February 18, 2002. Mr. Atherton represented Citadel. Mr. Arvai represented the Applicant. The main identified issue was the question of M.S.D.'s entitlement to weekly IRBs ongoing from February 4, 2001. Pre-judgment interest, a special award and legal expenses were also noted as being in dispute. Arbitrator Sone identified the Applicant's proposed witnesses as including Dr. Trevor Smith, a vocational psychologist, and noted that Citadel intended to perhaps call a psychiatrist, a psychologist and a physiatrist. The arbitration hearing was set for October 28, 29, 30 and 31, 2002.

By letter dated September 26, 2002, Mr. Arvai filed with the Commission copies of further reports of Dr. MacDonald dated March 2, 2000 and March 2, 2001, and reports of Dr. V. Kekosz, physiatrist, dated June 28, September 6 and October 24, 2000 and April 24, 2001 and April 30, 2002.

By letter dated October 1, 2002, Mr. Atherton requested an adjournment of the arbitration hearing, as he was scheduled to commence a three-week trial on October 7, 2002. After speaking with both counsel, by letter dated October 18, 2002, Arbitrator Sapin adjourned the arbitration hearing in accordance with Practice Note 9 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) (the "Code"), which she noted permits an adjournment when counsel is involved in a trial which, as result of rescheduling, conflicts with a FSCO arbitration.

By facsimile transmission received by the Commission October 28, 2002, Mr. Arvai forwarded further reports of Dr. MacDonald dated October 15, 2002 and Dr. Kekosz dated October 17, 2002. In this most recent report, Dr. MacDonald's diagnoses, as in his initial report, were chronic pain disorder, major affective disorder with depression, anxiety and panic and symptoms of a post-traumatic stress disorder. Dr. Kekosz' report, as in her initial report in 2000, addressed physical and psychological concerns resulting from this accident.

A settlement discussion was subsequently held October 31, 2002. That discussion evidently failed to resolve the matters in dispute. By Notice dated November 5, 2002, the Commission advised the parties of the new arbitration hearing dates of March 10, 11, 12 and 13, 2003. On Thursday, January 30, 2003, Citadel requested that M.S.D. attend an IME with Dr. L. Rezneck, psychiatrist, on Friday, February 7, 2003. On Tuesday, February 4, 2003, Citadel further requested an IME with Dr. G. Ko, physiatrist, on Tuesday, February 11, 2003. The Insurer concedes that it did not consult M.S.D. prior to arranging these appointments.

By letter dated February 4, 2003, Mr. Atherton wrote Mr. Arvai, confirming that Citadel had scheduled the two aforesaid IMEs and that M.S.D. was refusing to attend. Mr. Atherton, therefore, indicated that:

As your client refuses to cooperate, we have no alternative but to request a further pre-hearing with FSCO where we suspect they will order your client to attend.

Mr. Atherton subsequently contacted the Commission by fax on February 4, 2003 at 4:32 p.m, confirming his request for a "continued pre-hearing to obtain an order compelling the insured to attend these examinations," or, in the alternative, a further adjournment of the arbitration hearing.

A resumption of the pre-hearing was arranged by FSCO for Thursday, February 6, 2003, at 3:00 p.m., before myself. In its submissions, Citadel conceded that an arbitrator cannot order an insured person to attend a medical examination. This accords with Arbitrator Manji's decision in Granic and Allstate Insurance Company of Canada (OIC A-006615, January 30, 1995) that arbitrators "do not have authority to compel an insured person to attend an examination." Accordingly, the Insurer confirmed that the question before me was:

Is this arbitration hearing to be stayed pending the Applicant attending upon insurer medical examinations with Dr. L. Rezneck, psychiatrist, and Dr. G. Ko, physiatrist?

Result:

The arbitration hearing is not stayed. The arbitration hearing herein shall proceed, as scheduled, on March 10, 11, 12 and 13, 2003.

EVIDENCE AND ANALYSIS:

The relevant statutory provision is section 42 of the Schedule, which provides:

(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), (c) 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

(d) 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).

[emphasis added]

This motion involves two areas of inquiry. The first question is whether the proposed IMEs meet the prerequisites of section 42 of the Schedule. In that regard, the onus is on the insurer. If the insurer meets its onus, it is then for the applicant to establish that he or she has made himself or herself reasonably available for the examination(s). If the insured person has not, the question then arises as to the appropriate remedy.

The Insurer submits that the proposed IMEs with Dr. Rezneck and Dr. Ko are reasonably necessary for the following reasons:

The last IME was almost two years ago, being that with Dr. Devlin on May 1, 2001.
Citadel has not had M.S.D. examined by a psychiatrist. Such an examination is required due to information received which documents ongoing significant depression, which existed prior to the motor vehicle accident. Such an examination is also required as there is a biological basis for the depression which should be addressed by a medical doctor.

At the beginning of the motion, the Insurer withdrew its third ground, namely that the hearing was previously adjourned primarily due to late production and the need to assimilate this information and possibly request updated IMEs. Citadel confirmed that the adjournment was sought, and was granted, due to its counsel's scheduling conflict.

As I indicated orally on February 6, 2003, I am not persuaded that Citadel's proposed IMEs meet the prerequisites of section 42 of the Schedule for the following reasons:

The Insurer concedes that it did not provide M.S.D. with notice as required by section 42 of the Schedule. Nor did it advise M.S.D. as to the statutory consequences of non-attendance. I agree with the comments of Arbitrator Joachim in Tesfay and Allstate Insurance Company of Canada (FSCO A97-001439, April 7, 1999), upheld by Director's Delegate Makepeace (FSCO P99-00023A, June 21, 1999), that:

Further, an insurer must give reasonable notice of a section 42 examination. Since the consequence of a failure to attend a section 42 assessment is the forfeiture of benefits, I find that reasonable notice requires, at a minimum, written notice, a reasonable time frame between the notice and the examination, a reference to the fact that the examination is being requested under section 42, and a warning of the possible forfeiture of benefits. No such notice was given in this case.

I also find that these provisions are not mere formalities. I agree with Arbitrator Palmer in Avdalimov and CGU Insurance Company of Canada (FSCO A00-000433, May 25, 2001) that:

The requirement that an insurer specify "the benefit to which the examination relates" 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.

I am not persuaded that Citadel made reasonable efforts to schedule the examinations for a time convenient for M.S.D. or that it provided reasonable notice of the examination. Citadel conceded that it had not consulted with M.S.D. before arranging the IMEs. I do not agree with the Insurer's submission that as the Applicant is not working, there is no need to reasonably endeavour to find a mutually agreeable time for the examinations. I am not prepared to set a precedent that an insurer can choose which provisions of section 42 of the Schedule it chooses to honour, yet at the same time have the potential benefit of the punitive consequences enumerated in subsection 42(8).
I agree with Arbitrator Allen's comments in Swanson and Wellington Insurance Company (FSCO A98-000067, May 26, 1998) that the purpose of IMEs is to adjust an insured person's claim, not to bolster an insurer's case for the arbitration hearing. I further agree with (then) Director's Delegate Draper's comments in Traders General Insurance Company and Levey (FSCO P98-00035, February 25, 1999) that:

Insurers do not have an absolute right to schedule examinations whenever they want. The examination must be reasonably necessary and scheduled at a time reasonably convenient for the insured person. As Director's Delegate Naylor held in F.S. and Belair Insurance Company Inc., (OIC P96-00039, June 11, 1996), this involves a balancing of the interests of the parties, with the timing of the examination as an important consideration. Absent a clear explanation, examinations scheduled on the eve of the hearing suggest the kind of tactical brinkmanship that arbitrators have properly rejected as part of this system.

I am not persuaded that Citadel's proposed IMEs at this point in time are for the purpose of adjusting the claim. This finding is based in significant measure on the timing of the requests, which is dealt with further below. Citadel also indicated during the motion that it had first contacted Dr. Devlin to again assess M.S.D., but decided to proceed with an examination by Dr. Ko as only the latter expert could meet their "main concern" that a report be ready for the hearing. This was also a significant factor in retaining Dr. Rezneck. I am persuaded that these proposed IMEs are precisely for the purpose of bolstering the Insurer's case for the arbitration hearing.

I am not persuaded that it is "reasonably necessary" to have M.S.D. seen by a different physiatrist simply because Dr. Devlin is not apparently able to provide a turn-around time of approximately two weeks for a report, as promised by Dr. Ko. Although Citadel argued that a psychiatric assessment was now warranted because of an alleged biological basis for M.S.D.'s depression, the Insurer conceded that there was no evidence before me supporting this submission. Nor was I provided with any evidence as to the reasonable necessity of a psychiatric assessment in addition to a psychological evaluation regarding the emotional sequelae of this accident.

IMEs are obviously an intrusion into one's privacy. They are allowed, as noted in Scott and Toronto Transit Commission (Markel Insurance) (OIC A-001116, September 4, 1992) as an "effective opportunity to fairly assess the applicant's medical condition, on an independent basis." As noted, these concerns must be balanced. The criterion is reasonable necessity. Citadel has failed to persuade me of the reasonable necessity of M.S.D. seeing different specialists regarding areas of alleged physical and emotional disability which were identified early in this process.

While I find that the notice provided and the choice of practitioners has been flawed, I am persuaded that, given the passage of time since the last IMEs, further assessments by the same practitioners upon proper notice would be in order. That, however, is not the Insurer's request. Nor do I think that it would be appropriate to again adjourn this matter or to stay this proceeding until such appointments could be arranged and the Applicant attend.

Citadel did face legitimate problems in previously contemplating arranging IMEs as M.S.D. was out of the country from May 2001 until October 4, 2002, when she returned to Canada for the arbitration hearing (which was subsequently adjourned at Citadel's request). I am advised that during this period on only one occasion, namely December 20, 2001, did Citadel indicate that it might wish to have further IMEs and queried M.S.D.'s availability. The Applicant's silence in that regard may have led to a very different result had a motion been made in the Fall of 2002 (or before) in a timely manner and in accordance with the prerequisites of section 42 of the Schedule.

However notwithstanding what appears to have been a flurry of production exchange following the February 2002 pre-hearing discussion until October 2002 (including the clinical notes and records of the treating psychiatrist, Dr. Gisladottir, being served in June 2002), notwithstanding M.S.D.'s return to Ontario, and notwithstanding the adjournment granted the Insurer, no IME request was made, nor was any apparent attempt made to set up these assessments until late January 2003. Nor, in the interim, were any reports obtained by Citadel from its IME practitioners commenting on whether or not the further reports and documentation produced by the Applicant caused any change in their expert opinion or warranted any further examination. With an arbitration hearing scheduled to start March 10, 2003, IMEs were scheduled for February 7 and 11, 2003. Reports are promised for two weeks before the start of the hearing. In effect, Citadel is asking that I waive Rule 39 of the Code. The latter requires that all reports (including experts' reports) to be filed as exhibits at a hearing be served on the other party at least 30 days before the first day of the hearing, subject to extraordinary circumstances. This provision was specifically noted in Arbitrator Sone's February 22, 2002 pre-hearing letter forwarded to both counsel and to their principals.

While I do not have the authority to determine what evidence should be introduced at the arbitration hearing, I find that the criterion of extraordinary circumstances set out in Rule 39 does provide some further guidance as to when these late IME attendance requests might be considered. I am not persuaded that, in this case, extraordinary circumstances exist. I am not persuaded that the other commitments of Insurer's counsel since last summer warrant these late requests, especially when IMEs are intended to be an adjusting decision, not a litigation right. Nor am I persuaded that there has been any recent, previously undisclosed, significant change in the Applicant's condition warranting new areas of expert examination.

Accordingly, this matter shall proceed, as scheduled, to an arbitration hearing commencing March 10, 2003.

EXPENSES:

The issue of the expenses of this pre-hearing motion is referred to the hearing arbitrator.

February 19, 2003

Lawrence Blackman Arbitrator

Date