Neutral Citation: 2003 ONFSCDRS 75 FSCO A02-001264

BETWEEN:

BE THI TRAN Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: William J. Renahan

Heard: March 24, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: David H. Pham, Agent, for Ms. Tran Ian D. Kirby, Barrister and Solicitor, for Wawanesa Mutual Insurance Company

Issues:

The Applicant, Be Thi Tran, was injured in a motor vehicle accident on January 20, 2001. She applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.¹ Wawanesa terminated weekly caregiver benefits on April 29, 2001. The parties were unable to resolve their disputes through mediation, and Ms. Tran 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:

May Ms. Tran withdraw her Application for Arbitration, and if so, upon what terms or conditions?

Result:

Ms. Tran may withdraw her Application for Arbitration. Wawanesa is not entitled to an award under subsection 282(11.2) of the Insurance Act. Each party shall bear its own expenses of the arbitration proceeding.

Ms. Tran did not appear at the hearing. The matter proceeded by way of documents tendered by Wawanesa and submissions by both parties.

Ms. Tran seeks permission to withdraw her Application for Arbitration on the grounds that she would not succeed at hearing. She conceded that she failed to attend an orthopaedic medical examination arranged by Wawanesa under section 42 of the Schedule and that under section 50 of the Schedule she is precluded from proceeding with an arbitration.

Section 42 deals with an insurer's right to require its insured to be examined by a health professional specified by the insurer. The insurer has two remedies if its insured fails to submit to a reasonably required examination. Subsection 42(8) relieves the insurer from paying certain benefits if the insured fails to submit to the examination. Section 50 precludes the insured person from commencing a mediation proceeding, and by necessary implication, an arbitration proceeding,² where she has failed to make herself reasonably available for an examination under section 42. For simplicity, I refer to the application of sections 42 and 50 as the "section 50 defence."

Jurisdiction:

The parties proceeded on the basis that I had jurisdiction to hear the matter.

Section 281(2) of the Insurance Act provides in part as follows:

No person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 . . . unless mediation was sought [and] mediation failed . . .

The words of subsection 50(b) of the Schedule are clear:

An insured person shall not commence a mediation proceeding under section 280 of the Insurance Act unless:

(b) he or she made himself or herself reasonably available for any examination required by the insurer under section 42; . . .

On the face of it, I do not have jurisdiction to hear the dispute because section 50 of the Schedule precluded Ms. Tran from commencing a mediation and I do not have jurisdiction unless mediation was sought and failed.

Under subsection 280(1) of the Insurance Act an insured person or insurer is entitled to refer to a mediator any matter in dispute in respect of the insured person's entitlement to statutory accident benefits. Whether an insured has submitted to a reasonably required examination under section 42 of the Schedule is a matter in dispute in respect of the insured person's entitlement to statutory accident benefits and the insured is entitled to access the mediation and arbitration process for a determination of that issue.

I am satisfied that I have jurisdiction under subsection 280(1) of the Insurance Act to accept Ms. Tran's concession that she did not comply with section 42 and to deal with her request for permission to withdraw her Application for Arbitration and to impose terms on a withdrawal.

Ms. Tran's concession:

I heard evidence in connection with Wawanesa's claim that the Application for Arbitration was frivolous, vexatious or an abuse of process. Some of this evidence suggested that Wawanesa would not rely on Ms. Tran's failure to attend the medical examination. However, I need not deal with any evidence which does not support Ms. Tran's concession that she would not succeed at arbitration. Formal admissions made in a civil action for the purpose of dispensing with proof at trial are binding.³

Application to withdraw:

Wawanesa paid the Commission a $3,000 assessment fee to file a Response to Ms. Tran's Application. Wawanesa consents to a withdrawal on condition that I order Ms. Tran pay it $3,000 pursuant to subsubsection 282(11.2) of the Insurance Act on the grounds that Ms. Tran's Application for Arbitration was frivolous, vexatious or an abuse of process. It also seeks its expenses of the arbitration proceeding.

I permit Ms. Tran to withdraw her Application for Arbitration on the basis of her concession that she would not succeed at an arbitration hearing.

Terms:

Whether I should impose terms on the withdrawal is largely dependent on why Ms. Tran commenced an arbitration when she conceded that it would not succeed and whether she advised Wawanesa in a timely fashion when she determined that she would not succeed at an arbitration hearing.

The pre-hearing discussion in this case took place at the offices of the Commission on February 19, 2003. The main issues in dispute were identified as whether Ms. Tran was entitled to weekly caregiver benefits from April 29, 2001 and whether she was entitled to housekeeping expenses. The commencement date for the housekeeping claim was not specified in the pre-hearing letter.

A preliminary issue was identified as follows:

Was Ms. Tran precluded from proceeding to mediation and therefore arbitration by sections 42(8) and 50 of the Schedule because she:

(a) declined to participate in functional tolerance testing as part of an in home assessment by an occupational therapist, or

(b) failed to attend an insurer's examination scheduled for April 30, 2001.

The preliminary issue was scheduled to be heard one month later on March 24, 2003. On March 20, 2003, Mr. Pham wrote the Commission on behalf of Ms. Tran requesting permission to withdraw Ms. Tran's Application for Arbitration. On March 24, 2003, I heard submissions on Ms. Tran's request for permission to withdraw.

Mr. Pham argued that he was not aware that Wawanesa was relying on the section 50 defence until Mr. Kirby raised it at the pre-hearing discussion. He argued that he promptly applied for permission to withdraw Ms. Tran's application because he realized that the section 50 defence barred Ms. Tran from applying for arbitration.

Evidence:

On March 28, 2001, an adjuster for Wawanesa wrote to Ms. Tran and advised her that she failed to participate in the functional tolerance testing portion of an occupational assessment and that it would not consider any further housekeeping or "caregiving" [sic] expenses until she participated. Although Mr. Pham conceded that Ms. Tran failed to attend the medical examination, he did not concede that Ms. Tran failed to participate in the functional tolerance testing portion of the occupational assessment to determine the need for housekeeping and caregiver benefits. The pre-hearing letter indicated that Ms. Tran claimed caregiver benefits from April 29, 2001. Therefore, I find it likely that notwithstanding the adjuster's advice that it would terminate Ms. Tran's caregiver benefits March 28, 2001 on the basis of her failure to participate in the functional test, it continued to pay caregiver benefits until April 29, 2001. It is not clear when Wawanesa terminated housekeeping expenses and whether it was based on failure to participate in the functional tolerance testing or failure to attend the examination by the orthopaedic surgeon.

Mr. Kirby argued that the issue of Ms. Tran's non-compliance with her obligation to attend the medical examination was first raised May 7, 2001, a week after Ms. Tran failed to attend the examination, and that she should not be surprised that Wawanesa would rely on the section 50 defence.

On May 7, 2001, Wawanesa's adjuster wrote Ms. Tran as follows:

We have been informed by Seiden Health that you did not attend the Insurer's Examination scheduled for April 30, 2001, nor did you call to cancel.

As per the SABS, Section 42(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 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).

Therefore we will not consider caregiving or housekeeping expenses past April 30, 2001. If you wish to reschedule this appointment, please advises [sic] the undersigned in writing.

Wawanesa's letter of May 7, 2001 was correctly addressed to Ms. Tran's most recent address and copied to her representative. The letter clearly indicates that Wawanesa was relying on Ms. Tran's failure to attend the examination and it in fact terminated caregiver benefits effective April 30, 2001 on the basis of this failure.

The Report of Mediator is dated June 3, 2002. Mr. Pham claimed that the issue of non-attendance was not raised at the mediation. On February 6, 2003, Mr. Kirby wrote to Mr. Pham and indicated that he was relying on Ms. Tran's failure to attend the insurer's examination on April 30, 2001, and stated "[i]ndeed, I understand this issue was discussed at the mediation, though not specifically referred to in the mediator's report."

Ms. Tran filed her Application for Arbitration on August 29, 2002 and Wawanesa filed its Response on October 1, 2002. In its Response, Wawanesa claimed that Ms. Tran was not entitled to further caregiver and housekeeping benefits because she was not substantially disabled from engaging in those activities. It did not refer to Ms. Tran's failure to attend the orthopaedic examination or the section 50 defence.

Analysis:

On the one hand, Wawanesa clearly indicated in its letter of May 7, 2001 that it was terminating caregiver and housekeeping benefits on the basis of Ms. Tran's failure to attend the orthopaedic examination scheduled for April 30, 2001 and Ms. Tran's caregiver benefits were in fact terminated effective April 30, 2001.

However, one month earlier, on March 28, 2001, Wawanesa wrote to Ms. Tran that it would not consider further housekeeping or caregiver expenses because of Ms. Tran's failure to participate in the functional testing portion of an assessment by an occupational therapist. Yet, Wawanesa continued to pay caregiver benefits until April 29, 2001. This is some evidence that Wawanesa might not strictly rely on the section 50 defence.

Further, Wawanesa did not take advantage of the procedures in place to inform Ms. Tran that it was relying on the section 50 defence. The defence is not mentioned in the Report of Mediator and I have no information that Wawanesa asked the mediator to amend the report pursuant to Rule 23 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001). Wawanesa did not raise the defence in its Response to the Application for Arbitration and did not tick off the box in the Response form to claim that the Application for Arbitration was an abuse of process, frivolous or vexatious proceeding. Instead, it defended the claim on the basis that Ms. Tran was not disabled. Although Wawanesa raised the section 50 defence at the pre-hearing, it did not raise the issue of an award on the basis that the application was frivolous, vexatious or an abuse of process.

The best evidence that Ms. Tran should have known that Wawanesa was relying on the section 50 defence was Wawanesa's letter of May 7, 2001. Most of the other evidence, including Wawanesa's continuing to pay caregiver benefits after its letter of March 28, 2001 when it said it would not consider further benefits, the Report of Mediator and the Response, do not indicate that Wawanesa was relying on the section 50 defence. Considering all these circumstances, I find that Ms. Tran did not know that Wawanesa was relying on the section 50 defence until it was raised at the pre-hearing.

Since she applied for permission to withdraw her Application for Arbitration shortly after the pre-hearing, I do not find that her Application was frivolous, vexatious or an abuse of process. Accordingly, I will not make an award in favour of Wawanesa under subsection 282(11.2) of the Insurance Act.

EXPENSES:

The criteria I should consider in awarding expenses are set out in Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 464/96. Having regard to the expense criteria, I order each party to bear its own expenses of the arbitration proceeding.

May 14, 2003

William J. Renahan Arbitrator

ARBITRATION ORDER