Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 100

FSCO A04-002365

BETWEEN:

ZOI VIDINOPULOS

Applicant

and

LIBERTY INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A MOTION

Before: John Wilson

Heard: July 7, 2005, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Robert Zigler for Ms. Vidinopulos

Donata Di Ilorio for Liberty Insurance Company of Canada

Issues:

The Applicant, Zoi Vidinopulos, was injured in a motor vehicle accident on May 23, 1996. She applied for statutory accident benefits from Liberty Insurance Company of Canada ("Liberty Insurance"), payable under the Schedule.¹ Liberty Insurance terminated weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Ms. Vidinopulos applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. An arbitration took place which was concluded on July 22, 2002, by a consent order signed by Arbitrator Palmer.

Further Minutes of Settlement issued on October 9, 2003 set out the terms for attendant care benefits, both past and present. The agreement set out a rate of $700.00 per week for the payment of ongoing attendant care, and stated that the "rate will remain fixed, aside from indexing, for a twelve month period, following which may be subject to a variation dependant on the medical condition of the insured."

There was a further dispute about the quantum of attendant care following the delivery of an assessment of attendant care needs by an occupational therapist hired by the Insurer on April 1, 2004. The assessor believed that Ms. Vidinopulos' medical condition warranted 4.37 hours of attendant care per month and allocated $45.01 for the provision of those services.

Subsequently, an attendant care DAC was conducted on August 20, 2004, by another occupational therapist. The assessor made various observations about Ms. Vidinopulos' level of function and concluded that she was entitled to $53.27 per month attendant care.

Following that report of the DAC, Ms. Vidinopulos retained Ms. Sophie Bielawski, another O.T., to quantify her attendant care needs. This report, dated March 7, 2005, was provided to the Insurer by March 29, 2005.

Ms. Bielawski determined that Ms. Vidinopulos' condition required attendant care 24 hours per day, 7 days per week. She based this opinion on the results of tests administered by the DAC assessor, and the unavailability of Mr. Vidinopulos, the husband, due to scheduled prostate surgery and the consequent withdrawal of his assistance.

At a pre-hearing held on March 7, 2005 the parties agreed to hearing dates commencing August 15, 2005.

By notice dated May 11, 2005, the Insurer provided notice to Ms. Vidinopulos of a proposed assessment for other disability benefits, attendant care benefits, and housekeeping and home maintenance benefits. The first assessment date was set for May 31, 2005. The proposed assessment was to be by an occupational therapist and was to take place in Ms. Vidinopulos' home.

The assessment in question in this motion was scheduled to take place on July 12, 2005.

The issues in this motion are:

1. Is Liberty entitled to an order requiring Ms. Vidinopulos to attend an examination as it relates to other disability benefits, attendant care benefits and housekeeping and home maintenance benefits, including an OT in-home assessment at the request of Liberty Insurance?

2. Is Liberty entitled to extend the time for filing reports?

Result:

1. The Insurer has not met its burden of demonstrating that such an examination was necessary for the purposes outlined in the Schedule or that I have jurisdiction to make the mandatory order requested by the Insurer.

2. In the absence of an examination there is no need to extend the time for filing reports.

EVIDENCE AND ANALYSIS:

By notice of motion dated June 28, 2005, Liberty now seeks an order "requiring Ms. Vidinopulos to attend an examination as it relates to other disability benefits, attendant care benefits, and housekeeping and home maintenance benefits, including an OT in-home assessment at the request of Liberty Insurance."

Liberty also requested an order extending the time for the delivery of the reports resulting from the proposed examination.

Insurer's assessments under the Bill 164 Schedule, which governs this matter, are provided for in section 65(1), which reads as follows:

An insurer may, for the purposes of any of Parts II to VIII, X and XIII and as often as reasonably necessary, give an insured person notice requiring the person 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.

Parts II to VIII and X refer to the different heads of benefits payable under an insurance policy, including income replacement benefits, education disability benefits, caregiver, other disability and loss of earning capacity and attendant care benefits. Part XIII refers to claims for compensation for other pecuniary losses such as housekeeping, dependant care expenses and the expenses of visitors.

Part XV, which provides for the right to dispute benefits, engages the process outlined in sections 279 to 283 of the Insurance Act and provides temporal limitations on claims specifically not included in the enumerated purposes of section 65.

Section 65(1) also sets out pre-conditions for the examination, including a requirement to schedule an examination at a time "that is convenient for the insured person" and a requirement for reasonable notice.

Jurisdiction:

As noted, Liberty's motion requested specific relief: namely, an order compelling Ms. Vidinopulos to attend an examination. There is no disagreement that for whatever reason, she has not seen fit to attend the current examination proposed by the Insurer.

Sections 65(5) and 65(5.1) provide specific penalties for failure to attend an insurer's examination. The consequences spelled out in the legislation consist essentially of a suspension of the benefit in question pending compliance with the insurer's request.

In the decision of the Court of Appeal in McCombie v. Cadotte², at issue was section 258.6(1) of the Insurance Act, which relates to the right of insurers to require the examination of an insured prior to the commencement of an action (presumably a court action). The interpretive principles used by the court would, however, be equally valid when applied to section 65 of the Schedule.

These considerations incline me to the view that the legislative scheme was intended to involve plaintiffs submitting to requests, possibly after some variation agreed upon with the defendant, of their own accord and not under the compulsion of a court order. I do not think that the legislature intended the medical examination scheme for settlement purposes to be more inflexible and onerous than the one provided for the purpose of trial.

Morden J. essentially concluded that if a specific penalty is provided for in the legislation, then it is wrong to attempt to import other recourse into the legislative scheme. In this case, the absence of an express power to compel attendance, combined with specific sanctions, suggests that there was no legislative intention to clothe arbitrators with the power to make mandatory orders for attendance.

Because the power of an arbitrator derives from statute, a source for any arbitral action must be found in statute as well, in this case the Insurance Act and its regulations, and the Statutory Powers Procedure Act.

Neither explicitly grants an arbitrator the power to order a person to undergo an examination.

While it is generally accepted since F.S. and Belair Insurance Company Inc.³ that the power to prevent an abuse of process may permit a stay of an arbitration⁴, there is no jurisprudence recognizing a power to order attendance. As Arbitrator Blackman noted in M.S.D and Citadel General Assurance Company (FSCO A01-001561, February 19, 2003),

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."

For the above reasons I find that arbitrators at FSCO lack jurisdiction to order an insured to attend at a medical examination.

An order made without jurisdiction must be a nullity. Given my finding, and the fact that the notice of motion stated clearly that the only substantive remedy requested was the mandatory order, the application must fail.

Reasonable & Necessary

Although I have rejected the motion on jurisdictional grounds, since both parties' submissions addressed the question of the reasonableness of the proposed examination, I will also deal briefly with these considerations in refusing the request for an examination at this point in the arbitration process.

At common law, no one, including insurers, had a right to compel an insured to make him or herself available for examination simply because a claim was being advanced. (See Redly v. City of London et al. (1891), 14 PR (Ont.) 171). Parties to civil actions may now move under section 105 of the Courts of Justice Act to obtain an order for a compulsory medical examination where the plaintiffs health is at issue in the matter.

It goes without saying that forcing an individual to undergo an unwanted medical examination can be considered both stressful and extremely invasive of a person's privacy. Such an order should not be made lightly, nor without clear and cogent reasons. The law and the jurisprudence are clear, however, that section 65 of the Schedule gives the insurers a right to override such normal privacy concerns, provided that the legal pre-conditions for the examination are met.

In Glynn and General Accident Assurance Co. of Canada (OIC A96-000004, November 25, 1996), Arbitrator Makepeace summarized the normal requirements for insurer's medical examinations.

I find that the Insurer's right to require the Applicant to attend an Insurer Medical Examination is subject to the following requirements under sections 23(2) and 25:

(i) The examination must be required in respect of a claim for weekly benefits.

(ii) The Insurer may require an IME "as often as it reasonably requires."

(iii) The Insurer must give the Applicant "reasonable notice" that it requires the examination.

(iv) The examination must be performed by a "qualified medical practitioner, psychological advisor or chiropractor."

The second of Arbitrator Makepeace's requirements has engendered significant problems, since each side views the reasonableness of any particular examination through very different lenses. Later decisions, although recognizing the overall right to require insured persons to submit to medical examinations, have delineated limits to such examinations. Director's Delegate Draper commented in Traders General Insurance Company and Levey (FSCO P98-00035, February 25, 1999):

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.

Although there are very different considerations when evaluating requests under Rule 33 of the Rules of Practice, arbitrators have looked to court decisions for guidance in applying section 65 of the Schedule, and its predecessors.

In Manolakos v. Royal Insurance ([1998] O.J. No. 2157), a decision of Farley J. dealt with an insurer's request for assessments of an insured. He stated:

In my view the onus is on the insurance company in such circumstances to demonstrate its request for such as reasonable in the circumstances (although this would be "automatic" where there has never been an examination).

Arbitrators have also evaluated the consequences of a failure to attend examinations, following proper notice.

In F.S. and Belair, Director's Delegate Naylor considered whether an arbitrator has jurisdiction to stay an arbitration because of a failure by an insured to attend an insurer's medical examination.

The arbitrator also concluded that the words "commence a mediation proceeding" in section 25 were unambiguous and could not be modified so as to read "commence or proceed through the dispute resolution process." He concluded that he had no authority to preclude Ms. S. from proceeding to a hearing, disagreeing with contrary reasoning in Hanna and Royal Insurance Company of Canada, (December 2, 1994, OIC A-005409). He held that while Ms. S. could not be prevented from proceeding to a hearing, an adverse inference could be drawn against her for failing to attend the examination.

It would be an extraordinary result if, in the face of an express authority to require an examination, insureds could circumvent this condition by insisting on proceeding to arbitration, while shifting the basis of their claim. It is even more anomalous if an insured - the only party who can initiate arbitration - can deprive an insurer of the ability to evaluate the insured's condition through independent sources - by choosing arbitration over court. Nor do I accept the premise that considerations of fairness in adjudication or an arbitrator's obligation to hold a fair hearing should not inform the inquiry. The fact that the primary purpose of section 23(2) is to assist in the insurer's assessment of the claim does not mean that it cannot be applied to serve the ends of fairness.

This decision must be read with some caution in the light of the decision of the Court of Appeal in McCombie v. Cadotte (supra). While the court was considering section 258.6(1) of the Insurance Act, which relates to the right of insurers to require the examination of an insured prior to the commencement of an action (presumably a court action), many of the interpretive principles are equally valid when applied to section 42 of the Schedule.

Although the current section 42 of the Schedule differs somewhat in its wording from the Bill 164 Schedule in issue in this motion, an examination of the jurisprudence that has developed on that section is useful.

As noted earlier, section 65 only applies in relation to the sections of the Schedule dealing with substantive claims. It specifically omits reference to the sections dealing with and incorporating the dispute resolution process. By any analysis it is aimed at providing insurers with the necessary information to fairly and properly adjust an insured's claim. It is, in short, congruent to the provision in section 42 of the current Schedule that restricts section 42 examinations to "the purpose of determining whether an insured person is entitled to a benefit for which an application is made."

An insurer's examination under the appropriate Schedule is independent of any litigation or arbitration and relates only to the examination of the insured's claim, once made. It is not a section 105 examination under the Courts of Justice Act, which has as a pre-condition the institution of a proceeding.

It has often been noted that the arbitration process was set up to be "quicker, less expensive and less formal"⁵ than the courts. This fast track includes some compromises in comparison with the traditional court system. There is no provision for the holding of discoveries by either party. In addition, while there are provisions for both parties to obtain examinations to further the understanding of the claimed disability, there is no provision for compulsory litigation-related medical examinations, as provided for in the Courts of Justice Act.

In this matter, the evidence in support of the Insurer's motion was contained in the affidavit of Ms. Carrie Calway, a law clerk in Mr. Kazdan's office. At paragraph 19, Ms. Calway states:

Liberty Insurance requires an updated occupational therapy assessment of Ms. Vidinopulos to be able to address this new report and these new recommendations at Arbitration.

It is clear from Ms. Calway's affidavit that what Liberty is requesting is a section 105 examination for use in litigation, not for the purposes of determining entitlement to attendant care benefits.

This analysis is reinforced by reference to the uncontradicted statements in paragraphs 19 and 20 of David Wilson's affidavit, in which he asserted that the insured was willing to undergo assessments "provided that the Insurer agreed that the report could not be used at the upcoming arbitration." He further alleged that "the Insurer did not respond to the suggestion."

Liberty also pointed to the higher levels of attendant care recommended by Ms. Bielawski's report as indicative of a significant change in circumstances, justifying a new assessment.

I prefer Mr. Zigler's analysis of Ms. Bielawski's report which would attribute the differing levels of attendant care to the assumptions of the assessor, and her different analysis of pre-existing data contained in the DAC report. These include such factors as the report of holding onto walls and furniture while walking, and measurements of the Berg Balance Scale.

Another contributing factor in Ms. Bielawski's report, the unavailability of Mr. Vidinopulos to assist, due to his own illness, would appear to be a change not easily susceptible to analysis through further examination of Ms. Vidinopulos.

I note in passing that the Insurer's analysis of the change in levels of assessment care was at the very least, misleading, since it pointedly omitted consideration of the levels of attendant care paid, voluntarily, pursuant to the settlement agreement, which were significantly higher than the numbers presented in its affidavit evidence and submissions.

Even if there was a significant change in Ms. Vidinopulos' condition, an examination scheduled to take place on July 12, in the context of a hearing scheduled for August 15, smacks of "the kind of tactical brinkmanship that arbitrators have properly rejected as part of this system" as identified by the Director's Delegate in Traders and Levey (supra).

It was also clear that the ordering of an examination, so near to the hearing date, would have necessitated an adjournment of the arbitration, given the need for counsel to examine and potentially respond to any conclusions in the resulting report. Given Ms. Vidinopulos' age and condition, an adjournment, possibly in excess of six months, would have the potential of being highly prejudicial to the Applicant. The Insurer offered no suggestions of how such prejudice might be addressed.

Notwithstanding Liberty's reliance on Sherkat⁶, Farley J. stated the law correctly in that "the onus is on the insurance company in such circumstances to demonstrate its request for such as reasonable in the circumstances."⁷

Not only was the relief requested impossible to provide, for want of jurisdiction, but also Liberty failed to meet its onus of providing evidence establishing the reasonableness and the necessity of the examination requested, or even of its own complete compliance with section 65(1) of the Schedule.

Consequently, I decline to order the relief requested.

EXPENSES:

Ms. Vidinopulos was successful in resisting the Insurer's motion. In addition, the relief requested was clearly outside the jurisdiction of an arbitrator to grant.

Lord Blackburn observed in Metropolitan Bank Ltd. et al. V. Pooley (1885) 10 App. Cas. 210:

(T)he Court had inherently in its power the right to see that its process was not abused by a proceeding without reasonable grounds, so as to be vexatious and harassing.

Vexatious litigation includes situations where the court has no power to grant the relief sought (see Dreyfus v. Peruvian Guano Co.⁸), or if no reasonable person can possibly expect to obtain relief in it, (see Lawrance v. LordNorreys et al.).⁹

The bringing of a patently impossible motion constitutes an abuse of process. The jurisprudence is clear. It has long been decided that arbitrators lack the jurisdiction necessary for the order requested by Liberty.

Since vexatious motions are grounds to award expenses under Rule 75.2 of the Dispute Resolution Practice Code (4th Ed., Updated October 2003), I find that Ms. Vidinopulos is entitled to her expenses incurred in this preliminary issue hearing.

In my earlier letter decision dated July 7, 2005, I stated: "Should the parties not be able to agree on an appropriate amount they may make short submissions within the next 7 days."

If required I may be spoken to on the quantum of the expenses to be awarded.

July 14, 2005

John Wilson Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 100

FSCO A04-002365

BETWEEN:

ZOI VIDINOPULOS

Applicant

and

LIBERTY INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The Insurer's motion is dismissed.

2. Ms. Vidinopulos shall have her agreed or assessed expenses in this matter.

July 14, 2005

John Wilson Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
2. 253 O.R. (3d) 704. Ont. Court of Appeal
3. 3(OIC P96-00039, June 11, 1996)
4. 4Subject to the McCombie rationale (supra)
5. 5Dispute Resolution Practice Code, (3rd Edition, April 15, 1997), Introduction at p.10
6. 6(OIC A95-000101, April 12, 1996), an early and anomalous decision of Arbitrator Miller.
7. 7Manolakos v. Royal Insurance (supra) which, given the hierarchy of decisions, is binding on this tribunal.
8. 8(1889) 41 Ch.D. 151
9. 9(1888) 39 Ch. D. 213)