Neutral Citation: 2005 ONFSCDRS 13

FSCO A04-001277

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

HEATHER EIDT

Applicant

and

PILOT INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Judith Killoran

Heard:

By telephone conference call on February 8, 2005.

Written submissions were received on January 27 and February 4, 2005.

Appearances:

Robert W. Garcia for Ms. Eidt

Robert H. Rogers for Pilot Insurance Company

Issues:

The Applicant, Heather Eidt, was injured in a motor vehicle accident on August 13, 1999. She applied for and received statutory accident benefits from Pilot Insurance Company ("Pilot"), payable under the Schedule.¹ Pilot terminated weekly income replacement benefits on September 8, 2003. The parties were unable to resolve their disputes through mediation, and Ms. Eidt 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 issues are:

Shall the arbitration hearing scheduled for May 2, 3, 4 and 5, 2005 be stayed due to Ms. Eidt's refusal to attend insurer's medical examinations?

Result:

The insurer's medical examinations scheduled by Pilot are not reasonably necessary. The arbitration hearing shall proceed on May 2, 3, 4 and 5, 2005.

Background

On August 13, 1999, Heather Eidt was involved in a motor vehicle accident where she claims to have suffered various injuries.

In August 2001, Ms. Eidt attended a Disability DAC assessment in Kitchener, Ontario. The DAC found that she was substantially disabled from performing her pre-accident employment duties. Ms. Eidt attended a post 104-week disability DAC in November 2001. The DAC concluded that she was unable to return to her pre-accident employment. However, various occupations were suggested as alternatives for Ms. Eidt, while taking into consideration her education, training and experience. Pilot terminated Ms. Eidt's income replacement benefits as a result of the post 104-week disability DAC assessment.

Ms. Eidt applied for arbitration with respect to the termination of her weekly income replacement benefits in 2002. A hearing date was scheduled for September 8, 2003. Before the hearing date, Pilot agreed to pay benefits to the date of hearing.

Ms. Eidt applied for arbitration claiming entitlement to ongoing income replacement benefits beyond September 8, 2003. The hearing is scheduled to commence on May 2, 2005.

On November 17, 2003, Ms. Eidt gave birth to a baby.

On December 21, 2004, Pilot stated its intention to arrange for insurer's medical examinations. In a letter dated January 6, 2005, Ms. Eidt's counsel advised Pilot that Ms. Eidt would not be attending for the insurer's medical examinations.

On January 14, 2005, Pilot sent a letter to Ms. Eidt informing her that insurer's examinations had been arranged for her with Dr. Luczak, a psychiatrist, on February 10, 2005 and Dr. Heitzner, a physiatrist, on February 21, 2005.

On January 27, 2005, Pilot requested that the Commission stay the arbitration hearing based on Ms. Eidt's refusal to attend the insurer's examinations.

PRELIMINARY ISSUE HEARING

The preliminary issue hearing was conducted by teleconference before me on February 8, 2005.

The parties agreed that Ms. Eidt was not taking issue with the quality of notice provided for the insurer's medical examinations. The specialists chosen, a physiatrist and a psychiatrist, were appropriate doctors based on Ms. Eidt 's list of complaints which encompassed both physical and emotional/psychological issues.

Pilot submitted that it wanted the arbitration stayed if Ms. Eidt did not attend the insurer's medical examinations. Pilot argued that there was no prejudice to Ms. Eidt in attending the insurer's examinations and quite possibly, that the hearing could proceed as scheduled. Pilot submitted that the examinations were part of its ongoing obligation as an insurer and would assist the arbitrator in determining that ongoing obligation.

Ms. Eidt submitted that Pilot has had many years since the termination of benefits in 2001 to have her assessed. Ms. Eidt has filed subsequent medical documentation with Pilot during this period of time. Ms. Eidt claimed that the timing of Pilot's request is prejudicial to her because she has no control over when the reports will be produced and therefore, would not have sufficient time to have her specialists review the reports and respond.

Pilot submitted that it had raised the issue of insurer's examinations with Ms. Eidt at the pre-hearing discussion on November 29, 2004. Pilot argued that if Ms. Eidt had agreed, at the pre-hearing, to attend the examinations, the examinations would have been completed well in advance of the arbitration hearing.

Ms. Eidt questioned why Pilot did not make the examinations an issue before the pre-hearing discussion and ask for a preliminary issue hearing on the question at the pre-hearing.

Pilot argued that the examinations were scheduled by the insurer and not by its counsel. In this way, Pilot maintained that the circumstances could be distinguished from other similar cases and, as such, could not be seen as part of litigation manoeuvring.

Pilot submitted that insurer's examinations were appropriate because of the passage of a significant period of time and a change of circumstances. Pilot relied on a letter from Ms. Eidt's counsel dated March 12, 2004 which confirmed that Ms. Eidt gave birth on November 17, 2003. Ms. Eidt's counsel stated in the letter that the task of caring for her son had put increased strain on her.

Ms. Eidt submitted that there has been no change in her condition. According to her, the letter written by her counsel on March 12, 2004 must be read in context, as a reply to Pilot's inquiries about her return to work. She pointed to the letter as an opportunity for Pilot to respond, possibly with a request for insurer's medical examinations. Instead, it did nothing.

As evidence of the lack of change in her condition, Ms. Eidt referred to the ongoing treatment and conclusions of Dr. Teasell, her physiatrist, about the nature of her disability. On June 11, 2002, he stated that Ms. Eidt exhibited a significant adjustment disorder. On May 27, 2003, Dr. David Ponesse, her family physician, observed that Ms. Eidt had reached her maximum level of medical recovery. Dr. Paula Dimeck, the treating psychologist, stated on May 22, 2003 that Ms. Eidt would struggle indefinitely with an ongoing adjustment disorder.

Ms. Eidt maintained that she attended numerous treatments including physiotherapy, massage therapy, acupuncture, cortisone injections, cranial sacrum and psychological counselling. She has also attended for various tests, including an MRI and x-rays. Ms. Eidt has sought medical treatment since the date of the termination of benefits and has provided Pilot with reports relating to the treatment received. According to Ms. Eidt, the medical documentation in the file confirms that Ms. Eidt's condition has not changed since the termination of benefits in 2001.

In reply, Pilot submitted that Dr. Teasell's opinion has changed from June 11, 2002, when he stated in his first report that Ms. Eidt should try to return to work full-time, although the pain she experienced might restrict her to part-time work. Dr. Teasell's report of June 4, 2003 concluded that Ms. Eidt would not be able to return to full-time employment.

ANALYSIS

The relevant portions of section 42 of the Schedule specify, as follows:

(1) For the purpose of determining whether an insured person is entitled to a benefit for which an application is made, an insurer may give the insured person notice requiring the insured 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.

(2) The notice shall state the reasons why the insurer requires the examination and shall specify a date for the examinations that is at least five business days after the person receives the notice.

(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.

(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); and

(b) no benefit is payable for the period after the person has failed to attend the examination or failed to comply with subsection (5) and before the insured person submits to an examination under subsection (1) and complies with subsection (5).

Pilot referred to Antony and RBC General Insurance Company² which ruled that insurer's examinations are "not limited to requests made before the termination of benefits." In other words, although Pilot is not paying income replacement benefits currently, this does not eliminate Pilot's right to proceed with an insurer's examination.

Pilot also relied on Bogic and AXA Insurance (Canada)³ and the seven factors which comprised the test set down to determine whether an insurer's examination was reasonable and necessary.

In its review of the factors listed in Bogic, Pilot submitted that it had an ongoing obligation to the insured; it fairly balanced its right to the examinations with the insured's right to privacy; a nexus existed with respect to the choice of examiners based on the nature of the injuries; it was not limited in its rights to the period before termination; and a lengthy period of time had elapsed since the most recent examination.

In Bogic, the applicant had very recently alleged that he suffered a closed head injury as a result of the accident. There was an important issue of changed circumstances. I agree with the arbitrator in Bogic that the fact that an insurer has terminated benefits is not a valid basis on which to refuse a request for an insurer's examination. An insurer has an ongoing obligation to assess claims for weekly benefits so that it cannot be presumed that the purpose of a subsequent request for an insurer's examination is only to acquire evidence to bolster the insurer's case.

I accept that the principles as set out in Bogic remain valid for assessing when an examination is reasonably necessary. The final two factors for consideration in the test outlined in Bogic are:

The closer a request is made to a hearing, the closer the scrutiny of its reasonableness, to ensure that there is no avoidable delay or that the insured's preparation for hearing is not prejudiced. The speed and informality of the dispute resolution process do not allow for the insurer to investigate the Applicant's claim indefinitely.

While an arbitrator has no authority to compel an insured person to submit to an insurer's examination which has been reasonably requested an arbitrator may adjourn the hearing until the insured person attends such examination. However, an arbitrator's power includes the discretion, in appropriate cases, to refuse to adjourn a hearing to allow an insurer time to conduct a medical examination, where to do so would be unfair to the applicant. [footnotes excluded]

It is well established that the onus is on the insurer to prove that insurer's medical examinations are reasonably necessary. I find that the totality of the circumstances in this case support the Applicant's position that Pilot is seeking the examinations in order to bolster its case for hearing. First, I do not find it plausible that Pilot's intention in requesting the examinations is to review its decision on Ms. Eidt's entitlement to benefits. Pilot submitted no evidence to support its contention that it requested further medical examinations for the purpose of adjusting its file. Second, if Pilot is requesting the examinations in order to obtain more up-to-date medical information, it is too late to make such a request, if fairness to the Applicant is to be a consideration.

Pilot ignored many of its opportunities in the past to request insurer's medical examinations. The issue of insurer's examinations could have been raised before or during the mediation process, following the March 12, 2004 letter from Ms. Eidt's counsel, prior to the pre-hearing discussion, and finally, during the pre-hearing discussion. One of the purposes of a pre-hearing discussion is to identify the issues for arbitration. The November 29, 2004 pre-hearing letter is silent as to an insurer's examination issue. The timing of Pilot's request is made more than 3 years after its last examination. While this is favourable from the point of view that the insurer has not scheduled an oppressive number of examinations, the question arises as to why Pilot has waited so long to request the examinations.

In Nandkumar and Economical Mutual Insurance Company⁴, the arbitrator said: "In my view, requests for the insurer medical examinations during the final stages of a legal dispute must be regarded as inherently linked to their interests in advocating their position, as opposed to normal adjusting investigation." I find that the circumstances in this case point to such a conclusion.

I find that the insurer's medical examinations requested by Pilot are not reasonably necessary. The hearing will proceed on May 2, 3, 4 and 5, 2005.

EXPENSES:

I exercise my discretion to award Ms. Eidt her expenses incurred in this preliminary issue hearing. If the parties are unable to agree on quantum, they may apply to me for an expense hearing, according to the Dispute Resolution Practice Code, (4th Edition, Updated October 2003.)

February 11, 2005

Judith Killoran Arbitrator

Date