Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 171
FSCO A04-002268
BETWEEN:
CHARLENE A. GRAHAM
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
John Wilson
Heard:
By written submissions, at the offices of the Financial Services Commission of Ontario in Toronto.
Written submissions were last received on July 27, 2005.
Appearances:
David Derfel for Ms. Graham
Jonathan B. Schrieder for State Farm Mutual Automobile Insurance Company
Issues:
The Applicant, Charlene A. Graham, was injured in a motor vehicle accident on May 16, 2001. She applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.1 The benefits claimed included income replacement benefits, housekeeping and home maintenance benefits, the costs of certain examinations and medical and rehabilitation expenses.
As part of its response to Ms. Graham's claim, State Farm requested an assessment of her housekeeping and home maintenance needs. The assessment was to be carried out by an occupational therapist in Ms. Graham's own home.
Subsequent to the notification of this assessment, Ms. Graham arranged for her own assessor to attend and evaluate her housekeeping needs. Ms. Graham's then representative, Ms. McRae-Hill, advised State Farm that she would not co-operate with the Insurer's proposed assessment since it would be "duplicative" of the assessment carried out by Ms. Graham's assessors.
State Farm subsequently advised Ms. Graham that housekeeping and home maintenance benefits were not payable due to her failure to co-operate and participate in the Insurer's assessment.
The parties were unable to resolve their disputes through mediation, and Ms. Graham 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:
Has Ms. Graham forfeited her entitlement to housekeeping and home maintenance benefits claimed for the period from July 12, 2001 to November 1, 2001, since she failed to make herself reasonably available to attend at an insurer's in-home examination?
Are Ms. Graham's claims for housekeeping and home maintenance benefits statute-barred as the applicable limitation period elapsed prior to the Applicant commencing an application for arbitration?
Result:
I find that Ms. Graham was properly notified of the section 42 examination proposed for July 3, 2001, and that she was consequently under an obligation to undergo the proposed examination or face the consequences provided for under the Schedule. As a consequence of her failure to attend the scheduled examination, pursuant to section 42(8), "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)." For the purposes of this arbitration the Insurer has identified the relevant period as "July 12, 2001 to November 1, 2001."
The claims for housekeeping and home maintenance benefits are not statute-barred as the applicable limitation period did not commence with the Explanation of Benefits Payable dated February 4, 2002.
EVIDENCE AND ANALYSIS:
The factual background of this dispute is rather simple and uncontroversial. As noted above, State Farm first requested an in-home assessment pursuant to section 42 of the Schedule on June 12, 2001. This was followed up by a letter dated June 14, 2001 identifying the purposes of the assessment and advising that the assessment facility would be in touch with Ms. Graham to arrange a mutually convenient date.
Independent Rehabilitation Services, the assessment facility identified by State Farm, sent a letter dated June 19, 2001 advising that an appointment was set up for July 3, 2001, with a request to contact the facility by June 26, 2001, if the time set for the assessment was not suitable, so that alternative arrangements could be made.
Ms. Graham neither contacted the assessor to set a different date nor participated in the scheduled assessment. Instead, her representative sent a letter confirming that no further in-home assessment would take place as it would be "duplicative" of that commissioned by Ms. Graham herself on June 5, 2001. This has remained Ms. Graham's principal objection to the proposed assessment to date.
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. Cityof London et al. (1891), 14 PR (Ont.) 171). Parties to civil actions may now move under section 105 of the Courts of Justice Act, R.S.O. 1990, c. C.43, or Rule 33 of the Rules of Civil Procedure to obtain an order for a compulsory medical examination where the plaintiff's health is at issue in the matter.
In accident benefit matters before the Commission, however, insurer's examinations are only permitted pursuant to section 42 of the Schedule.2
Section 42 of the current Schedule provides further details of the insurer's obligations under such a request for examination. Section 42(2) provides for a notice provision to the insured while section 42(3) still provides for examinations as often as "reasonably necessary." Section 42(4) provides that an insurer shall make reasonable efforts to schedule the examination for a time that is convenient for the insured person.
Unlike the court rules which provide specifically for the medical examination of parties in the context of litigation, section 42 of the Schedule allows such examinations only in the context of the determination by the insurer of whether a benefit is payable; in other words as part of the adjustment of the file.
There is no specific provision either in the Schedule or the Dispute Resolution Practice Code3 for litigation related examinations. This is consistent with an arbitration process that does away with much of the discovery process, with the exception of documentary discovery. Rule 33 of the court Rules, of course, is in the context of rules outlining examinations for discovery, the inspection of property, and examination of non-parties. These form part of the wider pre-trial discovery process of the courts. Because of the significant differences between the arbitration and court systems, caution must be exercised, therefore, in following too strictly court jurisprudence on the timing and reasonableness of medical examinations.
Was Ms. Graham given proper notice of the proposed assessments?
The materials that constituted notice to Ms. Graham are set out in the parties' joint production brief. There seems to be no controversy that on June 14, 2001, State Farm wrote to Charlene Graham advising her of its intention to have a section 42 examination undertaken by Independent Rehabilitation Services Inc. with regard to Ms. Graham's activities of daily living in her home environment. It further advised her that Independent would be in touch with her "to arrange for a mutually convenient time for the assessment to take place." It also advised that the assessment would be in relation to Attendant Care, Housekeeping and Attendant Care.
On June 15, 2001 a letter from Counter Assessments was sent to State Farm stating that it had already conducted an in-home assessment for Ms. Graham, and enclosing their bill.
This was followed by a letter from Ms. McRae-Hill, Ms. Graham's representative at the time, stating that because of the Counter Assessments report, any "further assessment at this stage is duplicative."
On June 19, 2001, Independent contacted Ms. Graham in writing setting out July 3, 2001 as a tentative date, but asking Ms. Graham to "advise if this meeting is not suitable as soon as possible so that alternative arrangements may be arranged to complete the required assessment."
Between the two letters from the Insurer and its proposed assessor, Ms. Graham had been advised of the purpose of the assessment, the time and the place it was proposed to be held, the name of the proposed centre, the benefits related to the assessment and the consequences of non-attendance. In addition, both letters had urged Ms. Graham to contact the Insurer to make suitable arrangements, if the date chosen was not suitable.
It would appear that Ms. Graham's only response was a handwritten fax cover sheet sent by Ms. McCrae-Hill stating: "Another in home assessment is duplicative. My client will not participate at this time."
As noted earlier section 42(4) of the Schedule provides that an insurer shall make reasonable efforts to schedule the examination for a time that is convenient for the insured person.
I am satisfied that, under the circumstances, State Farm has demonstrated that it made reasonable attempts to find a convenient time for the examination. In its first letter, it invited Ms. Graham's participation in finding a convenient time. She did not respond. In the subsequent letter from the evaluator, he chose a tentative date, but invited her comments on its appropriateness. The only response was a flat denial of the right to hold an assessment because it was "duplicative." If Ms. Graham wants a time for an assessment that is "convenient", it is incumbent upon her to provide some sort of input into the scheduling process. This was not done.
By limiting her response to a blanket denial of the Insurer's right to schedule further examinations, Ms. Graham essentially relieved the Insurer of the obligation to make further attempts to find convenient dates. It was reasonable for State Farm to conclude from the response that whatever day might be fixed, it would be unacceptable, given Ms. Graham's position.
Duplication
As noted earlier, Ms. Graham appointed her own assessors to evaluate her housekeeping and home maintenance needs. Whatever the validity of this report, section 42(3) of the Schedule states that an "insurer may require examinations as often as is reasonably necessary." There is no provision limiting evaluations to matters that have never been examined by either side.
It is important to remember that in adjusting a claim an insurer has obligations both to its policyholders and its shareholders.
(A)n insurer in fulfilling its contractual obligations may give consideration to its own interests. However, the insurer must give as much consideration to the welfare of the insured as it gives to its own interests.4
An insurer should not pay out money that it is not obliged to pay. Nor should it refuse an otherwise meritorious claim. It has an obligation to both its policyholders and its shareholders to make some enquiry before making a decision. A consequence of not making reasonable enquiry can be a special award, or an award for exemplary or punitive damages.
An insurer, then, needs and, indeed, has an obligation to obtain reliable information on which to base its decisions on entitlement. It also has an obligation to comply with the statutory pre-conditions for such examinations. In this case, I find that these were satisfied.
Given the surprise, and, arguably partisan aspects of the assessment conducted by Counter Assessment, it was reasonable for State Farm to request further information, including an assessment by a professional in whom it had confidence, before making a decision on benefit entitlement. Although from time to time this may mean some duplication and some inconvenience to an applicant, such may be a necessary consequence of an insurer's obligation to fairly adjust each and every claim.
I find that Ms. Graham was properly notified of the section 42 examination proposed for July 3, 2001, and that she was consequently under an obligation to undergo the proposed examination or face the consequences provided for under the Schedule.
As a consequence of her failure to attend the scheduled examination, pursuant to section 42(8), "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)."
For the purposes of this arbitration the Insurer has identified the relevant period as "from July 12, 2001 to November 1, 2001."
Limitation period
The Insurer claims that Explanation of Benefits Payable dated February 4, 2002 constitutes a proper stoppage of housekeeping benefits, and that the two-year limitation should commence as of that date.
The law on limitations, as it relates to applications for statutory accident benefits, has been stated succinctly by Arbitrator Bayefsky in his decision Jakovljevic and Commercial Union Assurance Company (FSCO A98-001163, July 26, 1999):
Arbitration decisions have established a number of principles as to the manner in which the limitation periods under the legislation are to be applied. The principles most relevant to the case at hand are that the two-year period begins to run from the date the applicant receives a clear and unequivocal refusal of the benefits he or she has claimed, and that the insurer bears the onus of establishing both that the applicant received such a refusal and the date of receipt.
Since that time, the Supreme Court has had the opportunity of reviewing the notice provisions of the Schedule with regard to the termination of benefits. In its review in Smith5, a majority of the court adopted the reasoning of Borins J.A. and held that no refusal can be considered to have been given if there is inadequate compliance with the provisions of section 71, relating to information on the right to dispute a refusal to pay a benefit:
Borins J.A. dissented and would have held that there was insufficient compliance with s. 71 of the SABS. He indicated that the section is clear and unambiguous, and manifests a legislative intention to expand the information that an insurer must provide upon refusal to pay or the reduction of payments. Consistency with the consumer protection purpose of s. 71 requires insurers to completely and clearly provide insured persons with the information needed to enable them to challenge the refusal to pay or the reduction of payments. Borins J.A. stated that mediation is only the first step in the dispute resolution process, and as a result it is not sufficient for the insurer to give information about that step only. While he acknowledged that the dispute resolution provisions are complex, Borins J.A. found the limitation period to be central to the dispute resolution process contained in the Insurance Act since it conveys the need to proceed expeditiously. Complexity of the provisions could not be an excuse for ignoring the plain meaning of s. 71. Borins J.A. prescribed a basic minimum of four points of information that an insurer should provide to comply with s. 71. He concluded that the limitation period did not begin to run and consequently the appellant was not precluded from proceeding with her claim against the respondent.
The Report of Mediator in this matter is dated May 31, 2004. The Application for Arbitration is dated October 21, 2004. Section 51 of the Schedule provides that a mediation or arbitration must be commenced within two years of the insurer's refusal to pay benefits. Section 51(2) gives a further ninety-day grace period for the filing for arbitration following the delivery of the report of the mediator.
The supposed notice in this matter merely says:
You failed to participate in the Insurer's Examination schedule on July 3, 2001. As such you are not eligible for housekeeping benefits after July 3, 2001. You have been reimbursed for all eligible housekeeping expenses. No further is payable.
Were the February 4, 2002 correspondence to constitute a proper refusal, Ms. Graham would be out of luck. Her claim would be barred. However, I find that the notice given on the housekeeping issue is neither clear and unequivocal as required by Jakovljevic, nor did such notice meet the standards for clarity and information set out in Smith. In Smith, Gonthier J. remarked:
There is an equivocal sense of indeterminacy in the decision of the insurer giving the reader the impression that the insurer may very well change its stance if it is contacted for a discussion of the matter.
The same might easily be said of the Insurer's advice to Ms. Graham concerning housekeeping benefits. It is unclear whether no further benefits are payable unless attendance at an examination takes place, or whether, based on current information, nothing else is payable. Each would be a reasonable inference that could be drawn from the notice, and each would suggest that future benefits are not excluded. Consequently I find that the claims for housekeeping and home maintenance benefits are not statute-barred as the applicable limitation period did not commence with the Explanation of Benefits Payable dated February 4, 2002.
EXPENSES:
Given the mixed outcome of this motion I make no order as to expenses.
December 7, 2005
John Wilson
Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 171
FSCO A04-002268
BETWEEN:
CHARLENE A. GRAHAM
Applicant
and
STATE FARM MUTUAL AUTOMOBILE 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:
Ms. Graham was properly notified of the section 42 examination proposed for July 3, 2001, and that she was consequently under an obligation to undergo the proposed examination or face the consequences provided for under the Schedule. No benefit is payable for the period from July 12, 2001 to November 1, 2001.
The claims for housekeeping and home maintenance benefits are not statute-barred as the applicable limitation period did not commence with the Explanation of Benefits Payable dated February 4, 2002.
December 7, 2005
John Wilson
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Under the SABS-1996
- (4th Edition, Updated October 2003)
- Cumming J. in Bullock v. Trafalgar Insurance Co. of Canada [1996] O.J. No. 2566
- Smith v. Co-operators General Insurance Co. 2002 SCC 30, [2002] 2 S.C.R. 129