Neutral Citation: 2005 ONFSCDRS 47

FSCO A04-002286

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ANATOLY BALANKI

Applicant

and

ZURICH INSURANCE COMPANY (COMMERCIAL BUSINESS)

Insurer

PRE-HEARING DECISION

Before:

David Muir

Heard:

February 15, 2005, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received on February 18 and February 25, 2005.

Appearances:

Alexander Mazin for Mr. Balanki

Jean-Claude Rioux for Zurich Insurance Company (Commercial Business)

Issues:

The Applicant, Anatoly Balanki, was injured in a motor vehicle accident on September 13, 2002. He applied for statutory accident benefits from Zurich Insurance Company (Commercial Business) ("Zurich"), payable under the Schedule.¹ Zurich denied Mr. Balanki's these accident benefit claims. The parties were unable to resolve their disputes through mediation, and Mr. Balanki applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Prior to the pre-hearing in this matter Zurich brought a motion seeking a stay of the arbitration until not less than 45 days after the day on which Mr. Balanki attends for an examination under oath pursuant to section 33(1.1) of the Schedule. Mr. Balanki has refused to attend the examination under oath.

Mr. Balanki, although served with materials supporting the motion prior to the pre-hearing, was not prepared to respond to it at the pre-hearing but agreed to provide written submissions with reply from Zurich as required.

The issues are:

1. Is Zurich entitled to an order staying the arbitration hearing until not less than 45 days after the day on which Mr. Balanki attends for an examination under oath pursuant to section 33(1.1) of the Schedule.

Result:

1. Zurich is not entitled to an order staying the arbitration.

EVIDENCE AND ANALYSIS:

No evidence was tendered by either party in support of their respective submissions. Several reports as well as some correspondence between the parties related to the request that Mr. Balanki attend an examination were filed and provided a limited factual background. I have also taken note of some the public records of this proceeding such as the mediator's report, the application for arbitration, etc.

The statutory provision at issue here is a novel one and has not been commented upon in any arbitration decision. The provision provides for the examination under oath of an applicant for accident benefits:

33. (1) A person applying for a benefit under this Regulation shall, within 14 days after receiving a request from the insurer, provide the insurer with the following:

34. Any information reasonably required to assist the insurer in determining the person's entitlement to a benefit.

35. A statutory declaration as to the circumstances that gave rise to the application for a benefit.

36. The number, street and municipality where the person ordinarily resides.

37. Proof of the person's identity. O. Reg. 403/96, s. 33 (1).

(1.1) If requested by the insurer, a person who applies for a benefit under this Regulation as a result of an accident shall submit to an examination under oath, but is not required to,

(a) submit to more than one examination under oath in respect of matters relating to the same accident; or

(b) submit to an examination under oath during a period when the person is incapable of being examined under oath because of his or her physical, mental or psychological condition. O. Reg. 281/03, s. 12 (1).

(1.2) A person is entitled to be represented at his or her own expense at the examination under oath by such counsel or other representative of his or her choice as the law otherwise permits. O. Reg. 281/03, s. 12 (1).

(1.3) The insurer shall make reasonable efforts to schedule the examination under oath for a time and location that are convenient for the person and shall give the person reasonable advance notice of the following:

1. The date and location of the examination.

2. That the person is entitled to be represented in the manner described in subsection (1.2).

3. The reason or reasons for the examination.

4. That the scope of the examination will be limited to matters that are relevant to the person's entitlement to benefits. O. Reg. 281/03, s. 12 (1).

(1.4) The insurer shall limit the scope of the examination under oath to matters that are relevant to the person's entitlement to benefits under this Regulation. O. Reg. 281/03, s. 12 (1).

(2) The insurer is not liable to pay a benefit in respect of any period during which the insured person failed to comply with subsection (1) or (1.1). O. Reg. 281/03, s. 12 (2).

(3) Subsection (2) does not apply in respect of a non-compliance with subsection (1.1) if,

(a) the insurer fails to comply with subsection (1.3) or (1.4); or

(b) the insurer interferes with the insured person's right to be represented as described in subsection (1.2). O. Reg. 281/03, s. 12 (2).

(4) If an insured person who failed to comply with subsection (1) or (1.1) subsequently complies with that subsection, the insurer,

(a) shall resume payment of the benefit, if a benefit was being paid; and

(b) shall pay all amounts that were withheld during the period of non-compliance, if the insured person provides a reasonable explanation for the delay in complying with the subsection. O. Reg. 281/03, s.12 (2).

Mr. Balanki claims to have been injured in an automobile accident on or about September 13, 2002. The claims advanced by Mr. Balanki include medical benefits for physiotherapy, chiropractic and massage, as well as several section 24 assessments.

Zurich claims to be concerned about discrepancies in the reporting of the time of the accident. For example, in the Application for Benefits, received by the Insurer in January 2003, the time of the accident is said to be 9:15 a.m. In contrast, in a Functional Capacities Evaluation report dated January 6, 2003 as well as an In Home Assessment dated February 4, 2003 the time of accident is reported as being 5:00 and 6:00 p.m., respectively. Zurich also wishes to explore the extent and nature of the treatments provided to Mr. Balanki.

Mediation is said to have occurred between June 16, 2003 and September 10, 2003. An application for arbitration of the issues in dispute was made on October 22, 2004.

Zurich wrote to Mr. Balanki by way of a letter to Mr. Mazin, his solicitor, on January 10, 2005, requesting he attend an examination under oath. The salient portions of the letter are set out here:

Zurich requires the accident benefits applicant Anatoly Balanki to attend for an examination under oath pursuant to section 33(1.1) of the Statutory Accident Benefits Schedule.

The examination under oath has been scheduled for Wednesday February 16, 2005, starting at 10 a.m. (Bold omitted). The examination under oath is to be held at the offices of Rosenberger & Weir, at 130 Adelaide Street West, Toronto Ontario. (Bold omitted)

In our view, this letter constitutes reasonable advance notice of the date, time and place of the examination under oath. However, reasonable efforts will be made to scheduled the examination under oath for a time and location that are convenient for you.

You are entitled to be represented at your own expense at the examination under oath by such counsel or other representative of your choice as the law otherwise permits.

The reason for the examination under oath is to determine the true circumstances of the alleged motor vehicle accident that gave rise to you application for accident benefits and to determine whether you are entitled to the medical and rehabilitation expenses and costs of examinations you have claimed.

The scope of the examination will be limited to matters that are relevant to your entitlement to benefits.

Your insurer is not liable to pay a benefit in respect of any period during which you have failed to submit to an examination under oath.

I heard no submission from Mr. Balanki that the notice he received was deficient in any way or that it did not meet the requirements of subsection 33(1.3).

Zurich framed the issue as if this were a request for a stay of the arbitration for failure to attend an insurer's examination authorized by section 42 of the Schedule. At first blush this framework has some attraction, however, I am persuaded that this is not the proper approach and I find that I have no authority to stay the arbitration pending Mr. Balanki's attendance at an examination under oath.

The remedy sought by Zurich in this case has been utilized by arbitrators to deal with the consequence of applicants' refusals to attend section 42 assessments where they were reasonably required under that provision. That Zurich would frame the issue in this way is unsurprising given the similarity in the language of the two provisions, although there are some important differences.

One key difference is that unlike section 42, section 33(1.1) does not expressly limit the purpose of the examination to a determination of the applicant's entitlement to benefits. Rather the examination is limited to matters "that are relevant to the applicant's entitlement to benefits under this Regulation (the Schedule)." This is arguably broader language giving greater scope to an insurer's right to require such assessments.

Zurich relies on this broader language to assert that so long as the person is an insured who is an applicant for a benefit under the Schedule, they shall submit to an examination under oath. It does not matter that benefits have been terminated or never paid at all. In Zurich's view, if there are questions an insurer wants to ask of an insured that are relevant to entitlement, it may require attendance at an examination under oath at its option at virtually any point in the process.

Zurich may be correct in its analysis, however, because I have concluded that I have no authority to grant the remedy sought, I leave this issue for another day.

What is clear is that section 33(2) contains a remedy where an applicant for benefits fails to attend an examination under oath. I have no evidence and no submission respecting the adequacy of that remedy in general. I appreciate that the application of section 33(2) may be of no practical effect here as the benefit claims are not ongoing after the request was made.

However, it is important to recall that the remedy sought here, a stay or adjournment of the arbitration pending the attendance of Mr. Balanki at an examination under oath, was developed by arbitrators not to enforce the insurer's right to conduct assessments as such, but to address issues of fairness between the parties, which the available remedies in section 42 and elsewhere in the Schedule could not adequately address.

The appeal decision in F.S. and Belair² remains the high watermark of authority on this issue as it arose under section 42. In the context of a claim for ongoing benefits where the theory underlying Ms. S's claims of disability changed on the basis of medical opinions obtained by Ms. S an arbitrator determined that while the requested assessments were reasonable and authorized by section 23 (as it was then), he had no authority to stay the arbitration until the applicant attended. It was held on appeal, that Belair was entitled to a stay of the arbitration until Ms. S attended the requested assessment.

The reasons for the granting of the remedy in the appeal decision are what is important for us here:

In the arbitration process, the insurer's right to require an examination is subject to the general discretion of the tribunal to control its own processes in the context of the overall objectives of the system. These include adequate disclosure, settlement of cases and a fair, informed hearing of the issues remaining in dispute. The objectives are generally served by permitting insurers to arrange timely medical examinations, in appropriate cases.

The Insurance Act and the Statutory Powers Procedure Act, R.S.O. 1990, Chap S.22, as amended, contemplate the making of orders, including the authority to make interim orders subject to conditions, to conduct a fair hearing: orders that balance the rights of both parties while safeguarding the interests of the party being examined. The 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. It also includes the power, under section 21 of the Statutory Powers Procedure Act, to adjourn the hearing to permit an adequate hearing to be held, in the event that an applicant has refused to attend a reasonably required examination. In the exercise of such discretion, the arbitrator is not ordering a medical examination, as discussed in Granic, in the absence of an express or implied power to do so. Rather, the adjudicator is controlling the exercise of an extant power to require a medical examination conferred on one of the parties to the process.

One point from the above bears repeating. The Director's Delegate draws her authority from the Insurance Act, but more importantly the Statutory Powers Procedure Act, in particular the power to adjourn the hearing "to permit an adequate hearing to be held."

To my mind, different considerations apply here.

The timing of the request is not unimportant. It is made several months in advance of the hearing date, but many more months after Mr. Balanki's claims have been assessed and denied. What little information I have before me indicates that the issues that Zurich wishes to explore via this examination were known to it in early January 2004. This is not a situation, such as obtained in F.S. and Belair, supra, where new information had come to light that could have significantly impacted on the insurer's assessment of the claim. I also note that the power to require an examination under oath under section 33.1 has existed since October 2003.

Moreover, an insurer who has been denied a medical assessment because an applicant has refused to attend a section 42 assessment, may be significantly prejudiced in responding to an applicant's medical opinions. Indeed, they may have no response at all.³ It is this potential for significant unfairness, bordering on an abuse of process, that gave rise to the use of the stay or adjournment pending attendance at the requested assessment.

It is difficult to see where the fairness issue arises here. What Zurich seeks is an examination under oath of Mr. Balanki on events in September 2002, where the hearing is scheduled for late August of this year at which time Zurich will have an opportunity to examine him.

To be clear Zurich may well have been entitled to examine Mr. Balanki under oath, even at the time the request was made. The language of section 33(1.1) et passim is broad, likely broader, than section 42. However section 33 provides for a remedy - potential dis-entitlement to benefits claimed for the period of non-compliance, but not, significantly in my view, access to the dispute resolution process.

I also note another key difference between section 33 and section 42 that figured in the reasoning of the Director's Delegate in F.S. and Belair. Unlike the failure to attend a section 42 examination, a failure to comply with section 33 is not a bar to bringing issues to mediation (and hence to arbitration). In the context of a consideration of the remedies associated with section 42, it was seen as anomalous that while a failure to attend an insurer's assessment could bar you from entering the dispute resolution system at all, once an application for mediation had been made, any subsequent failure might have little or no consequence. The difference in remedies available reflects a legislative judgement about the potential prejudice to insurers faced with non-compliance with these two sets of provisions.

Further, where a legislative provision provides for an express remedy, a statutory decision maker has limited jurisdiction to fashion other remedies. The overarching duty of the arbitrator provided for in the Insurance Act and the Statutory Powers Procedure Act to control the process and to prevent an abuse of the process are relied on to police section 42, however, it is not at all clear why fairness between the parties or my obligation to control the arbitration process would allow me to impose the remedy sought in these circumstances.

Finally, Mr. Balanki argued that he would be prejudiced if he were required to submit to this examination as the passage time since the time of the accident will have affected his ability to recall the circumstances surrounding his accident and the treatments he received. Zurich responded that Mr. Balanki will have to give evidence on the same points at the hearing and, consequently, there is no prejudice in having to do it prior to the hearing. I agree with Zurich's submission in this regard, however the fact that Mr. Balanki is being asked to give evidence under oath twice at this late stage reinforces the points made above.

For all of these reasons I decline to grant a stay of the arbitration.

EXPENSES:

I leave the question of expenses in this pre-hearing motion to the hearing arbitrator.

April 11, 2005

David Muir

Arbitrator

Date

Neutral Citation: 2005 ONFSCDRS 47

FSCO A04-002286

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ANATOLY BALANKI

Applicant

and

ZURICH INSURANCE COMPANY (COMMERCIAL BUSINESS)

Insurer

ARBITRATION ORDER

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

1. Zurich's request for a stay of the arbitration is dismissed.

April 11, 2005

David Muir

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2F.S. and Belair Insurance Company Inc., (OIC P96-00039, June 11, 1996)
3. 3This presumed prejudice figured prominently in arbitral reasoning leading up to the F.S. and Belair Insurance Company of Canada decision, see for example: Granic and Allstate Insurance Company of Canada, (January 30, 1995, OIC A-006615).```