Neutral Citation: 2005 ONFSCDRS 49

FSCO A04-000965

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOHNATHON STEPHEN SHANNAHAN

Applicant

and

OPTIMUM FRONTIER INSURANCE COMPANY

Insurer

DECISION ON A MOTION

Before:

Lorne Slotnick

Heard:

March 14, 2005, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Stanley Pasternak for Mr. Shannahan

Tamara Tomomitsu for Optimum Frontier Insurance Company

Background and Issues:

The Applicant, Johnathon Shannahan, was injured in a serious motor vehicle accident on August 12, 2001. He was a back-seat passenger in a vehicle involved in a highway head-on collision. The driver of the car in which he was travelling died in the accident. Mr. Shannahan sustained numerous injuries, including several fractures and a closed head injury. Although he was only 15 at the time, he was working as a taxi dispatcher.

Mr. Shannahan applied for and received statutory accident benefits from Optimum Frontier Insurance Company ("Optimum"), payable under the Schedule.¹ Optimum terminated weekly income replacement benefits on June 17, 2003, after an insurer examination by Dr. Ross Roussev, a neurologist, concluded that Mr. Shannahan was able to resume his pre-accident employment. The parties were unable to resolve their disputes through mediation, and Mr. Shannahan applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The issues in the arbitration are Mr. Shannahan's ongoing claim for income replacement benefits, a claim under section 24 of the Schedule for the cost of a neuropsychological assessment, interest, expenses, and a claim for a special award. An arbitration hearing on these issues is scheduled for four days in August, 2005 and another four days in November.

As the dispute was moving through the mediation and arbitration pre-hearing stages, Mr. Shannahan was assessed by Dr. Harold Becker, a specialist in family medicine, whose report was the first to conclude that Mr. Shannahan's injuries met the Schedule's definition of a catastrophic impairment. Dr. Becker’s report was sent to Optimum shortly before I conducted the pre-hearing discussion in this case in November, 2004. In response, Optimum arranged three insurer examinations which it was requiring Mr. Shannahan to attend pursuant to section 42 of the Schedule. These assessments, which Mr. Shannahan is refusing to attend, are with Dr. Roussev, the neurologist who assessed Mr. Shannahan in 2003, Dr. Richard Hershberg, a psychiatrist, and a third assessment with Dr. David Goldstein, a general practitioner, and Dr. Rick Zarnett, an orthopaedic specialist.

In this motion, Optimum seeks an order that Mr. Shannahan be barred from proceeding to arbitration until he attends the three assessments noted above. The motion also sought a number of other orders, mainly relating to production of documents, but all these issues were resolved before or at the hearing of this motion.

Therefore the remaining issue is:

1. Is Mr. Shannahan precluded from proceeding to arbitration because of his refusal to attend the examinations with Dr. Roussev, Dr. Hershberg, and Dr. Goldstein and Zarnett?

Result:

1. Mr. Shannahan is not required to attend the examinations with Dr. Hershberg and Dr.Goldstein and Dr. Zarnett. The examination with Dr. Roussev is proper under section 42.

ARGUMENTS:

Optimum argues that in light of new information over the past two years, and the conclusion in Dr. Becker's report, these three assessments are reasonable and necessary under section 42 of the Schedule, which states as follows:

42 (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.

(3) The insurer may require examinations as often as is reasonably necessary.

Optimum concedes that the assessment with Dr. Goldstein and Dr. Zarnett is not directly related to any benefit for which an application has been made, but is solely for the purpose of determining whether Mr. Shannahan's injuries meet the catastrophic threshold. The other two assessments, Optimum says, relate to the question of catastrophic impairment but also to the ongoing claim for income replacement benefits. Optimum agrees that the issue of catastrophic impairment is not an issue in this arbitration, but says medical opinions on that issue will have an impact on Mr. Shannahan's entitlement to income replacement benefits, the main issue in the case.

Optimum argues that the assessment by Dr. Hershberg is reasonable because only recently has it emerged that Mr. Shannahan's post-accident emotional difficulties may be a major concern, and the Insurer has never requested a psychiatric assessment previously.

The Insurer says an assessment by Dr. Roussev is reasonable and necessary because it has been nearly two years since the last neurological insurer examination, and since then two reports prepared for the Applicant - Dr. Becker's and a neuropsychological report by Dr. Robert Gates – have disagreed with Dr. Roussev's statements that Mr. Shannahan's cognitive functions had returned to their pre-accident level and that his upper left arm and shoulder injury was not ongoing. A new assessment by Dr. Roussev, Optimum argues, would shed some light on these issues for the purpose of assessing the claim for income replacement benefits, as well as for determining whether Mr. Shannahan's injuries are catastrophic.

Mr. Shannahan argues that I have no jurisdiction to deal with examinations that relate only to the question of catastrophic impairment, since this issue is not part of the current arbitration. The issue of catastrophic impairment is being dealt with behind the scenes with no FSCO involvement, like many other issues that arise in a typical accident benefit file, and it would not make sense for an arbitrator to stay a hearing over an issue that is not before FSCO, Mr. Shannahan argues. For this reason alone, Mr. Shannahan says, I should make no order with respect to the examination with Dr. Goldstein and Dr. Zarnett. This argument would also apply to the examination with Dr. Hershberg, Mr. Shannahan says, since even though the insurer says this examination is for the dual purpose of assessing catastrophic impairment and evaluating the ongoing income replacement benefits claim, in reality it is only about whether the impairment is catastrophic.

Mr. Shannahan also argues that it is not proper to use insurer examinations under section 42 to determine catastrophic impairment. Mr. Shannahan points to the process under section 40 of the Schedule, under which an insured person may apply to the insurer for a determination of whether an impairment is catastrophic. If the insurer wishes, or if the insurer says the impairment is not catastrophic and the insured disagrees, the matter may be sent to a designated assessment centre. This, in fact, has happened in Mr. Shannahan's case: after some correspondence about the proposed assessments at issue here, Mr. Shannahan applied for a determination, Optimum said the impairment was not catastrophic, and the matter has been referred to a DAC. Section 42 assessments by definition relate to a benefit, Mr. Shannahan argues, and catastrophic determination is not a benefit, although a determination that an impairment is catastrophic affects the level of various benefits. Therefore, to the extent that these proposed assessments relate to the question of catastrophic impairment, they cannot fall under section 42, the Applicant says.

Finally, the Applicant relies on the many decisions in which arbitrators have rejected motions to stay arbitration hearings pending applicants attendance at insurer examinations where it appeared that the dominant purpose of the proposed examination was to bolster the insurer’s case at the upcoming hearing. Here, the Applicant points to the timing of the various insurer examinations - seven of them in just more than a year, starting in March, 2002, and then none for a year and a half, until the hearing was about to be scheduled. The only inference to be drawn, Mr. Shannahan says, is that these assessments are not for the purpose of adjusting the file, but to gather evidence for the hearing.

ANALYSIS

The onus is on the insurer to demonstrate that its proposed examinations fall within section 42. That section is the only mechanism for an insurer to require a claimant to attend an examination with a doctor of the insurer’s choice. The issue, then, is whether these examinations meet the requirements of the section, namely whether each of them is "for the purpose of determining whether an insured person is entitled to a benefit for which an application is made" and that they are being done "as often as is reasonably necessary."

A determination that an insured person has sustained a catastrophic impairment is not itself a benefit, even though it has a direct relationship to the monetary or time limits for certain benefits under the Schedule, such as housekeeping and home maintenance and attendant care benefits. However, a catastrophic impairment determination has no direct legal relationship to the main issue in this case, namely income replacement benefits: an insured person may be eligible for the maximum IRB benefits allowable under the Schedule without having sustained a catastrophic impairment; conversely, someone who has sustained a catastrophic impairment may in time be able to return to work and therefore would be ineligible for income replacement benefits. Similarly, the issue of catastrophic impairment has no legal relationship to the only other issue in this case (excluding interest, expenses and the claim for a special award), namely payment for the cost of an examination.

Mr. Shannahan's application for arbitration before FSCO contains no issues where a determination that he sustained a catastrophic impairment can have a direct impact. For this reason, I agree with Mr.Shannahan's argument that I cannot stay this proceeding while he attends these examinations, to the extent that the examinations are for the purpose of assessing whether the Applicant sustained a catastrophic injury. I also agree that the process for determining whether an impairment is catastrophic is set out in section 40, and use of section 42 examinations for this purpose is not proper.

The power of an arbitrator to stay or adjourn a hearing pending attendance at a section 42 insurer examination flows from the powers granted under the Statutory Powers Procedure Act to control proceedings and grant adjournments (see Belair Insurance Company Inc. and F.S. appeal decision (FSCO P96-00039, June 11, 1996)). I cannot see how I have jurisdiction to stay this proceeding pending an examination if that examination is only marginally relevant to the issues in dispute at the hearing. In light of this conclusion, I will assess the three proposed examinations below.

Dr. Goldstein and Dr. Zarnett

Optimum concedes that the proposed examination with Dr. Goldstein and Dr. Zarnett is for the purpose of assessing whether Mr. Shannahan has sustained a catastrophic impairment. As such, it is not a proper section 42 examination, since it is not "for the purpose of determining whether an insured person is entitled to a benefit for which an application is made." Mr. Shannahan is not required to attend this appointment. I accept Optimum’s point that this type of assessment may, albeit indirectly, shed some light on the question of Mr. Shannahan’s ability to work, and so could potentially contain something of relevance to the income replacement benefit claim. However, this in itself does not transform the request into a proper section 42 examination.

Dr. Hershberg

Mr. Shannahan argues that the psychiatric examination with Dr. Hershberg is solely for the purpose of determining whether the impairment is catastrophic, while Optimum says its motives are mixed: it wants an opinion on whether Mr. Shannahan’s impairment may be catastrophic, but also an assessment of the ongoing IRB claim.

The correspondence setting up the examination with Dr. Hershberg is revealing. The first reference is in a letter of November 2, 2004, from Optimum’s claims examiner to Mr. Shannahan’s counsel, saying, "We now also advise the Optimum Frontier Insurance Company requires Johnathon’s attendance at assessments by a psychiatrist and a neurologist for purposes of determining whether Johnathon meets the catastrophic impairment criteria and his entitlement to the limits and additional coverage which follow." When Mr. Shannahan's counsel objected to the examinations, Optimum's reply on December 3 noted that it had asked Mr. Shannahan to attend "to determine whether he meets the catastrophic impairment criteria." The letter adds that "if you confirm that Mr. Shannahan does not intend to and will not file a section 40 application [determination of catastrophic impairment], then Optimum Frontier Insurance will reconsider its request that Mr. Shannahan attend the examinations." Neither letter makes any mention of income replacement benefits.

Mr. Shannahan is then notified of the neurological and psychiatric assessments by letter dated December 6, which says, "these examinations are for the purpose of determining whether you sustained a catastrophic impairment..." Again, there is no mention of income replacement benefits. However, a letter the next day to Dr. Hershberg asks him to determine if there is a catastrophic impairment, but also adds, "We would also like Dr. Hershberg to comment on if he feels Johnathon suffers a complete inability to engage in any employment for which he is reasonably suited by education, training or experience," the test for IRB eligibility after 104 weeks.

Two months later, on February 9, 2005 - after this motion had already been initiated by Optimum - the Insurer wrote to Mr. Shannahan about the examinations with Dr. Hershberg and Dr. Roussev, saying "we wish to clarify that in addition to determining whether you sustained a catastrophic impairment in the accident of August 12, 2001, these examinations have been requested to determine whether you are entitled to any further income replacement benefits."

A review of this correspondence and the circumstances surrounding the proposed examination – including the fact that a psychiatric assessment was requested only after Dr. Becker’s report suggested Mr. Shannahan's impairment was catastrophic - lead me to conclude that the dominant, if not the sole, purpose of the appointment with Dr. Hershberg is to assess whether the Applicant’s impairment meets the catastrophic definition. The February 9 letter focusing on income replacement benefits strikes me as an afterthought, the main purpose of which was to put on the record for this motion hearing that the examination had something to do with income replacement benefits. Therefore, for the same reasons expressed in relation to the examination by Dr. Goldstein and Dr. Zarnett, I find that the appointment with Dr. Hershberg is not a proper section 42 examination and Mr. Shannahan is not required to attend.

Dr. Roussev

Many of the facts surrounding the proposed examination with Dr. Roussev are similar to those mentioned above in relation to Dr. Hershberg. For one thing, the correspondence is exactly the same, so Optimum's motives are at least mixed.

However, there are some significant differences. Dr. Roussev's earlier neurological report of May, 2003 - which was used as basis for the termination of Mr. Shannahan's income replacement benefits - does conclude that the Applicant appeared to be capable of working. However, he says (at page 21) that there are factors not related to the accident that were complicating the assessment of the Applicant's cognitive decline. He suggests further neuropsychological and other testing. Overall, my impression from reading his report is that while he draws a conclusion about Mr. Shannahan's ability to work, he does so with at least some degree of uncertainty.

Several months later, neuropsychological testing was in fact done as part of an examination, requested by the Applicant, by Dr. Robert Gates, a psychologist, who concluded that Mr. Shannahan's results "indicate impairments of verbal ability, verbal and visual memory and learning, working memory and attention, and some aspects of non-verbal reasoning." Dr. Gates also raises the possibility that Mr. Shannahan could meet the catastrophic threshold based on a mental or behavioural disorder.

Even before Dr. Becker's examination, which concluded that there was a catastrophic impairment, Optimum was seeking a neuropsychological assessment under section 42 with Dr. Gary Snow. Mr. Shannahan refused that assessment, and Optimum does not appear to be pursuing it, but still wishes to have a neurological assessment. The original appointment was set with Dr. Daniel Selchan but changed to Dr. Roussev after counsel for Mr. Shannahan responded that the Applicant would consider the request if the appointment was with one of the two neurologists who had already performed section 42 examinations.

While there is no doubt that the issue of catastrophic impairment is part of the motivation for the proposed examination with Dr. Roussev, it is my view that Optimum has made its case that this examination is valid under section 42. I base my view on the wording of Dr. Roussev's first report, and the apparent continuation of symptoms (for example, problems with Mr. Shannahan's left arm) that Dr. Roussev felt were likely not neurological issues. Dr. Roussev has assessed Mr. Shannahan before, but not for nearly two years. Optimum was interested in neurological assessment before Dr. Becker concluded that the impairment was catastrophic. The Insurer in fact began pushing for a neurological assessment several months before the pre-hearing discussion, leading me to conclude that this is not a case of an examination sought largely for the purpose of bolstering the case for the hearing. In my view, given developments in the two years since Mr. Shannahan saw Dr. Roussev, a re-examination is a reasonable step to assist the Insurer in assessing the ongoing income replacement benefits claim. It is also significant that there does not appear to be any need to delay the August start of the arbitration hearing in order for Mr. Shannahan to see Dr. Roussev and to respond to any of his findings.

I find, therefore, that the request for Mr. Shannahan to be examined by Dr. Roussev is a valid insurer examination under section 42. However, I see no need to adjourn or stay the hearing at this point, when there appears to be enough time for this examination to be concluded well before the scheduled August hearing dates.

EXPENSES:

I will leave the issue of expenses to the hearing arbitrator.

April 14, 2005

Lorne Slotnick

Arbitrator

Date

Neutral Citation: 2005 ONFSCDRS 49

FSCO A04-000965

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOHNATHON STEPHEN SHANNAHAN

Applicant

and

OPTIMUM FRONTIER 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:

1. Mr. Shannahan is not required to attend the examinations with Dr. Hershberg, Dr. Goldstein or Dr. Zarnett. The examination with Dr. Roussev is proper under section 42 of the Schedule.

April 14, 2005

Lorne Slotnick

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.