Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 128
FSCO A02-001081
BETWEEN:
DAVID McMICHAEL
Applicant
and
BELAIR INSURANCE COMPANY INC.
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Joyce Miller
Heard: All written submissions were received by June 23, 2007.
Appearances: Alan L. Rachlin for Mr. McMichael Chris T. J. Blom for Belair Insurance Company Inc.
Issues:
The Applicant, David McMichael, was injured in a motor vehicle accident on June 14, 1998. He applied for and received statutory accident benefits from Belair Insurance Company Inc. ("Belair"), payable under the Schedule.1 Belair terminated weekly income replacement benefits on November 24, 2002. The parties were unable to resolve their disputes through mediation, and Mr. McMichael applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. Mr. McMichael sought the reinstatement of the income replacement benefit and payment of attendant care benefits.
An Arbitration hearing was held on March 22, 23, 24, 25, April 20, 21, 22, and June 10, 2004. On March 2, 2005, the Arbitrator issued the following order:
Mr. McMichael has suffered a catastrophic impairment as defined in the Schedule.
Mr. McMichael is entitled to an attendant care benefit of $5,056.80 per month, from April 2002, to date and ongoing, pursuant to section 16 of the Schedule, less amounts credited to Belair for time when he was otherwise supervised. I remain seized of this issue in the event that there are any unresolved disputes respecting the quantum of attendant care benefit.
Mr. McMichael is entitled to weekly income replacement benefits in the amount of $256, from November 24, 2002 to date and ongoing.
Mr. McMichael is entitled to interest on those amounts found to be owing under subsection 46(2) of the Schedule.
The Arbitration decision was upheld both on Appeal2 and Judicial Review.3 Belair's Application for Variation that the Arbitrator's order in respect of payment for attendant care was accepted by the Director of Arbitration on April 4, 2007.
The preliminary issue is:
- Is Mr. McMichael required to attend an Insurer's Examination pursuant to section 42 of the Schedule prior to the variation proceeding?
Result:
Mr. McMichael is not required to attend an Insurer's Examination.
The issue of expenses is deferred to the hearing arbitrator.
SUBMISSIONS:
Belair's Submissions
Belair submits that it has surveillance of Mr. McMichael being active without attendant care contrary to the decision of the Arbitrator that Mr. McMichael requires 24-hour attendant care because of his drug addiction. Belair submits that although the surveillance stands as strong evidence, the need for attendant care "cannot" be determined on the basis of the surveillance alone. Accordingly, Belair is requesting that Mr. McMichael attend for an assessment with a physician trained in the diagnosis and treatment of addiction pursuant to section 42 of the Schedule.
Belair submits that: "... it is entirely reasonable to request an assessment pursuant to s.42 of the Schedule, in order to continue to meet its obligations to its insured, and in order to determine the extent of those obligations, in the context of the decision of the Arbitrator."
Belair relies on the principles enunciated in the case of Bogic and AXA Insurance (Canada)4 and confirmed in the recent case of Ives and Wawanesa Mutual Insurance Company5 to support its position. In applying these principles Belair submits:
- In order to fairly and effectively assess the continued claim for attendant care, a medical assessment is required by the insurer.
- The request for an assessment at this time is a reasonable one in the sense that one has not been undertaken since the arbitration was heard in 2004.
- There is a nexus between the nature of the impairment and the type of specialist the insurer seeks to engage.
- Section 42 does not limit the entitlement to conduct the assessment to the period of time prior to the commencement of an application for arbitration, or, in this case, the application for revocation.
- The lengthy passage of time since the hearing in 2004 reinforces the need and obligation on the part of the insurer to assess the continued entitlement to the attendant care benefit.
- Delay is not an issue as the hearing has not been scheduled, and will not be scheduled until a date after the assessment is completed. Any delay in no way prejudices the insured as the insurer continues to pay the benefit.
- The question of adjournment does not arise in this case.
Accordingly, Belair submits it is "... reasonable to request an assessment pursuant to s.42 of the Schedule, in order to continue to meets its obligations to its insured, and in order to determine the extent fo those obligations, in the context of the decision of the Arbitrator."
Mr. McMichael's Submissions
Mr. McMichael submits that Applications for Arbitration and Applications for Variation are brought in very different contexts.
Mr. McMichael submits that "An Application for Arbitration is delivered when the rights as between the insurer and insured have not yet been determined. In that context it is not unreasonable for the parties to seek additional documentation to support their positions prior to the hearing and adjudication."
Mr. McMichael submits that in contrast "an Application for Variation is brought after rights have been determined as between insurer and insured and at a time when entitlements have crystallized." Mr. McMichael submits that a first party insurer owes a duty of utmost good faith to its insured. Mr. McMichael further submits that "it is inconsistent with an insurer acting in accordance with that duty of utmost good faith for it to deliver an application to vary crystallized entitlements when it does not have the evidence that it intends to rely upon in support of that position."
Mr. McMichael submits that "[i]n contrast to the arbitration provisions, Part 5 of the Dispute Resolution Practice Code does not specifically contemplate additional documentation being obtained after delivery of the Application for Variation or Response, and neither does Form L, the Application for Variation/Revocation.6
Mr. McMichael submits that an insurer who intends to make an Application for Variation and wishes to obtain additional information by way of a section 42 assessment, ought to first obtain the information in accordance with its rights under the Schedule before applying for variation. To do otherwise is to cause an unnecessary expense to an applicant if the additional evidence being sought does not support the insurer's claim.
ANALYSIS AND FINDING
For the following reasons I find that Mr. McMichael is not required to attend an Insurer's Examination prior to the variation hearing.
Belair has applied for a variation in the Arbitrator's order on the basis that since the release of the Arbitrator's decision there has been a material change in Mr. McMichael's circumstances7 with regard to his apparent need for attendant care. It would appear, therefore, that when applying for the variation application, Belair should have had sufficient evidence to support its claim. However, Belair now admits it needs additional evidence of a physician to assist at the variation hearing. Accordingly, it now seeks a section 42 examination.
Subsection 42(1) provides:
For the purposes of assisting an insurer determine if an insured person is or continues to be entitled to a benefit under this Regulation for which an application is made, an insurer may, as often as is reasonably necessary, require an insured person to be examined under this section by one or more persons chosen by the insurer who are members of a health profession or are social workers or who have expertise in vocational rehabilitation.
It is clear from this subsection that an insurer may, as often as is reasonably necessary, require an insured to attend an Insurer's Examination, as in this case, to assess whether an insured continues to be entitled to a benefit being paid. It is also clear, that prior to making its Application for Variation, Belair did not take advantage of this section to get the relevant evidence it needs to support its variation claim that there has been a material change in Mr. McMichael's circumstances since the Arbitrator's decision. It now seeks to do so.
In my view, it is too late in the process for Belair to request a section 42 examination. I agree with Mr. McMichael's submission that an insurer should have all of the relevant evidence it intends to rely upon in support of an Application for Variation at the time the Application is delivered.
In this case, Belair had ample opportunity to adjust its file and request a section 42 examination before it made its Application for Variation. It did not do so. One of the things the section 42 examination could have told the insurer is whether or not it was appropriate in this case to proceed with the Application for Variation.
By not seeking a section 42 assessment before its Application for Variation, Belair clearly puts Mr. McMichael at risk of having to expend money to defend a Variation Application wherein the insurer does not as yet have sufficient evidence to support its claim and may even not be able to get this evidence to support its variation claim. It is quite possible that a section 42 assessment, post variation application would not provide the evidence that Belair is seeking to support its case.
More than the unnecessary expense it puts an applicant through, the request and the possible granting of a section 42 examination after the Application for Variation has been accepted undermines the purpose of a variation proceeding, namely, that the insurer has sufficient evidence that there has been a material change in the circumstances of the insured. It is only reasonable to expect that any relevant evidence that could be gotten to support an insurer's claim should be gotten before the Application for Variation is made and not after. In this case, a section 42 assessment could easily have been gotten before the Application for Variation was made. It was not.
Accordingly, for these reasons, I find that Belair cannot now seek evidence to support its claim by requesting a section 42 assessment after its Application for Variation has been accepted. Accordingly, I find that Mr. McMichael is not required to attend an Insurer's Examination pursuant to section 42 of the Schedule.
EXPENSES:
I received no submissions on the issue of expenses. Accordingly, the issue of expenses for this preliminary issue is deferred to the hearing arbitrator.
June 25, 2007
Joyce Miller Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 128
FSCO A02-001081
BETWEEN:
DAVID McMICHAEL
Applicant
and
BELAIR INSURANCE COMPANY INC.
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Mr. McMichael is not required to attend an Insurer's Examination pursuant to section 42 of the Schedule.
The issue of expenses is deferred to the hearing arbitrator.
June 25, 2007
Joyce Miller Arbitrator
Date
Either the insured person or the insurer may apply to the Director to vary or revoke an arbitration order or an appeal order if: (a) there has been a material change in the circumstances of the insured; (b) evidence not available on the arbitration or appeal has become available; or (c) there is an error in the order.
Footnotes
- The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- (FSCO appeal P05-00006, March 14, 2006)
- Belair Insurance Company and McMicheal, Superior Court of Justice - Ontario Divisional Court, File No. 177/06 - May 17, 2007
- (FSCO A96-001192, April 30, 1999)
- (FSCO A05002144, August 3, 2006)
- Form L states under the heading of "Evidence": "List any evidence that you intend to rely on that was not part of the hearing. Explain why this evidence is necessary. Your explanation should be as complete as possible."
- Rule 61.1 of the Dispute Resolution Practice Code provides that: