State Farm Mutual Automobile Insurance Company v. Kulaveerasingam Ramalingam, 2007 ONFSCDRS 154

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 154

Appeal P05-00026

OFFICE OF THE DIRECTOR OF ARBITRATIONS

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Appellant and Respondent by Cross-Appeal

and

KULAVEERASINGAM RAMALINGAM Respondent and Appellant by Cross-Appeal

BEFORE: Nancy Makepeace

REPRESENTATIVES: Todd McCarthy for State Farm David S. Wilson for Mr. Ramalingam

HEARING DATE: December 1 and 13, 2006

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The insurer’s appeal of the arbitration orders dated November 12, 2003, December 17, 2004, August 29, 2005 and April 25, 2006 is denied.

2. Mr. Ramalingam’s cross-appeal of the arbitration orders dated August 29, 2005 and April 25, 2006 is denied.

3. If the parties are unable to agree about expenses of the appeal and cross-appeal, a hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

August 13, 2007

Nancy Makepeace Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

State Farm appeals from four arbitration decisions. On November 12, 2003, Arbitrator Kominar dismissed the insurer’s motion for a stay of proceedings and an order that Mr. Ramalingam is precluded from receiving income replacement benefits (IRBs) because of his refusal to attend certain insurer examinations (IEs).¹ On December 17, 2004, Arbitrator Rogers dismissed a similar motion for insurer examinations with respect to IRBs after 104 weeks of disability. On August 29, 2005, Arbitrator Rogers ordered State Farm to pay IRBs plus interest and a special award with respect to various periods, and he determined the amounts payable in his final order dated April 25, 2006.

The insurer submits that Arbitrators Kominar and Rogers erred in law by dismissing its insurer examination motions and as a result it was denied a fair hearing because it could not obtain evidence to challenge Mr. Ramalingam’s claims. Mr. Ramalingam submits there was no error in the arbitrators’ insurer examination decisions and that the insurer conceded entitlement on the fifth day of the hearing. The insurer appeals and Mr. Ramalingam cross-appeals from the special award.

For the following reasons, I find that the insurer examination decisions were within the arbitrators’ authority under section 42 of the SABS-1996. Although I dismissed an early waiver motion brought by Mr. Ramalingam, the insurer’s decision to concede entitlement would have prevented me from concluding it was denied a fair hearing. There is no basis for allowing the insurer’s special award appeal and Mr. Ramalingam’s special award appeal also fails.

II. BACKGROUND

A. The Benefits Dispute

Mr. Ramalingam was involved in an automobile accident on January 9, 2002. According to the arbitration decisions, he was employed full-time as a janitor for the six months before the accident. He claims that as a result of the accident, he suffers from neck, shoulder and low back pain, incontinence, depression and anxiety. He claims his accident-related impairments require treatment and prevent him from performing his job and his housekeeping and home maintenance chores.

State Farm paid income replacement benefits and housekeeping and home maintenance expenses until July 27, 2002, when benefits were terminated based on insurer examination reports by Dr. L. Weisleder, an orthopaedic surgeon, Dr. L. Koepfler, a psychologist, and Ms. Alexandra Smol, a kinesiologist who conducted a functional abilities evaluation. Mediation failed to resolve the dispute in November 2002, and Mr. Ramalingam applied for arbitration that same month.

At the pre-hearing in March 2003, Arbitrator Killoran scheduled an arbitration hearing for September 2003 and an interim benefits motion for late April 2003.

In May 2003, after Arbitrator Alves heard the interim benefits motion but before she released her decision, State Farm gave notice that it required Mr. Ramalingam to attend insurer examinations by a neurologist, a physiatrist, and a psychologist. Mr. Ramalingam, through counsel, refused. On July 18, 2003, Arbitrator Kominar heard the insurer’s motion for a stay of proceedings and a ruling that benefits were not payable during the period of refusal.

As both decisions were pending, the arbitration hearing scheduled for September 2003 was adjourned to July 2004.

B. The First Interim Benefits Order

Arbitrator Alves released her interim benefits decision on September 5, 2003. She found that Mr. Ramalingam had presented a prima facie case, that is: “evidence, which, if unanswered and believed, is sufficient to render reasonable a conclusion in favour of entitlement.” Accordingly, she ordered State Farm to pay interim income replacement benefits of $388.42 per week plus housekeeping and home maintenance expenses of $100 per week, both starting on April 29, 2003, the date she heard the motion. The interim order was made subject to the further order of “the hearing arbitrator” (the arbitrator presiding at the entitlement hearing).

C. The First Appeal

State Farm did not immediately comply with the interim order. Instead, it appealed, arguing that the arbitrator failed to apply the correct test, failed to consider all the evidence, effectively granted summary judgment despite credibility issues that required a full hearing, and ordered interim benefits though the insurer examination decision was pending.

The appeal was initially delayed in anticipation of Arbitrator Kominar’s decision. However, to avoid delaying the matter any further, Director Draper released his decision on November 3, 2003. He rejected the appeal as premature, finding “it is not fair to ask Mr. Ramalingam to wait any longer,” and stating that “the most expeditious course” is for the interaction of the two issues (interim benefits and insurer examinations) to be addressed through the arbitration process.

In early November 2003, on receipt of the Director’s decision, State Farm paid the income replacement and housekeeping benefits ordered by Arbitrator Alves on September 5, 2003.

D. The Insurer Examination Motion

Arbitrator Kominar released his decision on November 12, 2003. He dismissed the insurer examination motion because he found the IEs were requested for litigation purposes, not claims adjustment. He concluded the requested examinations were not authorized by section 42 of the SABS-1996, and therefore did not find it necessary to consider whether the insurer had given notice as required.

E. The Second Appeal

State Farm then asked the Director to acknowledge its earlier appeal, now that Arbitrator Kominar had ruled. The insurer also noted that the two year anniversary of the accident – January 9, 2004 – was imminent. This was significant because after 104 weeks of disability, the “own occupation” test under subsection 4(1) of the SABS-1996 is replaced by the “any occupation” test under paragraph (b) of subsection 5(2).² The parties disagreed on whether Arbitrator Alves’ interim benefits order applied to post-104 week IRBs and whether the issue would be heard at the hearing already scheduled for July 2004.

Director Draper declined to re-open the earlier appeal, noting that a new appeal would have to be commenced because the first had been rejected. The insurer brought its second appeal in December 2003. As well as reiterating the position it had taken in the first appeal, the insurer argued that Arbitrator Kominar erred in delaying the release of his decision, and that the combined effect of his decision and that of Arbitrator Alves effectively prevented it from having any more IEs of Mr. Ramalingam prior to the 104-week mark.

Mr. Ramalingam objected to the appeal being heard, arguing that the insurer had not fully complied with the interim benefits order or satisfied its obligations to fund certain treatment. He asked that Arbitrator Kominar be directed to decide the IE notice issue to avoid an additional proceeding should the insurer succeed in the current appeal.

By letter dated December 18, 2003, the Director rejected the second appeal on the basis that the parties’ disputes “are better addressed at the arbitration level. Allowing the appeal to proceed is more likely to complicate and delay matters than to clarify them.”

F. The Variation Decision and Second Interim Benefits Motion

Mr. Ramalingam’s benefits were terminated effective January 9, 2004. As he did not claim to be catastrophically impaired, there was no claim for housekeeping benefits after 104 weeks, but he did claim ongoing entitlement to income replacement benefits under the post-104 week “any occupation” test. Arbitrator Killoran added that issue and others to the arbitration issue agenda at a pre-hearing resumption in March 2004.

In March 2004, State Farm applied for variation of the interim benefits order on the basis of the post-104 week test. The Director acknowledged the variation application and appointed Arbitrator Alves to decide it. Mr. Ramalingam submitted that the insurer should not be heard because it was in breach of the September 2003 interim order, having stopped benefits in January 2004, and he brought a cross-motion for an interim award of IRBs payable after 104 weeks. In the meantime, he instructed the sheriff to enforce Arbitrator Alves’ order, and this was done on March 29, 2004. State Farm brought IRBs up to date on April 22, 2004, a week before the variation hearing on April 29, 2004.

On June 8, 2004, Arbitrator Alves varied her initial order to clarify that it applied only to pre-104 week benefits, since she had not then considered the more stringent post-104 week test. That she now did, and ordered income replacement benefits to be paid on an interim basis beyond the 104-week mark, granting the claimant’s cross-motion. In a later decision, dated December 1, 2004, she ordered State Farm to pay the expenses of the variation and interim benefits motion.

G. The Insurer Examination Motion during the Arbitration Hearing

The insurer brought another insurer examination motion before Arbitrator Killoran at a pre-hearing resumption on June 4, 2004, but the issue was deferred to the hearing in order to avoid an adjournment. On July 26, 2004, the first day of the hearing, the insurer brought its IE motion before Arbitrator Rogers, asking for an adjournment to allow the motion to be decided and a stay of proceedings pending receipt of the IE reports. The arbitrator refused and proceeded with the hearing. However, when it became clear the hearing would not conclude in the four days allotted, the insurer renewed its motion.

Arbitrator Rogers issued his decision dismissing the insurer’s motion on December 17, 2004. He rejected Mr. Ramalingam’s argument that the issue was res judicata based on his reasons for rejecting State Farm’s motion at the start of the hearing, but held that Arbitrator Kominar’s findings of fact were binding on the parties and relevant to the current motion. The question, then, was whether changed circumstances justified a different result. The Arbitrator found there were no new issues of diagnosis or disability, and the application of the paragraph 5(2)(b) test for income replacement benefits after 104 weeks was not by itself a change that justified additional insurer examinations. He rejected the idea of “fairness exams” independent of section 42, but found that adjourning the hearing to allow for the requested IEs would not be fair in any event because the claimant was under cross-examination when the request was made.

H. The Third Appeal

State Farm brought a third appeal, this time challenging the insurer examination rulings by Arbitrator Kominar, dated November 12, 2003, and Arbitrator Rogers, dated December 17, 2004. On February 1, 2005, I rejected the appeal as premature. Though the appeal raised legitimate issues, I was not persuaded it should be allowed to proceed at the risk of further delaying the proceeding.

I. The Benefits and Special Award Decision

When the arbitration hearing resumed on June 28, 2005, the insurer conceded entitlement. Apart from a dispute about one week of IRBs and how much SABS interest had been paid, most of the remaining issues concerned Mr. Ramalingam’s request for a special award with respect to benefits withheld or delayed over various periods. In his order dated August 29, 2005, Arbitrator Rogers found that a special award was payable in respect of 11 findings of unreasonable withholding or delay, but not with respect to the insurer’s delay in complying with the first interim benefits order or the termination of benefits at 104 weeks. The amount ordered would be determined in a further decision based on the parties’ submissions.

J. The Appeal

Having now received an order for the payment of benefits, the insurer appealed the two insurer examination decisions along with the order of August 29, 2005. The insurer submitted that the IE decisions were in error and had denied it a fair hearing, and that there was no basis for a special award. The insurer sought repayment of all benefits paid from May 6, 2003, the date of the IE requests that were the subject of the motion before Arbitrator Kominar. Mr. Ramalingam cross-appealed with respect to the interest issue and the special award claims that were denied.

Because the arbitrator had yet to issue his final order on the amount of the special award, I stayed the appeal pending the final arbitration order.

K. The Final Arbitration Order

On April 25, 2006, Arbitrator Rogers issued his final order fixing the special award at $26,250 and amending his previous order by adding a paragraph on SABS interest. The parties were given an opportunity to amend their appeal pleadings, but did not find it necessary to do so. Neither party takes issue with the arbitrator’s application of the principles set out in Persofsky and Liberty Mutual Insurance Company, (FSCO P00-00041, January 31, 2003) or his calculation of the amount of the award in his final decision.

III. ANALYSIS

A. Introduction

The procedural issues were the main focus of both parties’ appeal submissions. The insurer submits that Arbitrator Kominar erred in law by finding that section 42 of the SABS-1996 authorizes insurer examinations only for purpose of claims adjustment and not for the purpose of hearing fairness, and that Arbitrator Rogers erred in law by finding that the change in the IRB entitlement test at 104 weeks of disability does not justify an insurer examination. The insurer claims Mr. Ramalingam pursued “a pattern of withholding information and reports from the insurer, presumably for strategic reasons,” which forced the insurer to bring its insurer examination motions belatedly.

The insurer asks me to set aside the final orders of Arbitrator Rogers and both insurer examination orders, and to order a new arbitration hearing, along with a stay of proceedings and suspension of Arbitrator Alves’ post-104 week interim benefits order pending Mr. Ramalingam’s attendance at such insurer examinations as I determine are reasonable. Further, the insurer asks that all benefits, interest and special award payments made pending this decision be made repayable pending the new arbitration hearing, whether or not Mr. Ramalingam attends the insurer examinations I find reasonably required. Finally, the insurer seeks its expenses of the appeal and the arbitration and repayment of arbitration expenses it has already paid.

In response, Mr. Ramalingam submits that Arbitrator Kominar was correct that the SABS does not authorize “fairness” examinations. He submits that the insurer’s IE notices were fundamentally flawed, the insurer failed to arrange for the IEs or the scheduling of the motion in a timely manner, and the insurer placed misleading evidence before the arbitrator about when it received Mr. Ramalingam’s various reports. Mr. Ramalingam submits that Arbitrator Rogers erred in considering the insurer’s renewed IE motion in July 2004, but came to the correct conclusion in finding that the SABS does not authorize fairness examinations, and that the crystallization of a claim for post-104 week IRBs was not a change that justified further assessment of the insured where the insurer takes the position that he did not satisfy the less stringent “pre-104 week” IRB test. On the entitlement issues, Mr. Ramalingam reasserts the position he took on the preliminary appeal motion: the insurer conceded entitlement during the arbitration hearing and cannot appeal on that basis.

Underlying the parties’ different positions is a disagreement on whether each arbitral order should be considered in isolation, as Mr. Ramalingam asserts, or as part of a series of orders, as argued by the insurer.

Subsection 283(1) of the Insurance Act allows either party to appeal an order of an arbitrator on a question of law. It does not allow me to revoke an arbitrator’s order that was legally sound on the basis that it led to an unfortunate result from the perspective of hindsight. Tactical decisions and unpredictable outcomes are inherent to litigation, and arbitrators can only decide disputes based on the evidence and submissions put before them in any given hearing.

The insurer’s three previous appeals make this case unusual. They were rejected as premature in accordance with the Commission’s established approach to interlocutory appeals. The insurer does not now argue that the rejection decisions were in error, but submits that they left the insurer with no option but to bring the present appeal addressing the cumulative effect of the arbitration orders. It is the insurer’s position that Arbitrators Kominar and Rogers erred in law by, amongst other things, failing to give proper consideration to the history of the proceeding when finding that the requested insurer examinations were not reasonable. That is an appropriate appeal submission because of the arbitral case-law requiring consideration of just such contextual factors in deciding an insurer examination motion.

B. Insurer Examinations

1. The Law

Section 42 of the SABS-1996 authorizes insurer examinations “as often as is reasonably necessary,” “[f]or the purpose of determining whether an insured person is entitled to a benefit.” Predecessor provisions authorized an insurer examination “in respect of claims under Part IV [weekly benefits]” (subsection 23(2) of the SABS-1990) and “for the purpose of any of Parts II to VIII, X and XIII [all but death and funeral benefits]” (subsection 65(1) of the SABS-1994). Arbitrators considering these provisions have consistently held that the purpose of an insurer examination is to determine whether an insured person is entitled to a benefit claimed and that the insurer bears the onus of proving that the requested examination is authorized by the SABS.

The difficulty is in the application of these principles where an insured person claims benefits ongoing after the application for arbitration through to the hearing, and provides new medical reports by treating doctors or medical-legal consultants throughout the pre-hearing process. In F.S. and Belair, (OIC P96-00039, June 11, 1996), the leading case, Director’s Delegate Naylor held that an insurer may require an IE after benefits are terminated and the insured person applies for mediation and arbitration in the case of a “continuing and evolving claim for ongoing benefits,” especially “where the basis of the claim substantially changed after mediation was commenced.”³

Looking at the matter realistically, there can be little doubt that most IE requests made after arbitration is commenced are intended, at least in part, to help the insurer reach a favourable settlement or obtain a favourable decision, whether or not there is also a claims adjustment purpose to the request. Delegate Naylor recognized this reality. She noted that neither the SABS nor the Insurance Act expressly authorizes “defence medical” examinations, in contrast to section 105 of the Courts of Justice Act, which expressly grants the courts authority to order a physical or mental examination, on motion, where the condition of a party is in issue. Delegate Naylor concluded arbitrators have implicit authority to deal with IE requests:

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.⁴

I agree these objectives properly inform interpretation of section 42.

Delegate Naylor considered litigation-related factors as well as claims-related factors in deciding to stay the arbitration pending the insured person’s compliance with section 23:

Determining the appropriateness of a request for an examination requires a balancing of the interests of the parties, in the context of the particular facts. The timing of a request is a factor in considering its reasonableness; it becomes very important where it would delay the process. 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 the hearing is not prejudiced. Trial brinkmanship is not a feature of the dispute resolution process. In this case, Belair might have requested the examination somewhat earlier than it did. However, I do not believe that the delay was so serious as to render the request unreasonable.⁵

She addressed hearing fairness even more directly in a later passage:

It would be an extraordinary result if, in the face of an express authority to require an examination, insureds could circumvent this condition by insisting on proceeding to arbitration, while shifting the basis of their claim. It is even more anomalous if an insured - the only party who can initiate arbitration - can deprive an insurer of the ability to evaluate the insured’s condition through independent sources - by choosing arbitration over court. Nor do I accept the premise that considerations of fairness in adjudication or an arbitrator’s obligation to hold a fair hearing should not inform the inquiry. The fact that the primary purpose of section 23(2) is to assist in the insurer’s assessment of the claim does not mean that it cannot be applied to serve the ends of fairness.⁶

I agree that nothing in the SABS requires an insurer to prove an ongoing arbitration proceeding is irrelevant to its request for an insurer examination.

Despite various amendments to the IE provisions since F.S., the outlines of the debate are unchanged. F.S. remains the leading Commission decision on insurer examinations, and has been followed and applied in many decisions under the SABS-1990, the SABS-1994 and the SABS-1996.⁷

However, alternative views have emerged. It has been suggested there may be authority to adjourn a hearing to allow for an insurer examination on free-standing fairness grounds, independent of the IE provisions in the SABS, but this view has not found favour.⁸ The two IE decisions under appeal in this case represent a more restrictive approach.

Many arbitration decisions contain statements to the effect that the purpose of an insurer examination is to allow an insurer to fairly adjust and assess a claim, not to “buttress” or “bolster” the insurer’s position at arbitration. If this suggests that an IE request cannot be found reasonable after the application for arbitration unless the insurer proves it is actively reassessing the claim outside the arbitration process, or that medical reports produced during the arbitration process cannot inform the insurer’s request for an insurer examination for the purpose of determining entitlement to benefits claimed, this misinterprets Delegate Naylor’s statement that “[t]rial brinkmanship is not a feature of the dispute resolution process.” I take Delegate Naylor’s statement to mean that both parties are to avoid “battle of the experts” tactics, like piling up expert reports just before the hearing, delaying disclosure of a report so the other side has no time to respond, or delaying an IE request to force a last-minute adjournment. I agree these tactics should be discouraged. However, an insurer examination may be authorized by section 42 despite the insurer’s mixed motivations in requesting it.⁹

Rather than focusing on the insurer’s motivations or other subjective factors, the prevailing arbitral authority is that the enquiry should focus mainly on the objective factors¹⁰ identified in numerous decisions, including:

• the timing of the request, especially whether it will require the hearing to be adjourned;

• whether the claimant disclosed relevant materials as soon as reasonably possible in accordance with the Dispute Resolution Practice Code and whether the insurer made its IE request as soon as it reasonably determined the need for the examination;

• what other information is available to the insurer, including information provided by the claimant and the number, nature and date of previous insurer examinations;

• whether information provided by the claimant since the insurer’s last insurer examination suggests a new diagnosis, a change in the claimant’s condition or a new direction in medical investigation of it;

• whether there is a reasonable nexus between the requested examination and the insured person’s injuries;

• whether the insurer accepts the claim and continues to pay benefits; and

• generally whether the request is reasonable considering the balance between the insured person’s right to privacy and the insurer’s ongoing right and obligation to assess the claim.¹¹

There is no authority for an arbitrator to order a claimant to attend an insurer examination,¹² but arbitrators have broad implicit powers to control their process to ensure a fair hearing.¹³ The Commission’s decisions, starting with F.S. and Belair, have created an arbitral rule that allows an arbitrator to adjourn a hearing to allow for an insurer examination in the case of an ongoing claim where, considering all the circumstances, fairness requires it and the section 42 requirements are otherwise met.¹⁴ However, I agree with Director’s Delegate Naylor that “an adjournment is a matter of discretion, not of right,” and “the exercise of an arbitrator’s discretion is not to be interfered with on appeal unless it is clearly wrong or there is substantial reason for doing so.”¹⁵

2. Arbitrator Kominar’s Decision

In July 2002 the insurer terminated benefits based on psychological and orthopaedic examinations and a functional abilities evaluation. These remain the only IEs obtained by the insurer.

In his November 2003 decision, Arbitrator Kominar rejected the insurer’s May 2003 request for a psychological IE because he had no evidence there was a psychological aspect to the case and “both parties” already had psychological reports. He rejected the physiatry request because the insurer had previously obtained an orthopaedic report concerning Mr. Ramalingam’s physical impairments in July 2002. I note that while Mr. Ramalingam had also seen an orthopaedic surgeon, Dr. Rina Jain, in July 2002, he saw a physiatrist, Dr. Joseph Wong, on March 6, 2003, apparently for the first time, which suggests he thought a new direction in medical investigation was appropriate.

The main part of the arbitrator’s reasons concerned the insurer’s request for a neurological insurer examination. The arbitrator recognized that the motion arose out of the materials filed by Mr. Ramalingam in early April 2003 in support of his interim benefits motion on April 29, 2003, including several reports before and after the accident by a neurologist, Dr. Ronald Wilson. As well, the arbitrator accepted the affidavit evidence of Mr. Jeffrey Kope, the insurer’s claims representative, that he received the October 31, 2002 report of Dr. K. Meloff, another neurologist, on January 13, 2003. The arbitrator made the following findings:

I find that Mr. Ramalingam was in the ongoing process of obtaining medical evidence to support of his claim for benefits consistently through the dispute resolution proceedings at FSCO. Viewed in the austere light of Mr. Wilson’s expression of concern that State Farm was engaged in marshalling evidence to support its case in arbitration, I have to wonder why the medical information that Mr. Ramalingam was rather regularly coming into possession of was not disclosed to State Farm on a more timely basis than it appears to have been here. In my view, Mr. Ramalingam ought to have been disclosing the information that supported his claim to State Farm on a more regular basis.¹⁶

Nevertheless, the arbitrator refused the request because Dr. E. George, Mr. Ramalingam’s family doctor, had mentioned neurological concerns in her initial disability certificate that was filed with the insurer. The insurer had not requested a neurology IE at that time. Nor had the insurer requested a neurological assessment in the two months between receiving Dr. Meloff’s report (January 2003) and the pre-hearing (March 2003). Mr. Kope stated in his affidavit that the insurer did not bring its motion at the pre-hearing because it did not want to delay the interim benefits motion. The arbitrator concluded the more likely explanation was that the insurer remained confident in its case “but reassessed their views after being confronted with a large number of reports at the interim benefits stage.”¹⁷ The arbitrator concluded the insurer was not “actively re-evaluating its position on entitlement to benefits” but seeking evidence to support its case at arbitration.

In my view, the insurer presented a good case for at least one insurer examination in the summer of 2003. With respect to the timing of the request, the arbitrator acknowledged that the entitlement hearing was scheduled in July 2004, a year after the motion hearing, leaving plenty of time for the requested IEs. The insurer was not responsible for the delayed release of the arbitrator’s decision in November 2003, but in any event, seven months remained before the hearing, enough time to obtain the reports.

The arbitrator’s focus on the insurer’s delay rewarded Mr. Ramalingam for late disclosure of documents. The arbitrator acknowledged the issue but refused the insurer’s IE motion on the basis that the SABS does not support “the tactical mustering of medical reports for the purpose of supporting either side’s position.”¹⁸ This is impractical and unrealistic, because it disregards the inherently adversarial nature of arbitration. It is also unfair, because it penalizes the wronged party and virtually precludes an insurer from obtaining an insurer examination after the application for arbitration, though claimants are able to obtain expert reports throughout the arbitration pre-hearing process. Mr. Ramalingam’s success in obtaining an order for the ongoing payment of interim benefits should have made it easier, not harder, for the insurer to obtain an insurer examination in response to recently disclosed reports.

For all these reasons, I would have regarded the insurer’s motion sympathetically. But that is not the test on appeal. Two factors supported the arbitrator’s decision. First, at the time of the motion in July 2003, it had only been a year since the insurer obtained the set of three insurer examinations on which it based its decision to terminate benefits. The critical factor for the arbitrator was that the insurer had not found it necessary to request another IE until after the hearing of the interim benefits motion. Looking behind the doctrinal differences in the arbitral case-law, there is a strong consensus that insurer examinations should be requested as early as reasonably possible and that motions brought after the pre-hearing will receive close scrutiny.

I expect the outcome in this case might have been different had the insurer brought its IE motion before or at the pre-hearing, or, at the latest, immediately upon receiving Mr. Ramalingam’s interim benefits motion.

The insurer could also have moved that its insurer examination motion be heard at the same time and before the same arbitrator as the interim benefits motion. Presumably, an arbitrator hearing both these motions together would have considered the insurer’s IE requests when considering the apparent strength of the claimant’s case, and would have considered the implications of an interim benefits order when considering the reasonableness of the insurer’s IE requests. Combining the motion hearings would have encouraged both parties to take reasonable positions aimed at early resolution or a hearing on the merits rather than procedural disputes. To no one’s credit, that is not what happened.

For these reasons alone, I conclude the Arbitrator’s decision was a reasonable exercise of his adjudicative discretion under section 42 and did not turn on an error of law. Accordingly, his order denying the requested insurer examinations will be upheld.

3. Arbitrator Rogers’ Decision

In July 2004, a year after the motion before Arbitrator Kominar, the insurer brought another insurer examination motion during the entitlement hearing before Arbitrator Rogers. This time, the requested examinations were in the same areas (neurology, physiatry, psychology), as well as orthopaedics and urology.

In his decision dated December 17, 2004, Arbitrator Rogers rejected the insurer’s submission that it was entitled to an examination to ensure fairness in the hearing, independent of adjusting the claim. Further, he held that the parties were bound by Arbitrator Kominar’s findings of fact, and therefore the insurer must show changed circumstances to succeed on this second motion. The main point of his decision was in the following passage:

The only changes noted in the affidavit in support of the motion are the crystallization of a claim for post-104 week IRBs in January 2004 and the receipt of new medical reports supporting the claim.

There is no evidence that the new reports raise new issues of diagnosis or disability. There is no claim that the additional areas of examination pertain to issues recently raised. There is no explanation at all of why the examinations by additional experts are now sought.

I find that the crystallization of a claim for post-104 week IRBs is not a change that, on its own, justifies further investigation of the claim. A claim for post-104 week IRBs is not a claim for a new benefit, as counsel submitted. It is still a claim for an income replacement benefit, under section 4 of the Schedule. The change is that the threshold for continued entitlement to the benefit is determined by subsection 5(2) and not 5(1). To continue to qualify for the benefit post-104 weeks, the Applicant must satisfy the stricter test of subsection 5(2) of the Schedule. If State Farm was in a position to decide that Mr. Ramalingam was able to perform the essential tasks of his previous employment (pre-104 threshold), it is certainly in a position to decide whether he is able to engage in any employment for which he is reasonably suited (post-104 threshold). It is not conceivable that an insurer that has denied payment of pre-104 IRBs would feel obliged to commence paying post-104 IRBs because it had not conducted an independent examination. Absent some other change, the adjusting decision would have been made.¹⁹

I disagree. That the 104-week point marks a change in the entitlement test, not a change in the benefit, is beside the point. The change in the test requires an insurer to reassess a claim for ongoing benefits, and all else being equal, a fresh IE may be reasonable to allow the insurer to determine entitlement to ongoing benefits.²⁰ However, the arbitrator must consider all the relevant circumstances, not just the change in the test, to determine the reasonableness of the IE request.

Does the insurer’s stated position on entitlement matter? An insurer’s request for an insurer examination under the “any occupation” test will generally be stronger where the insurer conceded ongoing entitlement under the pre-104 week test, but section 42 is not limited to those circumstances. It allows an IE “for the purpose of determining whether an insured person is entitled to a benefit for which an application is made” [emphasis added]. Where an insured person claims an ongoing benefit, section 42 continues to apply throughout the life of the claim. As has often been stated, an insurer has an ongoing obligation to continue assessing the claim, even after benefits are terminated. It is required, for example, to give fair and reasonable consideration to new information it receives, including medical reports provided by the claimant throughout the arbitration process. The principles do not change if the insurer terminates benefits before the 104-week point.

In my view, the insurer presented a good case for at least one new insurer examination in the summer of 2004. First, though the insurer terminated benefits effective January 9, 2004, the 104-week point, and continued to dispute entitlement, benefits were brought up to date before Arbitrator Alves heard the variation application and interim benefits motion on April 29, 2004. Both the claim and the benefits were ongoing and it had now been two years since the insurer’s last insurer examinations.

Second, Mr. Ramalingam produced a number of medical reports in early 2004 in support of his motion for interim benefits after 104 weeks, and Arbitrator Alves relied on them in granting the motion on June 8, 2004. If Mr. Ramalingam believed these reports were necessary to determine his entitlement to benefits, and Arbitrator Alves accepted they were persuasive on a prima facie basis, it is not clear to me why it was not reasonable for the insurer to obtain further insurer examinations to determine entitlement.

Third, Arbitrator Alves accepted the insurer’s submission that “a change in the disability test . . . is a material change in Mr. Ramalingam’s circumstances” so as to satisfy the requirements of section 284 of the Insurance Act, and therefore varied her initial order to make it clear it applied only in the first 104 weeks. I agree with her reasoning. While Arbitrator Rogers was not bound by her ruling, I am troubled by his failure to address the conflict in the decisions.

Fourth, this was not a case where the insurer requests an insurer examination only in final preparation for the hearing. The record suggests that State Farm requested new IEs within weeks of the post-104 week test taking effect, and they were refused. The insurer brought an IE motion before Arbitrator Killoran at the pre-hearing resumption in June 2004, and at the outset of the hearing before Arbitrator Rogers on July 26, 2004, both of which motions were dismissed on the basis they would require an adjournment of the hearing. This was no longer the case when the insurer renewed its motion at the conclusion of the first four days of hearing, when the parties agreed the hearing would need to be resumed. Once again, the arbitrator’s delay in releasing the decision would not have prevented the insurer from obtaining an insurer examination well before the hearing resumed on June 28, 2005.

I find that Arbitrator Rogers took an unduly narrow approach to the insurer’s motion and gave insufficient weight to some important contextual factors, especially the change in the entitlement test and the interim benefits order. However, the insurer’s delay was again the critical factor. Rather than bringing an insurer examination motion before or at the April 2004 variation and interim benefits hearing before Arbitrator Alves, the insurer did not bring its motion until after the post-104 week interim benefits order was released on June 8, 2004, just six weeks before the start of the hearing. There can be no doubt that an insurer examination motion brought in the course of a hearing deserves the most rigorous scrutiny, and a motion in the midst of the claimant’s cross-examination is unlikely to succeed. I conclude the arbitrator acted well within his adjudicative discretion in dismissing the motion. For these reasons, the order denying the requested insurer examinations will be upheld.

C. Entitlement to Benefits

Because the dismissal of the insurer examination motions was the sole basis for the insurer’s appeal of Arbitrator Rogers’ IRB entitlement order dated August 29, 2005, that ground of appeal also fails. However, what happened when the hearing resumed on June 28, 2005 would have made a remedy problematic had I reached a different conclusion about the IE decisions.

The arbitrator described these events at pp. 1-2 of his decision:

The hearing started on July 26, 2004 and was adjourned on July 29, 2004 for resumption on June 28, 2005. The only witness I heard was the applicant. Cross-examination was not completed. The issues in dispute when the hearing started were income replacement benefits (IRBs), housekeeping, medical/rehabilitation (med/rehab) benefits, interest, expenses and a special award.

When the hearing resumed on June 28, 2005, counsel for State Farm indicated that, although not consenting to an order, entitlement to income replacement benefits was no longer in dispute. Benefits were paid up to date and State Farm did not oppose an order for ongoing payment of IRB’s. State Farm also conceded Mr. Ramalingam’s entitlement to expenses of the hearing. Counsel for Mr. Ramalingam decided not to call further oral evidence upon my ruling that I had evidence upon which I would find entitlement to ongoing IRB’s. The hearing was then adjourned to July 4, 2005 for oral submissions and to allow State Farm to file further material.

On July 4, 2005, Mr. Ramalingam conceded that all amounts claimed for housekeeping had been paid. State Farm indicated that it would now pay the last unpaid med/rehab account. State Farm also conceded that interest is owed on all benefits overdue from the date overdue to the date paid. Mr. Ramalingam raised the issue of outstanding payment for IRB’s for the week of July 26, 2004 and State Farm agreed that I should decide that issue.

In an early motion in the appeal, Mr. Ramalingam argued that the insurer’s appeal of Arbitrator Rogers’ entitlement order was improper because insurer’s counsel did not oppose it at the arbitration hearing. He took the position that the insurer had waived its right to appeal entitlement and it would be an abuse of process to allow the appeal to proceed. Further, the insurer’s appeals of the two insurer examination decisions were moot, in his submission, because the IE requests no longer related to any ongoing benefits dispute.

I dismissed the motion in a letter decision dated August 3, 2006. On review of the transcript, I found there was no suggestion the insurer intended to waive its appeal rights. The insurer’s position at the arbitration hearing was that it had no basis to oppose an order for the payment of benefits because it had been unsuccessful in its attempts to obtain an insurer examination for the previous three years. I found that the insurer’s grounds for appeal reflected the position it had taken throughout the proceeding – that Arbitrators Kominar and Rogers erred in law and denied the insurer a fair hearing by dismissing the insurer’s IE requests. I concluded that fairness required the appeal to be heard.

However, the insurer’s decision not to pursue its defence, even if it fell short of waiver, seriously undermined its appeal of Arbitrator Rogers’ final orders. If I had decided that Arbitrators Kominar and Rogers erred in refusing the insurer examination motions, I would have had no basis for determining whether this made for an unfair hearing. Had the insurer taken a different tack, it might well have succeeded in resisting the claim by, for example, completing the cross-examination of Mr. Ramalingam and any other lay witnesses, cross-examining some of the medical experts Mr. Ramalingam relied on, calling its own experts to challenge them based on their review of the record, and asking the arbitrator to draw an adverse inference based on the late disclosures and the insurer examination refusals.

D. The Special Award

1. Introduction

In his decision of August 29, 2005, the arbitrator found State Farm responsible to pay a special award on the grounds he enumerated at paragraphs 2 through 12 of his order, the amount to be determined based on post-hearing written submissions. The arbitrator fixed the award at $26,250 in his final decision, dated April 25, 2006.

The insurer argues that no special award should have been ordered, or alternatively, the award should have been nominal, reflecting the unusual history of the case. Mr. Ramalingam cross-appeals, arguing that the special award should have been higher.

2. State Farm’s Appeal

The insurer restates the submissions it put to Arbitrator Rogers. Essentially, it argues that while its claims handling may have been flawed in certain respects, its conduct was not unreasonable considering what it describes as the “cat and mouse” tactics of Mr. Ramalingam’s counsel. In addition, the insurer submits that it mitigated any unreasonable delays by bringing benefits up to date at various points in the process.

The first issue before the arbitrator was whether the insurer acted unreasonably in terminating Mr. Ramalingam’s IRBs on July 26, 2002. The Arbitrator found that “the opinions of Dr. Weisleder and Dr. Koepfler that Mr. Ramalingam could return to pre-accident activities do not reasonably support that conclusion and it was unreasonable for State Farm to blindly rely on them.” The Arbitrator concluded that the only evidence the insurer had at the time it terminated benefits was that Mr. Ramalingam continued to be disabled as a result of his accident injuries.²¹

The arbitrator then considered the delay between July 26, 2002, when IRBs were terminated, and April 28, 2003, the date of the interim benefits motion before Arbitrator Alves. In her decision, dated September 5, 2003, Arbitrator Alves ordered State Farm to pay interim benefits from April 29, 2003 and ongoing, but she did not order payment of benefits for the period before the motion. These were the benefits paid with interest in March 2005.

Though the insurer was “to be credited” for paying the benefits and interest owed for this period on March 22, 2005 – before the conclusion of the hearing – Arbitrator Rogers found “the delay was nevertheless unreasonable” because the insurer had failed to reassess its decision when it received further evidence supporting the claim in early 2003, but instead “focused on obtaining rebuttal evidence.”²² State Farm was ordered to pay “a special award on IRBs paid, with interest, on March 22, 2005 for the period July 26, 2002 to April 28, 2003, unreasonably delayed from July 26, 2002.”²³ An additional amount was ordered because when the insurer paid all the outstanding IRBs in March 2005, it did not pay interest on the benefits payable under the first interim order.²⁴

For the same reasons, the Arbitrator found a special award was payable because of the insurer’s delay in paying housekeeping benefits for the same period (July 26, 2002-April 28, 2003) until it made four lump sum payments on January 22, 2004, April 23, 2004, May 26, 2004 and June 6, 2005. The insurer had not paid interest on these payments and the arbitrator ordered the interest paid and found a special award was payable because of the delay.²⁵

Turning to medical and rehabilitation benefits, the arbitrator found a special award was payable on four grounds.

(i) On April 12, 2002, the insurer approved a $3,600 plan for treatment by Dr. R.S. Miller, a psychologist, and paid all but $900 of the amount. On June 15, 2004, the insurer conceded the $900 was payable, and it was paid on July 30, 2004, though without interest. The arbitrator was not persuaded the delay in paying the $900 was unreasonable because the initial refusal resulted from “an innocent error” and there was a reasonable basis for denial. However, once entitlement was conceded, the insurer’s failure to pay interest on the principal was unreasonable.²⁶

(ii) In July 2003, a Med-Rehab DAC approved Dr. Miller’s $3,700 treatment plan dated April 7, 2003. The arbitrator found that neither the insurer examination dispute nor Mr. Ramalingam’s delay in getting the recommended treatment relieved the insurer from the obligation to pay the amount with interest, and accordingly a special award was payable.²⁷

(iii) The insurer paid Mr. Ramalingam’s claims of $2,232.17 for sundry prescriptions and other medical expenses on July 30, 2004, but without interest. These claims were submitted in February and March 2003, but the insurer did not accept they were needed as a result of the accident. On June 15, 2004, the insurer accepted that Dr. Baldwin’s second report, dated May 26, 2003, provided the link, and the principal amount claimed was paid on July 30, 2004, but without interest. The arbitrator found the delayed payment after the insurer received Dr. Baldwin’s report unreasonable, and also the insurer’s failure to pay interest on the overdue benefit.²⁸

(iv) The insurer refused to pay Dr. R. Fuller’s chiropractic treatment plan for $2,574, dated July 11, 2003, because of Mr. Ramalingam’s refusal to attend the requested insurer examinations. The insurer did not arrange a DAC, as required by subsection 38(12) of the SABS-1996. The Arbitrator held it was unreasonably delayed from 31 days after it was submitted until it was paid with interest on June 21, 2005.²⁹

I have some sympathy for the insurer’s submission that this was not an appropriate case for a special award, especially in relation to income replacement benefits, because of Mr. Ramalingam’s refusal to attend any insurer examinations after July 2002. However, for the reasons given above, I am not satisfied there is any basis for me to intervene in the insurer examination decisions of Arbitrators Kominar and Rogers.

An arbitrator’s finding that the insurer’s conduct was unreasonable deserves considerable appellate deference because it is “highly dependent on the arbitrator’s view of the evidence.”³⁰ Though the insurer’s concession cut the hearing short in this case, the arbitrator received a great deal of documentary evidence, and his reasons for the special award reflect strong findings in favour of Mr. Ramalingam. I have no basis for second-guessing his assessment.

2. Mr. Ramalingam’s Appeal

Mr. Ramalingam submits that the arbitrator erred in not ordering a special award based on the insurer’s delay in complying with Arbitrator Alves’ interim benefits order of September 5, 2003. Income replacement benefits were paid in accordance with that order 56 days later, on November 6, 2003. Arbitrator Rogers did not find the delay unreasonable:

Given that the order was based in part upon Mr. Ramalingam’s urgent need, that delay is arguably unreasonable.

However, I find that State Farm’s conduct is explained by the particular circumstances of this case. When State Farm received the interim order it was awaiting a decision on whether the arbitration would be stayed and Mr. Ramalingam precluded from receiving benefits because of his non-attendance on IEs. Such an order would arguably have nullified the effect of the order for payment of interim benefits. It was reasonable to expect that decision before the scheduled hearing date of September 15, 2003. When the decision was not received, State Farm promptly appealed the interim order and requested a stay. This was just 26 days after receipt of the order. It was not unreasonable to expect a prompt decision on the stay, but that decision was also delayed in anticipation of imminent delivery of the outstanding decision. Once the appeal was rejected, State Farm promptly complied with the order.

While State Farm could have taken the course of complying with the order and later pursuing recovery, if necessary, I do not find in the circumstances that its conduct was excessive, imprudent, stubborn, unyielding or immoderate. ³¹

On appeal, Mr. Ramalingam submits that the arbitrator erred in law in two respects. First, he argues that the interim benefits order should not insulate the insurer from a finding that its continuing delay was unreasonable when the arbitrator found its previous delay – between July 26, 2002 and April 28, 2003 – unreasonable; if anything, the interim benefits order was further evidence of the unreasonableness of the insurer’s continuing delay in paying IRBs. Mr. Ramalingam’s second argument is that the insurer was not entitled to wait for an appellate decision on its stay motion before complying with the arbitrator’s order. Absent a stay order, he says, the arbitrator’ interim benefits order took effect immediately.

I have little to add to Arbitrator Rogers’ analysis and I am not persuaded he erred. I am especially mindful that arbitral delays forced the adjournment of the September 2003 hearing, despite the stated urgency of the matter. The insurer appealed Arbitrator Alves’ decision within the 30-day time line set out in Rule 52 of the Code, and paid the benefits ordered within days of receiving Director Draper’s decision rejecting the appeal. In the circumstances, the insurer’s delay was not unreasonable.

With respect to the insurer’s obligations pending a stay order, Mr. Ramalingam raises a legitimate issue. Subsection 283(6) of the Insurance Act makes a stay the exception to the rule, and there is inevitably a delay before a stay motion can be decided. Subsection 283(1) of the Act gives either party 30 days to appeal an arbitrator’s order, and it is in the Notice of Appeal that the appellant is given the opportunity to seek a stay with reasons. The respondent is invited to comment in the Response to Appeal, which is due 20 days after receiving the Notice of Appeal. The order granting or denying the stay is generally given by letter within a week of receiving both parties’ submissions. As a result, there may be a lapse of about two months before a stay request is dealt with even in the ideal case where all time lines are met.

Mr. Ramalingam’s position is that the insurer was required to pay the benefits ordered by Arbitrator Alves immediately, and that the stay, if it had been granted, would have then entitled the insurer to stop payment of ongoing benefits from the date of the stay and seek repayment of the benefits paid in the meantime.

In my view, this is an unreasonably technical interpretation that is out of keeping with the overall dispute resolution scheme. While subsection 283(6) makes a stay the exception to the rule, it does provide for a stay of an arbitrator’s order, and fairness requires that both parties be given an opportunity to comment before a decision is made. From a practical point of view, I am unaware that this issue has been raised previously, likely because there is a broad consensus that it makes sense to allow both parties a short time to consider their recourse from an arbitrator’s decision. My view might be different if the insurer had delayed beyond the 30 days in bringing its appeal and stay request. In this case, I find no basis to fault the insurer for its conduct in the fall of 2003.

The second ground for Mr. Ramalingam’s special award appeal is the insurer’s delay in paying post-104 week benefits after January 9, 2004. Despite the pending variation application, Mr. Ramalingam’s counsel instructed the sheriff to enforce the interim benefits order, and this was done on March 29, 2004. On April 22, 2004, the week before the hearing of the variation application and interim benefits motion, the insurer brought the income replacement benefits up to date in response to Mr. Ramalingam’s submission that it should otherwise not be allowed to proceed. According to the arbitrator, subsequent payments have been timely.³² Arbitrator Rogers did not find the insurer’s conduct “excessive, imprudent, stubborn, unyielding or immoderate” in the circumstances:

It should have been patently clear to Mr. Ramalingam that the order was not intended to include payment post-104 weeks. . . . In the circumstances, it was unreasonable for Mr. Ramalingam to place the onus on State Farm alone to take steps to clarify the meaning of the order. The Arbitrator approved State Farm’s position regarding the intent of her order when she varied it retroactively.³³

I agree with the arbitrator. Even if the insurer erred in terminating benefits in advance of the variation order,³⁴ Mr. Ramalingam’s haste in enforcing the interim benefits order one month before the hearing that would consider the application of that order beyond the 104-week point was unreasonable. I find no basis for interfering with the arbitrator’s assessment.

IV. EXPENSES

If the parties are unable to agree about expenses of this appeal, a hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

August 13, 2007

Nancy Makepeace Director’s Delegate

Date

Footnotes

1. 1The motion was brought under subsection 42(8) (suspension of benefits) and paragraph 50(1)(b) (“shall not commence mediation”) of the SABS-1996 (the Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended). Paragraph 50(1)(b) was revoked by Ontario Regulation 546/05 effective March 1, 2006.
2. 2Under subsection 4(1) of the SABS-1996, IRBs are payable while the insured person “suffers a substantial inability to perform the essential tasks” of his pre-accident employment (described for ease of reference as the “own occupation” test). After 104 weeks of disability, paragraph (b) of subsection 5(2) requires the insured person to show that as a result of the accident he is suffering “a complete inability to engage in any employment for which he . . . is reasonably suited by education, training or experience” (the “any occupation” test).
3. 3F.S. and Belair Insurance Company Inc., (FSCO P96-00039, June 11, 1996), pp. 8 and 13.
4. 4At p. 12.
5. 5At pp. 7-8.
6. 6At p. 11.
7. 7For example, Glynn and General Accident Assurance Company, (OIC P96-00085, March 17, 1997), Levey and Traders General Insurance Company, (FSCO P98-00035, February 25, 1999), Bogic and AXA Insurance (Canada), (FSCO A96-001192, April 30, 1999), Chafe-Moote and Prudential of America General Insurance Company (Canada), (FSCO P99-00044, September 8, 2000), M.D. and Halifax Insurance Company, (FSCO P00-00049, May 16, 2001), Sellathamby and Allstate Insurance Company of Canada, (FSCO P02-00009, December 17, 2002), Pato and National Frontier Insurance Company, (FSCO P02-00037, February 5, 2003).
8. 8Sidhu and Security National Insurance Co./Monnex Insurance Mgmt. Inc., (FSCO A02-000763, June 11, 2003), considered further by the same arbitrator in Taylor and State Farm Mutual Automobile Insurance Company, (FSCO A05-001559, March 15, 2007).
9. 9See, for example, Arbitrator Muir’s statement in McDougall and Kingsway General Insurance Company, (FSCO A04-000229, November 18, 2004), at p. 5: “I accept that the motivations of Kingsway in seeking this assessment are at least mixed. They almost always are when an assessment is being sought after a benefit has been terminated and the parties are involved in the dispute resolution system. It does not follow that the requested assessment is not authorized by section 42.”
10. 10Scott and TTC (Markel Insurance), (OIC A-001116, September 4, 1992), discussed in, for example, Sellathamby and Allstate Insurance Company of Canada, (FSCO P02-00009, December 17, 2002), at pp. 14-15.
11. 11The factors were reviewed by Arbitrator VanderBent in Bogic and AXA Insurance (Canada), (FSCO A96-001192, April 30, 1999), and by Arbitrator Feldman more recently in Martucci and Economical Mutual Insurance Company, (FSCO A06-000207, May 8, 2007), and Al-Shimasawi and Wawanesa Insurance Company, (FSCO A05-002737, May 11, 2007), amongst others.
12. 12Granic and Allstate Insurance Company of Canada, (OIC A-006615, January 30, 1995).
13. 13Codified in subsection 23(1) of the Statutory Powers Procedure Act. See, most recently, Royal & SunAlliance Insurance Company of Canada v. Volfson, 2005 CanLII 38902. The Court of Appeal denied leave to appeal on April 18, 2006.
14. 14Both parties’ submissions focused on the purpose and reasonableness of the IE requests, not whether an arbitrator has power to remedy non-compliance by a stay of proceedings. Though remedy was not an issue before me, I query whether an arbitrator’s remedial powers include drawing an adverse inference or excluding an insured person’s new medical reports where the insured person refuses an insurer’s reasonable request for an insurer examination to determine entitlement in light of new information under section 42.
15. 15Peterson and Royal Insurance Company of Canada, (OIC P-006241, February 6, 1996), reaffirmed in Glynn and General Accident Assurance Company, (OIC P96-00085, March 17, 1997).
16. 16At p. 9.
17. 17At p. 11.
18. 18At p. 7.
19. 19At p. 6.
20. 20The decision usually cited for the view that a post-104 week IE is not reasonable where the insurer terminated benefits before the 104-week mark is Kong and Personal Insurance Company of Canada, (FSCO A04-001188, March 15, 2005). But, contra, see Stanley and Pilot Insurance Company, (FSCO A01-001482, November 13, 2002), Sellathamby and Allstate Insurance Company of Canada, (FSCO P02-00009, December 17, 2002), at p. 18, Downey and State Farm Mutual Automobile Insurance Company, (FSCO A01-0001603, April 4, 2003), Uwase and Royal & SunAlliance Insurance Company of Canada, (FSCO A02-001608, November 27, 2003), Zeris and Aviva Canada Inc., (FSCO A03-000473, May 17, 2004), Sivaloganathan and Liberty Mutual Insurance Company, (FSCO P03-00035, September 23, 2004), Conway and Certas Direct Insurance Company, (FSCO A03-000225, September 30, 2004), Ives and Wawanesa Mutual Insurance Company, (FSCO A05-002144, August 3, 2006), Sabet and Allstate Insurance Company of Canada, (FSCO A05-002879, January 2, 2007), Shaw and Economical Mutual Insurance Company, (FSCO A06-000194, March 6, 2007), for example.
21. 21Arbitration decision, p. 15.
22. 22Arbitration decision, p. 15.
23. 23Arbitration decision, pp. 14-16.
24. 24Arbitration decision, pp. 12 and 18.
25. 25Arbitration decision, p. 16.
26. 26Arbitration decision, pp. 12-13 and 18-19.
27. 27Arbitration decision, pp. 19-20.
28. 28Arbitration decision, pp. 13 and 20.
29. 29Arbitration decision, p. 13 and pp. 20-21.
30. 30Maas and State Farm Mutual Automobile Insurance Company, (OIC P96-00080, December 8, 1997), at p. 8. See also, for example, McConachie and GAN Canada Insurance Company, (FSCO P97-00069, October 28, 1998).
31. 31Arbitration decision, p. 17.
32. 32Arbitration decision, pp. 11-12 and 17.
33. 33Arbitration decision, pp. 17-18.
34. 34How section 287 of the Insurance Act (protection of benefits) applies to an interim benefits order in these circumstances is not entirely clear. See also Sellathamby and Allstate Insurance Company of Canada, (FSCO P02-00009, December 17, 2002), at pp. 20-21.