Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 2

FSCO A05-002879

BETWEEN:

NADIA SABET

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Edward Lee

Heard:

By telephone conference call on November 10, 2006.

Appearances:

Michael W. Kelly for Mrs. Nadia Sabet

Ryan M. Naimark for Allstate Insurance Company of Canada

History:

The Applicant, Nadia Sabet, was injured in a motor vehicle accident on January 9, 2003.

She applied for and received statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.¹ Allstate terminated weekly income replacement benefits ("IRBs") on July 18, 2003. The parties were unable to resolve their disputes through mediation, and Mrs. Sabet applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

1. Are the Insurer's medical examinations scheduled by the Insurer reasonable and necessary, and if they are, should the arbitration hearing scheduled for April 16, 17, 18, and 19, 2007 be adjourned or stayed because Mrs. Sabet has refused to attend insurers's medical examinations?

Result:

1. The insurer's medical examinations are not reasonable and necessary. The hearing shall proceed on April 16, 17, 18, and 19, 2007.

FACTS:

Allstate sought to have Mrs. Sabet undergo insurer's medical examinations pursuant to section 42(3) of the Schedule. Allstate had given notice of the examinations to Mrs. Sabet through Mrs. Sabet's counsel, Mr. Kelly, on August 11, 2006. The examinations were a functional abilities evaluation to take place on August 29, 2006 and an orthopaedic assessment scheduled for September 8, 2006.

Mrs. Sabet did not contest the validity of the notices provided by Allstate and did not raise any procedural defences in regard to the scheduling of the examinations. Nevertheless, Mrs. Sabet refused to attend the insurer's medical examinations on the grounds that they were neither reasonable nor necessary. Mrs. Sabet's refusal to attend the insurer's medical examinations is the subject of this motion.

In its motion, Allstate has asked for an Order staying or adjourning the arbitration hearing currently scheduled for April 16, 17, 18, and 19, 2007 until such time as Mrs. Sabet attends a functional abilities evaluation and an orthopaedic assessment. The motion also seeks to require Mrs. Sabet to attend a vocational assessment, but this particular examination does not appear to have been scheduled at any time previous to the filing of the current motion. As such, I do not find that the procedural requirements of section 42 of the Schedule have been met in regard to that vocational assessment and that examination is not part of the subject matter of this motion.

Allstate's Submissions:

Allstate submits that its request for a functional abilities evaluation and an orthopaedic assessment are reasonable and necessary, and arise from the insurer's obligation to assess the applicant's condition and entitlement to benefits on an on-going basis.

The motor vehicle accident occurred on January 9, 2003 and the two-year mark was reached on January 9, 2005. Allstate has not had Mrs. Sabet attend insurer's medical examinations since long before that date. Because the test for entitlement changes at the two-year mark, Allstate argues that it is reasonable and necessary to have Mrs. Sabet attend these new examinations to assess her entitlement to post-104 week IRBs. Allstate adds that it is irrelevant that it had terminated IRBs before the 104 week mark.

Allstate argues that its request is early in the arbitration process. The pre-hearing discussion was conducted in July 2006 and Allstate's notice for the examinations was sent to Mrs. Sabet in August 2006. The exams were to take place in late August and September 2006. The hearing is scheduled for April 2007.

Mrs. Sabet's Submissions:

In response, Mrs. Sabet argues that the timing of the request, and the position and approach of Allstate through its carriage of the file demonstrates that the requests have nothing to do with its obligation to assess Mrs. Sabet's continued entitlement to benefits.

Mrs. Sabet notes that she had previously undergone the following insurer's medical examinations: an occupational therapist's assessment, followed by a report issued April 15, 2003, a kinesiology assessment and report on May 22, 2003, a physical medicine assessment and report dated May 22, 2003, and a neurology assessment leading to a neurologist's report dated May 26, 2003.

Mrs. Sabet also submits that the Insurer's conduct of the file was based upon surveillance it obtained early (referred to at tab 3 of the respondent's motion record). As a result of that surveillance, Allstate terminated payment of IRBs in July 2003, long before the two-year mark. Since then, it has demonstrated little or no interest in adjusting the file, and it is highly unlikely that Allstate's purpose in seeking to have Mrs. Sabet undergo further medical examinations at this time can be for any other reason than obtaining defence medicals in anticipation of the arbitration hearing.

Mrs. Sabet had declared her intention to seek post-104 week IRBs as early as the mediation stage in September 2005, approximately nine months after the passage of the two-year mark. The application for arbitration was filed in December 2005 and reiterated this claim. In addition, this claim was again discussed at the pre-hearing conference in July 2006. At none of these stages did the Insurer ever suggest it required further insurer's examinations. If the Insurer had any real desire to assess the file for the purpose of determining entitlement to benefits, it could have made its intentions known at any of these earlier stages.

ANALYSIS:

It is well-established that the onus is on the insurer to prove that the insurer's medical examinations it requests are reasonable and necessary.²

In Bogic and AXA,³ the arbitrator listed a number of factors to be considered when evaluating the reasonableness of insurer's examinations. These included the insurer's right and obligation to continue to assess the claim; the balancing of the insurers' right and the applicant's right to privacy; that an insurer may require more than one examination; that there be a reasonable nexus between the specialist chosen and the injury; that examinations are not limited to requests made before the termination of benefits or the commencement of mediation; the timing of the examination; that the examination not be made solely to acquire evidence to bolster the insurer's case at a hearing; and that the closer the request is made to the hearing, the closer the scrutiny it should receive. In particular, the arbitrator made the following ruling:

Where there is a claim for on-going benefits, and a lengthy period of time has transpired since the most recent examination, it is fair, and hence reasonable for an insurer to request further examinations in order to evaluate an applicant's claim. Further examinations are also reasonable where there have been changes in the nature of the insured person's medical or psychological condition which are relevant to his or her disability claim. However, it is unreasonable to request an examination where circumstances indicate that its only apparent purpose is to acquire medical evidence to bolster the insurer's case at a hearingjemphasis mine]

In Nandkumar and Economical,'⁴ the arbitrator held the following:

In my view, the requests for the insurer medical examinations during the final stages of a legal dispute must be regarded as inherently linked to their interests in advocating their position as opposed to normal adjusting investigation....

In the present case, approximately three years have elapsed since the last insurer's medical examinations. The request for the present examinations were made in August 2006, one month after the pre-hearing conference. The arbitration hearing was set for April 2007. I agree with the Insurer that the number of previous examinations has not been excessive and that a significant period of time has elapsed since the last exam. I also agree that the post-104 week test differs from the pre-104 week test.

Nevertheless, the examination of the reasonableness of the request must be made having regard to the totality of the circumstances of the case.

In support of its position, the Insurer directed me to the decisions of Stanley and Pilot⁵ and Uwase and Royal & SunAlliance.⁶ In Stanley and Pilot, the arbitrator ruled that the insurer's request for examinations was reasonable even when the request was made a bare three months before the date scheduled for arbitration. Nevertheless, I am convinced that Stanley and Pilot is easily distinguished from the case at bar. In Stanley and Pilot, the applicant had delayed producing OHIP records to the insurer, and it was only after those documents had been exchanged that the applicant's psychological status became a factor in the dispute. It is clear that a new issue or issues had arisen as a result of that late disclosure, justifying the insurer's request for examinations at that stage of the proceedings. In the present case, there is no evidence that Mrs. Sabet delayed producing documents to the Insurer or that new issues or elements have arisen. The post-104 week test differs from the pre-104 week test, but is not a new issue.

In Uwase and Royal & SunAlliance, the motor vehicle accident took place on August 18, 2001. Weekly IRBs were terminated on July 26, 2002 after a DAC was conducted on July 10, 2002.

In deciding a motion very similar to the present motion, the arbitrator made the following ruling:

In other words, the passage of the 104 week mark brings a different test for entitlement into effect. This may justify obtaining further medical examinations under section 42 of the Schedule. Such examinations are still subject to the qualification that they be reasonably necessary. [emphasis mine]

What is revealing about Uwase is that the dispute arose almost contemporaneously with the passage of the two-year mark. In fact, the arbitrator heard the motion regarding insurer's examinations only five days before the two-year anniversary of the accident. It was clearly conceivable that the insurer was in fact seeking to adjust the file to determine entitlement at the two-year mark.

This is not the situation here. In the instant case, the two-year mark was reached on January 9, 2005. The Insurer's request was communicated on August 11, 2006, nineteen months later. The Insurer had known that the Applicant was seeking post-104 week IRBs since June 2005, when the application for mediation was submitted. Nor did the insurer request the examinations at the time when the application for arbitration was filed, or when the pre-hearing conference was conducted.

Allstate also presented no evidence that it was continuing to adjust its file. I find the present case very closely approximates the facts in the decision of Eidt and Pilot⁷ As in Eidt, the insurer here has ignored many past opportunities to request insurer's medical examinations. It could have sought the examinations at the time of the elapsing of the two-year period, at the mediation, at the filing of the arbitration, or even at the pre-hearing conference, but it did not do so.

I do not find it plausible that the Insurer is now seeking to adjust its file. I conclude that the only apparent purpose in conducting the medical examinations is to obtain evidence to bolster the Insurer's case for arbitration. I do not find that the insurer's medical examinations are reasonable or necessary. The hearing will proceed on April 16, 17, 18, and 19, 2007.

Mrs. Sabet made a final argument related to the amendment of section 50(2) of the Schedule. Based upon the decision I have made in regard to the reasonableness of the requests, it was not necessary for me to consider that argument.

EXPENSES:

The parties made no submissions respecting expenses. I leave the issue of expenses to the arbitrator hearing this case on the merits.

January 2, 2007

Edward Lee

Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 2

FSCO A05-002879

BETWEEN:

NADIA SABET

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

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

1. The insurer's medical examinations are not reasonable and necessary. The hearing shall proceed on April 16, 17, 18, and 19, 2007.

January 2, 2007

Edward Lee

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Eidt and Pilot Insurance Company, (FSCO A04-001277, February 11, 2005)
3. 3Bogic and AXA Insurance Canada, (FSCO A96-001192, April 30, 1999)
4. 4Nandkumar and Economical Mutual Insurance Company, (FSCO A03-000831 April 7, 2004)
5. 5Stanley and Pilot Insurance Company, (FSCO A01-001482, November 13, 2002)
6. 6Uwase and Royal and Sun Alliance Insurance Company of Canada, (FSCO A02-001608, November 27, 2003)
7. 7Eidt and Pilot Insurance Company, (FSCO A04-001211, February 11, 2005)