Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 46

FSCO A06-000194

BETWEEN:

NADINE SHAW

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A MOTION

Before:

Eban Bayefsky

Heard:

By telephone conference call on February 23, 2007.

Written submissions were received by February 20, 2007.

Appearances:

Jeffrey Raphael for Ms. Shaw

Sandra Drozd for Economical Mutual Insurance Company

Issues:

The Applicant, Nadine Shaw, was injured in a motor vehicle accident on September 13, 2003. She applied for and received statutory accident benefits from Economical Mutual Insurance Company ("Economical"), payable under the Schedule.¹ Economical terminated weekly income replacement benefits on October 10, 2005. The parties were unable to resolve their disputes through mediation, and Ms. Shaw applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The parties participated in a pre-hearing conference on September 20, 2006. Economical subsequently brought a motion to stay the arbitration pending Ms. Shaw's attendance at an examination by Dr. J. MacCallum on March 13, 2007.

The issues in this motion are:

1. Is the proposed examination of Ms. Shaw by Dr. MacCallum on March 13, 2007 reasonably necessary?

2. If the answer to issue 1 is "yes," should the arbitration be stayed pending Ms. Shaw's attendance at the examination?

Result:

1. The proposed examination of Ms. Shaw by Dr. MacCallum on March 13, 2007 is reasonably necessary.

2. The arbitration is not stayed. If required, the parties may return to the Commission on the issue of the consequences of Ms. Shaw not attending the examination.

EVIDENCE AND ANALYSIS:

Background

Ms. Shaw was injured in a motor vehicle accident on September 13, 2003. Economical paid Ms. Shaw income replacement benefits ("IRBs") following the accident, based, in part, on an insurer examination by Dr. J. MacCallum, physiatrist, on December 9, 2003. At that time, Dr. MacCallum reported that Ms. Shaw suffered from mild restriction of movement in the cervical spine, shoulder pain, disrupted sleep and general fatigue. Dr. MacCallum reported that Ms. Shaw was capable of returning to part-time modified work.

On June 17, 2004, Ms. Shaw's family physician, Dr. W. Mueller, provided a Disability Certificate in which he reported that Ms. Shaw suffered from neck, shoulder and low back pain with vigorous activities, and would be fit to return to modified hours on July 5, 2004. On August 23, 2005 (just prior to two years from the accident), Dr. Mueller provided a further Disability Certificate in which he reported that Ms. Shaw suffered from diffuse muscle pain in the neck, intrascapular area and lumbar spine, but that she could return to light duty modified work.

On August 30, 2005, based on Dr. Mueller's August 23, 2005 Disability Certificate, Economical advised Ms. Shaw that she would not meet the more stringent test for IRBs at the 104-week mark (namely, being completely unable to engage in any employment for which she was reasonably suited) and that her IRBs would, therefore, be terminated effective September 20, 2005. Economical advised Ms. Shaw of her right to request an assessment by a Designated Assessment Centre ("DAC"). Ms. Shaw initially requested a DAC assessment and Economical, therefore, continued to pay her IRBs. However, on September 29, 2005, Ms. Shaw, through her counsel, withdrew her request for a DAC, and Economical, therefore, terminated IRBs effective October 10, 2005.

Ms. Shaw subsequently applied for mediation in respect of her entitlement to IRBs, as well as her entitlement to housekeeping benefits. The Commission conducted the mediation on November 21, 2005. The matter did not resolve and Ms. Shaw applied for Arbitration on January 30, 2006.

On February 8, 2006, Dr. W. Potashner, a rheumatologist, reported that Ms. Shaw suffered from "myofascial pain syndrome of the cervical spine, myofascial pain syndrome of the lumbar spine and fibromyalgia on the basis of mechanical neck and back problems." Dr. Potashner stated that, since Ms. Shaw had not improved within six to eight months of the accident, "chronicity [would] ensue and the prognosis [would be] dismal in nature." Dr. Potashner said that, aside from a supervised exercise programme and anti-inflammatory medication, there was "really nothing more that [could] be offered this lady."

On July 17, 2006, Dr. G. Gale, a pain management specialist, reported that Ms. Shaw suffered from cervicothoracic sprain, lumbar sprain, cervicogenic headache and chronic pain disorder with psychological factors, a general medical condition, moderate anxiety and minimal depression. Dr. Gale stated that Ms. Shaw was "suffering from a complete inability to engage in any employment for which she [was] reasonably suited by education, training or experience," and recommended that Ms. Shaw participate in a pain management programme.

By letter dated September 11, 2006, counsel for Economical, Ms. Drozd, advised counsel for Ms. Shaw, Mr. Raphael, that she had arranged for a section 42 assessment of Ms. Shaw with Dr. M. Devlin on December 13, 2006. By letter dated September 20, 2006, Mr. Raphael advised Ms. Drozd that Ms. Shaw would not be attending the assessment on the basis that Economical had "made its determination based on the evidence it had and it [was] not proper to arrange for 'defence medicals' to bolster a decision that they [had] already made."

On September 20, 2006, the parties participated in a pre-hearing conference in respect of Ms. Shaw's arbitration. The parties agreed to the following issues for the arbitration: Ms. Shaw's entitlement to IRBs from October 10, 2005, housekeeping benefits from December 7, 2003 to September 13, 2005, a chronic pain assessment by Dr. G. Gale, a special award, interest and expenses. Economical's proposed witnesses included Dr. Devlin and Dr. MacCallum (with Economical noting the proposed examination with Dr. Devlin on December 13, 2006). The hearing was scheduled for October 15-18, 2007.

On October 26, 2006, Dr. K. Rod, a pain management specialist, reported that Ms. Shaw suffered from chronic pain syndrome (specifically, chronic cervicogenic headaches, cervical zygapophyseal joint pain, shoulder sprain, lower back sprain and sleep disturbances). Dr. Rod recommended a multi-disciplinary pain management programme, to reduce her limitations and restrictions, and to increase her level of function.

On December 4, 2006, Ms. Drozd advised Mr. Raphael that, given his refusal to produce his client for Dr. Devlin's assessment, she was arranging to have Ms. Shaw re-assessed by Dr. MacCallum.

On December 18, 2006, at the request of Economical, Ms. Shaw underwent an assessment by Dr. R. Nemeth, a psychologist, to determine the reasonableness and necessity of Dr. Rod's recommendation of a multi-disciplinary pain management. Dr. Nemeth confirmed the diagnosis of chronic pain syndrome and found that Ms. Shaw would benefit from Dr. Rod's proposed programme. Economical's counsel, Ms. Drozd, advised that Economical is now funding the programme recommended by Dr. Rod.

On January 22, 2007, Ms. Drozd advised Mr. Raphael that Dr. MacCallum's assessment had been arranged for February 23, 2007. On February 7, 2007, Ms. Drozd advised that Dr. MacCallum's re-assessment was to "determine Ms. Shaw's entitlement to income replacement benefits only." Ms. Drozd subsequently re-scheduled Dr. MacCallum's assessment for March 13, 2007, in order to allow for Economical's motion regarding Ms. Shaw's intention not to attend the appointment.

Law

Pursuant to section 42(1) of the Schedule, "for the purposes of assisting an insurer determine if an insured person is...entitled to a benefit...for which an application is made, an insurer may, as often as is reasonably necessary, require an insured person to be examined...by one or more persons chosen by the insurer who are members of a health profession...." Under section 42(4), the notice of the examination must, in part, state the "reasons for the examination." Pursuant to section 42(10)(b), if the attendance of the insured person is required at the examination, the insured person "shall attend the examination...." Under section 35(10), if the insured person fails or refuses to comply with section 42(10), the insurer "may make a determination that the insured person is not entitled to any specified benefit [which by virtue of section 35(1) includes income replacement benefits]" and "may refuse to pay specified benefits relating to the period after the insured person failed or refused to comply with subsection 42(10) and before the insured person submits to the examination...." Pursuant to section 35(11), if the insured person subsequently complies with section 42(10), the insurer "shall reconsider the application and make a new determination...."

The parties agree on the legal principles applicable to the present case, namely, that an insurer bears the onus of establishing that the proposed examination is "reasonably necessary," that the examination should not be for the purpose of bolstering the insurer's case for arbitration, that the examination can be justified on the basis of new information concerning the applicant's condition, and that the timing of the examination and potential prejudice to the applicant are factors in determining the reasonableness of the examination.²

Findings

I find that the proposed examination by Dr. MacCallum is reasonably necessary. Economical has only had Ms. Shaw undergo two medical examinations in the three and a half years since the accident, by Dr. MacCallum and by Dr. Nemeth, neither of whom addressed the issue of whether Ms. Shaw suffered the requisite degree of disability to entitle her to IRBs beyond the 104-week mark. Ms. Shaw's only evidence (of which I am aware) immediately prior to the 104-week mark was a disability certificate from her family physician, Dr. Mueller, which indicated that she was capable of returning to modified employment. Ms. Shaw initially requested a DAC assessment at that time, but then withdrew her request. In these circumstances, and even without the recent reports from Ms. Shaw's physicians, I find it reasonable for Economical to have sought to re-assess the extent of Ms. Shaw's disability in order to determine her entitlement to post-104 week IRBs.

I find that the reports of Drs. Potashner, Gale and Rod contain significant new information concerning the nature and extent of Ms. Shaw's condition and disability. Unlike Dr. Mueller, who simply reported that Ms. Shaw suffered from diffuse neck, shoulder and back pain, the three new physicians diagnosed, variously, myofascial pain syndrome, chronic pain syndrome, chronic pain disorder, anxiety and depression. Dr. Potashner considered Ms. Shaw's prognosis to be "dismal" and Dr. Gale specifically found Ms. Shaw to be completely incapable of returning to any suitable employment. In my view, this series of reports significantly altered the manner in which Ms. Shaw's medical condition and employability should be understood. I, therefore, find that it was reasonable for Economical to request that Ms. Shaw undergo a further assessment to determine her entitlement to post-104 week IRBs.

While there was some delay between Dr. Potashner's February 2006 report and Economical's September 2006 request for Ms. Shaw to be assessed, I, nevertheless, find that Economical's request was made in a timely manner, in relation to both the ongoing arbitration and the scheduled hearing dates. I find it significant that Ms. Shaw had gone to mediation and had commenced the arbitration prior to her obtaining the reports of Drs. Potashner, Gale and Rod, meaning that any consideration by Economical of this significant new information would, of necessity, be in the context of the dispute resolution process. I also find it significant that Economical initially sought to have Ms. Shaw re-assessed prior to the arbitration pre-hearing conference in late September 2006. Finally, I find it significant that Economical has sought to have Ms. Shaw re-assessed well before the October 2007 hearing dates. In my view, these facts support Economical's position that it is not engaged in "trial brinkmanship" or attempting to bolster its case for the approaching hearing. I find that Economical is legitimately attempting to adjust Ms. Shaw's file in relation to her claim for IRBs beyond the two-year mark.

I note, in this regard, that Dr. Rod recommended a multi-disciplinary pain management programme, that Economical sought to have this assessed, that Ms. Shaw underwent an assessment and that Economical funded the programme based on the results of the assessment. All of this occurred after Economical's initial request to have Ms. Shaw re-assessed in relation to the post-104 IRB issue. Again, therefore, I find that Economical has dutifully sought to determine Ms. Shaw's entitlement to ongoing IRBs, not to bolster either its initial decision to terminate benefits or to enhance its case for the October 2007 arbitration.

I do not find that Ms. Drozd's letter of December 4, 2006 (in which she cancelled the appointment with Dr. Devlin and indicated that she was making arrangements for a re-assessment by Dr. MacCallum) undermines the reasonableness of the proposed examination. At the motion, Ms. Drozd attempted to explain that this was the result of a misunderstanding arising from the fact that Economical was dealing with claims from both Ms. Shaw and her daughter, Tamara. Mr. Raphael maintained that, even if this were the case, it did not alter his basic position that Economical was attempting to have Ms. Shaw assessed in order to bolster its case for the arbitration. Even if I were to disregard Ms. Drozd's explanation at the motion (since it did not form part of the evidence), I am not satisfied that Economical changed the assessment by Dr. Devlin to a re-assessment by Dr. MacCallum for an improper purpose. In all of the circumstances, I remain satisfied that Economical was reasonably seeking to have Ms. Shaw examined in light of the reports of Drs. Potashner and Gale and to assess Ms. Shaw's potential entitlement to ongoing IRBs.

Mr. Raphael did not dispute Dr. MacCallum’s ability to address the nature and extent of Ms. Shaw's disability. However, he maintained that Economical had not discharged the onus on it of establishing that the proposed assessment was reasonably necessary, as it had not provided any direct evidence from a physician that such an examination was required. I do not find it necessary to have the type of direct evidence referred to by Mr. Raphael in order to establish that the proposed examination is warranted.³ In my view, it is for an arbitrator to determine, in all of the circumstances of the case, whether an assessment is reasonably necessary. While a physician has not stated that the proposed examination is required, I find ample evidence (as noted above) to conclude that the assessment by Dr. MacCallum is reasonably necessary to assist Economical in determining Ms. Shaw's entitlement to ongoing IRBs.

In relation to the issue of prejudice, I find that Ms. Shaw will in no way be prejudiced by the proposed assessment by Dr. MacCallum. As noted, it will occur well before the scheduled hearing dates, avoiding the need for an adjournment and allowing Ms. Shaw ample time to obtain further reports, should she deem that necessary. It is also entirely possible that Dr. MacCallum's re-assessment will assist the parties in resolving the matter, particularly in light of Dr. Rod's report and Economical's subsequent funding of the programme he recommended. While Economical made its decision to terminate Ms. Shaw's IRBs (or to deny her post-104 week IRBs) on the basis of Dr. Mueller's August 2005 disability certificate, by withdrawing her initial request to undergo a DAC assessment in relation to that decision, and by subsequently obtaining a series of reports that significantly altered the nature of this case, I find that Economical would be prejudiced by not being afforded the opportunity to re-assess Ms. Shaw's condition, particularly in light of its demonstrated willingness to consider her entitlement to further benefits. I, therefore, find that the proposed assessment would be fair for both Ms. Shaw and Economical.

Finally, Ms. Shaw raised two technical issues regarding the proposed assessment. First, she noted that the notices that had been sent by Ms. Drozd did not state the "reasons for the examination" as required by section 42 of the Schedule. However, as noted, by letter dated February 7, 2007, Ms. Drozd advised that Dr. MacCallum's re-assessment had been requested to "determine Ms. Shaw's entitlement to income replacement benefits only." At the motion, Mr. Raphael conceded that Ms. Drozd had remedied any defect in the notice. In any event, I am satisfied that Ms. Shaw fully understood, and fully understands, the purpose of the proposed examination.

Secondly, Ms. Shaw noted that both the request for the assessment and the affidavit in support of the motion came from the law firm representing Economical, rather than from Economical itself. Mr. Raphael did not argue that these facts were fatal to the motion, but that they undermined the basis upon which Economical maintained that the proposed assessment was reasonably required in the circumstances. I agree with Ms. Drozd that her firm is entitled to act on behalf of Economical, both in requesting the assessment and in bringing the motion. In any event, I see no practical effect in Economical’s lawyers requesting the assessment or in their attempting to justify the assessment, given that the statements in the affidavit concerning the reasonableness and necessity of the examination are supported by the history of Ms. Shaw's condition and of Economical’s adjustment of her claim, as set out in the available documents. I have found that those documents establish the reasonableness and necessity of Economical's request, quite apart from the statements in the affidavit to the effect that the examination is reasonably necessary and that Economical would be prejudiced without it.

In all of the circumstances, therefore, I find that the proposed assessment by Dr. MacCallum is reasonably necessary.

Remedy

Economical sought an order staying the arbitration pending Ms. Shaw's attendance at Dr. MacCallum's assessment on March 13, 2007. At this point, there is no indication that Ms. Shaw intends to disregard a finding that Dr. MacCallum’s assessment is reasonably necessary. Further, sections 35(10) and 35(11) of the Schedule set out the parties' rights should Ms. Shaw not attend, or subsequently attend, the examination. In my view, therefore, it is premature to address the consequences of Ms. Shaw's failure to attend the assessment. Either party is entitled to raise this issue at a later date, if required.⁴

EXPENSES:

The parties did not address the issue of expenses of the motion. In my view, this matter is more appropriately considered by the hearing Arbitrator in the context of the case as a whole.

March 6, 2007

Eban Bayefsky

Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 46

FSCO A06-000194

BETWEEN:

NADINE SHAW

Applicant

and

ECONOMICAL MUTUAL 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. The proposed examination of Ms. Shaw by Dr. MacCallum on March 13, 2007 is reasonably necessary.

2. The arbitration is not stayed. If required, the parties may return to the Commission on the issue of the consequences of Ms. Shaw not attending the examination.

March 6, 2007

Eban Bayefsky

Arbitrator

Date

I do not find the case of Lico v. Griffiths helpful. While Festeryga, J. relied on the fact that Dr. Langer had not said he was incompetent to provide an opinion on the case or that a further assessment was necessary, Festeryga, J. did not say that this was essential to determining any request for two related medical assessments. In my view, this is only one of a variety of factors to be considered. An insurer's request must be determined in light of the nature of the Applicant's injuries, the history of any treatment and/or assessments, and the relevance of the proposed examination to the issues in dispute in the arbitration.

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2See, for example, Marton-Lamberti and General Accident Assurance Company of Canada (FSCO A99-000202, May 19, 2000), Ferreira and National Frontier Insurance Company (FSCO A01-001032, September 20, 2002), Stanley and Pilot Insurance Company (FSCO A01-001482, November 13, 2002), Singh and Kingsway General Insurance Company (FSCO A02-001290, November 5, 2003), McDougall and Kingsway General Insurance Company (FSCO A04-000229, November 18, 2004) and Karn and Western Assurance Company (FSCO A05-000136, April 10, 2006).
3. 3See, for example, Vidinopulos and Liberty Mutual Insurance Company (FSCO A00-000977, December 5, 2001), where I stated as follows:
4. 4I reached a similar conclusion in Vidinopulos, supra, note 3.