Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 86

FSCO A06-002094

BETWEEN:

BAVANI THEVARANJAN

Applicant

and

THE PERSONAL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Lawrence Blackman

Heard: By telephone conference call on May 1, 2007. Written submissions were received by April 27, 2007.

Appearances: Mr. David S. Wilson for Ms. Thevaranjan Mr. Michael Chadwick for the Personal Insurance Company of Canada

Issues:

This arbitration arises out of Ms. Thevaranjan's April 22, 2004 motor vehicle accident and her dispute with her first party insurer, the Personal Insurance Company of Canada ("the Personal"). The arbitration hearing is scheduled to be heard May 9, 2007.

In advance of the hearing, the Personal brought a motion, returnable May 1, 2007, seeking the following relief:

An order staying the arbitration proceeding until Ms. Thevaranjan makes herself available for the vocational assessment required by the Personal; and,
An order for the Personal's legal expenses.

Result:

The arbitration hearing shall proceed, as scheduled, on May 9, 2007.
I remain seized regarding the question of the parties' entitlement to the legal expenses of this motion and the quantum of same. Should the parties be unable to agree on these issues, the procedure set out in Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003) shall be followed.

EVIDENCE AND ANALYSIS:

History

As noted, Ms. Thevaranjan was involved in a motor vehicle accident on April 22, 2004. She sought from the Personal statutory accident benefits payable under the Schedule.¹ In a prior arbitration proceeding, the Applicant had sought, amongst other benefits, entitlement to income replacement benefits ('TRBs") ongoing from October 15, 2004 under both the section 4 "own occupation" test and the paragraph 5(2)(b) "any occupation" test.

In her August 24, 2006 decision, Arbitrator Allen found Ms. Thevaranjan entitled to IRBs under the "own occupation" test up to the maximum two-year point, without prejudice to the Applicant bringing a further application for post 104-week IRBs. The Arbitrator indicated she had received no evidence pertaining to paragraph 5(2)(b), which is the applicable disability test after two years of disability.

On September 25, 2006 the Financial Services Commission of Ontario received Ms. Thevaranjan's Application for Arbitration seeking post 104-week IRB entitlement.

The Applicant also sought pre-judgment interest, legal expenses and a special award.

The Insurer's Response, received by the Commission November 1, 2006, contained what may be called a "boiler plate" response, denying impairment, causation and entitlement, alleging the availability of collateral benefits and non-compliance with applicable procedures, and relying on unidentified assessments, investigations and medical examinations.

Almost simultaneous with the Response, Mr. Chadwick, counsel for the Insurer, also provided the Applicant's counsel, Mr. Wilson, with a letter dated October 30, 2006 indicating the Personal would be reinstating post 104-week IRB benefits. Accordingly, Mr. Chadwick asked that the arbitration be withdrawn.

The Personal had earlier, by letter dated September 29, 2006 addressed to Mr. Wilson, indicated it had issued IRB payments with applicable interest in accordance with Arbitrator Allen's decision. It further indicated that if Ms. Thevaranjan was seeking post 104-week IRBs, it would require medical evidence that she met the requisite disability test. The Personal included for completion on the Applicant's behalf, a disability certificate and a three-page medical questionnaire.

On October 5, 2006, the Insurer received from the Applicant's counsel the medical questionnaire and the accompanying OCF-3 Disability Certificate, both completed by a Dr. Asirwatham.

By letter dated November 8, 2006, Mr. Wilson wrote Mr. Chadwick indicating that while his client would be pleased to have her benefits reinstated, she would not be withdrawing her application, as she was seeking an order for ongoing benefits.

The pre-hearing discussion was held December 7, 2006. By letter dated December 15, 2006, Arbitrator Feldman identified the issues in dispute as IRB entitlement ongoing from April 23, 2006, a special award, pre-judgment interest and legal expenses. Regarding the IRB issue, he specifically stated:

Note: Personal is taking the position that the Applicant has no right to proceed with this issue since Personal has reinstated payment of income replacement benefits (after the Applicant filed her application for arbitration).

Both Mr. Chadwick and Mr. Wilson attended the pre-hearing discussion. At the motion before me, Mr. Chadwick endeavoured to clarify the Insurer's pre-hearing position that while it was not in a position to dispute the Applicant's post 104-week IRB entitlement, having no contrary medical evidence, it was not agreeing that the Applicant was entitled to post 104-week IRBs.

The Applicant argued that Mr. Chadwick's statement was an improper endeavour to give evidence. Given:

there was no post pre-hearing correspondence from either party or any other evidence of any effort to clarify, correct or amend Arbitrator Feldman's pre-hearing notation set out above or any other part of his letter;
only one day (May 9, 2007) was assigned by Arbitrator Feldman for the arbitration hearing, when experience dictates that post 104-week IRB entitlement issues are invariably scheduled for several days of hearing;
there is no indication of any variance from the standard Commission policy of endeavouring to accommodate the parties' reasonable submissions regarding the necessary length of the hearing;
the Insurer's submission at this motion that it was not challenging IRB entitlement at the pre-hearing discussion as it had no medical reports of its own addressing the applicable entitlement test;
the Insurer being noted by Arbitrator Feldman in his pre-hearing letter as not currently anticipating calling any witnesses at the arbitration hearing;
the Personal's October 30, 2006 letter confirming ongoing IRB payments and the unchallenged submission that IRB benefits continue to be paid to the Applicant;
the documented position of the Personal at the pre-hearing discussion that the Applicant had no right to proceed given the reinstatement of benefits; and,
Mr. Chadwick's statement at the motion before me that the Personal was now changing its position and was now indeed challenging the Applicant's right to ongoing IRBs and hence it would be unfair to force the Insurer to proceed without the benefit of its own medical assessment,

I find that the IRB issue noted by Arbitrator Feldman was essentially a legal one regarding the Applicant's right to an arbitral order confirming ongoing post 104-week IRB payments when IRBs were, at that point, not in dispute and were being paid.

By letter dated December 6, 2006, the day before the pre-hearing, the Personal itself, rather than its counsel, had written the Applicant advising it had set up, pursuant to subsection 15(2) of the Schedule, a four-day comprehensive vocational and psychological evaluation with Vocational Pathways. This letter is not mentioned in Arbitrator Feldman's letter, nor does Arbitrator Feldman mention any examination being requested by the Insurer.

Subsection 15(2) states that the insurer shall pay for reasonable and necessary measures undertaken by the insured to eliminate the effects of any disability or to facilitate the person's reintegration into, amongst other things, the labour market. There is no mention in the December 6^th letter of a section 42 insurer medical examination ("IME") being sought.

Mr. Wilson responded by letter dated December15, 2006, asking for confirmation whether the Personal was seeking a section 42 assessment, questioning why four days were required for the examination, querying the Applicant's ability to undergo such an assessment and requesting an outline of the proposed program for review by his own assessors. Having received no reply, Mr. Wilson wrote the Personal on January 4, 2007, requesting a response.

By letter dated February 12, 2007, more than a month later and some two months after the pre-hearing discussion, the Personal again wrote Ms. Thevaranjan, enclosing a three-page copy of Section 42 and advising the Applicant she had been referred to a section 42 IME on February 19 to 22, 2007 inclusive.

Contrary to Section 42, the Insurer's Notice does not:

set out the name of the person or persons who would be conducting the examination;
provide the regulated health professions to which the examiners belonged or their titles and designations indicating their specialization, if any, in their professions; or,
provide a meaningful description of the type of the examination that would be conducted, merely indicating that the assessments would be "strictly pen and paper and interviews." No guidance was provided as to why four assessment days were warranted.

In addition, subsection 42(6) of the Schedule requires that the notice must be given not less than five business days before the examination, unless the insured and the insurer mutually agree otherwise. There was no evidence of any such agreement. Subsection 68(5) of the Schedule provides that in the absence of evidence to the contrary, a person is deemed to receive anything delivered by letter mail on the fifth business day after the document is mailed. There being an absence of any evidence to the contrary, the February 12, 2007 letter (requiring attendance seven days later) failed to give Ms. Thevaranjan the requisite notice mandated under the Schedule.

Neither a further letter from the Personal to Mr. Wilson dated February 13, 2007 or a letter dated February 13, 2007 to Mr. Wilson from Employment Strategies Working Solutions ("Working Solutions") remedy the omissions noted above.

By letter dated February 14, 2007, Mr. Wilson responded to the Personal, repeating his objection to the proposed assessment. By letter dated February 15, 2007, the Insurer advised that should the Applicant fail to attend, her IRB payments would be suspended. The Personal also advised that the Applicant's concerns regarding endurance could be accommodated. A month later, by letter dated March 27, 2007, Working Solutions advised, in a succinct and general way, the nature of the planned four-day assessment. It was indicated that the proposed activities fell within sedentary industrial work level. The names of the actual assessors were not provided.

By letter dated April 9, 2007, the Personal wrote the Applicant advising of an assessment from April 23 to April 26, 2007. For the first time, the names of the medical assessors were noted, namely Ms. Judy Keating, a vocational evaluator, and Dr. Paul Duhamel, whose profession or designation is simply noted as "doctor."

A few days earlier, by letter dated April 5, 2007, the Personal sought a pre-hearing resumption to discuss the possible need for an adjournment of the May 9, 2007 hearing and an order compelling the Applicant to attend the IME given her refusal to attend and her recent delivery of several medical reports. A Notice of Motion was served by the Commission, dated April 16, 2007, setting April 17^th and April 27^th for the Insurer and the Applicant respectively to serve and file their written submissions, to be followed by the May 1, 2007 date for oral submissions.

At the motion, Mr. Chadwick initially indicated he would let Mr. Wilson know that afternoon whether the Personal was now challenging Ms. Thevaranjan's entitlement to ongoing IRBs, but subsequently advised that the Personal was indeed now challenging such entitlement.

Submissions, Decision and Reasons

In its motion material, the Personal indicated a number of grounds for its motion, including section 42 of the Schedule. As section 42 has been amended since the date of the Applicant's accident, I asked which version of the Schedule was applicable. The Personal was content that the present provision apply, which is the version they sent the Applicant by letter dated February 12, 2007. It is this version of the Schedule to which I refer.

There are a number of issues this motion raises, which I will address in turn.

- Procedural Fairness

The Personal submits that this motion is fundamentally about procedural fairness. It argues that since the December 7, 2006 pre-hearing discussion the Applicant has bolstered her case by serving the Insurer with five medical reports; namely, reports of Dr. S.W.J. Wong, physiatrist, dated October 26, 2006 and March 6, 2007, a functional capacities evaluation report of Mr. A. Balaban, dated December 1, 2006, a psychological report of Dr. R.S. Miller dated March 20, 2007 and a vocational rehabilitation report of Mr. D. Antflick dated March 26, 2007.

Accordingly, the Personal submits that it should have an opportunity, for the purposes of the upcoming arbitration hearing, to have its own independent medical assessment. Otherwise, it argues, it would be unfairly forced to proceed to a one-sided arbitration hearing.

The Personal submits that I have the statutory authority to stay this proceeding until the Applicant submits to its reasonably required independent assessment, in order to ensure procedural fairness.

Setting aside for the moment the question of my authority to provide the relief sought, I am not persuaded that the Personal has met its onus of establishing that fairness requires this matter be stayed. Rather, I am persuaded by the evidence presented by the Insurer itself, that this matter should proceed to the scheduled May 9, 2007 hearing.

The Personal was aware at the two-year mark of the accident, namely April 22, 2006 (a year ago), that post 104-week benefits were being sought, as same was in issue before Arbitrator Allen. The Personal knew in late September or early October 2006, when it received the further Application for Arbitration, that a post 104-week IRB claim was still being advanced. The Personal knew at the December 7, 2006 pre-hearing discussion that post 104-week benefits were being claimed, and indeed, that they were paying same.

Rule 33 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003) (the "Code") sets out the purposes of the pre-hearing discussion. Those purposes are reiterated in every Notice of Pre-Hearing Discussion sent out by the Commission, including in this case. Those purposes include identifying and obtaining agreement as to the issues for arbitration, dealing with any procedural and preliminary issues, including requests for interim relief and identifying the expert and lay witnesses to be called at the hearing.

There is no evidence that the Personal identified at the pre-hearing discussion its wish to have the Applicant attend any medical examination. Indeed, Arbitrator Feldman confirmed that the Personal did not currently anticipate calling any witnesses at the arbitration hearing. I have found that the evidence indicates the Insurer's defence at the pre-hearing was essentially a legal one, that as IRB entitlement was not being challenged, the Applicant had no right to proceed.

Rules 39, 41 and 42 of the Code provide that at least thirty days before the start of the arbitration hearing, a party must identify the names of their intended witnesses and, in the case of experts, in addition to the full name, address and qualifications, inform as to the subject matter and the substance of the facts and opinion which the witness will present and serve any reports to be introduced at the hearing. Rule 41.3 of the Code states that an arbitrator may excuse a witness from attending at the hearing if the witness was not identified at the pre-hearing under Rule 33 or notified at least thirty days before the start of the hearing.

There is a uniform purpose of these Rules, namely to prevent surprise and, as set out in Rule 1 of the Code, produce the most just, quickest and least expensive resolution of the dispute.

The Personal has not complied with these requirements. It implicitly seeks to adjourn the hearing. Practice Note 9 of the Code states that adjournments will be refused where parties have not made early arrangements for further medical examinations, assessments or follow-up. Arbitrator Feldman's December 15, 2006 letter states that the parties should make arrangements at least sixty days prior to the start of the hearing to accommodate a pre-hearing resumption regarding production exchange, which is almost invariably a less complicated and more expeditious matter than medical attendances.

I find that the Insurer has not made early arrangements for their proposed IME, which should have been addressed at the pre-hearing discussion and not raised as a procedural matter for the first time by letter dated April 5, 2007 (a month before the hearing) seeking a pre-hearing resumption. I find that it would be unfair to grant the Personal an adjournment of the arbitration hearing in these circumstances.

The Insurer implicitly argues that the Applicant has, at a late date, provided five medical reports and only now does it know the case it faces. I disagree. The Personal is a sophisticated party. It has already had an arbitration hearing involving this Applicant. Expert medical evidence was presented at that hearing by both sides. The Applicant's medical expert reports filed at that earlier hearing included those authored by Dr. Wong and Mr. Balaban. Arbitrator Allen in her August 24, 2006 decision specifically kept alive the post 104-week IRB entitlement issue to allow the parties to obtain evidence.

What has changed from a year ago when the Applicant reached two years of disability and the disability test changed is not the nature of the Applicant's claim or the Insurer's ability to respond. Rather, it is the Personal's defence that has now changed, eight days before the start of the hearing. The Personal is now stating, on the record for the first time since the pre-hearing, that it is challenging not merely the Applicant's right to an arbitral order but also IRB entitlement itself. That changes the whole nature and scope of the upcoming arbitration hearing. A one-day hearing would now hardly suffice.

It may be that the Personal's purpose is tactical, the realization that prior to any arbitral order the onus is on an insured to prove entitlement, whereas afterwards the onus would shift to the party seeking a variation or revocation of any order. It may be perfectly legitimate for parties to seek the most advantageous terrain upon which to have their legal dispute determined. The time, however, for such decisions is not eight days before the start of the hearing. To allow the requested stay, with the consequent adjournment, delay, and costs thrown away, would be unfair and any discretion I might possess in this regard should not be exercised to allow such a result.

- Arbitral Jurisdiction

Regardless of the question of fairness in the particular circumstances of any case, there is still a question whether I have the jurisdiction to grant the relief sought by the Personal.

The Insurer submits that I have the jurisdiction to stay the proceedings until the Applicant attends the proposed assessment, relying on the decision of Sidhu and Security National Insurance Co./Monnex Insurance Mgmt. Inc. (FSCO A02-000763, June 11, 2003). In that decision, where the applicant served a report less than thirty days before the start of the arbitration hearing, Arbitrator Muir allowed the applicant the option of introducing the late report on the condition that Security was entitled to an assessment in compliance with section 42 so as to "serve the ends of fairness."

The Personal's intent in seeking the requested examination is explicitly now directly related to next week's arbitration hearing. Its fundamental submission was not that the request was based on section 42 of the Schedule and the normal adjusting of the file. Rather, the Personal went beyond the reasoning in Sidhu, arguing I have jurisdiction to stay these proceedings independent of section 42 in controlling the proceedings and preventing unfairness. This appears to run counter to Arbitrator Muir's more recent decision in Taylor and State Farm Mutual Automobile Insurance Company (FSCO A05-001559, March 15, 2007), where he states that:

To my mind the basis for my decision in Sidhu was not that F.S. and Belair had created some independent right to assessments based on an abstract sense of fairness. Rather, that in balancing the interests of the parties when considering the right to conduct invasive assessments, fairness between the parties in the context of an arbitration hearing must be one of the factors considered. In Sidhu, that analysis was taken one small step further, where, in an unusual set of circumstances, I concluded that irrespective of the Insurer's section 42 rights, it must have an opportunity to respond. In the normal course, section 42 remains an insurer's only basis for requesting an assessment.

While finding that an unusual set of circumstances does not exist in the case before me, I further find, as I stated in Martinho and York Fire & Casualty Insurance Company (FSCO A98-0000878, April 12, 1999), that:

My powers to control the arbitration process, however, do not extend to ordering an applicant to attend at a medical examination. This was stated in Granic and Allstate (January 30, 1995, OIC A-006615) by Arbitrator Manji and implicitly approved by Director's Delegate Naylor in Belair and F.S.

Arbitrators are creatures of statute. They do not have the inherent powers of judges. Further, the Commission has no provision equivalent to section 105 of the Courts of Justice Act, R.S.O. 1990, Chap. C.43, which expressly provides for a court to order a party to undergo a physical or mental examination by one or more health practitioners where the physical or mental condition of a party is in question. This is consistent with the more streamlined nature of arbitration whic, for example, does not provide for examinations for discovery. While one may argue that the mainstream discovery process may afford a more thorough pre-adjudication search for the truth, that must be balanced with cost and time efficiency.

Belair Insurance Company Inc. and F.S. (FSCO P96-00039A, June 11, 1996) held that:

The Insurance Act and the Statutory Powers Procedure Act, R.S.O. 1990, Chap S.22, as amended, contemplate the making of orders, including the authority to make interim orders subject to conditions, to conduct a fair hearing: orders that balance the rights of both parties while safeguarding the interests of the party being examined. The arbitrator's power includes the discretion, in appropriate cases, to refuse to adjourn a hearing to allow an insurer time to conduct a medical examination, where to do so would be unfair to the applicant. It also includes the power, under section 21 of the Statutory Powers Procedure Act, to adjourn the hearing "to permit an adequate hearing to be held", in the event that an applicant has refused to attend a reasonably required examination. In the exercise of such discretion, the arbitrator is not ordering a medical examination, as discussed in Granic, in the absence of an express or implied power to do so. Rather, the adjudicator is controlling the exercise of an extant power to require a medical examination conferred on one of the parties to the process.

With great respect, it is a legal fiction to distinguish between ordering a person to attend a medical examination and staying a proceeding (and effectively denying a person obtaining an entitlement order) until a person attends a medical examination. It is, in reality, a distinction without a difference.

One is sympathetic to an adjudicative instinct to right perceived procedural wrongs. However, there is a larger, systemic concern that the exception may become the rule, that extraordinary circumstances give way to the perceived routine right to what is, in reality, a defence medical examination. That is what the Personal is seeking.

Defence medical examinations are not a procedural part of this system. I have no inherent or statutory jurisdiction to order an insured to attend at a medical examination or to stay a matter until they attend. I agree with Arbitrator Manji in Granic that:

If the Legislature had intended that an arbitrator have the authority to compel an insured person to attend an examination required by an insurer pursuant to subsection 23(2) of the Schedule, it could have incorporated into the Insurance Act an express statutory power akin to that granted to the Workers' Compensation Appeals Tribunal in the Workers' Compensation Act or the Court in the Courts of Justice Act.

Therefore, I conclude that I do not have authority to compel an insured person to attend an examination pursuant to subsection 23(2) of the Schedule by necessary implication.

I further agree with Arbitrator Rogers in Ramalingam and State Farm Mutual Automobile Insurance Company (FSCO A02-001646, December 17, 2004), that "an insurer does not have a right to examinations, independent of section 42." The parties advise that the latter decision is under appeal, although the Commission decision data base shows otherwise.

- Section 42 of the Schedule

The only basis for an insurer's medical examination is section 42 of the Schedule.

Prior to March 1, 2006, section 50 of the Schedule provided that an insured person may not commence a mediation proceeding unless the person made himself or herself reasonably available for a section 42 examination. That provision has been abolished. Such a change is inconsistent with a Legislative intention to expand the powers of arbitrators to enforce attendances at insurer medical examinations for either procedural or adjusting purposes.

That is not to say that the Legislature has failed to provide insurers with a meaningful remedy should an insured unreasonably fail to attend a reasonably necessary medical examination. As noted by the Personal in its correspondence to Ms. Thevaranjan, where an insured refuses to attend at an examination, paragraph 37(7)(b) of the Schedule provides that the insurer may refuse to pay the specified benefits until the insured person submits to the examination.

Section 42 sets out specific and expanded insurer requirements regarding such examinations. The Personal submits that three times it requested the Applicant's attendance at an IME, and three times the Applicant improperly refused.

I disagree.

The first Insurer's notice, dated December 6, 2006 does not purport to be a section 42 assessment; rather the assessment is sought under subsection 15(2) of the Schedule.

The second notice, dated February 12, 2007, fails to comply with the requirements of subsection 42(4) as well as failing to comply with the mandated time requirements.

The third notice, dated April 9, 2007, for the first time identifies the proposed health professionals as well as complying with the time requirements. However, no evidence, medical or otherwise, is provided as to why the medical documentation provided by the Applicant, and specifically the disability certificate and medical questionnaire requested by the Personal itself, are inadequate, and hence, why the requested examination is reasonably necessary.

Specifically, there is no evidence presented that the reports lack a factual foundation for their conclusions, that they lack thoroughness, that the authors lack proper expertise, whether alternate theories or explanations have been omitted, or any other basis to find that an IME is reasonably required.

Nor is there any explanation provided in the filed material why the Insurer waited more than seven months after the two-year mark to seek any assessment. Nor is there any argument that the requested examination is simply for the purpose of adjusting the file, as required in Swanson and Wellington Insurance Company (FSCO A98-000067, May 26, 1998), rather than allow the Insurer an opportunity to "acquire medical evidence . . . to bolster its case for the hearing."

Accordingly, I am not persuaded that this proceeding should be stayed because:

adjourning the hearing would run counter to Practice Note 9 of the Code;
the only right of an insurer to a medical examination is that set out in Section 42 of the Schedule;
there is no independent right of an insurer to require, or for an arbitrator to order, an insured person to attend at an insurer's medical examination;
the Personal complied with the provisions of section 42 only a month prior to the start of the arbitration hearing;
the purpose of the requested examination is not the adjusting of the file but to acquire medical evidence to bolster the Insurer's case for the hearing;
the Personal has changed the basis of its defence eight days before the start of the arbitration hearing;
fairness dictates that this matter should proceed to the scheduled arbitration hearing; and,
the Schedule's present remedies afforded to insurers in the event of an insured's non-attendance at an insurer's medical examination do not include restricting access to or proceeding in the arbitration process.

EXPENSES:

I remain seized regarding the question of the parties' entitlement to the legal expenses of this motion and the quantum of same. Should the parties be unable to agree on these issues, the procedure set out in Rule 79 of the Code shall be followed.

May 4, 2007

Lawrence Blackman Arbitrator

Date

Financial Services Commission of Ontario