Badredine Soufan v. Aviva Canada Inc., 2008 ONFSCDRS 141

Financial Services Commission of Ontario

Neutral Citation: 2008 ONFSCDRS 141 FSCO A08-000612

BETWEEN:

BADREDINE SOUFAN Applicant

and

AVIVA CANADA INC. Insurer

DECISION

Before: Arbitrator Suesan Alves Heard: By telephone conference call on July 15, 2008

Appearances: Faisal Joseph for Mr. Soufan Kevin Griffiths for Aviva Canada Inc.

Issues:

Mr. Soufan was injured in a motor vehicle accident on June 28, 2005. He applied for arbitration claiming income replacement benefits and interest from Aviva under the Schedule,¹ and a special award and arbitration expenses under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

At the pre-hearing discussion, counsel for the Applicant asked whether the Insurer had conducted surveillance in relation to his client, and if it had, he requested that Aviva produce all the surveillance 90 days before the hearing. Counsel for the Insurer refused to state whether Aviva had conducted surveillance. He advised that if he intended to rely on any surveillance which may have been conducted, he would produce all surveillance 60 days prior to the hearing.

The issues are:

1. If Aviva intends to rely on any surveillance, when should it produce surveillance to the Applicant?
2. Is Aviva required to disclose whether surveillance has been conducted?
3. Which party is entitled to expenses of this motion?

Result:

1. Counsel for the Insurer shall determine whether he intends to rely on any surveillance which may have been conducted on the Applicant within 60 days of the pre-hearing and inform counsel for the Applicant of his intention. If he intends to rely on any surveillance which may have been conducted, he is obliged to produce a copy of all surveillance documents as required by Rule 40 of the Dispute Resolution Practice Code—Fourth Edition, Updated October 2003 90 days before the hearing.
2. Aviva is required to promptly disclose whether it has conducted surveillance on the Applicant.
3. The expenses of this motion are in the discretion of the hearing arbitrator.

EVIDENCE AND ANALYSIS:

Mr. Soufan applied for arbitration in relation to his claims for income replacement benefits, interest, a special award and expenses. Aviva disputes Mr. Soufan’s entitlement to all of the relief he claims and seeks its arbitration expenses.

As part of the production exchange portion of the pre-hearing, counsel for the Applicant asked counsel for the Insurer whether surveillance had been conducted in relation to his client, and if it had done so, he requested that Aviva produce the surveillance documents 90 days before the hearing. Counsel for the Insurer refused to disclose whether surveillance had been conducted; however, if surveillance existed and he intended to rely on it, he was prepared to provide copies 60 days before the hearing.

Surveillance

Surveillance is a tool which insurers may use in conjunction with medical and other evidence in assessing entitlement to a claim for benefits.² It has been used by insurers in relation to claims for caregiver benefits to contradict the applicant’s claim that a caregiver attends daily at a home to provide caregiving services.³ It appears to be most commonly used in relation to claims for income replacement benefits with a view to determining the nature and extent of an insured person’s activity and range of motion while he or she is unaware of the observation.

Surveillance may assist an adjudicator in determining credibility issues and in resolving conflicting medical opinions on the issue of disability. The surveillance may be consistent with the insured person’s report of his or her abilities⁴ and even support a person’s claim that he or she is disabled. It may put the insured person’s credibility squarely in issue by showing him or her engaging in activities which are inconsistent with the claim for benefits, such as repeatedly working at his or her job, or a similar job, while asserting an ongoing claim for income replacement benefits.⁵

Surveillance may be misleading because the person observing the surveillance lacks the expertise to assess whether there is a conflict between what is seen on surveillance and an insured person’s impairments and reported abilities. In such cases, the observer may draw an incorrect inference in relation to the insured person’s disability and credibility.

At times, without slowing down the videotape, an untrained eye cannot detect splinting of muscles or protective movements made by the insured.⁶ Surveillance may also be misleading because it is carried out on someone other than the applicant⁷, or because there has been manipulation of the surveillance videotape.

Timely production of surveillance

Rule 40 of the Dispute Resolution Practice Code—Fourth Edition, Updated October 2003, (“the Code”) requires a party to produce all surveillance documents relating to the issues in dispute to the other party, when it intends to introduce any surveillance evidence at a hearing. These documents must be produced to the other party at least 30 days before the hearing. The 30 day period may be adequate in some cases. However, where it is not, the period may be lengthened by agreement of the parties or by order of an arbitrator, depending on the circumstances of the case.

Rule 40 states:

40.1 If a party intends to rely on any portion of surveillance or investigative evidence, including videotapes, photographs, reports, notes and summaries of surveillance observations or investigations, at least 30 days before the hearing, the party shall provide:

(a) the names and qualifications of the persons who secured the investigative or surveillance evidence, the dates, times and places where any surveillance or investigation was undertaken; and

(b) copies of all videotapes, photographs, investigative reports, notes and summaries taken or prepared in connection with the issues in dispute.

An insurer may wish to produce surveillance 30 days before the hearing to minimize the chance that an applicant will be able to tailor his or her evidence. However, in most statutory accident benefit cases, by the time an insured person is at an arbitration pre-hearing, his or her activity levels and complaints will have been well documented in disability certificates, reports of assessments from a range of health practitioners, job site assessments, functional abilities assessments, etc. Frequently this documentation comes from both parties.

An insurer may wish to provide the surveillance 30 days before the hearing to maximize the value of surprise. However, if the surveillance seriously challenges the insured person’s credibility, an insurer may want to disclose it early in the arbitration process, with a view to obtaining the maximum benefit from the surveillance – facilitating settlement, and minimizing arbitration expenses.

Early production of surveillance gives the insured the opportunity to consider and respond to the surveillance as is appropriate in the circumstances of the case. The insured person may agree that the surveillance accurately portrays his or her level of activity; that the surveillance contradicts his or her claim for disability, compromises its value, and agree to settle his or her case for significantly less. The insured person may agree that the surveillance is accurate but represents an unusual level of activity which gave rise to a series of treatments and obtain documentary evidence to give this context to the surveillance. The insured person may believe that the videotape is misleading because the tape has been technically manipulated, or that the insurer has drawn incorrect inferences from what is shown on the videotape. In such cases, an insured person may wish to seek opinion evidence to address these concerns. It can be helpful to both parties to obtain such opinion evidence as early as possible.

In this case, counsel for the Applicant wishes to obtain medical opinion evidence as to whether the surveillance is consistent with his client’s disability claim. Based on a review of the provisions of the Code and arbitral jurisprudence, I find that in every case in which an applicant wishes to respond to surveillance with a medical opinion, the 30 day period set out in Rule 40 will be inadequate for two reasons.

One is that if the applicant received the surveillance 30 days before the hearing commences, except in the rarest of cases, it will be impossible for him or her to comply with the requirements of Rules 39 and 42.2 (c) of the Code.

Those Rules require that unless there are “extraordinary circumstances,” the applicant is to serve the written medical opinion responding to the surveillance on the same day that he or she receives the surveillance. If the applicant decides to respond to the surveillance through the testimony of an expert, he or she is required to serve a document which sets out the substance of the facts and the opinion of the expert, on the same day he receives the surveillance.

In either case, the applicant is placed in the position of seeking an indulgence from opposing counsel and the hearing arbitrator, or an adjournment of the hearing. The hearing arbitrator may consider such circumstances to be extraordinary, or may conclude that because these circumstances are created by the requirements of the Code, they are usual and ordinary circumstances.⁸

The time constraints imposed by the Code mean that it is more than likely that the applicant will arrange for an expert who is already scheduled to testify at the hearing to give an oral opinion on the surveillance at the hearing. That is, if the arbitrator permits the expert to give opinion evidence which is outside the four corners of an existing report.⁹

The second difficulty the applicant faces – assuming the expert’s oral testimony is admitted and accepted – is the significant financial burden for obtaining that oral opinion on an assessment of expenses. He or she will not be reimbursed for most of the cost of the expert’s account for reviewing the surveillance and comparing it against clinical notes and records and medical reports in order to provide the further opinion because of the provisions of the Schedule of Dispute Resolution Expenses, contained in Section F of the Code.

In most cases, the expert will spend the longer period of time reviewing the material before the hearing, and a relatively short period opining on whether his or her opinion is altered by what is shown on surveillance. However, the maximum recovery under the Code for the expert’s preparation time is $500. While there is provision for payment of an expert who testifies at the hearing at the rate of $200 per hour, to a maximum of $1,600 per day, the expert will spend a relatively small amount of time testifying about surveillance at the hearing.¹⁰

Even in a “best case” scenario for an applicant, where the surveillance does not impugn credibility or contradict the claim for benefits, where the applicant is completed successful at the hearing, is awarded benefits and is entitled to arbitration expenses, the applicant may bear a significant financial burden to respond to surveillance with medical evidence unless he or she is in a position to obtain and file a medical report which opines on the surveillance.

For example, in Lee and Certas Direct (FSCO A03-000041, June 15, 2006), Certas provided Ms. Lee with surveillance approximately three months later than the pre-hearing arbitrator had ordered. This caused one of the applicant’s experts to expend additional time reviewing the surveillance videos before the hearing, in order to provide an oral opinion on the surveillance at the hearing. For the most part, the surveillance showed Ms. Lee doing things she has stated she was able to do, such as lifting 10 pounds, even before the surveillance was conducted.

Ms. Lee’s expert rendered an account for preparation time, review of the surveillance, and travel to the hearing. At the assessment of expenses, the claim for that expert’s preparation time was allowed at the maximum of $500. However, because of the provisions of the Code, I had no alternative but to disallow preparation and travel time by that expert in the amount of $2,036.75, with associated GST of $122.21. Had the expert authored a report with respect to the surveillance, the applicant could potentially have recovered an additional $1,500 of the amounts which had been disallowed.¹¹

I accept that there are sound policy reasons for the structure of expenses set out in the Code. For example, it encourages parties to obtain reports which disclose the case to be met, thus encouraging settlement prior to a hearing. The expense structure also discourages hearings which are lengthy due to experts’ testimony, helps to control the costs of an arbitration hearing, and minimizes inconvenience to professional witnesses, etc.

Nevertheless, in my view, the combined effect of the provisions of the Code is to create a real injustice to an applicant who is unable to provide a report due to time constraints and then bears the financial burden of responding to surveillance which does not compromise the claim for benefits. I find this to be an unacceptable result.

I find that result can be tempered by earlier disclosure of the surveillance which will allow the applicant sufficient time to arrange for the preparation of a report which can be served in a timely manner.

In Plowright and Wellington Insurance Company, (OIC A-003985, October 29, 1993), Arbitrator Palmer held that surveillance videotape was reasonable information which an insurer was required to provide to an insured prior to an arbitration hearing, by virtue of section 8 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22. That section states that “Where the good character, propriety of conduct or competence of a party is an issue in a proceeding, the party is entitled to be furnished prior to the hearing with reasonable information of any allegations with respect thereto.” In my view, the applicant’s right to know the case to be met becomes meaningless if he or she is not permitted to respond to that surveillance in a meaningful way and if the financial cost of responding is too great.

In this case, counsel for the Applicant wishes to have the Applicant’s expert review and comment on any surveillance in a report. His request is to have any surveillance produced 90 days before the hearing in order to obtain and serve the report in a timely manner.

I find that in order to permit the Applicant to consider and respond to the surveillance and to avoid a possible or probable injustice, it is appropriate to extend the period of time for the Insurer to provide the surveillance and the other documents set out in Rule 40 of the Code, to ninety days before the hearing is scheduled to commence, as requested.

Is Aviva obliged to disclose whether surveillance exists?

The Applicant has an ongoing claim for income replacement benefits. His counsel seeks to know if Aviva has conducted surveillance on his client. Counsel for Aviva refuses to disclose this information. While Rule 40 addresses the production obligations of a party who intends to rely on surveillance, the Code is silent on the obligation to disclose whether surveillance exists.

In Cheraghi-Sohi and Zurich Insurance Company (FSCO A03-000148, September 27, 2004), Arbitrator Allen, as she then was, ordered the insurer to produce information as to whether or not it had conducted any surveillance upon which it would not be relying at the hearing based on the submissions of the parties. Her reasons for doing so included possible relevance and an absence of prejudice. I agree with these reasons and therefore conclude that Aviva is obliged to promptly disclose to counsel for the Applicant whether Aviva has conducted surveillance on Mr. Soufan.

Expenses:

I leave the expenses of this motion in the discretion of the hearing arbitrator

August 19, 2008

Suesan Alves, Arbitrator

ARBITRATION ORDER

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

1. Aviva Canada Inc. shall promptly disclose to counsel for the Applicant whether it has conducted surveillance on Mr. Soufan.
2. Counsel for the Insurer shall determine whether he intends to rely on any surveillance which may have been conducted on the Applicant within 60 days of the pre-hearing and inform counsel for the Applicant of his intention.
3. If counsel for the Insurer intends to rely on any surveillance which may have been conducted, he shall produce to counsel for the Applicant a copy of the names and qualifications of the persons who secured the investigative or surveillance evidence; the dates, times and places where any surveillance or investigation was undertaken; and copies of all videotapes, photographs, investigative reports, notes and summaries taken or prepared in connection with the issues in dispute at least 90 days before the hearing.
4. The expenses of this motion are in the discretion of the hearing arbitrator.

August 19, 2008

Suesan Alves Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Reliance on surveillance alone to terminate benefits may give rise to a special award. See for example, Cripps and AXA Insurance Company No.2 (OIC A-013360, February 7, 1997). The applicant sustained a severe brain injury. As he was desperate to work, his son rented him a stall next to his own at the market, where the applicant sold plants. It was evident from the videotape surveillance that the applicant could not have earned a living from his sporadic activities at the market stall. AXA terminated Mr. Cripps’ post 156 weekly income benefits based on surveillance without making the inquiries expected of a reasonable insurer in light of the nature of his injuries. Arbitrator McMahon held that the activities shown on surveillance could not form the basis of a reasonable termination of benefits and imposed a special award.
3. 3Phan and Waterloo Insurance Company (FSCO A03-001311 and A03-001312, June 15, 2004) in which the Insurer’s surveillance repeatedly contradicted the Applicant’s allegation that a caregiver/housekeeper attended her home on a daily basis.
4. 4Lee and Certas Direct (FSCO A03-000041, June 15, 2006) where the Applicant’s activities shown on surveillance were largely consistent with the abilities she reported to health practitioners before the videotape surveillance was conducted.
5. 5See for example Togias and Co-operators (OIC A-013485, August 16, 1996), in which Arbitrator Baltman, as she then was, held that the detailed surveillance conducted on twelve days during one and a half years strongly contradict virtually all of Mr. Togias’ claims that he was disabled from working by physical, cognitive or psychological problems, alone or in combination. “On the contrary, much of the evidence suggests that he is capable of returning to his pre-accident employment as a waiter and/or an ESL teacher.”
6. 6In Giacona and Liberty Mutual (FSCO A96-001743, November 26, 1998), the Applicant worked as a bricklayer prior to the accident. He sustained a concussion, damaged the discs and facet joints of his lumbar spine, and developed patellar osteochondritis of his left knee. His orthopaedic expert reported that Mr. Giacona had restricted lumbar flexion, rotation, lateral flexion and extension and tenderness and spasm over the lumbar musculature on examination. In his opinion, the protective spasm in Mr. Giacona’s low back indicated inflammation of the discs or facet joints located at the back of the spine, causing pain and loss of function, making it difficult for him to bend, walk or stand for a normal working day. On one examination, Mr. Giacona had an abnormal spinal rhythm, which was very significant objective evidence of pathology in Mr. Giacona’s low back, indicative of damage to the discs at the front of the spine, which left him with permanent and serious impairments, precluding employment as a bricklayer. Liberty Mutual obtained surveillance of Mr. Giacona bending, standing, cutting a small lawn, sawing and sanding in his garage, going up stairs, riding a bike, and repeatedly hacking at a weed or a seedling on the lawn with an axe for about a minute. At first blush, to a lay person’s eye, Mr. Giacona’s movements on the tape appeared to be a significant challenge to his stated limitations. However, on cross-examination, the orthopaedic expert asked for the videotape to be slowed down, and was able to demonstrate that Mr. Giacona was otherwise splinting and protecting his back, and favouring his knee while engaging in the activities shown on the videotape. In his opinion, there was nothing on the videotape which suggested that Mr. Giacona was capable of working full time as a bricklayer on a daily basis.
7. 7In Suong Nguyen and Allstate Insurance Company (FSCO A97-001778, March 11, 1999), surveillance had been conducted on the Applicant’s sister. The investigation report incorrectly identified the Applicant as the person “who walked fluidly to the Toyota, bent slightly at the waist and climbed into the back seat.” The Insurer sent a copy of the surveillance and the investigator’s report to an orthopaedic surgeon who examined Ms. Nguyen on behalf of Allstate. The orthopaedic surgeon compared his examination of the Applicant against the investigator’s report and reported “I really cannot identify any justification for this patient to have such a protracted period of disability from a musculoskeletal perspective.” At the hearing, the Applicant and her sister both testified that the surveillance had been conducted on the Applicant’s sister. Arbitrator Leitch attached no weight to the medical report of the insurer’s examiner.
8. 839.1 Subject to Rule 39.2, all documents, reports (including experts' reports) and assessments to be introduced at a hearing by either party must be served on the other party at least 30 days before the first day of the hearing. 39.2 In extraordinary circumstances, a party may seek an arbitrator's permission to serve a document, report or assessment on the other party for use at a hearing less than 30 days before the first day of hearing. 39.3 The hearing arbitrator will determine the relevance, materiality, and admissibility of evidence submitted at the hearing, but will not admit evidence at a hearing that: (a) would not be admissible in a court by reason of any privilege under the law of evidence; or (b) is not admissible under the Insurance Act; or (c) was not served on the opposing party in accordance with Rules 39.1 and 39.2, unless the hearing arbitrator is satisfied that extraordinary circumstances exist to justify an exception.
9. 9EXPERT WITNESSES 42.2 If a party intends to call an expert witness to present evidence at a hearing, that party must serve and file a document setting out the following: (a) the full name, address and qualifications of the expert witness; (b) the subject matter of the testimony to be presented; and (c) the substance of the facts and opinion which the witness will present. The time lines and requirements set out under Rule 39 and Rule 41 apply.
10. 10Schedule to Regulation 664, R.R.O. 1990, made under the Insurance Act, as amended to O.Reg. 275/03 (Dispute Resolution Expenses) 1. The maximum amount that may be awarded for the attendance of a witness is the amount of the attendance allowance for the witness that may be allowed under Rule 58.05 of the rules of court as a disbursement. 2. The maximum amount that may be awarded for the attendance of an expert witness is $200 per hour of attendance, up to a maximum of $1,600 per day. 3. The amount of the expenses paid by or on behalf of the insured person or the insurer to an expert witness for preparation for a hearing at which the witness testifies may be awarded, to a maximum of $500. The amount of the expenses paid by or on behalf of the insured person or the insurer to an expert for the preparation of a report may be awarded, to a maximum of $1,500.
11. 11Lee and Certas Direct – Expenses, (FSCO A03-000041 July 20, 2007)