Personal Insurance Company of Canada v. Bavani Thevaranjan, 2009 ONFSCDRS 44

Financial Services Commission of Ontario

Neutral Citation: 2009 ONFSCDRS 44 Appeal: P07-00022

OFFICE OF THE DIRECTOR OF ARBITRATIONS

PERSONAL INSURANCE COMPANY OF CANADA Appellant

and

BAVANI THEVARANJAN Respondent

BEFORE: David Evans

REPRESENTATIVES: Michael Chadwick for Personal Insurance Company of Canada David S. Wilson for Ms. Thevaranjan

HEARING DATE: June 13, 2008

APPEAL ORDER

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

1. The appeal of the arbitrator’s order dated May 4, 2007, is dismissed and paragraphs 1 and 2 thereof are confirmed.

2. The appeal of the arbitrator’s order dated June 26, 2007, is dismissed and paragraphs 1 and 2 thereof are confirmed.

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

April 16, 2009

David Evans Director’s Delegate

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Personal Insurance Company of Canada appeals two decisions. Principally, it appeals the preliminary issue decision dated May 4, 2007 by Arbitrator Blackman refusing its request for an adjournment in order to obtain insurer examinations. As a result, it did not consent to but did not oppose the subsequent decision of Arbitrator Sampliner dated June 26, 2007 ordering it to continue paying Ms. Thevaranjan ongoing income replacement benefits (IRBs) pursuant to the SABS–1996.¹ It appeals this latter decision on the basis that, if it is successful on the appeal regarding the insurer examinations, the decision on the IRBs also cannot stand, having been rendered without the benefit of the reports it seeks.

II. BACKGROUND

Ms. Thevaranjan was injured in an accident on April 22, 2004. In an August 24, 2006 decision, she was found entitled to IRBs up to 104 weeks after her accident under the SABS s.4 “own occupation” test.

Ms. Thevaranjan made a further application for arbitration for post 104-week IRBs under the SABS s. 5(2)(b) “any occupation” test. Personal then reinstated IRBs and asked that the application for arbitration be withdrawn. This was refused, leading to the pre-hearing conducted by Arbitrator Feldman in December 2006. In the preliminary issue decision under appeal, Arbitrator Blackman found 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.” A one-day hearing was scheduled for May 2007 on that basis.

Personal then sought an adjournment of the hearing in order to conduct insurer examinations (IEs), pursuant to s. 42 of the SABS, on the basis that after the pre-hearing it was served with a number of medical reports it needed to respond to. However, it was only at the preliminary issue hearing that Personal advised it was now disputing IRB entitlement.

The adjournment was refused on the grounds that the request did not meet the criteria for adjournments at the Commission. The arbitrator held that there is no free-standing right to examinations as part of the dispute resolution process but only pursuant to s. 42 of the SABS, and that the criteria for s. 42 had not been met. The arbitrator also held that in any event there is no remedy of an adjournment or stay of a hearing where an insured does not attend an IE.

The main hearing then proceeded without Personal’s consent or opposition to the order granting benefits. Accordingly, my analysis is restricted to the preliminary issue of whether the main hearing should have been adjourned and stayed until Ms. Thevaranjan attended IEs.

III. ANALYSIS

With respect to whether or not an adjournment should have been granted, the arbitrator considered the criteria set out in Practice Note 9 of the Dispute Resolution Practice Code. It states that adjournments will be refused where parties have not made early arrangements for further medical examinations, assessments or follow-up. He specifically found that Personal had not made those early arrangements. He also noted that what had changed from the point when Ms. Thevaranjan reached two years of disability was not the nature of her claim but rather the nature of Personal’s defence, which would have changed “the whole nature and scope of the upcoming arbitration hearing.” He concluded that allowing the adjournment would be unfair and refused to grant it.

The arbitrator had evidence before him on these points and he exercised his discretion. I have no basis to interfere.

The arbitrator then went on to consider IEs and the relationship between s. 42 and an arbitrator’s ability to control the process of a hearing. He stated that “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,” that the only right to an IE is set out in s. 42, that an IE for the purpose of bolstering an insurer’s case does not fit within s. 42, and that, as noted above, a stay of a hearing for the purposes of letting an insurer obtain an IE is not an available remedy.

However, subsequent to this decision, the appeal decision in State Farm Mutual Automobile Insurance Company and Ramalingam, (FSCO P05-00026, August 13, 2007) was issued. I agree with the decision of Director’s Delegate Nancy Makepeace and disagree with the arbitrator to the extent his decision is incompatible with Ramalingam. Accordingly, I will not repeat the entire Ramalingam analysis but just highlight a few points.

There is no authority for an arbitrator to order a claimant to attend a medical examination: Granic and Allstate Insurance Company of Canada, (OIC A-006615, January 30, 1995). However, as discussed by Director’s Delegate Naylor in Belair Insurance Company Inc. and F.S., (FSCO P96-00039A, June 11, 1996), s. 21 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, (SPPA) provides that a hearing may be adjourned “from time to time by a tribunal of its own motion or where it is shown to the satisfaction of the tribunal that the adjournment is required to permit an adequate hearing to be held.” She therefore held that exercising the discretion under the SPPA to adjourn a hearing where an applicant has refused to attend a reasonably required IE is not the same as ordering a medical examination 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.”

The arbitrator stated:

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.

The distinction is that, in the one case, as discussed in Granic, there is no legal basis for ordering a medical examination, whereas in the other case, under s. 42, there is a legal basis for an IE. The arbitrator therefore has the discretion afforded by s. 21 of the SPPA to permit an adequate hearing to be held.

Furthermore, arbitrators have broad implicit powers to control their process to ensure a fair hearing, as codified in s. 23(1) of the SPPA, which states that “A tribunal may make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes.” The extent of those powers was recently considered in Royal & SunAlliance Insurance Company of Canada v. Volfson, 2005 CanLII 38902, (leave to appeal denied April 18, 2006). Volfson had brought an arbitration application without any right to do so, causing considerable expense and inconvenience. The arbitrator had held that she had the jurisdiction to prevent abuse of the tribunal’s process by requiring the abuser to compensate those who had been caused expense as a result of the abuse of process. In restoring the arbitrator’s decision, the court stated “It is inconsistent with the purpose of s. 23 of the Statutory Powers Procedure Act to leave the tribunal without any power in the face of such abuse.” Refusing to attend a reasonably required IE can be equally abusive and can cause additional expense and inconvenience. It follows that an adjournment pending the attendance at a reasonably required IE is equally justified by s. 23.

The arbitrator also expressed concern “that the exception may become the rule, that extra-ordinary circumstances give way to the perceived routine right to what is, in reality, a defence medical examination.” However, arbitrators are given discretion in many areas, and I am not persuaded that a hypothetical concern should prevent arbitrators from controlling abuse. It is unreasonable to suppose that a floodgate will open, and there are the many decisions issued since Belair that suggest no insurer could imagine there is a routine right to a defence medical.

The arbitral rule therefore 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 s. 42 requirements are otherwise met. As to the s. 42 requirements, the arbitrator stated that “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.” If the arbitrator was stating that the only motive for a s. 42 IE can be adjusting the file, then again I disagree. There will inevitably be mixed motives, but as stated in Ramalingam, rather than focusing on the insurer’s motivations or other subjective factors, the enquiry should focus mainly on objective factors: the timing of the request, disclosure by the applicant, information otherwise available to the insurer, and so on.

In that regard, the arbitrator found that fairness did not require the IE and that objective factors did not support it. He found that the IE request was not properly made until a month before the hearing, that the insurer already knew or could have anticipated the case it had to meet, that it could have requested the IE earlier, and that on balance the request was not reasonable.

Since 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, I have no reason to intervene in light of the arbitrator’s findings regarding fairness and the objective factors negating the IE request.

The appeal of the preliminary issue decision dated May 4, 2007 by Arbitrator Blackman is dismissed. It follows that the appeal of the substantive issue decision dated June 26, 2007 by Arbitrator Sampliner is also dismissed.

IV. EXPENSES

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

April 16, 2009

David Evans Director’s Delegate

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.