Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 61

FSCO A06-000232

BETWEEN:

HYUNG SOO SHIN

Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Maggy Murray

Heard: Written submissions were concluded on May 14, 2009

Appearances: Robert Zigler for Mr. Shin

Philippa Samworth for Co-Operators General Insurance Company

Issues:

The Applicant, Mr. Hyung Shin, was injured in a motor vehicle accident on January 13, 2004. He applied for statutory accident benefits from Co-Operators General Insurance Company (“Co-Operators”), payable under the Schedule.¹ Co-Operators terminated payment of various benefits. The parties were unable to resolve their disputes through mediation, and Mr. Shin 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 issues are:

Is the psychiatric medical examination requested by Co-Operators under s.42(1) of the Schedule reasonably necessary?
Should this arbitration proceeding be stayed until Mr. Shin attends the proposed medical examination?

Result:

The medical examination requested by Co-Operators under s.42(1) of the Schedule is not reasonably necessary.
This arbitration hearing is not stayed.

EVIDENCE AND ANALYSIS:

Legislation:

An insurer’s right to examine its insured is set out in s.42 of the Schedule which states:

42(1) For the purposes of assisting an insurer determine if an insured person is or continues to be entitled to a benefit under this Regulation for which an application is made, an insurer may, as often as is reasonably necessary, require an insured person to be examined under this section by one or more persons chosen by the insurer who are members of a health profession or are social workers or who have expertise in vocational rehabilitation.

(4) Whenever the insurer requires an insured person to be examined under this section, the insurer shall arrange for the examination at its expense and shall give the insured person a notice setting out, [emphasis added]

(a) the reasons for the examination;

(b) the type of examination that will be conducted and whether the attendance of the insured person is required during the examination;

(c) the name of the person or persons who will conduct the examination, the regulated health professions to which they belong and their titles and designations indicating their specialization, if any, in their professions; and

(d) if the attendance of the insured person is required at the examination, the day, time and location of the examination and, if the examination will require more than one day, the same information for the subsequent days.

The s.42 Notice of Examination (“Notice”) must be in a form approved by the Superintendent of Insurance² and the insured must receive the Notice at least five business days before the examination.³

ANALYSIS:

Issue One:

Insurer's Submissions:

Co-Operators forwarded to Mr. Shin a purported Notice of the proposed examination.⁴ It submits that it is requesting that Mr. Shin undergo a s.42 examination with a psychiatrist because it has not assessed his psychiatric condition since April 2005.⁵ The insurer further submits that its request that the Applicant undergo a psychiatric assessment followed receipt of an insurer’s examination report in August 2008 by a physiatrist which included information regarding the Applicant’s mental health status.⁶

Applicant's Submissions:

Mr. Shin submits that Co-Operators is trying to bolster its case for arbitration rather than adjust his claim and that the Notice of Examination did not contain the information required by s.42(4) of the Schedule.

Law and Analysis:

a) Deficiency of Notice

Section 42 of the Schedule requires an insurer to provide the insured with a Notice of an Examination (“Notice”). The Notice must include the particulars contained in s.42(4) of the Schedule.

Because it is always open to an adjudicator to raise a legal issue on the facts before him or her and give the parties an opportunity to respond,⁷ I raised the issue of whether the Notice was deficient, and I gave the parties an adequate opportunity to address the issue. Co-Operators’ position was that its Notice was not defective,⁸ but any “technical deficiency”⁹ was corrected by its letter to the Applicant of April 24, 2009. It also submitted that the type of examination could be “inferred”¹⁰ from the doctor’s specialty.

In Part 2 of the Notice, under the heading “Type(s) of Examination,” Co-Operators checked off the boxes “Post-104 Weeks Disability,” “Medical and Rehabilitation Benefits” and “Housekeeping and Home Maintenance.”¹¹ This does not comply with s.42(4)(b) of the Schedule, which refers to “the type of examination that will be conducted.” Post-104 weeks disability, medical and rehabilitation benefits and housekeeping and home maintenance are not an examination that is conducted. They are benefits under the Schedule.

An “examination that will be conducted” is, for example, a psychiatric examination, a neurological examination, a functional abilities evaluation, to name but a few types of examinations. Indeed, all the items under “Type(s) of Examination” in the Notice refer to various benefits under the Schedule. As was stated in Smith v. Co-operators General Insurance Company:

The use by the insurer of a prescribed form does not detract from its obligations under [the Schedule].

…the industry practice of using a form prescribed by the [Superintendent] cannot somehow be a substitute for conformity with … the SABS. … There is no indication that insurers are legally prevented from adding to the prescribed form so that it is in conformity with the legal requirements.¹²

Moreover, in Ives and Wawanesa Mutual Insurance Company it was held that:

The legislature has set out information the insurer must give the insured if it seeks an examination, so that the insured can determine whether he or she wants to submit to the procedure. The parties cannot waive compliance with this section.¹³

Co-Operators did not indicate in its Notice or letter dated December 8, 2008 accompanying its Notice that the s.42 examination was a psychiatric examination. Co-Operators did not comply with s.42(4)(b) of the Schedule. Insurers must “explicitly and unambiguously advise”¹⁴ insureds in “straightforward and clear language, directed towards an unsophisticated person,”¹⁵ the information set out in s.42(4) of the Schedule.¹⁶ Although Co-Operators attempted to rectify its error by its letter to the Applicant of April 24, 2009, “arbitrators have rejected the piecemeal approach.¹⁷ Moreover, “requiring an Applicant to piece together information from scattered documents”¹⁸ is contrary to Smith.

Co-Operators failed to provide all the particulars required by s.42(4) of the Schedule. Therefore, it is not entitled to an Order that the proposed psychiatric examination of the Applicant is reasonably necessary.¹⁹ In the event that I am incorrect regarding Co-Operators’ Notice, I analyse below whether the proposed psychiatric examination is reasonably necessary.

b) Is the medical examination requested by Co-Operators under s.42(1) of the Schedule reasonably necessary?

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 hearing.²⁰ Consequently, a proposed insurer medical assessment must be for the purpose of adjusting the claim.²¹

Determining the appropriateness of a request for a medical examination requires a balancing of the interests of the parties, in the context of the particular facts.²² The following are the relevant factors in determining whether a s.42 examination is “reasonably necessary”:

1. The timing of the insurer’s request. The closer a request is made to a hearing, the more stringent the scrutiny of its reasonableness should be to ensure that there is no avoidable delay or that the insured’s preparation for the hearing is not prejudiced.[^23] Absent a clear explanation, examinations scheduled on the eve of a hearing suggest the kind of tactical brinkmanship that arbitrators have rejected as part of this system.[^24]

A medical/rehabilitation DAC psychological assessment conducted on April 25, 2005 reported that Mr. Shin had “severe levels of anxiety and depression.”²⁵ Co-Operators waited over three years between receiving this DAC report and requesting that Mr. Shin undergo a s.42 psychiatric examination.

2. The possible prejudice to both sides. If there will be a delay of the start of the arbitration hearing in order for an insured to attend an insurer’s examination,[^26] that may be considered prejudicial to the Applicant.

The arbitration hearing is scheduled to commence August 10, 2009. Co-Operators submits that it rescheduled the psychiatric assessment to July 15, 2009[^27] to accommodate the timeline for written submissions on the deficiency of its Notice to the Applicant. Section 39.1 of the Dispute Resolution Practice Code – Fourth Edition requires that all documents to be introduced at a hearing must be served on a party at least 30 days before a hearing. The rescheduled assessment date is less than 30 days before the hearing. Therefore, Co-Operators cannot comply with s.39.1 of the Code.

3. The number and nature of previous insurer’s examinations.[^28]

The Applicant underwent a disability DAC assessment on June 14, 2004 with a physiatrist and an occupational therapist. The DAC concluded that he did not suffer a substantial inability to perform the essential tasks of his employment.[^29] The Applicant underwent a s.42 psychiatric examination on August 20, 2004 which concluded that he did not suffer from any psychiatric disorders as a result of the accident.[^30]

The Applicant underwent a medical/rehabilitation DAC assessment on October 26, 2004 with a psychologist which concluded that the Applicant has psychological or emotional impairments as a result of the accident that warrant psychological intervention.[^31] In another medical/ rehabilitation DAC assessment conducted April 25, 2005, the psychologist concluded that a referral for a psychiatric assessment may be a prudent and effective approach in alleviating the Applicant’s distress.[^32]

In a disability DAC assessment conducted July 28, 2008, Dr. Berbrayer (physiatrist) stated: “Mr. Shin presents as a seriously depressed individual. This may be one of the most important sources of impairment, but the origin, and severity do not fall within my scope of practice … I cannot speak to his depression, other than to note that it does appear that he has a significant and poorly controlled psychiatric impairment that could well disable him.”[^33]

Based on the above, the Applicant has undergone numerous examinations to assess his mental health.

4. The nature of the examinations being requested.[^34]

There is a reasonable nexus between the psychiatric examination requested and the Applicant’s complaints.

5. Whether there are any new issues raised in the applicant’s claim that require evaluation. Where there are changes in the nature of an insured person’s medical or psychological condition which are relevant to a disability claim, further examinations are reasonable.[^35]

In a progress report dated March 2005,[^38] Mr. Shin’s treating psychologist recommended further psychological counseling. In a medical/rehabilitation DAC assessment conducted April 2005, Dr. Morris (psychologist) concluded that a referral for a psychiatric assessment might be prudent.[^39] In the Ministry of Community, Family and Children’s Services records received by Co-Operators in April 2005,[^40] it is noted that Mr. Shin “is psychologically affected from accident … and feels low” and that he might “benefit from psychotherapy.”

The decoded OHIP summary that was received by Co-Operators in March 2006 notes that in February 2005 and February 2006, Mr. Shin saw a psychiatrist.[^41] The report of Dr. Raphael Chow (physiatrist) dated October 2007, which was received by Co-Operators in February 2008 states that due to Mr. Shin’s psychological issues, he requires monitoring by a psychiatrist.[^42]

There are no new issues raised by the Applicant. The Applicant’s diagnosis of depression has continued since August 2004.

Conclusion:

Co-Operators was aware of Mr. Shin's limitations caused by the accident as early as November 19, 2004, the date which it received the medical/rehabilitation DAC assessment conducted October 26, 2004.⁴³ Co-Operators waited over three years to request a s.42 examination. Because of the delay in requesting a psychiatric examination, I find that Co-Operators has not met its onus of establishing that the s.42 examination is reasonably necessary.

Issue Two:

Because Co-Operators did not serve the Applicant with a Notice that complied with s.42 of the Schedule, it is not entitled to an Order staying this arbitration proceeding. In addition, Co-Operators’ request that Mr. Shin undergo a s.42 examination is not reasonably necessary.

EXPENSES:

I exercise my discretion to award Mr. Shin his expenses incurred in this preliminary issue hearing. If the parties are unable to agree on the issue of quantum, they may make submissions in accordance with Rule 79 of the Dispute Resolution Practice Code — Fourth Edition.

May 25, 2009

Maggy Murray

Arbitrator

Date