Troubitsine v. TTC Insurance Company Limited, 2009 ONFSCDRS 91

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 91

Appeal P09-00019

Appellant

and

Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. Owen Elliot for the Appellant, Mr. Troubitsine

Mr. Guri Pannu for TTC Insurance Company Limited

By written submissions received June 23, 2009

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

The May 27, 2009 Notice of Appeal from the Arbitrator’s April 30, 2009 decision on a motion is not rejected pursuant to Rule 50.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).
The Appellant’s request for a stay of the time frame set out in paragraph three of the Arbitrator’s Order is denied.
The legal expenses of this preliminary appeal decision are deferred to the conclusion of this appeal, subject to any other or further order of an appeals adjudicator.

July 3, 2009

Lawrence Blackman Director’s Delegate

Date

I. NATURE OF THE APPEAL

The Appellant, Mr. Iliia Troubitsine, alleges that he was injured on a bus on November 10, 2006 and, thus, applied to the Respondent, TTC Insurance Company Limited, for statutory automobile accident benefits payable under the Schedule.¹

In February 2009, the parties came before Arbitrator Nastasi (the “Arbitrator”) by way of a motion brought by the Respondent to determine the consequences of the Appellant’s non-attendance at insurer medical examinations (“IMEs”) requested by the Respondent pursuant to section 42 of the Schedule and examinations under oath requested under subsection 33(1.1). In her April 30, 2009 decision the Arbitrator held, in part, that:

As a result of the Appellant’s failure to attend IMEs without a reasonable explanation, the Respondent was not liable to pay him income replacement, attendant care, medical, rehabilitation and housekeeping and home maintenance benefits from February 27, 2007 to November 10, 2008.
As a result of the Appellant’s failure to attend examinations under oath without a reasonable explanation, the Respondent was entitled to rely upon subsection 33(2) of the Schedule and was not liable to pay benefits from January 22 to June 15, 2007 and then ongoing from November 1, 2007 until the Appellant complied with subsection 33(1.1).
The arbitration was stayed pending the Appellant’s attendance at an examination under oath to be scheduled by the Respondent in accordance with the notice requirements in the Schedule and within 60 days of the issuance of her order.

The Arbitrator noted that the Appellant had “conceded that since he provided no reasonable explanation for his non-attendance at the previously scheduled [psychiatric, orthopaedic and in-home] insurer examinations, no benefits are owing to him for the period from February 27, 2007 to November 10, 2008.”

Regarding the requested examination under oath, the Arbitrator found that the Respondent’s notices met the requirements of the Schedule. As the Appellant was represented by counsel from the beginning of the application process and as there was clear and continuous communication between his counsel and the Respondent throughout, the absence of specific notice of the Appellant’s right to be represented at the examination did not prejudice him. The Arbitrator further found that the notices adequately set out the scope of the examination.

The Arbitrator held that while the Appellant had no reasonable explanation for his non-attendance at the examination under oath scheduled for January 22, 2007, he did have a reasonable explanation for not attending the June 15, 2007 examination, namely, his incarceration. The Arbitrator found that the Appellant failed to provide evidence as to why he had not attended an examination under oath after his October 2007 release, the obligation being on the Appellant to advise the Respondent of his subsequent availability and intention to attend an examination.

The Arbitrator found that the statutory remedy under the Schedule of non-payment of benefits was inadequate in addressing the Appellant’s non-attendance. The Arbitrator held that in such circumstances, subsection 23(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”) provided arbitrators with the authority to control the hearing process.

The Arbitrator noted that the decisions in Balanki and Zurich Insurance Company (Commercial Business), (FSCO A04-002286, April 11, 2005) and Salah and State Farm Mutual Automobile Insurance Company, (FSCO A04-000210, November 2, 2005) both:

… concluded that the only remedy provided under the section is a suspension of benefits (section 33(2)) or if non-compliance is unreasonable, the loss of those benefits for the period of non-compliance (section 33(4)).

The Arbitrator found that in Balanki a parallel was drawn to cases of non-attendance at section 42 IMEs. While the Schedule did not prescribe a stay of proceedings as a remedy for non-attendance at IMEs, arbitrators had ordered such a stay where the remedy provided by the Schedule was inadequate. In this regard, the Arbitrator cited Belair Insurance Company Inc. and F.S., (FSCO P96-00039, June 11, 1996) where a stay of the arbitration until the applicant attended the IME was crafted to avoid the potential for unfairness, bordering on an abuse of process. In Belair, the Director’s Delegate stated that:

In the arbitration process, the insurer’s right to require an examination is subject to the general discretion of the tribunal to control its own processes in the context of the overall objectives of the system. These include adequate disclosure, settlement of cases and a fair, informed hearing of the issues remaining in dispute.

The Arbitrator, noting that arbitrators have not compelled attendance at a medical assessment, differentiated an examination under oath as serving a very different role in the arbitration process, being part of the more general disclosure obligations placed on a claimant making a claim for benefits while not raising the privacy concerns of a medical examination. In cases where there were potential allegations of fraud, an examination under oath was an important investigative tool and could assist in assessing credibility as well as identifying potential witnesses and relevant documents.

The Arbitrator found that by refusing to attend an examination under oath the Appellant had deprived the Respondent of the opportunity to gather basic information pertaining to the details of the accident and prevented it from conducting a complete investigation. Further, while noting that “the arbitration process does not usually permit examinations for discovery,” the Arbitrator found that the Respondent would be limited in its ability to prepare for and to respond to the evidence that would be led by the Appellant at the further arbitration hearing. This would, in the Arbitrator’s view, not only result in unfairness but could result in delay if the Respondent sought an adjournment following the Appellant’s examination-in-chief in order to prepare its cross-examination.

The Arbitrator held that the “arbitration process is intended to provide a timely, cost effective and efficient alternative to court proceedings.”The Appellant’s failure to attend the scheduled examinations under oath without providing any explanation had resulted in significant unfairness to the Respondent. To allow the Appellant to proceed to a hearing in the face of this non-compliance would be an abuse of the process.

The Arbitrator found that ordering a stay of the proceeding until the Appellant attended an examination under oath was a more appropriate remedy than ordering the Appellant to attend an examination, as had been requested by the Respondent.

The Appellant’s May 27, 2009 Notice of Appeal requested that paragraphs 2 and 3 of the Arbitrator’s April 30, 2009 Order be set aside on the basis the Arbitrator had erred in law in:

(a) finding that the Respondent’s notices regarding the examinations under oath were sufficient under subsection 33(1.3) of the Schedule; and,

(b) granting a stay of proceedings until an examination under oath was conducted, as it was not a statutory remedy for a failure to attend, it was inconsistent with the case law and such a remedy had not been requested by the Respondent.

The Appellant asked that this appeal from a preliminary or interim order be accepted on the basis of its merit and that it raised a novel issue. The Appellant also requested a stay of the sixty-day time period in the Arbitrator’s order for the Respondent to schedule a further examination under oath.

The Respondent asked that this appeal be rejected and that it be allowed to schedule an examination under oath and then proceed to arbitration. To allow this appeal would cause delay, prejudice and add an unnecessary and expensive step to the proceeding. At the same time, there was no reason why the Appellant could not attend an examination under oath prior to the presently set hearing dates in late January 2010, agreed to by the parties prior to receiving the Arbitrator’s decision. Rejecting the appeal would not prejudice the Appellant as he could still proceed to arbitration upon attendance at the examination under oath.

To allow this appeal, it is argued, would effectively allow accident benefits claimants to fail to comply with attending an examination under oath without recourse to the insurer in enforcing attendance as an investigative tool for potential fraud.

As well, a fair hearing could not be conducted if the Appellant were allowed to proceed without attending an examination under oath. Otherwise, the first time the Respondent would hear evidence about the details of the incident would be at the arbitration itself.

The Respondent submitted that the appeal was without merit. Its notices had been found to be sufficient and the Arbitrator acted within her powers under the SPPA, consistent with the case law in Belair. The Respondent, however, conceded that “a stay has not been granted as a remedy for an applicant failing to attend an Examination under Oath” and “that the issue may be novel.”

Regarding the requested stay, the Respondent questioned the bona fides of the appeal, submitting that the Appellant was challenging the Arbitrator’s finding of fact regarding the adequacy of its notices and that a statutory decision maker has authority and, indeed, the duty, to fashion remedies to address significant unfairness and to prevent an abuse of process.

II. ANALYSIS

Rule 50.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”) provides that a party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute have been finally decided, unless the Director (or in this case, his delegate) orders otherwise.

Delegate Makepeace, in Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001) held that the purpose of this Rule is to:

… facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters. The decision whether to hear an appeal of a preliminary order is discretionary … the over-arching principle guiding the exercise of the discretion is that the rule “should be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute.” The criteria to be considered include the apparent strength of the appeal, the importance or novelty of the issue raised, and whether rejecting the appeal or hearing it will prejudice either party. [emphasis added]

Regarding the apparent strength of the appeal, the following questions and issues arise from the Arbitrator’s decision:

Subsection 33(1.3) of the Schedule states that the insurer “shall” give the person to be examined reasonable advance notice, of amongst other things, that the person is entitled to be represented at the examination under oath, at his or her own expense, by such counsel or other representative of his or her choice as the law otherwise permits. In Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, where the insured person was, as found by Mackinnon J. in Smith v. Co-operators General Insurance Company, [1999] O.J. No. 2484, represented by counsel at all times, the Supreme Court held that:

… insurance law is, in many respects, geared towards protection of the consumer. This approach obliges the courts to impose bright-line boundaries between the permissible and the impermissible without undue solicitude for particular circumstances that might operate against claimants in certain cases.

It is presently unclear how the Arbitrator’s finding, that the Appellant’s representation by counsel throughout negated the requisite statutory notice regarding representation, is consistent with the Supreme Court’s statement above. It is also unclear how the question of what is to be included in the notice (as opposed to whether something was included) would be a question of fact.

The enhancement of a specified statutory remedy under section 33 of the Schedule, on the basis that it is insufficient to prevent abuse of the process, raises the question of the extent of such power. Does, for example, the unproven allegation by an applicant that he or she is entitled to a special award under subsection 282(10) of the Insurance Act, based on an alleged unreasonable delay or withholding of benefits, allow an adjudicator to fashion a procedural remedy not provided for in the legislation, such as examinations for discovery, to prevent an abuse of the process by the insurer?
The Arbitrator’s decision referred to examinations under oath not merely as part of the adjusting of a file, but also in preparing for and attending at an arbitration hearing. The importance of assessing credibility, identifying potential witnesses and relevant documents, and preparing for cross-examination are specifically noted as reasons for such examinations. Delegate McMahon, however, stated in CAA Insurance Company (Ontario) and Sandhu, (FSCO P01-00044, January 18, 2002), that the Commission’s:

… processes do not include examinations for discovery. An insured person who elects to arbitrate, instead of bringing a civil action, foregoes the opportunity to conduct a pre-hearing examination of one of the insurer’s representatives. But correspondingly, he is not subjected to such an examination at the behest of the insurer

It is presently unclear how the Arbitrator’s decision is consistent with Sandhu or how the Arbitrator’s statement that “arbitration process is intended to provide a timely, cost effective and efficient alternative to court proceedings” is consistent with the additional remedy she has crafted. There is also a question whether an abuse by the Appellant in the adjusting process equates to an abuse of the adjudicative process.

The Arbitrator noted the inconsistency between her decision and those in Balanki and in Salah.

As to the importance or novelty of the issue raised, the Respondent concedes that an arbitrator’s order staying a proceeding pending an applicant attending an examination under oath is novel. I agree. I am also persuaded that it is an important issue to the arbitration pre-hearing process at the Commission.

Regarding prejudice, delay in this arbitration by accepting this appeal is questionable as the arbitration is currently stayed. In any event, the parties have agreed to an arbitration hearing date in late January 2010. I am persuaded that this appeal can be completed, as set out below, before that tentative date.

Accordingly, I am persuaded that, considering the important questions and issues arising from the Arbitrator’s decision, the conceded novelty of the remedy granted in this case, the present inconsistency in the arbitration case law on the issue at hand, the lack of prejudice regarding delay and the significance of this issue in the context of the Commission’s primary mandate to provide the quickest, most just and least expensive resolution of disputes, this appeal should be accepted.

I set the following time lines for this appeal:

The Appellant shall serve on the Respondent and file with the Commission his written submissions by Tuesday, August 4, 2009, in accordance with the time lines of Rule 54.1 of the Code.
The Respondent shall serve on the Appellant and file with the Commission its written submissions by Monday, August 24, 2009, in accordance with the time lines of Rule 54.3 of the Code.
In the interim, the Commission will contact the parties to arrange an oral appeal hearing date.

Regarding the request for a stay, subsection 283(6) of the Insurance Act provides that an appeal does not stay the order of an arbitrator unless the appeals adjudicator decides otherwise.

The Arbitrator noted that there was no evidence before her of any further written request by the Respondent for an examination under oath following the Appellant’s June 15, 2007 non-attendance. The Arbitrator ordered that the Respondent, within sixty days of her order, schedule a further examination. The Arbitrator did not order the Appellant to attend. To stay the Arbitrator’s order would not prevent the Respondent from serving a notice of examination on its own initiative and within its own time frame.

The consequences of non-attendance at an examination under oath, however initiated, will be argued in this appeal. I am not persuaded that a stay of the Arbitrator’s scheduling time frame is required. Accordingly, the requested stay is denied.

III. EXPENSES

The legal expenses of this preliminary appeal decision are deferred to the conclusion of this appeal, subject to any other or further order of an appeals adjudicator.

July 3, 2009

Lawrence Blackman Director’s Delegate

Date

Footnotes

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