Neutral Citation: 2011 ONFSCDRS 118

Appeal P11-00023

Appellant

and

Respondent

Before:

Delegate Lawrence Blackman

Representatives:

Mr. Robert Besunder for the Appellant, Mr. Emilio Albanese

Mr. David Raposo for the Respondent, State Farm Mutual Automobile Insurance Company

Hearing Date:

November 30, 2011 by telephone conference call

PRELIMINARY APPEAL ORDER

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

This appeal from a preliminary arbitration order is rejected pursuant to Rule 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition, Updated – August 2011).
If the parties are unable to agree on the legal expenses of this request for leave to appeal a preliminary arbitration order, pursuant to Rule 79.2 of the Code, an expense hearing shall be requested, as set out below, within thirty days of the date of this decision.

December 20, 2011

Lawrence Blackman

Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND AND NATURE OF THE APPEAL

The Appellant, Mr. Emilio Albanese, requests that discretion be exercised under Rule 50.2 of the Dispute Resolution Practice Code (Fourth Edition – Updated August 2011) (the " Code") to accept this appeal from the September 16, 2011 preliminary order of Arbitrator Rogers (the "Arbitrator"), written reasons released October 25, 2011. The Arbitrator found the two insurer medical examinations ("IMEs") scheduled by the Respondent, State Farm Mutual Automobile Insurance Company, to be reasonable and necessary under section 44(1) of the Schedule.¹

The IMEs were booked with Dr. R.J.F. Saplys, an orthopaedic surgeon, for September 20, 2011 and for September 22^nd with Dr. B. Cook, a clinical psychologist. The Arbitrator ordered the arbitration stayed should the Appellant not attend. The Appellant did not attend.

The Appellant had been injured in a May 21, 2007 motor vehicle accident and had applied to the Respondent, his first-party automobile insurer, for statutory accident benefits under the Schedule. The Respondent paid the Appellant weekly income replacement benefits ("IRBs") until May 14, 2008 when, based on Dr. Saplys' April 28, 2008 IME report, it terminated payment. Mandatory mediation held December 14, 2009 failed to resolve this dispute. The Commission received the Appellant's Application for Arbitration on February 19, 2010.

The October 19, 2010 pre-hearing discussion confirmed as an issue in dispute the Appellant's IRB entitlement from May 14, 2008 and beyond the 104-week mark. As noted in the Arbitrator's decision, after 104 weeks of disability the IRB entitlement test changes from a "substantial inability" test pertinent to one's own occupation to a broader "complete inability" test.

The pre-hearing arbitrator set a four-day hearing for October 2011. By letter dated May 20, 2011, on consent, the pre-hearing arbitrator adjourned the hearing to May 2012 to allow a private mediation. In the interim, at the Respondent's May 16, 2011 request, the pre-hearing arbitrator scheduled a preliminary issue hearing for July 22, 2011 to determine whether the hearing should be stayed due to the Appellant's refusal to attend the requested IMEs. The Arbitrator adjourned the preliminary issue hearing to September 9, 2011 because the IME notices, served a short time before, had not yet been seen by the Appellant's counsel.

The Appellant argued that the requested IMEs were not scheduled for the purpose of determining IRB entitlement but, rather, contrary to the Schedule, to bolster the Respondent's case at arbitration. The Arbitrator rejected this submission, deriving the following principles from the Divisional Court decisions in State Farm Mutual Automobile Insurance Company v. Ramalingam, 2009 CanLII 44115, and Certas Direct Insurance Company v. Gonsalves, 2011 ONSC 3986, motion for leave to appeal subsequently dismissed November 18, 2011, Court of Appeal file No. M40259:

Fairness is fundamental to any administrative process. Procedural fairness requires that a party be able to respond to the position taken against it;
An assessment may be required in order to have a fair hearing; and
A change in the test for entitlement to a benefit post-104 weeks is a change in circumstances, giving an insurer a prima facie right to require an insured person to be assessed.

The Arbitrator concluded that:

Mr. Albanese relies on post-104 orthopaedic and psychological assessments in this arbitration. State Farm has no post-104 assessments. State Farm is therefore not in a position to respond. State Farm has a prima facie right to the post-104 assessments it seeks. No evidence is needed to support that right. Ramalingam and Gonsalves focus the analysis on whether fairness requires that the assessments take place, and not on whether the insurer is adjusting its file. The fact that counsel initiated the assessments is of no consequence in this analysis. Although State Farm could have requested the assessments earlier, the delay will have no impact on the hearing. The assessments could take place and the hearing could still proceed on May 7, 2012, as scheduled. The balance of procedural fairness weighs heavily in favour of State Farm.

The October 17, 2011 Notice of Appeal sought leave to appeal the Arbitrator's September 16, 2011 order. A stay of the arbitration order was also sought, but was subsequently withdrawn.

In support of its request that this appeal be accepted, the Appellant submits that:

The Arbitrator's decision is a final disposition of whether the Respondent is entitled to require the Appellant's IME attendance. If the appeal is not accepted, then the IMEs will take place prior to their propriety being determined.
Accepting this appeal at this time will achieve the quickest, most just and cost-effective resolution of the issues in dispute.
The Arbitrator erred in law in applying erroneous criteria and failing to consider, or inadequately considering with the requisite scrutiny the evidence before him clearly showing that the IMEs, requested by counsel and not the Respondent itself, were not for the purpose of determining entitlement to a benefit and, hence, were not reasonable.
This appeal raises novel, substantive and broadly important issues of law of whether the change in the IRB entitlement test creates a prima facie right to an IME without evidence, whether the option of a paper review is a proper criterion in assessing the propriety of proposed IMEs and whether it is appropriate for an IME to be initiated by counsel in the absence of proper procedural notices required by the Schedule, issues that have not been addressed by the Divisional Court. It is further submitted that the Arbitrator failed to address the reasonableness and necessity of each IME separately.
The Arbitrator's decision of the insurer's prima facie right, without evidence, to an IME effectively takes away any discretion of an arbitrator to determine whether an IME is reasonable and necessary. An insurer could request a set of IMEs at 103 weeks, yet be automatically entitled to a further full set of IMEs a week later. Such reasoning is contrary to the Arbitrator's earlier decision in Ramalingam and State Farm Mutual Insurance Company (FSCO A02-001646, December 17, 2004), where he held that:

I find that the crystallization of a claim for post-104 week IRBs is not a change that, on its own, justifies further investigation of the claim. A claim for post-104 week IRBs is not a claim for a new benefit ... It is still a claim for an income replacement benefit, under section 4 of the Schedule ... To continue to qualify for the benefit post-104 weeks, the Applicant must satisfy the stricter test of subsection 5(2) of the Schedule. If State Farm was in a position to decide that Mr. Ramalingam was able to perform the essential tasks of his previous employment (pre-104 threshold), it is certainly in a position to decide whether he is able to engage in any employment for which he is reasonably suited (post-104 threshold). It is not conceivable that an insurer that has denied payment of pre-104 IRBs would feel obliged to commence paying post-104 IRBs because it had not conducted an independent examination. Absent some other change, the adjusting decision would have been made.

Dr. Saplys had previously examined the Appellant. There is no evidence that Dr. Saplys required a further IME to address the subsequent MRI the Appellant underwent on February 21, 2009 or the July 26, 2009 report of the Appellant's orthopaedic specialist, Dr. B. Alpert. Dr. Saplys' August 21, 2008 IME addendum report shows that a paper review is a viable option, especially when weighed against the intrusive nature of IMEs. Significantly, Dr. Saplys' letter of April 20, 2009 states that a further orthopaedic assessment is neither reasonable nor necessary, yet this is not mentioned in the decision.
Dr. Cook's April 19, 2011 psychological IME included a review of the findings of Dr. G. Young, psychologist, retained by the Appellant. There is no evidence that Dr. Cook required a further IME. His assessment is still fresh and it is entirely open to the Respondent to ask Dr. Cook to comment on the post 104-week IRB entitlement issue.
The Respondent did not seek any post 104-week IMEs until April 2010, almost a year after the IRB test had changed and then, only through counsel. The non-contemporaneous IME requests were merely attempts to bolster the Respondent's case at arbitration, the requisite notices only being served when the Appellant raised this issue in its motion materials. Zeris and Aviva Canada Inc., (FSCO A03-000473, May 17, 2004) held that buttressing an insurer's arbitration case is not an IME purpose authorized by the Schedule. The finding of such an intended purpose has often been the basis for arbitrators declining to support IME requests in anticipation of an arbitration hearing.
The Respondent's delay in requesting IMEs is also shown in that while the Respondent's affidavit in support of its arbitration motion, dated July 7, 2011, states that there was no indication the Appellant had any psychological difficulties until receipt of Dr. Young's March 8, 2011 report, the Respondent's counsel, on April 26, 2010, indicated the need for a psychologist to address the post 104-week test.
The Respondent initially chose Dr. G.E. Ilacqua to perform the psychological IME. It is clear that the Respondent did not initially choose Dr. Cook because he found that the Appellant was not malingering, his condition was caused by the accident, he had not yet reached his pre-accident status and his testing scored below being able to participate in outdoor work and activities away from home, all supportive of ongoing disability.

The Respondent submits that this appeal does not raise a question of law as required by subsection 283(1) of the Insurance Act, R.S.O. 1990, c.I.8, but rather pertains to the exercise of discretion based on the facts of the case. Nor, it is argued, does the appeal raise an important or novel issue justifying accepting this appeal from a preliminary order. Rather, the Divisional Court in Gonsalves confirmed that fairness is fundamental to any administrative process and procedural fairness requires that a party be able to respond to the position taken against it.

The Respondent submits that to date the Appellant has served two post 104-week orthopaedic reports, a post 104-week psychological assessment and a post 104-week vocational assessment, while the Respondent has not had any post 104-week IMEs with any assessor in any discipline.

II. ANALYSIS

Rule 50.2 of the Code states that a party may not appeal an arbitrator's preliminary or interim order until all of the issues in dispute in the arbitration have been finally decided, unless the Director (or, by virtue of subsection 6(4) of the Insurance Act, the Director's Delegate) orders otherwise. Rule 51.2(c) of the Code provides that an appeal may be rejected if it is from a preliminary or interim order that does not finally decide the issues in dispute.

Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001), states:

The purpose of [now Rule 50.2] is to facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters.

In Allstate Insurance Company of Canada and Tesfay, (FSCO P99-00023, June 21, 1999), held that the decision whether to hear an appeal from a preliminary or interim order is discretionary, applicable criteria to include:

(a) the strength of the appeal;

(b) the importance or novelty of the issue raised; and,

(c) whether rejecting or hearing the appeal would provide the quickest, most just and most expeditious way of disposing of the issues between the parties, in accordance with Rule 1.1 of the Code.

Other considerations as to whether to accept an appeal from a preliminary or interim arbitration decision include the preference of the parties and whether the ruling represents a departure from the approach taken in prior cases.

I am not persuaded to exercise my discretion under Rule 50.2 of the Code to accept this appeal for the following reasons:

The decision under appeal is indeed a preliminary procedural order. The arbitration is stayed, it is not dismissed. It has been stayed by the Arbitrator after his consideration of the propriety of the IME requests. To accept that every arbitration decision regarding a requested IME is a final decision would undermine if not render meaningless the contextual purpose set out in Torok of Rules 50.2 and 51.2(c) of the Code.
The Respondent terminated payment of IRBs in May 2008, over three and a half years ago. Accepting this appeal from a preliminary order would not minimize the time and money spent on procedural or collateral matters. Rather, it would add to the expense and complexity of this proceeding and may well delay the scheduled May 2012 arbitration hearing, that hearing having already been postponed from October 2011.
In State Farm Mutual Insurance Company and Ramalingam, (FSCO P05-00026, August 13, 2007), Delegate Makepeace, in upholding arbitration orders regarding requested IMEs, stated that "the arbitrator must consider all the relevant circumstances, not just the change in the test, to determine the reasonableness of the IE request."

She held that:

Rather than focusing on the insurer's motivations or other subjective factors, the prevailing arbitral authority is that the enquiry should focus mainly on the objective factors ... identified in numerous decisions, including:

the timing of the request, especially whether it will require the hearing to be adjourned;
whether the claimant disclosed relevant materials as soon as reasonably possible in accordance with the Dispute Resolution Practice Code and whether the insurer made its IE request as soon as it reasonably determined the need for the examination;
what other information is available to the insurer, including information provided by the claimant and the number, nature and date of previous insurer examinations;
whether information provided by the claimant since the insurer's last insurer examination suggests a new diagnosis, a change in the claimant's condition or a new direction in medical investigation of it;
whether there is a reasonable nexus between the requested examination and the insured person's injuries;
whether the insurer accepts the claim and continues to pay benefits; and
generally whether the request is reasonable considering the balance between the insured person's right to privacy and the insurer's ongoing right and obligation to assess the claim ...

The Delegate further stated that "there is a strong consensus that insurer examinations should be requested as early as reasonably possible and that motions brought after the pre-hearing will receive close scrutiny." The Delegate's decision was upheld on judicial review, the Divisional Court finding that the formal notices in that case:

... were served very close to the date of the scheduled arbitration hearing. It was a reasonable exercise of discretion for the arbitrator, in the interests of fairness to both parties, to refuse first, the request for adjournment and second, the motion for a stay in the midst of the cross-examination.

Delegate Makepeace noted that her list of criteria was not final. The Divisional Court, in Gonsalves, confirmed the wide discretion of the arbitrator to ensure a fair hearing. This includes balancing the fairness to a party to make a full response, noted in Gonsalves, and the fairness to both parties to refuse an adjournment requested very close to the date of the scheduled arbitration hearing, noted in Ramalingam. The Appellant's submissions regarding the Respondent's alleged improper motivation for its requested IMEs run counter to the Divisional Court decisions, as well as that of Delegate Makepeace.

The Appellant argues that the Arbitrator's decision will lead to consecutive series of IMEs being requested at 103 and 104 weeks. In this case, however, the Respondent's arbitration motion materials directly addressed the criteria enunciated in Ramalingam by Delegate Makepeace, supported by affidavit evidence.

The Arbitrator did not simply automatically accept that both requested IMEs were reasonable and necessary. Rather, he gave reasons for the exercise of his discretion that addressed both requested IMEs, including (1) the Respondent's April 2010 request through counsel more than a year earlier for both orthopaedic and psychological IMEs, (2) the IMEs would not delay the May 2012 hearing, (3) the Respondent had not had an orthopaedic IME in over three years, during which time the IRB test had changed, (4) Dr. Cook's psychological IME only addressed proposed treatment, not IRB entitlement, and (5) the Respondent had not conducted any post 104-week IRB assessments.

The Arbitrator noted, in contrast, that the Appellant relied on two medical/legal reports that specifically addressed the post 104-week IRB test, Dr. Alpert's orthopaedic report of July 26, 2009 and Dr. Young's March 8, 2011 psychological report.

The Arbitrator, in relying on the Divisional Court decision in Ramalingam that procedural fairness entails the right of a party to make full response, found that not to allow the requested IMEs would give the Appellant an unfair advantage. Neither party, however, could assist where the Divisional Court also states that a change in the IRB test gives an insurer a prima facie right, without evidence, to require an insured to be assessed, although the Respondent suggested that this dicta was perhaps implicit.

Regardless of the Arbitrator's third extrapolated general principle not being enunciated by the Divisional Court, the Arbitrator's specific reasons supporting his decision, noted under reason #4 above, are consistent with the Divisional Court decisions and are supported by the still applicable, but not all inclusive criteria set out by Delegate Makepeace in Ramalingam.

I am, thus, not persuaded that there is a strong ground for the appeal or that this appeal raises important or novel issues warranting the additional time, expense, complexity and significant risk of delay consequent to accepting this appeal from a preliminary order.

Whether or not the option of a paper review must be considered before an arbitrator can find an IME reasonable and necessary, the Arbitrator did consider and rejected the option of a paper review, as follows:

Even if Mr. Albanese is correct in his submission that a paper review must be considered the first option, I find that his attendance is reasonably required because State Farm has had no assessments that address the post-104 change in circumstances, because it has not had an orthopaedic assessment in over 3 years, and because Mr. Albanese relies on assessments that were since done in-person. Mr. Albanese could reasonably argue that any opinion on his current ability to work, formed without the benefit of an in-person, issue specific assessment should be given less weight than the opinions from his own assessments. That would give Mr. Albanese an unfair advantage in the hearing.

Whatever the deficiencies of the initial notices, the July 25, 2011 IME notice regarding Dr. Cook and the July 29, 2011 notice regarding Dr. Saplys were both sent directly from the Respondent itself to the Appellant. The Appellant makes no submission that these notices violate the requirements of the Schedule.
Whether a requested IME is reasonable and necessary is ultimately an adjudicative decision encompassing considerations outside the qualifications of medical experts.

Dr. Saplys' April 20, 2009 letter addressed the reasonableness and necessity of the Respondent's OCF 22 request for an orthopaedic assessment by Dr. Alpert. Although the Arbitrator does not mention the letter, as stated by the Divisional Court in State Farm Mutual Automobile Insurance Co. v. Movahedi, [2001] O.J. No. 5099, "[n]ot reciting all the evidence does not mean the arbitrator failed to consider it." In any event, despite Dr. Saplys' opinion, Dr. Alpert's report was subsequently forthcoming and, as noted by the Respondent, the Arbitrator's decision as to the reasonableness and necessity of the requested IMEs looked at the situation more than two years after Dr. Saplys' opinion.

I do not agree with the Respondent's submission that the choice of an IME examiner is irrelevant. Rather, this is part of the determination of whether a requested IME is reasonable and necessary. In this case, the Appellant's arguments regarding the inappropriateness of Dr. Ilacqua conducting the psychological IME strengthens the reasonableness of the ultimate selection of Dr. Cook, in part, avoiding a multiplicity of assessors in the same area of expertise.
The Appellant cites Binnie J. in Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, that:

Reviewing courts cannot substitute their own appreciation of the appropriate solution, but must rather determine if the outcome falls within "a range of possible, acceptable outcomes which are defensible in respect of the facts and law" (Dunsmuir, at para. 47). There might be more than one reasonable outcome. However, as long as the process and the outcome fit comfortably with the principles of justification, transparency and intelligibility, it is not open to a reviewing court to substitute its own view of a preferable outcome.

The Appellant argues that the Arbitrator did not look at the IME requests with the requisite scrutiny. In Qureshi and State Farm Mutual Automobile Insurance Company, (FSCO P09-00030, October 14, 2009), I held that it "was not the role of appeals to review the evidence presented at arbitration and draw different factual conclusions or engage with a standard of perfection in a microscopic analysis of the arbitrator's decision." As stated by the Divisional Court in Gonsalves, it is not my role to hear the matter de novo and substitute my discretion for that of the arbitrator.

III. EXPENSES

If the parties are unable to agree on the legal expenses of this request for leave to appeal, pursuant to Rule 79.2 of the Code, an expense hearing shall be requested within thirty days of the date of this decision, accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs and submissions on entitlement to and/or the quantum of such legal expenses, as are in dispute.