Insurer request for insurer examination denied due to lack of timeliness

April 30, 2012, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer


Arbitrator: Joyce Miller
Decision Date: March 1, 2012



The Applicant, Subashini Yogesvaran, was injured in a motor vehicle accident on May 13, 2007. She applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company, payable under the Schedule. State Farm terminated weekly income replacement benefits on January 16, 2008. The parties were unable to resolve their disputes through mediation, and Mrs. Yogesvaran applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act.

The issues in this motion hearing are:

  1. Is State Farm entitled to an insurer's examination of Mrs. Yogesvaran pursuant to section 44 of the Schedule?
  2. If yes, should the arbitration scheduled on December 19, 2011 be stayed pending Mrs. Yogesvaran's attendance at a section 44 assessment?
  3. Should the continuation of interim income replacement benefits be suspended by reason of Mrs. Yogesvaran's failure to attend the section 44 assessments scheduled by State Farm?


  1. The motion is dismissed.
  2. If needed, the parties can speak to the Arbitrator on the issue of expenses within 30 days of receipt of this decision.


An arbitration hearing in this case was first scheduled to commence on July 6, 2009. At the start of the hearing Mrs. Yogesvaran raised a preliminary issue. She claimed that State Farm had failed to comply with section 37 of the Schedule when it terminated her income replacement benefit.

The preliminary issue was heard by written submissions. On November 26, 2009, the Arbitrator issued a decision with the following order:

State Farm shall pay Mrs. Yogesvaran an income replacement benefit from January 17, 2008 and ongoing until the benefits are terminated in accordance with section 37 of the Schedule.

Although State Farm appealed this order, there is no evidence presented that, pursuant to the Arbitrator’s order, State Farm made any attempt to terminate Mrs. Yogesvaran's income replacement benefit.

The appeal decision was issued on October 28, 2010. In his decision the Director's Delegate Blackman stated:

I am … not persuaded that the Arbitrator erred in law to the extent that her order be considered a proper exercise of discretion to award interim benefits, subject to a final hearing.… Accordingly, pursuant to my authority under subsection 283(5) of the Insurance Act, delegated by subsection 6(4), I vary the Arbitrator's November 26, 2009 decision by adding a third paragraph to her order that the Arbitrator's order is interim and the matter shall proceed to an arbitration hearing to determine the Respondent's final entitlement to the interim award.

The record shows that on November 30, 2010 a notice of hearing was sent to the parties that the arbitration hearing would resume on December 19, 2011.

On April 1, 2011, State Farm wrote to Mrs. Yogesvaran stating that pursuant to section 44 of the Schedule three insurer's examinations were scheduled as follows: a psychiatry assessment on April 29, 2011; a physiatry assessment on May 18, 2011 and a vocational assessment on May 30, 2011.

On April 8, 2011, Mrs. Yogesvaran's counsel wrote to State Farm's counsel and advised that Mrs. Yogesvaran would not be attending the scheduled section 44 assessments.

On October 13, 2011, State Farm made an Application for Variation of the October 28, 2010 appeal order. Director's Delegate Blackman's November 22, 2011 decision notes that:

The Application for Variation sought an order that IRB entitlement be determined at an arbitration hearing, with the Respondent's IRB entitlement in the interim being suspended under subsection 37(7) of the Schedule due to the Respondent's April 8, 2011 refusal to attend insurer medical examinations ("IME's") the Applicant had requested on April 1, 2011 for April 29th with a psychiatrist, May 18th with a physiatrist and May 30th with a vocational specialist.

Director's Delegate Blackman rejected the Application for Variation and concluded:

I am thus not persuaded that accepting this variation application will produce "the quickest, most just and least expensive resolution of the dispute." Accordingly, pursuant to Rule 61.4(a) of the Code, I exercise my discretion to reject this present Application for Variation as being from a preliminary or interim appeal order that does not finally decide the issues in dispute.

On Friday, December 16, 2011, at 2:44 p.m. counsel for State Farm faxed to the Commission the following letter addressed to the Case Administrator and Mr. Wilson:

Please find enclosed a copy of our Factum of the Insurer in support of our request for a suspension of benefits. Our Book of Authorities will be delivered to Mr. Wilson later today and to the Financial Services Commission on Monday morning at the commencement of the arbitration hearing.

The Factum attached were submissions in support of State Farm's request for an order that State Farm has a right to assess Mrs. Yogesvaran by way of a section 44 examination; that the arbitration hearing on December 19, 2011 be stayed indefinitely pending Mrs. Yogesvaran's attendance at a section 44 assessment and the payment of income replacement benefits be suspended by reason of her failure to attend the section 44 assessments scheduled by State Farm.

Is State Farm entitled to a section 44 assessment of Mrs. Yogesvaran?

  1. State Farm's Submissions

State Farm submits that the last insurer's examination of Mrs. Yogesvaran was on April 29, 2009. This was a psychiatric examination by Dr. K. Walsh. There had only been two previous assessments, one physiatry assessment and one chiropractic exam on January 2, 2008 and August 25, 2008 respectively.

State Farm submits that there has been a material change in Mrs. Yogesvaran's circumstances in that "there has not been a section 42 [now section 44] assessment since the passage of the 104-weeks of disability mark in May 2009."

State Farm submits that the arbitration cases of State Farm Mutual Automobile Insurance Company and Ramalingam (FSCO P05-00026, August 13, 2007), and Kostynyk and State Farm Mutual Automobile Insurance Company (FSCO A09-003158, September 28, 2011), have held that "a change in the post-104 week entitlement test equates to a change in circumstances giving an insurer a prima facie right to require an insured person to be assessed."

State Farm further submits that "basic procedural fairness requires that the Insurer have a right to assess the Claimant's current state of health."

State Farm notes that Mrs. Yogesvaran has provided three recent reports - a psychological report dated March 7, 2011; a functional capacity evaluation report dated May 25, 2011 and a medical examination report dated May 9, 2011 – that Mrs. Yogesvaran will refer to and utilize to advance her case at the arbitration hearing.

State Farm submits that "absent an Order requiring further section 44 examinations, the Insurer will be forced to rely on outdated data and will be denied the right to make a full response and will not be heard as the dictates of procedural fairness require."

  1. Mrs. Yogesvaran's Submissions

Mrs. Yogesvaran submits that State Farm has had ample notice of the post-104 issue in this arbitration prior to the July 6, 2009 arbitration hearing. In her Application for Arbitration, Mrs. Yogesvaran claimed benefits post 104 weeks. A letter dated February 19, 2009 confirmed that this was an issue for the July 6, 2009 arbitration.

Mrs. Yogesvaran submits that prior to the July 6, 2009 arbitration hearing, State Farm was in receipt of opinions which responded to her post-104 claim that she was unable to perform any occupation for which she was suited by reason of education, training or experience, which information is entirely omitted in the insurer's written submissions. These insurer's reports include the report of Dr. O, dated January 8, 2008, wherein he opines that:

From a physical point of view, in my opinion, she does not suffer a complete inability to engage in any employment for which she is reasonably suited by reason of education, training and experience.

The report of Dr.W, who did a psychiatric assessment on April 24, 2009, notes in his report dated April 29, 2009 that:

I will now address the question raised in the referral letter of March 19, 2009 … Does the insured suffer a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience? …Not from a psychiatric perspective as a result of the May 13, 2007 M.V.A.

Mrs. Yogesvaran further submits that: "There is no evidence that prior to the hearing, and in particular during the period May 13, 2007 to July 6, 2009 the insurer took any steps to arrange any further assessments other than those as previously referenced."

Mrs. Yogesvaran submits that one can infer from this that "…the insurer understood that it had sufficient medical evidence, and was in a position to respond to the insured's claims at the arbitration hearing, …" Moreover, "[t]here is no evidence that the insurer sought an adjournment of the arbitration hearing scheduled for July 6, 2009, so that it could conduct further assessments."

Mrs. Yogesvaran submits that upon receiving her counsel's letter of April 8, 2011 regarding her non-attendance for the insurer's examinations, "…the insurer ought to have taken timely steps to enforce its alleged right to require the insured to attend for the assessments. Specifically, the insurer has provided no explanation as to why, in a timely manner, it failed to commence any motion or application arising from the insured's position which had been provided to it on April 8, 2011."


In the case of Eidt and Pilot Insurance Company (FSCO A04-001277, February 11, 2005), Arbitrator Killoran stated: "It is well established that the onus is on the insurer to prove that insurer's medical examinations are reasonably necessary." For the following reasons the Arbitrator found that State Farm has not met its onus.

Section 44(1) of the Schedule provides that:

For the purposes of assisting an insurer to determine if an insured person is or continues to be entitled to a benefit under this Regulation for which an application is made, but not more often than is reasonably necessary, an insurer may require an insured person to be examined under this section by one or more persons chosen by the insurer who are regulated health professionals or who have expertise in vocational rehabilitation.

State Farm submits that it requires an insurer's examination due to the change in the test for entitlement and that procedural fairness requires that it be able to respond to the position taken against it.

The cases of Ramalingam and Gonsalves and Certas Direct Insurance Company (FSCO P09-00036, January 24, 2011), establish that an insurer has a prima facie right to require an insured person to be assessed, upon a change in the test for entitlement.

The case of Bogic and AXA Insurance (Canada) (FSCO A96-001192, April 30, 1999), which outlines the test to determine whether an insurer's examination was reasonable and necessary, states that:

The closer a request is made to a hearing, the closer the scrutiny of its reasonableness to ensure that there is not avoidable delay or that the insured's preparation for hearing is not prejudiced.

Succinctly, the timing of an insurer's request for an insurer's examination is a factor in its reasonableness.

In the present case, the Arbitrator found that from very early on in the process State Farm had more than ample notice that Mrs. Yogesvaran was claiming post-104 benefits. This is evidenced by the fact that Mrs. Yogesvaran's made this claim in her Application for Arbitration, dated May 22, 2008. Moreover, the February 19, 2009 letter confirmed that the post-104 test was an issue for the arbitration hearing.

Before State Farm terminated Mrs. Yogesvaran's income replacement benefit effective January 16, 2008 it had already obtained a report from Dr. O dated January 2, 2008 wherein he opined that Mrs. Yogesvaran did not meet the post-104 test.

In its March 19, 2009 referral letter to Dr. W, State Farm specifically asked him to comment on the post-104 test.

At the commencement of the arbitration on July 6, 2009, there was no indication from State Farm that it could not precede on the post-104 test because it did not have any adequate insurer's examinations on this issue. It was not until April 1, 2011 that State Farm, for the first time, made a request for an insurer's examination based on a change of circumstances.

On April 8, 2011 Mrs. Yogesvaran gave timely notice that she would not attend the insurer's examinations. Instead of immediately requesting a hearing for a motion in respect of whether Mrs. Yogesvaran should attend the insurer's examinations, State Farm waited eight months until the eve of the December 19, 2011 arbitration hearing, to make its request.

On the facts of this case, the Arbitrator found it completely unreasonable that the insurer should have waited until the eve of the resumed arbitration hearing to bring its motion to stay the proceedings and suspend the interim order for income replacement benefits until Mrs. Yogesvaran attended a section 44 insurer's examination, because of a change in circumstances.

While the Arbitrator fully accepted State Farm's submission that procedural fairness requires that a party be able to respond to the position taken against it, the Arbitrator found that State Farm failed to respond in a timely manner. The Arbitrator found it also failed to provide any explanation, whatsoever, why it did not do so. The Arbitrator found that this lengthy delay in requesting an insurer's examination was unreasonable in the circumstances of this case.

Furthermore, the Arbitrator found if there is any procedural unfairness in this case it is the unfairness caused to Mrs. Yogesvaran. The Arbitrator found that that State Farm's actions have strongly prejudiced Mrs. Yogesvaran in this arbitration process. It has significantly delayed her ability to have her case heard in a timely and expeditious manner.

Accordingly, for these reasons, the Arbitrator found that, pursuant to section 44 of the Schedule State Farm is not entitled to any insurer's examinations in this arbitration hearing. Accordingly, it follows from this that the arbitration hearing on December 19, 2011, is not stayed, nor is Mrs. Yogesvaran's income replacement benefit suspended.


Posted under Accident Benefit News, Automobile Accident Benefits, Car Accidents, Disability Insurance, Treatment

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