October 14, 2013

Accident Benefits Update – Procedural (Un)Fairness? Arbitrator allows seven IEs

For the week of October 14 to October 18, 2013

Phillipaiya  v TD  Home and Auto Insurance Company, FSCO A12-001040, Decision on an Arbitration Motion

The Applicant, Jemeamlouis Phillipaiya was injured in a motor vehicle collision on October 14, 2008. He received income replacement benefits (“IRBs”) from his insurer, TD Home and Auto Insurance Company (“TD”) until November 2, 2009, after which his entitlement was terminated. The parties could not resolve the dispute at mediation, and Mr. Phillipaiya applied for arbitration.

On this motion, TD sought to compel Mr. Phillipaiya to attend at seven independent medical examinations (“IEs”) including: neurological, psychological, orthopaedic and vocational assessments, a Functional Abilities Evaluation, a transferable skills analysis and a labour market survey, more than 3 years after denying IRBs in order to determine his ongoing entitlement to this benefit. Mr. Phillipaiya claimed that the IEs were improper and were for the purpose of bolstering TD’s case at arbitration.

TD claimed that the delay was a result of Mr. Phillipaiya’s failure to provide sufficient medical information for the IEs to be conducted.

Arbitrator Sapin held that the IEs were reasonable and necessary. She observed that whether an IE is necessary is fact driven. In this case, she found that TD was aware that Mr. Phillipaiya was challenging its termination of IRBs by October 13, 2010, the two-year anniversary of the collision. As a result TD should have recognized that it would require post-104 IEs because the test for entitlement changes at that point. However, TD did not send notices of the IEs until November and December, 2012.

Despite this significant delay, Arbitrator Sapin found that TD’s IE request was consistent with procedural fairness, in keeping with Certas v Gonsalves, a 2011 decision of the Divisional Court. She held that although TD might have acted earlier, it was not unreasonable to wait until Mr. Phillipaiya had demonstrated that he was serious in his pursuit of post-104 IRBs by serving two medical legal reports in July and August, 2012. Thereafter, the arbitrator felt that TD had acted promptly, and that it would be unfair to deny it the right to respond to the medical legal reports. This was bolstered by TD’s willingness to proceed with the arbitration as scheduled rather than seeking a stay.


It is worth repeating the principle underlying the Gonsalves decision:

Fundamental to any administrative process, is the requirement that it be fair. At its most basic, procedural fairness requires that a party have an opportunity to be heard and that it be able to respond to the position taken against it.

In the circumstances of this case, if this arbitration is allowed to proceed in the absence of a further orthopedic examination by a doctor of the insurer’s choosing, the insurer will have no practical ability to respond to the opinions with which it was provided thirty-one days before the commencement of the arbitration.

In our view, the insurer would be denied the right to make a full response and would not be heard as the dictates of procedural fairness require. It is not enough to say that the delivery of these reports was made within the permitted time frame (in this case one day before the last day the Code, clause 39.1 says is acceptable) when, as the arbitrator found, they provide new evidence supporting a new position. This is trial by ambush. This is not overcome, as counsel for Denise Gonsalves suggested by saying that we are adjusting a claim, rather than resolving a dispute between the insurer and the insured.

With respect, this decision stands as an aberration of the principle underlying Gonsalves and ought not to be seen as precedential.

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