State Farm has seven open AB claims, with seven claimants, all involved in separate accidents. The only link between them was their counsel. All of the claimants were using two service providers for their attendant care. From the OCF-6s presented, it became clear that, in February of 2015, one of the service providers to provided attendant care to three of the claimants for a total of 113.16 hours per week or 16 hours per day. In March of 2015, one of the service providers provided attendant care to two of the claimants in excess of 93 hours per week.
This presentation raised certain questions on the part of the insurer as to the bona fides of the claims as presented
State Farm therefore attempted to conduct Examinations Under Oath under section 33 of the SABS. Their counsel, Ms. Gorelashvili, contended that they were not medically fit to attend an EUO under section 33(2)(b).
State Farm brought an application for an order compelling their attendance. Counsel opposed the application because of their mental and physical condition, and because State Farm failed to comply with section 33(4) in that they failed to give proper notice of the proposed EUOs, in that the reasons were not clear.
In State Farm’s letters to their insureds, the only reason given for the examinations was:
We are requesting the examination for the purpose of determining whether State Farm is liable to pay benefits.
The claimants refused to attend, and the examinations were aborted before a formal notice of examination was ever sent, given the clear statement by counsel that his clients would not attend. On the application, State Farm led evidence that the notice of examination would have used the following language:
You are required to attend this Examination Under Oath in order to provide State Farm Mutual Automobile Insurance Company with information regarding the circumstances that gave rise to their Applications for Accident Benefits. This includes, but is not limited to, questions regarding the circumstances of the accident, your entitlement to specified benefits, your entitlement to medical and rehabilitation benefits, your claims for attendant care and housekeeping benefits, the treatment you have received and your possible ongoing entitlement to these benefits into the future.
State Farm relied on two prior cases in asserting that such notice was sufficient.
First, In Kivell v. State Farm Mutual Automobile Insurance Company, FSCO A14-008358, Arbitrator Marcel Mongeon held the following language met the requirements of 33(4):
Although it is my position that I have provided you with sufficient reasons for the EUO of Ms. Kivell, I reiterate that the examination pertains to the motor vehicle accident that occurred on November 20, 2012 and her entitlement to statutory accident benefits as a result of that motor vehicle accident. I can also advise that the scope of the examination will encompass but will not be limited to questions pertaining to her entitlement to medical and rehabilitation benefits, including facts surrounding her attendance at facilities where treatment and/or assessments occurred; her entitlement to income replacement benefits, including facts surrounding her employment history and current and prior levels of functioning and activities; questions pertaining to visitation expenses and, questions pertaining to her entitlement to attendant care benefits including the facts surrounding her current and prior level of functioning and activities.
The decision does not indicate what language was used in the notice of EUO. Arbitrator Mongeon found:
Given that the provision is found in section 33(4) and not in 33(2), I find that the requirement to provide “the reason or reasons” is merely a matter of form, not one of substance. Accordingly, any wording that alerts the Applicant that questions will be asked about the matters giving rise to the claim is sufficient to comply with the requirement. The reason or reasons do not have to be detailed, they merely have to give the Applicant notice about the general type of questions that will be asked.
In this case, I find that the Insurer’s notice of EUO complied with the requirements of section 33(4)3 of the Schedule.
In his decision on this application, Justice Hackland, the application Judge, disagreed:
In my opinion, a review of section 33 of the SABS demonstrates that the Legislature sought to achieve a balance between an insurer’s right to properly determine eligibility for benefits with the insured rights to convenience and fairness in the process by receiving reasonable advance notice of the examination, a right to counsel or other representation, a right to be told in advance of the reasons for the examination and a right not to be examined during a period of medical incapacity. This is reflective of the good faith obligations owed by an insurer and an insured in contracts of insurance and of general considerations of fairness to both parties.
Second, State Farm relied on portions of the decision in Baig v. Guarantee Company of North America, 2007 ONCA 847 (CanLII). This case stands for the proposition that the right to an examination under oath under section 33 of the SABS extends to matters in litigation and allows an inquiry into “all matters material to the insurer’s liability and extent thereof which the insurer has an objective and reasonable basis to explore.”
Justice Hackland focused on paragraph 27 of Baig, in which the Court of Appeal states:
I recognize the force of counsel for Baig’s submission that taking a broad view of the scope of the statutory examination could provide insurers with the opportunity to conduct baseless reviews of the underwriting of the insurance contract in an effort to find a basis to refuse claims. Undoubtedly, the statutory examinations is not intended to permit insurers to embark on fishing expeditions or take blind shots in the dark. However, where the insurer has an objective and reasonable basis for suspecting fraud in the initial appraisal, questions about the matter are relevant.
Ultimately, Justice Hackland dismissed the application to compel the attendance at the examinations under oath, but did so without costs. While some counsel acting for accident victims might take solace in this disposition, they would be unwise to use this case as a basis to refuse to produce their clients at examinations under oath, given Justice Hackland’s further comments in obiter.
He went on to address the concerns that many insurers have with providing fulsome “reasons” for the examination; that claimants will tailor their evidence once they know what is in issue. In Justice Hackland’s view, the notice would have had to advise the claimants that the insurer wished “to review the claims submitted for attendant care.” While not finding that these were necessarily the magic words that would have compelled an attendance in this case, it is clear that sufficient reasons must be more specific than the need to “determine entitlement to benefits.”
Examinations Under Oath are a difficult issue for insurers. Our advice is to always work from the premise that, despite having questions about a claim, this is still a first party relationship and the statutory requirements of section 33 are clear: reasons must be given. It is probably better to give clear reasons for the examination, and err on the side of more reasons rather than less.
While concerns about the tailoring of evidence are well founded in some cases, this is more readily dealt with through investigation prior to the EUO. There are few counsel that have experienced a claimant suddenly coming clean about fraudulent activity just because you asked them a question at an EUO. However, many have experienced claimants abandoning claims when presented evidence of fraud.
The major lesson to be drawn from this decision is that reasons for the examination under oath must be given, even if an insured says he is not going to attend irrespective of the reasons.
In parting, Justice Hackland provided one additional piece of useful information on examinations under oath. He says if a proper notice is delivered, the claimants would be obliged to attend unless they are “incapable of being examined” because of their physical, mental or psychological condition within ss. 33(2)(b). If that position were to be taken in a future application, proper affidavit evidence disclosing medical or psychological reasons for any claim of incapacity would be necessary, and an affidavit from the lawyer attaching a medical note would not suffice for this purpose (especially, as in this case, the affiant also sought to argue the motion).