Slaying The Section 42 Dragon

How to Restrict Endless Insurer Examinations. H. T. v. Security National Insurance Company [2009] F.S.C.O. Decision A08-002642

With the abolition of the Designated Assessment Centres (DAC) came the entitlement of the insurer to request section 42 medical examinations for each benefit applied for.

Since the demise of the DAC system, the insurers have argued that they have an unfettered right to as many examinations as they deem fit by as many different experts as they deem fit for any and all requests for benefits and treatment.

If an insured refuses to attend any requested examinations, the insurer typically cites the section of the accident benefits schedule that states the insurer does not have to pay for the requested benefit if the insured refuses to attend the examination.

The insurer’s right to these examinations is limited such that they can only be requested by the insurer “as is reasonably necessary”. [see section 42(1) of the Schedule]. Unfortunately, the insurers usually state that all of their requests are reasonably necessary and if the insured does not attend the examination, then a denial is forthcoming for failure to attend. Prior to the decision is H. T. v. Security, there was no proper legal interpretation of “reasonably necessary”.

In a recently argued interim benefit motion at the Financial Services Commission, the parameters of an insurer’s power to conduct unfettered, unlimited examinations was challenged.

In this case, our client applied to her insurer for a declaration that she was catastrophically impaired arising from a psychiatric/psychological condition. The insurer, as is normally done, immediately gave notice that they required our client to be examined by four different specialists over many days. We refused on the basis of evidence from her treating psychologist that repeated section 42 examinations were harming the insured and placing her at risk.

The Arbitrator ordered that if the insurer wished to maintain its denial, the insurer must proceed to arbitration without any section 42 examinations whatsoever.

The facts of this case were rather unique. However, the Arbitrator declared some very important and fundamental principles applicable to all claims for benefits limiting the rights of the insurer to Section 42 examinations. They are as follows:

• Upon receipt of a request for a benefit, the insurer is prohibited from immediately initiating a full blown assessment and a multiple examination process without first considering if a less invasive or demanding process is available to the insured to determine the entitlement to the benefit.
• An insurer is prohibited from delegating the determination of entitlement to a third party assessment centre. While there is nothing wrong with delegating the conduct of assessments to experts, the experts do not make the determination as to entitlement, the insurer must.
• It is improper for an insurer, having received section 42 examination reports supporting the insured’s disability and need for past benefits, to choose an entirely different team of assessors when they receive another treatment plan. The Arbitrator stated:

It is clear also that in the choice of such an independent expert, one party’s strategic interest does not trump issues of fairness. Given the first party relationship in accident benefit matters, the responsibility of experts chosen to assist in the determination of benefit entitlement should be no less than for unrelated parties in an adversarial situation. In this matter, it is not enough for Security to have an unexplained preference for a new and different psychiatrist, when such an abrupt change in assessors can lead to an inference of expert shopping for a more favourable report.

• An insurer cannot automatically choose to conduct a myriad of in-person examinations without first considering from available medical records and past insurer assessments if the benefit is payable. The failure of the insurer to consult with the experts of its own choosing who have already examined the insured without the need for further in-person examinations was described by the arbitrator as the “assessment equivalent of round-up the usual suspects”.

This arbitration commenced when the insurer refused to even consider its insured’s application for a declaration of catastrophic status without numerous new examinations from a whole new team of examiners. It refused to simply ask previous assessors who had already examined its insured. The insurer stated the insured’s refusal to attend the requested examinations allowed them to refuse the application for catastrophic status. Successfully challenging this position involved extensive time, effort and monies but we needed to do it to protect our client from this abuse.

If an insurer is proposing a “new team” and in effect “expert shopping” every time a benefit is applied for, we at Thomson Rogers urge treating physicians, psychologists and healthcare providers to insist the insured do what is necessary to stop this potential abuse. Endless section 42 examinations can be stopped.