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Court considers right to terminate disability benefits for failure to attend Independent Medical Exam

Jurisdiction: - British Columbia
Sector: - Retail Trade

In Nayyar v. Manufacturers Life Insurance Company/La Compagnie D'Assurance Manufactures, 2012 BCSC 28, the BC Supreme Court considered the right of the employer/disability plan administrator/insurer to terminate an employee's disability benefits for failing to attend an Independent Medical Exam ("IME").

Of specific value is this overview of the law on IME's that the court set out:

[120]     Given the continuing nature of a claim under a disability policy, an insurer is entitled to information concerning the insured in order to properly assess the claimant's ongoing entitlement to receive disability benefits: Paul Revere Life Insurance Company v. Patterson, 2002 BCSC 138 (CanLII), 2002 BCSC 138 at para. 12, 99 B.C.L.R. (3d) 189.

[121]      Some insurance policies, as is the case with the Plan and the Policy, contain a term requiring the insured to submit to an independent medical examination at the request of the insurer. The right of a disability insurer to request such an examination is also contained in s. 89 of the Insurance Act, R.S.B.C.1996, c. 226.

[122]      An independent medical examination may be an important tool for an insurer in cases where there is bona fide reason for concern that the opinions of the insured's doctor are subject to pre-disposition or bias. Even where that concern is not present, an insurer may be concerned about the treatment being provided to the insured by his or her physician: Richard Hayless, Disability Insurance Canadian Law and Business Practice (Scarborough, Ont: Thomson Canada Limited, 1998) at 254.

[123]      When an insured fails to attend an examination that is reasonably required by the insurer, then he or she is in breach of the policy. The insurer is entitled to suspend payment of benefits: Paul Revere at para. 14; Mononen v. Great-West Life Assurance Co. (1998), 6 C.C.L.I. (3d) 247 (B.C.S.C.), aff'd 1999 BCCA 431 (CanLII), 1999 BCCA 431, 128 B.C.A.C. 155.

[124]      In Haggart v. Nova Scotia Public Service Long Term Disability Plan Trust Fund, 2003 NSSC 14 (CanLII), 2003 NSSC 14, aff'd 2003 NSCA 132 (CanLII), 2003 NSCA 132, 219 N.S.R. (2d) 250, MacLellan J. said, at para. 44, that when a disability insurer exercises its righ to rely on the policy to request a medical assessment, "it must act honestly, fairly and in good faith".

[125]      Costco and Manulife concede that a disability insurer's request for an insured to attend an independent medical examination must be reasonable in the circumstances.