Posts Tagged ‘Arbitration’
A recent decision by the Financial Services Commission of Ontario (FSCO) confirms that an insurer cannot necessarily deduct attendant care benefits from times when a claimant is receiving medical or rehabilitation treatment.
In Ms. T.N. and The Personal Insurance Company of Canada [FSCO A06-000399] the Arbitrator Suesan Alves stated the following:
The Personal submitted that it should be permitted to deduct chiropractic, osteopathic, massage therapy and six hours of rehab social worker and one hour of social worker treatment from any award of attendant care benefits. I disagree.
The benefits that The Personal seeks permission to deduct are provided under section 14 and 15 of the Schedule. Attendant care benefits are provided under section 16 of the Schedule. Each section of the Schedule provides for different and distinct services.
The focus of the Schedule is to provide services which meet the needs of an insured person. Under the statutory scheme, an insured person is entitled to medical, rehabilitation and attendant care benefits based on the criteria of need or necessity and reasonableness. In this context, it seems an odd concept to contemplate deducting one equally necessary benefit from another. If that were permissible, then an insured person would be required to choose, for example, between receiving assistance with a bath from his or her attendant, or receiving a physiotherapy treatment.
I am not persuaded that double payment would result from the provision of both attendant care and medical and rehabilitation benefits. Although the Form 1s filed by the Applicant contemplate the provision of attendant care 24 hours per day, 7 days per week, the rate prescribed for care in the completed forms is $7.00 per hour. Effective March 31, 2010, the minimum wage in Ontario became $10.25 per hour.
In a letter dated October 9, 2008, the claims handler informed counsel for the Applicant that the cost of the services of a certified support worker from a private agency which provides attendant care services in Ms. N’s area is $21.00 per hour. If Ms. N purchases attendant care services from that agency, she will be able to purchase approximately eight hours of attendant care per day.
I do not see attendant care and treatment as being mutually exclusive. Had the Legislature intended to permit the deduction of medical and rehabilitation benefits from attendant care benefits it could easily have done so expressly. For these reasons, I am not persuaded that the Legislature intended that other benefits would be deducted from attendant care. For these reasons, I reject The Personal’s submission that I permit the deduction of chiropractic, osteopathic, massage therapy and six hours of rehab social worker and one hour of social worker from any award of attendant care benefits.
Applying to Wrong Insurer is a Reasonable Excuse for Delay in Applying to Correct Insurer for Accident Benefits
A recent arbitration decision by the Financial Services Commission of Ontario (FSCO) confirms that an insurer cannot deny accident benefits if the application is significantly delayed because the claimant applied to the wrong insurer first.
In the decision, Egal and Economical [FSCO A10-004057] Arbitrator Judith Killoran concluded that the Applicant, Roda Egal, had a reasonable excuse for the delay in applying for accident benefits with the Economical Insurance Company, because Ms. Egal had originally applied to another insurance company (American Assurance) who was handling her claim. Economical did not take timely steps to request information to corroborate her claim, but rather simply maintained their position that she had not applied for accident benefits within the timeframes outlined in the Statutory Accident Benefits Schedule (SABS).
Furthermore, Arbitrator Killoran ordered a special award in the amount of $5,000.00 against Economical for its unreasonable position. As stated in her decision,
I find no merit in Economical’s position that it had no responsibility to adjust Ms. Egal’s file until receiving a reasonable explanation for her delay in applying. Economical received a reasonable explanation for the delay. Economical was also aware that documentation had been sent to the wrong insurer and persisted in refusing Ms. Egal’s claims long before it had received her file.
I find that Economical failed egregiously in its responsibilities to its first party insured, Ms. Egal. It did not follow up expeditiously in obtaining her file from American Assurance and it made decisions about her entitlement in its absence. No attempts were made to evaluate the merits of Ms. Egal’s claims. I find that Economical unreasonably withheld the payment of benefits to which Ms. Egal was entitled. Consequently, I find that Ms. Egal is entitled to payment of a special award fixed at $5,000, inclusive of interest.
This decision can be read in its entirety by clicking here.
Further reforms to Ontario’s Auto Insurance Industry are planned as part of the 2012 Budget announcement made yesterday in Toronto. Two of these measures include changes to the
definition of catastrophic impairment and further enforcement of auto insurance fraud.
In 2010, the government made major changes to the auto insurance system. As a result, premiums are stabilizing for drivers across Ontario. Building on the success of the 2010 reforms, the government is taking action to tackle fraudulent and abusive practices, base insurance benefits on scientific and medical principles, and ensure its regulator continues to identify and respond to new and emerging issues. The government’s ongoing work in the area of auto insurance, including fraud, should continue to reduce the pressure on premiums.
Some of the key changes to be implemented include:
- Regulation of health clinics;
- Other gaps in regulation;
- Establishment of a dedicated fraud unit;
- Consumer education and engagement strategy;
- A single web portal for auto insurance claimants;
- Development of new Minor Injury Guideline;
- Make the report of the Superintendent of Financial Services on catastrophic impairment public and move forward to propose regulatory amendments in this area;
- Engage in a review of the automobile insurance dispute resolution system;
- Strengthen the [FSCO] Superintendent’s authority regarding rate and risk classification approvals;
- Support a Superintendent’s review of the profit provision benchmark in auto insurance rate change approvals;
- Work with insurers to explore the implications of voluntary usage-based auto insurance policies;
- Harmonize the timing of statutory automobile insurance reviews;
- Improve solvency supervision of Ontario insurers
- Update Ontario’s Insurance Act by:
- Proposing amendments to the life insurance accident and sickness insurance parts of the Insurance Act to enhance consumer protection, reduce regulatory burden, and harmonize
with other Canadian jurisdictions; and
- Enhancing the effectiveness of its insurance regulation by proposing amendments to give the Superintendent of Financial Services the authority to impose administrative monetary penalties in the insurance sector.
- Proposing amendments to the life insurance accident and sickness insurance parts of the Insurance Act to enhance consumer protection, reduce regulatory burden, and harmonize
You can read the Government’s comments on the insurance industry by clicking here.
In a recent Financial Services Commission of Ontario (FSCO) Arbitration ruling, Costel Sicoe and Jevco Insurance Company [FSCO A08-001173], Arbitrator Susan Sapin confirmed that the hourly rates indicated on the Attendant Care Needs Assessment (Form 1) are the rates which are to be used by insurers for paying the benefit.
Mr. Sicoe was catastrophically injured in a motorcycle accident on June 15, 2006. As a result of this accident he required round-the-clock attendant care. Jevco paid the attendant care to the maximum of $6,000.00 per month.
However, in February 2009 Mr. Sicoe moved to Romania. Jevco reduced the monthly attendant care payments based on an argument that the basic supervisory care amount of $7.75 per hour is based on the minimum wage in Ontario at the time of the accident, but in Romania the minimum wage was $1.30 per hour. Jevco paid $1.30 per hour for the basic supervisory services. This resulted in Mr. Sicoe being paid less than the $6,000.00 per month that he was entitled to in accordance with the Form 1.
Arbitrator Sapin confirmed the interpretation of an “incurred expense” from previous case law:
It is well-established that an applicant need not actually receive the items or services claimed in order to be entitled to an expense. To do otherwise would allow the insurer to set up the inability of an insured to pay for a benefit as a shield from its obligation under the policy of insurance. It is sufficient that the reasonableness and necessity of the service be established and that the amount of the expenditure can be established with certainty.
This decision further confirms that insurers are bound to pay attendant care benefits in accordance with the Form 1 and that they do not have the discretion to pay below the rate established by the Form 1. To that end, Arbitrator Sapin stated the following:
I note that the most recent Attendant Care Hourly Rate Guideline, dated June 2010 and available on the Commission website, establishes the maximum expense that automobile insurers are liable to pay under the Schedule for attendant care services (for accidents after September 1, 2010). The Guideline also states that “Insurers are not prohibited from paying above the maximum hourly rates established in this Guideline.” It does not say, however, that insurers can pay less.
NOTE: This decision was overturned on appeal on October 1, 2012
In the decision Marcia Henry and State Farm Automobile Insurance Company [FSCO A09-000213] FSCO Arbitrator Denise Ashby ordered the insurer to pay a claimant’s income replacement benefits (IRB) with interest. The insurer was also ordered to pay a special award of $23,000.00 for unreasonably withholding the benefit.
Marcia Henry was a full-time emergency triage nurse in a hospital. The medical experts identified that she was only capable of engaging in sedentary work. Despite that, State Farm terminated her income replacement benefits prior to the 104-week mark, taking the position that she did not suffer a substantial inability to perform the essential tasks of her pre-accident work.
The Arbitrator also considered Ms. Henry’s entitlement to IRB’s after the 104-week mark, when the eligibility criteria changes to having to suffer a complete inability to engage in any employment for which she is reasonably suited, based on education, training and experience.
Although Ms. Henry took courses to upgrade her resume following the accident, it was determined that she still remained competitively unemployable when compared to her pre-accident job. The Arbitrator noted that, “It is unrealistic to believe that a woman of Ms. Henry’s age, disability and expected level of income would be hired over similarly educated, healthy and younger candidates who would likely have lower salary expectations.”
The Arbitrator went on to state that,
The accident occurred in February 2007. For the majority of her studies Ms. Henry was not engaged in employment and was able to work at her own pace. Notwithstanding this flexibility, it took four years to complete her degree. While Ms. Henry’s extensive experience and academic success might appear to make her an attractive candidate for employment as a nursing or public health instructor, her lack of teaching experience and accommodation requirements negate this. I accept that Ms. Henry enrolled in post-graduate studies as part of a career plan which would have seen her transition from the physically demanding role of emergency department nurse to a more sedentary role in public health. However, the injuries sustained in the accident prevented her from implementing her plan. Therefore, I find that Ms. Henry is entitled to post-104 week income replacement benefits.
With regard to a special award, the Arbitrator made the following comments:
State Farm stubbornly held to the opinion of its medical assessments of 2007 that Ms. Henry was not substantially disabled. Notwithstanding there was compelling evidence that Ms.
Henry continued to require significant medical intervention including shoulder surgery in June 2009.
An insurer has a continuing obligation to adjust a claim. State Farm failed to meaningfully revisit its opinion as the 104 week period elapsed and Ms. Henry had not returned to work.
I find that State Farm unreasonably withheld income replacement benefits from Ms. Henry and as a consequence she is entitled to a special award. As State Farm essentially abdicated its responsibility to adjust the file in respect of the post-104 week period, the award should be at the higher end of that available.
The full decision can be read by clicking below.
Smitiuch Injury Law recently won an arbitration decision, DiMarco and Chubb Insurance Company, at the Financial Services Commission of Ontario (FSCO) regarding what is deemed to be an “accident”.
Marilena DiMarco was riding her bicycle on a training ride for a charitable event when she and her group went through a town that was having a street festival. Because the street was closed the group rode their bicycles on the sidewalk. A van was parked half-way on the sidewalk. When Ms. DiMarco swerved to avoid the van, she lost her balance and fell, hitting the van with her hand in the process. Chubb Insurance refused to accept the incident as a “motor vehicle accident” as defined in The Insurance Act and Statutory Accident Benefits Schedule (SABS) and refused to pay for badly-needed treatment and other accident benefits.
Arbitrator Deborah Pressman stated the following:
In this case, Ms. DiMarco was compelled to manoeuvre on the sidewalk around a vehicle that was parked in her way. This automobile set in motion a chain of events directly resulting in Ms. DiMarco’s fall from the bicycle. There was no intervening act that caused Ms. DiMarco to fall. There were no other impediments around the automobile or near Ms. DiMarco. Therefore, there was a direct and proximate cause between the “use or operation” of the automobile and Ms. DiMarco’s injuries.
Peter Cho, an associate lawyer at Smitiuch Injury Law Professional Corporation, represented Ms. DiMarco at the arbitration hearing. He was assisted by Chris Jackson, Accident Benefits Manager.
The decision can be read by clicking on the attached. DiMarco and Chubb Insurance Company of Canada FSCO Decision A10-003967
A recent decision by FSCO Arbitrator Jeffrey Rogers supports that a mediation can be deemed to have failed if it has not been mediated within the 60 day timeframe noted in both The Insurance Act as well as The Dispute Resolution Practice Code.
In the decision, Leone and State Farm, Arbitrator Rogers states the following:
Since the prescribed time for mediation had expired when Mr. Leone filed his Application for Arbitration, there was no jurisdictional barrier to his doing so. This conclusion is consistent with the scheme and intent of the Act, the Schedule and the Rules as they aim to promote prompt payment of benefits and speedy dispute resolution. The legislation and the Rules are all replete with fixed time limits intended to serve this purpose. Accepting State Farm’s position would mean that there is no fixed time for completing mediation. That would render meaningless the requirement in the Act and the Rules for the prompt appointment of a mediator.
Section 281.1 of the Act, section 51(1) of the Schedule and Rule 11 of the DRPC require that an Application for Mediation be filed no later than 2 years from the date the insurer provided written notice of refusal to pay an amount claimed. Accepting State Farm’s submission that the Application is not filed until a mediator is appointed would mean that an insured person does not know whether he or she has met this limitation when delivering an Application to the Commission. It would mean that the period differs from application to application and that close to 1 year of the permitted time was consumed by the delay in this case. Conceivably, if delays increase to the point where it takes 2 years to appoint a mediator, an insured person who attempts to file an Application immediately upon denial would see his or her rights extinguished, before the first step in the dispute resolution process has occurred. The Legislature could not have intended that absurd result.
A decision from the Superior Court of Justice of Ontario was released that declares a mediation by the Financial Services Commission of Ontario (FSCO) failed if it has not been mediated within 60 days of the application being submitted.
In Cornie v. Security National [2012 ONSC 905], which was heard with three other similar cases, Justice J.W. Sloan renders the following decision:
It currently appears that FSCO’s Dispute Resolution Services’ Mediation Unit is functioning without timelines and has been doing so for years.
The SABS [Statutory Accident Benefits] are for the benefit of injured motor vehicle victims and are often required in a timely fashion.
It makes perfect sense that the legislation and the DPRC [Dispute Resolution Practice Code] refer to a 60 day time limit to deal with such disputes.
In contrast to the injured victims, insurance companies are not in a vulnerable position. While there is nothing to suggest that these insurance companies are in any way responsible for the delay in mediation, there is no evidence that the delay in mediation is of any real consequence to them.
Justice Sloan found the insurance companies’ postion that accident victims must simply wait to be ”preposterous” and suggests that FSCO can continue to try to comply with the 60 day period or seek a change and/or ask for some legislative direction to extend the 60 day period in appropriate circumstances.
It remains to be seen if this motion decision will be appealed.
The Toronto Star has published an article identifying the lengthy wait times at the Financial Services Commission of Ontario (FSCO) for mediations of accident benefits denied by insurance companies.
Our firm’s own Michael Smitiuch was interviewed and quoted in the article. He identifies the significant hardship that these delays often mean for clients and notes this to be an access to justice issue.
To read the Toronto Star Article, click here.
The Ontario Court of Appeal has reversed the decision of Kusnierz v. Economcial Insurance.
In the Kusnierz v. Economical Insurance decision, Justice Lauwers had determined that it was not permissible to assign percentage ratings in respect of psychological impairments under 2 (1.1)(g) of the Statutory Accident Benefits Schedule (SABS) and combine them with percentage ratings in respect of Kusnierz’s physical impairments under Clause 2(1.1)(f) of the SABS for the purposes of determining whether an individual was catastrophically impaired.
Justice Lawers reviewed the earlier decision of Justice Spiegel in Desbiens v. Mordini but respectfully came to a different conclusion. Justice Lauwers did not review any of the FSCO decisions on the issue.
This means that both physical and psychological impairment percentage ratings can be combined when determining a catastrophic impairment.