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Posts Tagged ‘Economical Insurance’

Catastrophic Impairment Denial Not Subject to Limitation Period

Because a catastrophic impairment designation is not a “benefit”, as defined under the Statutory Accident Benefits Schedule (SABS), there is no time limitation for disputing an insurer’s denial.

On January 6 2009, Zofia Machaj submitted an Application for Determination of Catastrophic Impairment (OCF-19) to RBC Insurance.  After conducting insurer’s examinations, RBC responded on May 25, 2009, stating that, “the assessors have formed the consensus opinion that you have not sustained a catastrophic impairment and therefore you do not qualify for the increased benefits.”

In order to dispute RBC’s denial, an Application for Mediation was submitted by Ms. Machaj on July 18, 2011, which was almost two months beyond the two year limitation period that the Insurance Act stipulates is required.  Section 281.1 of the Insurance Act establishes a limitation period, provides that a mediation proceeding, “…shall be commenced within two years after the insurer’s refusal to pay the benefit claimed” (emphasis added).

In 2015, Whitten J. issued a decision on a Summary Judgment Motion in the matter of Machaj v RBC General Insurance Company [2015 ONSC 4310], wherein he found in favour of RBC Insurance and ruled that the two-year limitation applied, because the denial, “…flushed out the consequences of the denial of the status of catastrophic impairment; namely, the enhanced benefits were not available.”

Ms. Machaj appealed.  The Ontario Court of Appeal disagreed with Judge Whitten’s decision, noting that, “In our opinion, by adding the words, “and you therefore you do not qualify for the increased benefits”, the respondent insurer was doing nothing more than telling the appellant that she lacked status to claim increased benefits. The additional words did not convert what was, in substance, a denial of a catastrophic determination into a denial of the specific benefits that would trigger the commencement of the two year limitation period.”

RBC Insurance sought leave to appeal to the Supreme Court of Canada, but it was dismissed with costs.

As such, under the current legislation, an insured person is not bound to dispute an auto insurance company’s denial of catastrophic impairment determination within two years, unlike a denial of an actual “benefit” under the SABS.

If you have been injured in an automobile accident and your insurance company has denied anything, it is always best to consult with a lawyer to ensure that your interests and entitlements are protected.

FSCO Announces Amendments to Automobile Insurance Legislation and Regulations

The Superintendent of Financial Services for the Financial Services Commission of Ontario (FSCO) has released a bulletin today (A-05/15) outlining amendments to Ontario’s automobile insurance legislation and regulations.  Below is the content of this bulletin:

With this bulletin, the Financial Services Commission of Ontario (FSCO) is highlighting a number of recent reforms to automobile insurance legislation and regulations.

These reforms are the result of the announcements made by the government in the 2015 Ontario Budget. They include amendments to the Insurance Act, and to Regulation 664 (Automobile Insurance) and Regulation 461/96 (Court Proceedings For Automobile Accidents That Occur on or After November 1, 1996).

In the upcoming months, FSCO will issue additional bulletins relating to the implementation of other automobile insurance reforms announced in the 2015 Ontario Budget.

The amendments are listed and outlined below:

Ontario Regulation 664 (Automobile Insurance)

This regulation has been amended to require that all insurers offer a discount to policyholders for the use of winter tires. The winter tire discount must be made available for contracts issued or renewed on or after January 1, 2016, for all eligible private passenger automobile policies. Insurers are encouraged to implement the discount before January 1, 2016, where feasible.

Insurance companies that do not currently offer a winter tire discount must file an application for approval with FSCO no later than August 28, 2015. Insurers should use the Private Passenger Automobile Filing Guidelines – Simplified for these applications and not off-balance this discount.

Insurers are required to have a process in place to notify their policyholders of this new discount.

For inquiries regarding the filing process for this discount, contact your Rate Analyst in the Automobile Insurance Services Branch at FSCO.

Ontario Regulation 461/96 (Court Proceedings For Automobile Accidents That Occur On Or After November 1, 1996)

This regulation has been amended to ensure that the deductible amounts for damages for non-pecuniary loss (pain and suffering) reflect the effects of inflation since 2003.

The regulation amendments include the following:

The $30,000 deductible amount prescribed in the case of damages for non-pecuniary loss is adjusted to $36,540 from August 1, 2015 until December 31, 2015. On January 1, 2016 and every subsequent year, this amount will be revised by adjusting the amount by the indexation percentage published under Insurance Act subsection 268.1 (1) for that year.

  • The $15,000 deductible amount prescribed in the case of damages for non-pecuniary loss under clause 61 (2) (e) of the Family Law Act, is adjusted to $18,270 from August 1, 2015 until December 31, 2015. On January 1, 2016 and every subsequent year, this amount will be revised by adjusting the amount by the indexation percentage published under Insurance Act subsection 268.1 (1) for that year.

The existing endorsement [Added Coverage To Offset Tort Deductibles (OPCF 48)] to reduce the tort deductible amounts will remain unchanged.

Insurance Act, R.S.O. 1990, c. I.8

The Insurance Act is amended to adjust the monetary thresholds beyond which the tort deductible does not apply to reflect inflation since 2003, and link the monetary thresholds to future changes in inflation.

The legislative amendments include the following:

The monetary threshold beyond which the new deductible amount of $36,540 does not apply is adjusted from $100,000 to $121,799, in the case of damages for non-pecuniary loss from August 1, 2015 until December 31, 2015. On January 1, 2016 and every subsequent year, this new threshold amount will be revised by adjusting the amount by the indexation percentage published under subsection 268.1 (1) for that year.

  • The monetary threshold beyond which the new deductible amount of $18,270 does not apply is adjusted from $50,000 to $60,899, in the case of damages for non-pecuniary loss under clause 61 (2) (e) of the Family Law Act from August 1, 2015 until December 31, 2015. On January 1, 2016 and every subsequent year, this new threshold amount will be revised by adjusting the amount by the indexation percentage published under subsection 268.1 (1) for that year.
  • The Insurance Act has been amended in subsection 267.5 (9) to require that the tort deductible be taken into account when determining a party’s entitlement to costs in an action for damages from bodily injury or death arising directly or indirectly from the use or operation of an automobile.

Please ensure that your claims and underwriting staff, and any other staff who may be affected, are informed of these changes. Also ensure that you make any operational changes needed to implement these reforms by the effective date.

Copies of Regulations and Legislation

The Insurance Act and regulations can be downloaded from the e-laws website at www.e-laws.gov.on.ca . The proclamation order for the legislative amendments to the Insurance Act is expected to be published in a future edition of The Ontario Gazette.

Why Ontario drivers pay the highest insurance premiums in Canada

Auto Insurance

Why Ontario drivers pay the highest insurance premiums in Canada

ROBERT COLLISON

Special to The Globe and Mail

Published

Insurance

The Fraser Institute’s landmark 2011 study on public-versus-private delivery of auto insurance in Canada concluded that Ontario’s private-sector insurance regimen enjoyed the questionable distinction of being the most expensive in the country – a conclusion even more damning because the report’s major takeaway was the overall superiority of the private system in other parts of Canada.

Read the complete article in the Globe and Mail.

 

Balancing Lower Premiums with the Bottom Line

In this week’s edition of The Lawyers Weekly (October 25, 2013), Michael Smitiuch provides an analysis of the “tug of war” between auto insurers and consumers.

Although most in the industry agree that fraud is a concern that needs to be addressed, it is the potential “other cost-reduction initiatives” that are a source of considerable debate.

The Lawyers Weekly article can be read in its entirety by clicking here.

FSCO Arbitrator: Insurer Cannot Dictate Claimant to Have Amputation as a Remedial Procedure

The Financial Services Commission of Ontario (FSCO) has released an arbitration decision regarding the calculation of a whole body impairment rating when assessing whether or not an insured meets the criteria for a catastrophic impairment under the Statutory Accident Benefits Schedule (SABS).

Under the Ontario Accident Benefits regulations, an insured who is deemed to be catastrophically impaired has increased limits on various accident benefits.

In D.B. and Economical Mutual Insurance Company [FSCO A12-000632] Arbitrator Killoran dealt with the complex issue as to whether or not the insured, D.B., who suffered serious orthopaedic and psychological injuries in a motor vehicle accident in November 2008, suffered at least a 55% whole body impairment rating under the AMA Guidelines, in order for her impairments to be deemed catastrophically impaired.

D.B.’s lower leg injuries required five surgeries and she is unable to walk independently.  She is confined to a wheelchair for 99% of her time.  The only time that she does not utilize a wheelchair was when she goes to the washroom, and only with the use of rails.

Economical tried to argue that D.B. should have her leg amputated, which would then reduce her impairment rating to the point that she would not meet the criteria for catastrophic impairment.

Arbitrator Killoran stated that,

No doctor, insurer, arbitrator or judge can dictate to D.B. that she must have an amputation as a remedial procedure.

This decision can be read in its entirety by clicking here.

Attendant Care and Treatment can be Claimed Simultaneously

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.

Ontario Budget Brings Announcement of Auto Insurance Reforms

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.

You can read the Government’s comments on the insurance industry by clicking here.

FSCO Arbitrator Recognizes 60-Day Timeline for Mediations

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.

Ontario Court of Appeal: Desbiens Stands

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.

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