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Posts Tagged ‘special award’

The New Dispute System for Accident Benefits Claims: You Lose Before You Even Begin

On April 1, 2016, all disputes for accident benefits from motor vehicle accidents in Ontario were moved into a new system through the License and Appeals Tribunal (LAT) through the Ministry of the Attorney General. With a new system came new rules on the dispute resolution process. One of the most concerning is Rule 19, which deals with costs.

It is a common legal principle in civil law that the party that loses a case must pay at least some of the winner’s costs, which can include legal fees and disbursements (things that have been paid to third parties to advance the matter). This is based on the tenant of access to justice, which allows anyone regardless of economic resources to advance a claim against a party that has wronged him or her. In the context of the accident benefits system, it means that an injured person can advance a dispute against an insurance company and, if they are successful, their legal costs will be paid. They are not, therefore, hindered in advancing a claim because they cannot afford to do so.

Rule 19 of the LAT rules states that, “Where a party believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith, that party may make a request to the Tribunal for costs.” A recent LAT decision[1] with respect to this rule indicates that the unreasonable, frivolous or vexatious actions of a party are only within the context of the actual dispute resolution (LAT) proceeding.

What this means is that, even with the most egregious behaviour of an insurance company against a financially strapped injured person, that person cannot be reimbursed for the legal costs needed to dispute the insurance company’s decision, unless the insurer did not behave themselves within the LAT proceedings. It is as if all of the actions of an insurance company outside of the proceedings don’t matter.

While an injured person could claim a special award as a punitive measure against an insurer for unreasonable conduct, this is limited to up to 50% in addition to whatever amount is awarded for the most egregious conduct. The injured party cannot be reimbursed for the $100.00 LAT application fee, any medical reports or documents, which support their claim, or the costs of having a legal representative to stand up to the insurer on their behalf.

For example, let’s say that an insurance company denied payment of income replacement benefits to an injured person and that the insurance company’s denial was totally unreasonable. The injured person must pay a $100.00 application fee to dispute the denial. In most cases, given the complexity of accident benefits legislation, they must retain a legal representative. They go through the LAT process. The arbitrator ultimately agrees that the insurance company was unreasonable in denying payment of the income replacement benefit and orders it to be paid. As long as the insurance company behaved themselves in the proceedings they do not have to reimburse the injured person for the application fee, all supporting documentation supporting their claim (which could be in the thousands of dollars), or the costs for retaining the legal representative. The injured person could, in fact, be better off not even disputing the insurance company’s denial.

In our view, this is totally unjust and unfair.

At Smitiuch Injury Law we fully intend on appealing any adverse decisions on costs and will raise the access to justice principle in order to declare the current Rule 19 void.

[1] 16-000041 v Intact Insurance Company, 2016 CanLII 78333 (ON LAT)

Insurer Has Obligation to Ensure Graduated Return to Work is Possible: FSCO

A recent arbitration decision from the Financial Services Commission of Ontario (FSCO) has concluded that an accident benefits insurer has an obligation to ensure that a graduated return to work is possible before terminating income replacement benefits.

In the decision Nader and State Farm [FSCO A13-003230], Javed Tabey Nader was injured in a motor vehicle accident and was unable to return to his pre-accident job.  His accident benefits insurer, State Farm, sent him to insurer’s examinations and the assessors concluded that he could participate in a graduated return to work program.  State Farm then notified Mr. Nader that they were discontinuing his income replacement benefits after the period that the insurer’s assessors concluded that the graduated return to work would be completed.

No one from State Farm ever checked to see if Mr. Nader’s employer was able to accommodate a graduated return to work, which it could not.  Moreover, when State Farm was advised that Mr. Nader did not return to work, State Farm did not find out why this did not happen and simply maintained their denial.

Arbitrator Bujold concluded that Mr. Nader was entitled to income replacement benefits for the first two years of his accident benefits claim and made the following comments with respect to a special award of $5,000.00:

Dr. Armitage’s opinion that Mr. Nader could return to work was premised on the availability of a graduated return to work program, and the provision of active rehabilitation and other supports as may be reasonably required to facilitate the attempt. However, neither Dr. Armitage nor State Farm knew whether graduated work was available, and the OCF-9 provided no guidance or direction to Mr. Nader with respect to what was expected of him in terms of investigating, arranging or participating in a graduated work return. More importantly, when advised that Mr. Nader had not returned to work, State Farm took no steps to ascertain the reasons for his non-return to work, help determine the availability of graduated work, and either help facilitate a graduated return to work (if available) or proceed with a vocational assessment to explore other employment options, including possible upgrading. Instead, State Farm simply maintained its denial. In these ways, State Farm acted unreasonably, and its withholding of income replacement benefits from this point became subject to a special award.

This decision is an important lesson to insurers of their obligation to keep an open mind and to continue consideration of entitlement to accident benefits even after the benefit has been denied.

The decision can be read in its entirety by clicking on the link below.

Nader and State Farm – Special Award

 

Aviva Canada Penalized for not Producing Someone With Authority

The Financial Services Commission of Ontario (FSCO) has released a Pre-Arbitration Hearing Decision regarding Aviva Canada’s failure to have anyone from the insurer with authority available to resolve an accident benefits claim.

In the decision, Dabrowska and Aviva [FSCO A13-007793] a pre-arbitration discussion was held on February 27, 2014, and counsel for both parties reached an agreement on a “modest resolution” of the insured’s accident benefits claim.  While Aviva had legal counsel and a representative present at the discussion, neither of them had authority to approve the settlement and no one with authority was available by either telephone or email.

Arbitrator John Wilson found Aviva in violation of Section 279(5) of the Insurance Act, which reads as follows:

If an insurer or an insured is represented in a mediation under section 280, an evaluation under section 280.1, an arbitration under section 282, an appeal under section 283 or a variation proceeding under section 284, the mediator, person performing the evaluation, arbitrator or Director, as the case may be, may adjourn the proceeding, with or without conditions, if the representative is not authorized to bind the party he or she represents.

The Arbitrator made the following comments:

“Authorized to bind” in the Act means that the representative never has to pick up the telephone to get instructions. Binding authority does not exist where the representative merely has authority to say “no” with no room to vary that position should further information be made available.
This pre-hearing was not a surprise to Aviva. It received the appropriate notices. Indeed, it sent an in-house counsel and an experienced representative, neither with any authority to do more than attend the pre-hearing.
The requirements of the Insurance Act should not have been a surprise to Aviva either. It has a legal department which appears frequently at FSCO arbitrations and pre-arbitrations, and should have been in a position to be aware of its responsibilities under section 279 of the Act and the related jurisprudence.3 Aviva is a sophisticated player and should have known better.

As a result Aviva was ordered to pay the time for the legal representative to prepare and attend the pre-hearing, as well as the actual travel expenses for the insured.

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

State Farm to pay $23,000.00 Special Award for Unreasonably Withholding IRB’s

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.

Henry and State Farm.

Personal Insurance Hit With $28,000.00 Special Award

In a recent arbitration decision through the Financial Services Commission of Ontario (FSCO), The Personal Insurance Company of Canada was subjected to a $28,000.00 special award for unreasonably withholding accident benefits from their insured.

In Hoang and Personal, Arbitrator Denise Ashby found that The Personal unreasonably withheld payment for lost educational expenses and the costs of rehabilitation support worker services for Christopher Hoang, an 11 year-old boy who suffered a catastrophic brain injury from a motor vehicle accident.

Arbitrator Ashby noted that The Personal failed to reasonably assess the medical information available and acted unreasonably in denying his claim.  She noted that The Personal’s reliance on insurer’s examinations, “…in the face of the overwhelmingly consistent opinions and reasoning of the [treatment] Team and the other professionals who followed Christopher, amounts to an unreasonable disregard of the available information relating to the two rehabilitation benefits.”

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