[The Applicant] v. Unica Insurance Inc., 2019 CanLII 34602

Tribunal File Number: 18-000289/AABS

In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, R.S.O. 1990, c. I.8, in relation to statutory accident benefits.

Between:

[The Applicant]

Applicant

and

Unica Insurance Inc.

Respondent

DECISION

PANEL:

Craig Mazerolle, Adjudicator

APPEARANCES:

For the Applicant:

Nick Hamilton

For the Respondent:

Angela Comella

HEARD:

by Teleconference on: December 5, 2018

OVERVIEW

1The applicant was injured in a motor vehicle accident on February 1, 2016. He applied for statutory accident benefits payable under the Statutory Accident Benefits Schedule — Effective September 1, 2010 (the “Schedule”).¹

2The respondent declined to pay for certain benefits, namely an income replacement benefit and a medical benefit for counselling and case management services. The respondent argued that the applicant’s criminal conviction for impaired driving disentitled him from an income replacement benefit, and that the requested medical benefit was not reasonable and necessary.

3Since the applicant disagreed with these findings, he applied to the Tribunal.

4For the reasons to follow, I find that s. 31(1)(d) of the Schedule has disentitled the applicant from an income replacement. However, I have found that the respondent’s medical reason for denying the medical benefit was not sufficient, and that the applicant is entitled to this benefit. Finally, the applicant is entitled to a 20 per cent award on account of the respondent’s unreasonable withholding of this medical benefit.

ISSUES

5The issues in dispute are as follows:

(i) Pursuant to s. 31(1)(d) of the Schedule, is the applicant excluded from receiving an income replacement benefit?

(ii) Is the applicant entitled to a medical benefit in the amount of $5,450.00 for the counselling and case management services recommended by Dr. Robert Kwan? Specifically, is the applicant entitled to this benefit on account of a failure to comply with the notice provisions in s. 38(8) of the Schedule?

(iii) Is the applicant entitled to an award under Regulation 664² for the unreasonable withholding or delay of either or both of these benefits?

6The applicant is also requesting interest on any overdue payment of benefits.

INCOME REPLACEMENT BENEFIT AND THE OPERATION OF SECTION 31

7Section 5(1) of the Schedule states that an insured person is entitled to an income replacement benefit if she or he sustains an accident-related impairment that causes “a substantial inability to perform the essential tasks” of one’s pre-accident employment. Of importance to the present dispute are the provisions which limit this entitlement when a criminal offence is involved in the subject accident, namely ss. 31(1)(d)(i) and 31(3)(a) of the Schedule:

31. (1) The insurer is not required to pay an income replacement benefit…

(d) in respect of a person who, at the time of the accident,

(i) was engaged in an act for which the person is convicted of a criminal offence,

(3) The insurer shall hold in trust any amounts payable as an income replacement benefit to a person who sustains an impairment as a result of an accident if,

(a) at the time of the accident, the person was engaged in, or was an occupant of an automobile that was being used in connection with, an act for which the person is charged with a criminal offence…

8Since, the applicant eventually pled guilty to driving while impaired during the February 1, 2016 accident, the respondent takes the position that he is no longer entitled to an income replacement benefit. In its view, any other outcome would frustrate the legislative intent of these exclusion provisions—an intent that is explained in Guarantee Company of North America v. McDonald.³

9The applicant disagrees. He argues that the respondent owed him a duty of good faith to pay the benefit until he was charged, a fact the respondent did not discover until June 26, 2016. Withholding benefits on the “suspicion that an insured will later be charged with an offence” is not within an insurer’s powers under the Schedule, and it violates the intention of the Schedule to provide timely access to benefits.

10I cannot accept the applicant’s arguments since the question over his entitlement to an income replacement benefit is now moot. Regardless of the complaints that the applicant may have about the respondent’s investigation into his criminal charges, his conviction means that, given the clear wording of s. 31(1)(d)(i), he is not entitled to this benefit.

11In this same vein, there is no reason to then determine whether the respondent acted unreasonably in its decision to withhold the benefit pending the possibility of criminal charges. That is, s. 10 of Regulation 664 permits the Tribunal to award a lump sum of up to 50 per cent of benefits and interest if the Tribunal “finds that an insurer has unreasonably withheld or delayed payments”. Without a payment to which the applicant is entitled to, the question of whether the respondent acted unreasonably in withholding that payment is also moot.

MEDICAL BENEFIT FOR COUNSELLING AND CASE MANAGEMENT SERVICES

12Entitlement to a medical benefit is determined by ss. 14 and 15 of the Schedule. Briefly, the applicant has the onus of demonstrating on a balance of probabilities that the medical expenses listed in a treatment plan are reasonable and necessary as a result of injuries caused by the accident.

13The disputed treatment plan at issue requests $5,450.00 for the following: twelve hours of “Counselling and Case Management”; six hours of “Communication with Team”; and three hours of “Documentation”. The hourly rate for these three types of services is $250.00/hour. There is also a request for the flat fee of $200.00 for preparing the treatment plan.

14The plan lists “[m]ild cognitive disorder” as the primary impairment faced by the applicant, followed by post-traumatic stress disorder and chronic post-traumatic headache. The goals of the proposed services are listed as both “[c]ounselling and case consulting” and “return to activities of normal living”.

Compliance with the Notice Requirements of s. 38(8)

15Before considering the substantive merits of the disputed treatment plan, I must first address the procedural concern raised by the applicant. Specifically, the applicant argues that the respondent’s denial letter did not provide sufficient reasons to explain its decision. These insufficient reasons, therefore amount to a contravention of the following requirements in s. 38(8) of the Schedule [emphasis added]:

Within 10 business days after it receives the treatment and assessment plan, the insurer shall give the insured person a notice that identifies the goods, services, assessments and examinations described in the treatment and assessment plan that the insurer agrees to pay for, any the insurer does not agree to pay for and the medical reasons and all of the other reasons why the insurer considers any goods, services, assessments and examinations, or the proposed costs of them, not to be reasonable and necessary.

16The respondent provided the following reasons for its denial in a letter dated May 18, 2017: “In accordance with Section 38(8) of the [Schedule], please accept this as our notice of the following: We are unable to consider the proposed treatment and assessment plan as the accident has not precipitated the need for a family doctor.”

17The applicant argues that the Tribunal should use a “common-sense approach to the interpretation of insurer’s reasons for denials”. By using such an approach, this reason is rendered meaningless. That is, not only is this sentence difficult to understand, but it is merely a restatement of the respondent’s decision to deny the plan, as opposed to a reason explaining this denial.

18The respondent contends that there is no set language that an insurer is required to use when denying a benefit, nor should an insurer be held to a standard of perfection. Further, the quotation cited above from the May 18, 2017 letter has to be read in conjunction with an earlier reference in the letter to the treatment plan itself:

A Treatment and Assessment Plan (OCF-18) dated May 1, 2017 submitted by Dr. Kwan of Complex Care Medical & Health Services in the amount of $ 5450.00 was received via HCAI, on May 9, 2017 recommending counseling, case management, communication with team, documentation and treatment and assessment plan (OCF-18)

19Taken together, the respondent submits it is clear that the stated reason is: “there is no basis for the intervention of a family doctor to provide counseling and case management as a result of the injuries arising from this accident.” The respondent also argues that the applicant should have followed up when he had difficulty understanding the letter.

20I have found that this letter is not in compliance with s. 38(8) of the Schedule. The medical reason provided by the respondent, even when read in conjunction with the rest of the letter, does not provide any context or justification for its denial. Rather, the letter simply informs the applicant that his treatment plan is not reasonable and necessary. This “reason” is, therefore, the conclusion of the respondent’s consideration of the treatment plan, but it is not an explanation for why it concluded the plan is not reasonable and necessary.

21As noted in M.F.Z. v Aviva Insurance Canada,⁴ the purpose of the notice requirements in s. 38(8) is to allow an insured person to understand why a benefit is being denied. Therefore, even though an insurer cannot be held to the position of perfection, this purpose must be upheld for an insurer to meet its obligations under s. 38(8).

22Further, this obligation is for the insurer to meet, and so an insured person should not be expected to ensure that a letter is in compliance with s. 38(8). Requiring this follow up from an insured person would frustrate the consumer protection mandate of the Schedule.

Application of ss. 3(8) and 38(11)2

23When there is non-compliance with s. 38(8) of the Schedule, the provisions of s. 38(11) will apply:

If the insurer fails to give a notice in accordance with subsection (8) in connection with a treatment and assessment plan, the following rules apply:

1. The insurer is prohibited from taking the position that the insured person has an impairment to which the Minor Injury Guideline applies.

2. The insurer shall pay for all goods, services, assessments and examinations described in the treatment and assessment plan that relate to the period starting on the 11th business day after the day the insurer received the application and ending on the day the insurer gives a notice described in subsection (8).

24As alluded to in the applicant’s submissions, it appears that the services described in the disputed treatment plan have not, in fact, been incurred. Therefore, the applicant cites s. 3(8) for the premise that these services should be deemed incurred [emphasis added]:

If in a dispute described in subsection 280 (1) of the [Insurance Act⁵], the Licence Appeal Tribunal finds that an expense was not incurred because the insurer unreasonably withheld or delayed payment of a benefit in respect of the expense, the Licence Appeal Tribunal may, for the purpose of determining an insured person’s entitlement to the benefit, deem the expense to have been incurred.

25Put another way, in determining whether to deem a benefit as being incurred, the question is not, “Would I have reached the same decision as the respondent in withholding this benefit?” Rather, I am being asked to determine whether the respondent “unreasonably withheld or delayed payment” of the disputed benefit.

26On this point, the respondent argues that its denial of the benefit was reasonable. That is, since the applicant was already receiving case management services from a case manager, i.e., Elsa Poon, funding duplicate services would have been unreasonable. In response, the applicant contends that s. 38(11) applies automatically. In the alternative, the applicant then submits that so much time has passed since the breach of s. 38(8) that the remedy in s. 38(11) should apply. Failing these other arguments, the applicant then contends that—regardless of whether s. 38(11) applies—the benefit should still be deemed payable until a proper denial letter is produced.

27The disputed medical benefit was withheld due to an erroneous denial letter. Failing to follow the notice provisions of the Schedule may not, on its face, constitute an unreasonable withholding of benefits. However, in the present case, this breach was more serious than a mere, procedural hiccup. That is, the respondent apparently had reasons for the denial (i.e., concerns over the duplication of case management services), but it did not provide this important information to the applicant in a timely manner. Maybe the applicant could have provided additional information at the time of the denial that would have demonstrated a significant difference between the services proposed by Dr. Kwan and those being provided by Ms. Poon. There is no way to now know.

28Therefore, due to this breach, the applicant was left unaware of what information could have better satisfied the respondent—a clear and significant violation of the Schedule’s consumer protection mandate. This lack of necessary context about the true reasons for the denial also allows me to then conclude that the benefit would have been incurred but for the erroneous denial letter.

29One final point I will address about the operation of s. 3(8) is the respondent’s contention that Dr. Kwan never intended to provide the services listed in the treatment plan. That is, this expense was not incurred because of the respondent’s actions—rather, it was never going to be incurred in the first place.

30I am not swayed by this argument. Dr. Kwan’s testimony during the hearing (including his sworn affidavit) demonstrates that he is not only dedicated to the applicant’s care, but he has been conducting limited versions of the work anticipated in the plan. For instance, while he admitted during cross-examination that he has not held a team meeting with the applicant’s medical providers (what I interpret to be a reference to “Communications with Team” in the treatment plan), he has met with individuals associated with his care.

31Since the disputed benefit is deemed incurred, and more than ten business days have passed since the denial letter was issued, s. 38(11) requires the respondent to pay the disputed treatment plan.

AWARD UNDER REGULATION 664

32Once again, s. 10 of Regulation 664 permits the Tribunal to award a lump sum of up to 50 per cent of “unreasonably withheld or delayed payments”. The applicant argues that the failure to provide a valid, medical reason is a form of unreasonable behaviour that should entitle him “to the maximum special award available.” In addition to again claiming that its denial of the medical benefit was valid, the respondent submits that since the applicant was already receiving services from Ms. Poon and Dr. Kwan, its denial cannot be found to be unreasonable.

33In light of my aforementioned findings about s. 3(8), I am satisfied that the applicant is entitled to an award. However, while the applicant may request the maximum award of 50 per cent, I do not find the respondent’s withholding to be on the extreme end of unreasonable behaviour. I have no evidence that the respondent’s denial was made in bad faith, nor can I say that the reasons I was provided for the denial during the hearing were outlandish. Rather, the process by which the denial was communicated to the applicant failed to provide the readily available information required to uphold the consumer protection mandate of the Schedule.

34Therefore, I find that an award equal to 20 per cent of the delayed payment is justified in these circumstances. The applicant is also entitled to interest on this award, in accordance with s. 10 of Regulation 664.

CONCLUSION

35The applicant has demonstrated entitlement to a medical benefit in the amount of $5,450.00 for counselling and case management services (including interest). Further, the applicant is entitled to an award equal to 20 per cent of this delayed payment (including interest).

Released: March 27, 2019

___________________________

Craig Mazerolle

Adjudicator

Footnotes

1. 1O. Reg. 34/10.
2. 2Automobile Insurance, R.R.O. 1990, Reg. 664.
3. 3FSCO Appeal P01-00047.
4. 42017 CanLII 63632 (ON LAT).
5. 5R.S.O. 1990, c. I.8.