Released Date: 04/29/2020
In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.
Between:
[K.W.]
Applicant
and
Aviva General Insurance
Respondent
DECISION
ADJUDICATOR:
Rebecca Hines
APPEARANCES:
For the Applicant:
[K.W.], Applicant
Gus Triantafillopoulos, Counsel
Shannon Kelly, Counsel
For the Respondent:
Patrick Sinclair, Counsel
HEARD:
In writing and in-person on November 25, 2019
OVERVIEW
1[K.W.] (the “applicant”) was involved in an automobile accident on June 27, 2016, and sought benefits from Aviva General Insurance (the “respondent”) pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (the ''Schedule''). The applicant was denied certain benefits by the respondent and submitted an application to the Licence Application Tribunal - Automobile Accident Benefits Service (“Tribunal”).
2The parties participated in a case conference but were unable to resolve the issues in dispute. The matter proceeded to a combination hearing in which the parties filed written submissions followed by a one-day in-person hearing on November 25, 2019, in which Natasha Vujovic (the “adjuster”) was cross-examined.
ISSUES IN DISPUTE
3I have been asked to decide the following issues:
(i) Is the applicant entitled to interest on any overdue payment of benefits?
(ii) Is the respondent liable to pay an award under Regulation 664 because it unreasonably withheld or delayed payments to the applicant?
RESULT
4After reviewing the parties’ submissions and evidence, I find as follows:
(i) The applicant is entitled to payment of interest on the cost of examination expense in the amount of $2,486.00 for a physiatry assessment, recommended by Synoptic Medical Assessments Inc., in a treatment plan submitted on March 10, 2017.
(ii) The applicant is entitled to an award in the amount of 40% as I find the respondent unreasonably withheld and delayed payment of the benefit.
ANALYSIS
(i) Is the applicant entitled to interest on overdue payment of benefits?
5On March 10, 2017, the applicant submitted a treatment plan to the respondent for a cost of examination expense in the amount of $2,486.00 for a physiatry assessment, recommended by Synoptic Medical Assessments Inc. At no point in time did the respondent provide notice to the applicant that this treatment plan was denied. The applicant found out that the treatment plan was denied through Synoptic Medical Assessments as it was rejected through the Health Claims for Auto Insurance system (HCAI). The applicant has incurred the cost of this treatment plan.
6On December 6, 2018, the applicant filed an application with the Tribunal disputing the respondent’s denial of the subject treatment plan. A case conference took place on June 6, 2019 where the hearing was scheduled, and a deadline of October 4, 2019 was provided for the exchange of documents.
7The respondent did not officially respond to the treatment plan until September 30, 2019. It sent the applicant an explanation of benefits (two and a half years after the treatment plan was submitted) in which it indicated that it had approved and paid for the assessment. No rationale was provided in its correspondence for the delay in the approval or why the respondent had a sudden change in opinion. Despite approving funding for the treatment plan, the respondent refused to pay interest on the assessment as it had not received an invoice for the incurred treatment plan. The applicant maintains that she did not receive notice that the treatment plan had been approved until she received the respondent’s documents for this hearing.
8The applicant argued that interest is payable from the date the benefit became overdue which in this case is 10 days from the date the treatment plan was submitted. The applicant argued that the respondent was non-compliant with its obligations under s.38(8) of the Schedule, which provides that an insurer shall respond to a treatment plan within 10 days advising the applicant what benefits it agrees to pay for and, if a benefit is denied, it is to provide medical and other reasons why it does not find the treatment plan reasonable and necessary. Section 38(11) of the Schedule states that if an insurer fails to comply with s.38(8), it shall pay for the treatment plan starting from the 11th business day after the insurer received the treatment plan and ending on the date it provides notice in accordance with s.38(8).
9The respondent acknowledges that it was non-compliant with s.38(8) of the Schedule and consequently it paid for the treatment plan on September 30, 2019. However, it argues that interest is only payable on benefits that have been incurred and to date it has not received an invoice that the treatment plan has been incurred. It relied on s.38(15) of the Schedule which states that an insurer shall pay for goods and services it agrees to pay within 30 days after receiving the invoice. For the following reasons, I agree with the applicant. In my view, the respondent did not correctly interpret the application of this section as s.38(15) deals with interest on benefits that an insurer agreed to pay for and not benefits that are in dispute or overdue.
10I find the applicable section of the Schedule pertaining to when interest is payable is s. 51(1) which states that “an amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this regulation”. In this case, the respondent never complied with its obligation under s.38(8) in responding to the treatment plan. Further, no explanation was provided for why it only approved the benefit on September 30, 2019 (almost two and half years after the treatment plan was submitted).
11Since the respondent approved the treatment plan, I find the benefit was overdue on the 11th business day following the submission of the treatment plan in accordance with s.38(11) of the Schedule. Therefore, interest is payable in accordance with s.51 of the Schedule.
(ii) Is the respondent liable to pay an award under Regulation 664 because it unreasonably withheld or delayed payments to the applicant?
12I find the respondent is liable to pay an award as I find that it unreasonably withheld and delayed payment of the benefit.
13Ontario Regulation 664, R.R.O. 1990 (O. Reg. 664) states that, if the Tribunal finds that an insurer had unreasonably withheld or delayed payments, the Tribunal, in addition to awarding the benefits and interest to which an insured person is entitled, may award a lump sum of up to 50 percent of the amount to which the person was entitled at the time of the award with interest.
14The applicant argues that an award is appropriate given the respondent’s clear violation of the Schedule in not responding to her application for a benefit and the lengthy delay in approving and paying for same. She maintains that the respondent also took a stubborn and unyielding position in refusing to pay interest. The respondent had an obligation to continue to adjust her claim and failed to do so. Further, its conduct forced the applicant to hire legal representation and commence the application with the Tribunal to force the respondent to fulfil its obligations under the Schedule. Moreover, its failure to respond to her application for a benefit for two and a half years and only paying for the benefit one month prior to the hearing was an unreasonable delay. The applicant relied on 17-006757/AABS v. Aviva Insurance Canada, 2018 CanLII 81949 (ON LAT) (“17-006757”) and J.M. v. Certas Direct Insurance Company, 2019 CanLII 94016 (ON LAT) (“18-000052”) as authority.
15The applicant maintains that, in 17-006757, the adjudicator ordered an award because the insurer did not abide by the procedural requirements of the Schedule which is similar to the present case. The applicant takes the position that the period of delay in itself is grounds for an award. In addition, she asserts that 18-000052 supports her position that even if an insurer waits to pay for benefits after an application is filed with the Tribunal, it can still be liable to pay an award if it is determined that it unreasonably withheld and delayed payment of benefits.
16The respondent argues that an award is an extraordinary remedy and is not warranted for its failure to comply with s.38(8) on only one treatment plan. The respondent relied on the Reconsideration Decision of the Executive Chair Linda Lamoureux in T.F. v. Peel Mutual Insurance Company, 2018 CanLII 39373 (ON LAT) (“T.F. v. Peel”), which it contends has similar facts with the present case in that it involved a defective s.38(8) notice. In that decision, the Executive Chair determined that the insurer’s conduct did not warrant an award. The respondent also submitted another reconsideration decision of the Executive Chair in F.P. v. Pilot Insurance Company, 2018 CanLII 141006 (ON LAT) (“F.P. v. Pilot”). The respondent contends that this decision establishes that the standard for adjusting a file is reasonableness not perfection. The respondent agreed it was not compliant with s.38(8) of the Schedule with respect to this treatment plan. It submitted J.G. v. Travelers Canada, 2018 CanLII 76431 (ON LAT), which cited prior jurisprudence that establishes the test that must be met for an award to be warranted.1 In particular, the onus is on the applicant to prove that the insurer’s conduct was “excessive, imprudent, stubborn, unyielding or immoderate”.
17The respondent also argues that the case law relied upon by the applicant is distinguishable from the present case. For example, in 17-006757, the conduct of the insurer was significantly different from this case. In particular, the adjudicator found a consistent pattern of long delays and non-compliance with s.38(8) in responding to several treatment plans and other benefits, delays in paying service providers for approved benefits and the insurer failed to adjust the file by not considering relevant medical information which would remove the insured from the Minor Injury Guideline for a long period of time. Further, the insurer did not respond to multiple requests from the insured’s counsel communicating that no response had been received. In addition, it contends that 18-000052 is irrelevant to the present analysis as that decision dealt with a preliminary issue on whether the Tribunal had jurisdiction to grant an award if there were no substantive benefits in dispute.
18In her reply submissions, the applicant argues that T.F. v. Peel is distinguishable from the present case as that case dealt with a defective notice. In this case the respondent did not provide any notice at all. In addition, unlike the insured in F.P. v. Pilot, the applicant made submissions which demonstrated that the respondent’s conduct was “excessive, imprudent, stubborn, unyielding or immoderate.”
19I find that the applicant has met her onus in demonstrating that the respondent’s conduct has been “excessive, imprudent, stubborn, unyielding or immoderate.” I agree with the applicant that T.F v. Peel is distinguishable from the present case as in that case the insurer provided notice in accordance with s.38(8), however, the notice was defective as it did not provide adequate medical reasons for denying the benefit. In the present case, the respondent did not provide notice of its denial at all or respond once it was aware of its error despite having several opportunities to do so. For example, once it was in receipt of the application to the Tribunal and realized that it did not comply with s.38(8), it could have responded and approved the treatment plan, but it did not. The adjuster testified that she was aware that a mistake had been made at that point in time but, for whatever reason, did not take any action. Another opportunity to mitigate was available at the case conference and, without getting into details that are confidential, it did not approve the treatment plan. Instead, it waited another three months and only approved the treatment plan a month prior to the commencement of the hearing. In my view, this was not reasonable conduct and I find that this type of behaviour should be discouraged. In addition, when it finally approved the treatment plan two and half years later, it did not provide an explanation for why it had a sudden change of opinion.
20In my view, the applicant is the respondent’s client and pays a premium for insurance coverage. As the respondent’s client, the applicant deserves a timely response to her application for accident benefits. I also find she has a right to understand the decision-making process behind the adjusting of her claim. I find the respondent did not comply with its duty to adjust the file in good faith and treat the applicant in a fair manner. I understand that errors can be made in adjusting a claim and that in of itself does not always warrant an award. However, in this case what I find troubling is the respondent’s inaction when it realized that a mistake had been made and the length of time that has elapsed until it corrected its mistake.
21Much was made by the respondent in this case that an award is not warranted because its non-compliance involved only one treatment plan and the facts in this case are not identical to 17-006757. I disagree. While an adjudicator may take a pattern of behaviour into consideration (as was done in 17-006757) when determining whether to grant an award or in considering the quantum, I do not agree that its conduct must be a pattern for an award to be granted. Further, although an award is being claimed on one treatment plan, I find that the respondent refused to correct its mistake for a long period of time once it became aware of the error. I find that the respondent’s refusal to react was “stubborn, unyielding and immoderate” in its response to this treatment plan. As already highlighted, I have taken the amount of time that has elapsed and the opportunities it had to correct its mistake into consideration. Therefore, I find an award is warranted to discourage this type of conduct in the future. Now, I will address the quantum of the award.
Quantum of Award
22The applicant argues that an award in the amount of 50% is appropriate as a consequence of the respondent’s failure to respond to the initial treatment plan, its failure to approve the treatment plan once it became aware of the error, its failure to provide notice that it had approved for and paid for the treatment plan and its failure to pay interest. The applicant maintains that the respondent purposely disregarded the law. The respondent submits that if the Tribunal determines it is liable to pay an award, the quantum should be low as the circumstances in this case do not warrant an award at the highest end of the spectrum. The fact that it approved the benefit prior to the hearing should be considered a mitigating factor in determining the quantum of the award. It relied on 17-006757 and 17-005825 v. Aviva Canada Inc., 2018 CanLII 98285 (ON LAT) as authorities which outline the criteria other adjudicators have considered in determining the quantum. Some of the factors considered include the amount withheld, the length of the delay, any prejudice to the insured, any mitigating factors, the need for deterrence and the vulnerability and potential harm to the insured person.
23In considering the above factors, I order an award of 40%. Most important to my order granting an award on the higher end of the spectrum is the length of time that has transpired since the treatment plan was submitted to when the respondent became aware of the error and its long delay in correcting its error. While the respondent eventually approved and paid for the treatment plan, it did so two and a half years late without explanation. The respondent submitted a fax addressed to the applicant enclosing the explanation of benefits dated September 30, 2019 to support that it did notify the applicant that it had approved the treatment plan. What I find lacking from this evidence was a fax confirmation sheet confirming that the transmission went through. I am not convinced that the applicant was aware that the treatment plan was approved until she received the respondent’s productions as part of this hearing. Further, there was a delay of almost one year between when it became aware of the mistake to when it finally approved the treatment plan. This, in my view, was completely unreasonable and this type of conduct needs to be deterred. Further, the adjuster provided no explanation other than litigation strategy for not taking action sooner. I find this unacceptable. The respondent has an ongoing obligation to adjust its file in good faith even after an application has been commenced with the Tribunal. The respondent submits that it did not consciously decide to withhold benefits. In my view, I find that it did as, despite being aware of the mistake, a significant amount of time transpired which, in my view, made its conduct more aggravating.
24Finally, the respondent’s unreasonable delay in approving the treatment plan had an impact on the applicant as it forced her to incur costs as she had to hire legal representation to commence the application and attend an in-person hearing on an issue that should have been resolved. Further, she had to incur the physiatry assessment. Unlike the insurer, most people do not have deep pockets and to have to personally pay for this expense not knowing if she would be reimbursed added unnecessary stress. In addition, the amount of the treatment plan is minimal, therefore, I find that awarding less than 40% would not be much of a penalty to the respondent to deter this type of conduct in the future.
25I decline to award the maximum of 50% as the respondent approved the treatment plan prior to the hearing and, despite the long delay, I find this one mitigating factor worthy of a reduction. Further, I do not find its decision not to pay interest worthy of an award as it took a legal position on the issue. The fact that the respondent was incorrect on its interpretation on when interest is payable is in my opinion not worthy of an award.
26For all the above reasons, I order the respondent to pay an award of 40% on the treatment plan in the amount of $2,486.00 for the physiatry assessment.
ORDER
27For all the above reasons, I find the applicant is entitled to:
i. Payment of interest on the cost of examination expense in the amount of $2,486.00 for the physiatry assessment recommended by Synoptic Medical Assessments Inc. in the treatment plan submitted on March 10, 2017; and
ii. An award pursuant to O. Reg. 664 in the amount of 40% on the said treatment plan.
Released: April 29, 2020
Rebecca Hines Adjudicator