Kemp v. Aviva General Insurance, 2023 CanLII 152214

Citation: Kemp v. Aviva General Insurance, 2023 ONLAT 21-007404/AABS

Licence Appeal Tribunal File Number: 21-007404/AABS

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:

Peter Kemp

Applicant

and

Aviva General Insurance

Respondent

DECISION

VICE-CHAIR: Brett Todd

APPEARANCES:

For the Applicant: Gordon W. Harris, Counsel

For the Respondent: Natalie Spinelli, Counsel

HEARD: By Way of Written Submissions

OVERVIEW

1Peter Kemp (the “applicant”) was involved in a motor vehicle accident on February 2, 2019 and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010 (including amendments effective June 1, 2016) (the “Schedule”). Aviva General Insurance (the “respondent”) determined that the applicant should be treated within the Minor Injury Guideline (the “MIG”) and its $3,500.00 limit on treatment, and denied three treatment plans/OCF-18s. The applicant submitted an application to the Licence Appeal Tribunal – Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.

ISSUES IN DISPUTE

2The following substantive issues are in dispute:

1. Are the applicant’s injuries predominantly minor as defined in s. 3 of the Schedule and therefore subject to treatment within the $3,500.00 limit of the MIG?
2. Is the applicant entitled to $1,945.63 for an in-home (occupational therapy) assessment, proposed by Rehab First in a treatment plan/OCF-18 submitted on May 27, 2019 and denied on June 14, 2019?
3. Is the applicant entitled to $1,945.63 for a retroactive attendant care assessment, proposed by Rehab First in a treatment plan/OCF-18 submitted on May 27, 2019 and denied on July 31, 2019?
4. Is the applicant entitled to $5,850.00 for a physiatry assessment, proposed by Rehab First in a treatment plan/OCF-18 submitted on May 11, 2019 and denied on May 25, 2021?
5. Is the respondent liable to pay an award under s. 10 of Reg. 664 because it unreasonably withheld or delayed payments to the applicant?
6. Is the applicant entitled to interest on any overdue payment of benefits pursuant to s. 51 of the Schedule?

3Note: I qualified issue #2 above by adding “occupational therapy,” as the OCF-18 submitted into evidence makes it clear that this was the focus of the assessment, and as the applicant refers to this plan using this terminology in his submissions.

RESULT

4I find that the respondent’s denials of the three disputed treatment plans did not comply with s. 38(8) of the Schedule, which triggers both s. 38(11)1. and 2. of the Schedule.

5I further find that the respondent unreasonably delayed payment of the disputed benefits and deem them incurred, pursuant to s. 3(8) of the Schedule. As a result, the applicant is removed from the MIG and is entitled to all of the deemed incurred benefits in the three disputed treatment plans, plus interest, pursuant to s. 51 of the Schedule.

6I find that the respondent is liable to pay an award of 25 per cent of the total amount of the entitled benefits, including interest, for the unreasonably withheld and delayed payment of these benefits to the applicant.

ANALYSIS

MIG and Treatment Plans: Compliance with s. 38(8) of the Schedule

7In his submissions for the written hearing, the applicant submits that the respondent acted in contravention of s. 38(8) of the Schedule and should therefore be removed from the MIG and be found entitled to the three treatment plans in dispute pursuant to s. 38(11) 1. and 2., plus interest. The applicant also submits that the treatment plans should be deemed incurred, pursuant to s. 3(8) of the Schedule.

8Section 38(8) of the Schedule mandates that an insurer shall respond to a treatment and assessment plan within 10 business days of receiving it. This response notice is to identify the goods, services, assessments, and examinations described in the plan that the insurer does and does not agree to pay for. The insurer must also provide medical and all other reasons why it has determined that the plan is not reasonable and necessary.

9When an insurer fails to comply with s. 38(8), the Schedule sets forth two consequences for such a contravention under s. 38(11). First, an insurer that fails to provide an insured person with adequate notice of the reasons for its denial is prohibited by s. 38(11)1. from taking the position that the insured person has an impairment to which the MIG applies. Second, s. 38(11)2. provides that if an insurer fails to provide proper notice of the reasons for its denial, it must pay for all goods, services, assessments, and examinations described in the treatment and assessment plan starting on the 11th business day after the day the insurer received the application and ending on the day the insurer gives notice as described in s. 38(8).

10Section 3(8) of the Schedule provides that if “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.”

11The applicant argues that the respondent did not provide notice of all three of the treatment plans in dispute in accordance with s. 38(8). Specifically, he claims that Aviva posted the denial notices solely to the Health Claims for Auto Insurance (“HCAI”) system and did not send them directly to the applicant within the requisite 10 business days. In addition, the applicant claims that the insurer’s denial of the occupational therapy treatment plan was posted to HCAI on June 14, 2019, which is 14 business days after it was submitted on May 27, 2019 and further contravenes s. 38(8).

12Also, the applicant claims a second issue with the insurer’s denial notice of physiatry assessment treatment plan submitted on May 11, 2019. He argues that the letter sent by Aviva on September 17, 2021 did not include any reasons for this denial.

13Further, while the applicant admits that these plans have not been incurred, he submits that they should be deemed incurred pursuant to s. 3(8) of the Schedule due to Aviva’s failure to provide proper denial notice to the applicant for over two years following the submission of these plans. He also requests an award as a result of this delay, alleging that this constitutes the unreasonable withholding or delaying of benefits.

14The respondent counters that its denial notices were issued in accordance with s. 38(8) of the Schedule. It claims that the occupational therapy treatment plan dated May 27, 2019 was not submitted until June 11, 2019 and the denial notice was posted to HCAI on June 14, 2019, within the 10 business days as required in s. 38(8). It also claims that denial notices compliant with s. 38(8) were provided regarding the other two treatment plans in dispute on September 8, 2021 and September 17, 2021.

15Lastly, the respondent argues that the applicant has not incurred any of these treatment plans, and as a result the insurer is not obligated to pay for them. It relies on the Divisional Court decision Aviva Insurance v. Catic, 2022 ONSC 6000, where it was found that an insurer was not liable to fund assessments that were not incurred during the period of the insurer’s non-compliance with s. 38(8). Accordingly, the respondent takes the position that the applicant is still required to prove that the treatment plans in dispute are reasonable and necessary, and maintains that he has not met his burden in this regard, nor to demonstrate that removal from the MIG is warranted.

16As a finding on these matters could make it unnecessary to render a decision on the MIG determination and/or the reasonable and necessary nature of the plans, I address them first below.

The insurer contravened s. 38(8) of the Schedule; s. 3(8) applies

17I agree with the applicant.

18First, I find that the respondent contravened s. 38(8) of the Schedule with regard to the denial of all three treatment plans. Aviva did not provide notice of the denials to the applicant, as required. Specifics follow regarding the individual treatment plans.

19The respondent submits that notice was provided through HCAI with regard to the occupational therapy treatment plan dated May 27, 2019. In its submissions, it claims that this plan was denied on HCAI on June 14, 2019, within the 10 business day period specified in the Schedule. However, I find that this does not meet the criteria established in s. 38(8), as notice provided within HCAI is not sufficient notification. Section 38(8) specifies that “the insurer shall give the insured person” such a notice. An applicant does not have access to this system, and as a result I deem this denial to be in contravention of this section of the Schedule.

20The respondent submits that it provided notifications compliant with s. 38(8) outside of HCAI for the other two treatment plans in dispute, but not until September 8, 2021 and September 17, 2021. However, I find that these notices were submitted well after the 10 business days provision in s. 38(8), coming more than two years after these treatment plans were first submitted in May 2019. Again, I deem these denials to be in contravention of this section of the Schedule.

21Further, I find that the respondent also contravened s. 38(8) with regard to the denial letter dated September 17, 2021, in that the insurer did not provide any medical or other reasons for this denial, as required. The applicant provided this denial in submissions, and it clearly shows that Aviva failed to fill out the sections of the form under the “Reasons for our decision” section of the document. Instead, the document lists “<<Manual Entry – specify document>>” in locations where the reasons for the denial were to be filled in.

22Second, I find that the respondent unreasonably withheld and delayed the benefits in these three treatment plans. I rely on s. 3(8) of the Schedule and find that they have been incurred.

23The respondent argues that the notices were cured before the applicant incurred any of these benefits, and further claims that the applicant should not be entitled to them as he did not exhaust the MIG limit on treatment. It relies on Aviva v. Catic, which holds that benefits needed to be incurred in the time period between the 11th day after notice was to be provided pursuant to s. 38(8) and the curing of any deficient or non-existent notice.

24However, I find that deeming these plans incurred does not contradict Catic, as that decision did not determine whether the deemed incurred provision in s. 3(8) would be trumped by this ruling. While not speaking for the court, it seems unlikely to me that the court would make such a ruling, since that would effectively make s. 3(8) absurd—and I accept that the legislature does not legislate in vain or in absurdities.

25At any rate and in my view, the two years that passed between the submission of these treatment plans and the notices that the respondent alleges cured any contravention of s. 38(8) fully support the applicant’s argument that the insurer unreasonably delayed the applicant’s benefits. As a result, I deem these plans to have been incurred pursuant to s. 3(8).

26For the above reasons, I find that the respondent has contravened s. 38(8) of the Schedule. The applicant is therefore removed from the MIG, in accordance with s. 38(11)1. and 2. of the Schedule. I further find that the respondent has unreasonably withheld and delayed the treatment plans in dispute, and deem them incurred, pursuant to s. 3(8). The applicant is entitled to the treatment plans in dispute, plus interest, pursuant to s. 51 of the Schedule.

MIG Determination and Treatment Plans

27As a result of having found that the respondent contravened s. 38(8) of the Schedule and having deemed the treatment plans incurred pursuant to s. 3(8) of the Schedule, I find that it is not necessary to render a decision on either the MIG determination or the reasonable and necessary nature of the treatment plans.

Award

28I find that the respondent is liable to pay an award of 25 per cent of the total amount of the three treatment plans deemed incurred, including interest, for the unreasonable withholding and delaying of benefits.

29Under s. 10 of Reg. 664, the Tribunal may grant an award of up to 50 per cent of the total benefits payable if it finds that an insurer unreasonably withheld or delayed the payment of benefits. This Tribunal has previously and consistently considered whether the insurer’s conduct was “excessive, imprudent, inflexible, unyielding or immoderate,” in deciding whether to grant an award: see, e.g., Malitskiy v. Unica, 2021 ONSC 4603 at para. 55, citing Plowright v. Wellington Insurance, 1993 ONICDRG 66.

30Here, the applicant submits that Aviva handled this claim in bad faith due to its failures to send out proper notice letters in a timely fashion, or even at all, in accordance with its obligations under s. 38(8) of the Schedule. The applicant specifically calls attention to the denial letters only being posted to HCAI, the denial letters being sent more than two years following the submission of the treatment plans in question, and the issuing of one denial letter both late and without the blanks filled in on the form detailed medical and other reasons. The applicant requests that an award be ordered for these reasons, although he does not submit arguments regarding a specific amount or percentage.

31In response, the respondent submits that it properly served all explanation of benefits and notice letters on the applicant, and that the applicant has failed to provide persuasive evidence that the insurer unreasonably withheld or delayed benefits. It argues that no award is warranted.

32I agree with the applicant. Aviva was negligent in its denial notices to the applicant, in that it improperly submitted them via HCAI, did not correct them for two years after the submission of the treatment plans, and then compounded matters by sending out one letter without any reasons listed for the denial.

33This speaks to a rather cavalier handling of this file that warrants an award for the insurer unreasonably delaying benefits to the applicant. In my view, and in accordance with the test as established in Plowright v. Wellington Insurance, it was stubborn, inflexible, and unyielding of Aviva to take the stance that it did regarding these benefits, particularly given the length of time involved.

34As the applicant did not submit arguments regarding a requested number for this award, I award 25 per cent of the total amount of the delayed deemed incurred benefits and interest, which is the mid-point of what the Tribunal can award in such circumstances.

ORDER

35I find that the respondent’s denials of the three disputed treatment plans did not comply with s. 38(8) of the Schedule, which triggers both s. 38(11)1. and 2. of the Schedule.

36I further find that the respondent unreasonably delayed payment of the disputed benefits and deem them incurred, pursuant to s. 3(8) of the Schedule. As a result, the applicant is removed from the MIG and is entitled to all of the deemed incurred benefits in the three disputed treatment plans, plus interest, pursuant to s. 51 of the Schedule.

37I find that the respondent is liable to pay an award of 25 per cent of the total amount of the entitled benefits, including interest, for the unreasonably withheld and delayed payment of these benefits to the applicant.