Licence Appeal Tribunal File Number: 23-014332/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:
Jeyanasan Varapragasam
Applicant
and
Definity Insurance Company
Respondent
DECISION
ADJUDICATOR:
Nathan Prince
APPEARANCES:
For the Applicant:
Jono Schneider, Counsel
For the Respondent:
Yann Grand-Clement, Counsel
HEARD by Videoconference:
October 24, 2024
OVERVIEW
1Jeyanasan Varapragasam, the applicant, was involved in an automobile accident on June 18, 2023, and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (including amendments effective June 1, 2016) (the “Schedule”). The applicant was denied benefits by the respondent, Definity Insurance Company, and applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.
ISSUES
2The issues in dispute are:
i. Is the applicant entitled to an income replacement benefit (“IRBs”) in the amount of $56.50 per week from June 25, 2023 to date and ongoing?
ii. Is the applicant entitled to $45.00 for ambulance services, submitted on a claim form (OCF-6) dated October 3, 2023?
iii. Is the applicant entitled to $200.00 for a disability certificate, proposed by GTA Chiropractic Centre Inc. in a treatment plan/OCF-18 (“plan”) dated September 19, 2023?
iv. Is the applicant entitled to $2,500.00 for a forensic accounting report, proposed by Clarity CPA in a plan dated November 28, 2023?
v. Is the respondent liable to pay an award under s. 10 of Reg. 664 because it unreasonably withheld or delayed payments to the applicant?
vi. Is the applicant entitled to interest on any overdue payment of benefits?
vii. Is the applicant entitled to costs because the respondent has acted unreasonably, frivolously, vexatiously, or in bad faith?
3At the outset of the hearing, the respondent agreed to fund the benefits in dispute listed as issues i-iv above. The applicant indicated that he wished to proceed with the hearing on the remaining issues of costs, an award, and interest.
RESULT
4At the outset of the hearing, the respondent agreed to pay the following benefits:
i. an income replacement benefit in the amount of $56.50 per week from June 25, 2023 to date and ongoing;
ii. $45.00 for ambulance services, submitted on a claim form (OCF-6) dated October 3, 2023;
iii. $200.00 for a disability certificate, proposed by GTA Chiropractic Centre Inc. in a plan dated September 19, 2023; and
iv. $2,500.00 for a forensic accounting report, proposed by Clarity CPA in a plan dated November 28, 2023.
5The applicant is entitled to interest on overdue payments in accordance with s. 51 of the Schedule.
6The respondent is liable to pay a 15% award.
7The applicant is not entitled to costs.
ANALYSIS
8At the outset of the hearing, the respondent advised that it would fund the medical benefits and IRBs in dispute.
The respondent is liable to pay interest
9Interest applies on the payment of any overdue benefits pursuant to section 51 of the Schedule. An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under the Schedule.
10The payment of medical benefits and IRBs are overdue, and interest is therefore payable in accordance with section 51 of the Schedule from the date payment became overdue to the date that payment is made.
The respondent is liable to pay an award
11The applicant sought an award pursuant to s. 10 of Reg. 664. Under s. 10, 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. A special award is only given where the delay or withholding of benefits by the insurer is unreasonable, meaning “behaviour, which is excessive, imprudent, stubborn, inflexible, unyielding or immoderate”. The applicant has the onus to demonstrate entitlement to an award on a balance of probabilities.
12I find a 15% award is appropriate for the reasons that follow.
13The applicant submits that the insurer unreasonably withheld the payment of benefits for reasons unknown. He acknowledges that the insurer was conducting an investigation pursuant to section 32(10) of the Schedule; however, no further information was provided to him. He was not advised whether the investigation was completed, or what the outcome was, the respondent simply did not communicate. In addition, the applicant submits that he did not receive various communications and application forms from his insurer, despite confirming that his address as provided to the respondent was correct. The applicant relies on Plowright v. Wellington Insurance Co. (1993 OIC File No.: A-003985 (FSCO) wherein the arbitrator found that it is the insurer’s obligation to work as a partner with the applicant and not treat the applicant with suspicion.
14The respondent submits that the applicant has not met his onus of proving on a balance of probabilities that the payments of benefits were unreasonably withheld. It relies on the decisions in 17-008584 v Certas Direct Insurance Company, 2018 CanLII 83532 (ON LAT) and 16-002346 v Unifund Assurance Company, 2017 CanLII 81583 (ON LAT) wherein the Tribunal held that entitlement to a special award faces a "stringent test” and an insurer will not face a special award just because an adjudicator finds that the insurer got it wrong. Further, it submits that it had a reasonable basis to defer payments including the late submission of an OCF-1, a lack of medical documentation, delayed completion a statutory declaration, and the scheduling of examination under oath.
15In the alternative, the respondent submits that if it is liable to pay an award, that the quantum should be reduced from the maximum of 50%. In this regard, it relies on 17-005825 v Aviva Canada Inc., 2018 CanLII 98285 (ON LAT) (“17-005825”), where it was found that a 50% award would require the most egregious behaviour, which the respondent submits is not present here. In 17-005825 the adjudicator ultimately held that an award of 25% was appropriate and considered the outstanding amount of $12,612.13, the length of the delay of approximately 20 months, the failure of the insurer to respect its obligations under the Schedule, and mitigating factors which included the insurer eventually paying $9,154.08 of the outstanding amount.
16With respect to the late submission of an OCF-1, the applicant advised that he was under the impression that his previous legal representative had submitted the form; however, it appears that the form was not submitted until October 3, 2023 when the applicant retained new counsel. As a result of this delay, the respondent notified the applicant that it would be taking up to 45 days to investigate the claim pursuant to section 32(10) of the Schedule.
17On November 8, 2023, the insurer made a request for additional information pursuant to section 33(1) of the Schedule, including clinical notes and records from the applicant’s family doctor, hospital records, and a statutory declaration.
18On December 5, 2023, the insurer wrote to the applicant advising that it had not received the disclosure requested in their November 8, 2023 letter. The insurer further advised that the file was still under investigation. The required disclosure was provided shortly thereafter.
19Finally, on January 8, 2024, the insurer advised that it required more information from the applicant and that it would be scheduling an examination under oath which took place on June 4, 2024.
20I was not pointed to any evidence of communication from the insurer to the applicant after the examination under oath. The applicant was simply left in the dark as to the status of his benefits despite providing the insurer with the requested section 33 disclosure and completing an examination under oath. After the applicant complied with the section 33 requests, the Schedule required the insurer to make a determination with respect to the applicant’s benefits and I find that it failed to do so.
21While I find that the insurer’s lack of communication and failure to comply with the provisions of the Schedule is sufficient to warrant an award, I agree with the respondent that it does not rise to the level of egregious conduct that would attract a maximum award. The insurer was entitled to conduct an investigation based on the late filing of the OCF-1. In addition, the insurer had a statutory right to conduct a 45-day investigation, and although it exceeded this timeframe, it appears that this was a result of the applicant’s failure to respond to the insurer’s section 33(1) request.
22However, after it received the requested disclosure and the examination under oath was completed, the insurer had the obligation to make a determination with respect to the applicant’s benefits and advise the applicant accordingly. It failed to do so and did not advise the applicant that it would be approving the benefits in dispute until the commencement of the hearing.
23I find that the insurer unreasonably delayed the payment of benefits. In determining the quantum of award, I am guided by 17-005825. While the insurer failed to respect its obligations under the Schedule, the outstanding amount and length of delay were significantly less than in 17-005825. As such, I find that an award of 15% is appropriate in the circumstances.
The applicant is not entitled to costs
24Pursuant to Rule 19 of the Licence Appeal Tribunal Rules, 2023 (“Rules”), a party may make a request to the Tribunal for costs where they believe that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith.
25In deciding whether to order costs and the amount of costs to be ordered, the Tribunal shall consider all relevant factors including:
i. the seriousness of the misconduct;
ii. whether the conduct was in breach of a direction or order issued by the Tribunal;
iii. whether or not a party's behaviour interfered with the Tribunal's ability to carry out a fair, efficient, and effective process;
iv. prejudice to other parties; and
v. the potential impact an order for costs would have on individuals accessing the Tribunal system.
26The purpose of Rule 19 is to maintain civility and order during proceedings, to deter conduct that threatens the orderly and civil resolution of an application, and to ensure that the Tribunal’s process and the other participants are respected. This is aimed at the behaviour by the parties (See e.g. 16-000449/AABS v State Farm Mutual Automobile Insurance Company, 2017 CanLII 62164 (ON LAT)). It is a high bar to meet for conduct to attract a cost award and it is an exceptional remedy. For the following reasons, I find that this threshold has not been met.
27The applicant sought costs for his attendance at the case conference as well as the one-day hearing. He submitted that the issues in dispute could have been dealt with prior to the hearing and that he remains unaware of reasons for the delayed payment of benefits. He also submits that the respondent did not comply with the terms of the case conference report and order by failing to provide a copy of the property damage file.
28The respondent submits that the applicant has not met his burden of showing that the insurer’s conduct was unreasonable, frivolous, vexatious, or in bad faith, and he has not submitted any evidence to support his position.
29With respect to costs for attendance at the case conference, I find that the insurer did not act unreasonably, frivolously, vexatiously, or in bad faith. As of the date of the case conference, May 13, 2024, the insurer was still awaiting the examination under oath scheduled for June 4, 2024. As such, there was a reasonable basis upon which the insurer had deferred benefits as of the date of the case conference. The insurer’s decision to schedule an examination under oath was its prerogative and did not affect the orderly and civil resolution of the application. I therefore find that the applicant is not entitled to costs for attendance at the case conference.
30With respect to costs for attendance at the hearing, I find that the insurer did not act unreasonably, frivolously, vexatiously, or in bad faith. While I am alive to the fact that an earlier decision may have negated the need for a hearing, I was not pointed to any evidence regarding the insurer’s reasons for delaying its decision nor any evidence which would shed light on why the insurer elected to approve the benefits on the day of the hearing. I decline to draw an adverse inference from the lack of evidence before me given the serious nature of a costs award and the high bar which must be met to establish entitlement to costs. In addition, I find that the respondent is not in breach of the case conference report and order as it advised the applicant via email that it did not have a copy of the property damage file because the insured did not have collision coverage. Finally, the fact that the insurer agreed to fund the medical benefits and IRBs at the outset of the hearing did not interfere with the Tribunal's ability to carry out a fair, efficient, and effective process. Therefore, I find that the applicant is not entitled to costs for attendance at the hearing.
ORDER
31For the above-noted reasons, I make the following order:
i. The applicant is entitled interest on the following overdue payments:
a. an income replacement benefit in the amount of $56.50 per week from June 25, 2023 to date;
b. $45.00 for ambulance services, submitted on a claim form (OCF-6) dated October 3, 2023;
c. $200.00 for a disability certificate, proposed by GTA Chiropractic Centre Inc. in a plan dated September 19, 2023; and
d. $2,500.00 for a forensic accounting report, proposed by Clarity CPA in a plan dated November 28, 2023.
ii. The applicant is entitled to a 15% award.
iii. The applicant is not entitled to costs.
Released: November 25, 2024
Nathan Prince
Adjudicator