Steven Morrissey v. Wawanesa Insurance Company and Licence Appeal Tribunal, 2022 ONSC 4398

CITATION: Morrissey v. Wawanesa Insurance Company, 2022 ONSC 4398

DIVISIONAL COURT FILE NO.: DC 20-76

DATE: 20220729

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Dambrot, Stewart and King JJ.

BETWEEN:

Steven Morrissey

Appellant

– and –

Wawanesa Insurance Company and Licence Appeal Tribunal

Respondents

Nick de Koning, for the Appellant

Amanda Lennox, for the Respondent, Wawanesa Insurance Company

Valerie Crystal, for the Respondent Licence Appeal Tribunal

HEARD: January 31, 2022

REASONS FOR DECISION

Stewart J.

[1] This appeal is brought by Steven Morrissey (“Morrissey”) from the arbitration decision dated January 7, 2020 of Adjudicator Sandeep Johal (the “Adjudicator”) of the Licence Appeal Tribunal (“LAT”) which dismissed his request for enhanced attendant care benefits. Morrissey requested a reconsideration of the decision which was then conducted by the same Adjudicator and dismissed by his decision dated September 17, 2020.

[2] The Respondent Wawanesa Insurance Company (“Wawanesa”) is Morrissey’s insurer and is obligated to pay to him allowable benefits pursuant to the no-fault regime established under the relevant Statutory Accident Benefits Schedule (“SABS”). Wawanesa takes the position that it has complied with all of its obligations to do so.

[3] Wawanesa submits that Morrissey has raised no pure question of law that would justify interference with either of the Adjudicator’s decisions. Wawanesa further argues that it would be inappropriate for this Court to substitute the Adjudicator’s determination of the amount of attendant care to which Morrissey is entitled with the higher amount that Morrissey claims. If any error of law is identified, the remedy should be to refer the issue back to the LAT for a new hearing.

Background

[4] On January 13, 2000 Morrissey was involved in a motor vehicle accident that caused him to sustain a brain injury that eventually resulted in a catastrophic impairment designation as defined under the SABS. Accordingly, Morrissey sought payment of various statutory accident benefits from Wawanesa.

[5] Because Morrissey claimed benefits after 2010 in relation to an accident which occurred before 2010, his claim is governed by both O. Reg. 403/96 Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 (the “Old Schedule”) as well as O. Reg. 34/10 Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “New Schedule”). The issues raised on this appeal address the proper intersection and application of certain relevant provisions of both SABS.

[6] Both the 1996 Schedule and 2010 Schedule must be read together for the purpose of adjudicating benefits to be paid after September 1, 2010 in relation to accidents that occurred before that. The two Schedules set out a scheme in which, essentially, benefits are paid according to the procedure set out in the 2010 Schedule in an amount determined by the 1996 Schedule.

[7] On September 4, 2018 Morrissey filed an application to Wawanesa for payment of various claims, including a claim for retroactive attendant care benefits in the amount of $5,263.20 per month from October 14, 2015 onwards based on a retroactive Form 1 Assessment of Attendant Care Needs completed by occupational therapist.

[8] At the time of Morrissey’s application, he was already receiving attendant care benefits, but in the amount of only $346.15 per month for intermittent care of 90 minutes per day, and for 60 minutes per week for assistance with financial affairs. In his September 4, 2018 application Morrissey claimed retroactive benefits for the cost of 24/7 supervisory care, intermittent care for 120 minutes per day, help with exercise for 60 minutes a day, and 60 minutes per week for assistance with financial affairs.

[9] An in-person hearing of Morrissey’s application took place in June of 2019 before the Adjudicator who, in a decision of January 7, 2020, made the following determinations:

(a) There is no strict bar to filing an application for attendant care benefits on a retroactive basis. A retroactive Form 1 may be submitted and considered if it is reasonable and necessary and where there is evidence of an urgency and/or impossibility or impracticability of compliance with the requirements of the applicable Schedule. In order for his application to be considered, Morrissey must provide a reason for the delay in filing a retroactive Form 1. Because Morrissey did not provide a reason for the delay, he was not entitled to claim retroactive attendant care benefits. Despite this finding, Morrissey’s Form 1 claims may still be found to be reasonable and necessary but only as of the date it was submitted to Wawanesa;

(b) Section 3(7)(e) of the New Schedule and its definition of “incurred expenses” applies to Morrissey’s claim. As a result, Morrissey is required to show that the attendant care benefits were “incurred” in accordance with s. 3(7)(e) of the New Schedule;

(c) Morrissey is entitled to an increase to 120 minutes of intermittent care per day, and 60 minutes of assistance with financial affairs per week;

(d) A payment is deemed overdue when 10 business days have elapsed after the Form 1 has been received by the respondent insurer. The interest rate applicable to overdue payments owing to Morrissey is 1% per month according to the New Schedule, rather than 2% per month under the Old Schedule.

[10] Morrissey requested a reconsideration of the decision, submitting that the Adjudicator erred in concluding: (a) that Morrisey was not entitled to submit a retroactive Form 1; (b) that the definition of “incurred” under the New Schedule applied to Morrissey’s claim despite the fact that the accident occurred prior to 2010; and (c) that the applicable interest rate on any overdue benefits is 1% as set out in the New Schedule.

[11] Following the requested reconsideration, by a decision dated September 17, 2020 the Adjudicator upheld his original decision.

[12] Morrissey now appeals to this court.

Jurisdiction

[13] Decisions of the LAT may be appealed to the Divisional Court pursuant to s. 11 of the Licence Appeal Tribunal Act, 1999, S.O. 1990, c. 12, Sched. G. Such right of appeal is restricted to questions of law only.

Standard of Review

[14] The standard of review on a question of law is correctness (see: Housen v. Nikolaisen, 2002 SCC 33).

Issues and Discussion

[15] Morrissey raises three main issues on this appeal, as follows:

A. Is Morrissey permitted to submit a Form 1 for payment of retroactive benefits?

B. Does the definition of “incurred” provided for in the New Schedule apply to Morrissey’s claim?

C. What is the applicable interest rate on any overdue benefits to which Morrissey is entitled?

Issue A: Is Morrissey permitted to submit a Form 1 for payment of retroactive benefits?

[16] Morrissey argues that the Adjudicator was incorrect in finding that submitting a Form 1 for payment of retroactive benefits is not an unqualified right under s. 42 of the New Schedule and in imposing a requirement that an applicant must show “urgency, impossibility, or impracticability” in order to submit the claim. Morrissey cites a series of cases from the Ontario Divisional court, Financial Services Commission of Ontario (“FSCO”), and LAT that he believes support that position.

[17] Wawanesa submits that the Adjudicator properly held that there is no strict bar against filing a retroactive claim for attendant care benefits. Accordingly, it agrees with the case law citied by Morrissey that a submission of a retroactive Form 1 may be permissible in some circumstances but submits that the only issue here is whether submission of a retroactive Form 1 is appropriate in these circumstances where no reasonable explanation for the delay has been offered by Morrissey.

[18] Wawanesa argues that in each of the cases cited on behalf of Morrissey there were facts that provided some reason to explain the delay in submitting the Form 1. By way of example:

(a) In 16-004281/AABS v. Aviva Insurance Company, 2018 81909 Adjudicator Bickley said (at para. 39):

I agree with Adjudicator Shapiro’s comment in T.K. v. Unica Insurance Inc. that to allow all retroactive claims would render section 42(5) meaningless. Similarly, to never allow retroactive claims would render section 34 meaningless. Each case will turn on its particular facts. Having reviewed the totality of the dealings between E.E. and Aviva, I conclude that it is not appropriate in this case to allow an ACB claim for any period before the Form 1s were submitted. The delay in submitting Form 1 deprived Aviva of the opportunity to conduct its own timely assessment of E.E.’s attendant care needs. This is not a case in which an emergency situation or other special circumstance rendered a more timely submission of a Form 1 impractical.

(b) In 16-003306 v. Coachman Insurance Company, 2018 81882 Adjudicator Gosio said (at para.77):

Both parties refer me to the Tribunal’s decision in T.K. and Unica Insurance Inc. wherein adjudicator Shapiro reasoned that a retroactive Form 1 would be appropriate where urgency and impracticability prevented compliance with the Schedule and holding otherwise would produce and “absurd” result. I accept adjudicator Shapiro’s reasoning and find that there is no urgency or impossibility or impracticability that would explain the delay in submitting the Form 1 in this case. As a result, retroactive attendant care benefits are not awarded. The benefit shall be paid from the date the Form 1 was submitted to the respondent, July 7, 2016.

Jevco asserts that for C.W. to be successful, she must establish either that (1) “urgency, impossibility or impracticality” prevented her from submitting her Form 1 earlier, or (2) that she has a “reasonable excuse” for not doing so earlier. I agree.

Jevco reads s. 42(5) to mean an insurer is not required to pay ACBs for periods prior to the submission of the Form 1, but agrees two exceptions apply. First, case law such as Kelly v. Guarantee show there are urgent or other situations where technical compliance with s. 42(5) is impossible, but yet the legislature clearly intended for benefits to be paid.

Jevco agrees with this Tribunal’s summation of those exceptions in 16-000372 v. Unica Insurance and cases following it as where “urgency, impossibility or impracticality” prevents compliance with s. 42(5) payment for retroactive ACBs may be warranted. Second, Jevco notes “However, s. 34 [of the Schedule] acts as a savings provision to claimants, and provides: A person's failure to comply with a time limit set out in this Part does not disentitle the person to a benefit if the person has a reasonable explanation.” Thus, if her Form 1 is untimely under s. 42(5), C.W. is not disentitled if she has a “reasonable explanation” for the delay.

[19] It is evident that many subsequent LAT decisions have followed this earlier approach and have held that only where there is evidence of urgency of a need, and/or impossibility/impracticality of compliance with the requirements of the SABS, will a retroactive Form 1 be considered payable (and then only if same is reasonable and necessary). This reasoning has been applied to require an applicant to provide a satisfactory explanation for non-compliance with section 42.

[20] Section 42(5) of the New Schedule (and section 39(3) of the Old Schedule) provide that an insurer may, but is not required to, pay an expense incurred before a Form 1 that complies with that section is submitted to the insurer. The Adjudicator held that this provides the insurer with discretion as to whether it will allow the Form 1 to be submitted. If the Form 1 does not comply, a valid reason must be given for the delay.

[21] I agree with Wawanesa that, because Morrissey failed to provide any submission or evidence with respect to the reason for his non-compliance with s. 42 of the Schedule, the Adjudicator was correct in determining that his Form 1 for retroactive benefits should be refused.

[22] Counsel for the LAT additionally submits that the question of whether Morrissey ought to be permitted to submit a retroactive Form 1 is a question of mixed fact and law and therefore beyond the purview of this appeal. Although the procedure for claiming attendant care benefits is set out in s. 42 of the New Schedule which applies to accidents that occurred between November 1, 1996 and August 31, 2010, entitlement to attendant care benefits for the relevant time period is governed by s. 16 of the Old Schedule.

[23] I therefore also agree with counsel for the LAT’s characterization of this issue as raising only a question of mixed fact and law, and therefore cannot be the subject matter of an appeal. If I am wrong in that regard, as I have stated above, to the extent that the Adjudicator’s interpretation of the Schedule raises a question of pure law, his interpretation is correct.

[24] I therefore would not give effect to this ground of appeal.

Issue 2: Does the definition of “incurred” provided for in the New Schedule apply to Morrissey’s claim?

[25] Morrissey argues that the Adjudicator erred in concluding that the statutory definition of “incurred” under s. 3(7)(e) of the New Schedule applied to his claim. Morrissey submits that accidents after November 1, 1996 but prior to September 1, 2010 are subject to the New Schedule for procedural purposes but subject to the Old Schedule for his substantive benefit entitlement. Although Part V (Procedures for Claiming Benefits) of the Old Schedule no longer applied following September 1, 2010, Part V (Medical, Rehabilitation and Attendant Care Benefits) of the Old Schedule would continue to apply to Morrissey’s claim.

[26] Morrissey also submits that the Adjudicator misapplied the decision in Barnes v. Motor Vehicle Accident Claims Fund, FSCO A13-005372. Barnes dealt with s. 19 of the New Schedule (which also deals with attendant care benefits) and the lack of transitional provisions or clear indication of which amendments apply to accidents which occurred on or after September 1, 2010.

[27] Morrissey also relies on the decision in Federico v. State Farm Mutual Automobile Insurance Company, FSCO A08-001138 in which the Financial Services Commission allowed an applicant who was in an accident in 2006 to claim benefits according to the Old Schedule and held that the transitional provisions between the Old and New Schedule expressly provide for interest on overdue benefits to be paid on the basis of the Old Schedule.

[28] Morrissey argues that the decisions in Barnes and Federico establish that s.3(7) of the New Schedule does not apply to accidents prior to September 1, 2010. Accordingly, the definition of “incurred” under the Old Schedule as defined in the earlier decision in McMichael v. Belair Insurance, FSCO A02-001081 supports a conclusion that it is not necessary for an applicant to prove that he has paid for the attendant care benefits requested, as entitlement to benefits is based on genuine need, not service delivery.

[29] Wawanesa submits that because Morrissey claimed benefits on September 4, 2018 for attendant care benefits from October 14, 2015 and onward, this claim is governed by the New Schedule and thus subject to the definition of “incurred” under s. 3(7)(e) of the New Schedule.

[30] Wawanesa argues that all amendments to the Schedule are deemed to be incorporated into every policy of insurance, regardless of when they were enacted and relies upon a decision of the Court of Appeal for Ontario which held that every new version of the Schedule applies to an insured person by virtue of s. 268(1) of the Insurance Act, R.S.O. 1990, c. I.8, and the insured person’s policy is amended to incorporate the benefits and exclusions in the amendments (see: Beattie v. National Frontier Insurance Co., 2003 2715 (ON CA)).

[31] Counsel for the LAT points out that the provisions establishing entitlement to benefits in the Old Schedule continue to apply to pre-September 1, 2010 accidents. Entitlement to accident care benefits is set out in Part V and this Part continues to apply to accidents prior to September 1, 2010. Section 3 of the Old Schedule provides that for accidents that occurred between November 1, 1996 and September 1, 2010, benefits are paid under the New Schedule, in amounts determined under the Old Schedule.

[32] Counsel for the LAT submits that under both the Old and New Schedules, an applicant must prove that attendant care benefits were actually “incurred” in order to be paid. Section 3(8) of the New Schedule also provides the LAT with discretion to deem an expense “incurred”.

[33] I agree with Wawanesa that the continuing requirement that benefits be “incurred” before they are payable by the insurer as is the case with Morrissey is essentially procedural in nature, not substantive, and therefore the New Schedule applies. Further, the automatic amendment of an insured’s policy of insurance resulting from the enactment of a Schedule change would produce the same result in this case.

[34] For these reasons, I would not give effect to this ground of appeal.

Issue 3: What is the applicable interest rate on any overdue benefits to which Morrissey is entitled?

[35] Morrissey argues that the case of Federico is also applicable to sustain his claim for the pre-2010 interest rate of 2% per month. The accident that gave rise to the claim for benefits in Federico occurred in 2006 –prior to the New Schedule –and the FSCO applied a 2% interest rate as established by s. 46 of the Old Schedule.

[36] Morrissey points out that the decision in Federico was upheld by the Divisional Court (see: State Farm Mutual Automobile Insurance Company v. Federico, Financial Services Commission of Ontario, 2014 ONSC 109) where it was found that the FSCO had reasonably interpreted the transitional provisions of the Old and New Schedules which provide that benefits would be paid in the amounts determined by the Old Schedule. Such amounts necessarily would include the rate of 2% per month for overdue benefits.

[37] Counsel for the LAT notes that s. 46 of the Old Schedule prescribes an interest rate of 2% per month, compounded monthly. This section was in Part X of the Old Schedule, which, pursuant to s. 3(1.2) of the Old Schedule, no longer applies after August 31, 2010. Section 51 of the New Schedule sets a lower rate of 1% per month. On January 1, 2015, the provision was amended to provide that interest is calculated at the prejudgment interest rate set out in the Courts of Justice Act while a proceeding regarding entitlement of benefits is ongoing. Section 51 is in Part IX of the New Schedule, which, pursuant to s. 2(2) of the New Schedule, applies to an accident which occurred between November 1, 1996 and August 31, 2010.

[38] Wawanesa again submits that, according to Barnes and Beattie, when a new version of the Schedule comes into force every insured’s policy is amended to incorporate the benefits and exclusions within and argues that the Adjudicator was correct to follow Barnes and Beattie and to apply a 1% interest rate as per the New Schedule.

[39] In this case the benefits in question are for payment of an additional 30 minutes of daily intermittent care from the date of the making of the application. As a result of the conclusions set out above concerning the other issues raised by Morrissey, interest will run on this amount only from the date of his application.

[40] The rate of interest compounded monthly on late payment of benefits is designed presumably to deter insurers from unduly delaying payment of amounts owing to injured claimants. Interest on overdue payments is an integral and substantive component of those benefits under the Old Schedule and the transitional provisions. Therefore, the rate applicable to interest on amounts owing in this case is 2% per month.

[41] The question of the applicable interest rate per the legislation and the Schedules is one of law and therefore is the proper subject matter for appeal and within the jurisdiction of this court to vary.

[42] Accordingly, Morrissey’s appeal is allowed on the issue of the applicable interest rate on the attendant care benefits owing to him as found by the Adjudicator. Given the precise nature of that determination, it is most appropriate that the rate be adjusted by this court accordingly and does not require a re-hearing before the Adjudicator.

Conclusion

[43] This appeal is allowed in part. Interest at the rate of 2% per month on overdue payment of benefits owing shall be substituted for the 1% rate imposed by the Adjudicator.

Costs

[44] The parties had indicated that they had agreed upon the amount of $4000 plus disbursements and HST for costs to the successful party. The LAT does not seek its costs.

[45] In the result, however, success has been divided. When this factor is considered, along with all of the other circumstances of this case, I consider it fair and just that there be no order as to costs.

Stewart J.

I agree ________________________________

Dambrot J.

I agree _______________________________

King J.

Released: July 29, 2022