SUPERIOR COURT OF JUSTICE - ONTARIO
LINDSAY COURT FILE NO.: 07/09
DATE: 20151218
RE: Bradley Michael Mulhall, Plaintiff
AND:
The Wawanesa Mutual Insurance Company, Defendant
BEFORE: D.S. Gunsolus J.
COUNSEL:
David Zarek, Courtney Madison, Eric K. Grossman, Counsel, for the Plaintiff
Ian D. Kirby, Counsel, for the Defendant
HEARD: November 17, 18, 2015 and December 3, 2015
Reasons on motion
Nature of the Motion
[1] The plaintiff brings this action against his insurer for attendant care benefits (ACBs) in relation to a motor vehicle accident that occurred on Victoria Street East, Whitby, in the Regional Municipality of Durham, on March 18, 2001. This action is to be tried by a judge and jury. A preliminary question of law arose as to when interest should begin to run in relation to attendant care benefits that may be found to be owed during a retrospective time period.
[2] Mr. Kirby, on the behalf of the defendant, insurer, has indicated that his client acknowledges:
the plaintiff is entitled to a declaration that he is an insured person under Ontario Standard Automobile Policy with the defendant, policy number 204014;
the plaintiff is entitled to a declaration that he is entitled to receive accident benefits pursuant to that policy;
the defendant is not raising a limitations defence nor a timely notice defence; and
the plaintiff has a right to seek retrospective benefits.
[3] As the issue in relation to interest is a question of law, counsel agreed that I should decide this question before putting the substantive portion of this case to a jury.
Background Facts
[4] Bradley Mulhall was catastrophically injured in a motor vehicle accident on March 18, 2001. He was 17 years of age at the time. The accident was reported to Wawanesa Mutual Insurance Company on March 21, 2001. Wawanesa hired and assigned a case manager on March 23, 2001. The plaintiff remained hospitalized until May 15, 2001 at St. Michael’s Hospital in Toronto and immediately after was placed at Bloorview MacMillan Children’s Centre in an overnight capacity. When he was discharged from Bloorview on July 27, 2001, the discharge summary noted:
It was quite clear that throughout Brad’s stay here, because of his problems with attention, concentration, and impulsivity, poor safety awareness and poor judgments, which he needed this constant supervision to maintain his safety. It was also important to help teach the family about the significant impacts this injury would have for him now and lifelong period.
[5] When the plaintiff was discharged, Wawanesa paid for service providers including, but not limited to, a Registered Social Worker (RSW), speech pathologist, child youth worker, case manager, and occupational therapists. Twenty-four hour attendant care service was not provided and it is the plaintiff’s position that it should have been. The plaintiff’s parents provided 24 hour attendant care. Since April 2006, Wawanesa has paid attendant care benefits. The critical period of time for which the plaintiff now claims attendant care benefits is from July 27, 2001 to December 6, 2006.
[6] On March 22, 2001, Wawanesa mailed to the plaintiff an application for accident benefits and pamphlets explaining the various statutory accident benefits available. On April 3, 2001, a representative of Wawanesa and the assigned case manager met with the plaintiff’s parents at St. Michael’s Hospital. The plaintiff was in a coma at the time and not expected to survive. It is the position of the defendant that at that time the plaintiff’s parents were provided with an application for accident benefits and explanatory pamphlets in relation to various available statutory accident benefits. The defendant further takes the position that the available benefits were orally explained to the plaintiff’s parents. An application for accident benefits was completed by someone other than the plaintiff’s parents; however, the plaintiff’s father signed the actual application. Attendant care benefits were not claimed.
[7] On December 7, 2006, an Assessment of Attendant Care Needs including a Form 1 was submitted on behalf of the plaintiff to the defendant. The report and Form 1 referenced the plaintiff’s then current attendant care needs commencing December 7, 2006. It was not retrospective in application.
[8] As a result, Wawanesa began to pay attendant care benefits. A number of further attendant care assessments have taken place since then and while there may be a dispute as to the appropriate quantum of monthly attendant care benefits, Wawanesa has continued to pay for monthly attendant care to date.
[9] On August 20, 2015, counsel for the plaintiff commissioned a report together with a retrospective Form 1 for the plaintiff’s attendant care needs for the period July 27, 2001 to December 6, 2006. This report was received by Wawanesa on August 27, 2015. This was the first report and Form 1 assessing the plaintiff’s attendant care needs for the period of July 27, 2001 to December 6, 2006.
[10] To date, Wawanesa has paid almost all medical and rehabilitation as well as visitor expense claims submitted by or on behalf of the plaintiff together with monthly attendant care benefits since first notified, on December 7, 2006, of an attendant care benefit claim.
[11] As stated above, the only substantive claim in the action is one for statutory accident benefits in relation to retrospective attendant care. The issue on this motion is for a determination as to what date interest should begin to accrue on the plaintiff’s attendant care claim for the period of July 27, 2001 to December 6, 2006.
Party’s Positions
[12] It is the plaintiff’s position that he should receive the SABS[1] interest on the attendant care benefits commencing May 3, 2001 (effectively July 27, 2001 being the earliest date ACBs may be found to be owing). It is the defendant’s position that there is no obligation on an insurer to pay attendant care benefits until such time as it receives a Form 1 Assessment. Payment, it is alleged, is not overdue and therefore interest should not accrue or begin to run on attendant care benefits until 10 business days after the receipt of the Form 1 Assessment which, in this case, in relation to the retrospective period would be 10 business days following August 27, 2015.
The Law
[13] Insurance law has been interpreted by the Supreme Court of Canada as being “geared towards protection of the consumer.” As such, an insurer is required to inform an insured in straight-forward and clear language, at the level of an unsophisticated person, the process that an insured must follow in order to obtain the benefits available to them.
[14] Our courts have repeatedly confirmed the proposition that interest payable under SABS is compensatory and not punitive. As stated in Zacharias v. Zurich Insurance Company, the intent of interest payable under the SABS is to “compensate insureds for the loss of the time value of money and to encourage insurers to pay accident benefits promptly.”
[15] The defendant in this case relied primarily on the case of Grigoroff v. Wawanesa Mutual Insurance Co., where the Divisional Court held that under the SABS, payment is not overdue until 10 business days have elapsed after a Form 1 Assessment of Attendant Care Needs is received by the insurer. Until such time as a Form 1 Assessment is received by an insurer, payment does not become due. Interest, therefore, cannot begin to accrue until attendant care benefits become due as a result of the submission of a Form 1.
[16] Counsel for the plaintiff argued that Grigoroff is factually distinct from the present case. Plaintiff’s counsel submitted that Grigoroff was not a case dealing with the issue as to an insurer’s obligation under s. 32 of the SABS based upon the knowledge that the insurer had early on as to the specific needs of an insured. Counsel also suggested that Grigoroff was decided on legislative wording that is distinctly different from that which applied in 2001 at the time of Mr. Mulhall’s accident.
[17] In Grigoroff the trial judge, relying on Laskin J.A.’s statement in Attavar v. Allstate Insurance Co. of Canada, determined that interest ought to be paid from the time the payment is overdue even though the insurer had no way of knowing the amount to be paid. Interest should be attributable on attendant care benefits from the beginning of the period that ACBs should have been paid.
[18] I agree with counsel for the plaintiff that this decision appears to stand for the proposition that a claim for attendant care benefits must be in the form of an Attendant Care Needs Assessment, a Form 1.
[19] In Grigoroff, the Divisional Court did not consider the many cases that deal with the consumer protection aspect of insurance law nor did it deal with the issue as to when an insurer has sufficient information to properly adjust an insured’s claim for attendant care benefits.
[20] A review of arbitration and court decisions reveals that these provisions have been interpreted with consistency. Interest is compensatory and not punitive; it is designed to compensate the insured for the time value of money and to encourage insurers to pay accident benefits promptly; no finding of fault against an insurer is required.
[21] What the courts and arbitrators have not done is apply these provisions with consistency. This may be because each case is fact specific. It would appear that the underlying principle that courts have applied, yet have failed to clearly articulate, is that interest accrues from the date the insurer has sufficient information such that it is, or ought to be, aware that the benefit should be considered. Thus a payment is overdue once the insurer has sufficient knowledge to determine its obligation to pay the benefit or the insured’s entitlement to the benefit.
[22] In Attavar, the trial judge concluded that “it is the insurer not the insured who must bear the consequences of a decision not to pay benefits that are later found to be owing”.
[23] In Van Galder v. Economical Mutual Insurance Co., the Ontario Superior Court followed the consumer protection policy of the regulation in order to grant interest on retroactive benefits at the full SABS rate.
[24] In coming to its decision the court relied on Attavar and Grigoroff (prior to the Divisional Court overturning the trial judge’s decision) confirming that the intent of the legislation is compensatory.
[25] In Gill v. Royal and Sun Alliance Insurance Company, notwithstanding that the court found that the insured failed to provide the insurer with requested information, the court held that the insurer should have been able to make a determination with the information available to it and awarded interest to the insured from the date when the SABS benefits first became payable to the insured.
[26] In T.N. v. Personal Insurance Company of Canada the commission noted that even though an insured did not submit a Form 1 on a timely basis, this delay did not relieve the insurer of its obligation to pay the insured attendant care benefits to which she might have been entitled on a retroactive basis.
[27] In L.F. v. State Farm Mutual Automobile Insurance Company and Whyte v. State Farm Mutual Automobile Insurance Co., the insureds were awarded retroactive attendant care benefit claims.
[28] L.F. and Whyte acknowledged that interest is remedial and not punitive and designed not only to compensate applicants for the value of money withheld, but to further the system’s fundamental goal of insuring prompt payment of benefits.
Discussion
[29] The defendant has relied primarily upon the Divisional Court decision in Grigoroff.
[30] In 2001, s. 39(1) stated:
Within 14 days after receiving an application for an attendant care benefit, an insurer shall,
(a) give the insured person notice that it has approved the application, if the insurer determines that it is required to pay for the expenses described in the application; or
(b) give the insured person notice that the insurer required the insured person to furnish a certificate from a member of a health profession who is authorized by law to treat the person’s impairment stating that the expenses described in the application are reasonable and necessary for the person’s care.
[31] Therefore, pursuant to s. 39(1), a claim for attendant care benefits must be in the prescribed form of an Assessment of Attendant Care Needs.
[32] Grigoroff was not a case involving the issue as to whether or not the insurer held sufficient information to determine an application for ACBs in circumstances where a Form 1 had not been tendered.
[33] A review of the case law discloses that a rule that a payment is overdue after an application is actually received, has not been consistently applied.
[34] In Attavar and Van Galder interest was retrospectively applied because the insurer was obligated to pay the benefit and the insurer should be the one to bear the consequences of its decision not to pay benefits that are found later to be owed.
[35] If the trier of fact awards retroactive benefit payments, interest should begin accruing from the date that the insurer was, or should have been aware the benefits were owed.
[36] In T.N. it was found that even though the applicant did not submit an application for benefits, that had no bearing on the insurer’s obligation to pay the applicant those benefits.
[37] Following these underlying principles, I find that interest in this case should begin to accrue from the date that the insurer had sufficient information to be able to assess whether the benefit should have been paid regardless of whether or not the plaintiff or his parents specifically applied for attendant care expenses.
[38] A broad and liberal interpretation of when an application has been made for attendant care benefits in this fashion is consistent with the spirit of insurance law described by the Supreme Court in Smith v. Co-operators and the stated objective of consumer protection.
[39] In the circumstances of this case where Mr. Mulhall was left with severe brain injuries, I echo the comments of Arbitrator Wilson in Kelly v. Guarantee Co. of North America where the suggestion was expressly rejected requiring an injured person, in every circumstance, to complete all paperwork, including a Form 1, before becoming eligible for attendant care benefits.
[40] Counsel for Mr. Mulhall had urged that I should find some fault against the defendant insurer in this case. Fault does not enter into this exercise.
[41] A review of Mr. Mulhall’s application for accident benefits and statement of activities of normal life provided to the defendant on or about April 3, 2001, would indicate that the plaintiff could not bathe, groom, dress, toilet, walk, climb stairs, relate to others without irritability or temper, participate in social activities, or “do any physical activities”.
[42] And finally, the defendant was provided a letter from the Bloorview MacMillan Children’s Centre, dated June 7, 2001.
[43] As stated by Boswell J. in Sorokin v. The Wawanesa Mutual Insurance Company, affirmed by the Court of Appeal for Ontario, “[t]he compensatory nature of the interest provided for in s. 46(2) of the SABS suggests to me that it is part of the overall scheme of benefits available to an insured under the Schedule.”
[44] As stated in L.F., “[t]he insurer is expected to adjust the claim and determine what benefits may be available based on the information received.”
[45] I have no doubt that the insurer in this case had ample information, as in T.N., to begin to address the issue of attendant care benefits.
Relief From Forfeiture
[46] Given my reasons above, it is unnecessary for me to consider the plaintiff’s alternate argument in relation to relief from forfeiture.
[47] In the matter before me, the plaintiff’s conduct was not unreasonable given the fact that as result of the accident he suffered a severe brain injury.
[48] Given the fact that the defendant set up a reserve within days of the plaintiff’s accident, and given the unrestricted disclosure of medical evidence that the defendant received, the defendant suffered no actual prejudice.
[49] The attendant care benefits and applicable interest for the period 2001 to 2006 indicates that the disparity between the value of the property forfeited and the damage caused by the breach is indeed significant.
[50] Had it been necessary I would have granted relief from forfeiture in the circumstances of this case.
Order
[51] Accordingly an order shall issue as follows:
Should the parties agree, or the trier of fact determine, that attendant care benefits are payable for the 2001 to 2006 time period, the plaintiff, Bradley Michael Mulhall, shall be entitled to SABS interest from May 3, 2001. (Effectively July 27, 2001 being the earliest date ACBs may be found to be owing.)
As to costs, the parties may arrange an appointment before me, if they are unable to agree as to same. If such an appointment in not arranged within the next 30 days, the issue of costs shall be deemed to have been resolved.
D.S. Gunsolus, J.
Date: 18 December 2015