May 15, 2019, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
18-000790 CW v Jevco Insurance Company, 2019 CanLII 22200 (ON LAT)
Date of Decision: February 2, 2019
Heard Before: Adjudicator Jeffrey Shapiro
PAST ATTENDANT CARE AND INTEREST – CAT impaired applicant unaware that driver was insured; applicant proceeds with tort claim; driver advises insurer of accident two years after accident; insurer denies coverage and applicant’s application for benefits due to limitation period; applicant applies for benefit immediately after discovering driver was insured;
On November 1, 2007, CW was crossing a street when hit by the driver of a vehicle. The parties agree that she sustained catastrophic injuries including a mild to moderate traumatic brain injury and ligament tears in her knee, and that after initial hospitalization, she has continually needed $6,000 a month in attendant care as she has trouble caring for herself and needs supervision. A CT scan showed a head fracture, and diagnoses include depression and a “significant neurocognitive disorder”.
Despite her need, due to a series of events discussed below, CW did not apply to Jevco for benefits under the SABs until March 3, 2015, or for an attendant care benefit until December 16, 2015. Jevco agreed to pay for the attendant care for periods after the application, but not before.
CW appealed to the LAT for a ruling that she is entitled to the attendant care for the earlier period. Based on the unique circumstances in this case the Adjudicator found that CW is entitled to that attendant care and interest.
- Is CW entitled to $6,000 per month for attendant care benefits (“ACB”) from November 1, 2007 (date of the accident) to December 25, 2015?
- If CW is entitled to ACB in the amount of $6,000 from November 1, 2007 to December 25, 2015, on what date does interest begin to accrue?
- CW is entitled to the ACB and retroactive interest from November 9, 2007 (discharge from the hospital after the accident) to December 25, 2015.
BACKGROUND AND POSITIONS OF THE PARTIES
In general terms, persons injured in a car accident in Ontario, such as CW, are often entitled to at least two types of recovery: (1) no-fault “accident benefits” under the Schedule, and (2) liability damages from an at-fault-driver (commonly referred to as “tort” damages). Other “collateral” sources of recovery may also be available, but those are not relevant to the issues in this matter.
Accident benefits are a set of statutory benefits designed to be quickly available to all individuals who have been involved in a motor vehicle accident in Ontario, generally without regard to whether the claimant was the driver, passenger or a pedestrian, or to who caused the accident, and typically without regard to residence.
A pedestrian’s claim for accident benefits is typically made to their own motor vehicle insurer, but if they do not have one, then they may apply to the insurer of the vehicle that struck them, next to any vehicle in the accident, or if none apply, then they apply to Ontario’s Motor Vehicle Accident Claims Fund.
Regarding a tort claim, typically the at-fault driver’s own insurance will defend and indemnify the driver under the third party liability provisions of the driver’s policy.
In CW’s case, however, at the time of the accident, the driver did not tell CW that Jevco was his insurer, nor did he notify Jevco of the accident. Thus, following the accident, CW was unable to apply for accident benefits, as she did not have her own insurance, she was unaware of Jevco, no other car was involved in the accident, and as she was a Quebec resident, the parties agree, she was not entitled to accident benefits from the Fund.
Two years later, in October 2009, CW sued the driver for tort damages. The driver then notified Jevco about the accident, and CW soon after learned of Jevco. Jevco, however, claimed it did not insure the vehicle involved in the accident as the driver never advised Jevco that he acquired the vehicle, and thus Jevco was not going to defend or indemnify the driver. Jevco maintained that non-coverage position – discussed below – during the tort matter over the next five years. On September 14, 2014, Jevco finally agreed that it was obligated to insure the vehicle that hit her.
Following that admission, on March 3, 2015, CW formally applied to Jevco for accident benefits, and then on December 16, 2015 applied for the ACBs now in dispute. In broad terms, Jevco agreed to pay expenses incurred after the various applications, but not prior periods. Thus, Jevco paid ACB after CW’s December 2015 application, but Jevco disputes prior amounts.
The Schedule provides for a complicated and document intensive procedural system for claiming and responding to claims for accident benefits. It includes numerous prescribed claims forms that must be completed before the benefits will be payable and strict timelines.
Jevco submits that CW’s claim for ACB from 2007 to 2015 was untimely under the Schedule. Jevco’s main argument is that CW could and should have applied for accident benefits once she came to know of Jevco during her tort claim, regardless of whether Jevco was denying tort liability, because different standards apply to how it must handle an accident benefit claim. Jevco further argues that because the tort and accident benefit departments do not share information (due to privacy concerns), Jevco’s accident benefit department was unable to know CW existed until she actually applied, and thus it could not have notified C.W of her rights to claim accident benefits.
CW submits her claim is timely. Her main argument is that while she did learn that Jevco was a potential insurer during the tort matter, it is not reasonable to expect her to apply to Jevco for accident benefits, while Jevco was asserting in the tort matter that no relevant policy even existed. CW argues she actively pursued her rights by disputing Jevco’s non-coverage position through the tort proceeding. As well, the emotional and financial costs of litigation are expensive, and it is not realistic to expect her to have fought the coverage issue in the tort claim and simultaneously in an accident claim. Rather, once coverage was settled through the tort claim, she promptly applied for benefits.
Section 19 (1) of the Schedule provides that attendant care benefits shall pay for all reasonable and necessary expenses incurred for “the insured person as a result of the accident for services provided by an aide or attendant…” The procedures to claim ACB are found in s. 42, including that an “assessment of attendant care needs” and associated “Form 1” must be used.
The parties agree that CW’s Form 1 established her need to the past and present attendant care, but dispute her entitlement to be reimbursed for the period prior to the Form 1. In other words, they dispute if her claim for that period is timely. Thus, it must be determined if and when the Schedule permits claims for periods prior or “retroactive” to the Form 1, and second if CW complied with that requirement.
Under the Schedule, what must CW establish to claim retroactive ACBs?
Jevco asserts that for CW 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. The Adjudicator agreed.
Jevco arrives at that conclusion by reading s. 42(5), case law, and s. 34 together, as follows. S. 42(5) provides “An insurer may, but is not required to, pay an expense incurred before an assessment of attendant needs…is submitted to the insurer.”
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.” [Emphasis added.]” Thus, if her Form 1 is untimely under s. 42(5), CW is not disentitled if she has a “reasonable explanation” for the delay.
In contrast, CW reads s. 42(5) as simply establishing that ACBs do not have to be paid until a Form 1 is filed, but that the Form 1 can include prior periods, if supported. Thus, no time cut-off is created. The Adjuidcator disagreed for several reasons.
S. 42(5) says “is not required to pay an expense incurred before an assessment…is submitted,’ rather than “incurred until an assessment…is submitted…” In this context and when used with the Schedule’s other benefits, “before” disallows benefits incurred “before” application is made for the benefit. In fact, the overall language and formula used in s. 42(5) is similar to other benefits which clearly create a time-cut off. For instance, regarding medical benefits, s. 38(2) uses the exact formula as s. 42(5): “not [liable/required]…to pay…[the benefit]…incurred before…submits [the plan/Form 1]”.
The Schedule also consistently requires benefits be applied for in a way that insurers can respond and adjust in real time, and again, the language of s. 42(5) does not read in a way to depart from that concept to create an open-ended claims period for ACBs.
Given the above, for retroactive periods, the Adjudicator was left to determine if it was “impossible” or “impractical” for CW to comply with s. 42(5), or alternately, if she has a “reasonable explanation” for not doing so.
Was it impossible or impracticable for CW to apply earlier? Alternatively, does she have a “reasonable explanation” for not doing so?
While the parties argued this matter as if the pre-application period was one continuous time period, the evidence points to two different time periods, and therefore, the analysis follows those periods.
Regarding the first period - from the time of the accident until roughly two years later, when CW learned that Jevco was a potential insurer - it was impossible for CW to apply, as CW was unaware of any insurer to which she could submit an application for accident benefits or a Form 1 for ACB expenses. Again, as noted above, CW did not have the option of submitting a claim to the Fund.
Regarding the second period, from November 2009 until the Form 1 was filed, the Adjudicator found that although CW was aware that Jevco existed and could have started a claim for accident benefits, it was impractical for her to do so under the circumstances created by Jevco’s non-coverage position in the tort claim, or at least, she has a “reasonable explanation” for not doing so, all for the reasons that follow.
The parties assert many detailed and technical arguments about whether it was impractical for CW to apply earlier, or if she had a “reasonable explanation” for not doing so. However, before addressing them, the Adjudicator found that the analysis must focus on CW’s actions or non-action at the time and in her situation, rather than a retrospective analysis of what CW possibly could have done with the hindsight benefit of Jevco’s relatively recent agreement to accept coverage.
From that perspective, CW sustained catastrophic injuries, cognitive difficulties, and needed supervision. She and her family actively pursued her rights including filing a tort claim and used court procedures to identify Jevco and secure a ruling that Jevco insured the vehicle, even while Jevco actively denied any connection and opposed being added to the tort matter for declaratory relief. At no time did Jevco inform her of her rights to accident benefits despite its obligation to do so, which omission is glaring as it now argues she should have applied. When considering filing a claim, she considered the emotional and financial costs of starting a second coverage dispute, while she was litigating those issues in the tort claim. Although the Adjudicator cannot know with certainty that Jevco would have refused to pay accident benefits, under the circumstances and based on a preponderance of the evidence, the Adjudicator found it was impractical for CW to submit an earlier Form 1, or at least, CW’s choice not to do so qualifies as a “reasonable explanation”.
First, a review of key events during the tort proceeding supports that conclusion. Jevco was not asserting a limited policy exclusion but rather denied any coverage existed regarding that vehicle or the accident on the basis that the driver never advised Jevco that he acquired it. For example, in a January 24, 2014 filing, Jevco repeatedly stated there is no policy in effect for that vehicle and thus it didn’t insure it. Thus, Jevco’s position inherently meant it disputed any obligation to pay accident benefits. Additionally:
- Jevco refused to defend or indemnify the driver, and the driver did not challenge that position, thus leaving CW to fund the coverage dispute.
- In July 2010, Jevco added itself as a statutory third party solely to minimize its liability in case it was later required to indemnify the driver, yet in January 2014, when CW moved add Jevco as a defendant for a declaratory ruling on whether Jevco owed coverage, Jevco opposed the motion.
- In the Court’s March 14, 2014 order that added Jevco for a determination of the coverage issue, the Court explained that CW is entitled to know if insurance funds are available before expending further legal fees. Those reasons are very important, as discussed below.
- CW used court discovery and other methods to help establish Jevco’s coverage of the vehicle, such as orders compelling production of the driver’s insurance records and the broker’s file, and attendance at an examination.
- In September 2011, CW asked Jevco to accept coverage under the driver’s existing policy’s 14-day grace period for newly acquired vehicles. Jevco refused – but 3 years later accepted coverage on that basis.
- Jevco’s September 14, 2014 admission of coverage of the vehicle was in response to CW’s offer to settle.
Second, Jevco failed to manage its risk, and more importantly, failed to fulfill its duty to inform CW of available benefits or send her application forms to apply under s. 32, despite an insurer’s obligation to provide insured parties sufficient information to claim benefits even if they are represented by counsel or never asserted claim for that benefit. Dervisholli and State Farm notes that an insurer has two unique relationships – as accident benefit insurer it “owes the plaintiff a duty of good faith arising out of its fiduciary obligations” in contrast to its duty to defend the driver. Yet, while Jevco was failing to fulfill its fiduciary duty to inform her, it was proactively protecting its own rights by adding itself to the tort proceeding, and later by proactively denying ACBs even prior to CW applying for that specific benefit. It cannot now fault her for delay.
Third, Jevco’s accident benefit department should have known of CW and her claim. CW was not hidden from Jevco and the typical internal “firewall” for an insurer processing a “first party” and “third party claim” should not fully apply here. To the contrary, the firewall is for her benefit, and in any event can be waived. Thus, the Adjudicator did not accept that advising another department of a potential claimant, so that it can investigate for the benefit of CW, is the same as disregarding the firewall. Jevco’s position only makes sense if it can use the firewall to her detriment, as a means to not notify her of her rights. When Jevco received a tort claim involving a pedestrian, it should have, at some level of the company, considered that it may be the priority insurer and reached out to her to advise her of the potential accident benefits and considered its own obligation to adjust the claim.
Fourth, the Superior Court’s March 14, 2014 endorsement that added Jevco for the purpose of a declaratory ruling supports C.W’s position. The Court found “as far as possible, multiplicity of legal proceedings shall be avoided.” It also reasoned it is an “access to justice” issue to require CW to fund a “long and complex” trial until she knows if insurance benefits are available to satisfy an award and the legislature recognized the amount of potential benefits plays “a major and even a determinative role in how the litigation is conducted, and through what stages it should be pursued.” The Court quoted the Supreme Court that access to effective and affordable justice is the “greatest challenge” to the rule of law in Canada today, and a fair process “must be accessible, proportionate, timely and affordable.” The “best forum for resolving a dispute…is not always that with the most painstaking procedure.”
The Superior Court’s reasons support, by analogy, CW’s argument that the emotional and financial costs must be considered in why she did not previously start a claim for accident benefits. CW was already funding five plus years of litigation, without having established coverage.
Fifth, Jevco argues that several provisions of Ontario insurance law would have entitled her to immediate accident benefits, despite the existence of the coverage dispute, had she just applied. In CW’s unusual circumstances, the Adjudicator disagreed.
First, in most situations where there isn’t an applicable insurance company from which an insured person can receive accident benefits, the person can apply to the Fund. After arguing CW could apply, Jevco now concedes CW was ineligible.
Second, Jevco argues that O. Reg. 283/95 Dispute Between Insurers required it to pay for accident benefits had CW applied, even while it was disputing coverage of the vehicle. Reg. 283/95 generally prevents insurers from delaying paying accident benefits while they argue which one is responsible by requiring the first insurer that receives an application to provide benefits immediately, while it seeks resolution of which is the correct insurer. The Regulation applies to any insurer having a mere “nexus” to the claim – even a policy cancelled days before the accident.
While the existence of a Jevco policy with the driver on other vehicles likely created a “nexus”, Reg. 283/95 would apply. From my reading, Reg. 283/95 only applies when there is a dispute between insurers “as to which insurer is required to pay.”Yet, Jevco was the only potential insurer. The scheme’s purpose, words, and title only require the first insurer to pay when it can be reimbursed from the correct insurer. Jevco had no such potential. It defies logic that the scheme intended for Jevco to pay benefits regarding a vehicle it claims it does not insure when it cannot be reimbursed.
Third, Jevco argues by adding itself to the tort matter as a statutory party under s. 258(14) of the Act it “admitted that a valid policy of automobile insurance was in place, for which it was exposed to the statutory minimum liability limits of $200,000…” This, it was only denying liability coverage to the driver, but not accident benefits to CW.
The Adjudicator disagreed. Based on cases cited by the parties, the $200,000 coverage is minimal liability limits to or for the driver for the accident, but not accident benefits. In fact, while Jevco may have admitted a policy existed in its 2010 motion, its 2014 filing argues that the policy did not cover this vehicle and accident. That position is also important because s. 268(2)2 of the Act ties CW’s recourse for accident benefits to be “against the insurer of the automobile that struck the non-occupant.” Thus, even if Jevco admitted $200,000 statutory liability for the driver, because Jevco’s claim’s it does not insure the automobile, it appears Jevco did not admit liability to pay accident benefits to CW
Thus, under any of these arguments, it does not appear that CW had an automatic entitlement to accident benefits as Jevco submits. More importantly, the thrust of CW’s submission is that she reasonably believed that these provisions did not provide automatic entitlement and/or that Jevco would dispute liability for the accident benefits, and she would be expending more legal fees, in two forums. The Adjudicator agreed that this was a reasonable explanation for not applying earlier.
For all the above reasons, CW is entitled to ACB from November 9, 2007 when she was discharged from the hospital to the time she submitted the Form 1.
The Adjudicator found that CW is entitled to ACBs from her discharge from the hospital, with interest accruing from that date.