December 29, 2013, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
Heard Before: Adjudicator Susan Sapin
Date of Decision: Novemeber 13, 2013
DECISION ON A PRELIMINARY ISSUE
Kadian Augustin was injured in a motor vehicle accident on July 2, 2011. She applied under the Schedule for medical and attendant care benefits and claims a weekly non-earner benefit (NEB) from Unifund Assurance Company. Augustin refused to attend insurer’s examinations (IEs) to determine whether her accident injuries fell within the Minor Injury Guideline (MIG) and now Unifund argues her failure to attend the IEs precludes her from mediating its refusal. Unifund refuses to pay an NEB as it maintains Ms. Augustin did not apply for it. Ms. Augustin has now applied for arbitration.
Is Ms. Augustin precluded from commencing a mediation proceeding regarding Unifund’s refusal to pay her claims for treatment by s. 55.2 of the Schedule because she did not attend an IE for which Unifund sent her a notice under s. 44?
Is Ms. Augustin precluded from pursuing or mediating a claim for an NEB by s. 55.1 of the Schedule on the basis that she did not submit an application for the benefit?
Ms. Augustin is not precluded from commencing a mediation proceeding by s. 55.2 of the Schedule.
Ms. Augustin is not precluded from pursuing or mediating her claim for an NEB.
This dispute arose because from the beginning the parties disagreed whether the injuries were minor and fell into the MIG as set out in 2010 guidelines. The resulting conflict revolves around the process for making claims, awarding benefits, and requesting mediation.
Two processes exist for assessing claims and paying benefits depending upon whether they are minor injuries or not. Ms. Augustin submitted her claim for medical treatment, in the amount of $2,934.90, under s. 38, on a Treatment and Assessment Plan dated July 4, 2011, as required by that section on the basis of her practitioner’s opinion that her injuries fell outside the MIG.
Was Unifund’s IE reasonably necessary?
On the basis of the claim Unifund sent a notice of Explanation of Benefits indicating the treatment plans were not payable as injuries fell outside the MIG. They sent a Notice of Examination to attend an IE to confirm whether her accident related impairment was minor.
Ms. Augustin refused to attend the IE thereby becoming non-compliant in Unifunds view, and Unifund denied her claim. Unifund paid a total of $558.54 in treatment expenses. Ms. Augustin refused to comply with two more requests from Unifund to attend IEs at which point Unifund brought action to preclude Ms. Augustin from disputing her claims through dispute resolution. Unifund then brought this motion for a determination that Ms. Augustin was precluded by s. 55.2 from disputing her claims through the dispute resolution process.
Unifund’s position is that on a plain reading of s. 55.2, Ms. Augustin must attend an IE once notified in accordance with s. 44. If she does not attend, she is precluded from commencing a mediation proceeding under s. 280 of the Insurance Act, and is prevented from disputing any of: 1) the adequacy of the IE notice; 2) whether the IE is reasonably necessary; or 3) the denial of benefits.
Ms. Augustin submits that under s. 55.2, Unifund’s IE notices must first be “in accordance with this Regulation. Her position is that Unifund’s notices did not comply because they failed to include “medical reasons” for requiring the IE’s. She makes the same argument regarding Unifund’s failure to provide her with “medical” or other reasons for refusing to pay for her treatment, contrary to s. 38(8) of the Schedule.
Arbitrator Sapin agreed with Ms. Augustin’s position and found that insurers must comply with the notice requirements of both s. 38 and s. 44 before s. 55.2 can operate as a bar to mediation. Unifund’s notices were not compliant with the regulation.
Arbitrator Sapin also determined that refusing to pay benefits is an unacceptable outcome, given the emphasis on early treatment of accident injuries in the MIG. It defeats the purpose of the MIG for two reasons. Firstly, even if the IE determines the injury is a minor one, the insured person who could not pay for the treatment out of their own pocket might have to go without early treatment until the determination is made. Secondly, it increases the likelihood of insurers requiring IEs to challenge initial claims for treatment, which defeats the legislature’s goal to deal with and limit the increasing costs of IEs.
Arbitrator Sapin also found that the insurer’s statement that it believes the MIG applies is not itself a “medical reason,” nor is it subsumed under that term. It is a separate and different reason under a different subsection – s. 38(9). Including it as a reason for not paying the benefit claimed does not relieve an insurer from the obligation to include in its s. 38(8) notice the “medical and other reasons” why it considers the treatment claimed not to be reasonable and necessary (and, consequently, not payable).
The requirement to include medical reasons in a notice explaining whether a medical benefit will be paid is new to the SABS-2010. The new requirement for more fulsome reasons for refusing to pay for treatment in the early stages of the claims process begins to make sense in the context of reducing unnecessary IE costs, and requiring insurers to use judgment in applying the MIG.
Arbitrator Sapin stated that when s.38(8) notices are sent indicating medical benefits will not be paid that the insurer must indicate that it has reviewed the Treatment Plan and medical documentation in the context of the MIG and the insurer must indicated whether or not there exists sufficient medical reason to approve or deny the claim. This also eliminates the expense of an automatic initial IE.
Arbitrator Sapin found that by imposing the more onerous requirement upon insurers to provide medical reasons if they believe the MIG applies and they choose to refuse to pay for treatment, the 2010 Schedule makes insurers accountable for any initial decision that limits or denies initial treatment. The requirement to provide medical reasons prevents insurers from deciding to refuse treatment arbitrarily or on principle.
There are two consequences to Unifund in this case due to its failure to provide an IE notice, and Explanation of benefits notice that complied with the requirements of s. 38(8). Unifund cannot preclude Ms. Augustin from commencing a mediation proceeding, and it is prohibited from taking the position that the MIG applies therefore refusing to pay benefits. The Arbitrator required Unifund to pay the $2934.90 claimed.
Failure to comply with IE requests has serious consequences thus the notice requirements are mandatory allowing the insured person to make informed decisions about whether they wish to pursue claims. As Unifund did not comply with the requirements set out in s. 44, s. 55.2 precluding Ms. Augustin from mediation does not apply.
Arbitrator Sapin reviewed the jurisprudence and regulation and determined IEs must be reasonably necessary. On that basis Arbitrator Sapin found that Unifund’s position that an insured person cannot dispute any aspect of an IE had no merit.
Should Ms. Augustin be precluded from pursuing a claim for non-earner benefits because those benefits were never applied for, in accordance with the requirements of s. 55 of the Schedule?
Unifund’s position is that it is not required to pay Ms. Augustin an NEB because she never applied for it, and Ms. Augustin is precluded from mediating this issue under s. 55(a) of the Schedule, for the same reason.
Ms. Augustin’s Application for Accident Benefits (OCF-1) indicated she was unemployed at the time of the accident and was caregiver to two children aged 14 and 5 years old. The only weekly benefit for which Ms. Augustin might be eligible under the Schedule was the non-earner benefit (NEB) of $185 per week, which is only payable 26 weeks after the accident, and only if, at 26 weeks post-accident, the insured person’s accident impairments render her completely unable to carry on a normal life. Her treating chiropractor submitted a Disability Certificate indicating that Ms. Augustin would be disabled for 9-12 weeks. The Arbitrator found this notice met the requirement under s. 36(2) that “an applicant for a specified benefit shall submit a completed disability certificate with his or her application under section 32.”
In response to Ms. Augustin’s OCF-1 and OCF-3, Unifund sent Ms. Augustin an Explanation of Benefits (OCF-9) on August 9, 2011 explaining why she was not entitled to an income replacement, caregiver or non-earner benefit. Regarding the NEB, the explanation read:
There is no entitlement to weekly non-earner benefits for 26 weeks after the onset of a complete inability to carry on a normal life as per Section 12 of the Statutory Benefits Schedule. If there is any medical documentation regarding your disability, please submit as soon as possible.
Arbitrator Sapin rejected this argument for a number of reasons. The first being the OCF-1 and OCF-3 Ms. Augustin submitted to Unifund together satisfy the requirement of notifying the insurer of an intent to apply for a benefit under sections 32(1) and (5) of the Schedule. The second reason being that it was up to Unifund to properly adjust Ms. Augustin’s claim for an NEB by exercising its right to determine her continuing entitlement to the benefit under s. 37(1), and in failing to do so it cannot now raise the “defence” that she never applied for the benefit.
The OCF-1 indicated Ms. Augustin was an unemployed caregiver. The questions about employment and caregiver status serve the same function regarding potential entitlement to any of the three types of weekly benefits.
There is nothing in the Schedule to indicate Ms. Augustin is required to re-submit a claim for an NEB after the 26-week waiting period. In this case, because her health practitioner indicated she met the non-earner test when the OCF-3 was filed, the initial OCF-1 and OCF-3 trigger the Insurer’s obligation under section 37 to determine Ms. Augustin’s continuing entitlement to the NEB at the 26-week mark. Section 37 requires an insurer to do one of the three things if it wishes to determine continuing entitlement: 1) request an updated disability certificate; 2) notify Ms. Augustin that it required an insurer’s examination (IE) under s. 44; or c) do both. Unifund did none of these things.
There is nothing in the Schedule that either requires Ms. Augustin to reapply for the benefit, or that entitles Unifund to simply sit back and do nothing just because the NEB is subject to a 26-week waiting period. The Arbitrator rejected Unifund’s alternative argument that it is not required to pay an NEB because Ms. Augustin did not submit an election for the benefit under s. 35. Under s. 35, if an application indicates that the applicant may qualify for two or more of the IRB, caregiver or NEB benefits, the insurer must advise the person that she must elect which benefit she wishes to receive. As Unifund concedes, Ms. Augustin could only qualify for one benefit – the NEB. Although this may relieve Unifund of its obligation to require Ms. Augustin to elect a benefit, it does not necessarily follow that it can require her to reapply for the NEB after 26 weeks.
It appears the only information Unifund sent Ms. Augustin regarding her entitlement to an NEB inaccurately advised her that there was “no entitlement to weekly non-earner benefits for 26 weeks after the onset of a complete inability to carry on a normal life.” This information was inaccurate – an NEB is not payable for the first 26 weeks. It was also unhelpful because it does not advise Ms. Augustin whether or not she was expected or required to reapply for the benefit after 26 weeks, thus the Arbitrator found Unifund cannot take the position that it is not required to pay an NEB because Ms. Augustin did not “apply” for it.