February 19, 2011, Kitchener, Ontario
Posted by: Robert Deutschmann, Personal Injury Lawyer
Before: Judith Killoran
Decision Date: January 6, 2011
Ms. Browne was involved in a motor vehicle accident on April 30, 2006. She applied for and received statutory accident benefits from Chubb Insurance Company. Chubb terminated weekly caregiver benefits on April 30, 2008. The preliminary issues were to determine (1) if Chubb terminated caregiver benefits in accordance with section 37 of the Schedule, and if not, what were the consequences, and (2) if Chubb required to advise Ms. Browne of her right to apply for a non-earner benefit under the Schedule.
EVIDENCE AND ANALYSIS:
Ms. Browne was a passenger on a motorcycle that was struck by an automobile on April 30, 2006. She is the mother of two children and was the primary caregiver for her 12-year old daughter at the time of the accident. Her daughter turned 16 years of age on June 8, 2009.
Chubb paid Ms. Browne the caregiver benefit at the rate of $250 per week until the second anniversary of the accident. By letter dated May 8, 2008, Chubb informed Ms. Browne that caregiver benefits were payable for only 104 weeks from the date of loss. By letter dated June 11, 2008, Chubb informed Ms. Browne of an alleged overpayment of her caregiver benefit.
Chubb admitted that the notice of termination in respect of caregiver benefits was inadequate. In particular, the statement that "there is no further entitlement to caregiver benefits past 104 weeks" was incorrect. However, Chubb relied on the Ontario Court of Appeal's decision in Stranges v. Allstate Insurance Company of Canada. The Ontario Court of Appeal held that inadequate notice does not automatically entitle an insured to payment of benefits. The insured person is still required to prove entitlement.
Chubb insisted that it complied with all its obligations under the Schedule by providing Ms. Browne with the required notice that she was entitled to elect among the weekly benefits in accordance with section 36 of the Schedule. Chubb submitted that there was no provision in the Schedule that required Chubb to advise Ms. Browne that she could re-elect non-earner benefits upon the termination of caregiver benefits on April 30, 2008.
By Explanation of Benefit (OCF-9) form dated August 28, 2006, Cunningham & Lindsey advised Ms. Browne that she did not qualify for income replacement benefits. They requested the return of the election form sent to her on May 18, 2006. They also advised her that she could choose caregiver benefits or non-earner benefits.
Ms. Browne was claiming entitlement to non-earner benefits at the rate of $185 per week from June 9, 2009 and ongoing, pursuant to section 12 of the Schedule. However, Chubb had not been provided with an updated disability certificate indicating that Ms. Browne suffered a complete inability to carry on a normal life as a result of and within 104 weeks after the accident. Chubb submitted that it was not required to pay a non-earner benefit for the first 26 weeks after the onset of the complete inability to carry on a normal life.
Ms. Browne submitted that section 37 sets out the steps an insurer must take in assessing whether an injured person is still entitled to either caregiver or non-earner benefits. Subsection 37(2) states that an "insurer shall not discontinue paying a specified benefit" unless specific circumstances occur, such as the failure to provide a new disability certificate or the resumption of employment.
Ms. Browne alleged that Chubb disregarded the section 37 procedure when it terminated her caregiver benefit in that: it never requested that Ms. Browne provide a new disability certificate according to clause 37(1)(a); andit never exercised the option of arranging a section 42 assessment according to clause 37(1)(b).
None of the conditions set out in subsection 37(2) applied in Ms. Browne's case, yet Chubb still terminated her caregiver benefit. It sent Ms. Browne a letter wherein it erroneously stated that the caregiver benefit was payable for 104 weeks only. From June 9, 2009, Ms. Browne was eligible to receive the non-earner benefit under clause 12(1)2. Chubb never considered whether Ms. Browne suffered a complete inability to carry on a normal life and it ignored the wording and requirements of subsection 13(4). Rather, it terminated the caregiver benefit without requesting or obtaining any updated medical documentation on Ms. Browne's condition. It also did not reinstate Ms. Browne's caregiver benefit or request an updated disability certificate when it was informed that it had not followed the steps for termination of the benefit outlined in section 37 of the Schedule.
Although Chubb referred to the case as an "inadequate notice" case, Ms. Browne challenged this characterization as unfair. The appeal decision in Yogesvaran emphasizes that the ongoing adjustment of a file must comply with the Schedule and the decision discusses the importance of the insurer requesting a new disability certificate. In this particular case, a new disability certificate was requested and a new disability certificate was forwarded to Chubb on February 12, 2007. This was the only time a new disability certificate was requested.
Ms. Browne distinguished her case as there were egregious and repeated failures by Chubb to adjust the file properly. Ms. Browne addressed the question of why this could not be dealt with through a special award rather than reinstating benefits. Irreparable prejudice could not be dealt with by a special award, which could have been the situation in this case. There were no reports before June 8, 2009 as a result of Chubb's actions. Chubb was relying on its failure to follow the procedure outlined in section 37 to say that there was no reliable evidence from the relevant period. This irreparable prejudice is not remedied by a special award.
Although Chubb argued that no motion for interim benefits had been brought under Rule 67 of the Dispute Resolution Practice Code, Ms. Browne submitted that all of the requirements of the rule had been complied with.
In this case, the relevant clause in subsection 37(1) of the Schedule states that:
“If an insurer wishes to determine if an insured person is still entitled to a specified benefit, the insurer… (a) Shall request that the insured person submit within 15 business days a new disability certificate completed as of a date on or after the date of the request.”
The relevant clause in subsection 37(2) of the Schedule provides that: “An insurer shall not discontinue paying a specified benefit to an insured person unless... (a) The insured person fails or refuses to submit a completed disability certificate as required under clause (1) (a).”
Section 37 is not ambiguous about what is required of an insurer and an insured person. It is mandatory that an insurer request that the insured person submit a "new" disability certificate before an insurer makes a determination about continuing entitlement to a benefit. Chubb did not request a new disability certificate from Ms. Browne. Therefore, the arbitrator found that Chubb did not terminate caregiver benefits in accordance with section 37 of the Schedule.
In Stranges, the Court of Appeal held that the insured was still required to prove her entitlement to benefits despite the inadequate notice. The Director's Delegate ruled in Yogesvaran that he was bound by the Court of Appeal's decision in Stranges. He found that the Applicant was still required to prove her entitlement to the benefits in dispute according to the legislated criteria of eligibility. However, he added that the consumer protection goals at the heart of the Schedule, as enunciated by the Supreme Court of Canada in Smith, would be contradicted if the word "shall" in clause 37(1)(a) could be amended unilaterally by one party. The Director's Delegate found that:
“An adjudicator exercising his or her discretion to make an interim award of benefits in the circumstances of this case, subject to a final determination of entitlement, would be consistent with Stranges. In interpreting the legislation, as set out in Bapoo, in terms of plausibility, acceptability and efficacy, it would further the goal of the quick and efficient delivery of benefits in accordance with the legislated procedure, protect the integrity of the Schedule and, as stated in Brazier, safeguard a procedural protection for the benefit of insured persons.”
In Mendez and AXA Insurance (Canada) the arbitrator stated that "it would be inappropriate to give an insurer who terminated benefits improperly, an advantage over those who complied with the Schedule" and that the "goal was to attempt to put the parties back into the position they would have been in had the insurer acted properly."
Chubb's responsibility to inform Ms. Browne of her potential entitlement to a non-earner benefit if she met the qualifications in clause 12(1)2 is grounded in its responsibilities to act in utmost good faith to its first-party insured as required by the Insurance Act and its schedules. It is a logical extension of its obligations under section 32 of the Schedule and the consumer protection goals at the heart of the legislation. Not only did Chubb fail in its obligation to inform Ms. Browne of her potential entitlement to a non-earner benefit, but it also gave her erroneous information about the caregiver benefit which she was receiving by stating that it was limited to a 104 week period of entitlement. Ms. Browne was potentially entitled to the payment of caregiver benefits as long as her daughter, who resided with her, met the definition of a "person in need of care"; that is, until her 16th birthday on June 8, 2009.
After reviewing all of the submissions and circumstances in this case, the arbitrator found that the appropriate remedy for Chubb's non-compliance with its obligations was to issue an interim order until a full arbitration hearing was held and the hearing arbitrator could then issue a final determination on the issues of entitlement in relation to the discussed dispute.
The arbitrator was not persuaded that it was appropriate to order interest on overdue payments or for Chubb to pay a special award to Ms. Browne at the time of the decision. Both issues had to be assessed in the context of the issues in dispute and required a determination with respect to entitlement. These matters were deferred to the hearing arbitrator, who would have the benefit of hearing the evidence at a full hearing.