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Insurer to pay for home renovations but not before expenditures imminent.

November 15, 2010, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Arbitrator: Eban Bayefsky
Decision Date: October 7, 2010


Issues:

The Applicant, Jeff MacPherson, was catastrophically injured in a motor vehicle accident on December 20, 2007. He applied for and received statutory accident benefits from Intact Insurance. Mr. MacPherson maintained, however, that Intact approved, but then failed to pay, the sum of $252,000 towards the modification of his home. The sum of $252,000 would have been partial payment of $388,800 sought by Mr. MacPherson, pursuant to a Treatment Plan dated March 11, 2009 for the modification of his home. The parties were unable to resolve this dispute through mediation, and Mr. MacPherson applied for arbitration.

In his Application for Arbitration, Mr. MacPherson sought the full sum of $388,800, pursuant to the March 11, 2009 home modification treatment plan. He also sought interest on the $388,800 and a special award. Mr. MacPherson brought this motion to compel the insurer to pay the sum of $252,000.00, which sum was approved by way of OCF-9 dated May 19, 2009 in response to a treatment plan submitted on March 11, 2009 for housing, pursuant to s. 15 of the Schedule.

The arbitrator heard the motion on May 5, 2010, just prior to the pre-hearing conference, which was held on May 17, 2010. At the pre-hearing conference, the substantive issue in the arbitration was identified as whether Mr. MacPherson was entitled to a rehabilitation benefit of $388,800 for the cost of home modifications, as set out in the March 11, 2009 treatment plan.

The issues of the motion was to determine if Intact was required to pay Mr. MacPherson $252,000 for home modifications or the purchase of a new home, pursuant to sections 15 and 38 of the Schedule.

EVIDENCE AND ANALYSIS:

(i) Facts

Mr. MacPherson was catastrophically injured in a motor vehicle accident on December 20, 2007. He was 44 years old at the time and residing on his own in a detached bungalow in St. Mary's, Ontario. Mr. MacPherson suffered serious injuries in the accident, including numerous fractures and a closed head injury.

He was discharged to Cedarcroft Retirement Residence, where he was residing at the time of the hearing. He used a wheelchair for mobility and remained dependent on 24-hour nursing care for all of his activities of daily living. As a result of the accident, and by virtue of an Order dated March 4, 2008 by Madam Justice Leitch of the Superior Court of Justice, Mr. MacPherson was declared to be a person incapable of managing property and his father, Jim MacPherson, was appointed guardian of his property.

In preparation for his discharge from Parkwood Hospital, Mr. MacPherson's home was assessed by Adapt-Able Design Group to determine the modifications needed to ensure his safety and accessibility. In a report dated October 27, 2008 (a "home accessibility report"), Adapt-Able stated that, as a result of the accident, Mr. MacPherson had extraordinary housing requirements and that his pre-accident residence would need extensive modifications, costing approximately $388,800. Adapt-Able also noted Mr. MacPherson's apparent desire to move to Stratford to be closer to his family upon his discharge from Parkwood and that, given this, and the extensive changes required to his existing home, alternative housing was to be investigated as a means of fully addressing his accident-related housing needs.

Adapt-Able prepared a secondary report (an "alternative housing report") on October 31, 2008 outlining the costs associated with the purchase and modification of a new home for Mr. MacPherson. Adapt-Able reported that this would cost approximately $478,600 to $576,300, less expected proceeds of the sale of Mr. MacPherson's existing home of $142,800, for a total estimated cost of between $335,800 and $433,500.

In response to the reports, Intact had Accessible Solutions Inc. conduct an assessment of the costs of renovating Mr. MacPherson's existing home. On January 20, 2009, Accessible Solutions reported that the estimated cost of modifying Mr. MacPherson's pre-accident residence to be $251,940. In an accompanying "Alternative Housing Report", Accessible Solutions reported that the cost of purchasing and modifying, or building, a new home, would be in the range of $387,900 to $589,900.

On March 11, 2009, Mr. MacPherson submitted a Treatment Plan to Intact for the cost of modifying his existing home, as outlined by Adapt-Able in its October 27, 2008 report, in the amount of $388,800. On April 3, 2009, a paralegal from the office of Mr. MacPherson's counsel wrote to Intact to “confirm the treatment plan for the cost of Home Modifications dated March 11, 2009...is hereby approved as your time to respond has expired."

On May 19, 2009, an Explanation of Benefits form indicating the "Amount Claimed" as $388,800 and the "Amount Payable" as $252,000. Intact’s adjuster noted section 15(8) of the Schedule, to the effect that the "amount of the rehabilitation benefit for the purchase of a new home shall not exceed the value of the renovations to the insured person's existing home that would have been required to accommodate the needs of the insured person." The adjuster stated that she understood that Mr. MacPherson's family did "not wish to complete the renovations to the home in St. Mary's and wish to have Mr. MacPherson purchase a residence closer to his mother [and] father in Stratford." The adjuster then stated that Intact would consider the sum of $252,000 towards renovations of the existing home or the purchase of a new home.

Mr. MacPherson subsequently applied for mediation on the issue of home modifications, in which he claimed $388,800, less the amount that had been approved by Intact, pursuant to the March 11, 2009 Treatment Plan and the October 27, 2008 Adapt-Able report.

On February 5, 2010, the adjuster wrote to Mr. MacPherson’s counsel indicating that it was her understanding that Mr. MacPherson had not completed the home renovations noted in the Treatment Plan and that his home had been sold. The adjuster stated that, "therefore, the treatment plan has not been fulfilled and we are no longer obligated to pay for these renovations." The adjuster then stated as follows:
 
“To date Intact has not received any documentation or verification that a new home has been purchased. Upon receipt of all the proper documentation as well as the information regarding the sale of his existing home, Intact will be in a position to consider and provide the proper funding up to the $252,000. I would like to bring to your attention the caselaw Wynn v. Belair; Justin Vanden Berg v. MVACF and MacMaster.”


On February 19, 2010, Mr. MacPherson filed an Application for Arbitration on the issue of his entitlement to $388,800, pursuant to the March 11, 2009 home modification Treatment Plan, and, as noted, subsequently brought this motion to compel Intact to pay $252,000 of the $388,800.

(ii) Law

Pursuant to sections 15(1) and (2) of the Schedule, an insurer is required to pay an insured person who has sustained an impairment in an accident a rehabilitation benefit for reasonable and necessary measures "undertaken...to reduce or eliminate the effects of any disability resulting from the impairment or to facilitate the insured person's reintegration into his or her family, the rest of society or the labour market."
 
 Under section 15(5)(i), the rehabilitation benefit shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for a purpose referred to in section 15(5) for home modifications (to accommodate the needs of the insured person) or for the purchase of a new home (if it is more reasonable to purchase a new home to accommodate the needs of the insured person than to renovate the insured person's existing home). Pursuant to section 15(8), the amount of the rehabilitation benefit for the purchase of a new home cannot exceed the value of the renovations to the insured person's existing home that would have been required to accommodate the insured person's needs.

Pursuant to section 38(7), on receiving an application for a medical or rehabilitation benefit, an insurer is required to promptly determine whether it is required to pay for the goods and services contemplated by the treatment plan. Under section 38(8)1.ii, where an insured person provides a treatment plan for medical or rehabilitation benefits, and the treatment plan does not disclose a conflict of interest, the insurer is required to give the insured person a notice that describes the goods and services "contemplated by the treatment plan that the insurer agrees to pay for."
 
Section 38(8.1)(a) states that this notice must be given within 10 business days after the insurer receives the treatment plan. Pursuant to section 38(8.2)2, if the insurer fails to give the required notice, the insurer is required to pay for all goods and services "provided under the treatment plan that relate to the period starting on the 11th business day after the day the insurer received the application and ending on the day the insurer gives the notice described in paragraph 1 of subsection (8)."
(iii) Submissions

Mr. MacPherson’s counsel submitted that Intact had partially approved the March 11, 2009 Treatment Plan, towards either the renovation of Mr. MacPherson's existing home or the purchase of a new home. Regarding the need for an invoice under sections 38(11) or 38(17.2) of the Schedule, Mr. MacPherson’s counsel maintained that it was not reasonable for an insured to be required to purchase a house first, before the cost of a new home could be claimed. Mr. MacPherson’s counsel noted that the money owed by Intact would be paid into trust for use in purchasing a house for Mr. MacPherson, and that, by virtue of the Order appointing him guardian, Mr. MacPherson's father was accountable for the proper use of any funds acquired by him in this matter. Mr. MacPherson’s counsel argued that Intact was liable both to interest on the amount claimed in the Treatment Plan since it had not forwarded the funds upon their becoming due, and to a special award since it unreasonably withheld or delayed payment of the funds it had approved.

Counsel for Intact argued that Intact had never approved of, or agreed to, the purchase of a new home, since there had never been a Treatment Plan or, at least, a concrete and reasonable proposal, to that end. It was noted that Mr. MacPherson had not yet purchased a new home. Intact stated that, while they had not disputed Mr. MacPherson's entitlement to the cost of renovating his home, it was never the family's intention to renovate his existing residence, and that the issue was, therefore, moot. Intact submitted that section 38 of the Schedule (concerning the payment of medical and rehabilitation benefits) pertained to real expenses that would be incurred by the insured person.

Mr. MacPherson’s counsel noted that, based on its May 19, 2009 correspondence, Intact had known that Mr. MacPherson's family was not interested in renovating the existing residence, and that Intact had not indicated that it required a further treatment plan for the purchase of new home. Mr. MacPherson maintained that Intact was bound by its approval of the amount of $252,000 towards the purchase of a new home.

(iv) Findings

This was a procedurally challenging case.

Intact did not respond within 10 days of receiving the Treatment Plan, but did eventually issue an Explanation of Benefits in which it stated that $252,000 of the $388,800 was payable. Intact also stated in its covering letter that it would consider $252,000 towards the renovation of Mr. MacPherson's existing home. Mr. MacPherson appeared to have now sold his home and, on February 5, 2010, Intact denied his claim for home renovations on this basis.

Mr. MacPherson did not submit a specific application or treatment plan to Intact in respect of the purchase of a new home. He did submit Adapt-Able's October 31, 2008 "alternative housing report" to Intact, which contained an estimated total housing cost of $335,800 to $433,500, excluding various taxes and closing costs. Adapt-Able also stated that it could assist in the review of all available active listings, and visit and assess the most suitable homes. Intact conducted its own investigation of the matter, and stated in its May 19, 2009 covering letter that it would consider the sum of $252,000 towards the purchase of a new home.

The question was whether, in these circumstances, and pursuant to the relevant statutory provisions, Intact was required to pay Mr. MacPherson $252,000 towards either the renovation of his existing home or the purchase of a new home. For the following reasons, the arbitrator found that Intact was not required to pay.

(a) Mr. MacPherson's Application for Benefits

Mr. MacPherson did not submit a specific application or treatment plan for the purchase of a new home. However, he did submit Adapt-Able's "alternative housing report" to Intact. In the arbitrator’s view, this was more than sufficient information to constitute an "application" for the purchase of a new home, within the meaning of section 38(1) of the Schedule. Further, at no point did Intact object to Mr. MacPherson's possible entitlement to the cost of the purchase of a new home on the basis that he had not submitted an "application."

(b) Intact's Response

Pursuant to section 38(7), Intact was under an obligation to promptly determine whether it was required to pay for the goods and services contemplated by the Treatment Plan. While Intact did not formally respond until May 19, 2009, given the nature of the benefits requested, and Intact's need to assess the matter, the arbitrator was not prepared to find that it unduly delayed its determination.

Mr. MacPherson submitted a duly completed Treatment Plan to Intact for $388,800 for home modifications, in accordance with Adapt-Able's October 27, 2008 report. Intact formally responded to this Treatment Plan when it issued its letter and Explanation of Benefits of May 19, 2009. The arbitrator found that, by these documents, Intact agreed to pay Mr. MacPherson $252,000 towards the renovation of his existing home or the purchase of a new home.
 
While the renovation of Mr. MacPherson's existing home was apparently no longer possible, the arbitrator found that Intact had still agreed to pay $252,000 towards the purchase of a new home.

Pursuant to section 38(8.1), Intact needed to give Mr. MacPherson a notice under section 38(8)1.ii (describing the expenses contemplated by the Treatment Plan that it agreed to pay for) within ten business days of receiving the application. As noted, Intact did not provide such a notice until May 19, 2009, roughly two months after receiving the application. Pursuant to section 38(8.2)2, since Intact failed to provide the requisite notice within the allotted time, it was required to pay for the goods and services contemplated under the Treatment Plan that related to the period from approximately March 26, 2009 (the eleventh business day after receipt of the application) to May 19, 2009 (the day Intact issued its Explanation of Benefits and covering letter).

The difficulty was that, within the body of the Treatment Plan itself (specifically, within the October 27, 2008 report), Adapt-Able noted Mr. MacPherson's wish to relocate to Stratford, the need to investigate alternative housing options and its forthcoming supplemental report for this purpose. On June 8, 2009 (a few weeks after the May 19, 2009 letter, in which Intact’s adjuster noted Mr. MacPherson's wish to move closer to his family in Stratford), Mr. MacPherson’s counsel informed Intact that it was in Mr. MacPherson's best interests to purchase a new home. At some point in the ensuing months, Mr. MacPherson appeared to have sold his original home. In these circumstances, the arbitrator was not prepared to find, pursuant to section 38(8.2)2, that Intact was required to pay for the renovation of Mr. MacPherson's original home, as an expense contemplated by the Treatment Plan that related to the roughly two months between the receipt of the Application and the Explanation of Benefits and covering letter.

(c) The Need for an Invoice

If, however, the arbitrator was wrong in this analysis, pursuant to section 38(17.2), which states that an insurer shall pay medical and rehabilitation benefits it has agreed to pay or that it is required "under this section" to pay, Intact would be required to pay $252,000 towards home modifications within thirty days of receiving an invoice for them.

The issue at this point was whether Mr. MacPherson provided an "invoice" for either the renovation of his existing home or the purchase of a new home. The arbitrator found that he did not.

Pursuant to section 15(5) of the Schedule, an insurer is required to pay for all reasonable and necessary rehabilitation expenses "incurred" by or on behalf of the insured person. Arbitration decisions have consistently interpreted the term "incurred" in a liberal fashion, finding, in essence, that an insured person must show that he or she has become liable in some way in respect of the goods or services provided or claimed.

Pursuant to sections 38(11) and 38(17.2), an insurer's obligation to pay for medical and rehabilitation benefits crystallizes upon an insured person's providing an "invoice."
 
The person must have taken some concrete, positive step towards acquiring the goods or services claimed, and in such a manner as to create some degree of liability for the payment of those goods or services.

In this case, while Mr. MacPherson had throughout the process claimed the costs of renovating his original home, and submitted a Treatment Plan and detailed housing assessment for this purpose, Adapt-Able, in fact, recommended against home modifications, Mr. MacPherson expressed a desire from very early on to move closer to his family in Stratford, and he had, apparently, gone ahead and sold his existing home. While Intact conducted its own assessment of the estimated costs of renovations and, in fact, committed a significant sum to this end, other than the submission of a Treatment Plan and a tenuously supportive housing report, the arbitrator found that Mr. MacPherson took no active steps towards the renovation of his home and assumed no liability for the payment of this service. Even on an expansive interpretation of the term "invoice" under the Schedule, and despite Intact's agreement to pay $252,000 towards home modifications, in the absence of any concrete, positive steps giving rise to some liability for the payment of the renovation of his existing home, the arbitrator had no authority to order Intact to pay him the funds in question.

The fact remained, though, that Mr. MacPherson appeared to have sold his existing home and, to this extent, was in need of new accommodation suitable to his needs. Was this not a concrete, positive step giving rise to some degree of liability for the payment of the purchase of a new home? The arbitrator found that it was not. There was no evidence as to the reason Mr. MacPherson sold his existing house, particularly since the housing issue was far from being resolved. Assuming, however, that it could be inferred that he sold his house for the express purpose of moving towards the purchase of a new one, the arbitrator saw no evidence that he took any actual steps to acquire a new home.
 
The arbitrator did not have any documentary proof of the sale of Mr. MacPherson's original home. While the sale of Mr. MacPherson's existing house could have been an important step towards the purchase of a new one, on the limited evidence, the arbitrator was unable to conclude that it constituted a concrete and positive step towards the actual purchase of a new home.

It was not presented as such, but this motion is similar to a motion for interim benefits. However, to receive interim benefits, an insured must, in addition to showing a prima facie case of entitlement, demonstrate some financial or other urgency to obtain the benefits in question.
 
While the evidence appeared to support Mr. MacPherson's claim for new housing, the only information was the advice of Mr. MacPherson’s counsel that he was becoming restless and frustrated with his current accommodations. The arbitrator had no evidence to the effect that Mr. MacPherson had an urgent or compelling need to move into a new house (due, in part, to the absence of evidence as to whether it was urgent for Mr. MacPherson to sell his existing home).

While the arbitrator did not interpret the need for an "invoice" under section 38 to mean that a person must, in fact, pay for and receive the claimed goods or services (particularly where, as here, there is a very significant asset in issue), the arbitrator concluded that Mr. MacPherson had not taken sufficient steps towards the actual purchase of new house, so as to impose on Intact an obligation to forward the committed funds to him.

Therefore, based upon the evidence at hand, the arbitrator found that Intact was not, at the time, liable to pay Mr. MacPherson the $252,000 it committed to either the renovation of his existing home or the purchase of a new one.

Posted under Accident Benefit News, Automobile Accident Benefits, Car Accidents, Catastrophic Injury, Disability Insurance, Treatment

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