New Brunswick court overturns provincial regulator’s decision in favour of insurer

The Court of Queens Bench in New Brunswick has overruled the New Brunswick Superintendent of Insurance and ordered the regulator to review its dismissal of a case involving unresolved allegations of unfair or deceptive practices.
In making his decision for the court, Court of Queens Bench Justice Richard Bell said the regulator had not correctly disposed of the matter, having incorrectly framed the complainants issue with State Farm Mutual Automobile Insurance Company.
In Gaudet v. New Brunswick (Superintendent of Insurance), the applicant, Gerald Gaudet, alleged State Farm Mutual Automobile Insurance Company had discontinued making advance payments to him in late 2005 because he had hired a lawyer to assist with his claim.
The superintendent dismissed the complaint in March 2006. Gaudet asked the court to overturn the superintendents decision, which Justice Bell did in his decision.
Gaudet was injured on Mar. 16, 2005 when his car was struck by State Farm policyholder Jennifer Vetter. According to Bells decision, State Farm investigated the matter and concluded its insured was liable for the injuries and [financial] losses suffered by Mr. Gaudet.
When Gaudet was a self-represented litigant, he received four advance payments between the period of April 28 and September 28, 2005.
On Nov. 8, 2005, Gaudet retained a lawyer, George McAllister, who advised State Farm of his retainer on the same date. On Dec, 23, 2005, State Farm informed McAllister that his client would no longer receive any further advance payments. The payments ceased as of Nov. 8.
Gaudet filed a complaint with the superintendent, complaining that State Farm had cut off payments because he had retained counsel. He argued this was an unfair or deceptive practice, as defined in the provinces Insurance Act.
The superintendent, after making some preliminary inquiries with the insurer, dismissed Gaudets application for a hearing into the matter. In a letter to Gaudet, the superintendent cited a passage of the Insurance Act, which says an insurer is not required to make advance payments unless a judicial order has been made to do so under s.265.6 of the act. No such order had been made, the superintendent noted, and State Farm, in the absence of such an order being made, ceased to make payments when their position with respect to their liability changed.
But Justice Bell said the superintendents decision did not address Gaudets central question to the regulator: Did State Farm cease making payments to Gaudet because of his decision to retain a lawyer?
Since the superintendent had not directly answered Gaudets question, Bell set aside the superintendents decision; in addition, he ordered the regulator to come up with a direct answer to Gaudets allegations.