Canadian Underwriter

Back and Forth is Costly

September 30, 2007   by Donna Ford

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Two recent decisions by arbitrators at the Financial Services Commission of Ontario (FSCO) focus our attention on the need to investigate housekeeping and caregiving claims and not rely on the word of others.

Under the Statutory Accident Benefit Schedule (SABS), an insured person can qualify for:

* a caregiver benefit for reasonable and necessary incurred expenses up to $250 per week for the first person in need of care, eg. child under 16, and up to $50 per week for each additional person in need of care, if the injured insured was the primary caregiver and resided with the person in need of care;

* a housekeeping and home maintenance benefit (HHM) for reasonable and necessary additional incurred expenses up to $100 per week

There is considerable case law that an expense can be “incurred” even though it has not actually been paid.

In order to qualify for a “specified benefit,” meaning an income replacement benefit, non-earner benefit, caregiver benefit or HHM, the insured person must first provide the insurer with a disability certificate signed by a regulated health practitioner: chiropractor, dentist, nurse practitioner, occupational therapist, optometrist, physician, physiotherapist, psychologist or speech-language pathologist. The practitioner must certify the insured has suffered an impairment and is substantially unable to perform his/her normal pre-accident activities relating to the specified benefit as a result of the motor vehicle accident.

Manifest inconsistencies and discrepancies

Sanjay Mathur, a 43-year-old self-employed insurance salesman was involved in a motor vehicle accident on Sept. 27, 2005. RBC General Insurance Company paid him no-fault caregiver and HHM benefits for four months. Mathur disputed the termination and proceeded to arbitration.

He claimed he was the primary caregiver for his two children, a two-year old son and 13-year-old daughter, and that he was responsible for all the housekeeping and home maintenance responsibilities prior to the accident.

Mathur’s wife and father who also lived with him did not testify.

Mathur claimed to have worked up to seven days a week, 10 hours a day prior to the accident, and said he made his face-to-face calls after his wife returned home at 4 p.m. and on weekends. This “highly successful businessman” had returned to work and some of his pre-accident activities within seven to 10 days of the accident.

A chiropractor at the rehab clinic where Mathur was getting treatment, signed two disability certificates certifying Mathur was prevented from performing HHM and caregiving responsibilities.

His conclusion was based largely on what Mathur had told him and not on any significant understanding of what those duties were. David Muir, the arbitrator, also found the reports done by another chiropractor, who was retained by Mathur to perform two in-home assessments, to be unhelpful.

The arbitrator found “manifest inconsistencies and discrepancies” in Mathur’s evidence respecting his responsibilities pre-accident and his needs post-accident. For example, Mathur testified the caregiver and housekeeper came to his home Monday to Friday for four or five hours. However, invoices submitted to the insurer indicated the service provider was present seven days a week, for about four hours each day.

Surveillance by the insurer showed Mathur driving his daughter to school without his infant son in tow in March 2006. Despite Mathur’s insistence this was the one and only time he ever left his son alone with the child’s grandfather, the arbitrator found it likely Mathur would leave his son alone with his father for brief periods of time while he attended to other duties.

Muir dismissed all of Mathur’s claims.

No objective findings of impairment

Milroy Varatharajah was injured on June 6, 2004 while attempting to board a Toronto Transit Commission (TTC) bus. TTC Insurance Company Ltd. terminated his HHM benefits after three months, and he filed for arbitration, claiming those benefits until June 2006 along with medical benefits.

His family doctor, who signed the disability certificate, was not available to testify, but her notes revealed she had recorded the patient’s subjective complaints and had not recorded any kind of objective testing. Further, the patient had told his family doctor he was off work, when he was actually working.

Varatharajah testified he shared the cleaning responsibilities with his roommate before the accident. Both testified the roommate did all of the cleaning, laundry, cooking and shopping for both men after the accident, despite the fact the roommate worked full-time at a bakery on the overnight shift. Elizabeth Nastasi, the arbitrator, found the evidence of both men to be “exaggerated and at times not credible with respect to the issue of housekeeping.”

Varatharajah submitted an in-home assessment conducted in December 2006 that recommended he receive eight hours of HHM per week. The arbitrator “gave little weight to this evidence.” She also gave little weight to the evidence of the chiropractors at the rehab clinic he attended, who described his condition as “chronic.” The evaluation forms used at that clinic did not have a section for recording objective results. She preferred the evidence of the DAC chiropractor and insurer’s orthopaedic specialist who both came to the conclusion there were no objective findings of impairment.

Nastasi dismissed both the claim for additional housekeeping expenses as well as the claim for $13,968 in expenses from the rehab clinic.

What these cases highlight for us is that claims adjusters cannot, sadly, rely on the health practitioners who sign the disability certificates — many family doctors don’t understand the legal and financial consequences — to ensure their patients meet the tests set out in the SABS. Nor can they rely on the insured’s assessors, who are all-too-frequently referred to the assessor by the insured’s rehabilitation clinic or lawyer or paralegal.

While conflicts of interest are required to be disclosed under the legislation, in practice they are seldom disclosed.

The result has been a flood of assessment requests into Accident Benefit claims departments by the insureds — many insureds have no idea what they are signing and end up signing such forms in blank at the clinic or at the office of their legal representative — for even minor soft tissue injuries. The counter-result is a flood of assessments by the insurer. The costs are enormous. The big losers are the policyholders who just want to pay a fair price for auto insurance.

When investigating housekeeping or caregiving claims

* Get a detailed statement from the insured or examination under oath. Who lives in the house and what duties did they all perform before and after the accident? Were there any providers (paid or unpaid) before the accident? If so, get full details. What exact work is being performed post-accident, when and by whom? Is provider paid by cash or cheque? Ask for proof of payment. Is the provider a friend, relative, or a professional? Who prepares and signs receipts and when?

* Get a detailed statement from the provider. How much have they been paid so far in total? When were the payments made? By cash or cheque? Do they keep any records? How much is owing to them so far? Is there any employment agreement, either verbal or in writing? Get the work times, days and duties performed. Have the days or hours of work changed at all? Did provider do any work before the accident? Who completed the receipts and signed them and when? Who pays for provider’s travel to work? Are you a friend, relative or a professional?

* Review and keep notes of the details and discrepancies the insured gives to the assessors and treatment providers with respect to pre-accident responsibilities and post-accident needs.

* Consider using surveillance. It came in very handy in the Mathur claim.

* Don’t forget to use section 48 of the SABS if your investigation warrants it. An insurer may terminate a benefit if the insured person has willfully misrepresented material facts.

* Follow up after the claim has been closed. Have the adjuster call up the service provider to ask how much money he/she ended up getting paid. Compare that figure to the amount your company paid to the insured for those services. Based on my investigations, you may be very surprised how little ends up in the hands of the alleged housekeeper/ caregiver — the balance gets split between the insured and the legal representative. Keep statistics on your follow up investigations and feed that information to Insurance Bureau of Canada who can then lobby for changes.

Donna Ford is a chartered insurance professional, member of the Law Society of Upper Canada, and a freelance writer who worked for years in the insurance industry.