Arbitrator rules in favour of Ontario auto claimant refusing to attend insurer’s medical examination

An arbitrator with the Financial Services Commission of Ontario recently ruled against Unifund Assurance Company, which had refused to pay medical benefits to an Ontario auto claimant who refused to attend an insurer’s examination.

In a ruling release Nov. 13, FSCO arbitrator Susan Sapin ordered Unifund to pay Kadian Augustin treatment expenses of $2,934.90 plus interest.

Sapin also ruled that Augustin is not precluded from pursuing mediation for her claim.

FSCO records indicate that Augustin was injured in a vehicle accident July 2, 2011. She made a claim for medical and attendant care benefits, as well as a weekly non-earner benefit (NEB), from Unifund.

Non-earner benefits are for claimants who suffer “a complete inability to carry on a normal life as a result of and within 104 weeks after the accident” and either do not qualify for income replacement, were full-time students or who graduated less than a year before the accident but are not employed “in a capacity that reflected his or her education and training.”

Augustin was unemployed at the time of the accident and was a caregiver to her two children but had not purchased optional coverage for caregiver benefits.

“Unifund refused to pay for medical benefits on the basis that Ms. Augustin failed to attend insurer’s examinations (IEs) to determine whether her accident injuries fell within the Minor Injury Guideline (MIG), and now argues her failure to attend the IEs precludes her from mediating its refusal,” Sapin wrote in her decision. “Unifund has refused to pay an NEB because it maintains Ms. Augustin did not apply for it.”

The MIG, which took effect in 2010, provides for a $3,500 cap on claims for injuries that can include a “sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and any clinically associated sequelae.”

Sapin noted that section 38(9) of Ontario Regulation 34/10, also known as the Statutory Accident Benefits Schedule, requires that if an insurer “believes that the Minor Injury Guideline applies to the insured person’s impairment,” that a notice to the claimant “under subsection (8) must so advise the person.”

FSCO records indicate that Unifund advised Augustin that the carrier “required an IE to determine if her impairment was a minor injury within the MIG.” But Sapin noted that Section 38 of SABS requires that, once a claimant’s health provider submits a treatment and assessment plan, an insurer “must send the insured person a notice that identifies which goods and services the carrier agrees to pay for,” any goods or services the carrier does not agree to pay for and “the medical reasons and all of the other reasons why the insurer considers any goods or services, or the proposed costs of them, not to be reasonable and necessary.”

But Sapin found that Unifund’s notice to Augustin “does not state that Unifund ‘believes’ the MIG applies, or why.”

She added Unifund also does not state “medical reasons” for refusing to pay the benefit claimed.

“Given that an insured person’s treating practitioner must provide a factually based medical opinion to support a claim for treatment outside the MIG, I find it is reasonable to require an insurer who chooses to refuse to pay an initial claim to counter with something more than simply a desire ‘to determine if your impairment is predominantly a minor injury as described in the Minor Injury Guideline,’ as Unifund has done in this case,” Sapin wrote.

“This is particularly so where, as in the case here, Unifund refused to pay for the treatment pending an IE, a response I find undermines the stated purpose of the MIG to provide access to early treatment, a purpose based on sound medical principles.”

In explaining why she ruled that Augustin “is not precluded from pursuing or mediating her claim” for non-earner benefits, Sapin cited a 2002 ruling by the Supreme Court of Canada in the case of Bernadette Smith vs The Cooperators General Insurance Company.

FSCO records indicate that Augustin submitted an Application for Accident Benefits (form OCF-1) while her chiropractor “submitted a Disability Certificate (OCF-3) to Unifund dated July 4, 2011, indicating Ms. Augustin was completely unable to carry on a normal life.”

In August, Unifund sent Augustin an Explanation of Benefits (OCF-9) “explaining why she was not entitled to an income replacement, caregiver or non-earner benefit.”

Sapin noted that SABS requires that “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.”

She found that the OCF-1 and OCF-3 forms “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 SABS.

“I find 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,” Sapin wrote.

There is a 26-week waiting period for NEB benefits, Sapin noted, but added there is nothing in SABS requiring claimants to resubmit claims for NEB after that waiting period.

“If there was a requirement,” Sabin noted, “it falls short of the standard of consumer protection required of insurers since Smith v. Co-operators and I find Unifund cannot take the position that it is not required to pay an NEB because Ms. Augustin did not ‘apply’ for it.”

Smith’s dispute with The Cooperators was over the two-year limitation period under Ontario law. In 1996, The Cooperators ceased paying for benefits claimed by Smith in a vehicle accident that occurred in 1994. An attempt at mediation in 1997 failed, and Smith filed a statment of claim in 1998. Her claim was dismissed by the Ontario Superior court of Justice, which ruled it was time-barred. Smith unsuccessfully appealed to the Court of Appeal for Ontario but was successful in her appeal to the Supreme Court of Canada.

“There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance,” wrote Mr. Justice Charles Doherty Gonthier on behalf of the majority of the Supreme Court of Canada, adding Section 279(2) of the Insurance Act “provides that any restriction on a party’s right to mediate, arbitrate, litigate, or appeal is void, except as provided in the regulations.”