November 2, 2010 by Canadian Underwriter
Arbitrators are all over the map when it comes to ordering special awards, but as of late there have been more cases finding against an insurer.
“There is really a subjective element that comes into it, or, as some would say, a fact-based element that obviously comes in to each of these cases,” said Leilah Edroos, an associate with Brown & Korte. “What you’re left pondering is: Why is it that in this case there was no special award, and why is it in that case there was one?
“I wish I could say that there is a particular reason, but I don’t have one.”
Edroos spoke at the Canadian Defence Lawyers 3rd Annual Accident Benefits Experts Seminar held Nov. 1 in Toronto. She cited various arbitration decisions indicating how difficult it is to pinpoint hard and fast rules an insurer might follow to avoid having to pay special awards in an arbitration.
For example, in Sinnapu and Economical Mutual Insurance Company, after income replacement benefits were awarded, the insurer sent a medical report back to the “key examining physician” to comment on entitlement to income replacement benefits after 104 weeks.
The key examining physician maintained his opinion, upon which the insurer relied in terminating the income replacement benefits. But the arbitrator ruled that the insurer’s reliance on the “cowboy” approach of the physician was unreasonable and ordered a special award at 40% plus interest.
“I’ve looked at that case on several occasions and it’s difficult to understand why that case was made, because the insurer went and sent it back to its assessor,” Edroos said. “And yet, despite the fact that [the insurer] went back to the assessor to ask them to look at new information, that was not sufficient for the arbitrator in this particular instance.”
In contrast, in Carr and TD General Insurance Company, an arbitrator observed “serious flaws in the assessments and medical reports” upon which an insurer relied with regard to the insured’s entitlement to post-104-weeks income replacement benefits. The arbitrator went on to rule that the insurer’s reliance on and deference to its own medical assessors was not so unreasonable in these circumstances as to warrant a special award.
“Be aware of the medical reports relied on to deny benefit,” Edroos warned. “Where there are flaws in those reports, [that] may lead to a special award. Just because you retained them, doesn’t make them right.”
While there is no sure-fire way to avoid a special award, there is a need to examine the totality of the evidence when handling a file and not just one single piece of evidence, Edroos cautioned. This might include seeking another assessment if it’s warranted and timing allows for it, or a paper review of the assessments.