January 15, 2014 by Canadian Underwriter
The Court of Appeal for Saskatchewan recently ruled against Saskatchewan Government Insurance in deciding that the carrier must pay some of the ongoing operating costs of a lap pool used by a vehicle accident victim for rehabilitation.
Dennis Scott was injured Dec. 23, 2005 after his vehicle hit a moose. He was rendered an incomplete quadriplegic and received benefits under the no-fault provisions of the province’s auto insurance law. SGI administers Saskatchewan Auto Fund, the province’s compulsory auto insurance plan, on behalf of the provincial government.
Court records indicate that Scott used water therapy for rehabilitation, and that SGI had agreed to pay nearly $279,000 towards the construction of a lap pool and enclosure at his home. However, SGI had not agreed to pay for maintenance, repair or upkeep costs, other than an annual recreation allowance benefit of $692.00.
Scott appealed SGI’s decision to the Automobile Injury Appeal Commission, which dismissed his appeal, in a ruling released March 9, 2012.
“On his appeal before the Commission, Mr. Scott provided evidence of increased costs associated with the lap pool enclosure,” according to background information provided with a Court of Appeal for Saskatchewan ruling published Dec. 17, 2013.
“These costs included chemicals and maintenance of $390 per month plus taxes, additional insurance costs of $1,220 per year and additional property taxes of approximately $1,673 per year. The witnesses who testified agreed that the increased insurance and property tax costs were based on the increased value of Mr. Scott’s property resulting from the addition of the lap pool and enclosure.”
The court of appeal ordered SGI to pay Scott’s “on-going operating costs for the pool as claimed by him, except for increased taxes and insurance, for so long as the pool is a necessary or advisable rehabilitative measure in accordance with” the province’s Automobile Accident Insurance Act and regulations.
In 2006, Scott had started outpatient therapy at the Wascana Rehabilitation Centre in Regina but he lives in Whitewood, about 175 kilometres east of Regina, so his therapy sessions required a four-hour round trip. In the summer of 2010, SGI indicated it would provide $278,782.09 towards the building of a lap pool and enclosure, after Scott provided competitive quotes. Scott’s physiotherapist had sent a letter to SGI recommending “a lap pool as being more beneficial for (Scott’s) rehabilitation program than a swim spa.”
The energy costs required to heat the lap pool could not be determined at the time but court records indicate Smith had testified those costs would be $150 to $200 per month.
A key issue in the dispute over on-going operating costs was whether Section 112 of the Automobile Accident Insurance Act or Section 12 of the Personal Injury Benefits Regulations allows SGI the discretion to fund the maintenance of the lap pool.
In ruling against Scott in 2012, two of the three Automobile Injury Appeal Commission members on the panel (Keith Laxdal and Walter Matkowski) found that SGI did not have the discretion to fund the maintenance costs, other than paying the annual recreational benefit allowance. The third member, commission chair Joy Dobko, had dissented from the majority ruling.
Dobko quoted from Section 112 sub-section 2 of the Saskatchewan Automobile Accident Insurance Act, which states: “Subject to the regulations, the insurer may take any measure it considers necessary or advisable to contribute to the rehabilitation of an insured, to lessen a disability resulting from bodily injury and to facilitate the insured’s recovery from the accident.”
Sub-section 1, she noted, “is a definition section for rehabilitation but the clear intent of Section 112(2) is to go beyond just ‘rehabilitation’ in the strictest sense of the word.” Dobko added that definition section “does not limit SGI’s broad discretion to take any measures that may lessen a disability or facilitate recovery but may not be specifically provided for in the definition section of Section 112(1).”
The provincial appeal court essentially agreed with Dobko, finding that Section 112 “gives SGI an extremely broad discretion to make payments considered necessary or advisable to contribute to the rehabilitation of an insured.”
The court of appeal also quoted from the regulations and from a 2011 decision — also by the Saskatchewan Court of Appeal — in favour of Amelia Becker, who had been seriously injured in October 2006 in a school bus accident.
SGI had agreed to reimburse Amelia Becker’s mother, Heather Becker, for income lost for a period of time while she looked after Amelia. SGI discontinued payments, the Beckers appealed to the Automobile Injury Appeal Commission and SGI argued that the commission did not have the authority to order SGI to make ex gratia payments.
In ruling in favour of the Beckers and the injury commission, the provincial appeal court wrote in 2011 that Section 112 (2) “gives SGI an extremely broad discretion to make payments considered necessary or advisable to contribute to the rehabilitation of an insured.”
In applying the Becker ruling last month in the case of Scott, the court of appeal noted SGI had agreed that the lap pool for Scott “was an approved form of rehabilitation.”
In Becker, the appeal court noted, the income replacement benefits for Heather Becker were “not ‘explicitly’ a kind funded by s. 12(e)(ii) and (iii) of the Regulations.”
Those sections of the regulations stipulate that if the insurer “considers it necessary or advisable for the rehabilitation of the insured, the insurer may provide the insured with …. funds … to lessen the insured’s disability; and to facilitate the insured’s recovery from an accident to improve his or her earning capacity and level of independence.”
The Court of Appeal’s ruling in favour of Becker, released in March, 2011, “can be fairly said to signal that a narrow, technical interpretation of s. 112 of the Act and s. 12 of the Regulations is to be avoided,” wrote Mr. Justice Ralph Ottenbreit on behalf of the Court of Appeal in the Dec. 17 decision in favour of Scott. “This interpretative approach makes sense because the Act can be considered to be consumer protection legislation. The Act imposes a mandatory program of regulation or benefit distribution to those injured in Saskatchewan.”
Justice Ottenbreit added that increased property taxes and insurance for Scott’s pool “are more referable to the capital addition of the pool to Mr. Scott’s house rather than pure operating costs related to his day-to-day rehabilitation.” Therefore, he wrote, SGI has the discretion to decide whether or not to reimburse Scott for taxes and insurance, given that Scott “has received a potential substantial increase to the capital value of his property as a result of the construction of the pool.”