Canadian Underwriter

Ontario appeal court rules against insurer in disputed attendant care auto claim

July 17, 2013   by Greg Meckbach, Associate Editor

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A ruling released Tuesday by the Ontario Court of Appeal against Gore Mutual Insurance Company is significant because it does not define “economic loss” in the province’s auto insurance regulations governing attendant care benefits, when the person caring for the vehicle accident victim is a family member and not a professional, according to insurance lawyers.

Ontario court rules against insurer in attendant care dispute

In ruling in favour of Tyrone Henry, who was left a paraplegic after a motor vehicle accident in 2010, the Court of Appeal upheld a lower court finding that Gore Mutual’s obligation to pay for Henry’s attendant care benefits “was not restricted to care provided during the 40 hours per week of paid work foregone” by Henry’s mother, who quit her job to care for him.

On June 27, 2012, Justice Timothy Ray of the Ontario Superior Court of Justice noted that Henry’s attendant care needs were assessed about $9,500 per month on a Financial Services Commission of Ontario (FSCO) Assessment of Attendant Care Needs form, commonly known as “Form 1.”

Under Section 19 of the province’s Statutory Accident Benefits Schedule (SABS, also known as Ontario Regulation 34/10), the maximum payable for attendant care is $6,000 per month, if the victim sustained a catastrophic impairment and if the policyholder did not purchase optional additional medical, rehabilitation and attendant care benefits.

However, Cambridge, Ont.-based Gore Mutual contended that because it’s Henry’s mother providing the care, the carrier’s liability is limited “to the number of hours that the applicant’s mother had been working  as a proportion of the total attendant care hours assessed as reasonable.”

Court records indicate Gore Mutual reviewed Henry’s Form 1 and, in essence, calculated attendant care at $2,117.40 a month by apportioning the amount of care required into an eight-hour day, rather than compensating Henry for the income of $2,100 that his mother lost by quitting her job.

Henry had argued he should get the $6,000 maximum payable under the standard auto policy, given that the amount calculated on Form 1 exceeded that amount. Judge Ray ruled in favour of Henry and Gore Mutual appealed.

In a unanimous decision July 16, the Ontario Court of Appeal upheld Judge Ray’s decision, ruling in favour of Henry.

The issue on appeal was whether Gore Mutual was required to pay attendant care for a 24-hour period or only for the care that Henry’s mother provided during the 40 hours a week of paid employment she had forgone in order to provide attendant care.

“Of note to the industry is that the Court of Appeal refused to provide its own definition of ‘economic loss’ despite Gore’s request to do so,” wrote Daniel Strigberger, an insurance litigation lawyer for Miller Thomson LLP, on his company’s blog.

“Gore argued that because ‘economic loss’ is not defined in SABS-2010, insurers risk facing claims for attendant carebenefits founded on wide and expansive interpretations of ‘economic loss, or de minimis financial or monetary loss (such as subway token expenses).”

But in the case of Henry versus Gore Mutual, the “economic loss is clear,” wrote Justice Alexandra Hoy, associate chief justice of the Ontario Court of Appeal. “The respondent’s mother gave up full-time paid employment to provide care for her son on a 24-hour per day basis.”

Justice Janet Simmons and  Justice George Strathy, the other appeal court judges hearing the case, concurred.

Other lawyers reacting to the decision agree the refusal to define “economic loss” is significant to the industry.

“By failing to define ‘economic loss,’ the Court has left the term open to a wide range of interpretation,” according to a bulletin published by Dutton Brock LLP, a Toronto-based law firm specializing in insurance litigation.

“What if Henry’s mother had given up a part-time job to care for her son? What if she had given up one shift per week? Insurers and claimants will continue to argue and cases will continue to be decided on their facts until a Court takes on the definition once and for all.”

In his June 2012 ruling, Judge Ray wrote that economic loss has been defined “in very broad terms in claims for compensation in tort law cases, and has been the subject of a great deal of jurisprudence because of the difficulty in quantification.”

He added that economic loss “is a threshold finding for ‘incurred expense’, but is not intended as a means of calculating the quantum of the incurred expense.”

In upholding Judge Ray’s ruling, the appeal court found that “if the amount of the monthly care benefit were to be calculated based upon the number of hours the family care-giver was unable to work because she was providing care, or the quantum of the economic loss sustained by the care-giver, SABS-2010 could have so indicated.”

Both Dutton Brock and Miller Thomson noted insurance carriers still have the right to request information from Ontario auto claimants.

“Insurers are able to challenge an insured’s assessment of attendant care needs by securing a Form 1 of their own,” Dutton Brock wrote in its bulletin commenting on the ruling. “In the present case, Gore conceded that the attendant care was reasonable and necessary, and that it had been provided.”

For his part, Strigberger wrote that “in many cases insurers should be able to distinguish Henry from those cases where the economic loss is unclear.

In its ruling, the Court of Appeal noted that FSCO released in March, 2009 a five-year report on auto insurance in Ontario. That report quoted the Insurance Bureau of Canada as being concerned that “over-utilization of the attendant care benefit was becoming a problem” and that carriers were concerned that the benefit “can become a windfall for the claimant if not actual services are provided.”

“IBC’s solution, as summarized by FSCO, did not include restricting the amount of the payment for attendant care to care provided during the period that the family care-giver would otherwise have been at work, as the appellant now proposes,”

Judge Hoy wrote, adding that in 2009, FCSO did not propose that the province revert to the system in place as of 1990, “which provided for reimbursement of income reasonably lost by a person other than the insured in caring for the insured, subject to maximums.”