October 27, 2010 by Canadian Underwriter
An Ontario arbitrator has granted a special award against an insurer that terminated income replacement benefits to a claimant, on the basis that the insurer uncritically relied on a vocational assessment that appeared to have been the product of what the arbitrator described as an “assessment mill.”
In making his decision, Financial Services Commission of Ontario (FSCO) arbitrator John Wilson highlighted what he saw as a problem endemic ever since the dissolution of the Designated Assessment Centres (DACs) in Ontario in 2006.
“To a degree…Mr. Cowans’ claims bring into question the way Motors [Insurance Corporation] and perhaps other insurers deal with the determination of entitlement to benefits in a post-DAC world, and how the system of insurer’s assessments that replace the DAC system fits into such determinations,” Wilson wrote.
In Everliston Cowans and Motors Insurance Corporation, Motors terminated Cowans’ income replacement benefits after 104 weeks because the insurer relied on an assessment that determined “suitable employment” was available for Cowans.
Wilson found that in making this determination, the insurer did not critically analyze the contents of a medical and vocational report prepared by Health Impact Multidisciplinary Assessment Centres.
The arbitrator noted Health Impact’s report did not take into account several factors, including the absence of any apparent conflict of opinion among the medical assessors; the suggestion that Cowan was suited for a job requiring a “high school” education when his vocational tests showed him at Grade 3 or 4 levels; and the unlikelihood that Cowan would ever qualify for work in the upper income range targeted by the assessment.
Extrapolating on figures provided by Health Impact, Wilson found the assessment centre would have to have been doing roughly 10 assessments per work week, allowing a maximum of only four hours to process each assessment.
Since DACs no longer make a determination about disability, but rather insurers do (based on medical reports), insurers need to look at these assessments with a more critical view, Wilson found.
“In Motors’ case, delegating the investigation, unsupervised, to what seems to have been an assessment mill, and merely reciting the summary of the assessment before terminating benefits was not ‘a reasonable and competent investigation,’ Wilson found.