January 15, 2010 by Canadian Underwriter
There is a need to provide a clear definition for the word “incurred” under Ontario’s Statutory Accident Benefits Scheme (SABS), said Philippa Samworth, a partner at Dutton Brock LLP.
Typically, “incurred” is interpreted to mean that a person has paid for an expense out-of-pocket, she told delegates of the Ontario Risk and Insurance Management Society (ORIMS) professional development seminar on Jan. 15 in Toronto.
“Well, incurred doesn’t mean that [under] the Statutory Accident Benefits Schedule. Incurred means I wanted the service, I needed the service, I didn’t get the service, but now the insurer is going to have to pay me because somebody says they had to.”
The issue revolves around the notion that insurers deliberately “starve” claimants by denying a benefit such as attendant care, and then insureds, because they did not have the money, could not pay for the service, she said.
For example, she points to insureds with claims that are initially deemed non-catastrophic. In such instances, the insured is entitled to $1,500 in attendant care benefits for two months.
If in two years those injuries are ultimately deemed to be catastrophic, the limit of that attendant care benefit increases to $6,000 a month. In addition, the insured is entitled to collect for attendant care expenses they incurred during the interim time before they were determined catastrophic, Samworth explained.
During the two-year interim period, it’s unlikely the insured was able to pay for $6,000 worth of attendant care, she said.
“The insurer’s going to say: ‘Well, you didn’t get the services, so I’m not going to pay. I’ll start paying now because you’re getting the services’,” Samworth said. “The insured says: ‘I couldn’t get them because you didn’t pay me. I didn’t have any money and I wasn’t working because I was obviously disabled. You had no right to deny me that, because the grounds of it were bogus’.”
According to the proposed changes, if the arbitrator feels an insurer took a reasonable position based on the medical information available, the arbitrator can say the insured’s costs weren’t incurred, and therefore the insurance company will not have to pay the costs.
However, if the arbitrator feels the insurer was wrong in its approach, then, despite the insured not having incurred actual expenses, the insurance company will be required to provide the insured with the funds.
“A number of legal organizations and the Insurance Bureau of Canada asked the government to do something about the meaning of incurred,” Samworth said. “There has to be a clear definition of the term as no one seems to understand the true meaning.
“So do we see a definition [in the proposed reforms]?” she asked. “No. We see this weird section. There’s a great deal of disappointment because incurred expenses apply to care giving, housekeeping and attendant care. It is still going to allow for this potential for fraud, but on reduced limits.”