October 19, 2010 by Canadian Underwriter
On an “expenses incurred” issue, an Ontario arbitrator has found a claimant catastrophically injured in a car accident is not obligated to purchase a new home before an insurer is liable to pay home modification benefits.
Nevertheless, the arbitrator added, in the absence of an “invoice” to the insurer proving the purchase of a new home, the claimant must provide the insurer with something more than indeterminate housing reports to show the steps taken to purchase a new home (as opposed to renovating an existing home).
In Jeff MacPherson and Intact Insurance Company, Jeff MacPherson was catastrophically impaired in a motor vehicle collision in December 2007, when he suffered serious fractures and a closed head injury. He was 44 at the time of the accident and lived in a detached bungalow in St. Mary’s, Ontario.
He was discharged from Parkwood Hospital in March 2009 and now resides in a retirement residence, requiring 24-hour care.
In preparation for being discharged from hospital, counsel for MacPherson submitted a housing report to Intact Insurance Company on Oct. 27, 2008. The report estimated renovations to his St. Mary’s home would cost approximately $388,800.
The housing report further referenced MacPherson’s desire to move to Stratford to be closer to his family and suggested purchase of a new home might be considered instead.
Three days later, counsel for MacPherson sent to Intact an “alternative housing” report that pegged the cost of buying a new home at between $335,800 and $433,500 (minus projected equity from the sale of the home).
In response to these housing reports, Intact had its own housing assessment done. Intact’s assessments pegged the cost of renovations at $251,940 and the cost of a new home at between $387,900 and $589,900.
Counsel for MacPherson submitted a treatment plan to Intact on Mar. 11, 2009. It requested the insurer to pay benefits of $388,800 towards the cost of renovating MacPherson’s home.
On May 19, 2009, Intact noted the cost for purchasing a new home should not exceed the cost of renovating an existing home to meet the needs of the claimant. In the same letter, Intact agreed to pay $252,000 towards the renovations of the existing home or the purchase of a new home.
On Apr. 3, a paralegal for the firm notified Intact that it had failed to meet the 10-day response time to pay benefits according to the submitted treatment plan. Counsel called on the insurer to pay the full amount of $388,800.
MacPherson’s guardian took the matter to arbitration, insisting on payment of the full $388,800. The claimant called for an award against the insurer for failing to meet the 10-day response time.
The arbitrator found against MacPherson, noting that Intact did in fact make an inquiry in early February 2010 about MacPherson’s intention to renovate or buy a new home.
At that time, Intact noted the St. Mary’s home had been sold, a new one had not been purchased and renovations to the sold home did not appear to have happened. It asked for some kind of documentation, an “invoice,” proving the purchase of a new home.
MacPherson’s counsel argued the claimant could not afford to buy the home without receiving the benefits from the insurer, which had not yet been paid.
Even interpreting “invoice” widely, the arbitrator found, MacPherson had nothing other than the indeterminate housing reports to demonstrate an intention to buy a new home.
“This is a procedurally challenging case,” FSCO arbitrator Eban Bayefsky wrote.
“The fact remains … that Mr. MacPherson appears to have sold his existing home and, to this extent, is in need of new accommodation suitable to his needs.
“Is this not a concrete, positive step giving rise to some degree of liability for [Intact’s] payment of the purchase of a new home? I find that it is not.