Canadian Underwriter

What can go wrong if adjuster fails to obtain coroner’s report

January 3, 2020   by Greg Meckbach

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An auto insurer wants to deny liability coverage because its client had alcohol in his blood when he died. The thing is, the insurance company didn’t know its client had alcohol in his blood for three years, which is how long it took the insurer to obtain a copy of the coroner’s report.

As it stands, the insurer is able to take an off-coverage position, but  a coverage dispute arising from a fatal motorcycle accident could be headed to the Supreme Court of Canada.

Jeffrey Bradfield was found partly liable in 2012 in a personal injury lawsuit filed by Jeremy Caton. Bradfield, along with Steven Devecseri and Paul Latanski, were riding their motorcycles on May 29, 2006. Leading the trio was Devecseri, who drove onto the wrong side of the road and collided with a car driven by Caton. The accident killed Devecseri. Caton sued Bradfield and Devecseri’s estate. In 2012, Caton was awarded $1.8 million in damages, with Devecseri’s estate 90% liable and Bradfield 10% liable.

Separately, Bradfield also sued Devecseri’s estate and settled.

Bradfield was insured by State Farm. Devecseri was insured by RSA. Bradfield and State Farm asked the court to rule that RSA cannot take an “off coverage position,” despite the fact that Devecseri had alcohol in his system. It was three years after the accident that RSA got a coroner’s report from 2006, indicating Devecseri had alcohol in his blood.

Devecseri had $1 million in auto liability coverage with RSA but his M2 licence prohibited him from driving his motorcycle with any alcohol in his blood.

In Bradfield v. Royal and Sun Alliance Insurance Company of Canada, released July 20, 2018, Ontario Superior Court Justice Alexander Sosna ruled that Bradfield could recover $800,000 from RSA. That ruling was reversed on appeal in a decision released Oct. 10, 2019.

The Supreme Court of Canada announced Dec. 20 that Bradfield is applying for leave to appeal. This does not mean the top court will necessarily hear an appeal. It does mean it will be up to a panel of three Supreme Court Canada judges to decide whether or not Bradfield can have an appeal heard.

As it stands, RSA only has to provide $200,000 of coverage (the mandatory minimum liability coverage that all Ontario motorists must buy) rather than the $1 million provided by the policy it wrote for Devecseri.  Generally, if an at-fault driver gets sued but is also impaired, an insurer could refuse to cover any amount greater than $200,000.

A week after the 2006 tragedy that took the life of Devecseri, RSA told an adjuster to ask the executor of Devecseri’s estate to allow the insurer to “obtain any and all information” with regard to the accident from both the police and the corner.

In September 2006, the adjuster sent RSA a report stating: “You had asked us to obtain a copy of the coroner’s report. Can you possibly confirm with your [accident benefits] adjuster if they have obtained a copy of same. If not, we can easily do so, but traditionally, this would come from the AB file.”

RSA was apparently not aware of a coroner’s report, dated Aug. 29, 2006, indicating that Devecseri had a blood ethanol level of 31mg/100ml and a urine ethanol level of 46mg/100ml at the time of death. It was not until June 2009 that RSA discovered Devecseri had been drinking alcohol before the accident. That came from testimony from the third motorcyclist, Latanski, who was examined for discovery. At the time, preparations were under-way for the lawsuits filed by Bradfield and Caton.

In July 2009, RSA told the other parties it was taking an off-coverage position.

The lawyer for Caton agreed to get the coroner’s report, which was forwarded to RSA on Oct. 28, 2009.

RSA then added itself as a statutory third party in both lawsuits – the one filed by Bradfield in 2007 in Newmarket and the one filed by Caton in 2008 in Peterborough.

Bradfield settled his lawsuit against the estate in 2012. As part of the agreement, RSA paid Bradfield $100,000 and State Farm paid Bradfield $750,000 under the family protection endorsement (covering judgement awards from uninsured or underinsured defendants) that State Farm wrote for Bradfield.

After the 2012 judgement in favour of Caton, Bradfield and State Farm went to court asking that RSA be barred from taking its off-coverage position.

That issue went to trial in 2017 before Justice Sosna. Bradfield and State Farm argued that RSA had defended the Devecseri’s estate for three years without a reservation of rights and without raising any coverage issues. Therefore, Bradfield argued, it was too late for RSA to say it no longer had to defend the estate.

“From a common sense perspective, and in the context of an insurer’s investigation of a motor vehicle accident involving a fatality, evidence of alcohol in the deceased’s bloodstream — routinely detailed in coroner’s reports — is clearly relevant in determining if a policy breach has taken place,” Sosna wrote in his ruling against RSA.

But RSA had no actual knowledge that Devecseri breached the policy by consuming alcohol before driving until 2009, countered Justice Julie Thorburn for the Court of Appeal for Ontario.

“Although information as to the blood alcohol content was in the coroner’s report, there is no evidence that RSA knew that information was contained in the coroner’s report and knowing that, chose not to get the coroner’s report,” Justice Thorburn ruled. “On the contrary, had RSA obtained the report, it would not have expended monies conducting further investigation and defending the claim.”

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1 Comment » for What can go wrong if adjuster fails to obtain coroner’s report
  1. Kerry Eaton says:

    A complete systemic breakdown of claims handling fundamentals, policies, procedures, fundamentals, manifested in poor training, poor supervision, poor execution.

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