Canadian Underwriter

‘Boilerplate’ reasons for denying auto claims don’t cut it: Court

September 25, 2019   by Greg Meckbach

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Ontario’s Divisional Court ruled this week against Aviva Canada, which wants to challenge a Licence Appeal Tribunal ruling in favour of an auto accident benefits claimant. The case involves how Aviva denied the claim, which was to check a box labelled “medical reason,” with a short, boilerplate descriptor next to the ticked box.

Brian Hedley was injured in 2014. He went to an occupational therapist who submitted treatment and assessment plans to Aviva in June, 2016.

On July 8 of that year, Aviva sent Hedley a notice of denial. Aviva said it wants Hedley to attend an insurer’s examination, telling the claimant the insurer is “unable to determine whether the recommendations are reasonably required for the injuries you received in this motor vehicle accident.”  In a box labelled “Medical Reason,” Aviva wrote “The type(s) of treatment does not appear consistent with the patient’s diagnosis.”

Hedley asked for clarification from Aviva and ultimately took his claim to the LAT, a quasi-judicial body that adjudicates accident benefits claims disputes.

Both insurers and claimants are able to appeal LAT decisions to Divisional Court but only on a matter of law.

Initially, a LAT adjudicator ruled in favour of Aviva but that was overturned on reconsideration by LAT executive chair Linda Lamoureux. She characterized as “sparse” the reasons Aviva gave Hedley for denying his claim and asking for an insurer’s medical examination.

Aviva appealed to Divisional Court, arguing the Lamoureux should have shown deference to the original adjudicator’s ruling.

Section 38 (8) of Ontario Regulation 34/10 (also known as the Statutory Accident Benefits Schedule or SABS) gives auto accident benefits insurers 10 business days to respond to claimants’ treatment and assessment plans. If the insurer thinks any part of that plan is not reasonable and necessary, it must give the claimant medical reasons.

“Where reasons are required, they must be meaningful in order to permit the insured to decide whether or not to challenge the insurer’s determination,” Justice Ryan Bell wrote for the Divisional Court in its unanimous ruling, Hedley v. Aviva Insurance Company of Canada, released Sept. 23, 2019. “Mere ‘boilerplate’ statements do not provide a principled rationale to which an insured can respond.  In essence, such statements constitute no reasons at all.”

The divisional court denied Aviva’s request to have the original LAT adjuciator’s decision reinstated, awarding $3,500 in costs to Hedley.

The original decision had a “significant error of law” because giving effect to Aviva’s “sparse reasons” would run counter to the consumer protection objective of the SABS, Lamoureux wrote.

Lamoureux also found that the benefits included in the treatment plans “were entirely consistent with Mr. Hedley’s diagnosis of low back pain,” wrote Justice Bell.

The Divisional Court found the standard of review in this case is reasonableness and that Lamoureux’s ruling is within the range of reasonable outcomes.

Section 44 of the SABS gives insurers the right to require claimant’s to be examined by medical professionals selected by the insurer, provided that is “not more often than is reasonably necessary.” Insurers who do elect to require an insurer’s examination must give the claimant notice, which must include “the medical and any other reasons for the examination.”

An insurer meets its notice obligations under the SABS – for giving a claimant medical reasons – if it “offers a principled rationale based fairly on an insured’s file,” Lamoureaux wrote in an earlier LAT ruling which she cited in Hedley.

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