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FSCO Announces Further Changes to the SABS Effective December 1, 2014 and January 1, 2015  

The Financial Services Commission of Ontario (FSCO) recently announced further changes to the Statutory Accident Benefits Schedule (SABS).   The changes will affect service provider regulations, administrative penalties, transportation expenses and interest rates.  Service providers, in particular, should familiarize themselves with the changes.  The following is a brief summary of the key changes.

Effective December 1, 2014:

  • Both licensed and unlicensed service providers will be able to provide goods and services to auto insurance claimants. But, only licensed service providers will be able to receive payment directly from auto insurers. Unlicensed service providers must complete an OCF-21 (Auto Insurance Standard Invoice) in the HCAI (Health Claims for Auto Insurance) system and provide the completed form to the claimant and the claimant must submit the form to the auto insurer and the insurer is expected to pay the claimant directly.  The unlicensed service provider will need to be compensated by the claimant.
  • A new unfair and deceptive act or practice (UDAP) is added for a service provider who advertises that they are licensed, when at the time, the service provider was not licensed. It would also be a UDAP where a person makes any false, misleading or deceptive statements about their business and billing practices.
  • Licensed providers are now able to seek direct payment for a listed expense under the SABS from anyone other than an insurer.
  • Administrative Monetary Penalties (AMPs) may be levied in fixed amounts (for low-level, high-volume contraventions, e.g. non-compliance related to FSCO reporting requirements with final amounts ranging from $250 to $1,000) and variable amounts (for other requirements in the regulations, e.g. significant contraventions of the regulations that can involve or potentially lead to improper billing practices with a maximum of $25,000).
  • A reminder that “authorized transportation expenses”, as defined in the SABS, are intended to apply to expenses incurred by the insured person and an aide for travel to and from treatment sessions, and not mileage expenses for service providers traveling to and from an insured’s location when providing services.

Effective January 1, 2015:

  • Once a mediation proceeding is commenced, the interest rate of 1%, compounded monthly will then change to the prejudgment interest rate described in the Courts of Justice Act for past pecuniary loss (currently 1.3%), to be calculated from the date on which the mediation proceeding is commenced and ending on the date a settlement is reached or a decision is heard.




Court punishes insurance company for bad faith conduct requiring payment of $200,000 for punitive damages

A claim for punitive damages is not a claim for disability benefits and can be pursued in a lawsuit separately to punish an insurance company for bad faith conduct.  In the recent decision, Fernandes v. Penncorp Life Insurance Company, the Court of Appeal affirmed the Trial Judge’s decision awarding $200,000 in punitive damages, as the Appellant, Penncorp’s conduct met the test for punitive damages as being “highhanded, malicious, arbitrary or highly reprehensible conduct”.

The Respondent, Fernandes, suffered a serious back injury after falling off a scaffold and two days later falling off a trailer.  Following the two accidents, he was unable to work as a self-employed bricklayer.  He claimed disability benefits from Penncorp who accepted Fernandes as totally disabled and paid him a monthly benefit for approximately seven months.  Penncorp subsequently terminated Fernandes’ benefits, contrary to the medical evidence.  Penncorp failed to formerly advise Fernandes of the termination of his benefits until about five months after the fact. It simply stopped sending the disability benefit cheques.

Penncorp relied solely on surveillance that showed Fernandes doing some work around the house, which included shovelling, pushing a wheelbarrow, and lifting the wheelbarrow and a wooden skid into the back of a trailer.  This surveillance was not inconsistent with Fernandes’ evidence that he did some limited housekeeping activities.

The Court of Appeal upheld the trial judge’s decision awarding $200,000 in punitive damages.  The trial judge concluded that the Defendant breached its insurance contract with the Plaintiff to pay disability benefits and its duty of good faith.  Having reviewed the evidence, the trial judge concluded that Fernandes continued to suffer from a total disability contained in the insurance policy, i.e. he was unable to perform substantially all of the duties of his occupation and he was disabled from any occupation for which he was reasonably suited for by education, training or experience.

In addition, Penncorp had not dealt with Fernandes in a fair and balanced manner.  Instead, Penncorp took an adversarial approach to Fernandes’ claim and terminated his benefits in the face of medical evidence to the contrary and on the basis of surveillance that did not reasonably support the decision to terminate benefits.

The Court of Appeal, however, reduced the damages for aggravated damages (mental distress) from $100,000 to $25,000 as this award was inordinately high and entirely disproportionate and there was evidence that circumstances apart from Penncorp’s conduct contributed to Fernandes’ psychological distress.

Unfortunately, insurance companies frequently unfairly deny payment of disability claims.  This case, however, can be used as a powerful tool to ensure insurance companies comply with their duty of good faith. The prospect of high punitive damages awards can affect the way in which insurance companies approach claims.


Call out drivers that text

Distracted driving is much too common. It accounts for four million traffic accidents in North America each year. Although Ontario made it illegal in 2009 to drive while using a handheld device, last year approximately 75-80% of all car accidents resulted from driver inattention.

It is illegal to use a handheld device while driving but that does not seem to be eliminating its use.  This is especially alarming given the day and age we are in with heavy reliance on smartphones which only seems to be increasing.   One suggestion is that we create a culture stigmatizing driving and texting and speak up when we see people doing it, especially where you are a passenger and have the opportune moment to enforce zero tolerance.

Distractions don’t end at using a handheld device while driving.  For example, a very high number of car accidents occur each year outside of Canada’s Wonderland on Hwy 400, as many drivers are looking at the rides instead of paying attention to the road. The OPP has been fining people that they catch looking at the rides while sitting in traffic or just driving by. The number of accidents in the area is a testament as to how dangerous distractions are while driving!

Eliminate all distractions while driving and remain focused on the task at hand – arriving safely to your destination.


Am I entitled to interest on overdue payments from my insurance company?

Yes, for accidents that occur after September 1, 2010, the rate of interest on overdue accident benefits payments changed from 2% per month, compounded monthly to 1% per month, compounded monthly.   The decisions of Arbitrator Maggy Murray in Federico v. State Farm Mutual Automobile Insurance Co., [2012] O.F.S.C.D. No. 20 and Arbitrator JeffreyRogers in Subramaniam v. Wawanesa Mutual Insurance Co., [2012] O.F.S.C.D. No. 100 have clarified that interest will accrue at the rate of 2% per month for accidents that occurred prior to September 1, 2010 and 1% per month for accidents that occurred on or after September 1, 2010.  In other words, it does not matter that the benefits may have become overdue after September 1, 2010 but rather whether the accident occurred before or after September 1, 2010.

The Court of Appeal in the recent decision, Zacharias v. Zurich Insurance Company 2013 ONCA 48 in addition to other things clarified what is meant by compounded interest.  At the end of the month during which a payment is overdue, 2 per cent interest is added to the amount that is overdue. As long as that overdue amount remains unpaid, interest continues to accrue at 2 per cent per month on both the increasing principal and on the interest that has been calculated monthly. As both the principal and interest are “overdue payments”, interest must be calculated and paid on amounts that include interest.



Is any economic loss, however minimal, sufficient for attendant care benefit eligibility?

Since the September 2010 changes requiring a family member who provides attendant care services to demonstrate an economic loss in providing care in order to be eligible for attendant care benefits, lawyers for injured people have been advocating for a broad interpretation to be adopted for the term economic loss.

Plaintiff’s counsel can now also rely on a recent case, Deol v Gore Mutual, where Arbitrator Wilson confirmed that economic loss is any economic loss of the care provider regardless of how minimal it may be.

In this case the insurance company attempted to argue that Mrs. Deol could not have been performing the care to her husband given the hours she worked.  However, her T4 demonstrated a lower income as well as a ROE from a second job indicating that she stopped working at that job due to stress and illness of her husband.


What is required for “medical reasons” in notice of denial?

When the insurance company denies treatment or payment of benefits and sends you to an insurer examination, be sure to check with your lawyer if you are required to attend.  There are many requirements the insurance company must fulfill in order to properly require your attendance.

With the September 2010 changes to the Statutory Accident Benefit Schedule (SABs), if the insurance company does not agree to pay for a treatment or assessment plan, it must give you notice with the medical reasons and all of the other reasons why the insurer considers any goods, services, assessments and examinations, or the proposed costs of them, not to be reasonable and necessary” within 10 business days after it receives the treatment and assessment plan.

In a recent case, Augustin v. Unifund Assurance Company [FSCO A12-000452], the Arbitrator shed some light on what are proper “medical reasons”.  Arbitrator Sapin held that the notice that Unifund provided indicating “Based on our review of the medical documentation provided to date, we require an assessment by an independent medical assessor, in order to determine if your impairment is predominately a minor injury as described in the Minor Injury Guideline. Please see the Notice of Examination for further details” did not meet the requirements of s. 38(8) of the SABS.

As you can see and as the Arbitrator pointed out, the notice did not include any reason why Unifund was denying the benefit which the SABs requires as set out above.  Arbitrator Sapin noted that the failure for Unifund to state that it “believes” the MIG applies, or why was detrimental to Unifund’s position.   She indicated in explaining why the benefits are not payable and providing medical reasons, the notice must indicate “that it has reviewed the Treatment and Assessment Plan and any medical documentation provided; compare it to the criteria in the MIG; and determine either that there is insufficient compelling evidence (of pre-existing injuries or conditions, for example) or insufficient medical documentation to persuade it that the accident injuries fall outside of the MIG, and therefore, the insurer believes the MIG applies and the treatment claimed is not reasonable or necessary (because the treatment does not conform to the MIG treatment protocols, for example).”

Arbitrator Sapin indicated that Unifund could not simply indicate “a desire ‘to determine if your impairment is predominantly a minor injury as described in the Minor Injury Guideline’”.  This is only fair since “the insured person’s treating practitioner must provide a factually based medical opinion to support a claim for treatment outside the MIG.”  The Arbitrator did not agree with Unifund’s submission that the need for first a medical opinion in the form of an IE is itself sufficient to satisfy the definition of a medical reason.


MIG decision rescinded, new hearing ordered

The first ever decision interpreting the Minor Injury Guideline (MIG), Scarlett v Bel Air, is going to a new hearing with a new arbitrator.  FSCO Director’s Delegate David Evans granted Bel Air’s appeal of the decision finding that Arbitrator Wilson erred in many respects including:

  • – in finding that the burden of proof is on the insurer to prove that the insured falls within the MIG. The Director’s Delegate found that the burden of proof is with the  insured to prove that he or she fits within a scope of coverage
  • – failing to explain why Mr. Scarlett’s psychological disabilities were separate from his soft tissue injuries and therefore not “minor”;
  • – failing to apply the test for MIG by not addressing whether the insured’s injuries were “predominantly” minor injuries;
  • – reading down “compelling evidence” to mean credible evidence.  The Director’s Delegate found it means more than just credible evidence.
  • – indicating that the MIG was not binding because it was only a Guideline. The Director’s Delegate found that the MIG is binding because it is incorporated into the  SABS by reference.
  • – breaching procedural fairness by conducting his own research and relying on cases and statutory provisions he raised after the hearing without giving notice to the  parties and an opportunity to respond.

While claimants’ lawyers await further guidance from the courts and arbitrators, we will have to continue making creative arguments to advocate that our clients’ claims should be taken out of the Minor Injury Guideline so that they can access appropriate funding for their rehabilitation.

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