Denying benefits without merit concerning, damaging, and far too common: Preszler Injury Lawyers
This article was provided by Preszler Injury Lawyers
While an injured person can only be awarded nominal costs at the Licence Appeal Tribunal (LAT), an insurance company can still be penalized for its misconduct against an injured person through a special award.
Pursuant to section 10 of Ontario Regulation 664, in the event the LAT finds that an insurer has unreasonably withheld or delayed payments, the LAT may, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule (SABS), award a lump sum of up to 50% of the amount to which the injured person was entitled at the time of the award along with interest on all amounts at 2% per month, compounded on a monthly basis.
While there are limited instances where the LAT has awarded a significant special award, the LAT did so in the recent case of [K.M.] v. Aviva Insurance Canada, 2023 CanLII 60250 (ON LAT). This case included some particularly egregious conduct by the insurance company. The decision provides hope for injured persons that the LAT will, in certain circumstances, sanction the insurer for inappropriate conduct.
Background
The injured person in this case suffered a catastrophic impairment as a result of an accident. Prior to the start of the LAT hearing, the insurance company approved all the benefits in dispute, including $26,000.00 for the monthly difference in rent, $770,000.00 for a house purchase, $29,000.00 for renovations to suit the applicant’s medical needs and up to $100,000.00 for a wheelchair accessible vehicle. The insurer also made a payment for an outstanding attendant care benefit. Since all payments were made, the matter proceeded solely on the issue of the special award.
The insurer’s conduct
The Tribunal outlined that a special award is not granted simply because an insurer made an error. As set out in the decision in Plowright v. Wellington, 1993 ONICDRG 66 (CanLII), an award is justified if the delay in paying the benefits is due to behaviour on the part of the insurer that is “excessive, imprudent, stubborn, inflexible, unyielding or immoderate.”
The Tribunal spent considerable time in the decision going over the various instances where the insurer engaged in the above-noted conduct. The Tribunal found that the insurer failed to adjust the file in a timely manner. As a result, instead of being transferred from the hospital to an appropriate living space, the applicant was required to move to an inaccessible apartment living room. The Tribunal found that the insurer’s unyielding and stubborn interpretation of its statutory duty delayed the injured person from moving into an accessible location that would have afforded him the “dignity he deserves” (at para 16).
The Tribunal further stated that the insurer should have understood that the applicant’s need to secure a new living arrangement was urgent. The Tribunal found that the OCF-18 provided the insurer with the opportunity to meet its statutory obligation to determine the cost of renovating the applicant’s pre-accident apartment pursuant to s. 16(4)(c) of the SABS and to calculate the funds that would have been available to the applicant. Had the insurer done so, it would have afforded the applicant the opportunity to move from the hospital to a safe and accessible location and the insurer’s “unwillingness to work with the applicant towards a viable solution was harsh, not to mention excessive and stubborn” (at para. 37).
A significant issue and one that exemplified the poor handling of the file was the fact that the insurer claimed not to know until well into the file handling that the insured had optional benefits. At the hearing, a representative of the insurer testified that she did not know the policy contained optional benefits despite this being noted in the adjuster’s log notes over a year prior to it being acknowledged. While the insurer insisted that its adjusting was not impacted by this error, the Tribunal held that it is unknown as to what would have happened had the insurer been cognizant of the actual policy limits.
In addition, the Tribunal held that the insurer took an “unyielding approach to the severity of the applicant’s injuries” since the [insurer] had an obligation to determine the applicant’s health status if it believed more information was necessary.” The Tribunal found that this conduct was “lacking, stubborn and insensitive” (at para. 29).
The quantum ordered
The Tribunal noted that the factors to consider, as set out in the caselaw, regarding the quantum of the special award include the blameworthiness of the insurer's conduct, the amount withheld, the length of the delay, any prejudice to the insured, any mitigating factors, the need for deterrence and the vulnerability and potential harm to the insured person (at para. 40).
The Tribunal held that the insurer’s “indifference to the vulnerability of the applicant is a significant aggravating factor in determining the appropriate quantum of the award” (at para. 41). The Tribunal echoed the wording of the Tribunal in the decision of Y.K. v Aviva General Insurance Company, 2020 CanLII 34443 ON LAT, which outlined that “an insurance company is not held to a standard of perfection and is entitled to make errors. However, when such errors are numerous and continue in the face of an insured’s repeated follow-up as in this case, such conduct clearly becomes unreasonable” (at para 41).
In this case, the Tribunal highlighted that the applicant is a catastrophically impaired 27-year-old individual with a severe brain injury. The Tribunal highlighted that the insurer failed to afford the applicant the consideration and dignity he deserved, particularly when he had access to optional benefits. While the insurance company approved attendant care, there was a delay of months for payment on two separate occasions. This resulted in the severely injured person’s mother (and litigation guardian) taking out loans and borrowing money to pay for food and rent while awaiting attendant care payments. The Tribunal was also critical of the fact that the adjuster entered very few log notes when key decisions were made, which created a lack of transparency as to how the errors occurred.
The Tribunal held that this is a case where there is a need to deter the insurer’s “unyielding behavior” considering that the injured person and his mother were treated more “like adversaries than clients who pay a premium for insurance coverage” (at para 44). The Tribunal noted that the adjuster’s conduct “blatantly failed in its responsibility to adjust the applicant’s claim with due diligence” since the adjuster failed realize there were optional benefits, and that the insurer questioned the permanency of the catastrophic determination when this was detailed in the log notes after the applicant was deemed catastrophically impaired.
Furthermore, despite the fact that the insurer approved the benefits after being advised to do so from counsel prior to the hearing, the Tribunal noted that this does not negate all the prior poor conduct on the part of the insurer. In this regard, the Tribunal noted that “the swift decision-making following months of delays is not a substitute for acting in good faith” (at para 49).
The Tribunal ultimately held that, given the fact that the applicant is catastrophically impaired and has a severe brain injury, he is a particularly vulnerable member of society. Accordingly, the Tribunal held that the applicant is entitled to the maximum special award of 50% for the cost of the vehicle, the difference in rent and the late ACB payment.
Reconsideration decision
The insurer sought reconsideration. In [K.M]. v. Aviva Insurance Canada, 2023 CanLII 107273 (ON LAT), the Tribunal dismissed the application for reconsideration since the applicant did not demonstrate that an error of law or fact occurred such that the Tribunal would likely have reached a different result had the error not been made.
The takeaway
While the conduct in this case was indeed egregious, it is sadly far too common in first part statutory accident benefit cases. In numerous cases, the insurance company operates in an adversarial fashion and denies benefits consistently and without any merit. This is particularly concerning and damaging in cases with seriously injured parties.
As noted by the Tribunal, an injured person should be afforded the dignity that a seriously injured person deserves. As we do on all on our cases at Preszler Injury Lawyers, holding the insurer accountable requires an in-depth review and analysis of the actions by the insurer, understanding what the individual is entitled to, scrutinizing log notes and completing a rigorous cross-examination of the insurer’s representative at a hearing, if required. While it may require hard work, insurers must be held accountable for their “excessive, imprudent, stubborn, inflexible, unyielding or immoderate conduct that is unfortunately seen on far too many claims. It is only with an increase in special awards of this nature that insurers will take notice and change the type of egregious conduct seen in this case.
This article is provided by Preszler Injury Lawyers. For more information visit https://www.preszlerlaw.com/.
