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November 2013 Archives

FSCO Releases Decision Clarifying What Is a "Medical Reason" for Denial of a Benefit and Insurer's Examination

The Financial Services Commission of Ontario (FSCO) has released a decision clarifying what is considered to be a "medical reason" for an insurer to deny a benefit and for the insurer to demand that an insured attend an insurer's examination under Section 44 of the Statutory Accident Benefits Schedule (SABS). In the decision, Kadian Augustin and Unifund Assurance Company [FSCO A12-000452] Arbitrator Susan Sapin considers whether or not Ms. Augustin is allowed to dispute the insurer's denial of treatment because she failed to attend an insurer's examination.  In order to make a determination Arbitrator Sapin needed to consider whether or not the insurer's examination was compliant with the SABS. Unifund wanted to send Ms. Augustin to an insurer's examination to determine if she was within the Minor Injury Group (MIG) after receiving a treatment plan that, if approved, would take her out of the MIG.  Unifund provided the following notice to Ms. Augustin in their Explanation of Benefits: "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 predominantly a minor injury as described in the Minor Injury Guideline. Please see the Notice of Examination for further details." Arbitrator Sapin found that this explanation did not comply with Section 38(8) of the SABS because it did not state that Unifund "believes" the MIG applies, or why.  Nor did it state the "medical reasons and all of the other reasons why the insurer considers any goods or services, or the proposed costs of them, not to be reasonable and necessary.  The arbitrator noted that it provided no reason, medical or otherwise, explaining why it refused to pay the benefit. Arbitrator Sapin goes on to explain,

State Farm Barred from Denying Claimant as "Insured" Five Years After MVA

In a recent Ontario Superior Court of Justice decision, State Farm v. Bunyan [2013 ONSC 6670 (CanLII)], State Farm Insurance Company was not allowed to consider an accident benefits claimant as not being an "insured" under the policy five years after the motor vehicle accident. This decision deals with Christian Bunyan, who was a pedestrian who was struck by a truck in Alberta in September of 2007 and suffered catastrophic injuries.  At the time of the accident he did not have a driver's license.  He was dependent on his mother, who lived in Ontario and had a valid automobile insurance policy with State Farm.  Under Ontario law, a person who is considered insured under an Ontario policy can apply for accident benefits in Ontario if their accident occurs anywhere in Canada or the United States. State Farm accepted the accident benefits claim and also accepted that Mr. Bunyan was catastrophically impaired.  Five years after the accident State Farm then took the position that Mr. Bunyan was not dependent on his mother and was, therefore, not deemed to be an "insured person" under the policy.  Mr. Bunyan asserted that he was dependent upon his mother at the time of the accident and that, since State Farm was raising this issue five years after the accident, he had lost the opportunity to apply for benefits through any other insurer.  In other words, if he was not considered dependent on his mother and not eligible for further Ontario accident benefits he would have no other insurer to provide his much-needed benefits. D.L. Corbett J. ruled that Mr. Bunyan was dependent on his mother at the time of the accident and also ruled that State Farm was barred by the legal principal of estoppel from taking this position five years after the accident.  Estoppel basically means that a party is not allowed to assert a fact or a claim inconsistent with a previous position, especially when it has been relied or acted upon by others.  In other words, since State Farm had accepted that Mr. Bunyan was an insured person for five years and Mr. Bunyan had relied on that position and had not applied to other insurers because of that, State Farm was now estopped from changing their position. The Court's decision is also helpful because it expands on what constitutes dependency.  At the time of the accident Mr. Bunyan was living in Alberta, had recently acquired a low-paying job, had recently separated from his girlfriend and their son, and was relying on his mother for financial support.  As Judge Corbett stated in his decision, "It can be difficult to determine precisely when an adult child ceases to be dependant on his parents.  Functionally, the change from dependence to independence is more a transition than an event."

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