SUCCESSFUL MOTION CONFIRMS DEFENDANT S RIGHT TO PREPARE INSURER EXAMINERS FOR TRIAL

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1 October 2014 Number 128 Recent Cases SUCCESSFUL MOTION CONFIRMS DEFENDANT S RIGHT TO PREPARE INSURER EXAMINERS FOR TRIAL Nicholaus de Koning, Helen D.K. Friedman, and Audrey H. Wong of Miller Thomson LLP. Miller Thomson LLP. Reproduced with permission. In the context of insurer examinations under the Statutory Accident Benefits Schedule ( Schedule ), the Superior Court has found that for the purpose of trial preparation, a Plaintiff s consent is not required for Defendant s counsel to meet with the examiners. Motions Judge Erred in Not Interpreting Case in Accordance With Purpose of Legislation... 2 The Plaintiff was involved in a car accident in November The Defendant then Rolling Limitation Period Applies to Loss Transfer Claims... 3 Double Recovery Claim Not Established by Insurer... 3 healthcare information). In Lacroix v Federation Insurance Company of Canada, 2014 ONSC 6002, the Plaintiff brought an action against the Defendant for income replacement benefits (IRB). proceeded with insurer medical examinations pursuant to s. 42 of the Schedule (as it was then). The examiners concluded that the Plaintiff could eventually return to work with accommodations and/or retraining. Consequently, the Defendant discontinued IRB in April 2007, taking the position that the Plaintiff did not meet the complete inability disability criteria with respect to alternate employment. The Plaintiff disputed this and claimed to meet the disability test. Prior to trial starting on October 14, 2014, Plaintiff s counsel had corresponded with the s. 42 examiners cautioning the examiners against communicating with Defendant s counsel prior to the trial (as they did not have the Plaintiff s consent to discuss her Statutory Accident Benefits Limited to Accidents in Canada and United States... 4 Subsequently, at the start of the trial, the Defendant brought a motion for: (1) an Order confirming that counsel for the Defendant is entitled to discuss the subject matter of this action with certain medical witnesses in advance of those witnesses being called for Trial; and, (2) an Order directing counsel for the Plaintiff to communicate in writing with the witnesses [sic] that they may discuss the subject matter of this action, including health information of the Plaintiff, with counsel for the Defendant; The Defendant argued that the Plaintiff has a reduced expectation of privacy by participating in the litigation process. Further, as is its right to prepare for trial, the Defendant wished to refresh the memory of the examiner witnesses as many years had passed since their examinations. The Defendant also asserted that by obtaining these reports pursuant to s.42 of the Schedule, these reports belonged to the Defendant. The Defendant also recognized the distinction between s. 42 of the Schedule and s. 105 of the Courts of Justice Act, acknowledging that leave of the Court would be required 1

2 ONTARIO ACCIDENT BENEFIT CASE SUMMARIES 2 should any testimony go beyond the examiner s initial reports. The Plaintiff took the position that the s. 42 reports did not belong to the Defendant insurer, as a copy must be provided to the Plaintiff. The Plaintiff alleged that the Defendant s intention behind meeting with the examiners was to explore information obtained after the initial report. The Plaintiff argued that there was no statutory right for ongoing communication with these examiners; potential unfairness would ensue if one party had access to more medical information than the other, without the other s presence. The Honourable Justice Marc R. Labrosse noted that although s. 105 of the Courts of Justice Act would also permit a defence medical if the insured person elected to start a court action, s. 42 of the Schedule may be the insurer s only opportunity to obtain a report from an examiner of its choice. If the Plaintiff had commenced a FSCO arbitration instead, the insurer would be limited to the s. 42 reports. There is no suggestion that the examiner must be neutral. Justice Labrosse went on to note that s. 42 of the Schedule neither limits nor authorizes communications between the insurer and examiner. The appropriateness of those communications is determined on a case-by-case basis. Justice Labrosse noted that the Plaintiff consented to the release of her medical information in her Application for Accident Benefits (OCF-1), so there was no concern that the examiner would disclose confidential information to the Defendant. Justice Labrosse concluded that no further consent is required from the Plaintiff for the Defendant s counsel to meet with the examiners, revisit the report and relevant health information, and prepare the examiner for cross-examination. It would otherwise be prejudicial to the Defendant to prevent them from doing so. In effect, this is considered a part of the normal trial preparation process. This is a truly unusual issue as the OCF-1 should be a full answer to the concern. Had the approach taken by the Plaintiff been successful, the insurer Defendant would have been deprived of the ability to prepare their witnesses, which at the end of the day, would not benefit the court process. RECENT CASES Appeals Motions Judge Erred in Not Interpreting Case in Accordance With Purpose of Legislation Ontario Court of Appeal, July 11, 2014 The injured plaintiff was a farmer who was involved in an accident while riding his uninsured all-terrain vehicle ( ATV ) on a public road. He was taking a short ride to check on his sheep when the collision occurred with the defendant driver. The defendants took the position that the ATV was an automobile and a class of off-road vehicle that was required to be insured if ever driven off the farm property. The insurer therefore denied the payment of certain benefits. On a motion for a preliminary determination of law, the defendants submitted that the plaintiffs were statute-barred from bringing the action on the basis that the farmer contravened the Compulsory Automobile Insurance Act. The judge held that the ATV was a self-propelled implement of husbandry and was excluded from the compulsory insurance regime (see no ). The defendants appealed. The appeal was allowed. The motions judge correctly identified the purpose of the legislation, but he failed to interpret the law in accordance with the purpose of the legislation. He considered matters not pertinent to the exercise of statutory interpretation, such as whether the regulatory definitions were out of date, the views of the farming community, and the fact that the farmer was not at fault for the accident. The Court stated that the legislative scheme for automobile insurance could not result in a vehicle being classified as both an off-road vehicle that required insurance when operated on land not occupied by the owner and a self-propelled implement of husbandry that did not require insurance. The judge did not give effect to the grammatical and ordinary sense of the definition of a self-propelled implement of husbandry. The ATV being classified as an off-road vehicle led to a prima facie conclusion that it could not be a self-propelled implement of husbandry. The Court also commented on the motions judge s finding that the regulatory definitions had not kept pace with changes in farming practices. This statement was beyond his competence and was without basis. The Court concluded that the plaintiff s action was therefore statute-barred. Matheson v. Lewis, A-1153

3 ONTARIO ACCIDENT BENEFIT CASE SUMMARIES 3 Rolling Limitation Period Applies to Loss Transfer Claims Ontario Superior Court of Justice, September 2, 2014 A party insured by the respondent insurer was involved in a July 2005 motor vehicle accident with a party insured by the appellant. The respondent made accident benefits payments to its insured. In January 2006, the respondent purported to have made a loss transfer claim with the appellant. Between January 2006 and April 2008, the respondent forwarded three requests for indemnification to the appellant. In November 2009, the respondent served a notice to participate and demand for arbitration. No payment was made by the appellant. The appellant accepted that its insured was liable for the accident and that the case was appropriate for loss transfer. However, the appellant took the position that it was no longer responsible under the loss transfer regime due to the expiry of the two-year limitation period, since January An arbitrator found that the respondent was not barred in pursuing its claim, as each request for indemnification invoked a new limitation period. The appellant appealed. The appeal was dismissed. The Court noted that the decision in Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, on which the arbitrator relied, found that a first-party insurer has a complete and valid legal claim each time a request to indemnify is made and that the first-party insurer suffers a loss from the moment the second-party insurer fails to satisfy the loss transfer claim. This led to the arbitrator s finding that each unsatisfied request for indemnification commenced a new limitation period. The Court found the appellant s interpretation treated the matter as if it were an action based in tort, where the commencement of the limitation period is associated with the time of the accident. The Court noted that loss transfer claims have their basis in legislation (i.e., the Insurance Act), and the Court of Appeal has confirmed that, given this legislative foundation, there is no reason to apply the principles of limitation developed in torts. Accordingly, the Court confirmed the arbitrator s finding that the respondent s second and subsequent requests for indemnification, made in February 2008 and onward, were not barred as a result of the limitation period. Economical Mutual Insurance v. Zurich Insurance, A-1154 Cases Double Recovery Claim Not Established by Insurer Ontario Superior Court of Justice, June 17, 2014 The plaintiff was allegedly injured in a motor vehicle accident in April A jury trial resulted in a general damages award of $70,000, future costs damages of $57,250, damages for loss of housekeeping and handyman capacity of $85,000; pre-trial income loss of $5,800, and future income loss of $250,000. As the plaintiff s injuries were non-catastrophic, he was notionally entitled to statutory accident benefits, including medical and rehabilitation, attendant care, housekeeping and maintenance, and income replacement benefits. As of April 2014, the plaintiff received medical benefits and housekeeping benefits of $14,822 each from the defendant accident benefits insurer. The insurer brought a motion seeking an order declaring that the plaintiff was obligated to hold future statutory accident benefits and other collateral benefits in trust for the insurer. The insurer took the position that the jury s award of damages for certain future care costs and the plaintiff s entitlement to statutory accident benefits for medical expenses gave rise to concerns of double recovery and corresponding obligations of trust, payment, and assignment pursuant to section of the Insurance Act. The plaintiff had neither applied for nor received income replacement benefits or attendant care benefits, and he would also not receive any future statutory accident benefits related to housekeeping or home maintenance expensess. The insurer s motion was dismissed. The Court found it was inappropriate to grant the relief requested by the insurer. The ambiguity of the insurer s request for relief namely, certain and other benefits and any payment or entitlement was indicative of the concerns that courts have expressed over the entitlement and overlap issues under section The Court noted that the insurer had not quantified the scope of relief sought but merely indicated the maximum notional benefits permitted to someone in the plaintiff s situation. The Court was unable to find the quantum of benefits the plaintiff would receive. Further, the Court was unable to determine the extent, if any, that the jury awards related to the same losses for which the plaintiff would receive or had received statutory accident benefits. The insurer had the option to put to the jury questions that could clarify the issue of the precise losses the awards related to, but it did not do so. As the Court was unable to achieve the level of certainty required for a

4 ONTARIO ACCIDENT BENEFIT CASE SUMMARIES 4 determination of the issue and any deductions would entail the risk of reducing the plaintiff s due compensation, the Court found that the insurer did not establish the preconditions for the relief sought. Gilbert v. South, Statutory Accident Benefits Limited to Accidents in Canada and United States Financial Services Commission of Ontario, June 17, 2014 The applicant s husband was involved in a May 2012 motor vehicle accident in Somaliland, Africa, and died as a result of his injuries. The vehicle the husband was driving was uninsured. The applicant applied for death and funeral benefits. The insurer took the position that the applicant was precluded from claiming statutory accident benefits due to the territorial limitations in section 2(3) of the Statutory Accident Benefits Schedule ( SABS ). The applicant took the position that since the territorial limitations in SABS are silent on accidents occurring outside of Canada and the United States, the legislation is ambiguous and the doctrine of contra proferentum should be applied in her favour. The application was dismissed. The arbitrator found that neither SABS nor the Insurance Act are ambiguous with regard to territorial limitations. Sections 2(3) and 59(1) of SABS and section 243(2) of the Insurance Act specifically refer to accidents taking place in Canada or the United States. Although the 1994 SABS contained the phrase in or outside of Ontario, which the Court of Appeal interpreted as meaning throughout the world, the wording was changed in the current SABS, and case law confirmed that it does not pertain to accidents occurring worldwide (see Nazarali and Allianz Insurance Co. of Canada, no. 9658). The arbitrator distinguished the case relied on by the applicant, as it dealt with an accident in the US Virgin Islands and the question of whether the United States unincorporated organized territories were included. The arbitrator concluded that the silence in SABS with regard to other parts of the world is an intentional exclusion, not an ambiguity. The doctrine of contra proferentum was not relevant. Having regard to section 2(3) of SABS, the applicant was precluded from claiming statutory benefits. Jama v. Aviva Canada, Other Cases Whether Applicant Was Involved in an Accident Kagan v. CAA Insurance, 11832, Financial Services Commission of Ontario (June 2, 2014) Limitations/Bars to Claim Leduc-Moreau v. Echelon General Insurance, 11833, Financial Services Commission of Ontario (June 3, 2014) Limitations/Bars to Claim Ng v. State Farm Mutual Automobile Insurance, 11834, Financial Services Commission of Ontario (June 11, 2014) Non-Earner Benefits Beltrame v. Dominion of Canada General Insurance, 11835, Financial Services Commission of Ontario (June 13, 2014) Limitations/Bars to Claim Sobti v. Waterloo Insurance, 11838, Financial Services Commission of Ontario (June 20, 2014) Whether Applicant Was Involved in an Accident Shah v. Primmum Insurance, 11839, Financial Services Commission of Ontario (June 24, 2014) Entitlement Exclusions Leduc v. Aviva Canada, 11840, Financial Services Commission of Ontario (June 25, 2014) Attendant Care Benefits Kelly v. Guarantee Co. of North America, 11841, Financial Services Commission of Ontario (August 7, 2014)

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