BROWN & PARTNERS LLP SABS SUMMARIES JUNE 2016

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1 Case Name Chen and Certas, FSCO A and A Date May 24, 2016 Date of Loss December 30, 2011 Arbitrator Susan Sapin Issue(s) Attendance at IE s, sufficiency of notice of examinations, MAG interpreter The applicants both suffered minor injuries and received treatment within the MIG. When they applied for treatment beyond the MIG, the insurer scheduled IE s. The applicants refused to attend because the examinations conflicted with their work or treatment schedules. Once a convenient time was scheduled, the applicant s refused to attend the IE s because the insurer refused to provide a MAG-certified Cantonese interpreter. The applicants mediated and arbitrated the denied treatment plans. The insurer argued that the applicants were precluded from mediating the issues because they had not attended IE s. At the pre-hearing, the applicants raised concerns about the validity of the notices of examination for the first time. Relying on Augustin and Unifund, the applicants argued that the notices of examination did not contain medical and any other reasons, as required by the SABS. The insurer s notices to the applicants to attend IE s stated: Based on the information and medication documentation we have received we are setting up an Insurer s Examination to address: 1) if the claimant continues to meet the test of disability for Income Replacement Benefit; 2) Medical & Rehabilitation Benefits; 3) if the claimant s injuries can be treated under the Minor Injury Guideline. The applicants are not precluded to mediating the issues in dispute despite failing to attend IE s because the insurer s notices of examination were deficient. The applicants must pay the insurer s costs of $750 because their refusal based on the qualifications of the interpreter was unreasonable. The insurer s notices were similar to the notices at issue in Augustin. Arbitrator Sapin held that the notices were deficient because they did not articulate medical and any other reasons for requiring the IE s. So, the applicants are not precluded from mediating the issues in dispute because the insurer s notices of examination were deficient. The arbitrator held that it would have been sufficient for the insurer to advise the applicants that their injuries described in the treatment plans met the definition of predominantly minor and their health practitioner had not provided compelling medical evidence to take them out of the MIG. There is ample case law stating that an insurer does not have to provide a MAG-certified interpreter. The applicants failure to attend the IE s was unreasonable and delayed the timely adjusting of their claim. The insurer was awarded partial costs of $750. 1

2 Case Name Husein v. State Farm, FSCO A and A Date July 4, 2016 Date of Loss February 12, 2011 Arbitrator Jeff Musson Issue(s) Are the applicant s entitled to a special award? The two applicants (ages 6 and 9 at the time of the accident) were injured in a motor vehicle accident. All substantive issues (medical benefits and cost of examinations) and interest were resolved shortly before the arbitration hearing. The applicants allege that they are entitled to a special award because of (1) settling the issues just before the hearing showed bad faith by the insurer, and (2) the insurer did not adjust their files in good faith by denying them medical benefits when they needed it most. The applicants are not entitled to a special award. The insurer is entitled to its costs. The applicants called no witnesses and did not enter the adjuster s log notes as evidence. The applicants attempted to introduce the applicant s medical reports into evidence, but failed to comply with the DRPC. The arbitrator only allowed the applicant to introduce the insurer s examination reports into evidence because the insurer was aware of their content and conclusions as they were authored by the insurer s doctors. Not unusual to have disputes settle on the eve of the hearing. If payment of a benefit is late, the remedy is interest rather than a special award. The insurer conducted assessments and relied on those physicians opinions to deny benefits. Without evidence to the contrary, the insurer did everything required to properly adjust the files. A special award cannot be ordered against an insurer solely because the applicants disagree with the insurer s findings. 2

3 Case Name Anssari and Wawanesa A Date June 13, 2016 Date of Loss December 20, 2013 Arbitrator Issue(s) Matheson Is the insurer exempt from providing the Applicant with its engineering report, after claiming litigation privilege? Mr. Anssari fell from a ladder, suffering injuries. A vehicle may have hit the ladder. There is a preliminary issues hearing in the future to determine whether or not this was a motor vehicle accident. It was disclosed during the pre-hearing that the Insurer had commissioned an engineering report. The Applicant wants a copy of the report. August 15, 2014: The first mediation was applied for October 15, 2014: The Insurer commissioned the report January 7, 2015: The first mediation occurred January 15, 2015: Application for arbitration May 6, 2015: Insurer received the engineering report The insurer must disclose the engineering report forthwith. Insurer s counsel states that the bright line is the first Application for mediation, which separates the investigative stage from the litigation stage of an adversarial process, namely, arbitration. They say that Applicant s counsel must have had arbitration in mind as he applied for mediation. Alternatively, the bright line is the application for arbitration, and they did not receive the report until after the application for arbitration. The Applicant argues that the report was commissioned during the good faith investigation phase of the claim, and therefore litigation privilege cannot be claimed. The arbitrator concluded that the time frame in which the insurer requested the report was in its assessment phase. The report was consultative in nature and relative to the issues in dispute. Although the report was received 9 months later, it should not be protected by privilege since the commission date was in the assessment stage of the claim. Given the positive onus on the Insured to establish privilege, the bright line is not the date of the first notice of mediation. Arbitrator Matheson feels that mediation should have been the beginning of a conversation to adjust the claim in earnest, as the insurer has made it clear that more information was required by it. 3

4 Case Name Baradaran and State Farm Mutual Automobile Insurance Company, FSCO A Date May 31, 2016 Date of Loss May 30, 2012 Arbitrator Anne Sone Issue(s) Motion by insurer for an order permitting production of the accident benefits file of the applicant s daughter (Sama) to the applicant. The applicant is Sama s parent and guardian. The applicant is claiming NEBs. Sama s AB file contained medical records that discussed the care the applicant provided to her after the accident. The insurer intends to introduce Sama s evidence at the applicant s hearing as evidence of her post-accident functioning. Sama s counsel argued her AB file should not be produced as Sama is a vulnerable minor and her statements were not made under oath. The insurer can produce the complete AB file to the applicant, subject to claims of privilege. There were no privacy issues because the applicant is Sama s mother. As the insurer provided at least eight examples of comments in Sama s AB file that would be relevant to its defence of the applicant s NEB claim, the complete AB file should be produced. The file may also include evidence that would be helpful to the applicant s claim. The probative value outweighed the possibility of prejudice to Sama. 4

5 Case Name Khanehshir and Certas Direct Insurance Company, FSCO A Date June 6, 2016 Date of Loss November 7, 2014 Arbitrator Anne Morris Issue(s) Attendant care assessment, psychological assessment and a special award. The MIG was originally at issue, but the claimant was taken out prior to the arbitration. All outstanding medicals and assessments were paid except the two (2) at issue because they were not reasonable and necessary. The claimant had an extensive prior psychological medical history, which was brought to the attention of the insurer in December The claimant was then taken out of the MIG in February Yet, the attendant care assessment was not paid for as just because a claimant is outside the MIG, their injuries may still be minor and an attendant care assessment is not payable. The injuries were minor because the post-mva complaints were similar to the pre-mva ones. Further, the Insurer argued the attendant care assessment would only be necessary once they are outside the MIG, not right after the MVA. The psychological assessment was denied based on the fact there was no change in his significant pre-existing psychological history after the MVA. Both assessments are payable and a special award was given. The arbitrator did not fully speak to the argument about whether a claimant who is outside the MIG, based on pre-existing issues, can continue to suffer an injury that is minor. The arbitrator noted that any argument would relate to attendant care benefits, not an attendant care assessment. Due to the immediacy of the need of attendant care and the fact the pre-existing history of the applicant was noted in the first OCF-3, it was reasonable an assessment was necessary. There was little information on the psychological assessment, but due to his extensive pre-existing psychological issues, this should have been paid. For the special award, this was given as the Insurer had sufficient information about the pre-existing condition early in the process, but denied the assessments and continued to keep the claimant within the MIG. The amount was $1,

6 Case Name Doran and RBC General Insurance Company, FSCO A Date June 6, 2016 Date of Loss April 12, 2011 Arbitrator Charles Matheson Issue(s) Is the claimant excluded from non-earner benefits, housekeeping benefits and visitor expenses pursuant to s. 31(1)(a) of the SABS? This section deals with general exclusions. The claimant had a policy with RBC from October 29, 2009 to November 4, The claimant s mother contacted RBC to arrange another policy for her son, which was to take effect on January 18, The first withdrawal for funds was on January 22, 2011, but there were insufficient funds. The second attempted withdrawal for funds was on February 3, 2011, but there were insufficient funds. The claimant had already told RBC to make the withdrawal dates on the 22 nd of each month, not the 3 rd. The policy was cancelled on March 17, The claimant s old address was never updated in RBC s records and the cancellation letters were sent by registered mail to the wrong addresses. RBC argued the cancellation was valid and the exclusions can stand as there was no valid policy of insurance. The claimant argued the cancellation was in violation of the statutory conditions. Specifically, the cancellation letter was not written in plain language and there was no language stating they could re-pay in cash, which is contrary to s. 11(1.3)(b). The claimant is not excluded from their claim for benefits. The arbitrator felt the letter to the claimant had to be in extremely clear language that an unsophisticated party can understand. Further, it went to the wrong address as RBC treated the new policy as a continuation of the old policy when the claimant was a student and did not get a new address. As such, the cancellation letters were sent to the wrong address and the Insurer has the responsibility to get the letter to the claimant. Finally, the arbitrator found the deletion of the option to re-pay in cash, as per s. 11(1.3)(b), was fatal. The Insurer was found to have purposely omitted this from the letter, so the cancellation was invalid. As such, the claimant had insurance on the date of loss. 6

7 Case Name Kulveerasingam and State Farm Mutual Automobile Insurance Company, Appeal P Date June 21, 2016 Date of Loss October 29, 2010 Director s Lawrence Blackman Delegate Issue(s) Should the interest rate be at 1% per month or 2% per month on an accident that occurred after September 1, 2010, but on an old policy? The accident occurred after September 1, 2010, but the claimant had a policy that had not been renewed until after September 1, Arbitrator Pressman found that the interest rate of 1% per month applied as the accident occurred after September 1, 2010, which was in line with other jurisprudence about the applicability of the incurred provisions in the new SABS to accidents on old policies after September 1, The Insurer argued that interest was a substantive right and it vested after September 1, 2010, or at 1%. The claimant argued interest in a not a benefit and the transition language was ambiguous. Appeal allowed. Interest on transitional policies should be appropriately calculated at 2%, not 1%, even if the accident occurred after September 1, Director s Delegate Blackman stated: [T]he language of this specific legislation is neither clear nor unambiguous that the Legislature clearly intended to retrospectively take away an insured person s right in a purchased contract of insurance to a specific 2% per month rate of interest that were tangible, concrete and distinctive as soon as that contract was entered into, which was prior to the September 1, 2010 transition date. Overall, the Director s Delegate was not convinced the language in the Bulletins and other information was clear that interest was something that would change after September 1, 2010 on an old policy. This was required as interest was a substantive right, as per existing case law. 7

8 Case Name Veeran and State Farm, [2016] O.F.S.C.D. No. I194 Date June 13, 2016 Date of Loss May 11, 2011 Arbitrator Lynda Tanaka Issue(s) Is the applicant entitled to ongoing income replacement benefits? The applicant was 35 years old at the time of the accident. She lived with her husband, mother and 3 children (aged 2-8 at the time of the hearing). The family arrived in Canada in The applicant had limited English, working in a primarily Tamil speaking factory on a full-time basis. She had a second job in a party supply store, stocking shelves. On the issue of entitlement, State Farm advanced 2 arguments: 1. There was no credible evidence that the applicant suffered any ongoing injury. 2. The applicant stayed home after the accident because her mother could not care for the 3 young children (2 of whom were born after the accident). State Farm also disputed the quantum of the income replacement benefit. The applicant is entitled to an income replacement benefit in the amount of $ starting May 19, 2011, except during the period September 10, 2011 to August 25, 2011 when the amount of the benefit is $ to account for maternity benefits. Arbitrator Tanaka rejected State Farm s argument that the applicant s injuries healed. The applicant was 5 months pregnant at the time of the accident, which affected the treatment available to her. Moreover, in 2013 State Farm s own assessor found she had a possible chronic pain disorder, which required further assessment. The applicant never applied for that assessment, but State Farm did not arrange one for her. Although there was some inconsistency in the applicant s pain reports, the reports were consistent enough to find that her credible. Arbitrator Tanaka rejected State Farm s argument that the applicant remained off work to care for her children. The evidence demonstrated that she was motivated to work before the accident, holding down 2 jobs and regularly sending money to family in Sri Lanka. On the issue of quantum, Arbitrator Tanaka refused to deduct the EI sick benefits that the applicant received from the income replacement benefit. She accepted the applicant s testimony that she applied for those benefits because State Farm denied her the income replacement benefit, and she needed some income. Under the circumstances, Arbitrator Tanaka found it would be unfair to penalize the applicant for that decision. Arbitrator Tanaka did allow State Farm to deduct the applicant s EI maternity benefits from the income replacement benefit, relying on the decision of Aribtrator Conroy in Nelson and State Farm (FSCO A ). 8

9 Case Name Kazimierczuk and Pembridge Insurance Company A Date July 4, 2016 Date of Loss November 25, 2010 Arbitrator Issue(s) Sherman Is the applicant entitled to receive an IRB, even though the accident took place during the 2 week Employment Insurance waiting period? The Agreed Statement of included the following: March 1, 2010: employment terminated due to restructuring March 15 to April 30, 2010: received weekly pay in lieu of notice April 30 to November 15, 2010: received semi-monthly severance pay November 25, 2010: Date of Loss; not employed; had not worked 26 of the last 52 weeks Employment Insurance facts: March 2, 2010: the applicant applied for Employment Insurance Benefits March 10, 2010: Service Canada advised the applicant to submit an application for EI once he stopped receiving severance pay The subject accident took place during the 2 week waiting period prior to the issuance of EI payments. No, the applicant is not entitled to receive an IRB. Section 5(1)1.i.A. of the SABS states that an applicant can receive an IRB if they were employed for at least 26 of the last 52 weeks or they were receiving EI benefits. Section 13 of the Employment Insurance Act states that a claimant is not entitled to be paid benefits until after the claimant has served a two week waiting period. The Applicant tried to argue that he was eligible to receive EI Benefits before the date of the accident and he was thus entitled to EI benefits before he actually received these benefits. Arbitrator Sherman stated that the applicant was not receiving EI benefits on the date of the accident, and that he was only entitled to receive them on December 4, 2010, after the expiry of the 2 week waiting period. He was not entitled to EI benefits until he used up money received from his employer as a consequence of his termination. Since he was not receiving EI benefits on the date of loss, he is not entitled to an IRB. 9

10 Case Name Melechtchenko and State Farm, FSCO A , A , A and A Date July 6, 2016 Date of Loss June 21, 2010 Arbitrator Issue(s) Jeffrey Rogers 1. Did the applicants wilfully misrepresent material facts with respect to their applications for benefits within the meaning of s. 53 of the SABS? 2. Are the applicants liable to repay State Farm the benefits paid to them? 3. Is any party liable for costs of the proceeding? The arbitration arises out of a rear-end accident involving the cars driven by Melechtchenko (front car) and Pasaki (back car). State Farm alleged that it was a staged accident, based on inconsistencies in the evidence. State Farm called no expert evidence, nor did the applicants. 1. The applicants did not wilfully misrepresent material facts with respect to their applications for benefits. 2. State Farm's claims for repayment are dismissed. 3. The issue of costs is reserved. The applicants bear the onus of proving that they were involved in an accident. They did so, despite inconsistencies in the evidence, which Arbitrator Rogers accepted was simply the reflection of the passage of time. These inconsistencies included the various applicants testimony about the timing of events, whether the front car was moving or stationary at the moment of impact, and whether the cars moved away from each other after impact. Arbitrator Rogers was not swayed by State Farm s argument that Pasaki (owner of the back car) had some connection to the people in the front car. Pasaki bought his car from a woman who lived in the same apartment as the people in the front car. Arbitrator Rogers found nothing sinister in this. 10

11 Case Name Salamone and Aviva Appeal P Date June 16, 2016 Date of Loss February 2, 2013 Director s Evans Delegate Issue(s) Was Mr. Salamone involved in an accident as defined by section 3(1)? While driving his van, Mr. S had a heart attack and lost consciousness. His van hit one guardrail, slid along it; hit a second guardrail, then the van left the road and ended up angled over a ditch. The damage to the van and its internal layout prevented a CPR-trained bystander from immediately treating Mr. Salamone. He claims that the delayed treatment caused severe neurological impairments. The bystander tried to help Mr. S within one minute of seeing the van slide, but he could not enter through the van s damaged driver s door, and he could not perform CPR from the passenger s side or extricate him safely. Eleven minutes later, EMS personnel arrived, who then needed more time to remove and treat Mr. Salamone. By then, he had sustained severe neurological impairment. The incident was an accident as defined by section 3(1). The heart attack was not an intervening event. 1. The parties agreed that the first step of the accident test, the purpose test, was met: the accident occurred in the course of the ordinary and wellknown activities to which automobiles are put. 2. The second test, the causation test, states that the use or operation must directly cause the impairment. The causation test has 3 sub-tests: a) but for test: the proper question is but for the insured s car entrapping him, would Mr. S have received treatment sooner? Since the answer is yes, Mr. S passed the but for test. The arbitrator was incorrect in applying a hypothetical that asked whether EMS would have been there any sooner had the applicant been walking on the street. b) Intervening act: in some cases, where there is more than one direct cause, the trier of fact must determine whether there was an intervening act. The arbitrator felt that the heart attack was an intervening act that broke the chain of causation and that no later intervening act brought the van back into play. He found that the delay in treatment caused by the van directly exacerbated his impairment; however, this was irrelevant because the heart attack is not an intervening act in the ordinary course of things and to succeed, he would have to bring the use of the van back into play. DD Evans concluded that as an occupant of the van, Mr. S continued to use it, conscious or not, as it ricocheted down the road, and therefore no later intervening act was required to bring the use or operation of the van back into play. 11

12 c) Dominant feature: this test is not required in every case. It is not required here, where Mr. S remained an occupant of the vehicle, and where that occupancy delayed treatment, causing his current impairment. The use of the vehicle was not remote or ancillary. The arbitrator erred in failing to take into account the time delay caused by the crash itself, the resultant damage to the van, and the attempts to extricate Mr. S from the van. The arbitrator also erred by focusing on the heart attack as the triggering event that caused the crash. Evans notes that causation in that sense is irrelevant in the no-fault system. What is relevant is what caused the impairment. The arbitrator also erred if he was saying that the impairments arising from an accident have to be the dominant impairments in order for the incident to be an accident. He had already determined that the delay in treatment worsened the outcome of his heart attack, so to that extent, this is really a case dealing with a pre-existing impairment, although it had pre-existed for only moment. Mr. S suffered a heart attack which was one direct cause of his impairment. However, he continued to use the vehicle, which increased the level of his impairment, so the use of the vehicle was another direct cause of impairment. Mr. S therefore meets the test for an accident under the SABS. There is no apportionment between the 2 direct causes, so Mr. S is entitled to all benefits related to the impairment. 12