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 Volume. 7 Issue. 41 – November 8, 2023 – Complimentary Issue!

This week’s edition features a CAT case that proceeded before the Tribunal, with the applicant seeking an award and a finding that the benefits that were delayed be ‘deemed incurred’. This case details the lessons learned and perils of an insurer maintaining a position of denial, until just short of hearing, at which time all the denials were approved, in this case totalling in excess of $900k.

The Tribunal acknowledged an insurance company is not held to a standard of perfection, but when errors are numerous and persistent, the conduct is unreasonable. Ultimately a 50% award was levied against the insurer, although this was only against three of the denials, with the total award being in excess of $60K. The insurer was perhaps fortunate in escaping the finding of an award as against the largest late approval, $770k for a house purchase.

The Tribunal’s characterization of the overall handling of the matter as ‘imprudent and inflexible’ is noteworthy and provides guidance on the handling of such serious cases. 

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Award in Excess of $60K on CAT Case

50% Award on CAT Case – Shortly prior to the start of the hearing, Aviva, in 22-000554 v Aviva, approved all issues in dispute. This consisted of $26,000.00 for a 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 and outstanding attendant care benefit (ACB) of $1753.50. However, the applicant (K.M.) requested a hearing with respect to a claim for an award and sought a finding that delayed benefits be deemed incurred. The Tribunal found that the Applicant was entitled to an award of 50 per cent, for the cost of the $100,000.00 vehicle, difference in rent of $26,000.00 and ACB payment of $1,753.50 and deemed incurred that rental differential.

Delay in Providing For Accessible Housing

The Applicant was deemed CAT in July 2021, given that he was immobile, non-verbal, dependent for all acts of daily living (ADLs). In May 2022, a year following the accident, he was discharged from hospital, with his mother opting to provide care for him at home as opposed to placing him in a complex continuing care unit.

The Tribunal found in this regard however that Aviva’s “unyielding and stubborn interpretation of its statutory duty delayed the applicant moving into an accessible location that would have afforded him the dignity he deserves.” In January 2022, seeking $924,671 for a house, renovations and wheelchair accessible vehicle, that Aviva ultimately approved, the applicant was met with an EOB denial, indicating that the proposed costs exceed the available policy limits. Second, an insurer is not liable for the purchase of a new home in excess of the value of the renovations to an existing home that would be required to accommodate the applicant’s needs.

Delayed IE and No Construction Report Ordered as Intended

The Tribunal found that the handing of this request “was imprudent from the start”, with the adjuster of record testifying that at the time of denial, she was not aware that the applicant had optional benefits. To further address entitlement, Aviva requested an OT IE in February 2022, which took place September 2022, and a report issued December 2022. Following the IE Aviva maintained its position, now 11 months after the OCF18 had been submitted. The EOB indicated that they now awaited “a construction report to determine these costs as the OCF-18 did not provide cost details from an appropriate professional and the applicant continues to recover therefore his long-term needs may change so a wheelchair accessible vehicle is not reasonable or necessary.” Ultimately however, Aviva never did order a construction report.

Optional Benefits not Recognized

The Tribunal found Aviva’s handing herein as unreasonable on numerous grounds, the first being the incorrect understanding as to the applicable policy limits. In addition, the adjuster further testified that she decided to order the construction report (that was never commissioned) after the OT IE, with this process itself taking 10 months. Electing “to take a two-step approach to evaluate this treatment plan slowed down the respondent’s adjustment of this file… the respondent failed to identify that this IE request was urgent due to the applicant’s circumstances. In my view, the respondent’s behaviour in this regard was inflexible and imprudent.”

Onus to Quantify Housing Options

The Tribunal also noted that “the wording of the letter did not outline options for the applicant to proceed towards a resolution. At the time the EOB was sent the applicant had been immobile, non-verbal and dependent for all ADLs for nearly a year.” The Tribunal found that “respondent’s inflexible behaviour failed to meet the statutory requirement set out by the Divisional Court. In Wynn v. Belair.” In that matter the Court stated that “there is a statutory requirement that the insurer has to meet to determine what it will cost to renovate, and that determination needs to be made, even though the rented premises of the plaintiff will not be renovated.” Accordingly, it was clear that “the onus is on the respondent to determine the cost to renovate the pre-accident dwelling or communicate the information it needs from the applicant to complete this calculation. Rather than work with a highly vulnerable applicant to seek a reasonable resolution, I find the respondent’s behaviour stalled the applicant from accessing the housing benefit or understanding how to move forward.”

Questioning CAT Severity?

Aviva further “took an unyielding approach to the severity of the applicant’s injuries. The EOB issued after the OT IE was complete, stated the applicant continues to recover therefore his long-term needs may change… (the adjuster) testified that she did not know where the applicant’s recovery would go until a doctor says the applicant has plateaued. Yet, she did not order a second IE from a medical doctor to quantify the applicant’s future prognosis…the respondent had an obligation to determine the applicant’s health status if it believed more information was necessary. I find its approach and the content of the EOB was lacking, stubborn and insensitive.”

Temporary Housing Refused

The OCF18 for $26,000 was to find temporary accommodation so the applicant could secure an accessible living arrangement ahead of his discharge from the hospital. The OCF-18 requested the difference in monthly rent in order to facilitate the applicant’s move into an accessible apartment and resume living with his family as he did pre-accident. The handling of this item was also determined to be “stubborn and inflexible”. The Tribunal found it difficult to reconcile the denial, within context of the adjuster having testified that she was concerned about the applicant’s safety if he returned to live in his former apartment. The EOB indicated “the cost of the difference in the monthly rental is for a larger apartment for your entire family. The policy only provides coverage for yourself and since you require 24-hour personal care, our responsibility would be for a 2 bedroom.”

The Tribunal found that “the respondent misapplied s.16(4)(c). The intention of this section is to cap the funds available for a new dwelling. It is not a tool meant to stop insurers from finding a reasonable solution for an applicant.” Further, Aviva “should have understood that the applicant’s need to secure a new living arrangement was urgent.” When the OCF18 was submitted, the applicant had been offered a bed in a unit that specialized in caring for the geriatric population, however his mother did not consent, contending that the applicant would be more stimulated and have the opportunity to socialize if living with his family as he did pre-accident. Accordingly, it was “clear that the applicant needed to secure a new dwelling as his discharge from the hospital was imminent.”

The Tribunal reasoned that this OCF18 “provided a second opportunity for the respondent to meet its statutory obligation to determine the cost of renovating the applicant’s pre-accident apartment pursuant to s. 16(4)(c) and calculate the funds that would have been available to the applicant. This would have afforded the applicant the opportunity to move from the hospital to a safe and accessible location. I find the respondent’s unwillingness to work with the applicant towards a viable solution was harsh, not to mention excessive and stubborn.”

Failure to Afford Consideration and Dignity

The quantum of the award was informed by numerous factors. The applicant was a “particularly vulnerable member of society. He is a catastrophically impaired 27-year-old man who has a severe brain injury and requires a litigation guardian. He is immobile, non-verbal and dependent for all ADLs. This alone should have persuaded the respondent to act promptly, with the utmost care and due diligence in the handling of his file. The respondent failed to afford the applicant the consideration and dignity he deserved, particularly when he had access to optional benefits… the applicant was significantly and negatively impacted by the compounding effect of the errors made by the respondent’s adjusters, despite the efforts of his case manager and his mother/guardian.”

Need for Deterrence

In this particular case, “there is a need to deter the respondent’s unyielding behaviour. In my view, the applicant and his mother/guardian have been treated more like adversaries… Post-accident, his injuries were so glaringly severe that within four months he was determined to be catastrophically impaired by the respondent…The respondent had an obligation to determine the applicant’s current needs. It is unreasonable to expect that after being deemed catastrophically impaired, because of a permanent disability due to a traumatic brain injury, the applicant’s medical condition would improve so much that his need for accessible housing or a wheelchair accessible vehicle would no longer be warranted. I find the respondent’s handling of this file added unnecessary strife to an already devastating situation.”

Ultimate Approvals Only Upon Advice From Counsel

Further, the adjuster of record, who failed to realize that the applicant had optional benefits until August 2022, “questioned the permanency of the catastrophic determination when it too had been detailed in the log notes after the respondent deemed the applicant to have a catastrophic impairment without ordering an IE. I find the respondent blatantly failed in its responsibility to adjust the applicant’s claim with due diligence.” In addition, had Aviva “determined the cost of renovating the applicant’s apartment and communicated that figure to the applicant, he could have moved directly into a safe, accessible dwelling directly from the hospital.” It was found concerning that the adjuster testified that Aviva only reversed the denial positioning upon advice from counsel, otherwise the denial would have remained in place, and that the 11 month delay was not significant. The Tribunal found this assessment on the part of Aviva regarding its handling, “highlights the need for a strong message of deterrence in this case”.

Maximum Award

Ultimately, “the maximum award of 50 per cent is merited because of the respondent’s repeated unyielding behaviour that resulted in the applicant living and toileting in his family’s living room for months despite having optional benefits worth three million dollars. In my view, the respondent’s unrelenting need to quantify the applicant’s current and future medical condition, despite his permanent disability due to a traumatic brain injury, caused unnecessary strife and hardship to the applicant.”

Deemed Incurred

Finally, the $26,000 rental differential was deemed approved, as Aviva “failed to provide the applicant with a calculation, pursuant to s. 16(4)(c), that would have enabled him to move to an accessible location when he was released from the hospital on May 5, 2022… In my view, the respondent’s unyielding behaviour resulted in the applicant living for many months in the living room of his former dwelling, despite having optional benefits which was missed by the respondent at the time this benefit was denied.” However, the Tribunal declined to find the other denials as deemed, given that they were ultimately approved, and the applicant has an opportunity to incur same.

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