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Insurance - Auto - 'Delay Awards' [IA s.280]. McDonald v. Aviva Insurance Company
In McDonald v. Aviva Insurance Company (Div Court, 2024) the Ontario Divisional Court allowed a LAT SABS appeal, here where the main issue was 'special awards' under s.10 ['Dispute Resolution (Section 280 of the Act)'] of Reg 664/90 ['Automobile Insurance']:[34] Section 10 provides as follows:If the Licence Appeal Tribunal finds that an insurer has unreasonably withheld or delayed payments, the Licence Appeal Tribunal, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, may award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. [Emphasis added.] [35] The Appellant submits that the Adjudicator erred in interpreting s. 10 to require evidence under s. 16(4)(c) of the SABS in order to decide the amount of the entitlement in a case where the insurer had already agreed to pay the full amount of the benefits claim. The Appellant submits that the “amount” that the Appellant was entitled to was the agreed-on amount for the new house and renovations. Nothing more was needed. The Respondent disagrees, submitting that there still needed to be an adjudication of the amount because of the limit in s. 16(4)(c) of the SABS, even though it had agreed to pay the full amount claimed. The Respondent then submits that the onus was on the Appellant to provide the report and he did not do so.
[36] The Adjudicator’s reasons for decision include a discussion of the interpretation of other phases in s. 10, but not on this issue. On this issue, there is a single sentence in the first decision that assumes that the amount of the benefit must be adjudicated because of s. 16(4)(c). In the reconsideration decision, there is a somewhat expanded discussion that proceeds on the same assumption.
[37] I conclude that the Adjudicator erred in her interpretation of s. 10. Once the amount of the benefit was agreed on that amount did not need to be adjudicated in order to grant a special award. The “amount” the Appellant was entitled to under s. 10 was the amount agreed on. It was an error in law to bring s. 16(4)(c) into the s. 10 analysis in this case.
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[41] Section 10 provides for a special award when an insurance company unreasonably withholds or delays payments, as it did in this case. The nature of the legislation as consumer protection legislation is particularly important because a special award is intended to address and deter this poor behaviour by insurers. Section 10 special awards only arise when an insurer has behaved so unreasonably as to justify the payment of an amount in addition to the SABS benefits.
[42] We have not been provided with any LAT decision that focuses on the reference to the “amount” in s. 10 that is at issue here. However, we have been given this related case: 17-006757 v. Aviva Insurance Canada, 2018 CanLII 81949.
[43] In 17-006757, the issue was timing, not the quantification of the amount. The insurer argued that the phrase in s. 10 – “at the time of the award” – meant that there was no jurisdiction to make a special award if the benefits had been settled before the LAT hearing. In the case before us, the objection is not based on the timing and, again, the settlement of the benefits took place before the hearing. Indeed, in the case before this Court there is no issue about the special award on the amount for the wheelchair accessible vehicle, which was based upon the amount the Respondent agreed to pay before the hearing. However, the reasons for decision in 17-006757 provide a helpful interpretative analysis of s. 10 that is missing from the LAT decisions at issue here.
[44] In 17-006757, the LAT interpreted s. 10 and concluded that there was jurisdiction to make a special award on the amounts that the insurer had previously agreed to pay. In doing so, the LAT discussed the general principles that inform the interpretation of s. 10. The LAT interpreted s. 10 having regard for the consumer protection purpose of the legislation and provisions of the Legislation Act, 2006, S.O. 2006, c. 21, Sched. F, which makes it clear that the Insurance Act and the regulations made under the Act are remedial legislation. As a result, it is to be “given such fair, large and liberal interpretation as best ensures the attainment of its objects”: Legislation Act, 2006, s. 64(1). The LAT found it unlikely that the Legislature intended to deny consumers the protection of s. 10 by allowing insurers to avoid it by settling before the hearing.
[45] The interpretative discussion in 17-006757 applies here as well. At para. 21, the LAT reasoned that the Insurance Act is “consumer protection legislation and provides protection against insurers who unreasonably deny claims. …The literal meaning of a few words in s. 10 should not run counter to both the consumer protection mandate and the goal of providing accident benefits to injured persons in a timely manner. This would be unreasonable, inequitable and defeat the purpose of the statute.”
[46] At paras. 23-24, the LAT held that it “would be patently unfair that an insurer be allowed to circumvent the mandatory requirements of s. 10 through a non-contextual interpretation in situations where they have unreasonably withheld or delayed payments to then settle the benefits in dispute, perhaps on the eve of a hearing… It offends all sense of fairness and is not in keeping with the policy objective that accident victims promptly receive the benefits to which they are entitled under the Act to avoid injustice or hardship.”
[47] We have also been provided with Ross v. Aviva General Insurance, 2023 CanLII 19823, in which the LAT reiterated that the special award is a stand-alone issue that is not dependent on the Tribunal deciding the issue of entitlement to any other benefit. The LAT relied on 17-006757 and on JM v. Certas Direct Insurance Company, 2019 CanLII 94016 (ONLAT), in which the LAT also found that “[a]n insurer that unreasonably withholds or delays payments and waits to pay the benefits after an application is initiated at LAT may risk an award [under s. 10]”: at para. 29.
[48] I agree with the reasoning in the above decisions. The wording of s. 10 allows for an interpretation that serves the consumer protection mandate of the legislation and related principles. Beginning with the plain language, s. 10 refers to the “amount” to which the person was entitled at the time of the award. The ordinary meaning of this very general word does not mandate an adjudication under the SABS where the amount had been agreed on. Reading it in context, in its grammatical and ordinary sense, harmoniously with the scheme of the Act and the intention of the Legislature, does not support such a narrow, technical and inefficient interpretation.
[49] If the amount was in dispute at the LAT hearing, there is no question that there would need to be an adjudication of the amount. Under the SABS, the Adjudicator would be required to apply s. 16(4)(c) of the SABS to limit the award ultimately granted at the LAT hearing. The Respondent has provided us with a number of cases that are examples of that adjudication in a disputed context. However, the wording of s. 10, read in context and in accordance with the principles of statutory interpretation, does not require importing the limit in s. 16(4)(c) into s. 10 where the amount had been agreed on.
[50] The interpretation of the “amount” to which the insured person was entitled at the time of the award under s. 10 calls for a broad interpretation, permitting not only an adjudicated amount but also an amount that the insurance company had agreed to pay. To do otherwise would be not only inefficient but also place another hurdle in the way of a special award beyond those contemplated by the words of the section, contrary to the principles of statutory interpretation. As put in 17-006757, this would be unreasonable, inequitable and defeat the purpose of the statute.
[51] The conduct of the Respondent in this case illustrates the potential for abuse. The Respondent relied on the limit in s. 16(4)(c) repeatedly, and in May 2022, it notified the Appellant that it was arranging for a home modification report. But the Respondent did not actually do so. And as late as December 2022, the Respondent was still relying on s. 16(4)(c) and holding out that it was “awaiting the construction report to determine these costs” even though it had not taken steps to obtain one. When the Respondent reconsidered a few weeks later and agreed to pay the full amount claimed, it dropped its reliance on s. 16(4)(c), yet, at the hearing, it sought to avoid a special award because the report was not done.
[52] I conclude that s. 10, properly interpreted, does not require that an Appellant prove the amount of his entitlement where the Respondent has agreed to pay the amount, nor does it require that s. 16(4)(c), from the SABS, be imported into s. 10. The “amount” of the entitlement under s. 10, should not be interpreted to require more where there is an agreement to pay a specific amount. The “amount” may arise either from an agreement (as it did here) or an adjudicated amount where there is no agreement. The Adjudicator therefore erred in law in importing a requirement to adjudicate, including s. 16(4)(c), into s. 10 in this case. . Vivekanantham v. Certas Direct Insurance Company
In Vivekanantham v. Certas Direct Insurance Company (Div Court, 2024) the Divisional Court allowed a LAT SABS appeal, here where the issues were "a special award under s. 10 of Regulation 664 [SS: "Reg 664/90 Automobile Insurance, s.10 Dispute Resolution (Section 280 of the Act)"] and that the LAT breached procedural fairness when it admitted and relied on the report of Dr. Sivasubramanian in spite of the fact that he refused to attend the hearing and be cross-examined".
Here the court extensively explores the s.10 Regulation 'Automobile Insurance' dispute resolution 'special award' (aka 'delay award') provision:Section 10
[13] Section 10 of Regulation 664 reads as follows:If the Licence Appeal Tribunal finds that an insurer has unreasonably withheld or delayed payments, the Licence Appeal Tribunal, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accidents Benefits Schedule, may award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. The Appellant’s Request for a s. 10 award
[14] The Appellant claimed a s. 10 award (“special award”) in respect of two benefits: the insurer’s delay in paying the IRBs and its delay in removing her from the MIG, which delayed the payment of approximately $62,000 worth of benefits.
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The LAT Decisions regarding the request for a special award
[19] The Adjudicator refused to make a special award. The reason for her refusal is found at para. 40 of the Hearing Decision, which reads:As I have found that the applicant is not entitled to any of the benefits claimed, there is no basis for an award. [20] In the Reconsideration Decision, the issue is dealt with as follows:[40] Section 10 of Regulation 664 provides that, in addition to awarding the benefits and interest to which an insured person is entitled under the Schedule, the Tribunal may award up (sic) a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award, with interest. The power to make such an award is discretionary.
[41] At paragraph 40, the Tribunal found that as the applicant was not entitled to the benefits in dispute, there was no basis for an award. I see no error in this finding. As set out above, the Tribunal found that the applicant was not entitled to attendant care benefits, and the issues of MIG and IRB were not before the Tribunal at the hearing. The applicant submits she made arguments about the section 10 award at the hearing. This means that the Tribunal heard the applicant’s arguments and made its decision that there was no basis for an award. I find the applicant is attempting to re-argue her case, which is not grounds for reconsideration. ....
Analysis
[26] In the Hearing Decision, the LAT clearly stated that its reason for refusing make a s. 10 award was because the Appellant was “not entitled to any of the benefits claimed.” This finding directly engages the meaning of s. 10, which provides that the LAT “may award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award” (emphasis added). This raises the question of whether a person who has settled their claim for a benefit is “entitled” to that benefit “at the time of the award.” In this case the LAT decided that the answer to this question was “no.”
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The LAT Jurisprudence
[33] In 17-006757 v. Aviva Insurance Canada, 2018 CanLII 81949 (“17-006”), the LAT dealt with the question of whether it had “jurisdiction to make a ‘special award’ order when the substantive issues in dispute related to the benefits sought by the applicant have been resolved at the time of the hearing”: 17-006, at para. 7.
[34] In 17-006, the insurer made the same submission that Certas has made before us, namely that a “straightforward reading of the words ‘at the time of the award’”: at para. 13, (emphasis in original) precluded the LAT from having any jurisdiction to make an order under s. 10 in respect of any benefit that was settled prior to the date of the award.
[35] The LAT found that the words “at the time of the award” were not defined in the Insurance Act and were capable of being interpreted in different ways. To arrive at the correct interpretation the LAT noted the provision of the Legislation Act that makes it clear that the Insurance Act and the regulations made thereunder is remedial legislation. As a result, it is to be “given such fair, large and liberal interpretation as best ensures the attainment of its objects”: Legislation Act, 2006, S.O. 2006, c. 21, Sched. F, s. 64(1).
[36] The Tribunal then went on to apply the modern principles of statutory interpretation. First it focused on the meaning of the words “at the time of the award” and found that the dictionary definition of the word “award” (“a decision or determination rendered by arbitrators…upon controversy submitted to them”) supported a finding that as long as the dispute was the subject of an application before the Tribunal and the Tribunal had the power to make an award in relation to the dispute, then the Tribunal has jurisdiction to make an award under s. 10. The Tribunal continued:[21] Second, I am cognizant of the fact that the Insurance Act is consumer protection legislation and provides protection against insurers who unreasonably deny claims. Ample case law supports the proposition that the Schedule constitutes consumer protection legislation and as such must be read generously with any limitations construed narrowly. Viewed in this context, I consider it unlikely that the legislature intended to deny consumers the protection of s. 10 by allowing the insurer to unilaterally dispense with its enforcement by virtue of delaying the settlement of the main claims until after a proceeding has been commenced. This would amount to an absurd result where a “special award” is only granted in circumstances where there are ongoing accident benefit issues in dispute. The literal meaning of a few words in s. 10 should not run counter to both the consumer protection mandate, and the goal of providing accident benefits to injured persons in a timely manner. This would be unreasonable, inequitable and defeat the purpose of the statute. Fairness and not the guise of linguistic reform must always take primacy.
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[23] It seems to me that do otherwise would be to allow the insurer to delay payments to the insured without consequences. More to the point, it would be patently unfair that an insurer be allowed to circumvent the mandatory requirements of s. 10 through a non-contextual interpretation in situations where they have unreasonably withheld or delayed payments to then settle the benefits in dispute, perhaps on the eve of a hearing or at the case conference.
[24] It offends all sense of fairness and is not in keeping with the policy objective that accident victims promptly receive the benefits to which they are entitled under the Act to avoid injustice or hardship. If the legislature had intended such a significant automatic result, it would have certainly said so. [37] In Stegenga v. Economical Insurance Company, 2019 ONCA 615, 147 O.R. (3d) 65, the Ontario Court of Appeal dealt with the question of whether a claim for an insurer’s bad faith conduct in dealing with a claim under the SABS could be pursued in the courts through a civil proceeding. In deciding that the LAT had jurisdiction over such claims (and not the courts) the Court of Appeal pointed to 17-006 as an example of how the LAT enters into inquiries about an insurer’s conduct in administering claims and makes awards to punish what could be considered bad faith conduct. While not specifically addressing the jurisdictional issue discussed above, the Court of Appeal cites the case as an example of how the LAT uses special awards to punish an insurer who delays approving payments without an apparent explanation. Read in context, the case was part of the reason that the Court of Appeal concluded that the legislature had given the LAT the power to deal with an insurance company’s bad faith conduct in administering claims.
[38] In Ross v. Aviva General Insurance, 2023 CanLII 19823, the Tribunal again reiterated that the special award is a stand-alone issue that is not dependent on the Tribunal deciding the issue of entitlement to any other benefit. In doing so it relied on 17-006 and JM v. Certas Direct Insurance Company, 2019 CanLII 94016 (ONLAT), in which the LAT also found that “[a]n insurer that unreasonably withholds or delays payments and waits to pay the benefits after an application is initiated at LAT may risk an award [under section 10]”: Certas, at para. 29.
[39] The LAT appeared before us and submitted that the meaning of s. 10 under Regulation 664 is not a settled question in the LAT jurisprudence. In support of that proposition, it cited three LAT cases: Contreras v. Intact Insurance Company, 2023 CanLII 62916 (ONLAT), Spence v. Aviva General Insurance Company, 2024 CanLII 4272 (ONLAT), and Karamet v. Aviva Insurance Canada, 2024 CanLII 15888 (ONLAT).
[40] In Contreras, the LAT dealt with a dispute concerning certain medical benefits, which would only be payable if the insured was removed from the MIG guidelines. The LAT concluded that the insured had not “demonstrated that his accident-related impairments warrant removal from the MIG” (at para. 5) and therefore, he was not entitled to the disputed benefits. The LAT also found that he was not entitled to a s. 10 award. However, there is no suggestion in the decision that this finding was in relation to anything but the disputed benefits the LAT adjudicated at the hearing. There is no mention in the decision of benefits that the insurer refused to pay, but eventually agreed to pay after the insured initiated their LAT application.
[41] The same is true of the decisions in Spence and Karamat. Again, the LAT was asked to determine various benefit issues. It found in favour of the insurers with respect to all of the issues in dispute and therefore determined that no s. 10 award was warranted. Again, there was no suggestion in either case of any dispute relating to benefits that were in dispute at the time the insurers initiated their LAT applications and that were subsequently agreed to by the insurers.
[42] Thus, I was pointed to no LAT case where, prior to the case at bar, the LAT took a different position on the LAT’s jurisdiction to make s. 10 awards to that taken in 17-006, Ross and JM. In other words, this appears to be the only case where the LAT has determined that it had no jurisdiction to make a s. 10 award in relation to benefits that were in dispute at the time the insured initiated their LAT application and that were subsequently settled by the insurer before the LAT made its determinations on the application. Furthermore, as the Appellant points out, the LAT in the case at bar conducted no analysis of the issue.
Conclusion Regarding the Correct Interpretation of s. 10
[43] I agree with the reasoning and the conclusion in 17-006, Ross and JM.
[44] First, as found in all three cases, the wording of the section does allow for an interpretation that is consistent with the LAT’s conclusion in all three cases. The key words that are relevant to this determination are “entitled at the time of the award.” As the Court of Appeal found in Stegenga at para. 44, “‘entitlement’ is a term of wide meaning, referring to ‘a right to do or receive something.’” In this case the Appellant had a right to receive the SABS that the insurer agreed to pay her prior to and during the course of the hearing before the LAT. The fact that those benefits may have been paid by the insurer does not detract from the fact that at the time of the award the insured had a right to receive those benefits.
[45] In terms of the context of s. 10, the Stegenga case also supports the meaning adopted by the LAT in 17-006 and the other cases that have analyzed the issue of the LAT’s jurisdiction under Regulation 664.
[46] As noted, Stegenga focused on the extent to which the Insurance Act ousted the jurisdiction of the courts to deal with bad faith claims against insurers. This required the court to focus on the breadth of s. 280 of the Insurance Act. Section 280 is the section that explicitly restricts the right to bring a court of proceeding in respect of a dispute concerning entitlement to statutory accident benefits. The appellant in that case argued that she should be allowed to proceed with her court proceeding as her dispute, which had to do with how the insurance company handled her claim, and was not within the jurisdiction of the LAT. The Court of Appeal disagreed that s. 280 should be interpreted so narrowly and pointed to s. 10 of Regulation 664 (the section at issue in this case) as an example of how the LAT has jurisdiction to make determinations about the manner in which an insurer has administered claims for SABS. In doing so, it referenced 17-006 as an example of how the LAT enters into these enquiries and makes those determinations. More specifically, the Court of Appeal described what behaviour was covered in the special award as follows:[50] ... In making a special award, the LAT considered the insured’s entitlement to the benefits claimed, the insurer’s delay in approving payments without apparent explanation, its near total disregard of the correspondence from the insured’s legal representatives and medical practitioner’s, its failure to reassess the claim when new information became available, its ignoring the claim for a period of time and its imprudent, stubborn and inflexible and unyielding stance with respect to the benefits claimed.” [47] Given this, the Court of Appeal found that the LAT did have a broad power under s. 10 to grant a remedy in relation to how an insurance company handles an insured’s claim. This was key to its decision that the appellant in Stegenga had no right to proceed with her bad faith claim in the courts.
[48] In this regard it is important to note that the Court of Appeal also found that the purposes of s. 280 — to reduce insurance rates by providing for efficient dispute resolution through the LAT — meant that there should not be an overly restrictive reading of the LAT’s jurisdiction.
[49] As the LAT has noted, the need not to give an overly restrictive reading of the LAT’s jurisdiction in s. 10 is reinforced by the fact that the Legislation Act provides that the Insurance Act (and the regulations made under that Act) are to be interpreted as being remedial, with the result that it is to be interpreted in as large and liberal a way as to best ensure that it achieves its objects.
[50] Further, the SABS is consumer protection legislation: Smith v. Co-Operators General Insurance, 2002 SCC 30, [2002] 2 S.C.R. 129, at para. 11. As the Court of Appeal has found in Stegenga, one of the ways consumers are protected is if insurance companies are encouraged to be efficient in their resolution of legitimate benefit disputes. Section 10 is a vehicle for promoting efficiency by deterring insurance companies from unreasonably delaying the payment of benefits to which an insured is entitled. If s. 10 is read in the way proposed by the Respondent insurer, its effect in achieving its desired purpose will be undermined, not enhanced. As put by the LAT in 17-006, insurers would be able to unreasonably delay payments to insureds without consequences, thereby causing vulnerable people who are injured increased hardship and suffering. As noted in Rizzo, at para. 27, statutory interpretations that produce inequitable results or results that are “incompatible with other provisions or with the object of the legislative enactment” are to be avoided.
[51] For these reasons. I find that the LAT erred when it found that it did not have jurisdiction to make a special award in this case. . Bennett v Allstate Insurance Company of Canada
In Bennett v Allstate Insurance Company of Canada (Div Court, 2023) the Divisional Court considered a 'delay award' under s.10 of the Automobile Insurance Reg [Reg 664/90] of the Insurance Act [s.289 'Resolution of Disputes'], which reads:10. If the Licence Appeal Tribunal finds that an insurer has unreasonably withheld or delayed payments, the Licence Appeal Tribunal, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, may award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. The court dismissed the appeal as it was limited to 'questions of law' [LATA s.11(1,6)], as it found the issue was one of fact and law (at the highest) - but the case gives some insight into these 'delay award' provisions:[10] In our view, the appeal raises no question of law. In determining whether an award under s. 10 of the Regulation was warranted, the Adjudicator identified and applied the correct principles. The Appellant does not argue otherwise.
[11] The issues raised by the Appellant, namely: (i) the Adjudicator’s determination that the Respondent did not unreasonably withhold or delay payment of IRB, and (ii) whether the Respondent’s conduct was excessive, imprudent, stubborn, inflexible, unyielding, or immoderate are questions of fact. At their highest, they are questions of mixed fact and law from which no extricable question of law has been demonstrated. As a result, they are not the proper subject of an appeal under the Act.
[12] The Appellant’s submissions largely relate to the Adjudicator’s assessment of the evidence of the Respondent’s experts. The weighing of evidence and weight to be given to expert testimony by a specialized tribunal is a finding of fact and not a determination of a point of law: Maxwell v. Ottawa (City), 2012 ONSC 7224, at para. 23 (Div. Ct.).
[13] Further, there was ample evidence in the record before the Adjudicator, including through cross-examination of the Respondent’s expert, to support the factual conclusions arrived at by her. For example, in both the decision and the reconsideration decision, the Adjudicator noted that the Respondent’s expert, Dr. Jaroszynski, was cross-examined about his ability to diagnose chronic pain. In that context, he gave evidence that he did not see cause for “organically based pain” in the Appellant. It was open to the Adjudicator to rely on this evidence in finding that the Respondent did not improperly rely on Dr. Jaroszynski’s report to terminate IRB.
[14] In addition, the evidence was that the Respondent re-evaluated the Appellant’s claim after receiving and having its assessors consider the reports, including updated reports, received from the Appellant’s assessors, Dr. Ogilvie-Harris, Dr. Bax and Allan Mills.
[15] As a result, there was no finding of fact by the Adjudicator that would amount to an error of law, namely, a finding that was unsupported by the evidence or that was based on an “irrational inference.” See: Micanovic v. Intact Insurance, 2022 ONSC 1566, at paras. 35-36.
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