Accident victims get break as arbitrator rules against retroactive benefits cuts

Monday, 14 October 2013 By Darcy Merkur

Despite the Sept. 1, 2010 legislative amendments removing the obligation on accident benefit insurers to pay for rebuttal reports, they may still be responsible for the cost in relation to accidents governed by automobile policies predating that time.


In the recent case of R.J. v. Dominion of Canada General Insurance Co., Financial Services Commission of Ontario arbitrator John Wilson faced a motion for interim income replacement benefits along with a claim for the funding of a rebuttal report in relation to a catastrophic impairment claim.


R.J. had suffered a significant injury on July 23, 2007, when she accidentally accelerated into a concrete wall. Prior to the accident, she owned and ran a restaurant franchise. The accident prevented her from working and ultimately the business went into bankruptcy.


In addition to physical injuries, R.J. claimed psychological ones that included addictions to alcohol and OxyContin. Her situation led to multiple suicide attempts along with conflict within her family and the involvement of both the Children’s Aid Society and the police.


The insurer paid R.J. income replacement for an extended duration but eventually had her assessed for ongoing entitlement. The insurer assessor’s concluded R.J. was capable of suitable employment and, as a result, the company cut her off income-replacement benefits.


R.J. had also requested a designation as having suffered a catastrophic impairment.


Due to that request, the insurer arranged catastrophic impairment assessments with the same assessors who had looked into the income-replacement issue.


The insurer’s assessment team found R.J. had a zero-per-cent whole-person impairment rating for muscular impairments and a 5-8 whole-person impairment rating relating to a neurological impairment. With respect to behavioural and mental disorders, the assessors claimed there was no impairment on her activities related to daily living and only acknowledged a mild impairment in the spheres of social function and adaptation. Combining the mental and physical injuries, the insurer’s assessment team gave a combined whole-person impairment rating of 13 per cent, a number well below the 55-per-cent requirement.


R.J.’s treatment providers took issue with those opinions and conclusions and, as a result, the claimant wanted the company to fund a catastrophic impairment rebuttal report prepared by assessors of her choosing at a total cost of $14,916.


With respect to the reasonableness of the claimant’s request, Wilson concluded it was reasonable for her to ask for a rebuttal report. “In short, a rebuttal report in Ms. J.’s case would be not only reasonable but would facilitate the claims process,” he wrote in the Sept. 17 decision. “Consequently, if there is a basis to fund the report, it should be funded.”


Later, the arbitrator goes as far as saying: “In this case, a complex rebuttal report is not only reasonable but justified.”


Because the request for a rebuttal report dated back to April 19, 2011 — a time well after the Sept. 1, 2010, legislative changes — the arbitrator had to decide whether he could force the insurer to pay for it given the amendments removing insurance companies’ obligation to fund such reports.


The arbitrator reviewed the Sept. 1, 2010, amendments and noted they didn’t prohibit rebuttal reports but instead attempted to retroactively remove insurers’ obligation to pay for them.


In the end, the arbitrator concluded that the insurance contract in place at the time of the 2007 accident governed the matter and that the 2010 amendments preventing rebuttals at the insurer’s expense couldn’t apply retroactively in those circumstances.


The decision goes hand in hand with the reasoning in Federico v. State Farm Mutual Automobile Insurance Co. dealing with the question of retroactive application of the Sept. 1, 2010, legislative amendments that reduced the interest owed on past benefits.


The principle of these decisions is that substantive contractual rights crystallize at the time of purchase of the insurance policy. This principle makes absolute sense. Accident victims shouldn’t get less than they paid for simply because the government wants to help insurers.


After reviewing a practice direction that was in place at the time of the accident that limited the cost of these reports to $1,500, the arbitrator concluded that ordering the funding of seven different stages at a total cost of $10,500 was the only plausible way of proceeding. The arbitrator also awarded interim income-replacement benefits pending the disposition of the matter.


Subject to the R.J. decision withstanding any appeal, plaintiff’s personal injury lawyers will be getting in line to claim reimbursement for rebuttal reports prepared in relation to accidents governed by automobile policies predating the legislative changes.


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