In VK v. Unica Insurance Inc., Adjudicator Christopher Ferguson of the Ontario License Appeal Tribunal addressed the issue of whether the cost of catastrophic impairment (“CAT”) assessments should be absorbed by the insurer or the claimant.
The applicant was involved in a motor vehicle accident and sought medical and rehabilitation benefits from Unica. In determining whether the applicant was CAT, the applicant was required to undergo over $17,000 worth of CAT assessments, which represented a significant portion of their $50,000 (“$50K”) non-CAT limit for medical and rehabilitation benefits.
Section 18(3) of the SABS sets the $50K limit on medical and rehabilitation benefits payable to insured persons, unless they are CAT, in which case their limit becomes $1M. This limit includes the costs of medical and rehabilitation assessments. The issue in this dispute is whether CAT assessments are included as part of these assessments.
Adjudicator Ferguson ruled that CAT assessments are not covered for the following reasons.
Exclusion clauses to be interpreted narrowly while coverage clauses interpreted broadly
The insurer appealed to a broad reading of section 18(5) of the SABS. It was submitted that CAT assessments are sufficiently connected to “any benefit or payment to the insured”, and thus should be included in the $50K.
Section 18(5) states:
“… medical and rehabilitation benefits payable in respect of an insured person include all fees and expenses for conducting assessments and examinations and preparing reports in connection with any benefit or payment to or for an insured person under this Regulation” [Emphasis mine].
Adjudicator Ferguson found this argument unpersuasive because it is too loose of an interpretation of the word “connection”. He instead took a narrow reading of this restriction to exclude assessments not directly related to the specific benefit or payment. Moreover, he found that CAT determinations are not a benefit and neither are the required assessments, which further supports the view that such assessments should not be included in any limit placed on the payment for benefits.
Reasonable interpretation of s.25(1)(5) of the SABS
Adjudicator Ferguson interpreted this section broadly to mean that the insurer is obliged to pay the full cost of a CAT assessment, subject to professional services guidelines, and that it remains the applicant’s responsibility to show that any assessment is reasonable and necessary.
Section 25(1)(5) states:
“Reasonable fees charged for preparing an application under section 45 for a determination of whether the insured person has sustained a catastrophic impairment, including any assessments or examination necessary for that purpose.”
Adjudicator Ferguson stated, “I agree with the reasoning in Henderson [Henderson v. Wawanesa Mutual Insurance Company, FSCO A-14-001758] that “there is no room for ambiguity – the insurer shall pay the expenses of a CAT assessment””
Consumer protection favored over cost reduction
Unica appealed to the “guiding principle” of cost reduction in the auto insurance system. However, Adjudicator Ferguson also found this appeal to be unpersuasive. There is no reason for the goal of cost reduction to be weighed more heavily than the primary goals of the SABS and insurance law, being consumer protection and access to medical treatment.
Persuasive case law
In 17-007962 v. Scottish and York, Adjudicated Ferguson ruled to exclude the cost of CAT assessments from the $50K limit on non-CAT medical and rehabilitation benefits. The facts and issue were nearly identical to those in the present case, and the respondents failed to convince Adjudicator Ferguson why he should deviate from that ruling. The insurer was not able to distinguish the current dispute, citing only that reconsideration had been sought on the prior decisions.
Key Takeaway
Adjudicator Ferguson held that the cost of CAT assessments should not be included within the $50K limit for medical and rehabilitative benefits. Doing so would be clearly inconsistent with the consumer protection objective of insurance law as it would force claimants to significantly limit their entitlement and “hold a significant percentage of entitlement – in this case 34% – in reserve” in case they need a CAT assessment. This could consequently act as a major barrier to seeking needed medical treatment, and could even act as a deterrent to seeking CAT determination.
If you have a question about this decision, please contact Peter Durant
