In Aviva v. McKeown, released on July 4, 2017, the Court of Appeal has confirmed that an insurer does not have to justify the exercise of its right to conduct an examination under oath (EUO) under section 33(2) of the Statutory Accident Benefits Schedule (SABS). In reaching this conclusion, the Court has also underscored the critical importance of the EUO as part of the necessary exchange of information between an insurer and an insured person in determining entitlement to benefits under the SABS.
At issue was the refusal of six SABS applicants to attend examinations under oath requested by Aviva pursuant to section 33 of the SABS. Aviva brought an application before the Superior Court seeking an order compelling the respondents to attend. At the hearing of that application, the insured respondents argued that the notices given by Aviva were inadequate in that the “reason or reasons” contained in those notices did not justify or explain why the insurer was seeking the EUOs in question. The judge hearing the application agreed, finding that none of the notices (which varied in the degree of detail provided in terms of reasons) were sufficient, and essentially imported a requirement that reasons provided in a notice of examination must justify the reasonableness of the request being made.
The first level decision in this case led to routine requests by applicants for detailed reasons in support of an insurer’s request for an EUO and numerous disputes as to whether the reasons provided were sufficient to establish that the request for an EUO was “reasonable.” These disputes arose notwithstanding the mandatory language of the SABS in setting out an insured’s obligation to attend an EUO if asked, and which restricts the scope of the examination only to matters relevant to the insured’s entitlement to benefits under the SABS.
Writing for a unanimous panel of the Court which included Justices Pepall and Miller, Juriansz J.A. reversed the application judge’s decision, and ordered that each of the three respondents to the appeal attend the requested EUOs pursuant to the notices initially provided by Aviva.
In doing so, the Court adopted a purposive approach in interpreting the requirement for “reasons”, finding that the legislative objective behind the introduction of the EUO provisions contained at section 33(2) of the SABS was to “reduce insurance costs, address fraud and increase accountability within the system.” It was held that the application judge had erred in undertaking a purposive analysis informed by inferences unsupported by the record (for instance by accepting that the use of EUOs may result in increased costs overall), and by using reasoning that employed extraneous considerations to the extent that parallels to the Rules of Civil Procedure were drawn into the analysis.
Justice Juriansz compared the requirement for reasons under section 33(2) to similar provisions elsewhere in the SABS as they related to an insured person’s obligation to provide information to assist in determining entitlement to benefits. Unlike a request for a section 44 medical examination, for instance, it was noted that the requirement for reasons in support of a request for an EUO was not qualified in any way. As part of his contextual analysis, he also noted that the requirement to provide reasons in support of an EUO is contained in a list of procedural requirements (such as the requirement to notify the insured of the time and place of the EUO), and does not fall within the two substantive limits on an insurer’s right to conduct an EUO under section 33 – those being the right to only one examination and the right of the insured person to not participate if their physical or mental condition is such that they cannot.
With all that having been said, the Court of Appeal’s decision does not go so far to say that the requirement to give reasons is a mere formality. Justice Juriansz referenced the FSCO arbitral decision of Arbitrator Mongeon in Kivell v. State Farm, in which it was held that “the reason or reasons do not have to be detailed, they merely have to give the Applicant notice about the general type of questions that will be asked.” It was noted that at the time that this application was brought, the courts and FSCO had coordinate jurisdiction to hear disputes under the SABS and that the application judge had erred in failing to take note of the tribunal’s expertise as it related to processes for determining SABS disputes.
While finding that each of the notices in dispute before the Court of Appeal were adequate, the Court did leave room for an insured to dispute the adequacy of reasons, though noting that “the room for dispute is much reduced from what would be possible if the insurer were required to provide a justification for its request.” An insurer’s request for an EUO (and reasons given) must comply with its duty of good faith and cannot simply be pro forma. An insured person’s remedy for a non-compliant EUO request can be pursued by way of a claim for any benefits being withheld before the LAT, or a complaint pursuant to the Unfair and Deceptive Practices Act. However, the decision in Aviva v. McKeown significantly narrows the scope for such disputes. If a request for an EUO is made as part of the good faith adjusting of a first party accident benefits claim, and where the reasons given provide notice of the general type of questions to be asked, the accident benefit claimant will have no basis to refuse attendance at the examination under oath. Certainly if an insurer uses the precise language of the notices Aviva relied upon in this case (customized relative to the types of benefits an insured could potentially claim), the reasons will be adequate to compel the insured’s attendance.
More broadly, this decision has implications relative to other procedural issues that arise in the handling of accident benefits claims. Where the SABS is a procedural code onto itself, importing principles or analogous provisions from the Rules of Civil Procedure in interpreting the SABS is not appropriate. The Court of Appeal has further made it clear that the objectives of the legislation are met when insurers are able to conduct good faith investigations into the merits of a claim on a non-adversarial basis, and not through the creation of procedural hurdles under the guise of consumer protection or otherwise.
Jennifer Griffiths is co-chair of the EUO practice group and a member of the Appellate Advocacy group. If you have a question this about decision, an EUO or a possible appeal, please contact Jennifer.