In Hedley v. Aviva Insurance, 2019 ONSC 5318, the Divisional Court upheld a reconsideration decision from LAT Executive Chair Linda Lamoureux, finding that boilerplate medical reasons for denials of treatment plans submitted under the SABS were insufficient. Pursuant to s.33(8) of the Statutory Accident Benefits Schedule, denial letters are required to contain a meaningful and principled rational to which an insured can respond.
The dispute arises from a motor vehicle accident which occurred in March, 2014. The insured underwent a functional abilities assessment in March 2016. As a result of the assessment, an occupational therapist submitted a treatment and assessment plan requesting various assistive devices among other things. The request was denied on the basis that “[t]he type(s) of treatment does not appear consistent with the patient’s diagnosis”. The Insurer requested a s.44 assessment which the insured refused to attend. The insured repeatedly requested clarification of the medical reasons given, but never received a response.
Upon first adjudication, Adjudicator Gregory Flude was satisfied with the denial letters. Adjudicator Flude expanded on or interpreted the reasons offered by the insurer by reference to the medical documentation on file. Upon reconsideration, Executive Chair Linda Lamoureux found the insurer’s reasons for denying the treatment plan inadequate and that the previous decision constituted a “significant error of law”. Executive Chair Lamoureux, citing her own previous decision (16-003316/AABS v. Peel Mutual Insurance Company, 2018 CanLII 39373 (ON LAT)), found that while insurers are not held to a standard of perfection, their reasons must include a principled rationale based fairly on the insured’s file. Executive Chair Lamoureux indicated that reading into the reasons provided in the denial letter by citing the medical documentation, as done by Adjudicator Flude, ran contrary to the consumer protection objectives of the SABS.
Justice Ryan Bell
and writing for a unanimous panel of the Divisional Court which included Justice Alexander Kurke and Justice Harriet Sachs, applied a standard of reasonableness in reviewing the decision of Executive Chair Lamoureux. The court rejected the suggestion that Executive Chair Lamoureux was not sufficiently deferential to the initial adjudicator’s decision, noting the test on reconsideration articulated in section 18.2 of the Tribunal’s Rules of Practice and Procedure, is that the adjudicator “made a significant error of law or fact such that the Tribunal would likely have reached a different decision had the error not been made.” That is the standard that the Executive Chair applied.
The court cited the Court of Appeal decision in Turner v. State Farm Mutual Automobile Insurance Company, 2005 CanLII 2551, applying the principle that, where reasons are required to be provided by an insurer, they must be meaningful in order to permit the insured to decide whether or not to challenge the insurer’s determination. Boilerplate reasons are insufficient as they, in essence, state no reasons at all. The appeal was dismissed with costs.
This case reminds counsel and insurers that the SABS is first and foremost a consumer protection regulation. Adjusters are required to “show their work” when denying claims so as to prevent the appearance of unjust denials. Standard letters, even those requesting further assessments, will not be sufficient to deny a claim.