Section 3(8) of the Statutory Accident Benefits Schedule is supposed to serve as a deterrent to insurers unreasonably withholding a benefit. Under the section, if an insurer is found to have “unreasonably withheld or delayed payment of a benefit in respect of the expense” then the License Appeal Tribunal can deem the expense to have been incurred for the purpose of determining the insured’s entitlement to the benefit. However, the applicant must meet a high bar to have a benefit deemed incurred, as was demonstrated in Duval v Aviva General Insurance, 2021 ONLAT 20-001990/AABS.
In Duval, Adjudicator Monica Chakravarti assessed the applicant’s entitlement to an attendant care benefit. After determining that the applicant’s claim to the benefit was partially reasonable and necessary, the question turned towards whether the applicant should be deemed to have incurred past attendant care benefits. Adjudicator Chakravarti set out a two part test for applying s.3(8). First, the onus was on the applicant to show on a balance of probabilities that the benefit was unreasonably withheld or delayed by the respondent. Second, it then had to be shown that because of this withholding/delay the applicant could not incur the cost of the benefit.
The applicant was deemed to have failed the first part of the test. The denial of the attendant care was predicated on s.44 assessments, which in turn was considered by the adjudicator as a reasonable basis for the denial. Further, Adjudicator Chakravarti suggested that the applicant’s argument that the benefit was deemed incurred was likely doomed the instant it was found the benefit was only partially reasonable and necessary. The partial denial was viewed as proof that the insurer acted reasonably in its decisions regarding the attendant care. Adjudicator Chakravarti also went on to explain that the applicant failed the second part of the test when she failed to show that the insurer withholding the benefit was the direct cause of her not incurring the benefit.
It can thus be said that the test to have a benefit deemed incurred is a stringent one.
First and foremost, the denied benefit must be clearly reasonable and necessary. Even if that is the case, the applicant must then prove that the insurer acted unreasonably, which harkens back to the high bar that is applied for a special award claim. Adjudicator Chakravarti does not explain how, or if, the unreasonableness under s.3(8) differs from the unreasonableness under a special award. However it is likely that the applicant would have to show that the insurer demonstrated behaviour that was excessive, imprudent, stubborn, inflexible, unyielding or immoderate. Finally, Adjudicator Chakravarti advised that there needs to be a direct link between the unreasonable delay in payment and the applicant not incurring the benefit. This will likely make findings of “deemed incurred” rare going forward.
Yann Grand-Clement is author of this blog and member of the Licence Appeal Tribunal practice group. If you have a question about this decision or a similar file, please reach out to Yann at 416-777-5248.
