The Immutable Consequences of Section 36(3)
In the case of Kunaseelan v. Aviva Insurance Company of Canada, 2022 CanLII 11134 (ON LAT), the applicant was involved in a motor vehicle accident on June 20, 2019 and applied to Aviva for income replacement benefits (“IRBs”).
Pursuant to section 36(3) of the SABS, an applicant is not entitled to IRBs for any period before a completed disability certificate (an OCF-3) is submitted. In such previous cases as K.D. v. Jevco, 2019 CanLII 126100 (ON LAT) and K.A. v. Intact Insurance Company, 2020 CanLII 94779 (ON LAT), the LAT had already established that the language of s. 36(3) is compulsory and there is no exception to this. Therefore, whether an applicant is able to provide a reasonable explanation for failing to provide the OCF-3 at an earlier date is irrelevant to whether the consequences of s. 36(3) apply.
The Kunaseelan case very much put that ratio to the test. The applicant did not provide Aviva with a completed OCF-3 until November 15, 2019 and therefore Aviva refused to pay IRBs for any period prior to that date. However, the applicant had perhaps one of the best excuses possible for not providing her OCF-3 earlier: Aviva had never provided her with a blank OCF-3 to complete and offered no explanation for this. This omission by Aviva directly violated s. 32(2), which requires insurers to promptly provide their claimants with the appropriate application forms. However, Adjudicator Brian Norris correctly pointed out that the SABS does not actually impose any consequences on an insurer for failing to comply with s. 32(2). The provision simply has no teeth. Further, the SABS makes no reference to there being any connection between ss. 32(2) and 36(3).
He also noted that he was not bound by (and disagreed with) the FSCO decision in Anthonipillai v. Security National, FSCO A11-001168, 2013 CarswellOnt 10205, where it was held that an insurer must first discharge its obligation under s. 32(2) prior to relying on s. 36(3) to deny the benefit.
Section 34 allows a claimant to use a reasonable explanation to escape the consequences of missing a SABS-imposed time limit. However, Adjudicator Norris refused to apply s. 34, reasoning that s. 36(3) imposes no time limit for the applicant to comply with. While he felt the applicant was suffering an injustice in falling between sections 32(2) and 36(6), Adjudicator Norris held that he had “no remedy for this injustice and it would be wrong for [him] to order payment of IRBs contrary to section 36(3)”.
Adjudicator Norris’ decision in Kunaseelan seems to be in keeping with the existing case law. Indeed, s. 32(2) is not unique in imposing no consequences on insurers who fail to satisfy their SABS-imposed obligations. For instance, s. 36(7) requires an insurer to provide a claimant with a s. 44 insurer’s examination report within 10 days of receiving the report. Yet in 17-004156 v. Aviva Insurance Canada, 2018 CanLII 13175 (ON LAT), Adjudicator Chris Sewratten held that an insurer’s non-compliance with s. 36(7) does not result in the compulsory payment of IRBs.
The Period after the Applicant Submitted her OCF-3: Section 33 Letters Pause the Interest Clock
When Aviva received the OCF-3 on November 15, 2019, it issued a letter asking the applicant for her bank records and later asked for her tax records to confirm that she was actually employed at the time of the accident and reporting her income to the Canada Revenue Agency.
Despite the applicant’s failure to provide these requested documents, on May 28, 2019 Aviva agreed to pay IRBs retroactive to November 15, 2019, but did not pay interest.
At issue before the LAT was whether the applicant was entitled to interest for the delay between her submitting her OCF-3 (on November 15, 2019) and Aviva starting her IRB payments (on May 28, 2019).
Adjudicator Norris declined to order Aviva to pay interest. He explained that Aviva’s production request, which is explicitly provided for under s. 36(4), “essentially paused the interest clock until the applicant complied”. Because the applicant had not complied with the production request by the time Aviva made the payments on May 28, 2019, the interest clock had never started to run, and so the IRB payments never became overdue. He continued that it was the applicant’s own refusal to produce the requested documents that delayed her IRB payments, not any actions by Aviva.
Adjudicator Norris also explained that Aviva’s production requests were reasonable. Indeed, pursuant to s. 4(5), IRB payments are to be calculated on the income reported to the applicable tax authority. Further, the applicant was employed by her husband and such a non-arms-length employment relationship invites additional scrutiny, meaning that the insurer was within its rights to request corroborating records, including pre-accident bank statements.
He further noted that Aviva’s production request letters never referenced s. 33 and the initial production request letter never gave a reason for the request nor advised the applicant of the consequences of failing to provide the productions. However, he found that the SABS “makes no such notice requirement” and thus, refused to order the payment of interest.
The Late Submissions of Evidence
At the case conference, the LAT ordered the Applicant to produce bank records, income tax returns, her employment file, and a Record of Employment from her employer. The applicant missed the LAT-imposed timeline for these productions, opting to wait until after Aviva had served and filed its hearing submissions before finally providing only some of the ordered documents.
However, rather than disallowing the late productions from being admitted as evidence, Adjudicator Norris opted to allow Aviva to make sur-reply submissions.
The Special Award
Adjudicator Norris declined to order a special award against Aviva. He explained that a prerequisite to making a special award is entitlement to payment of a benefit and, in this case, the Applicant was not entitled to payment of IRBs prior to submitting her OCF-3.
He also found that Aviva’s failure to provide the applicant with a blank OCF-3 to complete only “delayed the Applicant’s application for IRBs and not the payment of them” (emphasis in original).
Finally, he held that Aviva’s production request letter ought to have explained that Aviva was requesting the impugned productions because of the applicant’s non-arms-length relationship with her employer. However, he found that Aviva sufficiently mitigated this shortcoming by simply agreeing to pay IRBs on May 28, 2020.
As such, it seems there is officially no excuse that the LAT will accept for the late submission of an OCF-3 by a claimant—not even the insurer’s own failure to provide the claimant with an OCF-3 to complete.
Further, for this adjudicator and in the circumstances of this case, t even the most bare-bones section 33 request letter was sufficient to pause the accumulation of interest.
Finally, the LAT reiterated its unwillingness to bar the admission of late evidence unless it absolutely has to.