The reconsideration decision of Vice-Chair Jeffrey Shapiro in C.W. v. Jevco Insurance Company 2020 CanLII 103671, which upholds the findings and conclusions of his initial decision, is worth a closer look. While there are a number of issues that are addressed, the focus of this blog is to review and consider the principle established in Adjudicator Shapiro’s decisions, that notice of a tort claim to an insurer, can be used in support of the notion that the same insurer, as accident benefit carrier, has knowledge of the claim and accordingly, benefits are potentially owed. A review of both decisions is required to understand the implications of this decision and rationale.
In this case, the insurer, Jevco, was arguing that the Applicant, C.W.’s claim for attendant care benefits from 2007-2015 was limitation barred pursuant to the Schedule. Jevco argued that C.W. could and should have applied for accident benefits once she came to know of Jevco during the prosecution of her tort claim, despite the fact that Jevco was denying tort liability, by reason of the fact that there are different standards that apply to the handling of an accident benefit claim. Jevco further argued that because the tort and accident benefit departments do not share information (due to privacy concerns), Jevco’s accident benefit department was unable to know C.W. existed until she actually applied and therefore, could not have notified C.W. of her rights to claim accident benefits, until she dealt directly with them.
C.W. was arguing that while she did learn that Jevco was a potential insurer during the tort matter, it was not reasonable to expect her to apply to Jevco for accident benefits, while Jevco was asserting in the tort matter that a relevant policy existed. She also posited that it was not realistic to expect her to fight a coverage issue in both the accident benefits claim and tort claim at the same time, as the emotional and financial costs of litigation are expensive.
As noted above, the focus of this blog is to highlight one of the most concerning findings in Adjudicator Shapiro’s decisions regarding the sharing of information between the tort and accident benefit departments of an insurer. It also highlights a misguided interpretation of Zurich Ins. v. Chubb Ins., 2015 SCC 19 (“Zurich”).
In his initial decision, Adjudicator Shapiro concluded that Jevco’s accident benefit department should have known of C.W. and her claim. He specifically states that C.W. was not hidden from Jevco and the typical internal “firewall” for an insurer processing a “first party” and “third party claim” should not fully apply. He suggests that the firewall is for C.W.’s benefit and can be waived. Therefore, he did not accept that advising another department of a potential claimant, so that is could investigate for the benefit for C.W., is the same as disregarding the firewall. He concluded that Jevco’s position would only make sense if it could use the firewall to her detriment as a means to not notify her of her rights and that when Jevco received a tort claim, it should have, at some level, considered that it may be the priority insurer and reached out to C.W. to advise her of the potential accident benefits claim and consider its own obligations to adjust the claim. Effectively, Adjudicator Shapiro conveniently disregards convention and case law in saying that where it hurts a potential claimant, the insurer should not, and really cannot apply the privacy screen. Mixing metaphors, it cannot be used by an insurer as a shield, but a claimant can still use the firewall as a sword.
Adjudicator Shapiro reconsidered his own decision and not surprisingly, reaffirmed his findings. His conclusions are contrary to the purpose behind the well established confidentiality screen between the accident benefit and tort departments of an insurer. The seminal case of Dervisholli (Litigation Guardian of ) v. Cervenak 2015 ONSC 2286 (“Dervisholli”) stipulates that in situations where an insurer has the dual obligation to provide tort and statutory accident benefits coverage, it is required to set up a firewall that prevents the transfer of any confidential information between the two files or dialogue between the adjusters and counsel handling them, unless specifically consented to by the insured. Dervisholli and the principles it supports do not suggest, nor establish, that this firewall is in place only for the benefit of an insured and that it should be disregarded in situations where disclosing a potential claim is to the benefit of the insured. This decision and its reasoning seek to establish an untenable precedent.
Furthermore, where this blog’s author was counsel on the Zurich case at the Supreme Court of Canada, it can be stated unambiguously that this decision was improperly interpreted by Adjudicator Shapiro. Adjudicator Shapiro, in his reconsideration decision, outlines Jevco’s submissions that Zurich stands for the proposition that the overriding public policy of Ontario Regulation 283/95 is to provide timely delivery of benefits to all persons injured in car accidents in Ontario, despite the inconvenience to insurance companies who must provide benefits immediately and seek reimbursement from the correct insurance company later, so long as the required nexus is met. This was argued in support of the fact that C.W. lacked a reasonable excuse for the delay in submission of her accident benefits claim, due to Jevco’s initial denial of coverage.
In his reconsideration decision, Adjudicator Shapiro suggests that Jevco misinterpreted Zurich and that if Jevco’s interpretation were to be followed, it would mean that even if Jevco successfully established that it did not insure the vehicle , it would nevertheless have to pay the accident benefits claim, without hope of being reimbursed, simply because it insured other vehicles. However, that is not a reasonable or logical extension of Jevco’s argument. Jevco’s argument, as outlined above, is what Zurich, in essence, espouses. In Zurich, the Supreme Court of Canada restored the subjective only component to the nexus test, confirming that as long as the claimant turned their mind to their choice of insurer, there will be a nexus, and potential disputes would arise later. The timely delivery of benefits to all persons injured in car accidents was the goal of the legislation.
These decisions could establish a concerning precedent for cases involving similar issues going forward, and could have dramatic implications to Jevco in this case, where the late claim for benefits, perceived to have been within Jevco’s knowledge as tort carrier from a far earlier date than any claim for accident benefits was ever contemplated let alone advanced, may create interest exposure at 2% a month compounded for a significant period of time, and depending on the magnitude of the claim, perhaps millions of dollars of exposure. It remains to be seen whether these decisions will be overturned on appeal.
Eric Grossman and Melinda Baxter are co-authors of this blog. If you have a question about this decision or a similar file, please contact Melinda at 416-777-5240 or Eric at 416-777-5222.