By Adam Imtiaz
Writing for a unanimous Court of Appeal panel which included Justices Lauwers and Thorburn, Justice Kathryn van Rensburg’s decision in Morrissey v. Wawanesa Insurance Company, decision the Ontario Court of Appeal has provided clarity as to how the definition of “incurred” is to be applied for accidents that occurred before September 1, 2010. The need for such clarification arises from the two versions of the Statutory Accident Benefit Schedule. The 1996 version was replaced by a new version in 2010 that was intended to govern all claims arising from accidents on or after September 1st of that year. At the same time however, the 1996 Schedule would continue to apply to benefit entitlements arising from accidents that occurred before September 1, 2010. To help moderate this change, both Schedules contain transitional provisions that apply to accidents that occurred on or after November 1, 1996, but before September 1, 2010, and for accidents that occur on or after September 1, 2010. The Court of Appeal found that these provisions held the answer to the interpretation of the term “incurred” in relation to Mr. Morrissey’s entitlement to attendant care benefits.
The procedural history of this matter can be traced back to a LAT application made in 2018 by Mr. Morrissey. He had been receiving benefits from the insurer since shortly after his motor vehicle accident in 2000 which had left him catastrophically impaired. Mr. Morrissey’s 2018 application for retroactive attendant care benefits was for increased benefits from October 2015 onwards to cover additional attendant care expenses. The LAT adjudicator granted this claim in part but held that he was not entitled to the retroactive attendant care benefits. Both reconsideration and a judicial review to the Divisional Court yielded similar results, determining that Mr. Morrissey was entitled to some benefits but not to increased attendant care benefits from October 2015 to April 2018.
On appeal, Mr. Morrissey argued that both the Adjudicator and the Divisional Court had erred in their interpretation of the word “incurred” in the 2010 Schedule and their conclusion that he was required to substantiate his attendant care expenses.
The Issues:
The Court first considered the issue of Mr. Morrissey’s claim for retroactive benefits, which was denied by both the LAT and Divisional Court. The relevant section of the 2010 Schedule, s.42(5), states that “[a]n insurer may, but is not required to, pay an expense incurred before an assessment of attendant needs that complies with this section is submitted to the insurer”. Both the Adjudicator and Divisional Court interpreted this section in the same way, concluding that insurers were permitted to refuse a retroactive claim for attendant care benefits when there was no evidence of urgency or impossibility of submitting an assessment before the expense had occurred.
The Court of Appeal disagreed with this interpretation, finding nothing in s.42 nor in its 1996 Schedule counterpart, s.16 , that prescribes a time period in which an assessment of attendant care needs (also known as a “Form 1”) must be submitted. In the LAT and Divisional Court decisions, the Adjudicator and Judge had relied heavily upon a line of cases originating from T.K. v. Unica Insurance Inc. (“T.K”), which suggested that allowing retroactive claims would render s.42(5) meaningless. The Court found this interpretation to be an error as the decision in T.K. is itself inconsistent with other authoritative cases such as Kelly v. Guarantee Company of North America and T.N. v. Personal Insurance Company of Canada.
The interpretation of s.42(5) in these cases differed from that in T.K. and was instead consistent with a plain reading of s.42(5) in the context of the SABs scheme. As such the Court determined that the Adjudicator and Divisional Court had erred , and that there was no basis for requiring “urgency, impossibility or impracticability” as a precondition to payment of attendant care benefits. Instead, the Court found that once a Form 1 is submitted , the insurer is obligated to determine whether the expense claimed for that period is reasonable or necessary. The second issue addressed by the Court was the definition of the term “incurred.
The second issue addressed by the Court was the definition of the term “incurred”. In defining the term “incurred”, section 3(7)(e) of the 2010 Schedule limits the insured’s attendant care benefits to goods or services provided by a qualified provider or a person who has incurred economic loss by providing such benefits, goods or services to the insured person.
However, the 1996 Schedule does not define the term incurred. Nonetheless, case law interpreted the term to allow for attendant care benefits to be paid when goods or services were provided by an unqualified person without evidence of economic loss. Both the LAT and Divisional Court had reached their decisions, in part, by applying the 2010 definition (which version did require proof of economic loss), which Mr. Morrissey asserted was an error.
Wawanesa relied on ss. 3(1.3) and 3(1.4) of the 1996 Schedule, which provides through transitional provisions as to how accident benefit entitlements arising from accidents before September 1, 2010 are to be paid under the 2010 Schedule. However, Wawanesa also maintained that the amount to be paid is still determined under the 1996 Schedule. Wawanesa’s position was that while Mr. Morrissey’s substantive rights were still governed by the 1996 Schedule, the procedure that he must follow to receive his benefits was laid out in the 2010 Schedule.
Wawanesa maintained that the requirement for attendant care benefits to meet the definition of incurred in the 2010 Scheduleis a procedural requirement, and that Mr. Morrissey does not have a vested right to benefits determined in accordance with procedure under the 1996 Schedule. Under the 1996 Schedule, an expense is incurred if the services or items were reasonable and necessary, and the amount of the expenditure could be determined. It is not necessary that the insured person had to have received or paid for the services for the expense to have been incurred. The 2010 Schedule takes a different approach, stating that, among other things, an expense is not incurred until the goods or services have been received, and the expense have been paid (or promised to be paid).
After a review of the transitional provisions of the 2010 Schedule, the Court of Appeal found that the definition of incurred is not included in the list of parts that apply to the pre-2010 accident claims. In fact, the transitional provisions state that the 1996 Schedule continues to apply to claims arising from accidents before September 1, 2010. As such, the Court found that both the LAT Adjudicator and the Divisional Court had erred because Mr. Morrissey’s claim is governed by existing case law that has interpreted the word “incurred“ as it appears in the 1996 Schedule.
Take Away:
Through this decision, the Court of Appeal has provided not only a definitive answer as to the application and meaning of the crucial term “incurred” in the context of claims for retroactive attendant care benefits arising from accidents that occurred before September 1, 2010, but also a broader guideline for the interpretation of the transitional provisions of the two Statutory Accident Benefits Schedules. By their nature, accident benefit claims can have tremendous longevity, and many existing claims still fall under the transitional provisions of the two Schedules. It is important for insurers to note that the determination of which Schedule is applicable and the interpretation of key terms within those Schedules can have a significant impact on what benefits may be owed to the insured. Further, this decision removes a filter that may otherwise have barred attendant care benefit claims submitted retroactively. The reasoning found in T.K. and its successor cases has been overturned and a Form 1 submitted retroactively cannot be denied on the basis of its “late” submission. Insurers will instead need to consider if the claim being presented is reasonable and necessary, even in respect of goods and services already provided to the insured. The treatment of both issues has highlighted the importance of understanding the nuances of the changing Schedule. Where more regulatory changes were announced by the government in the last budget, this case could also be helpful in interpreting the transition to be taken from the existing benefit regime to whatever changes may be introduced in the coming months as well.
Adam Imtiaz is the author of this blog and an articling student at the firm. If you have a question about this decision or a similar file, please contact Adam at [email protected].
