Oct 2, 2018
Ont. Div. Ct. upholds LAT Executive Chair’s decision finding that an accident benefits insurer who fails to comply with section 38(8) and 38(9) of the SABS…
Author Bevin Shores
…is precluded from taking the position that the insured person has an impairment to which the MIG applies, and is required to pay for the goods and services set out in the Treatment Plan until a proper notice is given.
Zheng, Cai v Aviva Insurance Company of Canada, 2018 ONSC 5707 is a decision in two judicial review applications which were heard together.
The underlying context was summarized at paragraphs 13-15 of the decision:
“ Section 38 of the Schedule establishes a procedure for an insured to apply for medical and rehabilitation benefits other than those payable under the MIG. The insured must present a Treatment Plan and comply with the conditions in s. 38. The insurer may refuse to accept the Treatment Plan if it describes goods or services to be received in respect of any period during which the insured is entitled to receive them under the MIG.
“ Within 10 business days of receiving the Treatment Plan, the insurer must give the insured notice identifying what goods, services, assessments and examinations it does or does not agree to pay for and the medical and other reasons why the insurer considers them not to be reasonable and necessary (s. 38(8)). If the insurer believes that the MIG applies to the insured’s impairment, the notice under s. 38(8) must so advise the insured (s. 38(9)).
“ If the insurer fails to give a notice that complies with these requirements in connection with a Treatment Plan, s. 38(11) imposes the following consequences on the insurer:
(1) The insurer is prohibited from taking the position that the insured person has an impairment to which the Minor Injury Guideline applies.
(2) The insurer shall pay for all goods, services, assessments and examinations described in the treatment and assessment plan that relate to the period starting on the 11th business day after the day the insurer received the application and ending on the day the insurer gives a notice described in subsection (8).”
Continuing at paragraphs 16-20:
 The Adjudicator held that because Aviva’s denial notices did not comply with the provisions of s. 38(8) and (9), the consequences in s. 38(11) applied. The Adjudicator recognized that the onus is on the insured to prove that he is out of the MIG, rather than on the insurer to prove that the insured is in it, citing Scarlett v. Belair Insurance, 2015 ONSC 3635 (CanLII), 2015 ONSC 3635 (Div Ct). However, the Adjudicator concluded that the statutory consequences of non-compliance prohibited Aviva from taking the position that the Respondents had an impairment to which the MIG applied. He further ordered payment of benefits to the Respondents pursuant to the Treatment Plans submitted by them, in excess of the $3500 limit.
 In our view, the Adjudicator’s conclusion was reasonable. The wording of s. 38(11) specifically states that an insurer that delivers a non-compliant notice is precluded from taking the position that the insured person has an impairment to which the MIG applies, and is required to pay for the goods and services set out in the Treatment Plan until a proper notice is given. These consequences are explicitly set forth in the Schedule itself. The section imposes no monetary limit on the amount that the insurer must pay until it delivers a compliant notice, nor does it refer to or incorporate the $3500 limit on benefits set out in s. 18(1).
 Reading those words in the context of s. 38 as a whole, it is clear that an insurer must respond to an insured’s Treatment Plan within a specified time. The insurer must provide the insured with the specific information set out in s. 38(8). The insurer must further notify the insured if the MIG applies to the insured’s impairment. These are matters that are exclusively within the control of the insurer.
 The consequences in s. 38(11) relate directly to the insurer’s failure to fulfill those statutory requirements. The insurer is no longer able to take the position that the impairment falls within the MIG and must pay for costs under the Treatment Plan in question until a compliant notice is given. This ensures that the insured who receives a non-compliant notice can proceed to obtain treatment with the assurance that his costs will be covered.
 The requirement for an insurer to comply with the provisions of s. 38 are strict and the consequences of s. 38(11) are mandatory: Ferawana v. State Farm Mutual Automobile Insurance Co.,  O.F.S.C.D. No. 247, pp. 4-6. The Adjudicator’s interpretation of these statutory consequences aligns with the consumer protection focus of the legislation: Smith v. Co-operators General Insurance Co.,  SCC 39.”
Significantly, the Court declined to accept that the consequences imposed by section 38(11) went beyond the particular Treatment Plans at issue in the proceedings before the Court, stating at paragraph 21:
“ The Adjudicator’s actual orders do not go beyond the Treatment Plans at issue. Further, the language used in s. 38 refers to the specific Treatment Plan in question. We therefore do not accept the submission, in these cases, that s. 38(11) imposes a permanent prohibition on Aviva with respect to whether the impairment of the Respondents is covered by the MIG or is subject to the $3500 limit in s. 18(1). As well, we should not be taken as agreeing with the Executive Chair’s reasoning in her denial of reconsideration.”
Zheng, Cai v Aviva 2018onsc5707