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Withholding payments based on medical opinion does not result in Special Award

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Although the arbitrator found the insurer’s expert reports to be flawed in many ways, by relying on them and withholding payment of an IRB, the insurer was not found to have “unreasonably withheld or delayed payments”. As a result, there was no special award in accordance with subsection 282(10) of The Insurance Act.

Phillip Carr and TD General Insurance Company, FSCO A09-003155, July 23, 2010 – Arbitrator Killoran

Date of MVA: January 30, 2008

In this matter the insurer stopped the Income Replacement Benefit (“IRB”) payments after it was determined by their experts that the insured could return to work. However, the arbitrator determined that the reports on which the insurer relied were flawed, and indeed the insured remained incapable of returning to work, and following the first 104-weeks of disability, returning to any employment for which he was reasonably suited by education, training or experience.

As a result of the arbitrator’s findings, the insurer was required to pay IRBs for all periods of incapacity and on-going, and pay interest on the outstanding amounts pursuant to subsection 46(2) of the SABS.

Another issue put forward in this matter was whether the insurer was liable to pay a special award. It was the insured’s position that by relying on the flawed reports of their experts, the insurer had “unreasonably withheld or delayed payments”, and therefore, pursuant to subsection 282(10) of The Insurance Act a special award should be payable.

The arbitrator found that while many of the criticisms put forward by the insured had merit, and that there were serious flaws in the assessments and medical reports, relying on these reports did not automatically mean that the insurer had acted unreasonably in withholding payments. Rather, the arbitrator found that no special award should be payable, but indicated that insurers should “aspire to a higher standard resulting in a more careful review of their medical reports, comparing and contrasting them with those of their insured, so as to guarantee the utmost fairness in their handling of claims.”

What this means for you:

This decision appears to indicate that special awards are not automatically triggered as a result of the insurer having relied on flawed reports. While insurers do not have carte blanche to rely on any report they receive, this should provide comfort when making decisions based on their experts findings. However, it would be advisable, when the expert reports presented by the insured significantly contrast the findings of the insurer’s experts, that steps be taken to address the discrepancy.

New SABS changes:

  • There does not appear to be any specifics in this decision that would be impacted by the introduction of the New SABS.

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