Material Facts
The Applicant was injured on or about May 27, 2016, and sought benefits pursuant to O. Reg. 34/10 effective September 1, 2010. The Respondent, Security National Insurance refused to pay for specific benefits, including an award pursuant to Regulation 664, interest, and costs. The Applicant brought a motion at the conclusion of the hearing to request that the Respondent be liable for costs pursuant to Rule 19.
In particular, the Applicant was denied Non-Earner benefits by way of an inadequate denial by the Respondent, lacking medical reasons for the denial, requiring Tribunal intervention to order the Non-Earner benefit payable. Subsequent to that decision, the Applicant brought the within proceeding dealing with the Respondent’s unreasonable conduct to withhold payments of benefits.
Issues
- Whether the Applicant is entitled to an award under Regulation 664 because the Respondent unreasonably withheld or delayed the payment of benefits?
- Whether the Applicant is entitled to interest on overdue payment of benefits?
- Does the Tribunal have jurisdiction to decide claims for bad faith seeking punitive damages?
- Whether the Applicant’s request for costs pursuant to Rule 19 of the License Appeal Tribunal Common Rules of Practice and Procedure, be added as an issue in dispute?
Brief Answer
- The respondent is liable to pay an award in the amount of $8,598.95 (30%) plus applicable interest in accordance with the Regulation;
- The Tribunal does not have jurisdiction to determine bad faith claims for punitive damages; and
- The Applicant’s request to add costs pursuant to Rule 19 is granted.
Analysis
Adjudicator Rebecca Hines concluded that the Respondent’s conduct was excessive, imprudent, stubborn, inflexible, unyielding, and immoderate. At [21] the Adjudicator found that the Respondent took an unreasonable and stubborn approach in its handling of the Applicant’s claim for Non-Earner benefits. It suspended payment of benefits prior to her being eligible to claim the benefit, it ignored submission of the OCF-3, and ignored requests by the Applicant to confirm payment of benefits. At [28] the Adjudicator goes on to conclude that the Respondent owes an ongoing duty to promptly adjust its file when it receives new medical documentation. The Respondent had a duty to acknowledge receiving it and to respond to the Applicant’s requests for status updates. This failure precipitates an unreasonable withholding of benefits and delay in handling the applicant’s claim for Non-Earner benefits, coupled with a failure to provide a proper explanation for the denial of benefits.
In determining the quantum of a Special Award, the Tribunal must consider the following factors, citing M.M. v. Aviva Insurance Canada, 2020 CanLII 42663 at [28]:
- Overall length of the delay;
- The blameworthiness of the insurers conduct;
- The vulnerability of the insured person;
- The harm directed at the insured person;
- The need for deterrence;
- The advantage wrongfully gained by the insurer from the misconduct; and
- Whether the insurer acted professionally in its handling of the claim or whether a pattern of unreasonable conduct in the handling of the applicant’s claim is established.
After a thorough analysis of the various conduct, the Adjudicator found at [46] that the weighing of the factors supported a Special Award of 30% in the amount of $8,598.95 plus interest payable at 2% per month.
In considering whether the Tribunal had jurisdiction to determine a claim for punitive damages for bad faith conduct the Tribunal considered the Court of Appeal’s decision in Stegenga v. Economical Insurance Company, 2019 ONCA 615 where it was determined the types of remedies that Tribunal had jurisdiction to award. Adjudicator interpreted Stegenga to conclude at [53-54] that:
I find that the decision supports that an insured person’s right to file bad faith claims for punitive damages is no longer available. Further, that this was a policy choice made by the legislature. In coming to that conclusion, the Court states that the purpose of the legislature’s policy decision was to reduce insurance rates and provide for the fast and efficient resolution of disputes and avoid a duplication of processes. Of significance, the Court states that the legislature must have considered “the importance of its objectives of efficiency and cost reduction to outweigh the loss of insured individuals’ access to the courts and to the full range of remedies available there.” [Emphasis added].
In my view, I find the underlined sentence above supports that an insured person’s right to file a claim seeking punitive damages has been eliminated in both the courts and at this Tribunal. Having said that, I do agree with the applicant that Stegenga clarifies that the Tribunal may consider an insurer’s bad faith conduct in finding that an award is payable, or in deeming a benefit to be incurred. For example, whether an insurer follows its procedural obligations and responds to applications for benefits in a timely manner, along with its processes for administering a claim, can be factors taken into consideration in finding an award payable. As noted above, I have already considered these factors in determining that an award is warranted in this case. Nevertheless, nothing in the Insurance Act or regulations grant the Tribunal the authority to award punitive damages.
With regard to the applicant’s request to add costs as an issue, the Tribunal considered Rule 19.2 in that an award for costs can be added at any time before the Tribunal issues an Order or decision. The Adjudicator added the issue of costs to be determined separately, on the basis that the respondent served new documentation on the applicant during the hearing in violation of the production orders at [65]. However, whether this conduct rises to the level of the high threshold for costs was to be another issue of determination.
Conclusion
Further submissions were ordered on the issue of costs, and a decision is forthcoming on that separate issue.
