Full Decision
Improper notice denying treatment prevents insurer from relying on MIG until defect corrected.
This was an appeal to the Divisional Court of the orders of Judicial Shapiro and Executive Chair Lamoureux of the LAT. It concerned two separate LAT cases dealing with the same issue.
The issue was whether or not a defective notice under the SABS, denying a treatment plan, precluded an insurer from taking the position that the MIG applied.
The facts in both cases are similar. In the Zheng case, Zheng was initially diagnosed with a minor injury to which the MIG applied. Aviva paid for med/rehab benefits that took him to the $3,500 MIG limit. Another treatment plan was submitted. Aviva denied the treatment. The reasons given were as follows: “The frequency of care does not generally diminish over time”. There was no reference to the MIG in the denial. Zheng subsequently paid for treatment.
In the Cai case, Aviva paid for treatment up to $3,500 (the MIG limit). Another treatment plan was submitted. Aviva denied treatment. The denial letter referenced the $3,500 limit but never explicitly stated that Aviva believed the MIG applied. It never directly mentioned the MIG. Aviva, however, enclosed portions of the SABS regulation concerning the MIG. Cai also subsequently paid for treatment.
Under s. 38(8) of the SABS, within 10 business days after the insurer receives the treatment plan, it must give notice identifying the goods and services it will not pay for. It must also identify in the notice the medical reasons and all the other reasons why the plan is not reasonable and necessary.
Under s. 38(9), if the insurer believes the MIG applies, the notice must “so advise”.
Subsection 38(11) outlines the consequences to the insurer for failing to give proper notice. It says:
- The insurer is prohibited from taking the position that the insured person has an impairment to which the MIG applies; and
- The insurer must pay for the goods and services in the treatment plan starting from the 11th business day after the insurer received the plan to the day the insurer gives proper notice.
It was Aviva’s position that the denials were proper. Further, even if s. 38(11) applied, it only required the insurer to pay for the plan if it was reasonable and necessary. That subsection does not make the plan automatically payable because of an improper notice.
At both levels of the LAT, the denials were held to be improper. Zheng’s denial did not reference the MIG. The reasons for the denial were meaningless and therefore were not reasons at all. Cai’s denial did not directly mention the MIG or directly state that Aviva denied treatment because it believed the MIG applied. These findings were not at issue in the appeal to Divisional Court. The only issue concerned the consequences under s. 38(11).
The Divisional Court found that the standard of review was one of reasonableness as the LAT was interpreting one of its “home statutes”. When assessing reasonableness, the court would look to the transparency and intelligibility of the reasons, and whether the decision falls within a range of possible, acceptable outcomes.
Divisional Court found that the LAT decisions were reasonable. Subsection 38(11) specifically states that if an insurer provides an improper notice, it cannot take the position that the MIG applies to the impairment. It is also required to pay for goods and services in the plan until proper notice is given. There is no monetary limit on what the insurer must pay. These consequences are mandatory, which aligns with the consumer protection focus of the SABS. The reasonableness or necessity of the plan is not to be considered.
The wording of s. 38(11) could potentially be interpreted to mean the insurer is prohibited from ever taking the position that the MIG applies following a defective notice. The Divisional Court clarified, however, that the prohibition only applies to the plan in dispute and not beyond that plan.
