Insurers defending retroactive claims for Attendant Care Benefits on the basis of a claimant’s failure to submit an “Application for the Benefit” by means of an Assessment of Attendant Care Needs – Form 1 (“Form 1”) had best beware.
Until the decision in T.N. v. The Personal (FSCO A6-0003999, July 26, 2012), many insurers felt comfortable denying payment of Attendant Care Benefits until a Form 1 was received and then once the Form 1 was received, only paying from the date of receipt of the Form 1 forward. Denial of payment of any expenses prior to receipt of the Form 1 appeared to be explicitly sanctioned by s. 39(3) of the old Schedule, now s. 42(5). These sections provide:
An insurer may, but is not required to, pay an expense incurred before an assessment of attendant care needs that complies with this section is submitted to the insurer. (42(5))
An insurer may, but is not required to, pay an expense incurred before an assessment of attendant care needs that complies with ss. (1) is submitted to the insurer. (39(3))
A reasonable literal interpretation of these sections was that payment of any Attendant Care expenses prior to receipt of a Form 1 was completely voluntary and moreover, on submission of a Form 1, payment would be required but only from the date of the Form 1 forward, as the Form 1 was the document which set out the care needs and would only be reflective of the needs as of date of completion of the Form 1.
Moreover, the correspondent provisions of s. 39 clearly indicated that an insurer was only obliged to begin payment within 10 business days after receipt of the Form 1. Similarly, the insurer’s right to assess Attendant Care needs and correspondingly adjust the Attendant Care claim appeared to arise only after receipt of the Form 1. Pending receipt of the Form 1, the insurer had no explicit right to assess the insured’s Attendant Care needs (save for some unusual situations in which the insured person agreed to a Pre-Claim examination. Even then, the Pre-Claim examination would be of limited weight as it could not be relied upon for a determination that a person was not entitled to a benefit).
In T.N., Arbitrator Bayefsky did not accept this interpretation. T.N. is a complex case involving a retroactive Attendant Care needs claim to 2000 arising out of a motor vehicle accident in that year. The insurer argued, in part, that it was not required to pay an Attendant Care Benefit until such time as it received a formal application for those benefits. As of 2005, s. 39(1) of the old Schedule determined that the application for Attendant Care Benefits must be in the Form 1 format. While accepting that T.N. did not submit a Form 1 to the insurer until December 2006, Arbitrator Bayefsky found that this failure did not relieve the insurer of its obligation to pay Attendant Care Benefits to which she might have been entitled to prior to submission of the Form 1.
Arbitrator Bayefsky found that s. 39(3) did not displace the insurer’s obligation to pay “reasonable and necessary Attendant Care Benefits” determined in accordance with a duly prepared Form 1. While s. 39(3) provided that an insurer was not required to pay Attendant Care Benefits before the Form 1 was submitted, this did not, in Arbitrator Bayefsky’s view, mean that an insured forfeited their right to Attendant Care Benefits prior to submission or that the insurer would be relieved of any obligation to pay Attendant Care Benefits prior to the Form 1 being submitted.
In Arbitrator Bayefsky’s view, stronger statutory language would be required to effect this purpose. His interpretation of s. 39(3) is that it “protects the insurer” from having to determine what it should pay in the absence of a specific and legitimate Form 1. He found that the question of whether a person is entitled to Attendant Care Benefits prior to the submission of the Form 1 can only be assessed in the light of the evidence at the relevant time. The question at that point would be whether the evidence prior to receipt of the Form 1 reflects the assessment contained in the Form 1. Accordingly, Arbitrator Bayefsky’s ruling leaves the determination of Attendant Care Benefits prior to submission of a Form 1 to the evidence led by the insured, and therefore, creates an open-ended exposure for the insurer for the period prior to submission of a Form 1.
It is somewhat difficult to understand how Arbitrator Bayefsky could view this as a “protection” for an insurer. An insurer is only protected if it is able to assess its exposure and payment obligations. By suggesting that submission of a Form 1 was simply a formality, Arbitrator Bayefsky creates a rather dangerous situation. It is dangerous because an insurer will be facing uncertain exposure until a Form 1 is submitted. What Arbitrator Bayefsky does not appear to take into account is that an insurer’s ability to assess Attendant Care needs is triggered by submission of a Form 1. Absent a submitted Form 1, the insurer has no ability to assess under the Schedule and accordingly, is precluded from even addressing its exposure. It is difficult to see how this “protects an insurer from determining what it should pay”. Insurers are generally better off if they can determine what it is they should have to pay rather than facing unknown and unquantified exposure until such time as an insured decides to submit a Form 1.
On truly serious claims, an insurer will have either completed a Pre-Claim examination or, alternatively, the insured, if they have ended up in a trauma unit, will likely have representation by one of the major personal injury firms before discharge and, in that case, their Attendant Care needs (while in hospital) will have already been quantified. While the assessed needs may not always be accurate, at least the submission of the Form 1 allows the insurer to assess its exposure and determine how to proceed.
The more dangerous claims are those claims which do not appear serious initially and in which a claimant seeks representation six to eight months to a year after the accident and then submits a Form 1. An insurer in those cases would have felt quite comfortable paying the Attendant Care Benefit from receipt of the Form 1 forward and then conducting its own assessment. Given T.N. however, an insurer now faces an unquantified exposure for a period of time during which it may have limited or no information as to the extent of the Attendant Care needs or “expenses incurred”. A situation such as this is dangerous as it, to some extent, may encourage a late submission of a Form 1 so as to trigger the potential for a large retroactive claim to leverage further funds from an insurer.
In light of T.N., insurers are well advised to request submissions of Form 1s, conduct Pre-Claim examinations, and obtain as much evidence as possible as to the insured’s functionality from the date of loss forward.