At our weekly Friday meeting, Taya Rosenberg discussed the recent decision of the Ontario Superior Court in Aviva General Insurance Company v. Catic, 2022 ONSC 6000.
This case was concerned with the interpretation of subsection 38(11)2 of the Statutory Accident Benefits Schedule (“SABS”), which sets out the consequences for an insurer when they fail to give a timely response to a treatment and assessment plan, as required by section 38(8) of the SABS.
Section 38(8) states that:
Within 10 business days after it receives the treatment and assessment plan, the insurer shall give the insured person a notice that identifies the goods, services, assessments and examinations described in the treatment and assessment plan that the insurer agrees to pay for, any the insurer does not agree to pay for and the medical reasons and all of the other reasons why the insurer considers any goods, services, assessments and examinations, or the proposed costs of them, not to be reasonable and necessary.
Section 38(11) states that:
If the insurer fails to give a notice in accordance with subsection (8) in connection with a treatment and assessment plan, the following rules apply:
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).
Facts and History of the Litigation
The insured, Ms. Catic, had been involved in a motor vehicle accident on July 15, 2016. She applied to Aviva General Insurance Company (“Aviva”) for benefits under the SABS.
On November 16, 2016, Ms. Catic submitted the treatment plan to Aviva, and sought coverage for the cost of a psychological assessment. On June 5, 2017, almost 7 months later, Aviva delivered an explanation of benefits and stated that the treatment plan was not “reasonable and necessary.”
It was not under dispute that Aviva had failed to deliver the explanation of benefits within the 10-day period. The insured did not incur any expenses under the treatment plan between November 15, 2016 and June 5, 2017.
Decision of First Instance and the Reconsideration Decision
In the decision of first instance, the Licence Appeal Tribunal (“the LAT”) concluded that the treatment plan was not “reasonable and necessary.” In the reconsideration decision, the Adjudicator determined that Ms. Catic was entitled to the treatment plan as it was “automatically payable by the insurer without proof of the services being incurred because of the insured’s failure to satisfy the notice requirements.”
The Parties’ Positions
Regarding the interpretation of section 38(11)2, Aviva’s position was that the Adjudicator was wrong in finding that the treatment plan was payable. They submitted that, properly read, section 38(11)2 only required an insurer to pay for the goods and services (1) actually incurred by the insured and (2) only between the 11th business day following the insurer’s receipt of the treatment plan and the date the insurer gives notice of their approval or denial (the “shall-pay” period). that incurred expenses need be paid.
Ms. Catic argued that in accepting Aviva’s interpretation, the purpose of section 38(8) and section 38(11)2 would be defeated. Ms. Catic submitted that since the SABS is consumer protection legislation, section 38(11)2 must be interpreted to compel an insurer to pay for all goods, services etc. described in the treatment plan if the insurer fails to give timely notice.
Additionally, section 38(11)2 does not require the insured to adduce evidence that services in the disputed treatment plan were incurred. It would be an unfair and unintended result if only those insureds with the financial ability to fund the expenses up front would be able to compel the insurer to pay for goods and services during the shall-pay period.
In its analysis, the Court noted that there have been competing decisions at the LAT regarding the interpretation of section 38(11)2.
On a plain reading of section 38(11)2, there is no requirement for any services to be “incurred” [and] it would be contrary to its consumer protection purpose to require an injured person to incur an expense prior to a finding by the Tribunal … because there would be little, if any incentive, for an insurer to comply with its obligations under section 38 otherwise. 
In 17-006851 v. RBC Insurance Company, 2018 CanLII 83514 (ONLAT), the insurer’s failure to comply with section 38(8) prevented it arguing that the Minor Injury Guidelines applied and the insurer was therefore obliged it to pay for any incurred treatment expenses during the shall-pay period. However, this finding was only supported by the fact that treatment was incurred by the insured during the shall-pay period.
In Sivalingam v. Unifund Assurance Company, 2021 CanLII 111087 (ONLAT), it was held that due to non-compliance with section 38(8), the insurer became liable for treatment plan services incurred during the “shall pay” period, but expenses incurred outside of this period would require the “reasonable and necessary” analysis.
the wording of section 38(11) is mandatory and requires an insurer to pay, for “all goods, services, assessments and examinations described in the treatment and assessment plan”. In our view, section 38(11) is akin to consumer protection legislation and is designed to protect victims of motor vehicle accidents where an insurer fails to respond within the prescribed time frame. It requires a broad and remedial interpretation.
While Ms. Catic suggested that Kyrylenko supported her reading of section 38(11)2, that it requires an insurer pay for all goods, services, assessments and examinations described in a treatment plan, the Superior Court noted that the Divisional Court did not address the question of whether an incurred expense was necessary in order to compel the payment requirement in the shall-pay period.
This Court disagreed that Kyrylenko supported the interpretation that goods and services are to be paid in the absence of an invoice. Instead, the Court found that section 38(11)2 compels an insurer who fails to provide the section 38(8) statutory notice to pay for all of the items listed in the subject treatment plan, but (1) only if they are incurred and (2) only for the period during which any denial notice remains outstanding (the shall-pay period). The Court provided six reasons for this finding:
- Subsections 38(8) and (11)2 must be read in conjunction with section 38(15), which requires the insurer to pay for goods and services it is “[…] required to pay for under this section within 30 days after receiving an invoice for them.”
- Section 38(11)2 does not specify that an expense does or does not need to be incurred for the payment obligation to be invoked.
- Treatment providers are usually a part of the communications between the insurers and the insured and are generally familiar with the SABS scheme:
“Those treatment providers will likely have sufficient knowledge of the SABS scheme to recognize that a treatment plan that is not denied within the mandated time frame must be paid if the subject goods and services are provided (and the accompanying expense incurred) prior to the insurer issuing a denial notice. In these circumstances, it is likely that the invoice will simply be sent by the treatment provider directly to the insurer, engaging the automatic payment obligation. I would think it would be a rare case where an insured would be expected to shoulder the costs of an unapproved treatment plan during the shall-pay period. ”
- If insurers were required to pay for non-incurred goods and services, an insured may receive payment for items not received or pursued and would defeat the purpose of the SABS.
- An insurer will suffer consequences should it fail to provide timely notice under section 38(8). During the shall-pay period, the insurer loses the ability to deny the goods and services in the treatment plan. Additionally, a failure to comply with the statutory notice requirement results in the insurer being prohibited from claiming that the insured’s impairments fall within the Minor Injury Guidelines.
- Lastly, the Legislature did not provide a clear intention that failure to provide timely notice would oblige insurers to pay the entirety of the goods and services set out in a treatment plan.
The Court found that Adjudicator erred in law in the reconsideration decision when he concluded that Aviva was obligated to pay the treatment plan under section 38(11)2 of the SABS. The reconsideration decision was set aside and the decision of first instance was reinstated. Aviva is only required to pay for the incurred goods, services, assessments and examinations described in the treatment plan for the relevant shall-pay period.