"Incurred expense" to be given broad meaning.

January 08, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Ingarra and Western

Date of Decision: October 17, 2016

Heard Before: Adjudicator Thérèse Reilly

Issues:

Mr.  John Ingarra was injured in a car accident on August 28, 2004, and sought accident benefits from Western, however, when the parties were unable to resolve their disputes through mediation and Mr. Ingarra applied for arbitration at the FSCO.

Issue

1. Are the Treatment and Assessment Plan for for chiropractic treatment dated August 28, 2014 prepared by BodyWorx Vitality Inc. and an invoice relating to an OCF-21 for two chiropractic sessions October 21, 2014 provided by Maple Health Care and Rehab (the “OCF-21”), “incurred” expenses within the meaning of the Schedule?

Result

1. The Treatment and Assessment Plan for chiropractic treatment, dated August 28, 2014, prepared by BodyWorx Vitality Inc., and an invoice relating to an OCF-21 for two chiropractic sessions dated October 21, 2014, provided by Maple Health Care and Rehab (the “OCF-21”), are “incurred” expenses within the meaning of the Schedule.

EVIDENCE AND ANALYSIS:

The sole issue for determination at the Hearing is whether the OCF-18 and the OCF-21 are incurred expenses. No witnesses were called. The parties presented oral submissions as to their respective positions. Mr. Ingarra maintains both are incurred under section 18(1)(a) of the Schedule prior to the end of the applicable 10-year period and as such, Western is liable for payment. Mr. Ingarra maintains this position although treatment related to the OCF-18 was not provided and treatment related to the OCF-21 was received after the 10-year period. 

Western denies that the OCF-18 and OCF-21 are incurred. Treatment related to the OCF-18 was not provided within the 10-year period. Treatment relating to the OCF-21 was approved in November 2013, but actual treatment was not provided until September 16 and 26, 2014, which were after the expiry of the 10-year benefit period. As neither was provided to Western within the benefit period, Western maintains neither is incurred and it is not obliged to pay for either expense. 

An Agreed Statement of Fact was filed. The parties agreed on the following facts:

1. On August 28, 2004, Mr. Ingarra was a passenger involved in a motor vehicle accident. At the time, he was 16 years old.

2. Mr. Ingarra’s claim for statutory accident benefits from Western was reported on October 8, 2004.

3. On or about August 12, 2014, a Treatment and Assessment Plan (OCF-18) was prepared by BodyWorx Vitality Inc., requesting $1,042.67 for chiropractic treatment; specifically, 16 counts of “soft tissue of the chest and abdomen therapy” plus taxes. This OCF-18 was submitted through HCAI on August 20, 2014.

4. Mr. Ingarra has not yet received any treatment from BodyWorx as per the OCF-18 submitted.

5. On August 28, 2014, Western denied the OCF-18 on the basis that no medical or rehabilitation benefit is payable for more than 10 years after the accident, and that the 10-year limitation period had been reached.

6. On or around October 6, 2014, an Auto Insurance Standard Invoice (OCF-21) in the amount of $111.80 was submitted for two chiropractic sessions provided by Maple Health Care and Rehab. The OCF-21 referred to the OCF-18 approved on November 19, 2013 for 12 chiropractic sessions. Mr. Ingarra underwent one course of treatment on September 16, 2014 and another on September 26, 2014. At this time, Mr. Ingarra has received all 12 treatments; there are no outstanding invoices other than the $111.80 in dispute.

7. On October 21, 2014, Western Assurance Company denied payment of this OCF-21 on the basis that no medical or rehabilitation benefit is payable for more than 10 years after the accident and the 10-year limitation period had been reached.

8. The above noted issues were mediated and failed on January 29, 2016.

    

The Arbitrator reviewed the Applicable Statutory Language and determined that section 18(1)(a) of the Schedule reads as follows:

1. 18.(1) No medical or rehabilitation benefit is payable for expenses incurred,

   1. more than 10 years after the accident, in the case of an insured person who was 15 years of age or more at the time of the accident; or

   2. after the insured person attains 25 years of age, in the case of an insured person who was less than 15 years of age at the time of the accident.

2. No attendant care benefit is payable for expenses incurred more than 104 weeks after the accident.

3. Subsections (1) and (2) do not apply in respect of an insured person who sustains a catastrophic impairment as a result of the accident.

Mr. Ingarra advances three main arguments in favour of its position that the expenses were incurred prior to the 10-year limitation period.   First, Mr. Ingarra maintains the disputed expenses were all “incurred” prior to the expiration of the 10-year limitation period, pursuant to the definition adopted by the Ontario Court of Appeal in Monks v. ING Insurance Company of Canada.

[A]n insured...need not actually receive the item or services or spend the money or become legally obliged to do so. It is sufficient if the reasonable necessity of the service or item and the amount of the expenditure are determined with certainty before the end of [the specified time limit under the applicable benefits schedule.

Pursuant to this definition, an Applicant is not legally obligated to spend money or receive the items/services in question. Other cases followed this definition as well.

Second, Mr. Ingarra relies on a broad interpretation of the word “incurred”. In Monks, the Court of Appeal stated the Courts “have rejected a narrow construction of the word “incurred” as used in accident benefits schedules.” Mr. Ingarra maintains a broad interpretation is the standard for interpretation of the term “incurred”. Further, it is a well-established principle of insurance law that “coverage provisions are to be interpreted broadly, while coverage exclusions or restrictions are to be construed narrowly, in favour of the insured” and is consistent with the policy objectives under the Schedule.

Given the applicable definition of incurred, Mr. Ingarra maintains it is immaterial that the actual treatments were not received or received by Mr. Ingarra after the 10-year limitation. The actual expense was incurred well before the limitation period and, as such, Western has a duty to provide this benefit.

Mr. Ingarra maintains the expenses in issue meet the two-part Test of Certainty as defined in Monks and applied in Smith. As conceded by the parties, the expenses are reasonable and necessary, and this is not in issue. As to the second part of the test, the parties must be certain as to the amount of the expenditure with reasonable certainty. Mr. Ingarra asserts the amounts in question are reasonably certain.

Third, Mr. Ingarra maintains the cases cited by Western are not relevant as they refer to wording in various sections of the Schedule which are significantly different from the wording of section 18(1). In the cases cited by Western the wording in the decision was based on the words found in a predecessor Regulation and not “incurred” as found in section 18.

Western submits that the treatment and services related to the benefits in dispute were incurred after the expiration of the 10-year benefits coverage period, and hence the Insured is not entitled to payment. Western submits that section 18 of the Schedule ought to be given a narrow interpretation based on the clear and unambiguous language provided by the Legislature. It is submitted that section 18 specifically limits an Insured’s entitlement to medical and rehabilitation benefits for non-catastrophic injuries to 10 years from the date of the accident. An interpretation to the contrary would produce absurd consequences where an Insurer would be required to expend its resources indefinitely for non-catastrophic injuries.

Western cited many cases to support its position that their obligation to pay reasonable expenses is triggered when those expenses result from an accident and that result occurs within ten years of the date of the accident. Western argues that on a plain reading of the operative words it cannot be said that the expenses resulted within the benefit period. In the Arbitrator’s view, the language of s. 6(1), and particularly the phrase “benefit period,” connotes payment of expenses for a fixed period of time, and not potentially for the rest of an insured’s life where those expenses can be established with certainty within a fixed period of time. Western also submitted that the expenses in issue do not meet the exception criteria, and that the treatment sought was incurred outside of the coverage time, and consisted of a series of treatment that would not be concluded within a concise time period and after the expiration of the applicable coverage period.

Analysis

The Arbitrator accepted the applicable statutory interpretation of the term “incurred” adopted by the Court of Appeal in Monks, which provides that “It is well-established that insurance coverage provisions are to be interpreted broadly … to the extent that the word "incurred" as used in the SABS restricts the coverage available … it must be assigned a narrow meaning.”.

Moreover, a broad interpretation of the word "incurred" under the SABS is consistent with the policy objective that accident victims promptly receive the statutory accident benefits to which they are entitled under the Act and their automobile insurance policies. It also prevents an insurer from benefitting from an insured's lack of financial resources.

Second, the Arbitrator noted that based on Monks and Smith, and the wording of section 18(1), the relevant test of “incurred” is as defined in the Monks case and as applied in Smith. In the Monks case, the relevant wording that was interpreted read, ‘… Western must pay for all reasonable and necessary expenses incurred by or on behalf of an injury as a result of a motor vehicle accident.” The Court of Appeal cited Smith and concurred that the applicant need not actually receive the item or service or spend the money or become legally obliged to do so. It was sufficient if the reasonable necessity of the service or item and the amount of the expenditure are determined with certainty before the end of the specified time limit under the applicable benefits Schedule.

The Arbitrator preferred the cases cited by Ingarra as being more relevant to this case. The Arbitrator determined that the relevant criterion considered by the courts appears to be the wording in the relevant Schedule, statutory interpretation and legislative intent.

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