Volume. 5 Issue. 40- September 8, 2021

What is an insurer’s liability for payment of medical benefits in the event of a notice deficiency? Good question… The Tribunal appears conflicted with respect to whether s.38(11) requires the medical benefit in dispute to be incurred in the event of s.38(8) non-compliance. We have previously referenced decisions where this was the case.

This trend continues as we explore three related reconsiderations, two of which resulted in an amended decision. In somewhat of a twist, the final decision reconfirms that the benefits in dispute need not be incurred to be “payable”, however need not be “paid” until incurred.

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Incurred A Requirement to Trigger Payment Provision Under S.38(11)?

Defect Cured and Not Incurred – In the original decision of A.T. v Aviva (18-010303), the Tribunal found that as the Respondent’s first two denial notices were deficient, they were obliged as per s.38(11) to pay any amounts incurred during the period of non-compliance until the date the defect was cured.

The Tribunal further noted however that “it is well-settled that once the defective notice is cured, there is no ongoing exposure to pay incurred amounts.” Therefore, the period for which payment was required was July 4, 2018 through to October 12, 2018.

Seeking Reconsideration, A.T. sought payment of the Treatment Plan in full. It was contended by A.T. that “treatment under the above noted plan continues to be incurred to date and shall be payable in full or in the alternative to a date to be determined.”

Upholding the decision, the Tribunal however further noted that “it does not appear that the applicant furnished any evidence at first instance of incurred treatment amounts during the period of non-compliance that would have resulted in payment.” Similarly, “on reconsideration, I was also not directed to evidence that treatment, partially or in full, was incurred by the applicant during the period of non-compliance”. It was reconfirmed that a determination that the deficient notice had been “cured” was well within his purview, and “there are numerous decisions from this Tribunal confirming this interpretation.”

Defect Cannot be Cured and No Need to Incur – Whereas the above seems to fairly reflect settled jurisprudence at the Tribunal, the adjudicator in Catic v Aviva (19-005572), hearing his own Reconsideration, reversed course entirely, in direct contrast to the apparent “jurisprudence”.

In the original decision, the Tribunal had found that Catic was entitled to the cost of a psychological assessment, beginning on the 11th business day following submission until the denial, provided three months later, if the assessment was incurred. Upon Reconsideration heard by the original adjudicator, Catic contended both that a late notice cannot be “cured” beyond the 10 day response window, and that there is no need for the item in dispute to have been incurred.

The Tribunal now agreed with Catic that the assessment in dispute does not need to be incurred. The Tribunal followed upon an earlier decision, P.M. v. Aviva (reported below), wherein it was found “there is no requirement for any services to be ‘incurred’ … 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 on issues raised over compliance…because there would be little, if any incentive, for an insurer to comply with its obligations under s. 38 otherwise.” The Tribunal was persuaded by this decision, concluding that the psychological assessment was payable, as “In the present case, although I agreed that the Respondent failed to satisfy the requirements set out in s. 38(8), I erred in not finding that the treatment plan was automatically payable, even without proof of services being incurred.”

Payable If Incurred – Yes and No – In a final s.38(11) reconsideration also heard by the original adjudicator, the Tribunal both agreed and disagreed with the Respondent’s submissions regarding whether the Applicant was obliged to incur expenses before they became payable. In P.M. v Aviva (19-002717), the Respondent submitted that the Tribunal “erred in law by vitiating its right to ‘cure’ its deficient notices… an insurer’s liability for payment of goods and services …as a result of its failure to comply with sections 38(8) and 38(9) of the Schedule only ends upon delivery of a compliant denial notice pursuant to s. 38(11), and not as a result of a decision of the Tribunal. I disagree.”

Further, were this the case, “then the outcome of the decision would only be a finding that the respondent’s denial notices were non-compliant… would neither resolve the substantive issues between the parties nor provide any clarity to the applicant on whether she is entitled to the benefits in dispute”. Such a finding would run “afoul of the Schedule’s consumer protection mandate… an absurd, unreasonable, and inequitable result and would also strip the Tribunal of its jurisdiction to resolve accident benefit matters”. Therefore “the respondent’s opportunity to cure its defective denial notices ended upon the issuance of the decision.”

However, the Respondent also argued there to have been an error in law by requiring payment of the two Treatment Plans regardless of whether they are ever incurred, which would result in a “lump sum monetary windfall to the applicant which is outside of the Tribunal’s jurisdiction.” In response, the Tribunal agreed that while finding the plans were payable, “the decision was silent on whether the treatment plans were ever required to be incurred prior to payment”.

As a result, the Tribunal varied the original decision by clarifying that “even though I found that the treatment plans submitted on February 28, 2018 and September 7, 2018 were payable and need not be incurred prior to a decision being made on the issue regarding the respondent’s compliance with s. 38, the benefits to which the applicant is entitled are only payable 30 days after an invoice has been submitted for services rendered in accordance with s. 38(15).”

Related LAT inFORMER/MIG Monday issues:

Court Remedies Tribunal’s failure to Invoke S.38(11)

Consequence of Notice Sufficiency
Insurer Obligated to Pay as Insured Could Have Incurred the Treatment

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