MIG Update – November 7, 2022

Court Rules – “Consumer Protection Should Not Result in Consumer Windfall”

In this special edition of MIG Monday, we delve into a historical review of Catic v Aviva, a s38(8) late notice case wherein the Tribunal on reconsideration held the related plan was ‘automatically payable even without services being incurred’.

This past week on appeal the Court set aside the reconsideration reinstating the decision of first instance.

In an earlier Special Edition LAT inFORMER it was noted that the Tribunal appeared conflicted with respect to whether s.38(11) requires items in dispute to be incurred in the event of s.38(8) non-compliance. One of the cases discussed in that issue under 19-005572 v Aviva, was the Catic matter. In this update, the Court ruled on the interpretation on the s38(11) 2, the ‘shall pay provision’ acknowledging there are competing interpretations on the issue at the LAT.

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Factor: s38 (8) Non-Compliance & s38(11)2 – ‘Shall Pay’ Period

Consumer Protection Should Not Result in Consumer Windfall – In Aviva v Catic, Aviva had delivered a denial notice well outside of the prescribed 10 day period post submission, however there was also no dispute, that Catic had not incurred any of the expenses under the plan in question prior to the delivery of said notice.

The Court commented that the appeal of the aforementioned reconsideration “raises the narrow but important issue of the interpretation which should be given to s.38(11)2 of the SABS, which sets out the consequences which flow from an insurer’s failure to give the timely notice called for in s. 38(8) of the SABS.” The Court further commented that “there are competing decisions at the LAT on this issue” with each party relying upon LAT precedents in support of their respective positions.

Aviva’s Position

Aviva advanced essentially that s.38(11)2 requires only that the insurer “shall pay” any amounts incurred until an effective notice was provided.

Catic’s Position

Catic argued that “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.”

Catic suggested that the Court’s decision in Kyrylenko v. Aviva “stands for the proposition that the wording of s. 38(11) is mandatory and requires an insurer to pay for all goods, services, assessments and examinations described in an OCF-18 (a treatment plan).” The Court however disagreed.

The Court Held:

• “The Court in Kyrylenko did not address the question of whether an incurred expense was necessary in order to compel the payment requirement in the shall-pay period. The Court clearly specified “physiotherapy expenses” which I take to mean monies outlaid or costs incurred for physiotherapy services. I am unable to conclude that this case stands for the proposition that goods and services are to be paid even in the absence of an accompanying expense or invoice.”
• To the contrary, “I find that s. 38(11)2 operates so as to compel an insurer who fails to provide the statutory notice called for in s. 38(8) to pay for all of the items listed in the subject treatment plan, but only if they are incurred and only for the period during which any denial notice remains outstanding”.
• “While s. 38(11)2 does not specify that an expense need be incurred for the payment obligation to be invoked, the opposite is also true – the section does not require payment to be made in respect of non-incurred goods and services.” In addition, “consumer protection should not result in consumer windfall. A requirement that the insurer must pay for non-incurred goods and services may result in an insured receiving payment for items that it elects not to receive or pursue.”
• In taking “Judicial notice that treatment providers are normally, if not automatically, tied into the communications between the insurers and the insured…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.”
• This appeal was concerning a rather “narrow” issue, being the payment requirements under s.38 in the event an effective notice was delivered beyond the 10 days required. The Court in Kyrylenko dealt with a similar fact situation. In these circumstances, a treatment plan is not payable unless it was incurred within the prescribed window. This appears to differ somewhat from cases wherein a deficient notice was not “cured”, with the Tribunal and the Courts indicating that the entirety of the plan(s) in dispute are payable, although need not be paid until such time as they are incurred.

The importance of this distinction is exemplified in two recent “MIG Hold” cases, where the Tribunal, notwithstanding the MIG confirmation, ordered treatment plans in excess of $26,000 to be payable. These cases will be further explored in our upcoming November 9th edition of the LAT inFormer.

If you Have Read This Far…

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