Volume. 7 Issue. 5 – February 15, 2023
For the fourth and now final time, the sufficiency of an IRB denial based solely upon the fact of the Applicant having returned to work is considered. And we appear to have come full circle. The Court of Appeal, in Varriano v Allstate, finally puts this saga to rest. In December 2021, we highlighted the Court’s decision in Varriano, whereby the decision by the Tribunal, upheld on Reconsideration, that a “return to work” denial satisfied the denial notice provisions, was in fact not sufficient, as it “left entirely unclear Allstate’s position on Mr. Varriano’s future eligibility for IRBs. Because Allstate’s Benefits Letter did not address the “medical reasons” for their denial, Mr. Varriano was unable to assess the full impact of their denial on his future rights.”
To that end, the Tribunal, in 19-010651 v Primmum, varied its own decision in a very similar fact situation, finding that Varriano “invalidates the denial on the basis that Primmum’s correspondence failed to include a medical reason, or, as I understand the Court’s requirement, failed to provide an indication that the applicant’s IRB was not being denied for a medical reason. The Court’s rationale does not provide discretion to navigate the facts on which Primmum and I relied.” Noting at the time that Varriano was subject of Appeal, the Tribunal further noted that “the effect of this reasoning on similar cases moving forward and on those already decided remains unclear, but the Court’s direction is binding on me.”
Read on further for the final word, in Medical Reasons Not Required for IRB Denial.
LAT Update – What Difference Did A Year Make?
The LAT released Performance Stats up to mid-year 7 which is current through to the end of September 2022. Together with the LAT’s last update we can now provide a comparison of year over year, with projections through to the end of year 7 in this annual update. What difference did a year make?
Court Weighs in For the Final Time Regarding Need for Medical Reasons in IRB Denial
Medical Reasons Not Required for IRB Denial – The Court of Appeal, in Varriano v Allstate, found that the Court’s interpretation of s.37(4) of the Schedule was incorrect. The section in question indicates that “If the insurer determines that an insured person is not entitled or is no longer entitled to receive a specified benefit on any one or more grounds set out in subsection (2), the insurer shall advise the insured person of its determination and the medical and any other reasons for its determination. S.37(2) confirms that an insurer shall not discontinue paying a specified benefit to an insured person unless one of seven conditions is satisfied, one being that “the insured person has resumed his or her pre-accident employment duties”.
It was noted that in the original Court decision, “a plain reading of s. 37(4) supported the interpretation of the word “and” in the phrase “medical and any other reasons” as bearing a conjunctive meaning… an impaired person would not be able to assess the “full impact” of a stoppage decision if the insurer did not provide their position on the insured’s medical impairment.” Therefore, as Allstate’s denial did not refer to Varriano’s medical condition. It was determined to be “insufficient to trigger the two-year limitation period as it did not allow Mr. Varriano to assess his future eligibility under the SABS.”
On appeal, the Court found that “the requirement to provide reasons in s. 37(4) is inextricably tied to the grounds for discontinuance of benefits stipulated in s. 37(2) … Some of the grounds under s. 37(2) are medical and some are not. For example, ss. 37(2)(a), (d), (f) and (g) provide for non-medical grounds to terminate benefits.” Further, “. 37(4) states that the insurer may rely on “any one or more grounds set out in [s. 37(2)]” in terminating benefits. By explicitly including those words, s. 37(4) recognizes that an insurer may rely on a single non-medical reason for termination of benefits, even though the insured might be otherwise medically entitled to the benefit. In such case, a medical ground is not a “reason” for the insurer’s determination under s. 37(4).” The decision of the Court, required “the insurer to state its position on the person’s medical eligibility even if that is not the basis for its determination.”
Accordingly, s.37(4) “requires provision of the insurer’s actual reasons for determination. If the insurer relies on a medical and a non-medical reason to deny benefits, the insurer must advise the insured person of both. However, if the insurer is relying on a non-medical ground under s. 37(2), the provision requires only that the insurer provide notice of the cancellation of the benefits and to provide the insured with the non-medical reason for that determination.”
Further, “…the sufficiency of the content of those reasons is determined by the grounds for termination of benefits. Where the insurer relies solely on a single non-medical ground for denying benefits, requiring the addition of a line stating, “there are no medical reasons for this denial”, would not further assist an insured in deciding whether to challenge the denial of benefits.”
Concluding, “I would allow the appeal, set aside the order of the Divisional Court, and reinstate the decision of the LAT.” Allstate was “entitled to its costs on this appeal, before the Divisional Court, as well as its successful leave application. Those costs are fixed in the amount of $24,500 all-inclusive.”
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