Category: Exclusions

Kyrylenko v. Aviva Insurance Canada, 2021 ONSC 4929

Justices Swinton, Corbett, and McKelvey of the Superior Court of Justice heard the appeal of Kyrylenko v. Aviva Insurance Canada from the decision of the License Appeal Tribunal (“LAT”) denying treatment plans for the appellant under section 38 of the Statutory Accident Benefits Schedule (“SABS”). The issue in this appeal is whether the adjudicator erred by failing to apply section 38(11) of the SABS to the two treatment and assessment plans that were claimed by the appellant.

Background

On September 11, 2017, two OCF-18 treatment and assessment plans were submitted by the appellant to the respondent insurer. The claims were rejected by the insurer on November 16, 2017.

Section 38(8) of the SABS states the following:

(8) 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, and 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.

Further, section 38(11) of the SABS states the following:

38(11) 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).

Based on section 38(8) of the SABS, the respondent insurer failed to provide the insured person notice within the 10-day time frame.

The appellant’s entitlement to the two benefits was first heard by an adjudicator on February 12, 2019. The hearing dealt with the appellant’s claim for physiotherapy treatment of $1,232.12 as well as a claim for an in-home assessment for the sum of $1,521.26. The claim for the in-home assessment was in relation to an assessment that was conducted on October 30, 2017. The physiotherapy treatment began prior to the date on which the insured made a claim to their insurer.

The appellant’s claims were initially denied, but the appellant asked for a reconsideration of their claim, referring to their argument under section 38 of the SABS. With respect to the OCF-18 in the amount of $1,232.12 for physiotherapy treatment, the adjudicator stated that there were problems with some of the expenses and it was unclear when they had been incurred. Section 38(2) of the SABS does not require payment for expenses before a treatment plan is submitted. Further, following the Supreme Court of Canada decision of Smith v. Co-Operators, which requires the applicant to prove its claim despite deficiencies, the adjudicator concluded that the proposed expenses were not reasonable and necessary.

With respect to the OCF-18 in the amount of $1,521.26 for an assessment of attendant care needs, the tribunal initially failed to address the issue under section 38(11) of the SABS. On reconsideration, the adjudicator found that there was no evidence that attendant care benefits were needed by the applicant. There was no evidence that the applicant’s mother or sister were professional personal care workers and the appellant failed to submit any evidence that the mother and sister suffered economic loss, as required under section 19(3) of the SABS. Therefore, the adjudicator found that the proposed OCF-18 was not reasonable and necessary.

Analysis

The parties agreed that pursuant to section 11(6) of Schedule G of the License Appeal Tribunal Act, SO 1990 c. C.12, an appeal from a decision of the tribunal relating to a matter under the Insurance Act may be made on a question of law only. The applicable standard of review in a statutory appeal from the LAT is correctness.

With respect to the OCF-18 in the amount of $1,232.12 for physiotherapy treatment, the respondent insurer argued that it cannot be held responsible under section 38(11) for any amounts that pre-date eleven business days following the submission of the claim. The insurer submitted that this claim was properly dismissed by the adjudicator because the appellant failed to establish which amounts were incurred during the relevant timeframe.

Justices Swinton, Corbett, and McKelvey note that the adjudicator failed to address the fact that there were expenses incurred during the time frame covered by section 38(11). The adjudicator also stated that the proposed expenses were not found to be reasonable and necessary, but section 38(11) does not include that requirement. Section 38(11) requires an insurer to pay “for all goods, services, assessments and examinations described in the treatment and assessment plan.” The Court concluded that section 38(11) was comparable to consumer protection legislation in that it was designed to protect the individual where an insurer fails to respond within the prescribed time frame. It requires a broad and remedial interpretation. Therefore, the adjudicator should have asked the insured to specify which expenses were incurred during the appropriate time frame and ordered payment accordingly.

With respect to the OCF-18 in the amount of $1,521.26 for an assessment of attendant care needs, there was no issue with respect to the costs of the assessment being incurred within the time frame contemplated by section 38(11). The adjudicator, however, noted that there was no evidence before the Tribunal that the applicant needed attendant care benefits. Justices Swinton, Corbett, and McKelvey concluded that the issue was not whether the insured needed attendant care benefits, but rather whether an assessment was conducted and if so, whether the costs of that assessment would be covered under section 38(11).

The insurer argued that there was an inconsistency between section 38(11) and section 25(2) of the SABS. Section 25(2) states the following:

25(2) Despite subsection (1), an insurer is not required to pay for an assessment or examination conducted in the insured person’s home unless the insured person has sustained an impairment that is not a minor injury.

On appeal, the Court concluded that there was no inconsistency between the provisions of section 38(11) and section 25(2). Section 38(11) stated that if an insurer fails to give notice in accordance with subsection (8), the insurer is prohibited from taking the position that the insured person has an impairment that falls under the minor injury guideline. Therefore, even though the Tribunal initial determined that the appellant’s claim fell within the minor injury guideline, this provision of the SABS precludes them from relying on that when responding to the insured’s claim. As a result, the adjudicator erred in law when they denied the claim for the in-home assessment.

The Court granted the appeal and held that the insurer was liable for payment of all amounts relating to the period after 11 business days up until a proper denial. Whether the claimed benefits were “reasonable and necessary” was irrelevant, as was the section 25(2) prohibition with respect to in-home assessments for MIG claims. Section 38(11) created an automatic right to payment regardless of the benefit being reasonable and necessary or the claimant being in the MIG.

Justices Swinton, Corbett, and McKelvey ordered the insured to pay the sum of $1,521.26 plus those portions of the physiotherapy expenses which fell within section 38(8) of the SABS to the appellant, together with interest calculated according to the SABS.

Moore Equipment Ltd. v. Temple Insurance Company, 2021 ONSC 3622

In Moore Equipment Ltd. v. Temple Insurance Company, Justice Smith considers an insurer’s duty to defend and indemnity an “Unnamed Insured.”

In this case, the applicant, Moore Equipment Ltd. (“Moore), leased a Skyjack scissor lift to Bondfield Construction Company Limited (“Bondfield”) to be used on a construction project to install solar panels on the roof of a building.

The lease between Moore and Bondfield specified that Bondfield would assume all risk and was responsible for all damages and losses incurred while leasing the Skyjack scissor lift. Bondfield also agreed to obtain all risk liability insurance for the construction project, naming Moore as an insured party.

Bondfield obtained a specific Commercial General Liability Policy (“CGL”) for the project with the Respondent, Temple Insurance Company (“Temple”), but they failed to name Moore as an insured party under the policy. An action for damages was commenced against Bondfield and Moore after an individual was injured while using the Skyjack scissor lift to inspect the installation of the solar panels.

Moore brought an application seeking a declaration that Temple is obligated to insure and indemnity them for any damages claimed in the action as a result of Bondfield’s CGL insurance policy. Moore claims that they are either an additional insured or an “Unnamed Insured” under the policy.

On the other hand, Temple submits that Bondfield failed to name Moore as an additional insured under its policy and that as a result, they have no duty to indemnify or defend Moore in the action.

Justice Smith considered whether Moore was an “Unnamed Insured” entitled to insurance coverage pursuant to Endorsement no.13 of Temple’s policy and concluded that Moore’s application should be dismissed.

Endorsement no. 13 of Temple’s insurance policy reads as follows:

5. Any person, firm, municipality, government agency or corporation (hereafter referred to as an “Unnamed Insured”) in whose name the Named Insured has, by written agreement, contracted to effect insurance as provided by this policy. However, the insurance provided for such Unnamed Insured is restricted to apply solely to liability arising out of operations performed by or on behalf of the Named Insured in connection with contract(s) performed for such Unnamed Insured.

Legal Test

Justice Smith references the cases of Papapetrou v. 1054422 Ontario Ltd. and Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada. In Papapetrou v. 1054422 Ontario Ltd, 2012 ONCA 506 at paragraph 34, the Ontario Court of Appeal held that an insurer’s duty to defend arises where there is a mere possibility that the facts alleged in the pleadings, if proven to be true, would require the insurer to indemnify the insured for the claim.

However, the Supreme Court in Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33 stated that if the insurer can demonstrate that the claim falls outside of the policy’s grant of coverage, or is excluded by an exclusion clause, the insurer’s duty to defend does not arise.

Is Moore Considered an “Unnamed Insured?”

Bondfield and Moore were under the impression that the scissor lift lease stated that Bondfield would assume all risk with respect to the operation and use of the scissor lift, while it was in its control. Bondfield would be responsible for all damages and losses. Bondfield also agreed to indemnify and hold Moore harmless, supporting the finding that both parties believed that Bondfield would assume all risks with respect to the operation and use of the scissor lift.

The first sentence of paragraph 5 of the lease states the following:

“Any person … corporation (hereafter referred to as an “Unnamed Insured”) in whose name the “Named Insured” has, by written agreement (“the lease”) contracted to effect insurance as provided by this policy.”

As Bondfield contracted, in writing, by signing the lease, to effect insurance as provided by Temple’s CGL policy, Moore meets the definition of an “Unnamed Insured.”

The second sentence of paragraph 5 of the lease states the following:

“However, the insurance provided for the “Unnamed Insured” is restricted to apply solely to liability arising out of operations performed by or on behalf of the “Named Insured” in connection with the contract performed for the “Unnamed Insured.”

The insurance coverage for an “Unnamed Insured” such as Moore is limited to operations performed by or on behalf of the “Named Insured,” Bondfield, in connection with contracts performed for Moore. The question that remains is whether or not the use of the scissor lift to inspect the installation of the solar panels was in connection with a contract “performed for” Moore.

The contract between Moore and Bondfield was for the lease of the scissor lift to be used on a construction project to install solar panels on the roof of a building. The contract between Bondfield and Potentia Solar Inc. was to install the solar panels, including electrical inspection. The insurance coverage for an “Unnamed Insured” is restricted to liabilities arising out of the operations performed by Bondfield “in connection with the contract(s) performed for Moore.”

The electrical inspection and use of the scissor lift to inspect the solar panels was not an operation performed by Bondfield in connection with the contract performed for Moore, but rather performed for Potentia Solar Inc.
As the scissor lift was being used in connection with the contract performed by Bondfield for Potentia Solar Inc., the limitation of Endorsement no. 13 does not allow for Moore to be considered an “Unnamed Insured” under the lease.

Justice Smith concluded that the restriction of liability insurance coverage for an “Unnamed Insured” solely for liability arising out of operations performed by or on behalf of Bondfield for Moore was unambiguous. The liability in this case arose out of the operations performed by Bondfield, but did not arise in connection with the contract performed “for Moore.” For those reasons, Justice Smith concluded that Moore was an “Unnamed Insured,” but subject to the restriction on coverage in Endorsement no. 13, Moore’s application should be dismissed.