Accident victims pursue $600 million in lawsuits

Written By Aidan Macnab | Law Times

Six Ontario automobile insurers have been named in a series of class-action lawsuits by accident victims who are seeking millions in benefits they say they were denied because the insurer improperly subtracted the harmonized sales tax from their benefits packages.

Lawyers for the class members are seeking an injunction to have the insurance companies cease subtracting the HST from payable benefits. They are also asking the court for a damages assessment to have the insurance companies pay back to injured claimants the HST they charged them since 2010, when the tax was introduced. They are asking for punitive damages as well.

Six insurers are named in the suit: Aviva Insurance Company of CanadaIntact Insurance CompanyCertas Home and Automobile Insurance Company, Belair Insurance Company Inc.Allstate Insurance Company of Canada and Unifund Assurance Company.

The claim also accuses the Financial Services Commission of Ontario of turning a blind eye to the practice of the insurers after they were notified that their policies regarding the HST were not being followed properly.

Acting for the insurance claimants is Paul Harte of Harte Law PC, Kevin Kemp of Kemp Law PC in Alliston, Ont. and Jay Ralston of Murray Ralston PC in Barrie, Ont.

Harte says that, aside from the class-action lawsuits, the issue will require a response from the provincial government. He says it is a widespread industry practice and they are still investigating in order to add insurers to their list.

“You cannot sell auto insurance in this province without a licence from FSCO,” Harte says. “So, if the government wanted to stop this practice, they could stop it immediately by directing FSCO to take disciplinary action against the insurance companies that continue this practice and ultimately threaten their licence to sell insurance.”

NDP member Gurratan Singh has expressed interest in the issue, says Harte, but he has not heard anything from the Liberals or Progressive Conservative Party.

“We certainly hope that the new government has a lot more concern for the little guy — the small individual that’s injured in these accidents, because there are over 60,000 a year in the province that are injured,” says Ralston. The six claimants have claimed “general, special and aggravated damages” of $100 million each, for “personal injury costs and economic loss,” which would total $600 million.

According to an email from Teri Lehmann of Intact Insurance Company, which was part of a media brief provided by lawyers for the class action claimants, Intact modified its system so that HST no longer comes out of its customers’ benefits.

Ralston says Belair has also reimbursed some of its customers who were charged the HST.

In 2016, on behalf of the Ontario Trial Lawyers Association, then-president Adam Wagman wrote to CEO and superintendent of the FSCO, Brian Mills, to alert him of the practice by insurers regarding the HST.

Ronald Bohm, president of the OTLA, says that prior to that, members raised the issue within the OTLA.

“While individually they were often small amounts, it seemed like it was wrong and it ought not to have been taking place,” he says. “So, once we looked into it a little bit, [we] realized that the concerns were well founded.”

Bohm says the FSCO told the OTLA it was aware insurers had been misapplying the HST, that it had contacted them and those insurers had ensured the regulator they would not subtract the HST from benefits in the future.

In two 2017 decisions from the Ontario Licence Appeal Tribunal, Aviva was forced to pay the HST for injury claimants. In another Licence Appeal Tribunal decision between an injured claimant and the Motor Vehicle Accident Claims Fund, adjudicator Ian Maedel wrote, “It has long been FSCO’s policy that H.S.T. is payable in addition to any rehabilitation benefit.”

Responding to a request for comment, Aviva said via email that it is seeking clarification from the government on how the tax is applied to its customers.

“In fact, this is part of our commitment to continually explore ways to reduce or eliminate complexity for them and to increase trust in the insurance industry overall. We exist to help our customers in their time of need,” says Aviva Canada spokesman Fabrice de Dongo.

As the issue is before the courts, it is inappropriate to comment on the details, says de Dongo. In an emailed statement, Sarah Kennedy, director of corporate communications for Royal & Sun Alliance Insurance Company of Canada, which controls Unifund Assurance company, said, “As this matter is before the court, we cannot provide comment.”

Certas Home and Automobile Insurance Company is controlled by Desjardins. Its spokesman,  John Bordignon, said via email that the company was “unable to comment further.” Intact Insurance Company, Belair Insurance Company Inc. and Allstate Insurance Company of Canada could not immediately provide comment.

Malon Edwards, senior communications officer for the Financial Services Commission of Ontario, said via email, “FSCO is aware of the statements of claim involving FSCO. As the matter is before the courts, FSCO is unable to comment further.”

Only 1.4 per cent of Canadians buy travel insurance for short trips

CTVNews.ca Staff

With Black Friday approaching, many Canadians will be getting ready to head across the border in search of deals.

But a quick day trip could turn into financial disaster, with even a minor accident or illness leaving travelers with bills that can cost thousands of dollars.

According to data from Allianz Global Assistance Canada, only 1.4 per cent of single-trip policies purchased by Canadians were for one or two-day trips.

That’s in spite of 78 per cent of Canadians saying they were covered by some form of travel insurance on their last vacation, according to the company.

Allainz suggests there may be a coverage gap, with Canadians not considering that they’re leaving themselves vulnerable on short cross-border trips.

Though provincial healthcare will cover a small percentage of medical expenses in the U.S., it doesn’t come close to covering the thousands of dollars that can be incurred.

“Just getting a few stitches in an American hospital could cost upwards of $3,000, or a sprained ankle around $2,000,” VP of Market Management Dan Keon said in a press release.

“More serious injuries requiring surgery or hospital stays, such as those resulting from auto collisions, will also increase medical costs considerably and possibly into the tens of thousands of dollars.”

Canada: LTD Insurance: Common Employee Misconceptions

Article by Devan Marr

Long-term disability (“LTD”) coverage is often a key benefit employees derive from their employment. LTD benefits can provide significant security to employees in the form of income continuation when they are disabled due to an illness or injury. I previously talked about some misconceptions that employers may have regarding LTD benefits, here. Today we deal with some common misconceptions that employees may have with LTD benefits.

Misconception #1: An Employer is not entitled to know why I am off work

Generally speaking, if an employee is taking a sick day or two, an employer is not entitled to ask for specifics, such as a diagnosis. In fact, the recent amendments to the Employment Standards Act 2000 brought in by Bill 148 explicitly prohibit the requirement for a doctor’s note when making use of Personal Emergency Leave. However, when employees are off work for an extended period of time, their employers become entitled to obtain further information. Generally this may mean an employee has to provide a diagnosis and details of their general functional abilities for the purposes of determining proper accommodation. In the extreme cases, Ontario’s Divisional Court has ruled that under the Ontario Human Rights Code employers are entitled to request that an employee undergo an independent medical examination as part of the duty to accommodate, provided the medical information required by the employer cannot reasonably be obtained from the employee’s treating practitioner.

Practically speaking, it is in the employee’s best interest to keep the employer in the loop. The employer and the LTD carrier are entitled to updates on an employee’s condition and their ability to return to work, within reasonable limits. A failure to communicate with the employer about an employee’s medical status may lead to an eventual claim for frustration of contract, as we discussed in a previous blog, here.

Misconception #2: The Employer and LTD Carrier have the obligation to obtain updated information

While most employers and LTD carriers will take the initiative to check in with an injured employee, ultimately, it is the employee’s responsibility to ensure they are providing sufficient information to satisfy the policy definition for disability.

LTD carriers require information in order to appropriately adjudicate a file. That information comes from the employee and their treatment team. As a recipient of LTD benefits, an employee has an obligation to provide ongoing information to the LTD carrier. In fact, many disability definitions require that the employee be under the continuous care of a physician in order to qualify for benefits. If an employee fails to provide the required information, the carrier may be entitled to terminate entitlement to benefits on the basis that there is insufficient information to determine their ongoing disability.

Where a medical picture is particularly complex or prolonged, many LTD policies allow the LTD carrier to arrange their own independent medical examination to determine an employee’s ongoing eligibility.

Misconception #3: An employee cannot be terminated while on disability and does not have to return to work unless they are 100% recovered

Just like employers have a duty to accommodate, employees have a duty to participate in reasonable accommodation attempts. If employers can provide modified meaningful work to an injured employee, the employee may be required to attempt a return to work. Many LTD policies will have provisions regarding “rehabilitation programs” which allow for gradual returns. Employees who fail to comply with these provisions may find themselves in violation of the Policy.

Similarly, an employee can be terminated while receiving LTD benefits, so long as their disability did not form part of the basis for the termination. As an example, during a factory shut down. However, it is worth noting that employees in this situation may still be entitled to pay in lieu of notice rather than “working notice.” Additionally, in some cases employees can be terminated on the basis that their disability has made it impossible to complete their contract of employment, resulting in frustration of contract. While each case is unique, an employer who is capable of showing there was no reasonable likelihood of the employee returning to work within the foreseeable future may have a valid claim for frustration, as seen in Roskraft v. RONA Inc.  In a valid frustration scenario, employers are entitled to consider the contract at an end and employees will only be entitled to the minimum statutory payments required under the Employment Standards Act, 2000.

Conclusion: Avoiding Disputes Through Collaboration

When dealing with an injured employee, benefit entitlement, accommodation, and potential termination of employment are areas of significant risk and concern for all parties involved. Early, often, and accurate information exchange can bust many of the myths in these complex multi-party disability situations. The overlap of contractual, statutory and common law obligations between the three parties make the management of long-term disability claims particularly complex. If an employee fails to take positive steps to advise their employer of their situation or cooperate with the LTD carrier, they may find themselves on the receiving end of a claim for frustration or abandonment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source: Mondaq

Dealing with adjusters, contractors can seem ‘unending’

Read more

Court says insurer must pay N.B. diocese $3.3 million to cover abuse claims

FREDERICTON _ An insurance company has been ordered by New Brunswick’s top court to pay over $3.3 million to a Catholic diocese to cover the cost of compensation for decades of sexual abuse by priests.

The province’s Court of Appeal ruled that Aviva Insurance Company of Canada breached its contract when it denied coverage of claims resulting from a conciliation process set up by the Catholic Diocese of Bathurst.

“The question on appeal is whether the diocese is entitled to damages for breach of contract in amounts that involve the costs of, and payments made through a conciliation process the diocese set up as a result of its insurer’s denial of coverage,” Justice Marc Richard said in a written ruling released Thursday.

Richard says 83 victims participated in the conciliation process, with compensation paid to 50 people.

Twenty-six priests were identified as having committed sexual abuse, he wrote, with 19 identified in the conciliation process and another seven in separate court actions.

In a previous civil trial held in Moncton, a Court of Queen’s Bench judge ruled Aviva wasn’t responsible for covering the costs of the conciliation claims  a decision appealed by the church in a hearing last February in Fredericton.

In his ruling, Richard points out that Aviva discontinued its own appeal in the case, leaving only a cross appeal to be argued. He said that left unchallenged the trial judge’s determination that the claims for sexual abuse were covered under policies that were not void for failure to disclose material risks and were not excluded in the intentional acts clause.

He said in essence, Aviva accepts it had wrongfully denied the diocese when it sought coverage for the sexual abuse claims and that left a question whether the trial judge erred in concluding that the claims were not recoverable as damages because they didn’t involve payments for liability imposed by a court.

“In my respectful view the judge did err in this regard by applying an incorrect test,” Richard wrote. “This was a claim for damages flowing from a breach of contract and not for indemnity under the policy.”

Richard said allowing an insurer to escape liability because the insured settled a claim rather than seeking a court judgment would encourage companies to deny coverage in such cases.

“Such conduct by insurers must be prevented,” he said.

Richard said whether or not the settlement by the diocese was reasonable was the  “threshold issue in this case.”

The ruling said the diocese acted reasonably in instituting an alternative dispute resolution process that would allow for its financial survival, having been abandoned by the insurance company.

The appeal ruling says the abuse of young people occurred from the late 1950s to the early 1980s.

Retired Supreme Court of Canada Justice Michel Bastarache was retained to devise and implement a process aimed at resolving claims and to seek the forgiveness of the victims. Aviva declined to participate in the process.

“By using the conciliation process the diocese kept its costs for that process to $4,284,000, which paled in comparison to the $15,000,000 paid by the Diocese of Antigonish, N.S., through claim-by-claim settlements. It was a decision designed to minimize costs, ensure there was enough money to pay victims, and avoid protracted litigation, all in the name of financial viability.”

Richard said the diocese’s “broader obligations” would have been known to Aviva when it decided to insure the diocese, and he noted the company did not dispute the amounts being claimed or the reasonableness of the amounts being claimed as reimbursement.

“For these reasons I would allow the appeal and set aside the trial judge’s decision on the question of Aviva’s liability to pay damages for breach of contract relating to claims resolved through the conciliation process.”

The diocese paid conciliation process participants a total of $4,284,000 and another group of victims who opted not to participate were paid a total of $2,879,179.

The diocese ultimately made a total claim for breach of contract totalling $3,358,264, which was the amount awarded by the Court of Appeal, with pre-judgment interest.

What’s In A Name? When Is An “Unnamed Insured” Entitled To Insurance Proceeds?

Article by Adrian C. Elmslie and Wendy N. Moody

Is it possible for a party not named in an insurance policy to be entitled to insurance proceeds under that policy? In short, it is. Parties who are not a “named insured” under an insurance policy can be eligible to receive insurance proceeds directly as a replacement for lost property that was covered under the policy of insurance. University of Alberta Professor Barbara Billingsley describes “unnamed insureds” as follows:

Named insureds are mentioned by name in the contract as persons to whom insurance proceeds are payable. Typically, named insureds are the purchasers of the insurance. In contrast, unnamed insureds are not mentioned by name in the contract but are entitled to receive insurance benefits because they fall within a particular class of person covered by the contract. 1

In this blog post, we will briefly discuss how the concept of the “unnamed insured” arises when:

  • A general contractor purchases insurance for a construction project; or
  • A party/corporation insures the physical assets of a separate but related party/corporation from fire.

Construction-based policies and the “unnamed insured”

In Sylvan Industries Ltd. v. Fairview Sheet Metal Ltd2, the court found that two subcontractors not named in a builders’ all risk insurance policy were “unnamed insureds” in part on the basis that the description of the property insured under the policy included property belonging to the subcontractors. The end result in Sylvan was that the insurer was barred from bringing a subrogated claim against the subcontractors, as they were, in fact, insured under the policy. 3 The court indicated that the cost of lost equipment and materials of the subcontractors was paid out under the policy. 4

Sylvan was upheld by the BC Court of Appeal. However, the Court of Appeal noted that “a party cannot attain the status of unnamed insured simply by holding an insurable interest in the property insured; rather, an intention to insure that party must be proved.” 5 This principle was satisfied in Sylvan CA in part because a builders’ all-risk policy is a unique type of contract that is intended to cover all contractors on a project. 6

In Surespan Structures Ltd. v. Lloyd’s Underwriters 7, two subcontractors that provided engineering services as part of a larger construction project sought a declaration that they were “insureds” under a project professional liability insurance policy. The policy listed named insureds, as well as “any other firm(s) which have or will provide Professional Services in regard to the Project …”. 8  The court refused to limit coverage to the parties named in the contract, and granted the declaration that the two engineering subcontractors were “insureds” under the policy. 9

Fire damage and the “unnamed insured”

In Austin Powder Ltd. v. Howard10  a judgment debtor’s house burned. The debtor intended to rebuild the house, and the insurer was to pay the builder directly. The judgment creditor sought to divert the insurance proceeds. A dispute arose as to whether the insurance proceeds could be paid directly to the builder, thereby avoiding garnishment. The insurance policy specifically insured relatives of the named insureds living in the household. The insurer had already paid more than CA$20,000 to the insureds’ son, an unnamed insured who was residing on the property and lost certain personal property items.11  While certain insurance proceeds payable to the named insureds (the parents) were subject to garnishment, the court found that the son’s living expenses “are benefits that are separate and distinct from any debt owing to [the parents]” and were not subject to garnishment. 12

In Sooter Studios Ltd. v. 74963 Manitoba Ltd., 13  the insurer sought to bring a subrogated claim in the name of the owner of a building (Sooter Studios) damaged by fire against the lessee of that building (749). Sooter Studios was not actually named in the policy of insurance, although its principle and sole shareholder was. At issue was whether Sooter Studios was an unnamed insured under the insurance policy by virtue of its relationship with the insured as its principle and sole shareholder. In making reference to the Supreme Court of Canada’s decision inKosmopolous,14 the Court concluded that the insurer was entitled to bring a subrogated claim in the name of Sooter Studios on the basis that its sole shareholder and principal was named in the policy.

The Manitoba Court of Appeal reversed the lower court’s decision.15 The building owner, Sooter Studios, was not a named insured and the policy did not include an unnamed insured provision. The insurer could not bring a subrogated claim against 749 through Sooter Studios simply based on Sooter Studios’ insurable interest.

The important question for the Court of Appeal was whether Sooter Studios was an unnamed insured entitled to recover the insurance proceeds, notwithstanding the lack of an unnamed insured provision in the policy. To determine this, the Court stated it must look to the intention of the parties. The Court noted the doctrine of “necessary implication” commonly applied to “builder risk policies” (such as in Sylvan CA, supra) where the intent is to cover all contractors on site. The Court cited the following:

It is true that an individual’s interest in property may be considered insured even if they are not named as an insured on the policy and their interest is not disclosed. However, two conditions are necessary in order to entitle the unnamed insured to recover.

First, the individual must have an insurable interest. It may be argued that Ted Allan has an insurable interest in the premises, such that he stands to gain from its existence and to lose from any damage to it. …

In any case, there must still be shown an intention on the part of the trustee to have insured for her benefit (see Keefer v. Phoenix Insurance Co. of Hartford Conneticut (1901), 31 S.C.R. 144). The onus is on the defendant to prove such an intention on the balance of probabilities.16

Ultimately, the Court was unable to determine the issue because of a lack of evidence regarding the intention of the parties.

Conclusion: How to identify an unnamed insured

Determining exactly when a party is an unnamed insured in a given situation is necessarily a fact-specific analysis. The law does not appear to be settled across all jurisdictions on this issue. However, having regard to the above case law, the following principles arise:

  • A person is an unnamed insured if they are not named in the insurance policy but fall within a category of people named therein (i.e., “relatives living in the house”, see Austin; “firms providing engineering services”, see Surespan);
  • Certain types of insurance contracts are, by nature, intended to cover multiple parties (e.g., builders’ risk policies) – these contracts will necessarily cover many unnamed insureds related to the intended coverage of that type of policy (Sylvan and Sylvan CA);
  • A party cannot attain the status of unnamed insured simply by holding an insurable interest in the property insured; rather, an intention to insure that party must be proved (Sylvan CA); and
  • Two conditions are required in order for a party not named in an insurance contract to recover insurance proceeds. First, the individual must have an insurable interest. Second, there must be shown an intention on the part of the named insured to have provided insurance coverage for the unnamed party’s benefit. The onus is on the unnamed party to prove such an intention on the balance of probabilities (Sooter CA).

 

Source: Mondaq

 

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