The excerpted article was written by Jordan Pinto
The Canadian Media Producers Association (CMPA) is in the process of developing a proposal that, if accepted, would see the federal government serve as a backstop for COVID-19 insurance claims.
Under the proposed solution – a detailed version of which will be submitted to the federal government in the coming days – producers would pay premiums for COVID-19 insurance coverage, which would go toward a funding pot designated for potential claims. The government would only be called upon to contribute financially if the funds generated through the sale of the COVID-19 policies was insufficient to cover the claims made, said the CMPA.
Since the production shutdown in mid-March, insurance companies have changed their coverage options so that claims related to COVID-19 (and communicable diseases more generally) are not covered. Across North America, the insurance industry as a whole is counting billions in losses and pending claims stemming from the onset of the COVID-19 pandemic.
“The CMPA is acutely aware that insurance companies are not offering COVID-19 coverage for the production sector at this time. Left unaddressed, this would mean the financial consequences associated with another industry-wide shutdown, or an on-set COVID-19 incident, would fall primarily to the producer. This would be potentially devastating to our sector and a significant barrier to the start up or resumption of production for many of our members,” read a statement from the CMPA. The association said it will also be reaching out to a “wide range of industry stakeholders to confirm broad support for this initiative.”
What remains unclear is how much producers would pay for the proposed premiums for COVID-19 coverage, and how much money would be in the pot. It is also likely that the government would need projections on how much a future production shutdown would cost before it committed to backstopping insurance claims related to COVID-19. (It should be noted that outside of exclusions for COVID-19 and/or communicable diseases, Canadian film and TV projects are still able to obtain insurance for production.)
While the implementation of on-set safety protocols and guidelines has dominated much of the discussion for the past two and a half months, the issue of how to resume production in the absence of insurance for COVID-19 has largely been viewed as the film and TV industry’s biggest obstacle, especially for higher-budgeted series, such as scripted dramas, that typically require larger casts and crews.
It is not simply a production issue, as bank loans, interim financing and financing contracts are typically contingent on the presence of insurance, making it all but impossible for independent Canadian projects TV projects to resume until a resolution has been found. It is supposed that unscripted projects and documentaries (which typically have smaller budgets and can be shot with smaller crews) will be able to navigate insurance issues more easily, however a clear route back to production has not been outlined for the unscripted or doc sectors in Canada either.
Other jurisdictions have proposed similar measures that would see the government acting as a backstop for COVID-19 insurance claims. Last week, the UK industry put forth a proposal that would see the government help cover the costs of shutdowns related to COVID-19. Other proposals have been put forth in Australia, France and elsewhere to help jumpstart the local production sectors, which are grappling with the same issues as Canada. In the state of New York, a proposal was floated last month that would also see the government backstopping insurance claims.
The unveiling of CMPA’s insurance proposal comes as Canadian provinces begin to release the guidelines for on-set processes in the age of COVID-19. Manitoba was the first province to release full details of its protocols, while Quebec also released its own guidelines yesterday. Other provinces, including Ontario, are expected to follow suit in the next week or two.
Previously the CMPA said it expects the production shutdown will mean at least a $2.5-billion shortfall in production spending ($773-million for Canadian content, $1.76 billion for the service economy) if film sets remain closed until June 31.
THE CANADIAN PRESS
OTTAWA _ Conditions in long-term care are breaking the people who staff nursing and retirement homes, leading to worse care for the vulnerable seniors who live there, the head of the Canadian Support Workers Association said.
About 82 per cent of the more than 6,800 COVID-19 deaths in Canada have been linked to long-term care, shining a harsh light on an industry that was already in crisis.
Miranda Ferrier, president of the association, said she read the military reports about cases of abuse and neglect in Ontario and Quebec long-term care homes with the same disgust and anger as other Canadians.
Military members called in to help homes with COVID-19 outbreaks witnessed some staff seemingly ignoring residents’ cries for help for up to two hours, and force-feeding residents to the point of choking, along with many other medical and professional problems.
While Ferrier said there is no excuse for that behaviour, there are reasons for it. Personal support workers are breaking under a neglected system, she said.
“I’m a (personal support worker) too and I worked in long-term care for years, and I’m broken,” Ferrier said.
Another former Ontario personal support worker, who now works as a long-term care nurse, said the massive workload means she is forced to choose which residents will be neglected.
She spoke to The Canadian Press on the condition she be granted anonymity due to fear of facing repercussions at work.
“Just to make it through the shift you have to dehumanize the people,” she said. “I have to walk past this person who’s yelling and try not to let it get to me.”
She said she and her co-workers try to do their best every day but it’s hard to look at herself knowing that she didn’t get to everyone.
“You feel like you’re drowning all day,” she said.
Many people have pointed the finger at support workers for the conditions in the homes, and Ferrier said she’s received several calls along those lines in recent days. But those people don’t understand that the workers are also victims, and have been for a long time, she said.
“They have no idea what’s going on in those homes. It’s totally unfair. I just think it’s totally unfair and it just makes me sick,” she said.
The profession is completely unregulated, workers are underpaid and typically underprepared for the huge workload, risks and mental, emotional and physical exhaustion associated with the job, she said.
“Many of them have developed post-traumatic stress disorder because of the load in long-term care, even pre-pandemic,” she said.
Statistics from the Ontario Workplace Safety and Insurance Board show support workers were six times more likely to be injured on the job than a police officer or firefighter in 2017, she said.
There’s no official accreditation needed to become a personal support worker. Most enter the homes having completed a one-year certificate program, eager to help people, but that’s difficult to do with a ratio of as many as 12 residents to one worker.
This is to say nothing of the lack of benefits and job security that has workers trying to cobble together enough hours at several long-term care homes to make a living.
That makes it hard to recruit people to the job.
“You get what you pay for, unfortunately,” she said.
It’s difficult to gather information about who these workers are, but the University of Alberta’s Translating Research in Elder Care program estimates many are immigrants or people of colour, and the jobs are overwhelmingly staffed by women.
The federal and provincial governments have stepped in to provide temporary wage increases to long-term care workers who have suddenly been deemed essential during the pandemic, but conditions have far from improved, Ferrier said.
The Canadian Support Workers Association has been trying to shine a light on the issues for years, and has called for those workers to be licensed, regulated and accredited as a step toward fixing long-term care.
Ferrier said she is now in talks with the Ontario government to create some kind of recognized regulatory body for personal support workers, but can’t say if or when the change will come.
The excepted article was written by
McCague Borlack LLP
This was a dispute between AIG Insurance Company of Canada and Lloyd’s Underwriters in respect of the duty to defend a claim brought against the City of Markham.
The City rented a hockey rink to the Markham Waxers Hockey Club and associated entities. A young boy was injured while attending a game at the hockey rink. He sued the City, Hockey Canada and the Waxers for damages resulting from his injuries. The City was insured by Lloyd’s under a commercial general liability policy. It was also an additional insured to Hockey Canada’s and the Waxers’ insurance policy with AIG. The City and Hockey Canada each retained separate counsel through their respective insurers.
AIG acknowledged its obligation to defend the action on behalf of the City but claimed that Lloyd’s had a concurrent duty to defend and must pay an equitable share of the City’s defence costs. AIG also claimed it had a right to participate in the City’s defence, including the right to retain and instruct counsel, alongside Lloyd’s. The City and AIG brought competing applications to determine which insurers had a duty to defend the action. AIG appealed the application judge’s decision that it must defend the action on behalf of the City, pay the cost of defending the action on behalf of the City and collect any indemnification costs from Lloyd’s upon final conclusion of the action, and may not participate in the defence with separate counsel.
The issues on appeal were whether
- Lloyd’s owes the City a concurrent duty to defend,
- Lloyd’s must pay an equitable share of the City’s defence costs, and
- AIG has the right to participate in the defence, including the right to retain and instruct counsel.
As to the first issue, there was no dispute that AIG is a primary insurer. However, AIG argued that Lloyd’s is also a primary insurer and not an excess insurer, as was argued by the City. The Court of Appeal concluded that because the AIG policy contains no excess provision, AIG is the primary insurer for bodily injury or property damage claims arising from the operations of Hockey Canada and the Waxers up to its $5 million policy limit. Moreover, to the extent that the AIG and Lloyd’s policies cover the same claims, AIG must defend up to its policy limits, and Lloyd’s maybe an excess insurer. However, Lloyd’s must still defend the City against claims that fall outside the scope of the AIG policy and within the scope of its own policy.
As to the second issue, the Court of Appeal concluded that since there was no contract between the two insurers with respect to the defence, the most equitable allocation of the City’s defence costs would be to require AIG and Lloyd’s to each pay an equal share of the City’s defence costs and to adjust the costs as between them after final disposition of the action.
As to the third issue, both insurers’ policies provided that they have a duty and right to defend the action. However, due to the discrepancies in coverage between the two policies of insurance, each insurer alleged various conflicts of interest with respect to the other’s handling of the City’s defence. The Court of Appeal found that AIG has an interest in having liability determined on the basis of the City’s actions alone so that it is not responsible for any damages. The Court likewise found that Lloyd’s and the City have an interest in having liability determined on the basis of the operations of Hockey Canada or the Waxers and not from the actions of the City, so as to minimize their own damages exposure and guard against raising the City’s premiums.
The Court of Appeal, therefore, concluded that both AIG and Lloyd’s owe a duty to defend the City in the action, AIG and Lloyd’s must share the City’s defence costs equally, subject to a right to seek a reallocation of the defence costs at the conclusion of the action, and AIG has a right to participate in the defence, including the right to retain and instruct counsel.
The Court agreed with AIG’s suggestion that it implements a “split file” system to sequester personnel handling the defence of the City from those handling the defence of Hockey Canada and the Waxers. The Court concluded this would ensure that the potentially conflicting interests insured by the AIG policy are handled separately both internally and by separate counsel. However, the Court also instructed that
- the terms of this arrangement must be provided in writing to those involved in managing the defence,
- counsel appointed by AIG must fully and promptly inform the City and Lloyd’s of all steps taken in the defence of the litigation against the City such that each would be in a position to monitor the defence effectively and address any concerns,
- defence counsel must have no discussion about the case with either coverage counsel, and
- counsel for the City must provide identical and concurrent reports to the City and both insurers regarding the defence of the main action.
Read the full decision, or the other case study for May –“It’s 2020”: Bringing the Courts in Line with the Times During COVID-19, or go to MB’s index of articles regarding COVID-19.
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 News
OTTAWA _ NDP Leader Jagmeet Singh says he wants to see the RCMP investigate conditions in long-term care homes in Ontario following allegations in a report of neglect and abuse in five homes being helped by the military.
Singh says he has written to Public Safety Minister Bill Blair saying the Canadian Forces’ report on the conditions they found should be referred to the RCMP and, should cases be found of corporate criminal neglect, that criminal charges should be laid.
He called the allegations “appalling” and said Ottawa must take swift actions to address the situation.
He is also calling on Prime Minister Justin Trudeau to bring the long-term care system under the Canada Health Act, blaming many of the problems in these centres on the for-profit model under which many seniors’ homes in Canada operate.
The military report, prepared after troops were sent into five homes overwhelmed by COVID-19 outbreaks, details “horrific” allegations of insect infestations, aggressive resident feeding that caused choking, bleeding infections, and residents crying for help for hours.
Allegations also included failure to isolate COVID-19-positive patients from the rest of the home and a host of hygiene issues involving everything from contaminated catheters to dangerous pressure ulcers.
The Ontario Superior Court of Justice recently held that an insurer who wrongfully denied a US$121 million claim must pay prejudgment interest based on the actual cost of borrowing, and not the rates stipulated in the Courts of Justice Act.
The case, MDS Inc v Factory Mutual Insurance Company, arose out of a leak at a nuclear reactor in Chalk River, Ontario. The business of MDS Inc. involved purchasing the radioisotopes produced at that reactor and processing them for eventual sale. When the reactor shut down for fifteen months following the leak, MDS turned to its insurer to cover its business interruption losses. The Court held in favour of the insured on all coverage issues, finding that all the exclusions and exceptions at issue should be interpreted in MDS’s favour. While a lot of digital ink has been spilled on the Court’s handling of those coverage issues, the Court’s decision regarding prejudgment interest has received relatively little attention.
MDS argued that, to be fairly compensated for its loss, it should be entitled to prejudgment interest based on the actual cost of borrowing from the date of loss to judgment (around five to six per cent), not the simple interest rate contained in the Courts of Justice Act. MDS maintained that had the insurer paid the loss promptly, it would not have had to borrow the funds in the amount of the policy limits. Further, it argued that it would be unfair for the insurer to realize a profit from its refusal to pay. On the other hand, the insurer’s position was that the Court should not award the actual cost of borrowing because “there is not a single insurance case in Canada” where that was done.
Finding for the insured, the Court took into account the following points in support:
- the history of the concept of prejudgment interest and case law on the issue, such as the concept that prejudgment interest is compensatory, not punitive;
- the discretion conferred on judges by the Courts of Justice Act to award higher interest rates;
- the relationship between the insurer and its insured, particularly given that the insurer was MDS’s long-time insurer, so it knew that the supply of isotopes from the reactor constituted a substantial proportion of MDS’s income, and thus it knew that MDS was seriously vulnerable and could not mitigate its damages;
- the insurer’s conduct, including its decision to deny the claim before the parties knew all the facts, and its refusal to change its coverage position in light of the developing evidence. While the insurer’s denial letter stated that it would consider any additional information that might affect coverage, the Court held that this assertion rang “hollow in light of the history. The battle lines were drawn early before the facts were known”. According to the Court, the denial letter read more like a pleading than an adjuster’s letter;
- the claim for commercial interest was reasonably foreseeable, because MDS put the insurer on notice from the date the proof of loss was filed that MDS was seeking “all losses, damages and expenses flowing from the Insurer’s refusal to pay in accordance with the Policy” as well as pre and post judgment interest “as appropriate”. Moreover, it was reasonably foreseeable that MDS would have to borrow at market rates to compensate for its losses;
- MDS filed undisputed expert evidence that estimated the insured’s actual cost to borrow the funds it would have received but for the insurer’s denial, and the insurer’s profits it earned because it failed to pay MDS;
- the Court stated that paying commercial rates was a Pareto-efficient result where both parties benefited, because the insured’s $12 million prejudgment interest award was less than the $17 million in profits the insurer realized from its delayed payment; and
- that the risk of being liable to pay commercial interest would prompt insurers to work quickly to resolve claims, which supports the public policy consideration of encouraging early and fair settlement by insurers.
- Counsel and adjusters would be wise to carefully consider this case in any future insurance coverage dispute, as it sets out a number of factors that a Court could consider in deciding whether to award commercial interest rates. In particular, the Court focused on the conduct of the insurer in coming to its decision, such as early denials, pleading-like adjusters’ letters and refusals to change a coverage position, which are not uncommon. An insured seeking commercial interest would have to ensure that it could present evidence on the insured’s cost of borrowing and the insurer’s profit on the unpaid funds, which will allow the Court to weigh the benefits to both sides if commercial interest were awarded.
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.
The excerpted article was written by Corey Mintz
Buying insurance is placing a bet you’d rather not have to collect on. It’s hoping for the best but planning for the worst. We pay monthly fees to a company just in case something terrible happens. If it does, the company agrees to cover our financial loss. Then COVID-19 hit, and something terrible happened to all of us.
In the past two months, the issue of insurance has come up repeatedly for restaurateurs, who pay for a specific type called business interruption. It can cover closure due to such events as municipal construction, burst water pipes, and riots. I spoke with two restaurateurs who have successfully claimed coverage after broken pipes forced their closure, in one case for five days and in the other for four months (although she is still waiting on a cheque). Neither has attempted to file a claim based on the pandemic. Most believe, or have been told, that the widespread shutdown of restaurants is not covered under interruption insurance.
Then I spoke with Hemant Bhagwani. The founder of the Amaya restaurant chain, plus a few other dining concepts, he has 29 restaurants in Ontario and more than 600 employees.
Bhagwani is availing himself of the Canada Emergency Wage Subsidy, which covers 75 per cent of payroll and requires employers to take care of the rest. Most of his restaurants are shuttered. A couple are doing takeout. And while he says some of his landlords are being reasonable (and currently exploring the possibility of the Canada Emergency Commercial Rent Assistance for small businesses), the total rent for these properties is about $700,000 a month.
“In 22 years of business, I have not taken a single penny from the insurance companies,” Bhagwani told me on April 24, just as the federal government was announcing the CECRA. “They keep increasing their premiums every year. So this is the time for them to support us a little bit. And they’re just washing their hands.”
“Government is doing so much,” said Bhagwani, as we both paused to listen to the prime minister’s live address. “Landlords are trying their best to help us. The only people who are not coming out are the insurance companies. I feel it’s very wrong. I’m ready to take them to court.”
On May 5, Bhagwani followed through, filing a claim for damages against his insurer, Allianz Global Risk, for $500,000 in combined revenues, $200,000 in punitive damages, and 90-days’ worth of payroll expenses.
“I think he’s wise to bring the action,” says Lawrence Swartz, a professor at Osgoode Hall Law School.
“It’s very rare that people claim insurance. Typically, you pay the premiums, and you don’t make a claim,” says Swartz, who has worked extensively in the financial and insurance sectors. “The reason you buy insurance is to get the coverage for these types of situations. Your typical person who is a restaurateur should think that an interruption includes a pandemic.”
A spokesperson for Allianz told TVO.org via email that the company is “unable to comment on individual claims settlements or pending legal matters” and that, as a result of the pandemic, it “has been notified of a large volume of claims from businesses around the world which we evaluate on a case by case basis to determine coverage.” They added, “We will certainly honor COVID-19-related claims where they are part of our policies and cover is clear. However, many businesses will not have purchased cover that will enable them to claim on their insurance for COVID-19 pandemic losses.”
Swartz can’t speak to the specific merits of Bhagwani’s case without examining his policy. But, in general, he sees the court leaning in favour of the restaurateur.
“If the company wanted to exclude a pandemic, they have to say so in the insurance contract. And if they didn’t, the presumption I think, by the courts, would be that the restaurant should be covered,” he says. “Because courts tend to interpret exclusions narrowly, they give somewhat of a benefit of the doubt to the purchaser of the insurance policy. And they tend to interpret coverage broadly.”
Another factor on Bhagwani’s side, Swartz says, is a legal principle that tends to apply in the case of insurance contracts. Known as contra proferentem, it means that, when the intention is ambiguous, the preferred meaning is the one that works in favour of the party that didn’t draft the contract.
Whatever happens with Bhagwani, Swartz sees this lawsuit as a good example for others in the industry to follow. “Every restaurant should presume that they have coverage,” he says. “This is a situation where they need help. And that’s what insurance is for. It’s for unforeseen disasters.”
Swartz urges owners to contact their lawyer or insurance broker, to look at their contracts to see whether the policy specifically excludes a pandemic, and to ask for claim forms.
“Restaurant owners should be in touch with their insurers and brokers. They should be asserting their rights,” he says. “They should assume that they have coverage, and they should proceed as if they do. It should be on the insurers to explain to them that they don’t if they don’t and to be very specific in why they don’t. Insurance companies shouldn’t be trying to wiggle out of their responsibilities.”
If a court rules in favour of Bhagwani, other suits will likely follow. What would that mean for the insurance industry? The business is predicated on the odds that disasters don’t usually happen every day and to everyone at once. If every restaurant in Canada claims interruption insurance, and the courts support them, could this bankrupt insurers?
“The insurance industry, going into this, was fairly strong,” explains Swartz. Insurance companies are sometimes part of big conglomerates that back them up, and they cede part of their risk to reinsurance companies. “So insurers have insurance themselves.”
However, that doesn’t mean that they’re bulletproof.
“This is a cataclysmic even,” Swartz says. “It wouldn’t be impossible for a number of insurance companies to go bankrupt.”
Corey Mintz is a Toronto-based food writer.