Albert M. Conforzi — Pace Law Firm, Toronto, Ontario.
Introduction
As plaintiff's counsel in tort MVA cases, we are used to doing the more brief examination that focuses on the liability of the defendant. There is usually a "knock out" answer obtained relating to speed or inattentiveness which leads to a finding of negligence.In my view, it would be a mistake to approach the examination for discovery of the accident benefits claims representative looking for the same "knock out" answer. Instead, having sat on both sides of the discovery table, the better approach to an accident benefits discovery results in "the death of a thousand cuts".
What we are looking to achieve is a bloodletting caused by small seemingly innocuous cuts resulting from seemingly harmless admissions which when added up create the desired scenario.
Have no doubt that there has never been an accident benefits file that does not contain a handling or technical error of some sort. In preparing for this type of an examination for discovery the little things done or not done do matter.
Having acted for insurers in accident benefits matters through pre-OMPP, OMPP, Bill 164 and Bill 59 it is my opinion that accident benefits adjusters start off as generally well-intentioned people who are incredibly overworked, and who handle first party claims within a culture of suspicion and mistrust borne from a third party corporate mentality. Theirs is the world of the proverbial good hands becoming boxing gloves.
Preparation
The preparation for the accident benefits discovery begins with the drafting of the claim itself.
The pressures of time and the somewhat repetitive nature of MVA actions generally make boilerplate pleadings an attractive resource-saver. However, nothing can derail a discovery faster than failing to specify the nature of the actions that you are complaining of sufficiently, to raise a semblance of relevance and avoid the appearance of fishing.
REFERENCES:
Santos v. Santek Investments Inc., [1999] O.J. No. 548 (Ont. Gen. Div.)- a claim for punitive damages does not entitle plaintiff to expansive discovery that is dictated in a bad faith action.
Kay v. Poslun (1989), 71 (O.R. (2d) 238 (Ont. Gen. Div.)) - production at the discovery stage is based on "a semblance of relevance" to the facts and the issues in dispute and not relevance itself.
Royal & Sun Alliance Insurance Co. of Canada v. Fiberglas Canada Inc., [2002] O.J. no. 3846 (Ont. S.C.J.), Appeal dismissed by Swinton J. November 29, 2002. - properly pleaded allegations of bad faith essentially render insurer's entire file relevant to issues in dispute given the insurer's duty to act in good faith.
Samoila v. Prudential of America General Insurance Co. (2000), 50 O.R. (3d) 65 & Davies v. American Home Assurance Co., [2002] O.J. No. 2696 (Div. Ct.) - only way an insured can ascertain whether his claim was treated in bad faith by his insurer, is by production of the insurer's internal file showing how it handled the investigation.
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The preparation of the pleadings must begin with a thorough examination of every piece of paper in the file looking for non-compliance with the statutory accident benefits schedule (SABS).
You are looking for inter alia:
- When was a document submitted?
- When was it responded to?
- Was it responded to in accordance with the SABS?
- Were timelines met?
- Was interest paid?
- How were decisions made on the file?
· What information did they accept?
· What information did they reject?
· What information did they ignore?
- Did they respond or otherwise deal with newly acquired information after an initial decision was made?
- What inconsistencies were demonstrated by the new material leading to a change in the nature of the claim and was it responded to by the insurer? (A classic example is a plaintiff who sustains soft tissue injuries that are subjected to insurer's examination that expresses the opinion that the injuries "should have resolved by now" and that there are no objective findings on examination. At the 12 month mark an MRI is finally obtained which shows disc bulging at levels corresponding with the complaints made by the plaintiff from the outset.)
In order to be able to prepare for the claim at this level one must have a deep understanding of every step of the accident benefits file.
As a defence lawyer, I was amazed at the number of plaintiff's counsel who let the accident benefits file run on autopilot until there was a dispute. By that time, however, the damage was usually done. Further, there was a lot of papering of the file done that could provide a refuge for the adjuster on a discovery.
You must have a complete claims file from the accident benefits carrier including adjusters and supervisory notes, log notes, e-mail, memoranda (both handwritten and computer kept); copies of all correspondence, including correspondence to and from assessors and investigators; copies of all surveillance reports and investigative reports including any tapes, copies of all OCF forms set and received, copies of any training manuals and materials used to educate the adjusters who handle the file as to their obligations and duties in handling the accident benefits file, financial statements of the insurer and reserve figures from the inception of the file. Many of the items above will not be provided to you by the accident benefits carrier, however, it is important to make the demand for the documentation and the decision will have to be made on a file-by-file basis as to whether or not to eventually move for a further and better Affidavit of Documents once the claim has been served.
REFERENCES:
General Accident Assurance Co. V. Chrusz [1999] O.J. No. 3291 (Ont. C.A.). - confirmed that the "dominant purpose test" is the test for establishing litigation privilege in Ontario.
Waugh v. British Railways Board, [1979] 2 All E.R. 1169 (H.L.) - counsel must establish connection between creation of the document and the activities of the adversarial advocate.Bennett Mechanical Installations Ltd. V. Toronto [2001] O.J. No. 1777 (Ont. S.C.J.). - failure of defendant to establish a sufficient connection between creation of document and activities of counsel formed, largely, the basis for the denial of a claim for privilege.
Royal & Sun Alliance Insurance of Canada v. Fiberglas Canada Inc., [2002] O.J. no. 3846 (Ont. S.C.J.) - determines considerations for litigation privilege:
- Carlucci v. Laurentian Casualty Co. of Canada, [1991] O.J. No. 269 (O.C.G.D. - Master) - must be more than a suspicion that there will be litigation to satisfy the dominant purpose test
• Gabany v. Sobeys Capital Inc., [2002] O.J. No. 3151 - distinguishes between creation of document for the dominant purpose of investigation and claim determination as opposed to creation of the document for the dominant purpose of anticipated litigation.
McCullough v. Axa Insurance Company, (unreported), July 21, 2000, Toronto file # 99-CV-64703 (Ont. Gen. Div.) - adjuster's notes ordered producible for period after plaintiff's counsel's statement to the insurer that there will be reference of issue re outstanding benefits to mediation.
Samoila v. Prudential of America General Insurance Co. (Canada), (2000), 50 O.R. (3d) 65 (Ont. S.C.J.) - insurer's entire claims file was ordered to be produced for period of time after action has been commenced until time when company withdrew a claim of misrepresentation and fraud against insured.
Perigny v. Royal Insurance, (unreported) (July 19, 2000), File# 96-CV- 158130 (Ont. Gen. Div.) - production of adjuster's notes ordered.
SuperCom California Ltd. v. Sovereign General Insurance Company (1998), 37 O.R. (3d) 597 (Ont. Gen. Div.) - production by defendant insurer of sixteen adjusters' reports to the Investigative Crime Prevention Bureau (ICPB) constituted a waiver of privilege and reports were required to be produced to plaintiff.
Shiekh v. The Personal, (November 13, 1997), Toronto File # 97-CU-125357 (Ont. Gen. Div.), Samoila v. Prudential of America General Insurance Co. (Canada), (2000), 50 O.R. (3d) 65 (Ont. S.C.J.), Bergeson et al. v. National Surety Corporation (1986), 112 F.R.D. 692 (D. Mont.), Cappadocia v. Canadian General Insurance, [1998] O.J. No. 5681, (Gen. Div.) per Master Polika - Adjuster's notes and memorandum can be ordered for production.
Shiekh v. The Personal, (November 13, 1997), Toronto File # 97-CU-125357 (Ont. Gen. Div.), Hall v. Co-op (1992), 14 C.P.C. (3d) 355 (Ont. Gen. Div.). - Adjuster's notes disclosing reserve numbers can be ordered for production.
Perigny v. Royal Insurance, (unreported) (July 19, 2000), File # 96-CV- 158130 (Ont. Gen. Div.) - computer notes can be ordered for production.
Samoila v. Prudential of America General Insurance Co. (Canada), (2000), 50 O.R. (3d) 65 (Ont. S.C.J.), Shiekh v. The Personal, (November 13, 1997), Toronto File # 97-CU-125357 (Ont. Gen. Div.), K. Cooper-Stephenson, Personal Injury Damages in Canada, (2nd ed.) (Toronto: Carswell, 1996), Contos v. Kingsway General Insurance Co., [2001] O.J. No. 1327 - Financial documents setting out the insurer's net worth can be ordered for production.
Perigny v. Royal Insurance, (unreported) (July 19, 2000), File # 96-CV- 158130 (Ont. Gen. Div.), ed.) (Toronto: Carswell, 1996), Contos v. Kingsway General Insurance Co., [2001] O.J. No. 1327 - Letters of instruction to investigators can be ordered for production. Perigny v. Royal Insurance, (unreported) (July 19, 2000), File # 96-CV- 158130 (Ont. Gen. Div.), - surveillance reports can be ordered for production.
Cappadocia v. Canadian General Insurance, [1998] O.J. No. 5681, (Gen. Div.) per Master Polika -surveillance tapes and investigative reports produced to experts can be ordered for production.
Samoila v. Prudential of America General Insurance Co. (Canada), (2000), 50 O.R. (3d) 65 (Ont. S.C.J.), Sharpe v. Co-operators (unreported), May 18, 1998, Court File No. 841/95 (Ont. Gen. Div.), McCullough v. Axa Insurance Company, July 21, 2000, Toronto file # 99-CV-64703 (Ont. Gen. Div.), Contos v. Kingsway General Insurance Co., [2001] O.J. No. 1327 - claims manuals, policy directives, and written practices can be ordered for production.
Sandhu v. Allstate, (unreported), Toronto Court File #98-CU-161320CM - training materials regarding processing and terminating claims can be ordered for production.
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However, at the pleadings stage, what you want to have is the most complete file possible. Having made the demand sets the stage for further demands later on.
Once the information has been digested, not only are you ready to properly plead, but you've also done much of the work necessary to plan your eventual discovery.Since the topic is the accident benefits discovery I have assumed, for the purpose of this paper, that the decision has been made not to proceed with FSCO and instead to issue a Statement of Claim. I have also assumed that your FSCO mediation on the issues has already taken place.
We are pleading a breach of contract for the failure to pay benefits in accordance with Statutory Accident Benefits Schedule. Particulars of that breach will vary with each case. There must be a failure to do something, otherwise there would not be a claim in the first place. There will have been a breach of the Insurer's duty to act in utmost good faith towards its Insured in the administration of the claim.
Whether or not there is a bad faith claim is another matter. Incompetent file handling or legitimate differences of opinion in file handling decisions do not, as a matter of course, always give rise to a bad faith claim. In my view it is a matter of the gravity of the actions taken by the adjuster that will govern whether the claim should sound in bad faith.What you must do in your pleading is raise particulars that will open the discovery doors in any event. These often include:
- Delaying decision making by insisting on completion or re-completion of forms for technical deficiencies when all material information to make a decision has been provided and when they knew or ought to have known that care was required or that delay would otherwise have been harmful to the recovery of the plaintiff;
- Failing to respond to requests for care benefits or treatments in a timely manner;
- Failing to pay for reasonable and necessary measures for treatment, assessment or rehabilitation notwithstanding that such treatment, assessment or rehabilitation had been recommended by the plaintiff's treating healthcare practitioners;
- Delaying payment for reasonable and necessary treatment thereby interfering with the plaintiff's relationship with his own treating practitioners;
- Failing to provide their employees with any or proper claims manuals or file handling guidelines;
- Relying on inaccurate and irrelevant information in withholding, delaying or denying the plaintiff's claims for benefits;
- Failing to fully and fairly consider all the medical information available;
- Relying on selective portions of reports of medical examiners they had paid to prepare reports;
- Using medical assessors who they knew were biased in favour of them and other insurers, to prepare reports so that they insurer could deny benefits;
- Subjecting the insured person to repeated and unnecessary assessments;
- Failing to provide assessments to the plaintiff or his representatives on a timely basis;
- Failing to provide their assessors with all available medical documentation;
- Overloading their claims adjusters with excessive numbers of files;
- That the insurer has financially benefited from the failure to pay relevant benefits; and
- That the insurer has failed to have any or adequate supervisory review of the claims making the decisions of the adjusters having carriage of the matter.
- If bad faith is specifically pleaded as opposed to the general breach of their duty of utmost good faith, then the use of the words capricious, highhanded, callous and arbitrary should be included in the references;
This is by no means an exhaustive list and the drafting of the allegations should be tailored specifically to your fact situations in each case.
Prior to actually conducting the examination for discovery you should have a complete updated and sworn affidavit of documents from the claim's handler with the production of all Schedule 'A' documentation listed by the affidavit. You should insist that any additional material that may appear at a later date be included in a further and better Affidavit of Documents.
Where there is an ongoing claim for benefits there may not be a viable claim for privilege regarding file notes created post-mediation. You will want to insure that questions are asked relating to the dominant purpose for which the records are kept by insurers.
Who Should Be Produced on Examination for Discovery
A Notice of Examination should specify who you want to discover. Otherwise, you will get a dispute resolution specialist who is much more experienced in responding to questions on examination for discovery. It is far better to have the claims representative who is actually making decisions on the file as the witness.
If the claims representative is no longer with the company, name the representative who took over carriage of the file. He or she will have to admit that they did a complete and thorough file review. Part of the reason they will admit this is to correct any past mistakes on the file that could be corrected. You can then take the new representative through the mistakes that took place before they took over carriage and review their file review (or lack of evidence thereof) to identify where they did not catch such mistake.
Preparing for the Examination
Be goal oriented. Your goals may include:
- Obtaining clear and unequivocal reasons for a denial of a benefit. Surprisingly, these can differ from what is in the OCF 9 and may also differ from the Statement of Defense.
- Demonstrating to the other side that you indeed have a mastery of the SABS.
- Making the experience one where the claims representative feels at risk of being humiliated or otherwise shown to be incompetent.
- Softening up the adjuster for the next claims submission or for the next file.
- Creating such an inordinate amount of work that they may just decide it is easier to reinstate the benefit.
Decide what the answers are you hope to get relating to the issues in your particular proceeding, and then find a way to build you questions towards those answers.
On one examination for discovery the following issues existed:
- Demanding information they already had
- Failing to look at all medical information to make a decision or revise a decision
- Demanding information not reasonably required to determine entitlement to benefits
- Failure to pay IRB's on time
- Failure to pay interest on overdue payments
- Failing to promptly respond to treatment plans
- Failing to respond to OCF-22 requests within five days and refusing to pay the assessment costs
- Failing to provide reasons for not agreeing to the assessment
- Failing to notify a DAC within five days
- Failing to make reasonable efforts to schedule Section 42 examinations at a time convenient for
the insured
- Failing to pay for the travel expenses to an insurer's examination
Once you have identified what your list of issues are in those concrete terms, you can then arrange the order of the examination.
Everyone has their own particular style for conducting an examination and you should be true to your own instincts in that regard.
My own preferred starting method is to delve into matters relating to the background and qualifications of the witness including their training and experience as well as the background of any of their predecessors on the file.
At that point, I prefer to cover what the file-handling decision-making structure is in the company and supervisory oversight and review of decisions. This will include periodic file reviews as well as whether or not this file in particular was subjected to a FSCO compliance audit at any point.
Once this type of background is complete, I then like to proceed into some of the more specific areas starting off with obtaining general agreement from the adjuster to basic propositions in terms of the insurer's obligations.
In my particular case which involved the above listed issues, in part, that portion of the examination went as follows:
Q: What is your understanding of AVIVA's duties to its insured in terms of accident benefits claims
administration that is the handling of accident benefits claims?
A: My understanding of the duty would be essentially the same as any other adjuster with the
company is to determine entitlement based on the accident benefits schedule.
Q: Do you agree that a duty to deal with the insured in good faith exists?
A: Yes.
Q: You are bound by that duty?
A: Yes.
Q: You have a duty to intimately understand the SABS if you are going to be administering them?
A: Yes.
Q: You have a duty to deal fairly with the insured person?
A: Yes.
Q: You have a duty not to take advantage of an insured person's need for a benefit by demanding
something that you are not otherwise entitled to under the SABS?
A: Yes, I agree.
Q: You have a duty not to put the company's interests ahead of the insured's interests?
A: Yes, I agree.
Q: You have a duty to be even-handed in your handling of a file?
A: Yes.
Q: You have a duty to receive, review and consider medical information as it is received in making your
decisions or revising your decisions?
A: Yes.
Q: AVIVA would be aware that the insured's obligation to provide information is limited to information
reasonably required to assist in determining entitlement to a benefit.
A: Yes.
Q: And AVIVA would be aware that an insured person is under no obligation to provide the insurer with
any information the insured asks for, just any random information, it has to be information
reasonably required.
A: Yes.
Q: And AVIVA has a duty to promptly determine if an income replacement benefit is payable pursuant
to Section 35(1) of the SABS.
A: Yes.
Q: And AVIVA is aware that it has 14 days to pay a benefit after receiving an application.
A: Yes.
Q: And AVIVA is aware that it is obliged to pay an income replacement benefit at least once every two
weeks unless you have prepaid the benefit.
A: Yes.
Q: And AVIVA would also be aware that if it had determined that there was no longer an entitlement to
an income replacement benefit, that it is required to give the insured person notice with reasons no
later than the date of the next benefit being due.
A: Yes.
Q: And AVIVA would be aware that upon receiving a claim for medical and rehabilitation benefits you
are under an obligation to promptly determine whether the insurer is required to pay for the goods
and services contemplated by the treatment plan.
A: Yes.
Q: And AVIVA would be aware that you must within 14 days give notice as to which treatment the
insurer will pay for and which they will not pay for along with a statement of the insurer's reasons
for not agreeing to pay for all goods and services contemplated by the treatment plan.
A: Yes.
Q: And AVIVA would be aware that the insurer shall pay for reasonable fees charged for an assessment
by a healthcare practitioner under Section 24.
A: Yes.
Q: And AVIVA would be aware that an OCF-22 would have to be submitted for such an assessment
and that you would have five days to respond yes or no if the amount of the assessment is over
$180.00?
A: Yes.
Q: And if you fail to give that notice of yes or no there is a deemed approval of the assessment under
Section 24(1.5)?
A: Yes.
Q: And AVIVA would be aware that you have to provide a notice stating what assessment you will or
won't pay for or the amount that you will pay and that notice must state the reasons for not
agreeing to the assessment or examination.
A: Yes.
Q: And AVIVA would be aware that if a matter was going to be DACed the notice must be sent out to
the DAC within five business days under Section 43?
A: Yes.
Q: And AVIVA would be aware in matters relating to insurer examinations under Section 42 that
insurers shall make reasonable efforts to schedule the examination for a time that is convenient
for the insured person?
A: Yes.
Q: And AVIVA would be aware that the insurer would be required to pay for the travel expenses of
the insured person if she was required to travel for an insurer's examination?
A: Yes.
Q: And AVIVA would also be aware that overdue payments attract interest pursuant to the SABS at
the rate of 2% per month compounded?
A: Yes.
Q: Does AVIVA have a list of assessment companies to use?
A: Yes. Once you have established the particular duties of and they have agreed to them then you
must proceed on a step-by-step basis with the evaluation of the factual underpinnings of what
took place.
For example:
Q: So we've talked about the OCF-1, 2 and 3. You agreed with me before that once those documents
are received the insurer has 14 days to pay the benefit, correct?
A: Yes.
Q: When was the first OCF-9 sent out with respect to an income replacement benefit?
A: May 13th
Q: Am I correct that it indicates "your application indicates that your injuries are preventing you from
working? In order to determine your eligibility to this benefit we require the completed disability
certificate OCF-3 and the completed Employer's Confirmation of Income OCF-2. Please provide
these documents so we may determine your entitlement".
A: Yes, that's what it says.
Q: And you would agree with me that the OCF-3 was received the 6th of May and was date-stamped
received the 6th of May?
A: Yes it was.
Q: Is there any kind of a log note or notation contained in the file contents that would suggest why
AVIVA was asking its insured to provide something that they had already received.
A: I don't see an indication here.
Q: We agreed that AVIVA had a duty to treat its insured with utmost good faith?
A: Yes.
Q: Would you agree that AVIVA was noncompliant with that duty by demanding information from its
insured that it already had in its possession?
A: Yes.
. * . * . * . * . * .
Q: Was an OCF-13 received by AVIVA during a period of time after May 28th, 2003 showing post-
accident earnings?
A: Yes.
Q: What's the date stamp received?
A: June 3, 2003.
Q: When was the next cheque processed for income replacement benefits for my client?
A: June 19.
Q: And June 19th would be more than two weeks after the last payment date of May 28th, correct?
A: Yes.
Q: And we agreed under the Act the benefit is supposed to be paid once every second week?
A: Yes.
Q: And you would agree that AVIVA is noncompliant with respect to paying the benefit within 14 days
from its first payment.
A: Yes.
Q: And even looking at the OCF-13 received by AVIVA June 3rd, if you were to try to take 14 days
from June 3rd, they still didn't issue the cheque within 14 days, correct?
A: Yes.
Q: And that would be noncompliant with their obligations under the SABS?
A: Yes.
Q: Was their any interest paid on that amount covered under the June 19th cheque?
A: It doesn't appear that any interest was added, no.
Q: And interest would be payable if it's late, correct?
A: Correct.
Q: So AVIVA would be noncompliant with the SABS obligations to my client?
A: For the payment of interest, yes.
Q: That's noncompliance, correct?
A: Yes.
Thank you.
Try to design each avenue of inquiry to lead to an agreement relating to noncompliance with their obligations. In the end, we had a list of 14 areas of noncompliance that were agreed to by the adjuster along with a number of other areas of what I alleged was noncompliance that was not agreed to by the claims representative, but which certainly remained arguable. Ultimately, what this led to was increased compliance with file handling on the ongoing claims that were being submitted as well as a significant lump sum payout for past and future claims.
Other ways of softening up the accident benefits adjuster is through extensive numbers of undertakings, particularly undertakings to go back and speak to past claims examiners who are still with the company, supervisors as well as to look for documents that appear to be missing from the file; cover letters, cheque requisitions, e-mails, CVs, pending file load counts, list of approved assessment companies, benefits spreadsheets, attachments to letters. In short, anything that presents itself as an encumbrance on an othwise already overworked person to have to drop everything in search of a long list of minutiae. The answers are often, but not always, less important than forcing them to have to comply with the undertakings.
Depending on the type of problem presented by the file you may wish to review with the adjuster the extent to which they are aware of past cases where special awards have been made against the company for certain types of behaviors. For example, Wawanesa has been sanctioned several times for their failure to continue to review new material received in order to re-evaluate decisions made.
Do not ignore the value of what is not in the log notes versus what is. You will of course explore the aspects of why log notes are kept and then compare that to what was done.You will often find references to the I.E. report conclusions leading up to the termination of the benefit, signifying that the adjuster noted up the conclusion for decision making purposes. The total absence of references to any of the conclusions from the reports provided to them by your treating or assessing doctors can be used to create the appearance of the failure to review, or consider, those conclusions. Was there any attempt to reconcile the conflicting opinions evident in the notes? Did they send the reports back to their doctor for consideration? Is there any evidence in the notes that they reviewed the conflict in the reports with a Supervisor or Manager?
Files are often the subject of internal review audits and these should be the subject of inquiry on discovery. Was the adjuster notified of problems found, or otherwise instructed to repair any compliance issues? In the past, FSCO has often asked insurers to do a self audit of files and you should also inquire about whether your matter was subjected to an audit.You will also want to inquire about the medical assessors used by the insurer. If there is a list of assessment companies to be used try to ascertain the frequency of usage and the amounts paid to these companies. The figures can be staggering and definitely provide a motive to give the insurer what it wants to see in the reports.
As a final overview comment I would remind you that you will finally have an adjuster in a place where they cannot take refuge behind voicemail, e-mail, or tersely written letters or OCF 9 denials. If you focus on carefully exposing their problems you can effectively de-fang the paper tiger.
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Conclusion
Planning an effective examination of the accident benefits claims representative requires time and patience. Do not leave it to the night before. Recognize that you will need to be focused on the breach of good faith issues or bad faith issues that brought you there in the first place. You will have done your client a tremendous service if you can leave the discovery room armed with that series of admitted non compliance problems that will lead to the death of a thousand cuts, or if not admitted, certainly expose the skin for viewing!
