A recent decision released by the Financial Services Commission of Ontario (FSCO) on December 5, 2014 appears to restrict an Insurer's ability to investigate and adjust a file if issues arise with respect to an Applicant's claim for a specified benefit following the initial 10 day period after receipt of the Application for Benefits (OCF-1) and Disability Certificate (OCF-3).
In Williams and State Farm (FSCO, A14-001463), the issue was whether or not State Farm was precluded from conducting an Examination under Oath pursuant to section 36(4)(c) of the Statutory Accident Benefits Schedule ("the Schedule") with respect to Mr. William's claim for income replacement and housekeeping benefits.
Mr. Williams had applied for income replacement benefits pursuant to an OCF-1 (Application for Benefits) dated August 18, 2008. On September 11, 2008, State Farm received Mr. Williams' OCF-1. State Farm began paying Mr. Williams weekly income replacement benefits on October 7, 2008. State Farm also paid Mr. Williams housekeeping and home maintenance benefits for a period of two years totalling $10,400.00.
Via correspondence dated July 9, 2013, Counsel for State Farm confirmed that an Examination under Oath was scheduled for November 29, 2013. The Notice of Examination confirmed that the scope of the Examination was restricted to Mr. Williams' entitlement to accident benefits.
While Mr. Williams attended a court reporter's office for the Examination under Oath, he refused to answer any questions dealing with income replacement or housekeeping benefits.
State Farm thereafter terminated Mr. Williams' income replacement benefits pursuant to section 33(6) of the Schedule based on Mr. Williams' alleged refusal to submit to an Examination under Oath.
Mr. Williams argued that State Farm was not entitled to terminate his benefits as a result of his failure to attend the Examination under Oath because according to Mr. Williams, if State Farm wanted him to undergo an Examination under Oath, it was required to ask him to do so within 10 business days of receiving his Application for Accident Benefits (OCF-1) and a completed Disability Certificate, pursuant to section 36(4)(c) of the Schedule.
State Farm argued that pursuant to the Schedule, an Insured is required to submit to an Examination under Oath and there is no time limit on when it can be requested.
The pertinent sections of the Schedule are set out below.
Section 36(4) of the Schedule, provides as follows:
36(4) Within 10 business days after the insurer receives the application and completed disability certificate, the insurer shall,
Section 33 (1) and (2) of the Schedule provides that:
(1) An applicant shall, within 10 business days after receiving a request from the insurer, provide the insurer with the following:
(2) If requested by the insurer, an applicant shall submit to an examination under oath, but is not required,
In deciding the issue, Arbitrator Murray noted that a "specified benefit" means an income replacement benefit, non-earner benefit, caregiver benefit or a payment for housekeeping or home maintenance services under section 23.
After considering the wording of section 36(4)(c), Arbitrator Murray noted that the "or," in section 36(4) of the current Schedule means that the section must be read disjunctively.
As such, Arbitrator Murray held that State Farm was approximately 1,707 days too late to request an Examination under Oath for a specified benefit, namely, income replacement and housekeeping benefits. State Farm was therefore precluded from conducting an Examination under Oath pursuant to section 36(4)(c) of the Schedule. As a result, State Farm was not entitled to rely on section 33(6) of the Schedule to suspend income replacement benefits as Mr. Williams was not required to attend the Examination under Oath.
The effect of this decision is that an Insurer's ability to request an Examination under Oath is severely restricted. Given the requirement that an Examination under Oath be requested within 10 days of the receipt of the Application for Benefits and Disability Certificate, an Insurer will be prevented from utilizing section 33 of the Schedule to continue to adjust the file and obtain information "reasonably required to assist the Insurer in determining the Applicant's entitlement to a benefit." Defence Counsel and Insurers have often found the Examination under Oath an invaluable tool in situations where Applicants have failed to respond to inquiries as to the status of their claim for benefits or to requests to provide pertinent documentation to support their claim.
Requiring that the Insurer request an Examination under Oath within 10 days of receiving the Application for Benefits and Disability Certificate is often much too soon in the adjusting of a claim. At that point in time, the Insurer is often giving the Applicant the benefit of the doubt that the required information to support a claim for benefits will be forthcoming. The need for an Examination under Oath often does not crystalize until many months or even years later.
While the decision in Williams and State Farm is currently being appealed, in the interim, to protect an Insurer's right to conduct an Examination under Oath in the future, Insurers could presumptively send out a Notice requesting an Examination under Oath every time a new claim for benefits is made.
While the recent decision in Williams supports that an Insurer must make the request for an Examination under Oath within 10 days – there is no time limit imposed as to when it must actually occur.
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.