Insurance News - Thursday, July 31, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, July 31, 2014:

• It took a while but a Toronto-based staged collision ring has been slapped with more than $800,000 in fines and restitution for false insurance claims that contributed to more than $4 million in fraudulent claims.
• Auto insurance and ridesharing: When personal and business uses of a vehicle converge, coverage confusion arises.
• Men and women can both be terrible drivers but in different ways.
• A look at the public v. private auto insurance debate - which works better?
• Is it true that low highway speed limits mainly benefit auto insurance companies in the form of higher premiums?
• A published study suggests that enforced laws banning texting produced 3% reduction in traffic fatalities for all ages.

Plaintiff Ordered to Attend Second IME

A recent decision highlights the importance of wording correspondence when disputes arise over IMEs.

In Caesar v. Griaznov, 2014 ONSC 4329 (S.C.J.), the plaintiff alleged both physical and psychological injuries.  Defence counsel arranged IMEs with a psychiatrist and a physiatrist.  Plaintiff's counsel advised the plaintiff would attend only one IME of the defendant's choosing.  A clerk in defence counsel's office sent a letter stating the defendant "chose" the psychiatrist.  She later followed up in an email that read as though the clerk assumed the physiatry IME would proceed as well.

Master Muir ordered the plaintiff to attend the second examination.  Since the plaintiff was claiming two distinct types of injury (physical and psychological), fairness dictated the plaintiff be compelled to attend.  There would be no overlap between the two examinations.  There was little unfairness to the plaintiff since there was no trial date pending and a mediation date was several months away.  In contrast, there was the risk of significant unfairness to the defendant who would be required to defend a central element of the plaintiff's claim without the benefit of a current expert assessment.

Master Muir denied the successful defendant costs given the clerk's letter which suggested the defendant had "chosen" only one examination.  The decision on costs seems odd given that Master Muir was satisfied the defendant always intended to preserve her right to a second examination.  Counsel should be alert to the wording used in correspondence relating to disputed IMEs.

Appeals Court holds pollution exclusion in auto policy of oil delivery service applies to overfilled oil tank

United Energy Oil Company, an oil delivery service, delivered oil from a truck to an oil tank in  a building owned by National Equity Properties.  It overfilled the tank and caused oil to seep into the ground. 


The truck was covered by a business auto insurance policy issued by Hanover Insurance.  Hanover determined that damages over $5000 came within the policy's pollution exclusion. 


A declaratory judgment action over the meaning of the pollution exclusion followed.  It was undisputed in that action that heating oil is a pollutant within the meaning of the pollution exclusion.


The first policy clause at issue in Izdebski v. Hanover Ins. Group, Inc., 86 Mass App. Ct. 1102, 2014 WL 2973681 (unpublished) was one that made the pollution exclusion applicable to property damage arising out of the actual discharge, release, or escape of pollutants:

a.  That are, or that are contained in any property that is:

(1)  Being transported or towed by, handled, or handled for movement into, onto or from, the covered 'auto.'

The Massachusetts Appeals Court held that the clause excluded coverage because the spill happened as the polluting oil was being delivered by the pump from the tank to its intended destination.    The plaintiffs argued that the oil had reached its final destination before it seeped into the ground, or that the oil that seeped into the ground was already in the tank before United began to fill it.  The court held that those interpretations ignored the meaning of "arising out of" in the exclusion. 


The second policy clause at issue was an exception.  The exclusion was for  damage arising out of the actual discharge, release, or escape of pollutants once they have been finally delivered. The exception applied to accidents with respect to pollutants not in a covered auto if

(1)  The pollutants or any property in which the pollutants are contained are upset, overturned or damaged as a result of the maintenance or use of a covered auto; and

(2)  The discharge, dispersal, seepage, migration, release or escape of the pollutants is caused directly by such upset, overturn or damage.

The phrase "upset, overturned or damages" was not defined.  The court held that a fair reading of the exception is that it applies to an accidental oil spill only  if United's truck is upset, overturned or damaged.  That doesn't make a lot of sense to me, as the exception plainly says that it is the pollutants "or any property in which they are contained" that must be upset, overturned, or damaged.  If it was only the covered auto that could be upset, overturned or damaged, the policy would have said so.  On the other hand, it does not seem that an overflow or seepage of oil comes within the definition either. 

Insurance News - Wednesday, July 23, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, July 23, 2014:

• Car crash scams are becoming increasingly sophisticated with the latest wrinkle involving organized groups gaining access to medical clinics to cash in on lucrative payouts for phony insurance treatments.
• Auto insurance fraud is more frequent and sophisticated, with organized groups replacing individual fraudsters.
• Ontario's efforts to reform the insurance sector and clamp down on fraud in the Toronto area have not slowed the problem of staged car accidents.
• There seems to be a debate going on as to whether self-driving cars will mean less traffic or in fact more congestion.
• Google may be ready to launch self-drivering cars in the near future but they may be more than 10 years away because we're just ready for them.

Plaintiff Failed to Meet Threshold

The Court of Appeal recently affirmed a trial judge's decision to dismiss an action based on the failure to meet threshold. 

In Jennings v. Latendresse, 2014 ONCA 517 (C.A.), the plaintiff was in a motor vehicle accident in 2005.  The defendant admitted liability.  While the jury was deliberating the judge heard a threshold motion, and ultimately dismissed the action after the jury rendered a verdict.  The jury held that the plaintiff had recovered from her injuries and did not award any amount for general damages or past loss of income, although they valued a loss of competitive advantage at $58,000.

The plaintiff submitted that her diagnosis of chronic pain, by definition, must indicate the injuries were permanent.  The Court of Appeal disagreed.  There was evidence that the plaintiff was improving and continued to improve, her functional abilities showed no impairment, she had returned to her pre-accident employment, her medical examination showed full range of motion, expert evidence stated recurring pain was not caused by the original injury, and pre-accident physical and psychological stressors contributed to the chronic pain but had nothing to do with the injury.  The evidence supported the trial judge's decision the plaintiff did not meet threshold.

One of the arguments made by the plaintiff on appeal was that the jury verdict was inconsistent when it found the plaintiff had recovered from her injuries but awarded an amount for loss of competitive advantage.  The Court of Appeal held that there was nothing inconsistent in finding a loss of competitive advantage but that it was not caused by the accident.

Jennings shows the importance of marshalling the evidence at trial as well as conducting a causation analysis, especially in chronic pain cases.

OWCP Information for Medical Providers

If your medical providers are having difficulty getting authorizations or paid for treating you, OWCP provides instructions on their website that you should be sure your doctors' offices are familiar with:

http://www.dol.gov/owcp/dfec/medicalprovider.htm

Insurance News - Wednesday, July 16, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, July 16, 2014:

• Ontario Liberals have re-introduced and combined Bills 171 and 189 as Bill 15.  The legislation contains some of the controversial changes introduced in Bill 171 including a reduction in prejudgment interest and restrictions on the ability to resolve SABS disputes in court.
• FSCO has released the second quarter 2014 rate approvals.  Only five  rate filings were approved representing only 14.5% of the market.  The filings reflect an average increase of 0.22% when applied across the total market. Although this represent a small portion of the market, it seems to suggest that the government's rate reduction strategy is stalled.
• A U.S. company will soon begin selling a kit that lets you turn your existing car into a self-driving vehicle. The system is being billed as the world's first "highway autopilot" and will cost about $10,000.

Why reserves matter

A reserve is the amount of funds that an insurance company sets aside as the probable payout on an unresolved claim.  Over at the AMAXX Workers Comp Resource Center, Michael Stack has posted an interesting article on the risks to an insurer from failing to set accurate reserves. 

Anxiety and Depression Does Not Necessarily Exclude One From The Minor Injury Definition

A recent FSCO arbitration case (by an ADR Chambers arbitrator), Lo-Papa and Certas Direct, determined that the existence of anxiety and depression following an accident does not necessarily exclude one from the minor injury definition or the $3,500 treatment cap.

In Lo-Papa and Certas Direct, the claimant was involved in a MVA on October 20, 2010 and at the time of the accident complained of pain in her spine and head.  At the arbitration hearing she stated she suffered from headaches, lower back pain, leg pain. anxiety and depression.  Her physician confirmed that she suffered from anxiety and depression, but did not address the question of whether her anxiety and depression were the predominant impairments or whether her symptoms were not clinically associated sequelae and therefore, exclude her from the minor injury definition.

The arbitrator noted that, as confirmed in the Scarlett v. Belair appeal decision, the burden of proof rests with the claimant to show that her injuries fall outside the minor injury definition.  This decision confirms that a claimant can sustain psychological impairment in an accident and still fall under minor injury definition.  However, if the psychological impairment is predominant then it will likely be outside the minor injury definition and the $3,500 cap.

Insurance News - Monday July 14, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, July 14, 2014:

• Why Ontario pay the highest car insurance rates in Canada - crowded roads, fraud, private delivery, take your pick.
• An alarming proportion of Ontario teenagers admit that they have texted while behind the wheel of a vehicle, says a survey of Grade 7 to 12 students in the province conducted for the Centre for Addiction and Mental Health.
• Editorial: Steps should be taken to curb dangerous texting by teen drivers.
• Premier Wynne says Ontario will bring back bill to toughen penalties for distracted driving.
• Will insurance companies be the greatest contributors to the success of self-driving cars?
• The tipping point for telematics is going from an installed device in the insured's vehicle to a downloaded app on their phone.

US District Court holds uninsured motorist coverage proceeds go to relatives of decedent insured, not estate

Michael Furlong was driving a pick-up truck southbound onto the Sagamore Bridge.  He swerved across the center line to avoid hitting  a vehicle that was merging.  He crashed into a minivan driven by Amnon Bogomolski.  Both men died as a result of the accident. 


Furlong's auto policy included $100,000 in uninsured motorist coverage.  Commerce had tendered the limits of the policy to settle Furlong's wrongful death claim against the unknown driver of the vehicle that was merging. 


Bogomolski's estate filed a wrongful death suit against Furlong's estate, and moved for what it called an attachment or to reach and apply the proceeds of the uninsured motorist insurance policy.  (The court noted that a motion for attachment or to reach an apply was technically premature until there was a judgment.  It treated the action one for preliminary injunction to restrain Commerce or the administrator of Furlong's estate from disposing of the property pending the outcome of the action.) 


The issue before the United States District Court in Bogomolsky v. Furlong, 2014 WL 29452927 (D. Mass. 2014) was whether the proceeds of the Commerce uninsured motorist policy were the property of Furlong's estate or of his daughter as his closest relative.  If the former, then the plaintiff could reach and apply the proceeds; otherwise, it could not. 


The court noted that under the Massachusetts Wrongful Death statute, the money recovered in a wrongful death claim is not a general asset of the estate, but constitutes a statutory trust fund held by the administrator of the estate as trustee for distribution to the statutory beneficiaries.   (In other words, under the wrongful death statute close relatives of the decedent can recover damages even if they are not included in the decedent's will and even if the decedent's debts exceed his assets.) 


Similarly, proceeds from a claim for ininsured or underinsured motorist insurance operates flow to the presumptive takers (i.e., the close relatives listed in the wrongful death statute), not to the estate.


The court held that Furlong's daughter, not his estate, was entitled to the proceeds of the uninsured motorist policy.  Therefore Bogomolski's estate could not reach and apply those proceeds. 

Limitation to Add Defendants Expired

Issues relating to discoverability can be decided on a motion to amend a claim.

In Garic v. Mack Trucks Canada 2014 ONSC 3103 (S.C.J.), the plaintiff was injured in 2006 while operating a dump truck owned by her husband.  One of the axles gave way, causing her to lose control and roll into a ditch.  Her husband was initially named as an FLA claimant.

In 2012, the plaintiff brought a motion seeking to add her (now former) husband and his company as defendants for failing to maintain the vehicle.  She argued the claim was not discoverable until the named defendants gave evidence on discovery that the owner had not followed proper maintenance procedures. 

The Court dismissed the motion to add defendants, holding that:

[19]           The difficulty with the plaintiff's position is that the case law has established that to discover a claim the plaintiff must only have sufficient facts upon which to support an allegation that there is a cause of action, and it is not necessary for the plaintiff to have discovered complete evidentiary support to make the claim winnable (see Wilkinson v Braithwaite [2011] O.J. No. 1714 (S.C.J.) at para. 32).

The Statement of Claim alleged the named defendants were responsible for "service, inspection and maintenance" of the truck, which was expressly denied in the Statement of Defence.  The plaintiff knew her husband was responsible for maintenance of the truck since the business commenced.  Justice Broad held that the essential facts were either actually known to the plaintiff or at least obtainable with due diligence more than two years since the motion was brought.

Insurance News - Thursday, July 3, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, July 3, 2014:

• Finance Minister Charles Sousa says Ontario Liberal government is still committed to lowering auto insurance rates by 15% by August 2015.
• Google and Detroit on a collision course regarding self-driving cars and car ownership. The auto makers are focused on accident avoidance systems while Google is talking about moving from an ownership model to a service model.
• Should the blind, drunk and elderly be allowed to operate driverless cars? The road rules may need to change.
• According to a recent survey of women in the insurance industry. leadership roles in the industry still lack gender diversity.
• Carfax has expanded Damage Reports for Canada auto dealers.

Insurance News - Wednesday, July 2, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, July 2, 2014:

• Car-sharing companies and insurers are in a state-by-state battle over their business model.
• How Google might put taxi drivers out of business.
• Meet Ray, the self-driving forklift that is parking cars at a German airport.
• The OPP suggesting distracted driving could be the cause of over 50% of accident (I think there is under-reporting).
• A great article about seniors driving. The numbers are growing despite declining physical abilities.

The Limitation Period to Commence a Claim under OPCF-44R

The decision in Schmitz(Litigation guardian of) v. Lombard General Insurance Co. of Canada, 2014 ONCA 88 (C.A.) is an important decision on when the limitation period begins to run in a claim under form OPCF-44R, for underinsured motorist coverage.

This matter concerned a motor vehicle accident that occurred on July 19, 2006. The plaintiff had a policy of insurance which included a provision for underinsured motorist coverage. The plaintiff commenced a claim against the defendant driver in June 2007 and a claim against his insurer for underinsured motorist coverage in June 2010. The plaintiff’s insurer brought a motion to dismiss the plaintiff’s claim on the basis that it was commenced after the expiry of the 1 year limitation period set out in section 17 of the OPCF-44R. The plaintiff took the position that section 17 did not apply and the 2 year limitation period set out in section 4 the Limitations Act overrode section 17 of the OPCF-44R. The motions judge accepted the plaintiff’s argument and dismissed the insurer’s motion. The plaintiff’s insurer appealed this decision.

 On appeal, the plaintiff’s insurer conceded that the 2 year limitation period in the Limitations Act applied and overrode the 1 year limitation period in the OPCF-44R. Instead, the insurer asserted that the limitation period began to run when the plaintiff knew or ought to have known that their claim exceeded the Defendant’s policy limits, embodied under section 15 of the OPCF-44R. The insurer argued that this section was not overridden by the discoverability provision under section 5 of the Limitations Act.

 
The Ontario Court of Appeal rejected the insurer’s argument. The court concluded that once it was accepted that the 2 year limitation period set out in the Limitations Act applied so did the discoverability provisions in section 17 of the Act. Turning to discoverability, the court held that this loss was only discovered by the plaintiff after a formal request for indemnification was made to the insurer and the insurer failed to indemnify the plaintiff. Given this finding, the court held that the 2 year limitation period did not begin to run until the day after the demand for indemnification was made to the plaintiff’s insurer under the underinsured motorist provision of the policy.

Ontario Auto Insurance Reforms

It appears Ontario's never ending auto insurance reforms are gearing up again.  I thought it would be fun to look at a Monty Python sketch on insurance.

Happy Canada Day!