Laches Applies to Loss Transfer Actions

Insurers dealing with loss transfers should be aware of the decision in Zurich Insurance Company v. TD General Insurance Company, 2014 ONSC 3191 (S.C.J), where the Court dismissed the claim.

The claim arose out of a motor vehicle accident that occurred July 14, 1999.  In 2010, approximately 11 years after the accident, TD sent Zurich a Notice of Loss Transfer alleging Zurich's insured was 100% at fault.  Shortly after, TD made two requests for indemnification.  In 2011, TD brought an application requiring Zurich to participate in an arbitration.  Zurich brought a motion to decide a preliminary issue as to whether the application was barred by the equitable doctrine of laches and the Limitations Act.  The arbitrator dismissed the motion and Zurich appealed.

Justice Lederman held that TD's claim was not barred by the Limitation Act, relying on decision in Markel Insurance v. ING Insurance Company of Canada, 2012 ONCA 218 (CanLII), where the Court of Appeal held that the limitation period runs from the day the first party insurer requests loss transfer from the second party insurer.

However, Justice Lederman held that laches applied in the circumstances.  Applying laches in the circumstances was consistent with the fusion of law and equity to achieve just results.  He held that acquiescence is a stand-alone basis for laches, and there need not be prejudice for the doctrine to apply.  The 11-year delay coupled with a directive that the first party insurer notify the second party insurer promptly and the fact the TD is a sophisticated insurer, gave rise to an inference that it had abandoned or waived its rights to the claim. 

Insurance News - Wednesday, June 18, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, June 18, 2014:

• Ontario Court of Appeal finds insurer must indemnify and and defend woman who let her driver's licence expire.
• The WSIB has been relying more on surveillance to investigate questionable claims.
• Government prepares regulations to enable large-scale testing of self-driving cars on Dutch roads.
• Driverless cars are going to change just about everything.
• Other than Ekos, why did none of the polls pick up on a Liberal majority?

What the Liberal Majority Government Means For Ontario Auto Insurance

The Liberal platform for auto insurance was essentially set out in the 2014 Spring Budget which never proceeded beyond first reading before the election was called.  Now that the Liberals have a majority, it is expected that they will proceed with those commitments.  It also means the NDP will no longer be able to influence government policy.

In the Spring, the Liberals indicates that the rate reduction strategy is on target and average rates will be 8% lower by August 2014 and 15% lower by August 2015. However, the Budget document does not point to any specific initiative that will specifically work towards achieving those targets. Average rates are down 5.6% as of the end of the first quarter of 2014.

The Liberals will  have a challenge bringing down rates further without a few significant systemic changes.  More and more it appears costs have been rising over past few quarters so it should be interesting to see the second half data for 2013.  Rising costs can be attributed to a number of factors including:

• a severe winter
• higher claims volumes
• the backlog of decisions awaiting arbitration
• deterioration of reforms as parties begin to discover how to work the system
• claims staff "fatigue"
• residual fraud

Governments are more likely to make unpopular decisions early in a mandate than immediately before an election.  So there is a possibilities that some tougher decisions make be made on the auto insurance file to stabilize costs and ensure consumers will see lower rates.

The Premier has committed to bringing back the Legislature on July 2 to re-introduce the Budget Bill following a Throne Speech. The Budget Bill itself had no auto insurance provisions.

Instead, legislative amendments to the Insurance Act were part of Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 which was introduced in March 2014.  The Bill included legislative amendments for the transformation of the dispute resolution system, and further action to crack down on fraud and abuse, as well as other cost-saving measures. The government was to take further steps on developing a dedicated investigation and prosecution office on serious fraud, with an initial focus on auto insurance fraud. The development of this fraud office would be based on the Auto Insurance Anti-Fraud Task Force’s principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants.

There is no timetable for re-introducing Bill 171.  There were some strong objections expressed over several provisions in the Bill - barring access to the courts for accident benefit disputes and reducing the prejudgment interest rate.  It will be interesting to see if there are any changes should the Bill be re-introduced.

The Liberals had also introduced legislation to regulate the towing industry that never passed.  Bill 189, the Roadside Assistance Protection Act would require towing and storage providers to publish their rates, provide an itemized invoices, accept payment by credit card if requested and to disclose to the consumer any interest a towing and storage provider may have in a location or facility to which a vehicle may be towed for repair or storage.  If passed into law, Bill 189 would also stipulate the consumers be given access to towed vehicles in order to remove personal property.

FSCO has been proceeding with the licensing of treatment and assessment facilities on the auto insurance sector.  The licence application process opened up on June 1.  Facilities will have to be licensed on December 1 in order to submit invoices through HCAI.  Application fees were also recently announced.

Perhaps even some outstanding issues, such as the definition of catastrophic impairment and a new minor injury treatment protocol will finally be addressed.

Insurance News - June 12, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, June 12, 2014:

• What do politics have to do with Ontario auto insurance rates anyway?
• The Ontario election is too close to predict but that doesn't stop people from predicting.  Go out and vote.
• Self-driving cars along with car sharing schemes could take up to 80% of traffic off the roads of congested cities.
• A fake city built at the University of Michigan is to be used to test self-driving cars.
• The legal costs to the telematics industry of handling subpoenas and other information requests will quickly rise.
• Auto risk management - how 'telematics' is revolutionizing insurance.

The “Curtain” of Asserted Claims of Privilege Lifted to Permit a Full Examination of all Available Evidence

In Tomasone v. Capo, Sgro LLP, 2014 ONSC 2922 (CanLII) the defendant had provided two legal opinions to the plaintiffs which the plaintiffs claimed failed to meet the requisite standard of care. The plaintiffs sued the defendant in negligence. The defendant brought a motion for summary judgment asserting that the plaintiffs’ claim was statute barred by the Limitations Act, 2002.

In defence to the summary judgment motion, the plaintiffs put forward affidavit evidence suggesting they discovered their claims against the defendant after retaining counsel. Their counsel also swore affidavits but during cross-examinations they refused to answer any questions about when or how they discovered those claims.

In advance of the summary judgment motion, the defendant moved for answers to refusals with respect to discoverability, particularly dealing with information and documentation the plaintiffs claimed privilege over.

Master Short considered whether the plaintiffs could rely on privilege in these circumstances and concluded at paragraph 48 as follows:

The plaintiff ought not to be allowed to rely on discoverability arguments to seek to avoid a limitations defence, without making full disclosure with respect to all relevant facts relating to what knowledge was acquired and when.

Master Short also considered the defendant’s argument that even if privilege applied, the plaintiffs waived privilege. Master Short agreed, taking into account the following factors inter alia:

1) the plaintiffs undertook to prove their action was not statue-barred and they put their state of mind and their lawyer’s mind in issue to argue that the action was not statute-barred;

2) the plaintiffs relied upon the affidavit evidence of their lawyer; and

3) the plaintiffs subpoenaed former counsel to give evidence.

Master Short went on to review the guidance provided by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 regarding the importance of full disclosure in light of the court’s power on the hearing of summary judgment motions to assess the quality and sufficiency of the evidence and the requirement that the parties "put their best foot forward".

The plaintiffs were ordered to answer the questions they refused related to the timing of receipt and review of relevant documents and the timing of investigations into possible claims against the defendant.

Insurance News - Friday, June 6, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, June 6, 2014:

• A number of experts think that self-driving cars could hold a big promise for public transportation.
• Almost  80% of Canadians are still unfamiliar with usage-based insurance.
• Telematics will become so popular that within 10 years drivers will likely have to opt out.
• Lawyers and expert witnesses are cashing in when auto insurance claims go to court and driving up costs.
• Armed with digital devices, consumers are filling many legacy insurance roles and driving insurers crazy.
• An interesting report by Lloyds on self-driving cars - opportunities and risks for insurers.

FSCO's Licensing Process for Service Providers Has Begun

The licensing process for auto insurance service providers, first recommended by the Auto Insurance Anti-Fraud Task Force in 2012, has officially begun.  

As if June 1, the application process was opened up by FSCO.  Service providers must be licensed by December 1 to continue to use HCAI and bill insurers directly.  As well, FSCO states that an application received after August 31 may not be processed before December 1.

Service providers can apply as a:

• Sole proprietor
• Partnership
• Corporation

The application fees are now available as well.  There is a one-time application fee of $337. Then there is a annual regulatory fee that is tied to the volume of business conducted with auto insurance companies. Service providers will be charged $15 for each claimant in the system in the calendar year plus $128 for each location it operates from.

So a chiropractor that sees 2 auto insurance claimants per month and operates one clinic will pay:

($15 * 24) + $128 = $488.

A larger provider operating from 5 locations with each location accepting 40 new claims a month will pay:

($15 * 2400) + ($128 * 5) = $36,640.

Regulatory fees will be payable on April 1, 2015 and will be prorated from December 1, 2014 (four months). 

For more information check the FSCO website.