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CAT Assessments Must Be Reasonable to be Payable

3 minute read

On May 4, 2015, Director's Delegate Blackman released his decision in Cook and RBC[1], which deals with the payment of catastrophic (“CAT”) assessments under the Statutory Accident Benefits Schedule—Effective September 1, 2010[2] (“2010 SABS”). As discussed in my blog post, Assessments Payable Even Though Medical and Rehabilitation Limits Were Exhausted, Director's Delegate Blackman ultimately found that the costs of CAT assessments in that case were properly characterized as interim legal expenses, assuming that the issue of catastrophic impairment was formally added to the arbitration, and therefore did not come out of the insured person’s medical and rehabilitation benefits limits.

In that blog post, I predicted that we would see further case law on this issue, given the potential for additional costs to insurers.

Indeed, in the five years that have followed, arbitrators at the Financial Services Commission of Ontario and the Licence Appeal Tribunal have held that the cost of CAT assessments are not payable out of an insured person’s medical and rehabilitation benefits limits. This has not been restricted to cases in which the expenses could be characterized as interim legal expenses. Arbitrators have found that, because CAT assessments are not a “benefit,” the cost of these assessments should not come out of the medical and rehabilitation benefits limits: see, for example, 18-007227 v Unica Insurance Inc.

The question then becomes, are CAT assessments payable outside of the medical and rehabilitation limits whenever requested by an insured person?

Based on case law from the Licence Appeal Tribunal, the answer to this question is, no. In order for CAT assessments to be payable, the insured person must establish that they are reasonable.

Most recently, in D.L. v Aviva Insurance Canada, Adjudicator Farlam highlighted that an insured person bears the onus of proving the reasonableness of the assessments claimed. This is because, pursuant to the 2010 SABS, an insurer is only liable to pay for medical and rehabilitation expenses that are reasonable and necessary as a result of the accident. The insured person therefore bears the onus of proving on a balance of probabilities that any proposed treatment plan he or she seeks is reasonable and necessary. Further, with respect to examinations, an insurer is only required to pay reasonable fees associated with preparing an application for a determination of catastrophic impairment, including any assessment necessary for that purpose.

As Adjudicator Farlam explained, it is not enough for the insured person to assert that it is possible that he or she may be catastrophically impaired. The insured person must establish, with supporting evidence, that there is a reasonable basis to investigate whether the insured person is catastrophically impaired.

Even though, by their nature, assessments are speculative and their purpose is to determine if an insured person has a specific condition or meets a specific threshold, there must be some suggestion that the specific condition exists, arose from the accident, and that further investigation is reasonable and necessary.

In short, as Arbitrator Farlam succinctly stated: “Entitlement to payment for a CAT assessment is not absolute. An insurer is not obligated to pay all CAT assessments but only those that are reasonable and necessary.”

[1] FSCO Appeal P14-00038 (Director's Delegate Blackman, May 4, 2015).

[2] O Reg 34/10.

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Danielle M. Gauvreau

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