A FSCO arbitrator has ruled that a child who fell off a fire truck at a birthday party was not involved in an automobile “accident”.
In Carr v. TD, the five-year-old claimant was attending a birthday party for a classmate at her classmate’s home. Her classmate’s father and grandfather were volunteer firefighters for the Town of Niagara-on-the-Lake. After obtaining the necessary permission, they brought a fire truck owned by the Town to the birthday party. The children attending the birthday party were invited to tour the fire truck. When the children were touring the truck, the truck was stationary and the engine was off. As the children toured the fire truck, the classmate’s grandfather walked around talking to their parents and educating them on the use of the truck. The claimant apparently lost her footing and fell as she went down the steps getting off the truck. She was injured when she hit the ground.
As a result of the incident, the claimant applied to TD (her father’s insurer) for accident benefits. TD denied the claim on the basis that the claimant was not involved in an “accident”, as that term is defined in section 3 (1) of the SABS:
3. (1) In this Regulation,
“accident” means an incident in which the use or operation of an automobile directly causes an impairment or directly causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device.
The arbitrator considered the “purpose” and “causation” tests that have evolved in the jurisprudence over the years. For the “purpose” test, the question is whether the incident resulted from the ordinary and well-known activities to which the automobile (fire truck) was put.
The arbitrator agreed with the claimant that getting out of a fire truck is the normal use of a vehicle, and in determining normal use and operation, the individual characteristics of the truck must be taken into account. The arbitrator accepted that the use of the fire truck at the birthday party was a normal use of the truck in the circumstances.
However, the arbitrator held that the use of the truck in this instance did not involve the fire truck being used as an automobile. She found that the vehicle was being used as a “display for entertainment and/or educational purposes”. She held, “Although the evidence indicates that this was a legitimate use of the truck, it was not a type of use or operation contemplated by Section 3(1).”
The ongoing saga continues as to whether unusual incidents involving vehicles are automobile “accidents”.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
On August 26, 2015, the Ontario Legislature filed Bill 251/15, which amends the Statutory Accident Benefits Schedule in a number of remarkable ways. For the most part, the amendments apply only to policies issued or renewed on or after June 1, 2016. Existing contracts will remain subject to the current limits until the contract is terminated or renewed.
The most notable/talked about changes are to the catastrophic impairment definitions, but there are also significant changes to the non-earner benefits and med/rehab benefits available under the policy. What follows is a brief overview of the notable changes and the possible implications the accident benefits and tort industries faces with them.
The catastrophic impairment definition post June 1, 2016 includes new and/or updated definitions and criteria for traumatic brain injuries for adults and children. The new definition adopts a number of medical tools to categorize these impairments, such as reference to a (bedside) text called “Structured Interviews for the Glasgow Outcome Scale and the Extended Glasgow Outcome Scale: Guidelines for Their Use, Journal of Neurotrauma, Volume 15”. The often-controversial and highly problematic Glasgow Coma Scale category is removed.
The new definition also updates criteria for amputations, ambulatory mobility, loss of vision, and mental and behavioural impairments. Of note, Pastore has been overruled: Future catastrophic status for pure mental and behavioural disorders will require marked impairment in three of four aspects of function, or extreme impairment in one aspect, and the person must be precluded from useful function.
Finally, the Desbiens / Kusnierz methods of “combining” physical and mental impairments now must be done with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 6th edition (as opposed to the 4th edition). The 6th edition provides a specific methodology for assigning a Whole Person Impairment (WPI) to certain mental and behavioural conditions, which the Legislature has adopted for use in conjunction with the 4th edition’s system for rating other impairments.
For catastrophic impairment claims, a new combined med/rehab and attendant care benefit of $1 million is available. This reduces the potential amount of recovery under the policy significantly from $1 million for med/rehab and $1 million for attendant care.
Under the existing SABS, the non-earner benefits are paid after a six-month waiting period after the accident (onset of disability), up to two years post-accident at a rate of $185/week. If the person continues to meet the disability test after two years, the benefit amount increases to $320/week. Further, the benefit is available to a claimant who is 16 years of age or older.
As of June 1, 2016, the six-month waiting period is replaced by a four-week waiting period, but the benefit is no longer payable after two-years. Therefore, the $320/week benefit is eliminated and the insurer’s exposure stops at the two-year mark. Finally, the benefit is not payable to anyone who is under 18 years old.
Medical / Rehab and Attendant Care Benefits
The new changes significantly water down the non-catastrophic med/rehab and attendant care benefits. A new standard benefit that combines med/rehab and attendant care limits these claims to $65,000 (instead of $50,000 for med/rehab and $36,000 for attendant care).
Most importantly, the non-catastrophic med/rehab benefits are no longer available after five years post accident (instead of 10 years). Of course this change may not make much difference in the long term considering how difficult it can (or should) be to make $50,000 last over the course of 10 years. Nevertheless, the insurer’s exposure post accident for these benefits will stop after five years. The new duration does not apply to children under 18 at the time of the accident.
Optional Benefits for Med/Rehab and Attendant Care
The current optional $100,000 non-catastrophic med/rehab and $72,000 attendant care benefit have been eliminated. Instead, policyholders can purchase a new combined optional med/rehab and attendant care benefit of $130,000, which doubles the $65,000 standard limit for these benefits. They can also purchase the existing optional $1 million combined med/rehab and attendant care benefit that is available currently.
For catastrophic impairments, a new optional benefit of up to an additional $1 million for med/rehab and attendant care will be available. This optional benefit essentially would restore the catastrophic limits to the default catastrophic limits available today (although the med/rehab benefits would be combined with the attendant care benefits up to $2 million).
Other Changes – Attendant Care
The amendments have tweaked the attendant care benefit claim by confining entitlement to actual losses when an attendant care provider performs the services at a cost that is less than the actual amount stipulated on the Form 1 (“Assessment of Attendant Care Needs”).
Implications Going Forward
The new changes present a number of challenges for insurers and claimants alike. Insurance adjusters will have to wrap their heads around the several new tools/texts that have been inserted in the new catastrophic definition, which could make responding to these claims difficult for the next while.
Tort adjusters should also expect to see more claims with higher exposures now that the standard and catastrophic med/rehab limits have been significantly reduced. Direct writers/brokers should consider advising their customers to purchase enough liability coverage going forward.
The new amendments are available on e-laws: http://www.ontario.ca/laws/regulation/100034[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
The Court of Appeal for Ontario has released a decision dealing with whether an owner of an ATV can be held vicariously liable for a driver’s negligence, even though no consent was given to operate the vehicle. The decision is of interest because a five-member panel of the Court heard the case and overruled a previous decision of the Court.
In Fernandes v Araujo, Fernandes was seriously injured while a passenger on an ATV. The ATV was owned by Carlos Almeida and insured by Allstate. Eliana Araujo was the driver of the ATV; she had a G1 licence at the time of the accident.
Carlos was fixing a fence on his farm with some of his friends, including Eliana. Carlos told Eliana that she could drive the ATV on the farm, while Carlos’ cousin, Jean Paul, told Eliana not to leave the farm on the ATV. Carlos did not expressly forbid Eliana and Fernandes to leave the farm, although later he said if Eliana and Fernandes had asked him to leave the property he would have said no.
Eliana and Fernandes left the property to drive over to a nearby farm on a public road without permission. While returning back from the nearby farm, the ATV rolled over and Fernandes was seriously injured.
Allstate brought two summary judgment motions. The first motion dealt with whether Allstate was liable to provide insurance coverage when the owner of the ATV did not give his consent for Eliana and Fenandes to drive it.
The second summary judgment motion asked the court to dismiss Eliana’s third party claim because she was operating the ATV without the owner’s consent and was operating the ATV contrary to Statutory Condition (4.1) of O.Reg 777/93, which states that an insured shall not operate, drive or permit another person to operate or drive a vehicle unless they are authorized by law to do so.
Allstate’s motion in the main action was dismissed and was granted in the third party action.
In the main action, the judge relied on the Court of Appeal’s decision in Finlayson v. GMAC Leasco Ltd. In Finlayson, the Court of Appeal held that vicarious liability under section 192(1) of the Highway Traffic Act is based on possession, not operation, of a vehicle, following an old line of authority (Thomson v. Bouchier). Section 192 provides:
192 (2) The owner of a motor vehicle or street car is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle or street car on a highway, unless the motor vehicle or street car was without the owner’s consent in the possession of some person other than the owner or the owner’s chauffeur. [emphasis added]
In Finlayson, it was stated that if an owner gives possession of a vehicle to another, and the owner expressly prohibits that person from operating the vehicle, the owner is nonetheless vicariously liable for the negligent operation of that vehicle.
The motions judge had to reconcile this decision with the Court of Appeal’s decision in Newman v. Terdik. In Newman, Terdik was a tobacco owner who gave his worker permission to use the defendant’s automobile to travel down a laneway between two tobacco farms, but was expressly forbidden from driving on the highway. The worker drove on the highway where he hit the plaintiff, Newman, who sustained injuries. The Court of Appeal held that the worker did not have possession of the vehicle with consent; therefore, Terdik was not vicariously liable. The Court of Appeal found that possession is a fluid concept; it can change from rightful to wrongful possession or to possession with or without consent.
The judge found that Newman was distinguishable because Carlos did not expressly impose any restrictions on Eliana’s operation of the vehicle; he gave her possession of that vehicle. The fact that Carlos’ cousin expressly forbid Araujo from leaving the property could not be attributed to Carlos. However, the judge went further, stating that Newman may be wrongly decided, as it did not follow Thompson v. Bourchier.
Accordingly, the judge dismissed Allstate’s motion for summary judgment and found that there was consent, as Carlos gave Eliana possession of the ATV. Allstate’s motion dealing with the third party action was allowed.
Allstate appealed the summary judgment decision, raising two issues:
- Did the motion judge err by concluding that in the absence of an express prohibition against taking the ATV off the farm property, the owner must be taken to have consented to possession at the time of the accident?
- Did the motion judge err by failing to follow the decision of this court in Newman?
With respect to the first issue, the Court of Appeal disagreed with Allstate’s argument that the test for consent essentially turns on the subjective belief of the party in possession of the vehicle. The court found that this approach would allow anyone with actual possession of the vehicle to fix the owner with liability even where the owner had not consented to that person having possession of the vehicle:
The focus of the language and purpose of the provision are on the actions of the owner who is charged with the responsibility of exercising appropriate caution when giving another person possession of the vehicle.
With respect to the Newman decision, the Court noted that Newman stood for the proposition that “possession can change from rightful possession to wrongful possession, or from possession with consent to possession without consent” where the person in possession violates a condition imposed by the owner. However the Court found that this principle was inconsistent with the reasoning of the line of authority outlined in Finlayson, Thompson, and long list of other decisions.
Accordingly, the Court held that Newman was wrongly decided. Accordingly, the Court overruled the case and declared that it no longer represents the law of Ontario.
The appeal was dismissed.
The decision in Fernandes confirms that vicarious liability is based on possession, not operation. Even if the owner expressly prohibits the driver from operating the vehicle, the owner will be found vicariously liable if they gave the driver possession of the vehicle and such possession was exercised at the time of the accident.
The decision makes sense in light of the plain wording of section 192 of the Highway Traffic Act. In Thompson, the Court held that the purpose of this provision is “to protect the public by imposing, on the owner of a motor vehicle, responsibility for the careful management of the vehicle.” Part of careful management would include taking steps to ensure that the person with whom an owner gives possession of the vehicle would not use that possession in a way that would cause danger to the public.
See Fernandes v. Araujo , 2015 ONCA 571.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
On June 18, 2015, the Digital Privacy Act received Royal Assent and is now law in Canada. The Act amends PIPEDA in a number of ways, but there are three major changes that insurers need to know about:
- Organizations must make sure they are using a valid consent for the collection, use or disclosure of personal information. What constitutes a “valid consent” might not be as obvious as it might have been before the amendments.
- Organizations can now disclose personal information without the knowledge or consent of an individual for the purposes of preventing, detecting or suppressing fraud; and
- Organizations can now, for certain purposes, collect, use and disclose, without the knowledge or consent of an individual, personal information contained in witness statements related to insurance claims.
As discussed below, the disclosure amendments should alleviate some privacy concerns/obstacles that have plagued the insurance industry over the years, while the valid consent issue will likely cause some new headaches.
What is Valid Consent?
Sections 6 and 7 of PIPEDA deal with an individual’s consent to allow organizations to collect, use, and disclose the individual’s personal information. Section 4.3 of Schedule 1 of PIPEDA stipulates that the knowledge and consent of an individual are required for the collection, use, or disclosure of personal information, except where inappropriate (such as by legal obligation, best interests of the individual, etc.).
The Digital Privacy Act adds a new section 6.1 to PIPEDA, which places an important condition on consents:
6.1 For the purposes of clause 4.3 of Schedule 1, the consent of an individual is only valid if it is reasonable to expect that an individual to whom the organization’s activities are directed would understand the nature, purpose and consequences of the collection, use or disclosure of the personal information to which they are consenting.
This means that a claimant’s executed consent is valid only if the individual providing the consent fully understands the potential consequences of providing their personal information to the insurer. In the insurance claims world, companies deal with a wide array of individuals, some of whom are sophisticated while others are not. It now appears that insurers will have to tailor their consents to suit the individual whose private information they will be seeking to collect, use, or disclose.
Gone are the days where an insurer can rely on a “one size fits all” consent to collect, use, and disclose a claimant’s medical records. Insurers might have to take into account the claimant’s age, education level, first language, etc. before asking them to sign a specific consent.
Moreover, insurers might have to review all of the existing consents that they have on open files to determine whether they are still valid in the circumstances. It might be safer for insurers to send new consents on every open claims file, first making sure that the particular claimant would understand the nature, purpose and consequences of the collection, use or disclosure of the personal information to which they are consenting.
Is your head hurting yet?
Disclosure for Fraud
This is likely the most welcomed PIPEDA amendment for the insurance industry. Section 7 (3) of PIPEDA deals with disclosure without an individual’s knowledge or consent, and provides a number of instances where such disclosure is allowed. TheDigital Privacy Act adds a number of other instances allowing such disclosure, including disclosure:
(d.2) made to another organization and is reasonable for the purposes of detecting or suppressing fraud or of preventing fraud that is likely to be committed and it is reasonable to expect that the disclosure with the knowledge or consent of the individual would compromise the ability to prevent, detect or suppress the fraud;
Previously, insurers were not allowed to share information with other insurers (and in many unfortunate and misguided cases, with other departments within their own companies), without obtaining the consent of the person they suspected were committing a fraud. Section 7 (3)(d.2) should allow different insurance companies to exchange information with each other for the purpose of investigating and combatting fraud.
For example, in any given car accident there might be a number of passengers who each have accident benefits claims with different insurance companies. Where one or more of the insurers suspect a fraudulent claim involving one or more individuals, that insurer can now contact another insurer to see whether they have any information that could identify or substantiate fraudulent claims.
Insurers should embrace this amendment and proactively work with other companies if they are presented with a potentially fraudulent claim.
Information in Witness Statements
How often have we tried to investigate the cause of an accident by obtaining witness statements from third parties, only to find out that the names and contact information of the witness (or other witnesses) have been redacted?
The Digital Privacy Act adds a new section 7 (3)(e.1), which allows an organization to disclose personal information without the knowledge or consent of the individual if the disclosure is:
(e.1) of information that is contained in a witness statement and the disclosure is necessary to assess, process or settle an insurance claim;
This provision should allow police departments or other investigative bodies to disclose witness statements to insurers (or their lawyers) without fear of breaching PIPEDA. Whether they actually disclose that information is another story.
Click here to read the Digital Privacy Act .[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]