The SAB Adjusters Duty of Utmost Good Faith
If you have been injured in a motor vehicle accident, you are eligible to receive provincial Statutory Accident Benefits (“SABs”) from your automobile insurer, regardless of who is at fault. These benefits are governed by the Statutory Accident Benefits Schedule (“SABS”), which is a regulation enacted under the Insurance Act that sets eligibility standards for the SABs. Claiming benefits under the SABS require corresponding with your SAB adjuster who is assigned to your file.
What does a SAB adjuster do?
A claims adjuster’s job is to handle the procedural and substantive aspects relating to a claim for accident benefits. The adjuster is essentially your main point of contact as a representative of your insurer. They will ask you to submit certain documents, such as your Application for Accident Benefits (OCF-1) and Treatment and Assessment Plans (OCF-18), and respond with procedural guidance.
However, they also have the mandate to review all paperwork and medical documentation (i.e. hospital records) and then determine which benefits you are entitled to and which category of injuries that you fall in (i.e. MIG, NCAT, or CAT). For instance, it is their job to agree to submitted Treatment Plans by determining whether the medical or rehabilitation treatments claimed are reasonable and necessary. Denials of any benefits can be challenged by submitting an application at the License Appeal Tribunal (“LAT”), which is a specialized body that adjudicates SAB disputes. These disputes often settle before a hearing at the LAT, as the insurer may agree to pay out a lump sum for a full release of obligation under the SAB claim for that motor vehicle accident.
As a result of the insurer’s powerful position of providing or restricting benefits, a dependency relationship is created between the injured insured and the insurer. Canada’s jurisprudence has recognized this practical reality and have imposed a common law duty on the insurer to act in good faith.
The Duty of Good Faith
Bhasin v. Hrynew, 2014 SCC 71 is the leading Canadian contract law case that defines good faith as a basic organizing principle for contractual relations. Although a corporate and securities law case, the case adequately builds upon previous jurisprudence and applies to the SAB context (RBC v. Field, 2016 ONSC 5584). The good faith principle requires parties to perform their contractual obligations honestly and reasonably, rather than in capricious or arbitrary manners. In Bhasin, the court states that:
“he duty of good faith which requires an insurer to deal with its insured’s claim fairly, both with respect to the manner in which it investigates and assesses the claim and to the decision whether or not to pay it … This duty of good faith is also reciprocal: the insurer must not act in bad faith when dealing with a claim, which is typically made by someone in a vulnerable situation, and the insured must act in good faith by disclosing facts material to the insurance policy.”
Bhasin v. Hrynew, 2014 SCC 71 at para 55.
This cemented the Whiten v. Pilot Insurance Company, 2002 S.C.J. No. 19 principle that an insurer must treat its insured during the claims process with the “utmost good faith.” In the SAB context, this principle of “utmost good faith” requires the insurer to undertake a number of affirmative acts to protect the well-being of the injured party:
“The contract is one of utmost good faith. In addition to the express provisions in the policy and the statutorily mandated conditions, there is an implied obligation in every insurance contract that the insurer will deal with claims from its insured in good faith . . . The duty of good faith requires an insurer to act both promptly and fairly when investigating, assessing and attempting to resolve claims made by its insureds.”
Ernst & Young Inc. v. Chartis Insurance Company of Canada, 2012 ONSC 5020.
Therefore, an adjuster owes a duty to assess the merits of the claim in a responsible and reasonable matter without delay. Any refusals must be based on a reasonable interpretation of the policy or SABS. This obligation continues throughout the entire claims process, from the point of first contact to resolution of dispute (Mamaca v. Direct Protect, 2007 CanLII 9890).
Breach of this duty can have a number of consequences for the insurer, including the potential for the court to award “punitive” or “aggravated” damages in order to punish the insurer and denounce their conduct. Unfortunately, SAB insurers cannot be given punitive damages. Instead, the LAT must protect the applicant’s rights by granting special awards. For instance, section 10 of Insurance Act O/Reg 664 states an amount of up to 50 per cent with interest on all amounts owing may be awarded if an insurer has unreasonably withheld or delayed payments.
As a vulnerable party who rely on their insurer’s to conduct their obligations in good faith to receive their benefits, an insured has protection under the duty of “utmost good faith.” This requires the insurer to (1) investigate, (2) assess, and (3) resolve claims in a fair, prompt, and good faith manner.
The personal injury lawyers at Littlejohn Barristers have significant experience representing clients who have had their rights under the SABS breached by the bad faith actions of their insurer. If your insurer has breached their duty to act in utmost good or you have been denied disability benefits, contact our Barrie office at 705-725-7355 to see if we can help.