Insurers cannot escape paying less than the Form 1 rate
Author(s): Stacey L. Stevens
October 31, 2012
With the return of the definition for the term “incurred”, Insurers have been applying various interpretations of this term in order to reduce or limit the amount of attendant care payable since September 1, 2010.
Recently, FSCO released a decision with respect to an Insurer’s attempt to pay the attendant care benefit based on the minimum wage applicable to the Insured’s residency rather than the Form 1 hourly rate. While this decision relates to a collision, which predates the September 1, 2010 changes, the Arbitrator makes it clear that the Insurer must pay basic supervisory attendant care at the Form 1 rate of $7.75 per hour.
On June 14, 2006, Costel Sicoe sustained catastrophic injuries in a motor vehicle collision. Jevco initially paid Mr. Sicoe a monthly attendant care benefit at the rate of $6,000 per month in accordance with the Form 1. Three years later, Mr. Sicoe moved back to Romania where his parents provided him with 24-hour basic supervisory care.
In response, Jevco reduced Mr. Sicoe’s attendant care benefit to $1,596.10 per month based on the fact that the minimum wage in Romania is $1.30 per hour compared to the rate of $7.75 per hour as set out in the Form 1.
At the time of the collision, the applicable provisions of the Schedule requiring Insurers to pay for attendant care services were set out in Sections 16 and 39(18), which are stated as follows:
16(2) The attendant care benefit shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident. . .
(4) The monthly amount payable by the attendant care benefit shall be determined in accordance with Form 1.
39(16) An assessment of attendant care needs under this section in respect of accidents occurring on or after March 1, 2006 but before February 1, 2007 shall be in the form of and contain the information required in the “Assessment of Attendant Care Needs” dated December 31, 2005, as it read on March 1, 2006.
Jevco argued that the only way to give meaning to the then undefined term “incurred” in Section 16 is to pay the actual cost of Mr. Sicoe’s care, which, in this case, would be minimum wage in Romania. Jevco argued that Section 16 is silent on what the hourly rate payable is, and therefore it is reasonable to pay attendant care based on rates that reflect the actual cost of care. Jevco compared Section 16 to Section 50 of the previous version of the Regulation, which tied the hourly minimum wage rate to the Employment Standards Act, and suggested the Legislature’s lack of reference to a specific hourly rate, allowed for payment based on the actual cost of providing the care and anything above that would be a windfall for the Insured.
Arbitrator Sapin rejected Jevco’s argument for three reasons. Firstly, the Scheduleis not silent on the issue of rates as Section 16(4) mandates the use of the Form 1, which contains specific rates.
Secondly, Jevco’s interpretation of the term incurred is inconsistent with the “broad, remedial and purposive interpretation of the term by the Courts and the Commission” and the legislative intent to “provide benefits quickly and efficiently, at a predictable cost, to those most seriously injured”. Lastly, the Legislature’s decision not to refer to a specified hourly rate in Section 16 has firmly removed any uncertainty as to how the benefit should be calculated. The purpose of the Form 1 is to provide the mechanism for calculating the cost of care based on the exact amount of care required, down to minutes per week for each activity, and multiplying it by the specified hourly rates.
The reasoning in the Sicoe and Gore decisions (see our article: Family Members Sustain Economic Losses in Providing Attendant Care) will have a significant impact on how the Courts and the FSCO react to the Insurers’ current interpretation of the definition of the term “incurred”, as set out in Section 3(7)(e) of the post-September 2010 SABS, as it relates to payment of the attendant care benefit.
The Sicoe and Gore decisions join a series of cases, which prohibit insurers from contesting the hourly rates payable under the Form 1. While the term “incurred” is now a defined term, it remains to be seen as to whether the Courts and FSCO will continue to apply a “broad, remedial and purposive interpretation” to this term in order to “provide benefits quickly and efficiently, at a predictable cost, tothe most seriously injured”.
The lawyers at Thomson Rogers continue to challenge the Insurers’ attempts to narrowly define the term incurred through the Courts and FSCO, and will provide regular updates as they become available.