An arbitrator with the Financial Services Commission of Ontario (FSCO) issued a “rare” ruling when it decided against an auto insurance company due to its mismanagement of a client’s application for catastrophic impairment, according to Law Times News.
That client, Thomas Waldock, had been struck by an errant vehicle while helping to remove another car from a snowbank. Waldock applied for statutory accident benefits from his insurer, State Farm Automobile Insurance Company, but then the question arose of whether the injuries sustained could be considered “catastrophic.”
FSCO held a preliminary issues hearing to assess the extent of Waldock’s injuries, and an arbitrator ruled in favor of Waldock but postponed the issue of hearing costs to a later date. When eventually making his decision, the FSCO arbitrator commented that State Farm’s medical examiner “failed to follow the accepted guidelines to determine whether a person is catastrophically impaired, and ruled against the insurer based on its denial of catastrophic impairment on a flawed report.”
Waldock’s legal team then filed for a special award of $361,520, asserting that the policyholder incurred various medical and related expenses throughout the period that State Farm withheld benefits.
Last week, the arbitrator confirmed that State Farm “refused to accept” his original ruling declaring catastrophic impairment, and ordered the carrier to pay a special award consisting of 30% of the $361,520 plus interest, as well as $125,435 for bill of costs and $45,824 in disbursements.
Leonard Kunka, the Thomson Rogers lawyer who represented Waldock, believes this will set a new precedent for how insurance companies evaluate the extent of their clients’ injuries.
“It’s a signal to insurance companies that when you’re going to deny benefits to a person or they’re going to deny that somebody has a catastrophic impairment, they better make sure that they have followed the legislation and their assessments have been done properly,” Kunka told Law Times News. “To rely on a defective assessment to the detriment of their insured is really a breach of their obligation of good faith to their client.”
In addition, he believes that this case could have striking ramifications for the insurance industry since it is the first one where “inevitable deterioration of an injured person’s condition” was taken into consideration when determining a catastrophic injury under Ontario Statutory Accident Benefits regulations.
“Because they relied on a report that was so obviously defective, and they blindly relied on that and wouldn’t change their position on that, that’s what the arbitrator took exception to – an insured should not have to go through all of this,” he said.
