UPDATE: HENRY V. GORE MUTUAL INSURANCE

Posted May 5, 2014

On February 1, 2014, the Ontario Government introduced Ontario Regulation 347/13 negating the findings of the Ontario Court of Appeal in Henry v. Gore Mutual and seriously constraining the amount of attendant care benefit payable when a family member is providing the attendant care.

When a person is injured, a close family member is often the main caregiver during recovery. It is simply human nature to lend a hand when a close relative is struggling. After all, what mother is not going to care for their injured child? In such a circumstance, in which a family member is essentially acting as a free personal support worker, should the accident benefits insurer compensate them for their efforts?

In the past, this question has been answered with reference to economic loss as defined in the SABS. In accordance with section 3 of the SABS, one of the criteria for payment of an attendant care benefit is establishing an economic loss. Initially the economic loss criteria was interpreted by the Court in Henry v. Gore Mutual as simply being a threshold requirement. Once the person claiming the benefit established an economic loss, regardless of the amount, the benefit was payable in accordance with the amount set out by Form 1.

In Henry, the Plaintiff was catastrophically injured as a result of a motor vehicle collision. His attendant care needs were assessed at approximately $9,500 per month. The maximum payable to the applicant by Gore under the SABS for attendant care is $6,000 per month with a lifetime maximum of $1,000,000.00. The Plaintiff’s mother took a leave of absence from her fulltime employment as an assistant manager for a retail store in order to provide care to her son. At the time of the collision, she worked 40 hours per week with a salary of approximately $2,100 per month.

The Court of Appeal upheld the decision of Justice Ray and found there was no correlation between the quantum of the caregiver’s economic loss and the amount of the insured’s benefit entitlement. This makes sense given that the amount of attendant care required is connected to the injuries sustained and not the economic loss of the caregiver. Rather, the Court stated that economic loss was a “threshold decision”, which once found would trigger an insurer’s obligation to pay the benefit at the assessed amount according to the injured person’s needs. As a result, Gore was required to pay Mrs. Henry $6,000 per month despite the fact that her economic loss was only $2,100 per month.

In the lower court decision, Justice Ray notes the change in the SABS requiring an “economic loss” be demonstrated by an attendant care provider. He notes this change:

“…was apparently to prevent a member of an insured’s family who was not ordinarily an income earner or working outside the home, from profiting from an attendant care benefit when they would be at home anyway – and would have looked after the injured insured without compensation.”

Further, Justice Ray finds that the amended regulation “retained the requirement that an insurer pay all reasonable and necessary expenses but required that they be incurred by or on behalf of the insured person” and that “the person who has provided the service has ‘sustained an economic loss’ as a result of providing the services”. In footnote 7 below, Justice Ray notes:

“In 1994 the attendant care benefits were expanded to include payment to family members, and in 2002 the benefit was clarified in [a case in which I acted for the Applicant] F. (L.) and State Farm (FSCO P02-00026, June 3, 2004) that payment by an insured to a family member for attendant care was not a pre-condition to payment by the insured for attendant care benefits for a family member. The only requirement was that the services be reasonable and necessary. This was seen as something that needed to be changed and was addressed in the amended Statutory Accident Benefits Schedule – Effective September 1, 2010 Ont. Reg. 34/10, Section 19.”

Changes to entitlement to an attendant care benefit made as of September 1, 2010 substantively altered the rights of accident victims and their attendant care providers to receive payment for services delivered. Family members who did not suffer an economic loss as a result of providing attendant care were not entitled to be paid for their services. Therefore, stay-at-home moms of injured children who provide attendant care are expected to do so for free, since as Justice Ray put it, “They would be at home anyway”. There is no compensation contemplated for the massive disruption, strain, and labour involved in providing extraordinary care to her child. Instead, because she is not employed outside the home, her labour as an essentially free personal support worker becomes a benefit to the insurer.

The recent changes affected by Regulation 347/13 provide that the payment to the attendant care provider shall not exceed the amount of the economic loss. In effect, the attendant care will now be measured according to the economic status of the family member providing care and not the actual value of the care provided. For example, if two working mothers took time off work to care for their children, and the children had the same injury and required the same level of attendant care, the mother taking time off of a minimum-wage job to care for her child would receive less attendant care benefits than the mother who took time off a high paying corporate job. This is obviously problematic as it further devalues the care provided by lower income family members.

Even more problematic is paragraph 5 of the Regulation which states: “This Regulation comes into force on the later of February 1, 2014 and the day it is filed”. As a result of this Regulation, not only do automobile insurers have the statutory right to pay less than the amount of care quantified in the Form 1, they are taking the position this Regulation is retroactive and applies to all claims for attendant care benefits after September 1, 2010. This change directly impacted the insured person’s substantive right to this benefit. There are two types of rights defined in law. A substantive right which addresses a person’s right and benefits and a procedural right which deals with the rules that govern those rights and benefits. A change to a substantive right cannot be retroactive in accordance with the prevailing case law which prevents substantive changes from being applied retroactively in relation to accidents which have occurred before the date on which an Amending Regulation comes into effect.

Insurers applying this Regulation retroactively to claims for attendant care arising out of collisions occurring after September 1, 2010 and before February 1, 2014, are doing so at their peril. It is a breach of the insurer’s duty of good faith and obligations under the Unfair and Deceptive Act and Practice pursuant to Section 439 of The Insurance Act, Section 6.1. of part XV of the SABS and contrary to the plain reading of Ontario Regulation 347/13. These breaches should not be looked upon lightly. The Financial Services Commission will be flooded with Applications for Mediation and requests that insurers consent to fail as a matter of urgency and safety followed by Applications for Arbitration and Motions for Interim Benefits seeking reinstatement of the attendant care entitlements.

In the end, Ontario Regulation 347/13 does exactly what insurers intended it to do. It limits the attendant care benefit to an amount equal to the economic loss. But that may not be the final statement on this issue. Let’s not forget that family members who have been forced to quit work in order to care for their loved ones not only lose the income they earned at the time of the collision but will continue to suffer further economic losses associated with lost overtime, annual cost of living increases and performance bonuses. This is especially relevant, given that lower income caregivers will be more likely to quit or lose their jobs as a result of providing care to their loved one.

View PDF version: Accident Benefit Reporter | Volume 15, Issue 1 | May 2014

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