V1102 – The Insurer’s Obligation to Give Medical and All Other Reasons for Treatment Plan Denials

Insurers are required to give their claimants determination notices within 10 business days of receiving treatment and assessment plans. Such notices must identify the items for which the insurer agrees to pay and must also identify any items that are denied.  If there is a denial, then the insurer is required to provide “the medical reasons and all of the other reasons why the insurer considers any goods, services, assessments and examinations, or the proposed costs of them, not to be reasonable and necessary.” This requirement to give reasons for denial is described in section 38(8) of the Statutory Accident Benefits Schedule.

But what can pass as acceptable reason for denial? The reality is that we often see adjusters using boilerplate statements such as:

“Given the passage of time, it is not clear that you require ongoing treatment”

“We require a second opinion about the recommended treatment”

“There does not appear to be objective signs of improvement with ongoing treatment”

“In considering medical information available, the treatment appears not reasonable and necessary”

“The frequency of care does not generally diminish over time”

We previously highlighted the LAT decision 16-000517, M.F.Z v Aviva Insurance Company of Canada. This was a case in which Adjudicator Shapiro commented: “…the “medical reason” provided is so unclear … that it is meaningless. It is no reason at all. The requirement is to provide a medical reason, not leave the applicant to guess what the reason is”. In rendering his decision, Adjudicator Shapiro confirmed the mandatory consequences for a non-compliant notice of denial. These are detailed in section 38(11) and result in deemed approvals. They are as follows:

1 – The insurer is prohibited from taking the position that the insured person has an impairment to which the Minor Injury Guideline applies.

2 – The insurer shall pay for all goods, services, assessments and examinations described in the treatment and assessment plan that relate to the period starting on the 11th business day after the day the insurer received the application and ending on the day the insurer gives a notice described in subsection.

In a much more recent decision, Brian Hedley and Aviva Insurance Company of Canada, the Divisional Court reviewed the requirement that insurers give reasons for denials. This is a case in which Aviva had informed Mr. Hedley that it was “unable to determine whether the recommendations are reasonably required for the injuries” and stated also that “The type(s) of treatment does not appear consistent with the patient’s diagnosis”.

The original LAT Adjudicator accepted Aviva’s reasoning but the Executive Chair disagreed. She noted that to so accept would essentially allow an insurer to justify any denial of a plan by merely stating that it had reviewed the plan in light of the medical documentation on file, and without providing any meaningful detail, assert that the plan was not appropriate given the insured’s condition.”  She concluded that the Adjudicator’s interpretation constituted a “significant error of law” and granted the request for reconsideration of the dispute.

The case was then brought by Aviva to the Divisional Court for further consideration. At this stage, the Court reflected on Turner v. State Farm Mutual Automobile Insurance Company. In Turner, it was stated that “…where reasons are required, they must be meaningful in order to permit the insured to decide whether or not to challenge the insurer’s determination.  Mere “boilerplate” statements do not provide a principled rationale to which an insured can respond.  In essence, such statements constitute no reasons at all.” The Divisional Court concluded that it was reasonable for the LAT’s Executive Chair to conclude the original Adjudicator had erred, and the appeal to the Court was dismissed accordingly.

With this recent example, we see a continued trend of favour being given to an insured person when boilerplate statements are used by insurers in their processing of denials. Clearly, adjusters are required to think critically about treatment plans and they must respond in detail when providing the medical and all of the other reasons for processing a denial. Surely, “reasons” should not be chosen from a drop-down list on a template letter. Rather, adjusters must consider the information available to them and should then provide individualized reasons for denial; they should document their understanding of the treatment plan, the medical records, and the claimant’s situation. Anything short of this, arguably, is insufficient and should trigger the consequences of deemed approval as highlighted above.

The challenge that we face is that raising the issue of whether a notice of denial is compliant in reasoning can yield delays in the claim. We must remain sensitive to our clients’ ability to access care and we should choose our battles wisely. This is a careful balance that requires case by case consideration. Do we object to insufficient rationale but permit the insurer examination in the essence of time? Do we object and also reject the examination? Do we insist that the treatment be continued, on a deemed approved, basis pending an appropriate notice of denial being received? Do we stop ongoing treatment for risk aversion purpose? Do we file to the LAT, even with risk of failure or delay in care, if we come to an impasse? These questions are complex in nature and should be carefully considered by capable counsel.

Official Decisions:

Reconsideration, 17-003774, B.H. v. Aviva Canada Inc.

Hedley v. Aviva Insurance Company of Canada, 2019 ONSC 5318

16-000517, M.F.Z. and Aviva Insurance Canada

About the Authors