V101 – Treatment Plans Denials – The Consequences of Defective Notices

Receiving a denial of a treatment plan can be both disappointing and disruptive to care. While insurers do have the right to render denials, it is important to note that they must comply with strict procedural requirements when so doing. These requirements serve to inform the injured person regarding the determination and to ensure prompt response to plans.

It is well known that insurers have up to 10 business days from the date of receipt of a treatment plan to render a determination of the plan. In rendering its determination, the insurer must identify the goods and services for which it agrees to pay as well as those for which it does not agree to pay. Where there is a denial, the insurer must give the medical and all of the other reasons why it considers the goods and services to be not reasonable and necessary. In addition, if the insurer believes that the Minor Injury Guideline applies to the injured person’s impairment, then the determination must include a statement to this effect. Each of these requirements must be met in order for a determination of a treatment plan to be considered as a SABS compliant notice.

The question of what happens when an insurer fails to comply with the above requirements was well dealt with within the recent LAT decision of 16-000517, M.F.Z v Aviva Insurance Company of Canada. In this case, the insurer had given what may be considered as a vague reason for denial of a treatment plan: “The frequency of care does not generally diminish over time”.

In considering the facts of the case, Adjudicator Shapiro commented as follows: “While I cannot ascertain whether a response was provided within 10 days, 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”. The Adjudicator further recognized that the insurer did not make mention of the Minor Injury Guideline when rendering its determination of the plan.

In recognizing that Aviva’s notice was defective, given its failure to give an adequate reason for denial and its failure to indicate belief that the Minor Injury Guideline applied, Adjudicator Shapiro confirmed two mandatory consequences to be imposed upon the claim. These consequences are as detailed in S.38(11) of the Statutory accident Benefits Schedule and 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 (8).

Indeed, the outcome of this case was such that the incurred goods and services were deemed to be payable for the period of the defective notice. Further, because the insurer failed to indicate its belief that the Minor Injury Guideline applied to Mr. Z’s impairment, the insurer was found to be prohibited from ever again taking such a position in relation to the claim. With this, the $3,500 coverage cap for medical and rehabilitation benefits was removed from Mr. Z’s claim.

Of interest, Aviva requested that the Tribunal reconsider this decision. Upon reviewing the case, Executive Chair Lamoureux confirmed the original decision.

This case highlights the care that insurers must take when rendering determinations of treatment plans. When denials are received, they should be critically reviewed for compliance purposes. Where there is non-compliance with procedural requirements, continued access to services can be permitted and, as demonstrated above, removal of minor injury limits may be achieved.

Official Decisions:

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

16-000517, M.F.Z and Aviva Insurance Canada (Reconsideration Decision)

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