September 22, 2014

SABS Update – “OR” Really Means “AND”: Examinations Under Oath

Dayavata Singh v. State Farm Mutual Insurance Company, FSCO A12-007594

MVC May 2010. The following timeline applies:

• Application for benefits in May 2010.

• IRBs paid to November 2011

• Housekeeping paid to January 2012

• Notice of an Examination Under Oath (EUO) in August 2012

In October 2012, the Applicant attended the EUO but refused to answer questions relating to IRBs and housekeeping benefits, on the grounds the Insurer had initially chosen to pay her these benefits and in reliance on section 35(3) of the SABS (Reg. 403/96). The Applicant argued that where an Insurer decides to pay benefits under section 35(3), it cannot also require the insured to submit to an EUO.

State Farm maintained the Applicant failed to comply with her obligations to attend the EUO pursuant to s. 33 of the SABS and answer questions about IRBs and housekeeping. It stopped payment and brought a motion to compel the Applicant to attend.

 

ANALYSIS

S. 35(3) of the SABS (Reg. 403/96) provides that within 10 business days of receiving an application and completed disability certificate, an insurer is required to do one of three things: pay the specified benefit, request in part that an insured submit to an EUO, “or” require that the insured undergoes a medical examination. By contrast, section 33 of the Schedule sets out the process and parameters for conducting an EUO and contains a simple and broad obligation to participate.

Although s. 35(3) of the SABS requires an insurer to respond in one of three ways to the initial application for benefits, this does not restrict or diminish the insurer’s general and ongoing option of requiring an insured to attend an EUO under s. 33. The arbitrator concluded s.35(3) does not preclude an insurer from requesting an EUO where it initially paid benefits in response to an application for benefits, particularly where the insurer terminated benefits and requested the EUO. The word “or” in s. 35(3) was read conjunctively by the Arbitrator. This interpretation allows the insurer to initially pay benefits and then to request an EUO at a later date. The insurer was not ‘locked’ into the initial option selection under section 35(3).

No benefits were payable to the Applicant until she attended the EUO and costs of $1000 were awarded against the Applicant.

 

CONCLUSIONS

Section 35(3) requires a prompt and definitive response from the insurer upon receiving an application for accident benefits. However, a more involved process may be necessary as the claim develops which may include the application to attend an EUO under the broader provisions of section 33 of the Schedule.

 

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