Accident Benefits Regime Does Not Provide Vested Rights: MVACF and Barnes

By Patrick M. Baker May 10, 2017

Under the 2010 Schedule, an insured person must prove that he or she has incurred attendant care services in order for attendant care benefits to be payable.  Unlike past iterations of the Schedule, the 2010 Schedule provides a detailed definition of “incurred”.  Among other things, an insured person must show that either a) the service provider did so in the course of employment (professional aides); or b) that a non-professional aide sustained an economic loss in providing the services. 

In the 2013 decision of Henry v. Gore Mutual, the Court of Appeal held that a showing of economic loss was a threshold requirement for recovery of attendant care.  Once incurred was established by any economic loss to a non-professional aide in any given month, the insurer was liable to pay up to the Form 1 amount regardless of the actual amount of economic loss by the aide. 

On February 1, 2014, the Legislature enacted an amendment to the 2010 Schedule, limiting the amount of attendant care to the actual amount of economic loss sustained by a non-professional aide.  The amendment was not intended to be retroactive.  However, it remained unclear whether the amendment would apply to ongoing and future claims arising out of accidents that occurred before the date of enactment of the amendment.

This issue has now been decided.

In the FSCO appeal decision of MVACF and Barnes, Director’s Delegate Jeffrey Rogers held that regardless of the date of loss, an insured person’s entitlement to attendant care rendered by a non-professional aide after January 31, 2014 is limited to the actual economic loss sustained by the aide.

Ms. Barnes was catastrophically injured in a motor vehicle accident on January 3, 2012, for which she submitted a Form 1 demonstrating monthly attendant care needs up to the maximum catastrophic limit of $6,000.00 per month.  Ms. Barnes received attendant care services from her mother, who took unpaid leave from her employment from March 2012 onwards in order to provide attendant care. 

There was no dispute that Ms. Barnes’ mother had sustained an economic loss in providing attendant care, and that attendant care services were incurred.  Rather, the sole question on appeal was whether the February 1, 2014 amendment applies to accidents that occurred prior to the amendment.

In the underlying arbitration decision, the arbitrator held that the February 1, 2014 amendments did not apply to Ms. Barnes where her accident occurred before the date of the amendment. The arbitrator found that Ms. Barnes had acquired a vested right to pre-amendment calculation of entitlement. 

Crucially, Delegate Rogers held that there are no vested rights in an unchanged version of the Schedule (as opposed to, for instance, the change from the 1996 Schedule and the 2010 Schedule).  In making this determination, the Delegate relied on section 268(1) of the Insurance Act, which states:

Every contract evidenced by a motor vehicle liability policy, including every such contract in force when the Statutory Accident Benefits Schedule is made or amended, shall be deemed to provide for the statutory accident benefits set out in the Schedule and any amendments to the Schedule, subject to the terms, conditions, provisions, exclusions, and limits set out in that Schedule.

Delegate Rogers pointed to three key principles from section 268(1): the terms of an auto insurance policy are set by legislation rather than a private contract between an insurer and insured, the Schedule is part of every policy, and the amendments to the Schedule are also part of every policy.

Delegate Rogers went on to find that Attendant care benefits are not static; entitlement is contingent on a variety of factors including ongoing need, the receipt of services, and the incurring of expenses. In this context, Delegate Rogers found that the amendment had immediate application; it changed the future impact of an ongoing legal situation. 

Delegate Rogers then rejected the proposition that entitlement to statutory accident benefits vests at the time of the accident.  This proposition arises from the FSCO appeal decision of Federico and State Farm, dealing with the application of amendments to interest provisions in the 2010 Schedule.  The question was whether the 2010 Schedule interest provisions applied to accidents that occurred before September 1, 2010.

In Federico, Director’s Delegate Blackman found that the insured person was entitled to interest at the 1996 Schedule rate of 2%.  First, the language of the relevant 2010 Schedule provisions (the transitional provisions) preserved the old 1996 Schedule rate.  Second, Delegate Blackman found, in obiter, that the rights of the insured person vested on the date of the accident.  He relied on the idea that Schedule in force on the date of an accident are crystallized private contractual rights in the second finding.

While the Divisional Court upheld Federico on judicial review, it did so based on the relevant transitional provisions and not based on vesting rights.  Delegate Rogers similarly rejected the non-binding Superior Court decision in Davis v. Wawanesa Mutual, which relied heavily on the Federico obiter. 

Instead, Delegate Rogers relied upon and followed GAN Canada Insurance and Lehman, an OIC appeal decision of Director’s Delegate Draper dealing with the impact of an amendment to the 1994 ScheduleLehman rejects the idea that the right to accident benefits arises from a private contract that vests at the time of an accident.  Instead, the terms of auto policies are mandated by legislation and the terms are not fixed for the entire duration.  In 1994, as now, section 268(1) of the Insurance Act contemplates amendments that will impact accident benefit coverage during the life of a policy.

Lehman was upheld on judicial review by the Divisional Court, which agreed with the OIC’s rejection of auto policies as a private contractual right.  In Beattie v. National Frontier Ins. Co., the Court of Appeal similarly rejected the idea that auto policies were private contracts, instead finding that amendments to the Schedule also amended the coverage in every policy in force.

Delegate Rogers concludes: “I find it illogical to apply the concept of vested contractual rights to a relationship in which the parties have no direct input in terms of their relationship, and the terms may be amended from time to time without their input or consent.”  He held that Ms. Barnes had no vested right to the determination of her entitlement to attendant care as it existed at the time of her accident, and that her entitlement to those benefits after the February 1, 2014 is limited to the actual economic loss sustained by her mother.

This decision is of critical importance not only for the specific attendant care issue identified, but also for its broader implications on the concept of vesting rights under the Schedule.  With the recent June 1, 2016 amendments to the 2010 Schedule, insured persons and insurers are faced with sweeping changes to existing auto policies that have a tremendous impact on coverage.  In rejecting Federico and identifying that the Schedule is not driven by private contractual rights, MVACF and Barnes arguably has made it that much more difficult for injured accident victims to successfully argue that amendments reducing benefits should not apply until their next policy renewal or accident.

If you have a question about this blog or a similar file. please contact the author, Patrick Baker.