AB INSURERS BEWARE: ADJUSTING DECISIONS WILL BE CLOSELY SCRUTINIZED

November 2, 2010

In Everliston Cowans and Motors Insurance Corporation (October 15, 2010), the parties settled all outstanding claims except for entitlement to a special award. A stand alone special award claim then proceeded before arbitrator Wilson.

The insured felt that Motors acted unreasonably when it cut off IRBs at the 104 week mark. The insured was a factory worker who worked a lot of overtime; he grossed $1,376 alone in the week prior to the mva. Motors terminated based on a vocational assessment and labour market survey which found that he had the physical ability to work at other jobs that were commensurate with pre-mva status and remuneration.

Wilson found that by reinstating prior to the hearing, Motors implicitly agreed that its denial was wrong – but this was not enough to support a special award. Motors’ position was that it made a good faith determination based on the opinions of qualified experts. Given that its determination was backed by the expert opinions, its conduct could not be unreasonable.

Wilson rejected Motors’ position. Good intentions and papering the denial will not protect an insurer that closes its mind to other info potentially available to it. Wilson was critical of the Motors’ adjusters for accepting the opinions at face value and failing to scrutinized the reports and analyze the conclusions. Motors thus failed to live up to its obligation to make decisions only after assessing and critically examining the reports. Wilson stated that Motors had credible info that cast the assessor’s conclusions into doubt, but never had any follow-up discussions with the assessors to address the questions that ought to have been on Motors’ mind. Wilson stated that Motors was willfully blind.

Wilson then went on to comment on what he saw as systematic problems of assessment mills. In this case Motors used Dr. Richard Finkel’s facility, Health Impact Multidisciplinary Assessment Centre. Wilson was critical of Health Impact for providing a “multidisciplinary” assessment when the summary was merely a synopsis of the various opinions without any attempt to interrelate the findings and arrive at a consensus. Although the DACS are gone, the methodology for arriving at a consensus was good, namely employing a primary assessor to determine that there are no inconsistencies and that consensus has been reached.  Wilson noted that Dr. Finkel was dependent on the insurer’s  goodwill for his lucrative business. Dr. Finkel took on too many assessments and his assessment mill could not generate meaningful results.

Essentially, it was found that Motors went astray when it put absolute trust in Health Network’s assessment mill.

But for the settlement Wilson would have ordered a special award at the 50% max. He took 6% off for the settlement and 4% off because David Wilson delayed in providing some reports that Motors claimed would have caused it to reconsider its denial (arbitrator Wilson was not convinced that prompt delivery would have changed Motors’ mind).  Wilson felt that it was an egregious denial and awarded a 40% special award.

Wilson’s comments are harsh but he has focused on an important problem.  Vocational assessors cannot ignore the fact that if the suggested alternative jobs do not pay enough, they will not be accepted. Even if the insurer can establish that the insured can physically do the job, it can lose for the reason alone that the pay is inadequate. His comments regarding protocols for multi-disciplinary assessments should also be heeded.  There should be a primary assessor and there must be a consensus opinion.  Insurers should make these requirements abundantly clear to assessors chosen by them.