Are Insurers Obligated to Pay for Plaintiff Accounting Reports?

A growing trend has emerged recently as it relates to individuals making a claim for income replacement benefits (“IRBs”).  More frequently than ever, insured’s seem to be racing to have accounting reports prepared on their behalf (“plaintiff accounting reports”) that calculate their IRBs.

This rising trend leads to a question, are insurers obligated to pay for frivolous plaintiff accounting reports?

The recent Licence Appeal Tribunal decision M.G. and Intact Insurance Company (17-008078/AABS) indicates that an insurer may not always be required to pay for a plaintiff accounting report.

In this decision, the adjudicator ruled that the insurer (respondent) was not required to pay for the preparation of the plaintiff accounting report, as it was not reasonable and necessary considering the circumstances of the claim.

The adjudicator relied on Section 7(4) of the Statutory Accident Benefits Schedule (“SABS”) which states:

“The insurer shall pay an expense incurred by or on behalf of an insured person for the preparation of a report for the purpose of calculating the person’s income from employment or self-employment if all of the following conditions are satisfied:

1. The insured person is applying for an income replacement benefit under this Part that is based on the employment or self-employment considered in the report.
2. The report is prepared by a member of a designated body within the meaning of the Public Accounting Act, 2004.
3. The expense is reasonable and necessary for the purpose of determining the insured person’s entitlement to an income replacement benefit.”

Section 7(5) of the SABS limits the amount an insurer may be required to pay for a plaintiff accounting report to $2,500.

In the above decision, the insured (applicant) argued that the plaintiff accounting report was reasonable and necessary as the respondent had failed to continually adjust the file and had not provided notice regarding the status and delay of their claim for IRBs.  The applicant also asserted that the IRB calculation was not straightforward as it included employment income and EI benefits.  It was the applicant’s position that the respondent is obligated to pay for the preparation of a plaintiff accounting report as Section 7(4) is a shall-pay provision.

The respondent countered that any delay to the applicant’s claim for IRBs was the result of an investigation they were conducting into whether the applicant’s injuries were as a result of an accident.  The respondent disputed that the applicant was unaware of this investigation as notice had been provided via correspondence.

The respondent also argued that no specified benefits are payable until a disability certificate (“OCF-3”) is provided pursuant to Section 36(3) of the SABS and that an OCF-3 was not received by the respondent in this claim until 11 months after the plaintiff accounting report was prepared.  In addition, the respondent asserted that the IRB calculation in this claim was straightforward notwithstanding that the applicant had two sources of income.

Given this, it was the respondent’s position that the plaintiff accounting report was prepared prematurely as an IRB quantum was not in dispute at the time the report was commissioned and, as such, it was not reasonable and necessary.

The adjudicator did not accept the applicant’s position that they were unaware an investigation into their claim was ongoing by the respondent and questioned why the applicant was unable to explain the delay in providing an OCF-3.  The adjudicator also considered that the respondent continually adjusted the claim as they had notified the applicant of their investigation, requested documentation pursuant to Section 33 of the SABS and attempted to schedule an examination under oath.

Despite the applicant having two sources of income, the adjudicator agreed with the respondent that the calculation of IRBs was simple and straightforward and did not necessitate the preparation of a plaintiff accounting report.

In regards to Section 7(4) of the SABS being a shall-pay provision, the adjudicator disagreed that a shall-pay provision is automatically invoked for the respondent when a plaintiff accounting report is prepared should the report not be considered reasonable and necessary, in accordance with Section 7(4)(3) of the SABS.

Accordingly, the adjudicator ruled that the plaintiff accounting report was prepared prematurely and, as such, was not reasonable and necessary considering the circumstances of the claim.  Therefore, it was determined that the respondent was not obligated to pay for the preparation of the plaintiff accounting report.

As the trend of racing to have plaintiff accounting reports prepared continues to become more prevalent, insurers should remember that they do not have an obligation to pay for these reports should they not be deemed reasonable and necessary when considering the circumstances of the claim.

Read the decision in full detail here:

M.G. and Intact Insurance Company (17-008078/AABS) decision