Reasons Why Your Catastrophic Impairment Application May Be Denied

Any person who was injured in a motor vehicle accident may claim statutory accident benefits (SABS) under their vehicle insurance policy.  This includes passengers, cyclists, motorcycle riders, snowmobilers and anyone else who sustained an injury during the operation of a motor vehicle.  And, if you don’t have access to your own vehicle insurance, you may claim benefits under the policy of a driver involved in the accident.  In cases where you have no access to vehicle insurance, for example, if you were injured by a hit-and-run or uninsured driver while walking or cycling, you may claim SABS benefits under Ontario’s Motor Vehicle Accident Claim Fund (MVACF).

The amount that you can claim depends on the nature and severity of your injuries, and the types of losses you experienced.   Persons who sustained a catastrophic impairment are eligible for the highest maximum benefits under SABS; non-catastrophic injuries are eligible for the next highest maximum benefits; and persons with the lowest severity of injury are eligible for benefits under the minor injury guidelines (MIG).  Regardless of the nature of your injuries, you need to submit medical proof of your impairment with your application for accident benefits.

Having a genuine injury that has resulted in medical bills, lost wages and/or other losses does not guarantee that the insurance company will honour your claim for benefits, whether you’re claiming accident benefits under your own or another vehicle insurance policy.   The following are common reasons for denied accident claims.

Why an accident claim may be denied

• Failing to provide required medical evidence to substantiate your level of injury
• Failing to provide evidence of the losses you suffered, such as proof of lost wages from your employer as required when claiming the income replacement benefit, or receipts for funeral expenses to substantiate a claim for funeral or death benefit 
• An incomplete or incorrectly filled-out application form
• Insurer disputes the level of injury and benefits claimed
• Missing the deadline for filing your claim without a compelling reason for doing so

If your claim was denied because you forgot to submit required medical evidence, such as the results of your medical tests (for example, an X-ray, blood test or CT scan), you may be able to successfully appeal your claim on your own simply by resubmitting your application along with all the required medical information that was previously lacking.  However, in many instances of denied accident benefits, the likelihood that you will be successful in changing your insurer’s opinion on whether you have a legitimate claim for benefits is much greater when you are represented by an experienced accident claims lawyer.  And, an accident claims lawyer can provide you with a frank assessment of your case and can properly assess whether you have good prospect of getting the accident benefits you are claiming.

Claiming Accident Benefits for a Catastrophic Impairment

It is not unusual for applicants to experience a substantial delay in receiving a medical determination of ‘catastrophic impairment’ after they are injured in a motor vehicle accident.   Seriously injured persons are often initially assessed as having a non-catastrophic injury, but after a period of further assessments and medical treatments, their doctors may determine they actually sustained a catastrophic impairment.  In such a case, the claimant must submit a determination of catastrophic impairment application (form OCF-19) to their insurer which, when approved, will substantially increase the amount of eligible benefits - a non-catastrophic impairment is currently eligible for a maximum of $65,000 in combined medical, rehabilitation and attendant care benefits for a period of 5 years after the accident, while a catastrophic impairment is eligible for $1 Million in these combined benefits to be paid over one’s lifetime.

Unfortunately, sometimes insurers dispute a claim for benefits under the catastrophic impairment designation – for example, if they believe there is insufficient medical evidence to prove the person sustained a catastrophic injury, or on the basis that the application for catastrophic impairment designation was submitted past the deadline.  In such a case, the claimant may be forced to bring a civil action against their insurer to compel them to recognize their higher severity of injury and pay the deserved benefits.

Van Galder v Economical Mutual Insurance Company is a case that illustrates how challenging it can sometimes be to attain a catastrophic impairment designation and receive owed benefits.  This case involves a woman who was severely injured in a car accident on January 20, 2004. The accident victim was initially assessed for receiving the non-catastrophic level of attendant care and housekeeping benefits, and at that time, attendant care benefits for non-catastrophically injured persons were paid for only 2 years, so on January 20, 2006, Economical stopped paying this benefit.

The applicant subsequently submitted four separate applications for a determination of catastrophic impairment but the insurer did not evaluate the applicant’s injuries and concede that the applicant was catastrophically impaired until July 23, 2013 (after the fourth application had been submitted in September of 2012).  Since 2005, the applicant underwent many medical assessments: unfortunately, two of the first three catastrophic impairment applications were incorrectly filled out and withdrawn by the submitting doctors; and the remaining application was declined by the insurer because it did not meet SABS requirements.  The 2009 application reported that the applicant underwent surgery to have her ankle amputated which understandably required a significant recovery period.  The application process was also made more challenging and arduous for the applicant because, from the time of her accident, she was assigned 8 different claim adjusters and had many changes of doctors. 

After approving the catastrophic impairment application, Economical paid the amount of attendant care and housekeeping benefits owed between 2006 and 2013, when the applicant should have been receiving benefits for a catastrophic impairment.  However, the insurer did not pay any interest for the time between the discontinuation of benefits in January 2006 and the date of the applicant’s catastrophic injury determination, so the applicant filed a civil action to receive interest payments.     

Based on insurance law governing SABS at the time of the accident, if payment of benefits is overdue then the insurer must pay interest for every day the amount was overdue “at a rate of 2 per cent per month compounded monthly”.  (However, in the current version of SABS, the rate has been reduced to 1 per cent.)  So, the issues for the Court to decide in the current case is whether the payment of benefits was ‘overdue’ since the applicant was actually catastrophically injured since the accident, and if so, what is the appropriate interest rate.  In the current case, the Court noted the applicant went through a very difficult period during which she was dealing with the amputation of a limb and chronic pain, and her focus was appropriately on her health issues and adjusting to major changes in her life.  As such, the judge found that it was understandable that she missed the 2-year deadline for applying for a catastrophic injury determination or for being re-assessed.  Further challenges for the applicant came when the applications were improperly filled out by several doctors, through no fault of the applicants, or rejected by the insurer.

The Court concluded that it would be unfair to deny the applicant interest on the costs she incurred due to the delay in her catastrophic injury determination.  Consequently, the Court ordered the insurer to pay interest on overdue attendant care benefits and housekeeping benefits at a rate of 2 per cent.