McQueen v. Echelon General Insurance Company, 2011 ONCA 649
The Ontario Court of Appeal has confirmed that motor vehicle liability policies secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties, and fall squarely within the category of insurance contract described in Fidler v Sun Life to which aggravated, punitive and exemplary damages may attach.
Ms. McQueen was involved in a rollover motor vehicle accident in January 2007 that destroyed her vehicle.
She applied for and received statutory accident benefits (“SABs”) from Echelon, including benefits for housekeeping and for transportation assistance to and from appointments.
Echelon retained an occupational therapist — Ms. Foster — to attend Ms. McQueen’s home to conduct an assessment. Ms. Foster recommended Ms. McQueen continue to receive housekeeping benefits, and concluded she required transportation benefits to get to and from medical appointments.
Echelon later retained orthopaedic surgeon Dr. Kwok to assess Ms. McQueen. Echelon did not give the doctor Ms. Foster’s report.
Dr. Kwok concluded Ms. McQueen was capable of doing her own housekeeping, and was able to take public transportation to and from medical appointments.
Echelon immediately stopped paying Ms. McQueen housekeeping and transportation benefits on the basis of Dr. Kwok’s report.
Ms. McQueen continued to apply for SABs; Echelon refused to reinstate her benefits or to pay for additional assessments, despite the fact that both were recommended by a number of physicians.
Ms. McQueen filed two separate statements of claim alleging breach of the SABs schedule and bad-faith conduct on the part of Echelon for which she claimed damages for mental distress, and aggravated, punitive and exemplary damages.
At trial, Justice Harris rejected Echelon’s argument that it had simply denied Ms. McQueen benefits, and described Dr. Kwok’s 30-minute assessment of Ms. McQueen as “superficial.” He found that Echelon created an adversarial relationship with Ms. McQueen from the outset, and noted Echelon’s 21 denials for 16 separate benefits to Ms. McQueen over a three year period.
Justice Harris awarded Ms. McQueen $20,000 for housekeeping and transportation benefits and medical assessments and, relying on the Supreme Court decision of Fidler v Sun Life, $25,000.00 for mental distress arising from Echelon’s bad-faith handling of the file. Echelon appealed.
Except for a slight downward adjustment of the damages for transportation costs, the Court of Appeal left undisturbed Justice Harris’ decision and dismissed the appeal.
Lessons to be Drawn from the Decision
Insurance companies should draw the following lessons from this decision:
- Motor vehicle liability policies fall squarely within the category of insurance contract described in Fidler, which are entered into to secure a psychological benefit and which bring mental distress upon breach within the reasonable contemplation of the parties;
- Insurers should provide experts they retain with all reports, including those that are favourable and unfavourable to their position;
- Insurers should hesitate to deny benefits and/or assessments recommended by their experts;
- If an insurer refuses to provide a benefit, they must give reasons explaining why the benefit and/or assessment claimed is not reasonable or necessary.