FSCO, Sivakumaru Sinnapu and Economical Mutual Insurance Company

FSCO A09-000900

Sivakumaru Sinnapu (Applicant)
Economical Mutual Insurance Company (Insurer)
Heard January 28, 2010

Issues:
Mr. Sinnapu was injured in a motor vechicle accident on June 22, 2006. He applied for and received SABS from Economical, payable under the Schedule. Economical terminated weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. Sinnapu applied for arbitration at the FSCO under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this hearing is if Mr. Sinnapu is entitled to a special award.

Results:
Mr. Sinnapu is entitled to a special award.

Evidence and Analysis:

• A special award is unique to the arbitration process. It is a statutory award that is outlined in subsection 282 (10) of the Insurance Act
• The threshold for such an award, reasonableness, is rather low and is merely triggered by a withholding or delay of payments that is unreasonable. No ill-will, no intent to harm an insured, delay, or intentionally withhold payments is necessary, merely that the delay or withholding be "unreasonable."
• I find that there is no specific evidence of malice or intent to harm. Nor indeed was any specific malice alleged by Mr. Sinnapu. Rather, I find it more likely that Economical's efforts to adjust this file for some unknown reason went off the rails at the two-year mark, and as a result decisions were taken that ignored Mr. Sinnapu's reality and caused much tribulation to a vulnerable person.
• I find that in accepting Dr. Lexier's conclusions on employment, in the face of contradictory evidence from experts in that field, Economical acted unreasonably. It made no apparent attempt to reconcile conflicting reports, or to weigh the value of Dr. Lexier's opinion in an area that was clearly outside his claimed expertise.
• The decision to discontinue benefits, based on this opinion, was unreasonable, a conclusion that in accordance with subsection 282 (10) of the Insurance Act mandates a special award.
• Failure of the Insurer to comply with the Schedule in discontinuing benefits. While there may well still be the possibility of entitlement to ongoing benefits in the face of a flawed discontinuance of payments, what is important in the context of this special award is whether or not an insurer should have known that it was obliged to reinstate until such time as the defective notice is properly addressed. Given the inconsistencies in the jurisprudence and this most recent statement from the Court of Appeal, I cannot accept that the Insurer can be somehow deemed to have such knowledge. Consequently, a withholding of benefits in the face of a flawed termination process need not necessarily be found unreasonable and so attract a special award.