Insurers Must Provide a Reason If They Request an Examination Under Oath
Aviva Insurance Company of Canada v. Frank McKeown
In Aviva Insurance Company of Canada v. Frank McKeown (2016), Aviva brought an application to determine whether an insurer is obligated to state their reason for an examination under oath (EUO) in order to compel a person claiming statutory accident benefits (SABS) to attend an EUO, if requested by their insurer, pursuant to subsection 33 (2) of the SABS. Aviva was seeking a legal order to compel the named respondents to attend their respective EUOs.
Each of the six respondents were seeking accident benefits arising from five unrelated motor vehicle accidents, and each received a letter from Aviva requesting that they attend an examination under oath. The letters indicated that the EUO was to evaluate the claimant's entitlement for benefits (or similar wording), but failed to include a reason for the request to submit to an EUO. Although the accidents were unrelated, the respondents were represented by the same legal counsel who was challenging Aviva's approach to requests for examinations under oath.
At the core of the dispute between Aviva and the respondents, was the requirement in s.33(4) of the SABS that the insurer gives the insured advance notice regarding a request for examination under oath, including justification for the examination.
Aviva argued that the requirement is a "mere matter of form" and that it is satisfied by general references to the purpose and/or scope of the examination. Counsel for the respondents disagreed with this approach, arguing that the insurer is required to submit the actual reason for the examination, rather than a general purpose for an examination, and Aviva failed to do so.
Justice Matheson agreed with the respondents, stressing that the insurer must give justification for pursuing that particular examination under oath and must, in good faith, have a reason to require an examination in the context of what is intended to be an efficient and no-fault process. Further, the reason must be disclosed before the insurer can proceed with an examination. In considering all the facts, Justice Matheson, did not believe Aviva fulfilled those requirements.
The first factor the judge considered in his analysis, was the statement in the affidavit submitted by Aviva regarding why they were requesting an EUO, which read, "In the course of adjusting the claim, the Applicant determined that it required an EOU in order to investigate its potential ongoing exposure for accident benefits". The judge noted that the statement did not disclose why the EUO was necessary and instead simply said a decision was made that one was needed.
Justice Matheson noted that the key issue in the application was one of statutory interpretation and more specifically, the interpretation of the requirement to give a reason as a prerequisite to an EUO. Breaking down the requirements of the SABS, particularly subsection 33, the judge stressed that s. 33(2) expressly requires an insured to submit an examination under oath if asked to do so, except if incapable or there has already been an examination, and s.33(4) requires mandatory advance notice by the insurer, with 'certain requirements'. Subsection 33(4)(3) defines those 'certain requirements' as the insurer giving reason(s) for the EUO. Clearly, there is an obligation for Aviva to provide respondents with both advance notice and reason(s) for the EUO.
Aviva referenced the decision in Kivell v. State Farm Mutual Insurance Co., where the arbitrator ruled that because the requirement to provide reasons was found in s.33(4) and not s.33(2), it is "merely a matter of form, not substance." Justice Matheson disagreed with the arbitrator's finding, citing the decision in State Farm Mutual Automobile Insurance Company v. Aslan et al. in which the judge in that case also disagreed with the decision in Kivell v. State Farm.
In the Aslan case, the Court considered a similar situation where seven SABS claimants received an order from their insurer requesting that they attend an EUO to provide information on the circumstances that gave rise to their application for benefits. State Farm argued that only general information on the purpose of the EUO was required and if they were more specific, particularly in cases involving potential fraud, they would lose a tactical advantage and possibly hinder the exploration of whether the individual was entitled to SABS. However, the Court rejected State Farm's argument and ruled that the reasons required under the section 33(4) required more than simply defining the scope of the examination.
Justice Matheson agreed with the Court's ruling in the Aslan case and added that the notion that the notice requirement is merely a matter of form is inappropriate. Rather, the requirement is a mandatory statutory requirement and a prerequisite to an examination under oath, and is therefore not satisfied by a general statement that the EUO will be about a person's entitlement to SABS. Judge Matheson emphasized that the ordinary meaning of 'reason' is why something is happening, as opposed to 'scope' which refers to the range of subject matter to be addressed.
The judge added that the requirement that there be an actual reason disclosed in advance of an EUO is consistent with the overall statutory scheme and it helps ensure that insurance companies do not simply request EUOs as a matter of course, thereby increasing the overall cost of providing insurance and reintroducing a more combative process into what should be an efficient and no-fault system. Also, although the claimants in the current application were represented by counsel, examinations under oath can be pursued directly with a claimant who may not have counsel. Judge Matheson noted that this is another reason why insurers must provide meaningful reasons for the examination.
Judge Matheson acknowledged Aviva's argument that the requirement to provide a reason for an EUO can create problems for an insurer, for example, if the opposing counsel does not find the reason to be sufficient. While that may be true, it nevertheless does not release the insurer from its statutory obligation to provide justification for the examination. The judge added that presuming the insurer has a good faith specific reason which is clearly conveyed to the claimant, then there is no reason why the examination under oath should not proceed.
Because the required notice was not given in any of the respondents' SABS claims, Justice Matheson ruled that they were not obligated to attend and be examined under oath. Accordingly, Aviva's requested order that the respondents attend the EUO was denied.
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