When Section B expenses are “incurred”

The decision of the Nova Scotia Small Claims Court in Rushton v. Economical Mutual Insurance Company, 2007 NSSM 90 is a good example of a situation where the correct application of the law might run counter to what an intuitive approach might suggest.

In that case, the Plaintiff was involved in a motor vehicle accident.  She received various soft tissue injuries and was prescribed physiotherapy as a result.  She underwent treatment for nearly 47 months following the accident, and all treatments were paid for either by her Section B insurer or by the Nova Scotia Medical Services Insurance program.

After that time, she was reassessed by her insurer’s medical examiner and by her own doctor.

The conclusion of the reassessment was that her treatments should continue.  When 4 years had elapsed since the date of the accident, her insurer refused further payment, even though over $10,000 remained under her Section B coverage limit.

In Nova Scotia, the relevant section of the Standard Auto Policy reads as follows:

Section B – Accident Benefit

The Insurer agrees to pay to or with respect to each insured person as defined in this section who sustains bodily injury or death by an accident arising out of the use or operation of an automobile:

Subsection 1 – Medical Rehabilitation and Funeral Expenses

(1) All Reasonable expenses incurred within four years from the date of the accident, as a result of such injury for necessary medical, surgical, dental, chiropractic, hospital, professional nursing and ambulance service and for any other service within the meaning of insured services under the Health Services and Insurance Act and for such other services and supplies which are, in the opinion of the physician of the insured
person’s treatment occupational retraining or rehabilitation of said person, to the limit of
$25,000 per person.  [emphasis added]

The Adjudicator found that even though certain treatments were given after the 4 year limit under the policy, and that those treatments would continue for some time thereafter, the insurer was still required to pay for them.

In doing so, the Adjudicator followed the Nova Scotia Supreme Court decision in MacLeod v. Lumbermen Mutual Casualty Company, 121 N.S.R. (2d) 146.  the Adjudicator’s reasoning was that where 4 years had elapsed from the date of the accident, the impugned Section B expense was “incurred” within the 4 year limitation when

1. they happen as a result of treatment given within 4 years of the accident;
2. they are part of an ongoing treatment plan, part of which was deferred to a later date; or
3. they are treatments which are certain to exist at some point past the 4 year limitation.

On the last point, the treatments must be a certainty, as opposed to mere speculation or possibility.  In addition, they must be mandatory treatment, and not treatments that are optional.

This reasoning is a reminder to counsel settling cases where ongoing treatment is anticipated.  If the plaintiff’s Section B coverage limit has not been exhausted, counsel should ensure that the Section B insurer contributes to the full extent of the proposed future treatment, up to its coverage limit.