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June 2012

FSCO Counsel Meeting May 25th: Current Issues

At McCague Borlack LLP, one of the ways our Accident Benefits team keeps track of the current issues and developments at the Financial Services Commission of Ontario (FSCO) is by having a representative attend their counsel meetings which occur every other month. At the meeting held on May 25, 2012, the following four issues were discussed at length:

  1. Parveen v. Aviva (Parveen)

    As many are aware, the Parveen decision has created confusion among insurers regarding the adequacy of the Settlement Disclosure Notice that has been approved by the Superintendant. The preliminary issue in Parveen was whether the applicant had rescinded her settlement and was entitled to proceed to arbitration. Paragraph 3 of subsection 9.1(3) of the Settlement Regulation stipulates what information must be included in the Settlement Disclosure Notice regarding an applicant's right to rescind a settlement agreement. According to this section, an applicant may rescind their agreement within two business days after the later of the day the insured person signs the disclosure notice and the day the insured person signs the Release. This is commonly referred to as the "cooling off" period. A rescission of a settlement agreement must be done by way of written notice to the insurer or their legal representative and by the applicant returning any settlement funds to the insurer. In Parveen, the arbitrator held that the current Settlement Disclosure Notice does not comply with the Regulation because it fails to adequately indicate and give examples of when the forty eight four hour "cooling off" period begins.

    Many insurers have taken the position that Parveen undermines the entire settlement process. Some have responded by temporarily suspending all settlement negotiations until an appeal decision is rendered. To further complicate matters, the Notice released by the Superintendant on May 4, 2012 states that the current Settlement Disclosure Notice continues to be the approved form and that it complies with the Regulations. This directly contradicts the arbitrator's decision in Parveen.

    At the counsel meeting, FSCO's representatives suggested that insurers have overreacted to Parveen because it only applies in limited situations where the Settlement Disclosure Notice and the Release are signed on different days. Typically, the Settlement Disclosure Notice and the Release are simultaneously signed.

    Until an appeal decision is released, insurers can ease their fears by having applicants execute the Release first or at the same time as the Settlement Disclosure Notice. Additionally, insurers can supplement the Settlement Disclosure Notice with an addendum approved by their legal counsel which indicates when the two day "cooling off" period begins.

    FSCO is fast tracking the appeal of Parveen and an appeal decision is expected by the end of July or early August 2012.

  2. Notifying FSCO when files settle

    FSCO has noticed an increase in the number of files where neither party has notified the case administrator or arbitrator that the file was settled prior to a mediation or pre-arbitration hearing.  

    Several insurers advised that while they routinely notify FSCO by phone when a file has settled, case administrators have often advised that they require written confirmation from the applicant to cancel a mediation or pre-hearing.

    FSCO confirmed that while this may be the case, it remains the responsibility of both parties to advise that a file has settled. As such, we recommend that insurers call and write to the case administrator when a file settles.

  3. Consent failures

    In order to reduce the mediation backlog, FSCO has implemented “consent failures” where the parties can mutually consent to fail the mandatory mediation and proceed to arbitration. Unfortunately, out of the six thousand consent failure notices sent to applicants and insurers, only thirty six completed forms have been returned to FSCO.

    While FSCO advised it intends to continue the consent fail initiative, it will no longer be sending out the failure notices. Rather, they will be made available on FSCO's website and it will be up to the parties to print, complete and return the forms to the case administrator.

  4. Outsourcing mandatory mediations

    FSCO's other strategy to reduce the mediation backlog is to outsource a large portion of the mandatory mediations. Obstacles to the implementation of this initiative are finding skilled mediators who are proficient in Accident Benefit matters and the implementation of appropriate security screening for proposed mediators. FSCO hopes to begin outsourcing a limited number of mediations in July 2012.

 

McCague Borlack LLP has the experience to address all of your accident benefits needs. Our team has the depth to handle all levels of files from soft tissue and chronic pain injuries to complex catastrophic claims and files where bad faith and special awards are claimed. Our team members have experience handling every stage of an accident benefit file from the mandatory FSCO mediation and pre-arbitration hearing to preliminary issues and week long arbitrations. We also have experience with loss transfer and priority disputes files. At McCague Borlack we strive to work with our clients to resolve each file quickly and efficiently. Read more about our Accident Benefits practice group.


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