Monday, 28 January 2013

FSCO Arbitrator Further Clarifies Meaning of 'Economic Loss'

In the recent case of Simser and Aviva (FSCO A11-004610, January 16, 2013), Arbitrator Lee examined the meaning of “economic loss” in s. 3(7)(e) of the SABS.

The insured provided a report from an economist regarding the definition of “economic loss”.  He argued that since it was not defined in the SABS it should be defined to include “opportunity cost”, as well as loss of time devoted to labour or leisure. The arbitrator indicated that if a broad interpretation of "economic loss" was accepted, it would negate the intent of introducing the amendment.  The outcome would be no change to the interpretation prior to September 1, 2010.

Aviva argued that economic loss should mean a financial or monetary loss. The arbitrator rejected the insured’s argument and accepted that of the insurer.  As a result, he concluded that no economic loss was sustained and as such the claimed benefits were rejected.

The insured had applied for attendant care and housekeeping benefits following his accident of November 10, 2010. None of the three providers provided supporting documentation to that would have demonstrated an actual loss. The only witness was vague and was unable to sufficiently support the claims. 

The significance of this decision is that it recognizes that the amendment made in September 1, 2010 was intended to narrow the interpretation of incurred expense. For an expense to have been incurred:

(1) the insured person has received the services;

(2) the insured person has paid or promised to pay or is otherwise legally obligated to pay the expense; and

(3) the person who provided the goods or services:
(i) did so in the course of the employment, occupation or profession in which he was ordinarily engaged, but for the accident; or
(ii) the person sustained an economic loss as a result of providing those goods or services to the insured person.
 In this particular case, part 3 of the definition was not met.

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