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What is an Incurred Expense?

In Arbitration Case No. A11-004610, Kevin Simser (“applicant”) and Aviva Canada Inc. (“insurer”), Arbitrator Edward Lee ruled on January 16, 2013, on whether the attendant care services and the housekeeping and home maintenance services provided, during the period of February 1, 2011 to November 1, 2011, are an “incurred expense” as required by section 3(7)(e) of the SABS.

Under this section, an expense is incurred when:

(1)  The insured person has received the services
(2)  The insured person has paid or promised to pay or is legally obligated to pay the expense;
(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, the dispute is limited to part (3).  The service providers were Julie and Kasey Simser and JJ Lawncare.  The applicant submitted an expert report which detailed how the words “economic loss” have been defined and applied in the field of economics.  This report notes there are various types of economic loss such as loss of income and loss of time devoted to labour or leisure.  For example, a student loses income by attending to university rather than working, which is labeled as “alternative opportunity cost”.  The applicant argued this wider reading of the term “economic loss” is consistent with the SABS.  However, the insurer argued an ordinary, everyday meaning should be used as was adopted by the Supreme Court of Canada.  Aviva added that Black’s Law Dictionary gave an ordinary definition of economic loss as a monetary loss such as lost wages as would be considered in a claim for damages recoverable in a lawsuit.  The arbitrator agreed with the insurer and found that “economic loss” as applied in the SABS must relate to some form of financial or monetary loss.

Service provider, Julie Simser, continued to work at her normal job during the period of time the service was provided by going into work early and left at various hours to provide the services.  She testified she lost five to ten hours of work per week but failed to provide evidence from her workplace to substantiate this loss.  She never said she earned less income.  The arbitrator found her to be vague and her lack of testimony affected her credibility.

Service provider, Kasey Simser, did not testify.  Her only evidence was given by Julie who stated that Kasey lost time from her schooling in order to provide the services.  No documented evidence was provided and the arbitrator found that she did not sustain an economic loss.

No one appeared from JJ Lawncare as a service provider.  No business records were produced other than some simple, generic invoices that provided little or no information.  Julie testified that JJ Lawncare was hired to mow the applicant’s lawn.  The insurer’s questions were whether JJ Lawncare ordinarily engaged in the occupation of providing lawn care but since no representative attended at the hearing the questions could not be answered and the evidence given by Julie was not convincing or credible.  Consequently, the arbitrator did not find that JJ Lawncare provided the services in the course of the employment, occupation or profession in which it was ordinarily engaged.

Out-of-pocket expenses were claimed and paid in the amount of $797.96.  All but a few of the receipts for these expenses were incurred during the time the applicant was initially convalescing.  There was approximately $50.00 worth of receipts that were incurred on two separate days during the period in dispute.

The applicant applied Henry v Gore Mutual Insurance Company  and argued that the threshold for incurred expenses had been met when the insurer paid the out-of-pocket expenses in the amount of $797.96.  Aviva accepted the incurred expenses as an economic loss and the amount of the economic loss was irrelevant.  The economic loss could in fact be a loss of time or opportunity or actual monetary loss.  However, in Henry v. Gore, the judge was asked to determine the quantum of attendant care payable.  In that case the service provider left her full-time employment to provide the attendant care services and there was no question that she sustained an economic loss in the form of lost income.  The judge allowed the full payment of attendant care expenses as was determined by the Form 1 submitted.  The within case only had approximately $50 worth of expenses that were incurred during the period in dispute that was paid by the insurer.  The arbitrator found this to be a clearly different situation than in Henry v. Gore in that there was a concrete loss of income because the service provider remained at home from her full-time employment.  Consequently, the arbitrator found that the payment of approximately $50.00 for gas, parking and restaurant invoices on two separate dates during the period in dispute was not sufficient to trigger the full payment of the attendant care and housekeeping services provided during the disputed period.

The arbitrator ordered that no attendant care benefits nor housekeeping and home maintenance benefits be paid for the period between February 1, 2011 to November 1, 2011.

In conclusion, documentary evidence and a clear testimony is certainly a requirement to prove one has suffered an economic loss and has consequently “incurred expenses” to claim.