Article by Michael J. Henry and Daniel Fisher
Recently, the Divisional Court released their decision in Tomec v Economical Mutual Insurance Company, 2018 ONSC 5664. This Appeal concerned the issue of whether the limitation period set out in the Insurance Act and the SABS is a “hard” limitation period, such that the limitation period begins two years from the date of denial of a benefit, or a “soft” limitation period, such that the limitation period only begins to run when the insuredʼs right to claim the benefit is discovered.
In Tomec, the insured submitted an Application for approval of an assessment for a file review to evaluate the issue of Catastrophic Impairment (CAT). On August 26, 2010, the insurer responded. In the insurer’s response, the following was noted:
In accordance with Section 18(2) of the Statutory Accident Benefits Schedule, no attendant care benefit is payable for expenses incurred more than 104 weeks after the accident unless you have been determined to have sustained a Catastrophic Impairment as defined by the Statutory Accident Benefits Schedule.
In accordance with Section 22(3) of the Statutory Accident Benefits Schedule, no payment for housekeeping and home maintenance benefits are payable for expenses incurred more than 104 weeks after the accident unless you have been determined to have sustained a Catastrophic Impairment as defined by the Statutory Accident Benefits Schedule.
Please note that should you disagree with our assessment of your claim and wish to dispute it, mediation must be commenced within 2 years from your receipt of this letter.
On November 4, 2015, the insured was deemed CAT. The insurer subsequently denied payments of past benefits owing, and denied ongoing attendant care benefits and housekeeping benefits on the basis that these benefits had been denied at the two-year mark and the insured did not mediate this denial within two years.
A LAT application was filed in relation to the denials. The Vice-Chair determined that the insured was barred from proceeding with her application for attendant care and housekeeping benefits, despite having a Catastrophic Impairment, because she did not dispute the stoppage of those benefits within two years of the denials.
The insured made two primary arguments:
- That the 2010 denials was not valid because at the time of the denials, she was not CAT and was therefore, not eligible to claim the attendant care and housekeeping benefits.
- That the limitation period could not have started to run as the insured had not discovered she was catastrophically impaired, such that she would become entitled to the increase levels of Attendant Care and housekeeping benefits.
The vice chair rejected both arguments. She found that the 2010 denials were clear and unequivocal and therefore sufficient to trigger the two year limitation period found in s. 281.1 (1) of the Insurance Act, which stated as follows:
A mediation proceeding or evaluation under s.280 or 280.1 or a court proceeding or arbitration under s.281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.
She found that this provision did not include the doctrine of discoverability. It is a fixed limitation period, triggered by a specific event (in this case, the denial letter).
The Divisional Court upheld the Vice Chair’s Decision. In determining when the limitation period starts to run, the Court compared the wording of s.281.1 (1) to that of section 38 (3) of the Trustee Act, which states:
An action under this section shall not be brought after the expiration of two years from the death of the deceased.
The Court noted that the two sections were analogous in that they were both triggered by fixed events. In the case of s. 281.1 (1), the event is the denial by the insurer, while with section 38 (3), the event is the date of death.
This decision is a tough pill to swallow for the Plaintiff’s bar. While one can understand the Court’s legal reasoning, it takes too restrictive an approach in its analysis. It ignores the fact that the insured had no claim to make until she was deemed CAT. The insured did not have a claim for the benefits that they simply needed to discover. Rather, the insured was not entitled to the benefits until the CAT determination was made. One wonders how a benefit can be denied before the insured becomes eligible for it.
Furthermore, this Decision ignores a vital aspect of the wording of 2. 281.1 (1) of the Insurance Act. The wording of the provision is that a proceeding must be commenced within two years after the insurer’s refusal to pay the benefits claimed. In this case, attendant care and housekeeping benefits were not claimed after the 104 weeks. What was submitted to the insurer for consideration was an application for a CAT file review. The insurer sent back a letter with a blanket denial of benefits that had not been claimed. As the benefits had not been claimed, how can these benefits fall within 281.1 (1)?
Regardless, the limitation periods under the SABS are now considered ʺhardʺ limitation periods, such that any denial must be mediated or disputed within two years. While this interpretation creates difficulties for insured individuals going forward, all lawyers must be mindful of this fact to ensure that no client is accidentally precluded from accident benefits entitlement.
Whether this decision will be appealed to the Ontario Court of Appeal is not known at this time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.