April 15, 2013

Accident Benefits Update – Glass half full? Court of Appeal considers FSCO mediation and the 60 day deadline


For the week of April 15 – April 19, 2013

Glass half full? Court of Appeal considers FSCO mediation and the 60 day deadline

Younis v State Farm Mutual Automobile Insurance Company, 2012 ONCA 836 (Ontario Court of Appeal); November 29, 2012

This was an appeal by State Farm of the order of Justice DiTomaso of the Superior Court of Justice.  It was heard along with four other appeals.   The question raised on the appeals was when can insured persons commence court actions against their own insurer to claim benefits under the Statutory Accidents Benefits Schedule (the “SABS”)?

Subsection 281(2) of the Insurance Act provides that no civil action or arbitration can be commenced unless the claimant seeks mediation, mediation fails and, if the issues in dispute were referred to an evaluator, a report from the evaluator is given to the parties.  The Financial Services Commission of Ontario (“FSCO”) is responsible for conducting mediation under the SABS. FSCO has been inundated with mediation requests for several years and a significant backlog has accumulated.

In all five claims, the claimants had commenced court proceedings prior to having their cases mediated by FSCO.  In response, the insurers applied to stay or dismiss the court proceedings for failing to follow s.281(2).  The motions judges dismissed all five motions for similar reasons.

The legislative scheme requires that mediation be completed within 60 days of receipt of the application at FSCO, unless the parties agree to an extension.  The motions judges found that Subsection 281(2) postpones the right of an insured to proceed in court or arbitration in order to provide time for mediation to be completed, but leaves them free to proceed once the 60 days has elapsed.

The Court of Appeal upheld four of the decisions in Hurst v Aviva Insurance Company, 2012 ONCA 837.

However in Younis, the facts were sufficiently different that the court allowed the appeal.  In this case, Younis applied for FSCO mediation of certain disputed benefits on July 14, 2011.  On July 22, 2011 he commenced the civil action at issue in the appeal.  When the motion to stay or dismiss the civil action was heard, more than 60 days had elapsed since the filing of the mediation application.  The motions judge found that Younis had fulfilled s.281(2), and that, “the balance of prejudice … favoured the continuation of the action”.

The Court rejected this conclusion.  Justice Juriansz for the Court found that the motions judge had incorrectly used the inherent jurisdiction of the court to disregard a statutory bar to the commencement of an action.  The fact that, practically, FSCO would not have heard the mediation within the 60 days was irrelevant.  Justice Juriansz stated:  “To conclude otherwise would allow all insured persons to immediately commence civil actions knowing that the insurers’ motions to stay are not likely to be heard until after the expiration of the 60 day time period”.


In recognition of the right of plaintiffs to have matters heard in timely fashion, these appeals establish conclusively that claimants have the right to commence proceedings 60 days after submitting a mediation application with FSCO, regardless of whether it the mediation is held or not.  In Younis, the Court was given the opportunity to extend this right to allow plaintiffs to issue claims within the 60 day window on the grounds that the window would have closed in any event, but refused to do so.

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