April 21, 2014

SABS Update- “It’s Nothing Personal…”: Court finds insurer non-compliance fatal to limitation argument

For the week of April 21 to April 25, 2014

Roger v. Personal Insurance of Canada, [2014] O.J. No. 1575 (S.C.J.), April 1, 2014

This was a motion for partial summary judgment by the Plaintiff, Ms. Roger, seeking a ruling that the action was not statute-barred under s. 281.1 of the Insurance Act:

A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.

Ms. Roger had been injured in a collision on August 4, 2006, and began receiving income replacement benefits (IRBs) on August 9, 2006.

After the passage of 104 weeks, the Defendant, Personal , served notices for three assessments under  s. 42 of the SABS  in order to determine Ms. Roger’s ongoing entitlement to IRBs.  The assessors all found that there were no physical impairments rendering Ms. Roger completely unable to engage in any employment for which she was reasonably suited.  However, the orthopedic assessor indicated that a psychological evaluation was warranted.  As a result, Ms .Roger was sent to a neuropsychological assessment which also found that she failed to meet the post-104 complete inability test.  IRBs were terminated effective August 14, 2009.

On August 8, 2011, Ms. Roger served a Mediation Application.  Mediation was held in the summer of 2012, but failed to resolve the matter.   Personal took the position that the application was out of time under s. 281.1 of theAct, because the Explanation of Benefits (OCF-9) notifying Ms. Roger had been sent on July 14, 2009.

Justice Aitken held in favour of Ms. Roger and granted the partial summary judgment.  Her Honour found that Personal had failed to ask for a new disability certificate (OCF-3) prior to scheduling the s. 42 assessments, contrary to the mandatory language of  s. 37(1)(a) of the SABS:

If an insurer wishes to determine if an insured person is still entitled to a specified benefit, the insurer,

(a) shall request that the insured person submit within 15 business days a new disability certificate completed as of a date on or after the date of the request;

Therefore Personal did not, and could not comply with s. 37(5) which requires the insurer to serve a copy of the s. 42 assessments on the practitioner who completed the new OCF-3.  No possible rebuttal report could follow, to the disadvantage of Ms. Roger.

Justice Aitken drew the following general proposition with reference to the Supreme Court of Canada decision inSmith v. Co-operators General Insurance Co., [2002] S.C.R. 129:

… where an insurer does not comply with the clear and unequivocal procedural requirements set out in ss. 37 and 42 of the SABS in regard to preconditions which, if ignored, place the insured at a disadvantage, the insurer cannot rely on its purported termination of benefits as triggering the commencement of the limitation period under s. 281. 1 (1)

Therefore the limitation period did not commence with the OCF-9 in July, 2009 and Ms. Roger was entitled to proceed with her claim.

IMPLICATIONS

This decision reaffirms the primacy of consumer protection when applying the Insurance Act and SABS.  However, Justice Aitken specifically did not state that Ms. Roger was entitled to receive ongoing IRBs as a result of the failure to comply by Personal.  She will still be required to demonstrate entitlement to post-104 benefits, in keeping with existing case law.

Her Honour also sidestepped the, “thorny question of what the term “the insurer’s refusal to pay the benefit claimed” means in the context of this case”.  Ms. Roger had raised the alternative argument that the s. 281.1 limitation period only begins to run once the benefit actually ceases as opposed to the date when the OCF-9 is received.    This “thorny question” will have to wait for another set of facts.

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