A Denial Is A Denial Is A Denial – Limitation Periods Revisited By The Court Of Appeal
Bustamante v. Guarantee Co. of North America,  O.J. No. 3704.
In a case relevant to policies that still permitted re-election of income-type benefits, Bustamante, the insured appealed the motion granting summary judgment to the insurer on the basis of an expired limitation period.
The insured suffered injuries in a collision which occurred on June 3, 2004. She was working as a hairdresser at the time of the collision, and elected to receive income replacement benefits (IRBs). On September 1, 2004, the insured was provided with an explanation of benefits which approved her application for IRBs and denied her entitlement to non-earner benefits (NEBs). She continued to receive IRBs until July 26, 2006, when her IRBs were terminated by her insurer. She returned to work in September 2006.
She later applied for NEBs by letter dated September 25, 2009. Her counsel took the position there had been no “denial” of non-earner benefits and the limitation period had not started to run. She was advised by letter from her insurer dated January 19, 2010 that she was not entitled to NEBs. She applied for mediation, which occurred on June 17, 2011. When that failed, she initiated a claim against her insurer on November 28, 2012.
The motion judge granted summary judgment, dismissing the action, on the basis that the limitation period for the insured’s claim for NEBs began to run on either September 1, 2004 (when the NEBs were refused) or July 26, 2006 (when the IRBs were terminated).
The Court of Appeal agreed the insured’s claim was time-barred.
The Court found the insurer terminated the IRBs on July 26, 2006. The insured did not re-assert a claim for NEBs until June 17, 2011, when she sought mediation. Even her letter dated September 25, 2009 was delivered two years after the insurer terminated her benefits.
Section 281.1(1) of the Insurance Act and s. 51(1) of the SABS establishes a two-year limitation period for the commencement of litigation or arbitration after the insurer’s refusal to pay the benefit claimed. The insured’s position that the insurer cannot rely on the September 1, 2004 denial of the NEBs as triggering the limitation period, as she was not eligible for NEBs at the time, cannot stand in light of the Court of Appeal’s decisions in Sietzema v. Economical Mutual Insurance Company, 2014 ONCA 111 and Sagan v. Dominion of Canada General Insurance Co., 2014 ONCA 720. The insurer’s refusal to pay NEBs in the OCF-9 triggered the limitation period in section 51(1) of the SABS, which required mediation to be commenced “within two years after the insurer’s refusal to pay the amount claimed.” Regarding the insured’s argument that the limitation period for NEBs does not begin to run during the period when she was entitled to IRBs, the court repeated what it said in Sietzema:
If we accept the appellant’s argument, the limitation period for making a claim for Non-Earner Benefits never began to run. This would defeat one of the primary purposes of the SABS regime, namely, to ensure the timely submission and resolution of claims for accident benefits.
The implications of this decision are limited to those collisions not governed by the September 1, 2010 SABS, where there is no right of re-election. However, it is important to note that the limitation period ran against a benefit that was never applied for.
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