Applicant Commences Action After Two-Year Limitation Period - ST v Economical LAT 16-003034

February 14, 2018, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

ST v Economical LAT 16-003034  2017 CanLII 59507 (ON LAT)

Decision Date:  November 27, 2017
Heard Before: Adjudicator Heather Trojek, Vice Chair

LIMITATION PERIOD: denial of benefits is clear and equivocal; applicant commenced action 6 years after the refusal; application denied by LAT

Issue:

1. Is ST precluded from proceeding with her application for ongoing entitlement to attendant care and housekeeping and home maintenance benefits because she missed the statutory two-year time limit to dispute Economical’s denial?

Result:

1. ST is barred from proceeding with her application for attendant care and housekeeping and home maintenance benefits despite having a catastrophic impairment because she did not dispute the stoppage of these benefits within two years of Economical’s denial.

ST was injured in a car accident on September 12, 2008. She was hit while walking across an intersection. She was hospitalized and required surgery for her orthopaedic injuries. She sought benefits pursuant to the SABs from Economical.

After the accident numerous Form 1’s or Assessment of Attendant Care Needs forms were completed on behalf of ST and Economical. ST underwent an OT IE and completed a Form 1 dated March 17, 2010, six months before the two year anniversary of the accident. This is the most recent pre-104 week Form 1 on record and recommends that ST receive $1,851.35 per month in attendant care benefits.

On August 11, 2010, Economical approved an Application for Approval of an Assessment or Examination (OCF-22) in the amount of $1,113.96 for Dr. B to conduct a file review for evaluation of catastrophic impairment (CAT) and submit a CAT application (OCF-19), if required. There is no evidence that Dr. B completed the approved OCF-22 assessment. In a letter on August 26, 2010 Economical advised ST that as of September 12, 2010 attendant care and housekeeping and home maintenance expenses incurred more than 104 weeks after the accident would not be paid unless she was determined to be catastrophically impaired. The letter included an Application for Catastrophic Impairment (OCF-19) for ST to complete but was not however submitted at that time.  ST was paid a total of $9,512.85 in housekeeping and home maintenance benefits and $66,777.92 in attendant care benefits by Economical from the date of the accident up until September 12, 2010.

In 2011 and again in 2013 and 2014 ST submitted occupational therapy progress reports to Economical confirming her ongoing need for attendant care services. There is no evidence that expenses for the services were submitted to Economical.  ST did not submit an OCF-19 until May 13, 2015. After the OCF-19 was submitted, Economical requested that ST attend a section 44 multidisciplinary CAT assessment. Based on the findings of this assessment, Economical informed ST in a letter dated November 4, 2015, that her CAT application was approved.

ST then submitted claims for attendant care and housekeeping and home maintenance benefits ongoing from 104 weeks post-accident because Economical had accepted that she was catastrophically impaired. However, Economical denied her claims for attendant care and housekeeping expenses because she did not dispute the initial denial of these benefits within the two year time period required by the Schedule.

ST argued that there was no proper denial of the benefits for the following reasons:

1. The denial was equivocal or unclear;
2. The denial was not valid because ST had not been found to be catastrophically impaired and therefore was not entitled to claim the benefits;
3. Since there is no time limit for applying for a catastrophic determination the two year limitation period cannot apply to benefits that flow from it, and;
4. The two year limit is not triggered until ST discovers that she meets the test of catastrophic impairment.

Economical argued that there was a proper denial of the benefits for the following reasons;

a)     The denial was clear and unequivocal;

b)     It is the denial of specific benefits that triggers the two year time limitation, the fact that ST was later found to be catastrophically impaired is irrelevant;

c)      Even if its denial was not legally correct it still triggers the two year time clock, and;

d)     The principal of discoverability does not apply to the scheme of statutory accident benefits.

This dispute revolves around the statutory requirement to dispute an insurer’s denial of benefits within two years. In August 2010, when the benefits in dispute were denied, the Insurance Act and the Schedule required an insured person to apply for mediation at the FSCO within two years of an insurer’s denial to pay a claim and prior to applying for arbitration or commencing a court action.

The Arbitrator was left to determine whether Economical’s “denial” in August 2010 was sufficient to trigger the two year time limit for applying for mandatory mediation at FSCO.  The key to determining this issue is to be found in the Supreme Court of Canada decision of Smith v. Co-operators General Insurance Co., which states that a limitation period cannot commence unless the insurer’s denial is in writing and is found to be clear and unequivocal. The criteria for a clear and unequivocal denial are: the reasons for the denial must be “straightforward” and in “clear language”. It must also provide information about the different stages in the dispute resolution process which an “unsophisticated person” can understand and include information about the relevant time limits.

The Arbitrator reviewed Economical’s denial of benefits and found that it meets all of the requirements set out in Smith and Cooperators and therefore constitutes a clear and unequivocal denial of ST’s entitlement to ongoing attendant care and housekeeping and home maintenance benefits. It also clearly states, “Warning: Two Year Time Limit: You have TWO YEARS from the date of your insurer’s refusal to pay or reduce benefits to arbitrate or commence a law suit in court.”

Having found that Economical issued a clear and unequivocal denial, the Arbitrator found that the two-year time limit to dispute the denial began to run as of August 26, 2010.

ST argues that as there is no time limit for filing a CAT application – a principle that both parties agree is well-established in the jurisprudence - there should then be no time limit for disputing a denial of benefits that potentially flow from a determination of catastrophic impairment.

Economical disagrees. It submits that the fact there is no time limit on filing a CAT application does not release ST’s obligation to dispute a clear and unequivocal denial of specific benefits within the required two-year time limit,

The Arbitrator agreed with Economical and noted that  ST’s argument was made and rejected in Mayo v. Economical,  where the fact situation was virtually identical to the one before the tribunal. In that decision, the Arbitrator found that although a CAT designation may further entitle an insured to a higher tier of benefits, this does not absolve the insured from his or her obligation to adhere to the two year time limitation period established by the Schedule and the Insurance Act when faced with a clear and unequivocal refusal to pay the benefits.

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