S.R. v. Aviva Insurance Canada, 2018 CanLII 13157

Licence Appeal Tribunal

Date: 2018-02-13

Tribunal File Number: 17-004556/AABS

Case Name: 17-004556 v Aviva Insurance Canada

In the matter of an Application for Dispute Resolution pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.

Between:

S.R.

Applicant

and

Aviva Insurance Canada

Respondent

AMENDED DECISION

ADJUDICATOR: Christopher A. Ferguson

APPEARANCES:

For the Applicant: A. Fabio Longo and James Armstrong, Counsel

For the Respondent: Patrick Baker, Counsel

HEARD in Writing on January 15, 2018

OVERVIEW

1S.R. (“the applicant”) was involved in an automobile accident on December 28, 2014 (“the accident”), and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010¹ (the ''Schedule'').

2The applicant applied for benefits from the respondent, Aviva Insurance Canada, and applied to the Licence Appeal Tribunal (the “Tribunal”) when the disputed benefits were denied.

3The respondent has raised a preliminary issue that could prevent the Tribunal from hearing this appeal. It asserts that the applicant is “statute barred” (explained below) from appealing its refusal to pay claimed income replacement benefits (“IRBs”), because she failed to commence her appeal within two years of the date that her claim for benefits was denied as required by s. 56 of the Schedule.

4The Tribunal issued an order dated October 31, 2017 for a hearing of the preliminary issue that directs me as follows:

i. If I find that the applicant’s appeal for IRBs is statute-barred, then I will dismiss her claim.

ii. If I find that the applicant’s appeal for IRBs is not statute-barred, I will order that the Tribunal schedule a case conference to deal with the substantive issues in dispute.

PRELIMINARY ISSUE

5Is the applicant barred from appealing the respondent’s denial of her claim for IRBs under s.56 of the Schedule because her appeal was filed more than two years after the insurer refused them?

FINDINGS

6I find that the appeal is not statute-barred under s.56.

7The appeal should proceed by way of a case settlement conference to be scheduled by the Tribunal.

REASONS

8Under s.56 of the Schedule, an appeal of an insurer’s denial of a benefit must be commenced within two years after the insurer’s refusal to pay the amount claimed. The two years is called the “limitation period”.

9If an appeal is not filed within the two-year limitation period prescribed by s. 56, then the Tribunal cannot hear it: the appeal is effectively dismissed without a hearing. The appeal is said to be “statute barred.”

10Section 11 of the Schedule prescribes that a person receiving an IRB may return to work or start new work without affecting his or her entitlement to resume receiving IRBs if he or she is unable to continue working as a result of the accident. This only applies to the period during the first 104 weeks after receiving the IRB.

11The applicant filed her first disability certificate (“OCF-3”) on January 21, 2015 and was paid IRBs from January 4 to February 25, 2015. The respondent insurer stopped the IRB payments when the applicant resumed working, and sent her a letter explaining its action, dated March 4, 2015.

12In its letter of March 4, 2015, the respondent stated:

i. its reason for stopping IRB payments, namely the applicant’s return to work;

ii. “Should you be off work again due to the injuries sustained [in the] accident, we would require an updated Disability Certificate (OCF-3) to determine your eligibility”;

iii. notice that the Schedule requires an applicant for a specified benefit to submit a completed OCF-3 that indicates she meets the disability test for IRBs; and

iv. notice that “there is no entitlement to benefits for any period before the updated OCF-3 is submitted.”

v. a standard-form description of the procedure that the applicant could follow if she disagreed with the insurer’s decision, characterized as “this decision” – the same boilerplate used by the insurer in letters approving claimed benefits.²

vi. a warning that the recipient “has TWO YEARS from the date” of the insurer’s “refusal to pay, or a reduction of a benefit, to arbitrate or commence a lawsuit in court”.

13The letter of March 4, 2015 also included paragraphs outlining the applicant’s entitlement to IRBs for the period from January 4 to February 24, 2015, a statement of the calculation of the benefit and confirmation that payment of the IRB would be sent to the applicant under separate cover.

14The applicant indicates that she had to stop working on May 31, 2015 as the result of symptoms arising from her accident-related injuries.

15On June 15, 2015, the applicant received a letter from the respondent, which did not mention IRB issues expressly, but did request medical and income tax records for 2015.

16The applicant obtained a second OCF-3 dated June 13, 2017.

17The applicant filed her appeal with the Tribunal on July 17, 2017.

18The respondent responded with a request to bar the applicant’s appeal as being filed after the limitation period set out in s. 56 of the Schedule as described in paras. 8-9 above.

19This dispute turns on whether or not the respondent’s letter of March 4, 2015 was a “clear and unequivocal” denial of the applicant’s claim for IRBs. If it was, then the appeal is statute-barred, and the Tribunal cannot hear it. If it was not, then I will order the matter to be heard.

What is meant by a clear and unequivocal denial of the IRBs?

20For an insurer to be able to rely on the limitation period, it must provide the applicant a valid refusal of benefits that states a clear and unequivocal denial, it must give reasons for the denial, and it must provide a description of the dispute resolution process.³

21“Unequivocal” means “clear, plain; capable of being understood in only one way, or as clearly demonstrated; free from uncertainty, or without doubt …”⁴ A denial notice must be “in straightforward and clear language, directed towards an unsophisticated person.”⁵

22The onus is on the insurer to establish that the applicant has received the proper notice of denial⁶ and that the denial was clear and unequivocal.⁷

Was the respondent’s letter of March 4, 2015 a clear and unequivocal denial of the IRBs?

23The applicant argues that the respondent insurer never provided her with a clear and unequivocal denial of the claimed benefit. She contends that the letter from the respondent insurer dated March 4, 2015 and subsequent letters led her to believe that the respondent insurer would reconsider its decision to terminate IRB payments if she provided it with an updated disability certificate (“OCF-3”).

24The respondent’s position is exactly the opposite: it contends that the March 4, 2015 letter was a clear and unequivocal denial of the claimed IRBs.

25I find that the respondent insurer’s letter of March 4, 2015 did not constitute a clear and unequivocal refusal to pay further IRBs, because:

i. I interpret it as clearly informing the applicant that she remains eligible for further IRBs if she has to leave work due to her accident-related injuries and submits an updated OCF-3 so that the insurer can determine her eligibility.

ii. It lacks any statement that the insurer would only consider an updated OCF-3 if it were sent within two years of the letter.

iii. The letter’s notice of a limitation period on the applicant’s right to dispute its termination of IRBs was equivocal because it referred to “this decision” [emphasis mine]. I find that “this decision” could reasonably be interpreted to:

a. include the stipulation by the insurer that it would reconsider her IRBs upon submission of an updated OCF-3, and

b. exclude any future “s.11 decision” by the respondent made with respect to an updated OCF-3 and accompanying documents.

iv. The wording of the bold-typed paragraph on page three of the letter, warning of a two-year time limit for commencing arbitration (i.e. an appeal), does not reinforce the respondent’s interpretation that it has set the limitation period running on future IRB claims.

v. As the result of my observations in subparagraphs i.-iv., I find that the letter could reasonably lead the applicant to believe that her options with respect to the IRBs were being kept open in case her circumstances changed – and not to believe that it had denied her eligibility for IRBs with finality.⁸

vi. I am persuaded that the ambiguity I see in the denial notice should be interpreted in favor of the insured, applying the contra proferentum rule that laws purporting to be consumer protection should be interpreted generously in favour of consumers, a widely understood principle in consumer and insurance contract law, articulated in Balzer⁹ and confirmed by the Supreme Court in numerous cases, including Smith.¹⁰

26I agree with the applicant that it is not necessary for me to consider any evidence that does not pertain to whether or not the denial letter of March 4, 2015 was clear and unequivocal. I agree with other adjudicators that:

i. In assessing whether a claim is statute-barred, the analysis is of the refusal itself.¹¹ This is an objective test to be applied without regard to what an insured might or might not have known following a termination of benefits.”¹²

ii. It is not necessary for me to consider circumstances outside of the refusal, such as representation by counsel.¹³

28The respondent agrees that whether or not its letter of March 4, 2015 is a “clear and unequivocal denial” is the over-riding, determining issue in this matter. I simply do not agree with its analysis that its denial meets the standard of “clear and unequivocal” described in paragraph 20 above for the reasons that I have set out above in paragraph 24.

29The respondent contends that a temporary return to work as defined by s.11 of the Schedule “does not operate to reset the limitation period”. True as that may be, that is not the issue here. The respondent does not explain how its argument overcomes the requirement for a denial to be clear and unequivocal. The cases it cites, such as Haldenby¹⁴, do not provide me with an answer on this issue.

30The respondent argues a number of concerns that do not pertain to the preliminary issue. Whether or not the applicant has submitted sufficient documentation to determine her claim and whether or not the date of her updated OCF-3 precludes her from “pre-104” IRBs are questions that should be discussed in case conferences and if necessary determined in a hearing on the substantive merits.

31My findings lead me to determine that the letter of March 4, 2015 was not a clear and unequivocal denial of the applicant’s claim for IRBs. Accordingly, I have decided that the appeal in this matter is not statute-barred and should proceed.

Procedural Note

32On January 12, 2018, the applicant submitted a response to the respondent’s Reply submission of January 8, 2018 in this matter, without the Tribunal’s permission.

33I ignored the applicant’s second submission: the established process for hearings gives the proponent, in this case the respondent, the right of final reply, and I do not accept the applicant’s implicit contention that her second submission is necessary for a fair disposition of this matter.

CONCLUSIONS

33The application is not statute-barred.

34The Tribunal will schedule a case conference to resume settlement discussions in this matter, and if necessary, to set the substantive issues down for hearing.

Footnotes

1. 1O.Reg. 34/10
2. 2As noted by the applicant, who submitted two such letters in evidence
3. 3Smith v. Co-operators General Insurance Company, 2002 SCC 30,, 2002 SCC 30, [2002] 2 S.C.R. 129 submitted by both parties.
4. 4Black’s Law Dictionary definition relied on by the Superior Court in Kitchenham v. Axa Insurance Canada, 1998 CarswellOnt 6071, submitted by the applicant.
5. 5Ponnampalam and State Farm (FSCO Appeal P12-00031C, December 11, 2013) submitted by the applicant.
6. 6Zeppieri and Royal Insurance Company of Canada, (OIC A-005237, February 17, 1994), submitted by both parties.
7. 7Smith v. Co-operators cited in Burden and Western Assurance, (FSCO Appeal P13-00020, April 28, 2014), submitted by the applicant.
8. 8An interpretation that I note is consistent with s.11 of the Schedule.
9. 9Balzer v. Sun Life Assurance Co. Of Canada, 2003 BCCA 306 at para. 45 submitted by the applicant – the case is not binding, but it is persuasive.
10. 10Smith v. Co-operators, see above at footnote 2.
11. 11Turner and State Farm (FSCO Appeal P00-00046, February 1, 2002), submitted by the applicant.
12. 12T.N. and The Personal Insurance Company of Canada, (FSCO A06-000399, July 26, 2012 ) submitted by the applicant.
13. 13Burden and Western Assurance, (FSCO Appeal P13-00020, April 28, 2014), submitted by the applicant.
14. 14Haldenby v. Domininion of Canada General Insurance Company, 2001 CanLII 16603 (ON CA), 55 OR 3d 470 [2001] O.J. No.3317 (C.A.).