H. S. v. Allstate Insurance, 2018 CanLII 132563

Date: 2018-11-16

Case Name: 17-007264 v. Allstate Insurance

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

Between:

H. S.

Appellant(s)

and

Allstate Insurance

Respondent

PRELIMINARY ISSUE DECISION

ADJUDICATOR:

Deborah Neilson

APPEARANCES:

For the Appellant:

Frank Burns, counsel

For the Respondent:

Kathryn Watson, counsel

HEARD: Teleconference Hearing:

June 14, 2018

OVERVIEW

1The applicant was involved in a motor vehicle accident on August 18, 2016, and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010, O. Reg. 34/10 (the “Schedule'').

2The applicant applied to the respondent for a catastrophic impairment determination.¹ The respondent rejected the applicant’s catastrophic application on the basis that the application form was for accidents that occurred before June 1, 2016 and contains definitions for catastrophic impairment that are different from those in the application form concerning accidents that occurred after June 1, 2016. The respondent also denied the applicant certain benefits for which she applied under the Schedule. In response, the applicant submitted an application to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”).

3The parties attended a case conference, but could not agree which definition of catastrophic impairment in the Schedule applies to the applicant: the one for accidents that occurred before June 1, 2016 (the “old definition”) or the one that applies to accidents that occur after June 1, 2016 (the “new definition”). There is no dispute that the applicant’s insurance policy with the respondent was in force from May 1, 2016 to May 1, 2017. The applicant claims that, because her policy was in force before June 1, 2016, the old definition of catastrophic impairment applies to her. The respondent claims that, because the applicant’s accident occurred after June 1, 2016, the new definition of catastrophic impairment applies.

4The parties consented to me being seized with the preliminary issues.

ISSUES

5The parties agreed that the preliminary issues to be decided are as follows:

(1) Whether the new definition of catastrophic impairment in s. 3.1(1) of the Schedule, as amended by O. Reg. 251/15, for accidents that occur on or after June 1, 2016 applies to the determination of whether the applicant sustained a catastrophic impairment.

(2) Whether the applicant is barred from proceeding with her claim for catastrophic determination as she failed to submit a proper application for the determination of catastrophic impairment prescribed by the Schedule.

6The parties agreed that, if the applicant sent in the wrong application, she will withdraw her claim for catastrophic impairment and send in the correct application.

RESULT

7I find that the new definition of catastrophic impairment for accidents that occurred after June 1, 2016 applies to the applicant.

8The applicant submitted the incorrect application for catastrophic impairment determination.

ANALYSIS

9The applicant’s policy of insurance was in effect from May 1, 2016 to May 1, 2017. All contracts of motor vehicle liability insurance in Ontario are deemed to include the Schedule.² Generally speaking, this means that, if the Schedule is amended, the terms and provisions in the amended Schedule govern what is in the contract of insurance. This means that every motor vehicle liability policy in force is amended when the Schedule is amended if the Schedule explicitly states that is the case.³

10Ontario Regulation 251/15 (“O. Reg. 251/15”) is a regulation made under the Insurance Act that amends certain provisions in the Schedule. O. Reg. 251/15 was filed on August 26, 2015 and published in the Ontario Gazette on September 12, 2015, well before the applicant obtained his policy of insurance. O. Reg. 251/15 came into force on June 1, 2016, after the applicant obtained his policy. It reduced the limits of medical, rehabilitation and attendant care benefits payable, and amended the definitions of catastrophic impairment in the Schedule for accidents that occur after June 1, 2016.⁴

11Under s. 3.1(1) of the amended Schedule, the new definitions of catastrophic impairment apply in the case of an accident that occurs on or after June 1, 2016.⁵ The applicant’s accident occurred after June 1, 2016. Therefore, it appears at first glance that the applicant’s application for catastrophic impairment should be governed by the new definition. However, the applicant submits that s. 3.1(1) of the Schedule does not apply to her for three reasons:

(a) her policy is a transitional policy;

(b) the respondent waived its right to rely on the new definition; and

(c) she has a vested right for the old definition to apply to her.

12For the reasons below, I disagree with each of these arguments and find that the new definition applies.

A. Transitional Policy

13The applicant claims that her insurance policy was a transitional policy governed by s. 68 of the Schedule and, therefore, the old definition of catastrophic impairment applies to her. A transitional policy is a contract of insurance that was entered into before an amendment to the accident benefit regulation or the introduction of a new regulation, where an accident occurs after the amendment or new regulation, but before the expiry period of the insurance policy.

14There are presently four different statutory accident benefits regulations in force.⁶ Those regulations all came into force in different times and all four regulations contain a transition section to address those transition policies that were entered into before each regulation came into force. The applicant’s policy is a transitional policy because she entered into the policy before the amendments to the Schedule were made and she was still insured under that same policy when the accident occurred.

15Section 2 of the Schedule is a transition section that is listed under the “GENERAL” provisions in Part I of the Schedule under the heading “Application and transition rules.” This section was amended on March 3, 2016 to indicate the amendments to the Schedule that would come into effect on June 1, 2016. Those amendments essentially state that under s. 2(1.1), for accidents that occur after September 1, 2010 and before June 1, 2016, the old definition of catastrophic impairment in s. 3(2) of the Schedule and the old procedures for other goods and services of a medical or rehabilitation nature that were in the Schedule before the June 1, 2016 amendments still apply. The old definition of catastrophic impairment was revoked effective June 1, 2016. Under s. 2(1.1)2 of the Schedule, the old definition of catastrophic impairment applies only to accidents that took place between September 1, 2010 and June 1, 2016. According to this section, the old definition of catastrophic impairment would not apply to the applicant because her accident occurred after June 1, 2016.

16Section 68 is another transition section of the Schedule, and the one that the applicant claims applies to her. Section 68 of the Schedule deals with the transition from the 1996 Schedule to the Schedule, and comes under the heading of “TRANSITIONAL PROVISIONS” in Part XIII of the Schedule. Section 68 of the Schedule applies to every motor vehicle liability policy that was in effect on September 1, 2010 until the first expiry date on the policy or the day on which the policy is terminated if the policy was terminated before the expiry date. This means that s. 68 of the Schedule applies only to those policies that were entered into before September 1, 2010 (when the 1996 Schedule was in force) and that were still in force after September 1, 2010. Under s. 68(2), those transition policies were deemed to include certain optional benefits that are listed in s. 28 of the Schedule and optional benefits that were purchased under the 1996 Schedule.⁷ The optional benefits described under paragraphs 1 to 3 of s. 28(2) of the Schedule are the same benefits with the same policy limits that were available under the 1996 Schedule. Those benefits were reduced or eliminated under the Schedule.⁸ For regular non-transitional policies, those benefits were only available as optional benefits under the Schedule.

17The applicant also submits that the transitional provisions in s. 68 apply to her because s. 68(2) of the Schedule is ambiguous. I disagree. Section 68(2) of the Schedule cannot be read in isolation from s. 68(1); s. 2(1.1) for accidents after September 1, 2010 and before June 1, 2018; s. 2(1.2) for policies entered into or renewed after September 1, 2010 and before June 1, 2018; or s. 3.1(1) of the Schedule for accidents that occur on or after June 1, 2010. If s. 68 of the Schedule applied to the applicant, one would have to ignore those other sections of the Schedule. However, s. 68 clearly does not apply to the applicant because s. 68(1) of the Schedule states that s. 68(2) of the Schedule only applies if the policy of insurance was in effect or in force on September 1, 2010. There was no evidence before me that the applicant’s policy was in force on September 1, 2010. The only evidence before me was that the applicant’s May 1, 2016 policy was a renewal policy and that the previous policy expired on April 1, 2016. Further, even if the applicant did have a policy with the respondent that was in force on September 1, 2010, the policy would have expired at some point no later than August 31, 2011, because the standard motor vehicle insurance policy issued to the applicant was for no longer than one year.⁹ Every time a policy is renewed, it is not considered the same policy because it expresses a different policy period. The policy is “renewed” because it “expired” at the end of the previous policy period. Accordingly, the applicant’s May 1, 2016 to May 1, 2017 policy does not fit within the description of a policy that was “in effect on September 1, 2010” because any policy that may have qualified under s. 68(1) would have expired by August 31, 2011. Even if the applicant did have a policy that was in force back on September 1, 2010, there is nothing in s.68 that indicates the old definition of catastrophic impairment applies to the applicant or that the applicant is exempt from the new definition of catastrophic impairment.

18The applicant submits that s. 68 of the Schedule should be interpreted broadly because paragraphs 3 and 4 of s. 68(2) of the post-June 1 Schedule refer to “subsection 28(1), as it read immediately before O. Reg. 251/15 came into force.” I find that to read s. 68 the way the applicant submits would be to ignore the clear and unambiguous meaning in s. 68(1) of the Schedule: that s. 68(2) only applies to policies that were in effect for a limited period of time that ended years before the applicant’s policy was in force. Paragraphs 3 and 4 of s. 68(2) of the Schedule, were amended on June 1, 2016 for the purpose of including a description that the deemed optional benefits are still those benefits described in the Schedule before the June 1, 2016 amendments. For this reason, the legislature amended the sections by adding the words “subsection 28 (1), as it read immediately before O. Reg. 251/15 came into force.” This means that anyone who has an accident benefit claim under a policy that was in force on September 1, 2010 as a result of an accident that took place after September 1, 2010 and before the policy expired or was terminated (which would have been no later than August 31, 2011) will still get the same benefits within the same limits as what was set out under the 1996 Schedule. ¹⁰

B. Waiver

19The respondent paid the applicant benefits at the rate and limits that were in the Schedule before the June 1, 2016 amendments. The applicant relies on this fact as support that the old definition of catastrophic impairment applies to her. The applicant’s reasoning is that, by paying at the pre-June 1, 2016 policy limits, the respondent has accepted the old definition of catastrophic impairment applies to the applicant. In other words, by paying the applicant at the old policy limits, the respondent has waived its right to rely on the requirement in s. 3.1(1) of the Schedule that the new definition of catastrophic impairment applies to accidents that occur after June 1, 2016.

20I disagree. The respondent has been paying the applicant medical, rehabilitation and attendant care benefits at the pre-June 1, 2016 rate because it was required to do so under s. 2(1.2) of the Schedule. That section deals with policies that were obtained or renewed after September 1, 2010 but before June 1, 2016. Under s. 2(1.2), the old policy limits for non-earner benefits, medical, rehabilitation and attendant care benefits that were in the Schedule before the June 1, 2016 amendments apply to policies such as the applicant’s policy.

C. Vested Right

21The applicant submitted that she has a vested right in the old definition of catastrophic impairment. A vested right is a right that is fixed and crystalized when a person enters into the contract. According to this principle, it is presumed that the legislature does not intend to interfere with vested rights, absent a clear indication to the contrary in the legislation.¹¹ I do not accept that the applicant had a vested right to the old definition of catastrophic impairment. The legislation contains a very clear intention to the contrary in s. 2(1.1)2 of the Schedule by stating that the old definition of catastrophic impairment applies to accidents that occur before June 1, 2016 and in s. 3.1(1) of the Schedule by stating that the new definition applies to accidents that occur on or after June 1, 2016. Further, when the applicant renewed his policy of insurance on May 1, 2016, the Schedule had already been amended to state that on June 1, 2016, the Schedule would be amended to add the new s.3.1 definition of catastrophic impairment for accidents that occur on or after June 1, 2016. Accordingly, I am unable to find that the applicant had a vested right to the old definition of catastrophic impairment.

22For all of these reasons, I find that the new definition of catastrophic impairment applies to the determination of whether the applicant sustained a catastrophic impairment. For this reason, I find that the applicant submitted the incorrect application for catastrophic impairment. I need not consider whether the applicant is barred from proceeding from her claim for catastrophic impairment because she agreed to withdraw her claim if I determined that she submitted the incorrect application.

ORDER

23The amendments to the definition of catastrophic impairment in s. 3.1(1) of the Schedule for accidents that occur on or after June 1, 2016 apply to the determination of whether the applicant sustained a catastrophic impairment.

24The applicant failed to submit a proper application for the determination of catastrophic impairment prescribed by the Schedule. The issue of whether she sustained a catastrophic impairment is withdrawn.

25The parties shall attend a resumption of the case conference to schedule a hearing on the remaining issues.

Released: November 16, 2018

______________________

Deborah Neilson

Adjudicator

Footnotes

1. 1If the applicant is determined to have sustained a catastrophic impairment, he will be entitled to enhanced benefits. For example, a catastrophic impairment determination under policies entered into or renewed on or after September 1, 2010 and before June 1, 2016 means the insured’s policy limits increase for medical and rehabilitation benefits from $50,000 for no longer than 10 years to $1,000,000 for life; for attendant care benefits from $36,000 at a maximum of $3,000 per month for no longer than 2 years to $1,000, 000 for life at a maximum of $6,000 per month. The insured may also claim housekeeping benefits for life, which are not available under the standard policy.
2. 2Sections 224(3) and 268(1) of the Insurance Act, R.S.O. 1990, c. I.8. Section 268(1) of the Insurance Act makes contractual entitlement to accident benefits subject to the terms, conditions, provisions, exclusions and limits in the Schedule.
3. 3Beattie v. National Frontier Insurance Co., 2003 CanLII 2715 (ON CA), paras.23 and 24
4. 4Section 3.1(1) of the Schedule
5. 5Section 3.1 (1) For the purposes of this Regulation, an impairment is a catastrophic impairment if an insured person sustains the impairment in an accident that occurs on or after June 1, 2016 and the impairment results in any of the following.
6. 6Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672 , Statutory Accident Benefits Schedule - Accidents After December 31, 1993 and Before November 1, 1996, O. Reg. 776/93, Statutory Accident Benefits Schedule - Accidents on or After November 1, 1996, O. Reg. 403/96 (the “1996 Schedule”) and the Schedule
7. 7S.68(2)4 refers to optional benefits purchased under the “Old Regulation.” Under s.3(1) of the Schedule, the “Old Regulation” is defined as the 1996 Schedule.
8. 8Section 68(2)1 deems the policy to include the optional caregiver benefits and housekeeping and home maintenance benefits for 104 weeks found in s.28(2)2. These benefits were standard available under the 1996 Schedule, but not under the Schedule unless the applicant suffers a catastrophic impairment. Section 68(2)2 deems the policy to include medical and rehabilitation benefit limits of $100,000.00 found in s. 28(1)3 of the Schedule. The 1996 Schedule provided $100,000 limits for medical and rehabilitation benefits. This was reduced to $50,000.00 for the standard policy under the Schedule. Section 68(2)3 deems the policy to include the optional attendant care benefit in s.28(1) 4 of the Schedule, which is a limit of $72,000.00 within the first 104 weeks for attendant care benefits for non-catastrophic impairments. This is the same limit under the 1996 Schedule. The limit for attendant care under the Schedule was reduced to $36,000.00 for the first 104 weeks.
9. 9Schedule “A” to the respondent’s factum, tab 1: offer for renewal of the applicant’s policy, undated, and certificate of insurance dated April 2, 2016.
10. 10The exception is payment for cost of examinations, which is subject to the $2,000 limit per assessment.
11. 11State Farm Automobile Insurance Co. v. Kulaveerasingam, 2017 ONSC 6278 (Ont. Div. Ct.), paras.21 and 22.