17-008613 v State Farm Mutual Automobile Insurance Company, 2018 CanLII 95587

Licence Appeal Tribunal

Date: 2018-07-17

Tribunal File Number: 17-008613/AABS

Case Name: 17-008613 v State Farm Mutual Automobile Insurance Company

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:

Applicant

and

State Farm Mutual Automobile Insurance Company

Respondent

DECISION

ADJUDICATOR: Chris Sewrattan

APPEARANCES:

Representative for the applicant: Malcolm Zoraik (student-at-law)

Counsel for State Farm: Matthew Owen

HEARD in Writing: June 4, 2018

OVERVIEW

1The applicant was injured in a motor vehicle accident on December 7, 2011. She sought payment for an income replacement benefit under the Schedule¹. State Farm Mutual Automobile Insurance Company ("State Farm") denied payment. The applicant appeals for payment to the Licence Appeal Tribunal – Automobile Accident Benefits Service.

2This is a preliminary issue hearing to determine whether the applicant's claim is time-barred.

PRELIMINARY ISSUES:

3Is the applicant prevented from applying to the Tribunal for an IRB because her claim is outside of the two-year limitation period?

4Is the applicant entitled to costs under Rule 19.1?

RESULT:

5The limitation period applies in this case and, as a result, the applicant is prevented by from applying to the Tribunal for an IRB.

6The applicant is not entitled to costs because the conduct about which she complains occurred outside of the Tribunal's proceeding.

FACTS:

7A brief overview of the timeline is essential to understand how the limitation period impacts the applicant's claim.

8The applicant was injured in an accident on December 7, 2011. A physiotherapist sent an Application for Accident Benefits to State Farm on the applicant's behalf on February 27, 2012. State Farm responded just over a week later with an Explanation of Benefits dated March 8, 2012. The Explanation of Benefits stated that State Farm was denying any claim for an income replacement benefit (IRB). There is no dispute between the parties that the text of the Explanation of Benefits dated March 8, 2012 was clear, unequivocal, and advised the applicant of her dispute resolution options.

9Because of the date of the Explanation of Benefits, the limitation period for the applicant to dispute State Farm's denial became March 8, 2014.

10The applicant first believed she needed an IRB after exhausting a collateral benefit from Sun Life. With the assistance of legal representation, she caused her physician to submit a Disability Certificate, dated January 27, 2017, to State Farm. The Disability Certificate was for an IRB.

11State Farm responded to the Disability Certificate with another Explanation of Benefits denying the claim and requesting additional financial documentation. The parties corresponded back and forth through much of 2017, sorting through State Farm's requests for additional financial documentation. State Farm never raised the limitation period issue during this time.

12On November 29, 2017, after State Farm was provided with the financial documentation it had been requesting, State Farm raised the limitation period for the first time. In an Explanation of Benefits dated November 29, 2017, State Farm stated that it was denying the applicant's claim to an IRB because she applied outside of the limitation period.

13The applicant filed an application for dispute resolution to the Tribunal on December 7, 2017. This was 5 years, 8 months, and 29 days after State Farm first denied the IRB claim in its Explanation of Benefits dated March 8, 2012.

DISCUSSION:

14The applicant is prevented from applying to the Tribunal for an IRB because of the limitation period. To explain why, I will canvass some legal principles that govern my decision and explain why I do not agree with the applicant's submissions. While I am mindful that the onus is on State Farm to prove its case, the clearest reasoning in this case flows from framing the issues with the applicant's submissions.

The governing legal principles

15An application for dispute resolution to the Tribunal must be made within two years after an insurer's refusal to pay the amount claimed.² The two-year limitation period begins running when an insurer provides the insured person with a refusal to pay. The refusal must be clear, unequivocal, and advise the insured of their appropriate dispute resolution options.³

16Since State Farm is moving to prevent the applicant's matter from proceeding before the Tribunal, State Farm must prove on a balance of probabilities that the two-year limitation period applies.

17State Farm has proven its case. The Explanation of Benefits dated March 8, 2012, was a proper denial of the applicant's IRB claim. The applicant had two years from this date to apply to the appropriate dispute resolution body to dispute State Farm's denial. The applicant's failure to do so prevents her from now applying to the Tribunal.

18I turn to the applicant's submissions.

When does an insured person make a claim in the context of the limitation period?

19The applicant submits that she did not make an IRB claim until the Disability Certificate dated January 27, 2017 was submitted to State Farm. State Farm's denial of an IRB on March 8, 2012 was not valid because the applicant did not yet make a claim.

20The applicant's submission boils down to a simple question: In the context of the limitation period, when does an insured person make a claim? If the answer is 'when an Application for Accident Benefits is submitted' then State Farm validly denied the applicant's claim on March 8, 2012, and the limitation period prevents the applicant from disputing the refusal. If the answer is 'when a Disability Certificate is submitted' then the limitation period does not yet apply.

21To this simple question the Court of Appeal for Ontario has provided a clear answer: in the context of a limitation period, an insured person makes a claim when she or he submits an Application for Accident Benefits.⁴

22Court of Appeal decisions are binding on the Tribunal. It is not for me to question the wisdom of a directly binding Court of Appeal decision. Under the governing law, then, if the applicant wanted to prevent the limitation period's application she should have disputed the denial within two years, notwithstanding that she did not believe she needed an IRB when State Farm denied her claim in March 2012.

23After written submissions were completed, the applicant provided 16-000216 v Aviva Insurance Company of Canada⁵. This case distinguishes the Court of Appeal's decisions. 16-000216 v Aviva Insurance Company of Canada is not applicable at this hearing. Unlike in 16-000216 v Aviva Insurance Company of Canada, the applicant properly applied for the benefit in dispute with her Application for Accident Benefits. State Farm's denial was therefore valid, and it started the limitation period.

Should I extend the limitation period in this case?

24The applicant submits that I should exercise my power under the Licence Appeal Tribunal Act to extend the limitation period. Under s. 7 of the Act, I can extend the time for giving the notice after the expiration of the limitation period and give proper directions.⁶ The Executive Chair of the Tribunal has provided a non-exclusive list of factors that should be generally weighed when considering whether extend the limitation period:

1. The existence of a bona fide intention to appeal within the appeal period;
2. The length of the delay;
3. Prejudice to the other party; and,
4. The merits of the appeal.⁷

25I decline to extend the limitation period. The first and third factors are determinative in this case. The applicant never intended to appeal State Farm's refusal within the appeal period; that is, within the two years following State Farm's denial on or about March 8, 2012. According to the applicant's own submissions, she first manifested an intention to appeal State Farm's denial in early 2017 after she exhausted her benefits with Sun Life. The applicant caused her physician to submit a Disability Certificate to State Farm on or about January 27, 2017. This is almost three years after the expiration of the limitation period. Extending the limitation period under s. 7 would indirectly undermine the Court of Appeal's answer to the question of when the limitation period begins to run.⁸

26I appreciate that it must have been frustrating for the applicant to have State Farm entertain her IRB claim following receipt of the Disability Certificate. For much of 2017, State Farm corresponded with the applicant, requesting additional documentation. It was only after State Farm received the requested documentation that it turned around and, for the first time, raised the limitation period as a bar to the claim.

27Whatever the frustration caused by State Farm's conduct, it remains that the applicant's claim would still be well outside of the limitation period if State Farm invoked it as soon as State Farm received the Disability Certificate. State Farm's conduct did not prejudice the applicant's ability to comply with the limitation period.

Is State Farm estopped from relying on the limitation period?

28The applicant submits that I should use the equitable remedy of estoppel to prevent State Farm from relying on the limitation period. The submission follows that State Farm frustrated the applicant by, on the one hand, entertaining her IRB claim through much of 2017 and, on the other hand, relying on the limitation period after the applicant complied with State Farm's disclosure requests.

29The parties spent considerable time disputing whether the Tribunal has the jurisdiction to use the equitable remedy of estoppel.

30I do not need to decide whether the Tribunal has jurisdiction. Even if I could use the equitable remedy of estoppel, I would decline to do it in this case. My reasoning is same as my decision to not extend the limitation period under s. 7 of the Act. State Farm's conduct after receiving the Disability Certificate, however frustrating, did not prejudice the applicant's ability to comply with the limitation period.

Is the applicant entitled to costs under Rule 19.1?

31The applicant is not entitled to costs under Rule 19.1. According to the applicant, State Farm's conduct after receiving the Disability Certificate was unreasonable, frivolous, vexatious, and in bad faith, and deserving of costs under Rule 19.1 of the LAT Rules.

32The Tribunal can only award costs under Rule 19.1 for unreasonable, frivolous, vexatious, or bad faith conduct that occurs in its proceeding. The conduct about which the applicant complains occurred outside of the Tribunal's proceeding.

CONCLUSION:

33The applicant is prevented by the limitation period from applying to the Tribunal for an income replacement benefit. The applicant is not entitled to costs under Rule 19.1.

Footnotes

1. 1Statutory Accident Benefits Schedule – Effective September 1, 2010.
2. 2Section 280(2) of the Insurance Act R.S.O. 1990, c I.8. Note that the provision is now in s. 56 of the O. Reg. 34/10.
3. 3Smith v. Co-operators General Insurance Co., [2002] 2 S.C.R. 129, 2002 SCC 30. The applicant did not provide any submissions indicating that State Farm's refusal on March 8, 2012, was unclear, equivocal or not informative of the appropriate dispute resolution options.
4. 4See especially Sagan v. Dominion of Canada General Insurance, 2014 ONCA 720
5. 516-000216 v Aviva Insurance Company of Canada, 2016 CanLII 78332
6. 6Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, Sch. G, s. 7
7. 7A.F. v. North Blenheim Mutual Insurance Company, 2017 CanLII 87546 at para. 28
8. 8See e. g. Sagan v. Dominion of Canada General Insurance, 2014 ONCA 720.