Licence Appeal Tribunal File Number: 18-002397/AABS
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:
Ummugulsum Yatar
Applicant
and
TD Insurance
Respondent
PRELIMINARY ISSUE HEARING DECISION AND ORDER
VICE-CHAIR:
Craig Mazerolle
APPEARANCES:
For the Applicant:
Sean Dewart, Counsel
Ian McKellar, Counsel
For the Respondent:
Geoffrey L. Keating, Counsel
HEARD:
By Way of Written Submissions
OVERVIEW
1The applicant, Ummugulsum Yatar, was involved in an automobile accident on February 10, 2010 and sought benefits from the respondent, TD Insurance, pursuant to the Statutory Accident Benefits Schedule – Accidents on or After November 1, 1996. When she was denied certain benefits by the respondent, she applied to the Licence Appeal Tribunal – Automobile Accident Benefits Service (“the Tribunal”) for resolution of the dispute. The benefits at issue include an income replacement benefit and a housekeeping and home maintenance benefit.
2Prior to a substantive determination of these benefits, the parties were ordered to participate in a preliminary issue hearing to address a limitations defense that the respondent had raised (case conference report and order, released November 5, 2018). The respondent sent the applicant a series of letters in January, April, and September 2011. According to the respondent, these letters were valid denials of the two benefits in dispute. In turn, the letters started the two-year limitation period for both benefits, pursuant to s. 56 of the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “Schedule”). Since the applicant did not file her application with the Tribunal until March 16, 2018, the limitation periods had passed.
3In a decision released on April 29, 2019, the Tribunal determined that the applicant was statute-barred from proceeding with her application, as the limitation periods expired in April 2014. Upheld on reconsideration, and by both the Divisional Court and the Court of Appeal for Ontario, the applicant eventually appealed the Tribunal’s preliminary issue decision to the Supreme Court of Canada.
4Finding the reconsideration decision was unreasonable, the applicant’s appeal was allowed by the Supreme Court: Yatar v. TD Insurance Meloche Monnex, 2024 SCC 8 (“Yatar”). Writing for the unanimous Court, Justice Rowe ordered at paragraph 77 that the matter be sent back “to the LAT adjudicator to consider the issue of the effects of the reinstatement of benefits on the validity of the initial denial and, thus, on the limitation period.”
5Returning to the Tribunal for a case conference on June 28, 2024, the parties were ordered to participate in a preliminary issue hearing via written submissions (case conference report and order, released July 3, 2024). The Tribunal has also scheduled a substantive issues hearing. This hearing is currently scheduled to take place via videoconference from February 10 – 13, 2025.
PRELIMINARY ISSUE IN DISPUTE
6The preliminary issue to be decided is:
i. Is the applicant barred from proceeding to a hearing for the following benefits: income replacement benefits and housekeeping and home maintenance because the applicant failed to dispute their denial within the 2-year limitation period pursuant to s. 56 of the Schedule?
7Of note, the case conference report and order further stated:
[T]he parties agreed that the Preliminary Issue Hearing will focus on the comments made by the Supreme Court of Canada in Yatar v. TD Insurance Meloche Monnex, 2024 SCC 8. Specifically, the Preliminary Issue Hearing will consider the issue of the effects of the reinstatement of benefits on the validity of the initial denial and, thus, on the limitation period.
RESULT
8The applicant is barred from proceeding with her application for the housekeeping and home maintenance benefit.
9The applicant may proceed with her application for the income replacement benefit.
ANALYSIS
10I am satisfied that the respondent has established that the applicant is barred from proceeding with her application for the housekeeping and home maintenance benefit, as she did not apply for this benefit in accordance with the limitation period established by s. 56 of the Schedule.
11I am then satisfied that the applicant may proceed with her application for the income replacement benefit.
Limitation Periods and the Supreme Court’s Ruling in Yatar
12In accordance with s. 56 of the Schedule, an application with respect to disputes in respect of accident benefits under s. 280(2) of the Insurance Act, R.S.O. 1990, c. I.8 shall be commenced within two years after an insurer’s refusal to pay the amount claimed. Despite the date of loss falling prior to September 1, 2010, s. 56 of the September 1, 2010 Schedule applies to this case.
13To trigger the limitation period, an insurer must provide clear and unequivocal notice of a refusal to pay benefits. In Smith v. Co-operators General Insurance Co., 2002 SCC 30 (“Smith”), the Supreme Court of Canada articulated the requirements that an insurer must satisfy for there to be a proper denial of benefits: straightforward and clear language to inform a person of the dispute resolution process; language directed towards an unsophisticated person; identification of the person’s rights to dispute the denial; and the relevant time limits that govern that process.
14As noted above, the case conference report and order requires me to consider comments made by the Supreme Court in Yatar. Specifically, I am required to “consider the issue of the effects of the reinstatement of benefits on the validity of the initial denial and, thus, on the limitation period.” I find the following selection from Yatar at paragraphs 72 – 74 is of assistance:
The LAT adjudicator relied on Smith v. Co-operators and concluded from the affidavit adduced by Ms. Yatar that there was an “implicit acceptance of the denials effective January 4, 2011” (reconsideration decision, at para. 15) and that her counsel should have been aware of the two-year limitation period, but that nothing was done to protect her rights.
At the time, both s. 281.1(2)(b) of the Insurance Act and s. 51(2) of the SABS provided for a 90-day extension of the limitation period after the mediator’s report was released. The LAT adjudicator took into account the fact that Ms. Yatar commenced the mediation process after receiving the September [2011] letter. The LAT adjudicator had regard to the letters as well as the mediation process, and concluded that “[t]he limitation period lapsed April 14, 2014, [at the end of] the statutory ninety-day extension following the report of the mediator” (preliminary decision, at para. 26, aff’d in reconsideration decision, at para. 17).
However, the LAT adjudicator failed to have regard to the effect of the reinstatement of the IRBs between February and September. The LAT adjudicator did not consider earlier tribunal decisions, some of which had held that when an applicant’s benefits are reinstated, the limitation period can only be triggered when they are validly terminated again (see Veldhuizen v. Coseco Insurance Co., 1995 ONICDRG 144; Rudnicki v. Certas Direct Insurance Co., 2001 ONFSCDRS 60).
Parties’ Positions
15The respondent submits that the applicant is barred from proceeding to the substantive issue hearing, as she did not apply to the Tribunal within the limitation periods triggered by the 2011 denial letters. The respondent then asserts that the cases cited in Yatar are of limited value, i.e., Veldhuizen v. Coseco Insurance Co. and Rudnicki v. Certas Direct Insurance Co. These cases are from the Ontario Insurance Commission and Financial Services Commission of Ontario (“FSCO”), respectively. According to the respondent, they do not account for more recent case law from this Tribunal. The respondent also relies on the Superior Court’s ruling in Golic v. ING Insurance Company of Canada, 2008 CanLII 69502 (“Golic”), as well as the dissenting opinion in Smith. The respondent further argues that the principles of res judicata and abuse of process are bars to the application, since the applicant agreed to dismiss a Superior Court action that “would have addressed her entitlement to housekeeping and home maintenance benefits, and arguably income replacement benefits as well.” Finally, the respondent asserts it is facing prejudice from the 14 years that have passed since the accident.
16The applicant submits that the respondent’s January 2011 letter was not a denial. Rather, this letter was a temporary benefit suspension based on a procedural breach, i.e., a missing OCF-3. As such, the limitation period was not triggered. Paired with the fact that the February and September 2011 letters did not include dispute resolution notices, the applicant contends there has not been a valid denial for either benefit. Further, the applicant challenges the respondent’s case law as unrelated to the facts at hand. Instead, the applicant argues that Smith creates a “bright-line” obligation for insurers to always include written notice of the dispute resolution procedure with their denials. Finally, the applicant disputes the respondent’s position on res judicata, claiming it was first raised in its preliminary issue submissions. She also contends the respondent’s claim of prejudice is unsupported.
17The respondent did not provide reply submissions.
Housekeeping and Home Maintenance Benefit
18I am satisfied that the respondent has established that the applicant is barred from proceeding with her application for the housekeeping and home maintenance benefit, as she did not apply for this benefit in accordance with the limitation period established by s. 56 of the Schedule.
19To start, it is important to note that, while the respondent initially refused to pay the income replacement benefit in its January 2011 letter, it later reinstated payment of this benefit following its February 2011 letter. No such reinstatement took place for the housekeeping and home maintenance benefit. As the applicant did not file her application to contest the refusal to pay either of these benefits until March 2018, the key question for determining whether she missed the limitation period for the housekeeping and home maintenance benefit is whether the January 2011 letter constituted a valid denial. I find the January 2011 letter was a valid denial of both benefits.
20In addition to providing a dispute resolution form, the respondent’s January 7, 2011 letter provided the following information to the applicant:
Please be advised we have made a determination that you are not entitled to the following specified benefit(s) as a result of your failure to submit a completed Disability Certificate (OCF-3) within the timeframe specified in our request.
Income Replacement Benefit
Housekeeping and Home Maintenance
Payment of your benefit has been stopped effective 2011.01.04. Please be advised that no benefit is payable for the period after the date specified and before the day the insurer receives the completed disability certificate.
Since you have failed or refused to provide a new OCF-3… you are required to be examined by an assessor(s) chosen by the insurer.
21The applicant takes the position that this letter did not deny either of the benefits in dispute. Rather, the respondent had only suspended the benefits due to a missing OCF-3. I accept that there is some wording that may be slightly ambiguous, as there is a suggestion that the benefits are not payable “before the day” it receives an OCF-3. However, when read as whole, the January 2011 letter provides a clear refusal to pay both benefits.
22For example, the letter begins with a firm statement that the respondent has “made a determination”. There is no suggestion that the respondent is weighing its options about whether to pay the benefits. In a similar vein, the letter informs the applicant that she is “not entitled” to the benefits as of a date that precedes the date on the letter, i.e., the benefits stopped as of January 4, 2011, while the letter is dated January 7, 2011. This timeline further indicates that the respondent has “made a determination”, and that determination is to not pay the benefits.
23I then find the letter possesses the requisite firmness that the majority of the Supreme Court expected in Smith. After determining that the denial in Smith was invalid because the insurer did not inform the insured of the dispute resolution procedure in writing, Justice Gonthier added at paragraph 20: “There is an equivocal sense of indeterminacy in the decision of the insurer giving the reader the impression that the insurer may very well change its stance...” I do not find there is the same level of “indeterminacy” in the January 2011 letter. Rather, for the reasons set out above, I conclude that the letter clearly establishes that the respondent has determined it will not pay the benefits.
24I also do not accept the applicant’s interpretation of s. 56 of the Schedule. Specifically, even if I accepted that this letter was not a denial, but rather “a temporary suspension of benefits under section 33(6) of the [Schedule]”, I find the wording of s. 56 would still capture this “suspension”. Specifically, s. 56 states that an application must be brought to the Tribunal [emphasis added] “within two years after the insurer’s refusal to pay the amount claimed.” When an insurer refuses to pay an amount claimed by an insured person (regardless of whether it is based on a substantive or procedural basis), s. 56 may be engaged.
25Therefore, since the housekeeping and home maintenance benefit was never reinstated, I find the limitation period for disputing this benefit had exhausted prior to the application being filed in March 2018. Neither party raised s. 7 of the Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, Sch. G., so I did not consider this potential, discretionary relief.
Income Replacement Benefit
26I do not reach the same conclusion for the income replacement benefit. While I accept that the January 2011 letter constituted a proper denial, I am satisfied that the reinstatement of this benefit following the February 2011 letter restarted the clock. In other words, the limitation period started in January 2011 came to an end when the respondent restarted payment of the benefit. Further, though the respondent later decided to stop paying the benefit following the September 2011 letter, this correspondence did not include a dispute resolution form. As such, the letter did not constitute a further, proper denial, such that the limitation period never restarted after the reinstatement in February 2011.
27Further, I do not accept the respondent’s assertion that the limitation period started by the January 2011 letter is not impacted by the reinstatement of the income replacement benefit in February 2011. Section 56 is triggered by the “refusal to pay”, so I find the logical outcome from a later reversal of this refusal must be the end of the limitation period triggered by said refusal.
28Then, considering the context of s. 56 in relation to an insurer’s obligation to provide reasons for a denial (along with the consumer protection mandate of the Schedule), I also find it would be illogical to interpret s. 56 to mean that reinstatements would not impact earlier denials. Allowing an initial denial to dictate the limitation period for that benefit moving forward would remove an insured’s ability to respond to future denials based on the most up-to-date information. For instance, it would be illogical to require the applicant in this case to decide whether to contest the income replacement benefit denial based on the reasons provided in the January 2011 letter (i.e., missing OCF-3), as opposed to the reasons provided in the September 2011 letter (i.e., results of an insurer’s examination). Such an interpretation would weaken the protections afforded to an insured through the provision of reasons for denials.
29I also note that adopting the respondent’s position could theoretically foreclose the possibility of any application being made in cases involving lengthy periods between a reinstatement and a subsequent denial. For instance, if a hypothetical case involved the same initial refusal and reinstatement dates as this present case, but the second refusal took place over two years after the first (say, March 2013), this hypothetical applicant would have had to file their application before the second refusal had even occurred. Put another way, the respondent’s position would mean the two-year limitation period starting in January 2011 would expire before the hypothetical, second refusal took place in March 2013. Again, this interpretation would not uphold the consumer protection mandate.
30The respondent provided other arguments in support of its position on the limitation periods, but I do not find they are compelling. First, I am not convinced that extenuating, personal circumstances of the insured may remove an insurer’s obligation to provide a dispute resolution form under s. 54 of the Schedule. Specifically, the respondent’s reliance on Golic and the dissenting opinion in Smith does not alter my analysis. Not only am I bound to follow the majority in Smith, but I also find the respondent’s interpretation of Golic does not account for how the Court of Appeal only upheld the lower court’s decision in its result, not the entire rationale: Golic v. ING Insurance Company of Canada, 2009 ONCA 836. Specifically, the Court of Appeal found at paragraph 21 that the lower court’s “conclusion is available from the letter standing alone”, as there was no need “to go outside the letter” to consider whether the insured person was attempting “to feign ignorance”. Therefore, while the respondent highlights the number of dispute resolution forms that the applicant has received along with the mediation at FSCO, I find the obligations under s. 54 of the Schedule remain.
31In a similar vein, I do not place significant weight on the Tribunal case law cited by the respondent: 17-002867 v. Economical Mutual Insurance Company, 2018 CanLII 83510, 17-006863 v. Aviva General Insurance Company, 2018 CanLII 132574, and G.P. and Aviva Insurance Company of Canada, 2017 CanLII 77379. Though it conceded that the cases are “not directly commenting on the issue” at hand, the respondent argues that they suggest that “an initial denial can cause the limitation to begin running in spite of later developments”. Beyond the fact that I am not bound by decisions from my colleagues, I note the cases are factually distinct from this matter. For instance, in G.P., the Tribunal was addressing whether an applicant may reapply for a denied benefit as a means of restarting the limitation period. Then, in 17-002867, the limitation period at issue had expired prior to a later payment that the applicant had raised as a potential challenge to the respondent’s preliminary issue. These circumstances provide little guidance in answering the preliminary issue before me.
32I am then unconvinced that res judicata and abuse of process are helpful lenses to understand this preliminary issue. Aside from the fact that I have been provided an insufficient evidentiary basis to understand the scope and content of the Superior Court claim as it relates to the income replacement benefit, I accept the applicant’s position that questions of res judicata and abuse of process are not properly before me. The parties were provided an opportunity to define the preliminary issues, and the only preliminary issue ordered to proceed to this hearing involved s. 56.
33Finally, though I accept that the respondent may experience prejudice from having to adjust and defend a claim that is now over 14 years old, this prejudice does not remove the mandatory requirements of the Schedule. Insured persons are entitled to rely on the procedural protections in the Schedule, including the provision of dispute resolution forms. Breaches of these protections may mean that insurers will be, in turn, unable to rely on the Schedule’s corresponding remedies, including the limitation period under s. 56.
ORDER
34I find:
i. The applicant is barred from proceeding with her application for a housekeeping and home maintenance benefit.
ii. The applicant may proceed with her application for an income replacement benefit.
iii. The substantive issue hearing shall proceed as scheduled on February 10 – 13, 2025.
Released: October 21, 2024
Craig Mazerolle
Vice-Chair