Miller v. State Farm Mutual Automobile Insurance Company

[Indexed as: Miller v. State Farm Mutual Automobile Insurance Co.]

Ontario Reports Ontario Superior Court of Justice Rady J. November 30, 2018 143 O.R. (3d) 675 | 2018 ONSC 7150

Case Summary

Insurance — Automobile insurance — Statutory accident benefits ("SABs") — Plaintiff suing for statutory accident benefits in December 2015 — Plaintiff moving to amend his statement of claim to plead entitlement to medical and rehabilitation benefits denied since claim was issued and for declaration that he suffered catastrophic impairment — Motion brought after Insurance Act was amended to remove insured's right to bring action with respect to insurer's SABs decisions — Motion granted — Proposed amendments particularizing claims already pleaded and not adding new claims that arose after Act was amended — Defendant not suffering non-compensable prejudice if amendments allowed — Insurance Act, R.S.O. 1990, c. I.8.

After certain statutory accident benefits were denied by the defendant, the plaintiff commenced an action in December 2015. The Insurance Act and Regulations were amended in 2016 to remove an insured's right to bring an action with respect to an insurer's SABs decisions. The plaintiff subsequently brought a motion to amend his statement of claim to plead entitlement to medical and rehabilitation benefits denied since the claim was issued and for a declaration that he suffered from a catastrophic impairment.

Held, the motion should be granted.

Read with a generous eye, the proposed amendments were simply a particularization of claims advanced in the original claim. The original claim stated that the full particulars of the claim were within the defendant's knowledge. Further particulars were promised before or at trial. The implication was that claims until the time of trial were contemplated. It was therefore reasonable to conclude that the pleading was sufficiently broad to include post-amendment claims. The defendant would not suffer non-compensable prejudice if the amendments were permitted.

Charway v. TD General Insurance Co., 2017 ONSC 4593 (Master); Lucas-Logan v. Certas Direct Insurance Co., 2017 ONSC 828 (S.C.J.), consd

Other cases referred to

Marks v. Ottawa (City), 2011 ONCA 248

Statutes referred to

Courts of Justice Act, R.S.O. 1990, c. C.43, s. 138 Insurance Act, R.S.O. 1990, c. I.8, s. 281 [as am.], (1) (a), (b) [Interpretation Act, R.S.O. 1990, c. I.11] Automobile Insurance, R.R.O. 1990, Reg. 664, s. 21(2)2 Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.03(1), 26, 26.01, 48.04(1) Statutory Accident Benefits Schedule, O. Reg. 34/10, ss. 15 [as am.], 19 [as am.], 45 [as am.]

MOTION for leave to amend a statement of claim.

Counsel: Mary-Anne Strong, for plaintiff. Kelly Tranquilli and Elizabeth Funduk, for defendants.

ENDORSEMENT OF RADY J.

Introduction

[1] This is the plaintiff's motion to amend his statement of claim. The motion raises interesting issues arising from amendments in 2016 to the Insurance Act, R.S.O. 1990, c. I.8.

The Background

[2] The Insurance Act and Regulations were amended effective April 1, 2016. Prior to that time, the Act and Statutory Accident Benefits Schedule, O. Reg. 34/10 ("SABS") permitted an insured to dispute an insurer's decision respecting a SAB, by applying for mediation. If the mediation was unsuccessful, the insured could either commence an action or proceed to arbitration with the Financial Services Commission of Ontario ("FSCO").

[3] Following the amendments, except in certain circumstances, an insured is no longer able to resort to either the court or arbitration. Instead, an insured must apply to the Licence Appeal Tribunal ("LAT") for a hearing.

[4] The relevant sections of the Insurance Act, as amended, are as follows:

280(1) This section applies with respect to the resolution of disputes in respect of an insured person's entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled.

(3) No person may bring a proceeding in any court with respect to a dispute described in subsection (1), other than an appeal from a decision of the Licence Appeal Tribunal or an application for judicial review.

[5] There are transitional provisions. Disputes that arose before the transition date but had not yet been determined can be continued through either action or arbitration, whichever mode was previously chosen by an insured.

[6] The relevant transitional sections of Regulation 664 are:

21(1) A proceeding described in subsection (2) that was commenced but not completed before the transition date is continued after that date.

(2) The proceedings referred to in subsection (1) are the following:

1. A mediation under section 280 of the pre-transition date Act.
2. A proceeding in a court of competent jurisdiction brought in accordance with clause 281(1)(a) of the pre-transition date Act.
3. An arbitration under section 282 of the pre-transition date Act.
4. An appeal under section 283 of the pre-transition date Act.
5. An application for a variation or revocation of an order under subsection 284 of the pre-transition date Act.

(6) For greater certainty, if mediation fails, a court proceeding or arbitration may not be commenced on or after the transition date but the insured person or the insurer may apply to the Licence Appeal Tribunal under subsection 280 (2) of the Act.

[7] Section 281 of the pre-transition Act, to which Regulation 664 refers, provided:

281(1) Subject to subsection (2),

(a) the insured person may bring a proceeding in a court of competent jurisdiction; (b) the insured person may refer the issues in dispute to an arbitrator under section 282; or (c) the insurer and the insured person may agree to submit any issue in dispute to any person for arbitration in accordance with the Arbitration Act, 1991.

(2) No person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed and, if the issues in dispute were referred for an evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties.

[8] In this case, the plaintiff sued for certain SABs after they were denied by the defendant. His statement of claim was issued on December 18, 2015. He now seeks to amend his claim to plead entitlement to medical and rehabilitation benefits denied since the claim was issued, and for a declaration that he suffers from a catastrophic impairment as defined in the SABS. He says these claims are not new post-transition claims but were raised in the original pleading. He characterizes the amendments as simply particularizing his earlier pleading.

[9] The defendant disagrees. It says the original statement of claim does not include, implicitly or explicitly, what is now being sought by the proposed amendments. The defendant submits that the amendments are clearly post-transition claims and they must be dealt with through the LAT process.

Issues

[10] The characterization of the proposed amendments is critical to the analysis and disposition of the motion. Are the proposed amendments a particularization of claims already pleaded, or do they add new claims from disputes that arose after the Act was amended? Issues of statutory interpretation also arise.

The Statement of Claim and Proposed Amendments

[11] Reproduced below are the relevant portions of the original claim and the proposed amendments, aligned side-by-side for ease of comparison:

[12] The expenses claimed at para. 1(a)(v) a.--f. were submitted and denied after the statutory amendment. The OCF-19, which is the form used to begin the catastrophic impairment ("CAT") process was submitted to the insurer before the amendment. The insurer assessments and denial respecting the CAT occurred after the amendment.

The SABs

[13] It is helpful to briefly outline the relevant SABs provisions in order to frame the analysis that follows:

• for accidents which occurred after September 20, 2012, SABS limits on medical and rehabilitation therapy vary depending on the classification of injury suffered by the insured. That limit is $50,000 for individuals who sustain an injury outside the minor injury guideline and $1 million for those who suffer a catastrophic injury;
• attendant care benefits will not be paid for more than 104 weeks after an accident unless the injured party suffers a catastrophic injury;
• housekeeping benefits are available for up to $100 per week for insureds having a catastrophic injury.

The Parties' Positions

[14] The plaintiff submits that the claims articulated at para. 1(a)(v) a.--f. of the proposed amended claim are captured by the broad language in the original claim: "medical and rehabilitation benefits . . . including but not limited to . . . ".

[15] Similarly, he suggests the catastrophic designation falls within the expansive words at paras. 1(a)(iv), (b) and 12, which specifically reference attendant care benefits, and future and ongoing benefits. The claim for future attendant care benefits is said to necessarily imply a claim for a catastrophic designation. He also makes the point that the claim for punitive damages involves an examination of the insurer's conduct throughout the entire claims process, including after the Act was amended. Thus, the catastrophic designation and other claims necessarily arise from the claim for punitive damages.

[16] The defendant submits that the amendments are properly characterized as new disputes. The transition provisions do not contemplate amendments being made to a claim to add post-transition claims or disputes. Moreover, the issue of catastrophic impairment is not raised in a pleading simply because a claim for ongoing accident benefits is advanced.

[17] Further, a determination of CAT impairment is not a SAB. The designation is simply a prerequisite to eligibility for attendant care or medical and rehabilitation benefits at an enhanced level, as well as to housekeeping benefits. So, for example, a CAT designation enables an insured to access medical and rehabilitation in excess of $50,000, which, as noted above, are the non-CAT limits.

[18] The defendant submits that the transition rules signal the legislature's clear intent to eliminate an insured's ability to challenge post-transition disputes through a lawsuit.

[19] It further urges that even if there is a gap in the transition rules, it is not for the court to fill it. Finally, it says that Rule 26 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which makes legally tenable pleading amendments mandatory, absent non-compensable prejudice, cannot trump the clear provisions of the Insurance Act.

The Law

[20] There is little case law dealing with the issue raised on the motion, only two of which I was made aware. Before discussing what was decided in those cases, the pertinent rule is set out here.

[21] Rule 26.01 provides:

26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[22] Notwithstanding the mandatory language of the rule, there is no absolute right to an amendment. Aside from the issue of prejudice, the court must be satisfied that the claim is tenable at law. See, for example, Marks v. Ottawa (City), 2011 ONCA 248.

[23] Section 138 of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that a multiplicity of proceedings is to be avoided, as far as possible.

[24] Turning then to the two cases on point, the first chronologically is Lucas-Logan v. Certas Direct Insurance Co., 2017 ONSC 828 (S.C.J.). In that case, the plaintiff was in a car accident on March 16, 2013. She sought SABs. In 2014, she sought to mediate one claim for dental treatment, but for unknown reasons a mediation never went ahead. On February 3, 2015, she commenced an action seeking payment for dental treatment, property damages and damages for conspiracy and mental distress. Certas defended, noting that the plaintiff could not litigate claims that had not been mediated.

[25] In October, the plaintiff sought to mediate 15 additional claims for SABs. The mediation failed. The mediator reported, in total, 30 failed claims. On March 30, 2016, the plaintiff sought to arbitrate the claims, but she subsequently withdrew her application. FSCO closed its file.

[26] The plaintiff then moved to amend her statement of claim to include matters dealt with at the failed mediation, other disputed claims that were never mediated and for damages.

[27] At para. 19 of the decision, the motion judge noted that "[t]o allow her to amend her original statement of claim to include the failed issues from the March 2016 mediation would effectively circumvent the effect of the amendment and the law as it existed after April 1, 2016". The motion was dismissed.

[28] In Charway v. TD General Insurance Co., 2017 ONSC 4593 (Master), a different conclusion was reached, albeit on slightly different facts.

[29] In that case, the plaintiff was involved in a car accident on June 24, 2011. She sought SABs, some of which were disputed. Two mediations followed. The first failed to resolve claims for income replacement benefits ("IRBs"), massage therapy and counselling claims.

[30] The plaintiff then issued a claim seeking

• caregiver benefits;
• IRBs;
• declaratory relief for caregiver benefits and IRBs;
• medical and rehabilitation benefits of $1 million;
• housekeeping and home maintenance benefits of $200,000;
• attendant care benefits of $1 million; and
• interest.

[31] She also alleged that she had suffered a catastrophic impairment, thereby permitting her access to an enhanced level of benefits.

[32] The defendant delivered a statement of defence. A second mediation followed on November 24, 2015. Four claims remained in dispute at its conclusion, the most significant being the determination of catastrophic impairment.

[33] Following a change in counsel on August 17, 2016, the plaintiff brought a motion to amend her claim seeking

• IRBs from June 24, 2011 to date;
• payment or reimbursement of costs of housekeeping and home maintenance expenses in the amount of $100 per week less amounts paid for the period of June 24, 2011 to date, and ongoing;
• a determination of catastrophic impairment pursuant to s. 45 of the Statutory Accident Benefits Schedule;
• a declaration that the plaintiff was entitled to income replacement benefits from the date of trial and ongoing;
• medical benefits pursuant to s. 2(2) of s. 15 of the SABS;
• attendant care benefits pursuant to s. 19 of the SABS;
• payment or reimbursement for costs of examinations;
• interest on all overdue payments; and
• punitive, aggravated and exemplary damages of $500,000.

[34] The defendant opposed the amendments sought. The master summarized the parties' respective positions, which mirror the submissions on this motion [at paras. 15 and 16]:

In the present case, the Defendant argues that the proposed amendments are untenable for two reasons: First, the Superior Court no longer has jurisdiction over the accident benefits sought because the Fresh Claim is brought after April 1, 2016 when all SABs matters are to be determined by LAT. In particular the Defendant takes issue with the claim for a declaration of catastrophic impairment and punitive damages. To this the Plaintiff states that the relief sought in the Fresh Claim is not new but rather a particularization and re-drafting of what was already there.

Second, the Defendant submits that the amounts claimed including the aggravated and punitive damages were not mediated prior to the original Claim being issued and therefore could not properly be the subject of the original Claim. The Plaintiff regards this as a defect that should be cured due to the deleterious effect of bifurcation.

[35] The master permitted the amendments. The essence of her decision is captured at para. 24:

Taking a fair and liberal approach sometimes involves applying a measure of common sense and having sensitivity to the overriding goal of achieving the just and fair resolution of disputes. One goal of the legislation is self-evident -- it is to remove the adjudication of SABS from the Superior Court to a specialized tribunal who like many tribunals, will develop the required expertise to deliver just and expeditious resolutions for these litigants.

It cannot be that the purpose of the amendments is to bifurcate matters that were caught in the transition period such that for the same accident and the same benefits, the Plaintiff must go to one Court to resolve her entitlement to the benefits, and to go another to determine if there has been catastrophic impairment and insurer conduct that warrants punitive damages (this is assuming that LAT can even award such damages which I do not need to determine for the purposes of this motion). The entitlement to certain benefits will depend on if there is catastrophic impairment, and the appropriateness of the Defendant's refusal to pay will impact the punitive damages analysis. In my view, the Plaintiff's claim for SABs ought to be adjudicated by the same judicial body to avoid duplication and wasted judicial resources. In this case, that judicial body is the Superior Court of Justice because the original Claim was commenced there. At the very least, it is not in interests of justice in the facts of this particular case to allow for bifurcation.

[36] She also noted [at para. 22] that in the Lucas-Logan decision, supra, there was no "reformulation and redrafting of existing claims", which is an important distinguishing feature between the two decisions.

[37] The proposed amendments were permitted.

Analysis

[38] I have come to the conclusion that the motion must be permitted. I do not agree with the defendant that the legislature's failure to deal with the amendment of an existing claim was deliberate. It was more likely an oversight, given that the result is the bifurcation of issues and the requirement for two parallel proceedings through two different forums. This results in a multiplicity of proceedings, contrary to the important policy expressed in the Courts of Justice Act.

[39] Nevertheless, it is not necessary (or, admittedly, open) for the court to fill that gap.

[40] I agree with both decisions referenced above. In the Lucas-Logan, the proposed amendments very clearly advanced claims that arose after the amendment and they were in no way implicit in the original pleading.

[41] In contrast, in Charway, the language used in the original claim clearly contemplated the claims that were simply being more fully particularized in the proposed amendment.

[42] Here, read with a generous eye, I conclude that the proposed amendments are simply a particularization of claims advanced in the original claim. They are not new disputes. I recognize that the specifically quantified medical and rehabilitation benefits claimed in the original pleading pre-date the statutory amendment. The amendments sought all arose after that time.

[43] However, at para. 12, the original pleading advances a claim for future and ongoing benefits, which is sufficiently broadly worded to include post-amendment claims. And para. 1 makes it clear that the claim includes but is not limited to those articulated.

[44] More significant, however, is that the OCF-19 was completed and submitted before the amendment to the Act. Consequently, the insurer had notice of the claim. Unfortunately, the assessments and denial did not occur until post-amendment, something that was within the insurer's control. It was no longer open to the insured to dispute the decision through mediation because that avenue was foreclosed by the statutory amendment.

[45] Paragraph 11 of the original claim makes the point that the full particulars of the claims are within the insurer's knowledge. Further particulars are promised before or at trial. The implication is that claims until the time of trial are contemplated. Therefore, it is reasonable to conclude that this pleading is sufficiently broad to include post-amendment claims.

[46] Finally, I am satisfied that the language of the statutory amendment itself is properly interpreted to permit the amendments sought.

[47] First, it is important to bear in mind the [Interpretation Act, R.S.O. 1990, c. I.11] provides:

10. Every Act shall be deemed to be remedial, whether its immediate purport is to direct the doing of any thing that the Legislature deems to be for the public good or to prevent or punish the doing of any thing that it deems to be contrary to the public good, and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.

[48] Of course, the purpose of the Insurance Act and SABS is to provide compensation to qualified individuals who were injured in motor vehicle accidents.

[49] Second, as noted, s. 21(2)2 permits a proceeding to be continued post-transition if brought in accordance with s. 281(1)(a) of the pre-transition Act. A proceeding includes an action (rule 1.03(1)).

[50] Section 281(1)(a) is subject to subsection (b), which requires a failed mediation before an action may be brought. However, as already noted, that step is no longer available because the amendments have eliminated the process and presumably, the institutional supports that would accompany it.

[51] Other concerns arise if the defendant's submission were correct. There would be a duplication of evidence if two parallel proceedings, one in court and the other before the LAT. Because a claim for punitive damages is advanced, the insurer's handling of the file throughout its adjustment process until trial is relevant. Finally, there is the prospect of inconsistent findings if proceedings continue in two separate forums.

[52] Turning then to the issue of non-compensable prejudice, none exists in the circumstances here. As noted, the insurer had the OCF-19 in February 2016. Assessments proceeded in the late spring and early summer of 2016. Examinations for discovery were conducted in November 2016, and I am advised that questions relevant to catastrophic impairment were asked. As of the date of the motion's hearing, the matter had not yet been set down so further discoveries are available without running afoul of rule 48.04(1). The defendant does not allege prejudice.

[53] For these reasons, the motion is granted, and the amendments are permitted. If the parties cannot agree, I will receive brief written submissions on costs by January 16, 2019, according to a timetable that I leave to the parties to arrange.

[54] I wish to thank counsel for their well-prepared materials and helpful submissions.

Motion granted.

End of Document