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Insurance - Auto - Tort. Tracy Adams v. Aviva Insurance Company
In Tracy Adams v. Aviva Insurance Company (Div Court, 2023) the Divisional Court considered what are (IMHO awkward structured) claim 'notice' time extension SABS provisions, here provisions that can extend insurance claim timelines [primarily under SABS s.32(1) 'Notice to insurer and application for benefits', but also s.32(10), 34 and 55]. The case doesn't reflect definitive legal points, but it is helpful to see consider how these time provisions may operate together:[1] This is an appeal by the Appellant, Tracy Adams, of an underlying decision and of a reconsideration decision of the Licence Appeal Tribunal (the “Tribunal”), which held that Adams’ application for statutory accident benefits (“SABS”) was barred because she failed to provide a “reasonable explanation” for her failure to notify the Respondent, Aviva Insurance Company of Canada (“Aviva”) of the circumstances giving rise to her claim for benefits within the prescribed timelines set out in the Statutory Accident Benefits Schedule, O Reg. 34/10 (the “Schedule”).
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Preliminary Decision
[4] In a decision of the Tribunal, dated January 27, 2023 (the “Preliminary Decision”), the Tribunal dismissed the Appellant’s application for insurance benefits.
[5] The Tribunal stated that it was not disputed that the Appellant had submitted her application after the time period described in s. 32(1) of the Schedule. It further noted that s. 34 of the Schedule states that “A person’s failure to comply with a time limit set out in this Part does not disentitle the person to a benefit if the person has a reasonable explanation.” The Adjudicator concluded that the Appellant did not have a “reasonable explanation” for the delay and that the Appellant was barred from applying to the Tribunal because of her failure to adhere to the SABS timelines.
[6] In light of this finding the Tribunal stated that it was unnecessary to consider whether the Appellant failed to submit her application within the time limit prescribed in s.32(5) of the Schedule.
[7] Finally, the Tribunal concluded that the Appellant was precluded pursuant to s.55(1) of the Schedule from applying to the Tribunal due to her breach of the timelines and there was no need for the Tribunal to consider whether it should use its discretion to invoke s. 55(2) of the Schedule to permit the Appellant to continue her application to the Tribunal.
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The Law
[13] A person involved in an automobile accident may seek accident benefits from their insurer. Section 32(1) of the Schedule provides:A person who intends to apply for one or more benefits described in the Regulation shall notify the insurer of his or her intention no later than the 7th day after the circumstances arose that give rise to the entitlement to the benefit, or as soon as practicable after that date. [14] Section 32(10) of the Schedule states:Despite any shorter time limit in this Regulation, if an applicant fails without a reasonable explanation to notify an insurer under subsection (1) within the time required under that subsection, the insurer may delay determining if the applicant is entitled to a benefit and may delay paying the benefit until the later of,
(a) 45 days after the day the insurer receives the completed and signed application; or
(b) 10 business days after the day the applicant complies with any request made by the insurer under subsection 33(1) or (2). [15] Section 34 of the Schedule provides that “[a] person’s failure to comply with a time limit set out in this Part does not disentitle the person to a benefit if the person has a reasonable explanation.”
[16] Finally, section 55 of the Schedule provides:(1) Subject to subsection (2), an insured person shall not apply to the Licence Appeal Tribunal under subsection 280(2) of the Act if any of the following circumstances exist:1. The insured person has not notified the insurer of the circumstances giving rise to a claim for a benefit or has not submitted an application for the benefit within the times prescribed by this Regulation.
2. The insured has provided the insured person with notice in accordance with this Regulation that it requires an examination under section 44, but the insured person has not complied with that section.
3. The issue in dispute relates to the insurer's denial of liability to pay an amount under an invoice on the grounds that,
i. the insurer requested information from a provider under subsection 46.2(1), and
ii. the insurer is unable, acting recently, to determine its liability for the amount payable under the invoice because the provider has not complied with the request in whole or in part. (2) The Licence Appeal Tribunal may permit an insured person to apply despite paragraph 2 or 3 of subsection (1). . Tagoe v. The Personal Insurance Company
In Tagoe v. The Personal Insurance Company (Div Court, 2023) the Divisional Court considers (and allows on other grounds) an Insurance Act (IA) appeal [under s.280] from a LAT decision to deny SABS income replacement benefits on limitation grounds.
In these quotes the court considered the running of the IA s.56 application limitation period on the issue of the date of 'clear and unequivocal' notice of decision:[1] ... The adjudicator dismissed the application on the ground that it had been brought after the two-year limitation period in s. 56 of the SABS.
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[7] In January 2019, the appellant applied for income replacement benefits.
[8] In June 2020, the insurer informed the appellant that his claim was barred by the expiry of the limitation period on May 20, 2018, relying on the Explanation of Benefits dated May 20, 2016.
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Denial of benefits
[12] For the limitation period to run, the denial of benefits must be clear and unequivocal from the point of view of an unsophisticated person: Smith v. Cooperators General Insurance Company, 2002 SCC 30. In dismissing the application, the adjudicator said:[32] On the evidence, I find that the respondent’s EOB [Explanation of Benefits] letter to [the appellant] satisfied the basic requirements of Smith because it stated the reasons for the denial of the IRBs; it clearly indicates the [appellant] is not eligible for IRBs; provides particulars as to why he is not eligible; and it provides, in straightforward language, the dispute process available to [the appellant] should he disagree with the denial. The respondent provided a clear indication of a denial. [13] The adjudicator went on expressly to acknowledge that the reference to income replacement benefits in the discussion of non-earner benefits may have presented as confusing but noted that it must be read within the context of the entire form. The adjudicator concluded that she was persuaded that the respondent’s clear language of “you do not qualify for an IRB benefit”, which appeared under the appropriate IRB section, would extinguish any such uncertainty. The adjudicator did not err by looking through the lens of counsel instead of an unsophisticated person. The adjudicator added that the appellant had counsel who would have made an effort to obtain clarification if needed. The reference to counsel was an added comment, and not a central part of the analysis.
[14] This finding was open to the adjudicator on the evidence. She made no error of law. . Varriano v. Allstate Insurance Company of Canada
In Varriano v. Allstate Insurance Company of Canada (Ont CA, 2023) the Court of Appeal considered the adequacy of a SABS auto insurance discontinuation notice letter, and in the process engaged in statutory interpretation of the notice provision:[3] The Divisional Court overturned the decision of the LAT adjudicator, finding that Mr. Varriano’s application was not time-barred because Allstate’s Benefits Letter did not meet the legislative requirements under s. 37(4) of the SABS. The Divisional Court held that s. 37(4) required Allstate to provide medical reasons in the Benefits Letter for the stoppage of benefits.
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[11] If the insurer determines that it will discontinue paying a benefit because an insured is ineligible on any one or more grounds, the insurer, pursuant to s. 37(4) is required to provide a notice to the insured containing the reasons for their determination:37(4) If the insurer determines that an insured person is not entitled or is no longer entitled to receive a specified benefit on any one or more grounds set out in subsection (2), the insurer shall advise the insured person of its determination and the medical and any other reasons for its determination. [Emphasis added.] ....
[17] The Divisional Court held that Adjudicator Boyce erred in his interpretation of s. 37(4) of the SABS. That court concluded that a plain reading of s. 37(4) supported the interpretation of the word “and” in the phrase “medical and any other reasons” as bearing a conjunctive meaning. ...
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A. The Divisional Court’s Interpretation Does Not Accord with the Modern Principle of Statutory Interpretation
[23] I begin with the observation that the modern approach to statutory interpretation requires that statutes “are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at para. 26. A statute must not be interpreted in a manner that would result in absurd consequences. An interpretation will be absurd where it leads to “ridiculous or frivolous consequences, if it is extremely unreasonable or inequitable, if it is illogical or incoherent, or if it is incompatible with other provisions or with the object of the legislative enactment”: Rizzo, at para. 27. The modern principle of interpretation applies with equal force to regulations: Beaudin v. Travelers Insurance Company of Canada, 2022 ONCA 806, at para. 36.
[24] In my view, in giving a conjunctive meaning to the word “and” in the phrase “medical and any other reason” in s. 37(4), the Divisional Court failed to properly apply the modern principle of statutory interpretation. That interpretation failed to acknowledge that the grammatical and ordinary usage of the word “and” can include both the joint sense and the several sense. When the phrase “medical and any other reason” in s. 37(4) is read contextually, it becomes clear that the ordinary meaning of the word “and” was intended in its several sense. Nor does the Divisional Court’s interpretation accord with the purpose of the notice provision.
(1) The grammatical and contextual meaning of “medical and any other reason”
[25] Presuming that the plain meaning of the word “and” is conjunctive reflects an incomplete appreciation of the grammatical use of the word in ordinary language. As Ruth Sullivan points out in The Construction of Statutes, 7th ed. (Markham: LexisNexis Canada Inc., 2022) at § 4.05, “and” is sometimes used in the joint and several sense (A and B jointly or severally) and in other circumstances is used only in the joint sense (A and B jointly, but not severally).
[26] Considering the use of “and” in a statutory provision contextually assists in determining when it should be interpreted in the joint sense as opposed to the joint and several sense: R. v. Yadegari, 2011 ONCA 287, 286 C.C.C. (3d) 320, at para. 62. In my view, the requirement to provide reasons in s. 37(4) is inextricably tied to the grounds for discontinuance of benefits stipulated in s. 37(2). Contextually, when the two provisions are read properly together, it is clear that the word “and” in the phrase “medical and any other reason” was intended in the joint and several sense.
[27] These two sections read together simply require the insurer to determine the basis for disqualifying the insured person under s. 37(2) from receiving specified benefits and to communicate the basis for that determination to the insured. Some of the grounds under s. 37(2) are medical and some are not. For example, ss. 37(2)(a), (d), (f) and (g) provide for non-medical grounds to terminate benefits.
[28] Importantly, s. 37(4) states that the insurer may rely on “any one or more grounds set out in [s. 37(2)]” (emphasis added) in terminating benefits. By explicitly including those words, s. 37(4) recognizes that an insurer may rely on a single non-medical reason for termination of benefits, even though the insured might be otherwise medically entitled to the benefit. In such case, a medical ground is not a “reason” for the insurer’s determination under s. 37(4). Yet, the Divisional Court’s interpretation requires the insurer to state its position on the person’s medical eligibility even if that is not the basis for its determination. Put differently, interpreting “and” in the joint sense conflicts with the joint and several nature of the grounds for termination.
[29] Such an interpretation is not a harmonious reading of the two sections particularly in light of s. 37(2)(g) which specifically contemplates that the disentitlement need not relate to an impairment. This subsection permits termination if the insurer determines that the insured person is not entitled to a specified benefit “for a reason unrelated to whether [the insured] has an impairment that entitles the insured person to receive the benefit” (emphasis added). The Divisional Court’s interpretation would require the insurer to state its position on the insured’s impairment even though it has no bearing on the insurer’s determination.
[30] In support of its interpretation that s. 37(4) requires an insurer to provide its position on an insured’s medical eligibility, the Divisional Court relies upon the fact that the SABS was amended in 2010 to specifically add the language “medical and any other reasons”. However, as the Divisional Court recognizes, prior to that, the SABS did not require insurers to provide any reasons for their determination. In my view, the addition of language of the 2010 amendment does not indicate that the legislature intended to mandate the provision of medical reasons in all cases, as the Divisional Court suggests. It merely codified the requirement to provide a sufficient reason or reasons for the insurer’s decision, by directly tying the reasons to the actual grounds for termination of benefits in s. 37(2).
[31] Accordingly, s. 37(4) requires provision of the insurer’s actual reasons for determination. If the insurer relies on a medical and a non-medical reason to deny benefits, the insurer must advise the insured person of both. However, if the insurer is relying on a non-medical ground under s. 37(2), the provision requires only that the insurer provide notice of the cancellation of the benefits and to provide the insured with the non-medical reason for that determination.
(2) The purpose of the notice provision
[32] This interpretation of the 2010 amendment accords with the purpose underlying the notice provision. In Smith, Gonthier J. concluded that insurance notice provisions serve a consumer protection purpose by requiring insurers to completely and clearly provide insured persons with the information they need in straightforward and understandable language to enable them to challenge a refusal to pay or a reduction of payments: at paras. 11-14. In Turner v. State Farm Mutual Automobile Insurance Co., (2005) 2005 CanLII 2551 (ON CA), 195 O.A.C. 61 (Ont. C.A.), this court also concluded that: “[t]he purpose of the requirement to give reasons is to permit the insured to decide whether or not to challenge the cancellation.” at para. 8.
[33] Accordingly, Smith and Turner support the argument that s. 37(4) should be interpreted with this policy goal in mind. That policy goal requires reasons to be sufficiently explanatory to permit the insured to decide whether to challenge the denial of benefits.
[34] Although these cases were decided before the Legislature’s 2010 amendments to the SABS, those amendments did not alter that underlying purpose. Rather, those amendments enhance and reinforce that purpose by codifying the requirement to provide a sufficient reason or reasons for the insurer’s decision. However, the amendments also acknowledge that the sufficiency of the content of those reasons is determined by the grounds for termination of benefits. Where the insurer relies solely on a single non-medical ground for denying benefits, requiring the addition of a line stating, “there are no medical reasons for this denial”, would not further assist an insured in deciding whether to challenge the denial of benefits.
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