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Notice - Notice and Commencement of Limitation Period

. Varriano v. Allstate

In Varriano v. Allstate (Div Ct, 2021) the Divisional Court considered when a SABS insurer's notice was effective to trigger a limitation period:
[26] Allstate argues that, even if the reasons in the Benefits Letter were deficient, the denial itself was unequivocal such that the limitation period began to run. In Sietzema v. Economical Mutual Insurance Company, 2014 ONCA 111, 118 O.R. (3d) 713, at paras. 12-13, the Court of Appeal held that it was sufficient for the insurer to give clear and unequivocal notice that it was cancelling benefits to trigger the limitation period, even if their reasons for stopping the benefit were incorrect. In Bonaccorso v. Optimum Insurance Company Inc, 2016 ONCA 34, 129 O.R. (3d) 544, at para. 19, the Court of Appeal clarified that an unequivocal denial of benefits was sufficient to trigger the limitation period, even if the insured person’s eligibility for future benefits under s. 11 was left unclear.

[27] In my view, Seitzema and Bonaccorso are of limited assistance because the Court was considering the proper interpretation of the pre-2010 SABS, which did not explicitly require “medical and any other reasons” as part of the insurer’s decision to deny IRBs. The Court of Appeal’s narrow focus on the clarity of the insurer’s ultimate decision to deny benefits cannot be justified in the face of the legislature’s 2010 amendments that clearly and explicitly require insurers to provide adequate reasons for their determination, including medical reasons.

[28] Allstate’s Benefits Letter was not a valid refusal and did not trigger the running of the limitation period.
. Higashi v. Western Assurance Company

In Higashi v. Western Assurance Company (Div Ct, 2020) the Divisional Court considered when a time limit under the SABS auto insurance regime started to run. The issue was whether a default in the duty to deliver "independent assessment reports" influenced the starting of running of time or not. The court held that, after an analysis of the statutory context of the relevant provisions, time started from notice of the decision, despite the default:
[14] I agree with the Tribunal that the breach of the obligation in s.37(5) to give a copy of all the independent assessment reports to the appellant’s practitioner was not fatal to the running of the limitation period.

[15] The starting point on this issue is the decision of the Supreme Court in Smith v. Co-operators General Insurance Co., 2002 SCC 30, which dealt with the adequacy of notice of a denial of benefits. In that case the insurer did not fulfil its duty under s.71 of the Schedule as it then read to inform the insured of the process for challenging the refusal of benefits. The Supreme Court held that the refusal did not operate to start the limitation period because it did not convey the information that the legislature intended should be conveyed to the insured.

[16] Here, the Tribunal found that the notice provided by the respondent to the appellant was proper and in accordance with the Schedule and the Smith decision.

[17] The appellant cites Klimitz v. Allstate Insurance Company of Canada, 2014 ONSC 7108, aff’d 2015 ONCA 698, leave to appeal refused 2016 CanLII 21913 (SCC), and submits that omission to comply with the requirements of s.37(5) of the Schedule prevents the limitation period from running. I do not agree that Klimitz stands for that proposition.

[18] In Klimitz, the insurer denied benefits and gave reasons that referred to the reports of two independent assessors. It gave the insured a copy of one report but not the other. Two years later it gave the insured a copy of the second assessor’s report. Within two days the insured applied to an arbitrator to decide the dispute.

[19] At the time s.37(1) of the Schedule provided, “the insurer shall give the person notice of its determination, with reasons”. Subsection 37(5) required the insurer to give a copy of independent assessments to the insured and the practitioner who had issued the certificate of disability within 5 days of receipt. The arbitrator held that the omission to provide copies of the second assessor’s reports did not invalidate the refusal for the purposes of the limitation period.

[20] The delegate of the Director of the Financial Services Commission of Ontario reversed the arbitrator’s decision on appeal. The delegate held that the limitation period did not begin to run until the insured received the second assessor’s reports. He held that s.37(5) was not linked to the limitation period, but the obligation to give reasons for the refusal in s.37(1) required the insured to have a copy of the assessments on which the insurer relied so that she could decide whether to apply for relief. On judicial review, the Divisional Court held that the delegate’s decision was reasonable and upheld it. On appeal from the Divisional Court, the Court of Appeal agreed. The court said, “The Director’s Delegate was entitled to deference in the interpretation of his home statute.”

[21] The decision had nothing to do with the obligation to give a copy of the assessment to the insured person’s practitioner. It had to do with the requirement to give a copy to the insured, and the effect of non-compliance on the adequacy of the reasons for the refusal. It also had to do with the reasonableness of the delegate’s decision, not its correctness.

[22] In Beric v. The Guarantee Company of North America, 2020 ONLAT 18-009494/AABS the adjudicator held that failure to give a copy of the independent assessment reports to the doctor who completed the OCF-3 invalidated the refusal for the purposes of the limitation period. The adjudicator said,
The applicant had a right for her physician to be fully informed and provided with critical information that formed the very basis of the denial. Without this critical step, M.B.'s ability to decide whether or not to challenge the cancellation was seriously compromised and placed her at a clear disadvantage.
[23] I disagree. As long as the insured has a copy of the reports, she can show them to her doctor if she wants his views on entitlement to benefits, which is essentially a legal question. I do not think that the legislature had in mind that the doctor would be involved in the decision to challenge a refusal of benefits.

[24] It is s.37(4) of the Schedule that deals with the sufficiency of the reasons for refusing benefits:
(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. O. Reg. 34/10, s. 37 (4).
[25] The purpose of the requirement to give reasons is to permit the insured to decide whether or not to challenge the cancellation: Turner v. State Farm Mutual Automobile Insurance Co. (2005), 2005 CanLII 2551 (ON CA), 195 O.A.C. 61, paragraph 8. The reasons need not be legally correct: Sietzema v. Economical Mutual Insurance Company, 2014 ONCA 111.

[26] Subsection 37(5) on the other hand is not linked to refusal of benefits in particular. It obliges the insurer to give a copy of the independent assessment to the insured and to the practitioner who completed the disability certificate whether benefits are to be continued or not. The independent assessment would be useful to the practitioner with respect to the care of the insured whether benefits are continued or not.

[27] I think that the ordinary meaning of the words of the section in the context of the Act and considering its purposes leads to the conclusion at which the adjudicator arrived. The failure to give copies of some of the reports to the appellant’s doctor did not invalidate the refusal of benefits for the purpose of the limitation period.

[28] On July 2, 2015 the appellant had what she needed to know that the respondent had made an unequivocal determination to discontinue her benefits and the medical reasons therefor. She had copies of the independent assessments upon which the determination was based. She was given enough information to know whether or not to challenge the cancellation of benefits. There is no reason why the limitation period should not have started to run.


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