Catastrophic Application for Accident Benefits Limitation Periods

Do v. Guarantee Company of North America - Released November 6, 2012

This is an interesting determination on the limitation period following an insurer's refusal of a determination of catastrophic impairment.

As you are aware, upon being declared catastrophic, an insured car driver is entitled to up to $1,000,000.00 in Medical and Rehabilitation benefits as well as $1,000,000.00 of Attendant Care benefits if used.

There are other significant benefits as well relating to the appointment of a Case Manager and higher benefits generally.

Case example

In this case, Mr. Do was injured in a car accident on October 9, 2005 and applied for a determination that he sustained a catastrophic impairment under the Statutory Accident Benefits.

The insurer sought an Order on Arbitration before FSCO that the limitation period had expired because Mr. Do's applications for Mediation and Arbitration were out of time and more particularly, the limitation period set out in Section 281.1 of The Insurance Act (two years) had expired thereby barring the action.

The Director Delegate, on Appeal from Arbitrator Richards, reviewed the following facts:

1. The Application for a determination that there was a catastrophic level of impairment was made in 2006.
2. The insurer sent reports to the insured in May 2007 which suggested that Guarantee disagreed that Mr. Do sustained a catastrophic impairment however, no formal refusal of benefit was made i.e. the Independent Medical opinions were forwarded to him but not a formal Declaration of Refusal.
3. In 2008, following a paper review of Mr. Do's rebuttal report, the insurer forwarded on an independent paper review of that rebuttal report which suggested that Guarantee's doctor did not agree with the insured's doctors.  

Again, no formal refusal of benefit was forwarded by The Guarantee, only the opinion.

Section 281.1 provides as follows: "A Mediation proceeding or evaluation under Section 281 or 281.1 or a Court proceeding or Arbitration under Section 281 shall be commenced within two years after the insurer's refusal to pay the benefit claimed."

Arbitrator Suesan Alves found at page 5, as follows: "In my view, in the absence of the refusal of a benefit, the limitation period under The Insurance Act is not triggered. For these reasons, I conclude that neither the 2007 nor the 2008 Explanation of Benefit form and the accompanying documents which were filed, triggered a limitation period."

Following the Wiggen v. Simcoe & Erie decision, the Arbitrator felt that a limitation defence must be strictly construed since it denies the Applicant.

Arbitrator Alves found that in order to trigger the running of the limitation period, refusals of benefits have to be clear and unequivocal. In so finding, Arbitrator Alves declared that the OCF-9 "The Explanation of Benefits Form", even though delivered with the insurer's independent medicals, was not sufficient to be an unequivocal and clear denial of benefits.

She said as follows: "The form states that it is used to address refusals of benefits and reduction of benefits. It states that there is a two year limitation period from the date of the insurer's refusal to pay, or reduction of benefits, however, it states nothing about a limitation period from a refusal of determination of catastrophic impairment. It does not specifically tell Mr. Do that he has two years from the date Guarantee refused to agree that he was catastrophically impaired, to commence Mediation or Arbitration."

"I find the information provided was insufficient to provide Mr. Do with meaningful information regarding the dispute resolution process in relation to the determination that he did not sustain a catastrophic impairment. For that reason, neither refusal triggered the limitation period. If this analysis is incorrect, I now determine whether refusal was unequivocal."

Arbitrator Alves found that the May 2007 refusal was equivocal because the forms specifically gave Mr. Do the right to obtain a rebuttal assessment.

This made it implicit that the insurer would consider the rebuttal assessment and defer its final determination if Mr. Do exercised that right. That right of rebuttal is a substantive right. It was only after a "final determination" that the limitation period would run.

Having forwarded this review of the rebuttal report and the OCF-9 Explanation of Benefits Form, the insurers' physician's response to the rebuttal report was that the doctor's opinion "remains unchanged". However, this was not a refusal normally provided by the insurer, but a comment by the IME physician.

The Arbitrator found that it was necessary for Guarantee to provide a "final refusal" of the status communicated. As Mr. Do's Mediation Application was filed with FSCO approximately one year and ten months following Guarantee's April 2008 refusal, the application was timely.

The insurer's application was dismissed. The matter is now before the Ontario Courts by way of Judicial Review.