January 27, 2015 by Canadian Underwriter
A Toronto-based personal injury lawyer is challenging, on constitutional grounds, an amendment to Ontario’s Insurance Act that changes the dispute resolution for auto insurance claims.
Currently, when there is a dispute over an auto insurance claim, both the insurer and claimant can apply for mediation with the Financial Services Commission of Ontario. If after mediation there are still issues in dispute, the claimant may either apply for arbitration with FSCO or launch a lawsuit.
This will change once an amendment – moving the dispute resolution system to Ministry of the Attorney General’s Licence Appeal Tribunal – takes effect. The Insurance Act will now prohibit parties from bringing such proceedings into court, “other than an appeal from a decision of the Licence Appeal Tribunal or an application for judicial review.”
That restriction violates both the section of the 1982 Charter of Rights and Freedoms guaranteeing equal protection under the law regardless of disability, and a section of the 1867 Constitution Act stipulating the appointment of judges, personal injury lawyer Joseph Campisi contended Monday in a court challenge.
The Insurance Act amendment was in Bill 15, an omnibus bill that was passed into law last November.
Section 280 (1) – which has yet to come into force – will allow insured persons and insurers to apply to the Licence Appeal Tribunal in order to resolve 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.”
The restriction on court proceedings “has a disproportionate impact on the physically and mentally disabled, due to the magnitude of entitlement of benefits and the potential magnitude of disputes that arise” in claims under Ontario’s Statutory Accident Benefits Schedule (SABS), wrote Campisi in an application filed Jan. 26 with the Ontario Superior Court of Justice in Toronto.
Campisi is asking the court to declare that Section 280 is “inconsistent” with Section 15 of the Charter of Rights and Freedoms, which guarantees Canadians “equal protection and equal benefit of the law” without discrimination based on factors including mental and physical disability. He is also asking the court to declare, among other things, that Section 280 (1) “creates a distinction when accessing the courts in contract disputes based on physical and mental disability.”
He also suggested that although the Insurance Act would let claimants appeal Licence Appeal Tribunal decisions on questions of law, “there is no allowance to appeal” a Licence Appeal Tribunal decision, “based on a question of fact.”
Essentially, Campisi is asking for a declaration that section 280 “shall be read” such that no person may bring a proceeding in any court, with respect to an auto insurance dispute, if that proceeding has been commenced before the License Appeal Tribunal. He is also asking that it be read such that an insurer needs the consent of the insured in order to apply to dispute resolution before the Licence Appeal Tribunal.
Campisi is also asking the court to declare that Section 280 (1) of Ontario’s Insurance Act violates Section 96 of the 1867 Constitution Act (formerly known as the British North America Act), which stipulates that the Governor General “shall appoint the Judges of the Superior, District, and County Courts ….”
The change to Ontario’s Insurance Act “empowers the Licence Appeal Tribunal solely with the power to adjudicate on contractual disputes of entitlement to Accident Benefits between insurers and insured individuals,” Campisi wrote in his application. But at the time of Confederation in 1867, the “Inferior Courts'” monetary jurisdiction was limited to $100 – an amount worth about $50,000 today – with respect to contractual disputes, Campisi suggested.
“Contractual disputes for amounts greater than $50,000 were, at the time of confederation, within the sole jurisdiction of the Superior courts,” he wrote. “Section 280 of the Insurance At should be read in a way as to not offend the division of powers as drafted in the Constitution Act, but to allow for private contracting of disputes.”
Members of both the New Democratic and Progressive Conservative parties criticized that section of Bill 15 during debates last fall in the legislature.
“Ontario has a hybrid insurance system that accommodates both tort-which is negligence, pain and suffering-and no-fault claims, such as accident benefits, home care and income replacement, among others,” said Sarah Campbell, NDP MPP for Kenora-Rainy River, on Oct. 23 during debate on Bill 15. “Some cases have both a tort and a no-fault component. Prohibiting the court system as an option for all disputes with a no-fault component means that a claimant with both a tort and a no-fault case will have to appear in court and in front of a tribunal separately. This change essentially removes the court option as an avenue of appeal on the no-fault side. This is confusing, and it’s expensive for the victim, who will have to pay the added costs of having a representative represent them when it comes to the two different levels.”
Rick Nicholls, PC MPP for Chatham-Kent-Essex, suggested the move to the Licence Appeal Tribunal would not reduce overall costs.
“The costs of the dispute resolution system will still be there, but they will be taken from your tax dollars instead of your insurance premiums,” Nicholls told the legislature Nov. 19 during debate on third reading. “If you have auto insurance and pay taxes, you’re just paying out of a different pocket.”
Bill 15 included a number of measures intended to reduce auto insurance claims costs. The Consumer Protection Act will require tow and storage providers to publish their rates, accept credit card payments and provide itemized invoices before receiving payment. The Highway Traffic Act has been changed such tow trucks are included in the commercial vehicle operator’s registration system.
Early last year, the Liberals introduced auto insurance bills similar to Bill 15, which died on the order paper when the budget was defeated in May.
“The current arbitrators at the Financial Services Commission of Ontario are highly skilled, experienced, full-time, permanent, salaried employees who are hired to be independent – I repeat, independent – decision-makers,” said Paul Miller, the NDP MPP for Hamilton East-Stoney Creek, in the legislature at the time.
“The Liberal proposal would see them replaced with per diem arbitrators from the Licence Appeal Tribunal who typically deal with issues such as the Board of Funeral Services Act, the Collection Agencies Act, the Payday Loans Act and liquor licence violations, among other things – not what I would call experts in the field of insurance.”