Canadian Underwriter

Court weighs in on when insurers are prejudiced in AB claims

February 8, 2022   by David Gambrill

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In considering whether an insurer is prejudiced by extending the two-year limit to file an appeal of termination of accident benefits, an appeals tribunal should be considering the period of the proposed extension, not the sum total of the time that elapsed after the claim was rejected, a court has ruled.

Also, when a claimant’s lawyer asks you in an email when the effective date was for termination of non-earner benefits, the insurer can take that as intent that the claimant is about to sue.

Sushma Kumari Sharma was involved in a motor vehicle accident on Feb. 20, 2015. She made a claim for payment of Statutory Accident Benefits from her insurer, Allstate Insurance Company of Canada. Allstate sent a fax to Sharma on Mar. 10, 2016, advising that her non-earner benefits (NEB) were being terminated.

Sharma contested Allstate’s denial of the NEB by filing an application for mediation with the Financial Services Commission of Ontario (FSCO) on Mar. 14, 2016. FSCO scheduled a mediation to take place on June 29, 2016.

Only the mediation did not happen, because the Ontario law changed on Apr. 1, 2016, to revoke court and FSCO jurisdiction over accident benefits disputes. Since that time, AB disputes have been under the exclusive jurisdiction of the Licensing Appeal Tribunal in Ontario (LAT).

On Mar. 15, 2018, Ms. Sharma applied to the LAT to dispute Allstate’s denial of the NEB claim. She started her application five days after the two-year statutory deadline to sue, as set out in s. 56 of the Statutory Accident Benefits Schedule.

LAT denied her claim, citing three reasons. One had to do with the fact that her intent to sue Allstate was never made clear. Another said the claim was statute-barred because she missed the two-year deadline to sue by five days, and to extend the deadline would prejudice the insurer, since that would mean the claim hadn’t been dealt with for 735 days.

In finding that the requested five-day extension would not prejudice the insurer, the Ontario Superior Court ruled the LAT considered the wrong time period for determining whether prejudice had occurred, the Superior Court found.

“In both the preliminary issue decision and the reconsideration decision, the tribunal focused its analysis on the period starting with the date of the denial, as opposed to focusing on the period starting from the expiry of the limitation period,” the Superior Court ruled.

“While the tribunal was correct in stating that a short delay does not automatically entitle an applicant to an extension of the limitation period, an applicant is entitled to have his or her case assessed based upon the correct length of delay.  In the case at bar, Ms. Sharma was entitled to have the Tribunal undertake an analysis based upon a delay of five days, rather than 735 days.”

Regarding the claimant’s intent to sue, the court noted Sharma’s lawyer the submitted an email to Allstate dated Mar. 8, 2018, which read in part: “Could you please advise if the client received NEB, if so, how much was paid to date and when was the denial date.”

Sharma argued the email was evidence of her intention to appeal. LAT disagreed and noted that the email was sent on the day that the two-year limitation period expired.  The Tribunal further noted that this email was not provided in the preliminary issue hearing.  The Tribunal therefore considered it as making a new argument at the reconsideration stage and chose to reject it.

“However, in the agreed statement of facts, the limitation period expired on Mar. 10, 2018, the day that Allstate’s denial of NEB was delivered via facsimile to Ms. Sharma’s counsel,” the Superior Court found. “The tribunal was incorrect.”


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