With the change from FSCO to the LAT, some questions have arisen about when it is too late to file for a mediation at FSCO, what the effect of an outstanding mediation is on a LAT proceeding, how limitation period issues are dealt with as well as some other transitional issues.
To put the current situation in context, under the pre-April 1, 2016 “system”, a claimant had two years from the date of the insurer’s refusal to pay the benefit claimed to mediate, arbitrate or litigate. And so long as a claimant mediated within the two years, then litigation or arbitration could be commenced within 90 days of the mediator’s report date (effectively pushing past the two year mark).
However, those sections of the Insurance Act were repealed to make way for the new “system” where the only available option is to apply to the Licence Appeal Tribunal to resolve a benefit dispute.
The LAT AABS website makes it clear that in the new regime, the two year mark is king [their emphasis]:
These steps are meant to help you settle your dispute quickly, but the law states that you must file an application with AABS within two years from the date that your insurance company denies your policy benefits. The two-year time limit is important. If you do not apply to AABS within two years, it is very possible that your application will be refused.
This is based upon section 56 of the Statutory Accident Benefits Schedule which states:
56.An application under subsection 280 (2) of the Act in respect of a benefit shall be commenced within two years after the insurer’s refusal to pay the amount claimed.
I will use an example to help work through the transitional provisions. Let’s say Carla Claimant was denied an IRB on February 15th, 2014. She files for mediation on February 14th, 2016, so within the two years of an insurer denial, and before FSCO’s cut-off of April 1, 2016. So, what happens to Carla’s claim on April 1, 2016? Does she get the protection of the 90 days anymore? Is the mediation deemed to be failed? Should she file for LAT on April 2nd ? Does she lose her right to apply for Arbitration to FSCO? Can she still go the route of a Civil proceeding? Is she out of time?
The answers to most of these questions can be found in Ontario Regulation 664, in sections 19-25, which contain the transition provisions. Section 21 indicates that a mediation that was “commenced” but not completed before the transition date (April 1, 2016 – as proclaimed by the Lieutenant Governor of Ontario), continues on after that day. The section goes on to say that in respect of such a proceeding, the Insurance Act as it existed before the transition date continues to apply. Therefore, Carla Claimant can proceed with her mediation, and still has 90 days after she receives the mediator’s report to proceed to the next dispute resolution step.
However, subsection 21(6) makes it clear that Carla Claimant can only proceed to the LAT, even though her mediation was commenced prior to April 1, 2016:
(6) For greater certainty, if mediation fails, a court proceeding or arbitration may not be commenced on or after the transition date but the insured person or the insurer may apply to the Licence Appeal Tribunal under subsection 280 (2) of the Act.
Therefore, as long as a claimant commenced a mediation at FSCO prior to April 1, 2016, they may rely upon O. Reg 664 to extend their limitation period to the 90 days following a mediator’s report. The only restriction on the claimant though, is that they can only proceed to the LAT if/when the mediation fails.
The transitional provisions are just one aspect of the many new changes to the Accident Benefits world.