The Court of Appeal for Ontario has upheld an insurer’s summary judgement motion, dismissing a claimant’s action against her accident benefits insurer because she missed the two-year limitation period.

Tanya Sietzema was involved in a car accident November 11, 2005. She filed an application for benefits on November 29, 2005 with Economical Insurance. She was employed at the time of the accident. Her application included a Disability Certificate, signed by her physician. That form described her injuries and included the physician’s response to questions about the appellant’s eligibility for various benefits. Under the category Non-Earner Benefits, the physician indicated that the appellant did not meet the “disability test” for Non-Earner Benefits.

Economical replied to the appellant’s application on December 19, 2005. It sent her a an Explanation of Benefits Payable by Insurance Company (OCF-9). This stated she was eligible for Income Replacement Benefits of up to $400 per week. The form indicated that she was not eligible for Non-Earner Benefits because she was employed at the time of the accident.

Although the appellant was not eligible for Non-Earner Benefits, the reason given by the insurer was wrong. She was not eligible for Non-Earner Benefits because she qualified for Income Replacement Benefits and the SABS did not permit her to receive both benefits. Although it was generally assumed in the insurance industry in 2005 that employment at the time of the accident precluded receipt of Non-Earner Benefits, the Court of Appeal’s decision in Galdamez v. Allstate Insurance clarified that, rare though the situation might be, a person who was able to continue to work might nevertheless qualify for Non-Earner Benefits.

The appellant returned to work on February 13, 2006. Economical terminated her Income Replacement Benefits on March 2, 2006. The appellant had retained counsel in January, 2006, shortly after receiving the OCF-9. However, she did not re-assert a claim for Non-Earner Benefits until February 3, 2010, when her lawyer wrote to Economical stating that the appellant had not been informed on the termination of her Income Replacement Benefits that she had a right to claim Non-Earner Benefits. The lawyer’s letter took the position that there had been no “refusal” of Non-Earner Benefits and the limitation period had not started to run. There followed an unsuccessful mediation of the appellant’s claim. The statement of claim in this action was issued on April 14, 2011.

The appellant’s submission before the motion judge and the Court of Appeal was that the insurer misled her concerning her entitlement to Non-Earner Benefits. She thought she could never receive the benefits because she had been working at the time of the accident, so she did not apply for them when her Income Replacement Benefits were terminated. At the time the insurer terminated her Income Replacement Benefits, she should have been told of her right to apply for Non-Earner Benefits.

The motion judge held that although the appellant may have been personally misled, she had hired a lawyer in early 2006 to advise her of her rights as a result of the accident and this would have included her right to accident benefits. Her lawyer would have known that limitation periods were running. The OCF-9 contained a clear refusal to pay Non-Earner Benefits, and this triggered the limitation period in s. 51(1) of the SABS, which required mediation to be commenced “within two years after the insurer’s refusal to pay the amount claimed.”

The Court of Appeal agreed with the motion judge and dismissed the appeal. The Court held that the information package sent to the appellant complied with the SABS and stated the test for Non-Earner Benefits as it was then understood. The Court held:

There is nothing in the Insurance Act or the comprehensive SABS regime to require an insurer, on termination of benefits, to give the claimant a further notice advising that he or she may have a right to renew a claim for a benefit that had previously been denied.

The interesting (or perhaps obvious) point to this matter is that it is the claimant’s lawyer’s responsibility to inform the claimant of her rights to claim certain benefits. The insurer is not obligated to assist the claimant in applying for benefits, even though in practice this happens often, especially where the claimant is unrepresented.

The insurer might have caught a break here because the claimant was represented, although what really helped the insurer in this case was that its refusal-of-benefits package was foolproof.

Special shout-out to my good friend Lisa Armstrong, who argued this case successfully for the insurer.