Despite Tomec, Insurers and Tribunal Continue to Apply SABS Limitation Period In A Rigid Way

In November 2019, the Ontario Court of Appeal released its decision in Tomec v. Economical Mutual Insurance Company, 2019 ONCA 882, in which it found that the two-year limitation period set out in the Statutory Accident Benefits Schedule (SABS) was subject to the rule of discoverability. The Court of Appeal stated that applying a hard limitation period was contrary to the consumer protection purposes of the SABS and discouraged a narrow interpretation of the time limitation by insurers. Such an approach was not only inconsistent with the policy rationales that underlie limitation periods but could also lead to absurd results.

However, despite the Court of Appeal’s decision in Tomec, insurers and the Licence Appeal Tribunal have continued to apply the limitation period set out in s. 56 of the SABS in a rigid, unforgiving and improper way.

In Tagoe v. The Personal 2023 ONSC 5715, the applicant was advised by his insurer in May 2016 that he was not entitled to income replacement benefits (IRBs) because the Disability Certificate (OCF-3) he submitted indicated that the applicant had continued to work after his collision. However, the applicant subsequently became unable to work as a result of his collision-related impairments and applied for IRBs in July 2019. The insurer denied his application on the basis that it was time-barred as it was more than two years after the original denial in May 2016. The applicant appealed to theLAT, which dismissed the appeal and sided with the insurer.

The Divisional Court allowed the appeal and found that the May 2016 denial did not begin the limitation period as the applicant did not qualify for the benefit at the time and did not apply for those benefits. The court confirmed that the applicant was not required to apply for IRBs before he was eligible. The court found this was analogous to the situation in Tomec and found the LAT adjudicator erred in law by failing to apply the doctrine of discoverability.

In Nguyen v. Economical Mutual Insurance Company, 2023 ONSC 2541, the LAT dismissed the applicant’s appeal challenging the insurer’s denial of catastrophic impairment on the basis that it was time-barred as the appeal to the tribunal was brought three months after the expiration of the two-year limitation period.

Subsequently, the Divisional Court allowed the appeal on the basis that the LAT had dismissed the appeal without having been provided with any evidence from the insurer, who had the onus, to support that the limitation period had expired. The Divisional Court found the LAT made two critical errors of fact: first, it made a finding of fact on a material point based on no evidence and second, it reversed the onus of proof by faulting the applicant for failing to provide evidence to support the limitation period had not expired.

While the above two cases are different in the facts, they both highlight that insurers and the tribunal continue to apply s. 56 of the SABS in an inflexible and incorrect way. The Court of Appeal’s decision in Tomec requires that insurers and the tribunal take a more liberal approach, keeping in mind that the SABS is consumer protection legislation, and they must not ignore the doctrine of discoverability.

View the original article on Law 360 at https://law360.ca/ca/articles/1831716