P.V. v. Economical Insurance: Discoverability in SABS
The lawyers at Littlejohn Barristers recently had the pleasure of representing P.V. in his License Appeal Tribunal (“LAT”) Reconsideration Hearing. This decision confirmed the principle that pre-emptive denials do not start the limitation period without there being discoverability, or eligibility for benefits, in the first place.
This is a good, practical decision that, for the first time, respects the rights of the injured motorists who try to work while severely injured, but ultimately cannot. We all recall that the mandate of Statutory Accident Benefits Schedule (“SABS”) is to provide the treatment to get injured persons back to work. This case finally permits the injured motorists who try to work but cannot, protection, and some degree of economic security.
Facts of the Case
P.V. was injured in a motor vehicle accident on August 14, 2013. At the time of the collision, he had been working for 15 years in a well-paying position, earning $225,000 annually plus a bonus. Despite the aggravations of the collision on his pre-existing medical conditions, he was able to remain in his position for 3 years and 9 months following the accident with struggles. During this time frame, he did not seek, claim or pursue any Income Replacement Benefits (“IRB”) through his SABs and notified his insurer, Economical Insurance, that his was not claiming IRBs.
Within two years of the accident P.V. was later demoted to a lesser position, as his medical state worsened. As a result, he earned less and lost access to a bonus. He was then terminated from his position 3 years and 9 months following the accident, due to his severe multi-factorial injuries which reduced his cognitive and executive functioning. Economical also deemed P.V. to be catastrophically impaired. Since he was now off work due to his injuries, P.V. claimed post-104 IRBs on January 17, 2018. Despite his obvious eligibility, Economical took the position that he was not eligible because they denied P.V. IRBs in 2013, despite the fact that P.V. did not apply until 2018. Since there is a two-year limitation date following denial for the SABS, Economical believed that P.V.’s ability to claim IRBs expired in 2015. Instead, P.V. was pursuing other benefits during this time frame, including Med/Rehab Benefits.
Issue on Reconsideration
The issue in this case was whether P.V. was restricted from making his claim for IRBs following the alleged expiration of the two-year limitation period which was alleged triggered by the 2013 advisement of Economical that he “did not qualify for IRBs.” In other words, are insurers allowed to pre-emptively deny benefits that an insured person has not yet applied for?
It was P.V.’s position that he never claimed or intended to claim IRBs while he continued to work post-accident and therefore no limitation period was triggered in 2013. He relied on section 56 of the SABS, which clearly states that the 2-year limitation period only commences “after the insurer’s refusal to pay the amount claimed.” Thus, for an Insurer to properly deny a benefit or amount, the Applicant must first claim the benefit or amount, which did not occur here. P.V.’s position was a winning one.
Analysis of Decision
In reversing his decision, the adjudicator referenced the recent Court of Appeal decision, Tomec v. Economical Mutual Assurance Company, 2019 ONCA 882. The primary issue in that case, was whether the two-year SAB limitation period is subject to the principle of discoverability, which states that the limitation period only begins when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff (i.e. denial of benefit). The court reasoned that:
“Absent a refusal to pay the benefit sought, there cannot be a claim made for mediation or an evaluation. Thus, the refusal to pay a benefit and the ability to make a claim are inextricably intertwined in the cause of action. The refusal cannot be stripped out of the cause of action and treated as if it is independent from it.”
Tomec v. Economical Mutual Assurance Company, 2019 ONCA 882 at para 36.
Tomec was based on the Supreme Court of Canada decision Pioneer Corporation v. Godfrey, 2019 SCC 42, which provided guidance regarding when a limitation period should be construed as a hard limitation. The case states that the limitation period runs from “the accrual of the cause of action”, meaning that discoverability only occurs when it is evident that the operation of a limitation period is conditioned upon accrual of a cause of action or knowledge of an injury.
In this case, there was no cause of action for IRBs until P.V. stopped working. Therefore, a benefit cannot be denied unless there is entitlement in the first place. The court also asserted that any outcome that would permit the denial of benefits before the applicant is even entitled would be an ‘absurd result.’
Through the application of Tomec and Pioneer, the LAT determined that to uphold Economical’s pre-emptive denial, would be an error of law. Since P.V. was working full-time at the time of denial and was therefore ineligible for IRBs, he could not have been said to have applied for the benefit. As a result, the adjudicator found that “P.V. did not “discover” his claim for IRB until his substantial inability to perform the essential tasks of his employment surfaced.” Additionally:
“To allow an insurer to pre-emptively deny IRB entitlement where it was not explicitly claimed (and where there was no eligibility) and then also strictly adhere to the limitation period to reinforce that denial would, in my view, undermine the consumer protection nature of the Schedule and the policy rationale of limitation periods.”
P.V. v. Economical Insurance, 2020 CanLII 12744 (ON LAT) at para 17.
Represented by the lawyers at Littlejohn Barristers, P.V. v. Economical Insurance affirmed the Tomec principle that discoverability applies in the SAB context and that pre-emptive denials do not start the limitation period without eligibility.
The personal injury lawyers at Littlejohn Barristers have significant experience representing clients dealing with motor vehicle accidents. If you have been in an accident or have been denied compensation or disability benefits, contact our Barrie office at 705-725-7355 to see if we can help.