Limitation Period Begins to Run with Denial of Benefit, Not Status
Machaj v. RBC General Insurance Company, 2015 ONSC 4310 – This is motion for summary judgment brought by the defendants on the basis that the plaintiff’s action is statute barred.
On January 6th, 2009, the Plaintiff applied for Determination of Catastrophic Impairment. On May 25, 2009, the insurer responded by way of an Explanation of Benefits stating that the assessors had formed the consensus opinion that the plaintiff had not sustained a catastrophic impairment and therefore did not qualify for increased benefits.
On July 18th, 2011, the Plaintiff applied for mediation. The defendant subsequently brought this motion pursuant to Section 281.1 of the Insurance Act, R.S.O. 1990 c. I.8, alleging that the mediation application was filed almost two months past the two year limitation period. The court ultimately dismissed the matter finding that the limitation period was applicable and consequently there is no genuine issue for trial.
The court distinguished the decision in Guarantee Insurance Co. of North America v. Do, 2015 ONSC 1891, which upheld Director’s Delegate Blackman’s appeal decision that the s. 281.1 limitation period would not run from a finding of no catastrophic impairment because a finding of no catastrophic impairment is not a denial of a benefit per se but a status. In that case, there was absolutely no reference to benefits or a refusal to pay benefits, just a denial of the status of the catastrophic impairment designation.
In this case, because RBC actually stated in its response that the claimant did not qualify for the increased benefits, RBC effectively flushed out the consequences of the denial of catastrophic impairment status. In other words, the response was not just a denial of the status of catastrophic impairment as it was in Do, but also the communication of the fact that the denial meant that the Plaintiff would not qualify for increased benefits—a denial from which the limitation period would run. The court found that to “ignore that additional phraseology would be a denial of the plain meaning of the language and work mischief for the operation of the limitation period.” (at para. 22).
What the Insurer Should Know
When issuing a denial of the Catastrophic status for the insured, it should also indicate that benefits will be denied in order to commence the limitation period.