Accident Benefits Disputes

The Ontario Superior Court of Justice has recently pronounced that the Financial Services Commission of Ontario (“FSCO”), the regulating body for the insurance industry in Ontario, can no longer continue its practice of having motor vehicle collision victims wait in limbo for a resolution of their accident benefits disputes with their insurers.

In Ontario, individuals who are involved in motor vehicle collisions are entitled to certain statutory benefits on a no-fault basis. From time to time, a claimant and an insurer will disagree on whether a claimant is entitled to receive a certain benefit. When these disagreements arise, the claimant has the option of applying for mediation through FSCO to resolve the dispute. Applying for mediation is required in the event that a claimant wishes to dispute a denial.

Unfortunately, and due in no small part to the continuing restriction of accident benefit claims by the Ontario Legislature, more and more accident benefit claims are being disputed and heading to mediation at FSCO. This has resulted in a significant back log of disputes awaiting mediation. Until recently, a claimant might wait six months to a year between filing an application for mediation, and actually having the mediation.

This should be changing rapidly as a result of the decision in Cornie v. Security National (2012 ONSC 905). In this case, which involved the hearing of four separate disputes at once, the plaintiffs were individuals who were denied certain accident benefits and applied to FSCO for a mediation of their disputes. The plaintiffs’ lawyer wrote to FSCO 60 days after applying for mediation requesting a mediator’s report that the mediation had failed since the mediation had not taken place within 60 days. This was required so that they could move their matters forward to a claim in court.

The plaintiffs’ took the position that since the mediation had not occurred within 60 days of the application for mediation, which is a requirement of the Insurance Act; the mediation should be deemed to have failed. The insurance companies took the position that mediation was required to take place before the claimant’s could proceed with a Statement of Claim, even if this meant a significant delay before the dispute was resolved.

The court agreed that the 60 day time limit under the Insurance Act was mandatory and that a claimant is entitled to proceed to issue a Statement of Claim after the 60 days has elapsed. What this means is that claimants who are facing a dispute have the option to either proceed to a wait for mediation to take place, or issue a Statement of Claim if no mediation has taken place within 60 days of their request for one.

The court’s decision has been appealed and the Court of Appeal heard arguments in July, 2012. Stay tuned…