In Varriano v. Allstate Insurance Company of Canada, 2023 ONCA 78 (“Varriano”), the Ontario Court of Appeal reversed the Divisional Court’s finding and held that the insurer was not required to provide medical reasons for the stoppage of an insured’s Income Replacement Benefits (“IRBs”).
In Varriano, the plaintiff was injured in a motor vehicle accident on September 30, 2015, and sought IRBs from his insurer, Allstate Insurance Company of Canada (“Allstate”). On December 30, 2015, Allstate notified the plaintiff that his IRBs would stop effective December 2, 2015. The reason given as to why his benefits were terminated was because the plaintiff had returned to full-time work.
On September 28, 2018, the plaintiff filed an application before the Licence Appeal Tribunal (“LAT”) disputing Allstate’s decision to terminate his benefits. The LAT sided with Allstate and concluded that the application was time-barred, having been filed more than two years after the December 30, 2015 Benefits Letter.
The Divisional Court overturned the LAT’s decision and held that s. 37(4) of the Statutory Accident Benefits Schedule (“SABS”) required Allstate to provide medical reasons in the Benefits Letter for the stoppage of benefits. This decision was appealed.
Writing for a unanimous panel of the Court of Appeal including Justices Simmons and Huscroft, Justice Coroza held that the Divisional Court’s interpretation of s. 37(4) was incorrect and reinstated the LAT’s decision (to dismiss the Application as being time barred). Justice Coroza explained that s. 37(4) requires the insurer to provide actual reasons for determination. This means that if the insurer relies on a medical and a non-medical reason to deny benefits, the insurer must advise the insured person of both. However, if the insurer is relying on a non-medical ground under s. 37(2), the provision requires only that the insurer provide notice of the termination and the non-medical reason for that determination. Therefore, Allstate did not have to provide a medical reason to meet the SABS requirements.
The Court of Appeal noted that the Divisional Court’s decision did not accord with the modern principles of statutory interpretation enunciated in Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC),  1 S.C.R. 27, at para. 26 – “that statutes are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”. He noted that in giving a conjunctive meaning to the word “and” [in medical and any other reasons], the Divisional Court failed to apply the principles of statutory interpretation. Specifically, that the word “and” can be, and clearly was intended to be applied in its several sense in the phrase “medical and any other reason” as opposed to in its conjunctive sense.
Justice Coroza also noted that the Divisional Court erred in construing section 37(4) as a coverage provision and that any exclusions or restrictions are to be interpreted broadly in favour of the insured. The Court unanimously, decided that section 37(4) is not a coverage provision and ought not to be interpreted broadly in favour of the insured. Rather, the provision ought to be interpreted according to the purposes of the SABS which are “timely submission and resolution of claims and the purpose of the provision itself, which is to permit the insured to decide whether or not to challenge the denial of benefits)”.
Allstate’s notice that the IRB was being terminated gave the plaintiff clear and unequivocal notice that their benefits were being terminated, in addition to the reasons for termination. Because of this, Justice Coroza concluded that the insurer had acted in compliance with the legislative requirements under s. 37(4).
This decision from the Court of Appeal clarifies the notice requirements for insurers. If the insurer is only relying on a non-medical ground, such as returning to work, the insurer need not provide medical evidence.