The Court of Appeal has recently weighed in on limitation periods in the context of catastrophic determinations. And their ruling is not a favourable one for insurers.
In Machaj, the plaintiff completed an OCF-19 dated January 6, 2009 seeking catastrophic determination.
Following insurer’s examinations, RBC sent the plaintiff an Explanation of Benefits (OCF-9) dated May 25, 2009 which stated the assessors had formed a consensus she had “… not sustained a catastrophic impairment and therefore you do not qualify for the increased benefits.”
The plaintiff submitted an Application for Mediation on July 18, 2011 with respect to “catastrophic determination” under the Medical Benefits heading.
In the lower court decision, RBC successfully argued that the Application for Mediation was beyond the two year limitation period pursuant to section 281.1 of the Insurance Act, R.S.O. 1990 c. I.8. In particular RBC was successful in distinguishing their case from that of the Divisional Court decision Do v. Guarantee Insurance Company, 2015 ONSC 1891.
In Do, the OCF-9 stated the insurer had reviewed the insurer examinations and determined Do did not sustain a catastrophic impairment. The Divisional Court held that that there was a mandatory link between the denial of a benefit and the triggering of a limitation period.
In Machaj, the Court of Appeal found that the motion Judge erred in distinguishing Machaj from Do.
The Court of Appeal stated “… there is no difference in substance between the denial that was made in the case at bar and denial that was made in Do.” The court added elaborated as follows:
Do stands for the proposition that the two year limitation period only applies to claims for specific benefits and not to claim for a determination of catastrophic injury status. In our opinion, by adding the words ‘and therefore you do not qualify for the increased benefits,’ the respondent insurer was doing nothing more than telling the appellant she lacked status to claim increased benefits. The additional words did not convert what was, in substance, a denial of catastrophic determination into a denial of the specific benefits that would trigger the commencement of a two year limitation period.
What does this mean for insurers?
It means that in cases where the insurer has found the claimant does not meet the criteria for a catastrophic designation some thought should be given to the following:
1. The insurer may wish to draft its OCF-9s/communication in a very specific manner. In the case of a non catastrophic finding, the insurer may consider stating that its insured is not entitled to receive catastrophic level medical benefits, housekeeping benefits, caregiver benefits, and attendant care benefits beyond 104 weeks of the accident.
2. The insurer must be mindful of ‘silent’ future claims where the insured has not put forth a claim for a particular benefit. For example, in the context of case where no attendant care was put forth, it would be prudent to deny the benefit at the 104 week mark (as not being available under the contract) in an effort to trigger the running of a limitation period seeing that a non-catastrophic finding will likely not trigger the clock if the benefit had never been claimed.
3. Ultimately, the insurer must be as precise as possible communicating with its insureds. However, the current reality seems to be that without a specific denial of a given benefit there will be no limitation period commenced regardless of the insured’s status as it relates to catastrophic impairment.