Limitation Period in Challenging Your Insurer's Refusal of Benefits

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All contracts, including insurance policies, are a legal document with specific rules, guidelines and procedures that individuals must pay attention to, when signing such documents. There is good reason for the saying, "don't sign anything without having a lawyer read it first". 

Not observing the details of a legal document can be very costly, as Angela Bustamante learned, when a failure to pay attention to the procedures and guidelines for challenging her insurer's refusal of benefits, resulted in a dismissal of her claim at trial.

Case example

Ms. Bustamante was involved in a car accident on June 3, 2004. At the time, she agreed to receive income replacement benefits as opposed to non-earner benefits. Her insurer, The Guarantee Company of North America, informed her that she would not qualify for non-earner benefits, because she qualified for income replacement benefits. (Income replacement benefits apply when someone was employed before the collision but are no longer capable of working at the same level or speed as a result of their injuries.)

Ms. Bustamante was also informed of the criteria, including timelines, for disputing Guarantee's refusal of non-earner benefits, if she so chose. Ms. Bustamante accepted Guarantee's decision without dispute.

After 104 weeks, a disability assessment was made by Guarantee, which showed that Ms. Bustamante no longer met the disability test for entitlement. As a result, Guarantee stopped the payments of benefits in July 2006 and a few months later, in September 2006, Ms. Bustamante returned to work.

Three years passed before Ms. Bustamante notified Guarantee, in September 2009, that she intended to pursue a claim for non-earner benefits. 

Ms. Bustamante argued that since she had initially not qualified for non-earner benefits, it was understood that she never actually received a denial of non-earner benefits. Further, if she didn't receive a denial, it also meant that the limitation period for her to challenge said denial did not start.

Over the next several months, Guarantee sent multiple letters to Ms. Bustamante requesting an updated disability certificate and documentation, but she never responded.

On January 19, 2010, Guarantee informed Ms. Bustamante by mail, that she was not entitled to non-earner benefits. Once again, the insurance company provided Ms. Bustamante information with respect to her right to challenge the denial.

After a failure to resolve their dispute via the Financial Services Commission of Ontario, Ms. Bustamante initiated a claim on November 28, 2012 against Guarantee, seeking damages for breach of contract and mental distress. Guarantee moved for a summary judgement to get Ms. Bustamante's action dismissed.

On December 4, 2014, the judge ruled in favor of Guarantee and dismissed Ms. Bustamante's claim on the grounds that the limitation period for her to have challenged Guarantee's refusals, had passed. Ms. Bustamante appealed the ruling, leading to an appeals trial. The Court of Appeal for Ontario upheld the previous judgement, ruling that Ms. Bustamante's time period to challenge for non-earner benefits had indeed passed.

The justices noted that in the document sent by Guarantee to Ms. Bustamante in 2004, informing her of her right to challenge the denial of non-earner benefits, there was a clearly stated two year time limit warning at the bottom of the page. Ms. Bustamante also ignored the two year time limit when her payments were discontinued on July 26, 2006.

Ms. Bustamante's claim that the time limit could not have started because she was not formally denied non-earner benefits in 2004 when she was not eligible for them, was rejected by the justices in light of the court's decisions in Sietzema v. Economical Mutual Insurance Company and Sagan v. Dominion of Canada General Insurance Co. 

In the first of these trials, much like Ms. Bustamante's case, the claimant applied for and received income replacement benefits and by that token was denied non-earner benefits.

More than two years later, after the claimant was no longer eligible for income replacement benefits, she sued her insurer for non-earner benefits. In Sietzema, the court also upheld the summary judgement, which stated that the claim was brought after the limitation period.

The appeal court also noted that to accept the claimant's argument that non-earner benefits was never an option during that period and thus never really denied, meaning the time period never started, would defeat one of the main purposes of the Statutory Accident Benefits Schedule (SABS), which is "to ensure the timely submission and resolution of claims for accident benefits."

The justice for the appeal in this case referred to this reasoning in also rejecting Ms. Bustamante's similar argument as to why the time limit for challenging the refusal of non-earner benefits, never actually started. The justice reiterated that Ms. Bustamante was given clear notice of her rights if she wished to challenge the denial of non-earner benefits, including a clear understanding of the time limit in which she had to challenge.

In conclusion, the appeal court ruled that Guarantee's refusal to pay non-earner benefits did trigger the limitation period, therefore making Ms. Bustamante's claim too late. The appeal was subsequently dismissed, with a ruling that Guarantee was entitled to the costs of the appeal, fixed at $6,000.

In some ways, Ms. Bustamante was a victim of her own failure to understand her legal rights as well as the procedures and guidelines involved in challenging her insurer's refusal of a particular benefit. Consultation with skilled legal professionals immediately following an accident and before agreeing to an insurance settlement, is very important in enabling you to make the best decision for your benefits compensation. 

At Gluckstein Personal Injury Lawyers, our team of personal injury lawyers will work tirelessly to ensure that you are well protected in your claim and that you receive the justice you deserve.

If you or a loved one has been involved in an accident, please do not hesitate to give us a call.


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