S.K. v. Allstate Insurance Company of Canada, 2017 CANLII 77394, ON LAT

A refusal to pay a benefit that stems from a period of non-compliance pursuant to section 33 of the SABS can trigger a section 56 limitation period. 

Date Heard: May/June, 2017 | Full Decision [PDF]

The Applicant applied for IRBs, following which Allstate issued a section 33 request for several financial documents in order to determine entitlement to and the quantum of the IRB payable. The Applicant failed to provide all of the documents that the insurer requested, and in response Allstate held him in non-compliance with s. 33 and refused to pay benefits.

The Applicant commenced a LAT application, but he failed to do so within 2 years of the insurer’s refusal to pay the IRB. Allstate argued that this breached the limitation period set out in s. 56 and the Applicant was statute barred from proceeding with his claim. Allstate confirmed that otherwise the Applicant’s impairments met the test for entitlement to the IRB.

The Applicant argued in response that a s. 33 request cannot trigger a s. 56 limitation. If it can, the insurer failed to provide the Applicant with a valid refusal. The Applicant relied on Falcon v State Farm and Smith v Cooperators which hold that a valid refusal must be clear and unequivocal such that an unsophisticated individual would understand it and it must also explain the dispute resolution process.

Adjudicator Lester found that the insurer’s Explanation of Benefits and its accompanying letter, which stated that the Applicant was in a period of non-compliance, and that the benefits were withheld and no longer payable to him, constituted a valid refusal.  The Explanation of Benefits had ticked off the box, “not eligible/stoppage of benefit” and contained an opening paragraph explaining that the applicant has “two years from the date of the insurer’s refusal to pay…a benefit to arbitrate or commence a lawsuit in court…”

This decision is clear that while a s. 33 request cannot trigger a limitation period, the refusal to pay a benefit that stems from a s. 33 request can.

 

Read the full decision [PDF]
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