An insurer may discontinue an insured’s entitlement to benefits under the Statutory Accident Benefits Schedule[1] (“the SABS”) pursuant to any of the specified grounds enumerated under section 37(2). If the insurer determines that the insured is ineligible for benefits on the basis of any of these grounds, section 37(4) requires the insurer to provide notice, along with “the medical and any other reasons for its determination”.
Most recently in Varriano v Allstate Insurance Company of Canada[2], the Ontario Court of Appeal considered whether the word “and” in the phrase “the medical and any other reasons for its determination” in section 37(4) requires an insurer to provide medical reasons for the denial of statutory accident benefits in every instance.
The Court of Appeal ultimately concluded that an insurer must provide its actual reasons for its determination. As a result, where a denial is based on medical reasons, the insurer must provide these reasons. However, where a denial is not based on medical reasons, the insurer is only required to advise of the non-medical reasons for denial.
The Facts
The plaintiff applied to Allstate Insurance Company of Canada (“Allstate”) for income replacement benefits (“IRBs”) pursuant to the SABS after being injured in a motor vehicle accident.[3] Allstate paid the plaintiff IRBs from October 7, 2015 – December 2, 2015. On December 2, 2015 the plaintiff returned to full-time work.[4] Since the insured’s resumption of his pre-accident employment duties was a permitted ground for discontinuing benefits under section 37(2), the insurer notified the insured via letter dated December 30, 2015 that his IRBs stopped as of December 2, 2015.[5]
The explanation of benefits letter stated:
“Your Income Replacement Benefit has been stopped on December 2, 2015, as you returned to work fulltime on December 2, 2015. No further Income Replacement will be paid after this date.” [Emphasis added].[6]
On July 1, 2018, the plaintiff stopped working, and applied to Allstate again for IRBs. Allstate denied the resumption of benefits, as its position remained unchanged from the initial denial of benefits.[7] On September 28, 2018, the plaintiff filed an application with the License Appeal Tribunal (“LAT”) to dispute the denial of benefits.[8]
The Licence Appeal Tribunal Decisions
At the LAT hearing, Allstate argued that the LAT application was time-barred pursuant to section 56 of the SABS, which prescribes a two year limitation period.[9] In particular, Allstate took the position that the limitation period began to run from the denial of benefits letter dated December 30, 2015, and therefore the plaintiff’s application was seven months too late. The plaintiff correspondingly argued that the limitation period did not commence on December 30, 2015, as the denial letter failed to provide medical reasons to support the stoppage of benefits.[10]
On both the initial hearing and the reconsideration hearing, the LAT adjudicator found in favor of Allstate.[11] First, it found that the denial was in accordance with section 37(2) of the SABS, which enumerates the valid reasons for the discontinuance of benefits. The plaintiff’s return to work fell squarely within section 37(2)(e): “the insured person has resumed his or her pre-accident employment duties”. Second, the denial of benefits letter was written in straightforward language that could be understood by an unsophisticated person. As a result, the LAT concluded that medical reasons were unnecessary as the notice complied with the legislative requirements, and did not otherwise prejudice the insured’s right to challenge the denial of benefits.
The LAT adjudicator explained that requiring medical reasons for the discontinuation of benefits where they do not exist would result in insurers fabricating reasons for denial. Thus, it concluded that medical reasons are only required where a determination is based on medical grounds. On the facts of the case, there were no medical grounds for the denial of benefits, and therefore, the notice of December 30, 2015 was valid.[12] The plaintiff appealed to the Divisional Court.
The Divisional Court
On appeal, the Divisional Court overturned the decision of the LAT adjudicator. Justice Mandhane held that an insurer must provide both medical and other reasons for the stoppage of statutory accident benefits.[13]
In particular, Justice Mandhane reasoned that a plain language reading supported the conclusion that the word “and” in the phrase “medical and any other reasons” was conjunctive in nature. His Honour additionally reasoned that this interpretation was consistent with the proposition that insurance coverage provisions are to be interpreted broadly, as to afford the insured an opportunity to fully assess the insurer’s position on their disability or medical impairment.[14] Allstate appealed.
The Ontario Court of Appeal
The question on appeal, therefore, was whether an insurer is always required to provide a medical reason for the stoppage of benefits under the SABS.[15]
The Court of Appeal held that a proper analysis of the word “and” in the phrase “the medical and any other reasons for its determination” in section 37(4) requires the application of the modern principle of statutory interpretation.[16] Here, the Court stated that it was clear that the word “and” was intended to be understood in the joint and several sense. Justice Coroza reasoned that reading the word “and” jointly and severally corresponded with the reality that not all discontinuances of benefits are grounded in medical reasons.[17] Thus, the Court clarified that the insurer is only required to provide its actual reasons for determination, which may or may not include medical reasons.[18]
Key Takeaways
This decision underscores the fact that insurers are required to provide sufficient reasons for their decision when it discontinues statutory accident benefits. However, insurers must provide their actual reasons for terminating benefits. They are not required to provide medical reasons for the discontinuance of benefits where they do not exist. This conclusion accords well with the purposes of the SABS, namely the timely submission and resolution of claims that affords the insured an opportunity to decide whether to challenge a denial of benefits. Requiring the provision of medical reasons where they do not exist, or stating “there are no medical reasons for this denial” would not support these purposes.
[1] O. Reg. 34/10 – Effective September 1, 2010 under the Insurance Act, RSO 1990, c. I.8.
[2] 2023 ONCA 78.
[3] Ibid at para 1.
[4] Ibid.
[5] Ibid at para 6.
[6] Ibid.
[7] Ibid at para 8.
[8] Ibid at para 9.
[9] Ibid at paras 14-15.
[10] Ibid.
[11] Ibid.
[12] Ibid.
[13] Ibid at para 17.
[14] Ibid.
[15] Ibid at para 19.
[16] Ibid at para 24.
[17] Ibid at para 31.
[18] Ibid.
