The Ontario Court of Appeal has upheld Justice Ramsay’s determination that the LAT has exclusive jurisdiction at first instance over all claims in respect of accident benefits, including extra contractual claims such as bad faith conduct.
By way of background, Ms. Stegenga started an action in Superior Court against her accident benefit insurer, Economical, claiming aggravated, exemplary and punitive damages for breach of contract, negligence, misrepresentation, infliction of mental distress and bad faith. Economical brought a motion to strike the claim pursuant to Rule 21 of the Rules of Civil Procedure, on the basis that the LAT had exclusive jurisdiction at first instance, not the court.
Economical took the position that s. 280 of the Insurance Act, which came into effect April 1, 2016, was clear and unambiguous in taking jurisdiction from the courts and giving it to the LAT. They argued that the legislature had made a policy choice to grant exclusive jurisdiction to the LAT and limit the remedies the LAT could grant.
The Plaintiff argued that the language of s. 280 of the Insurance Actwas not clear and unambiguous enough to take away the Superior Court’s inherent jurisdiction over certain claims, and in particular claims for bad faith. She also argued that the fact that the LAT cannot award aggravated, exemplary or punitive damages supported this conclusion.
Economical was successful and the Plaintiff’s claim was struck on the motion, with Justice Ramsay finding:
There is no reason to doubt that the legislature, in enacting the present s. 280 of the Insurance Act, intended to deprive a claimant of resort to the court at first instance whenever the claim is based on a denial of accident benefits, no matter how the denial is characterized in legal terms.
The Plaintiff appealed to the Court of Appeal.
Once again the Plaintiff, now the Appellant, argued that her claim was for bad faith handling of her accident benefit claim and not a claim “in respect of an insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled”. As a result, she took the position that her claim did not fall within the ambit of s. 280 of the Insurance Act, which provides jurisdiction to the LAT and prohibits access to court other than on appeal or judicial review.
To understand the decision it is helpful to review the language of s. 280 of the Insurance Act, which falls under the title“Dispute Resolution- Statutory Accident Benefits”:
Resolution of disputes
280 (1) This section applies with respect to the resolution of disputes in respect of an insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled. 2014, c. 9, Sched. 3, s. 14.
Application to Tribunal
(2) The insured person or the insurer may apply to the Licence Appeal Tribunal to resolve a dispute described in subsection (1). 2014, c. 9, Sched. 3, s. 14.
Limit on court proceedings
(3) No person may bring a proceeding in any court with respect to a dispute described in subsection (1), other than an appeal from a decision of the Licence Appeal Tribunal or an application for judicial review. 2014, c. 9, Sched. 3, s. 14.
Resolution in accordance with Schedule
(4) The dispute shall be resolved in accordance with the Statutory Accident Benefits Schedule. 2014, c. 9, Sched. 3, s. 14.
Orders, powers and duties
(5) The regulations may provide for and govern the orders and interim orders that the Licence Appeal Tribunal may make and may provide for and govern the powers and duties that the Licence Appeal Tribunal shall have for the purposes of conducting the proceeding. 2014, c. 9, Sched. 3, s. 14.
Orders for costs, other amounts
(6) Without limiting what else the regulations may provide for and govern, the regulations may provide for and govern the following:
1. Orders, including interim orders, to pay costs, including orders requiring a person representing a party to pay costs personally.
2. Orders, including interim orders, to pay amounts even if those amounts are not costs or amounts to which a party is entitled under the Statutory Accident Benefits Schedule. 2014, c. 9, Sched. 3, s. 14.
The Court of Appeal dismissed the appeal and upheld the motion judge’s decision, finding that the legislative purpose, use of expansive language and the jurisdiction given to the LAT in the Insurance Act, Statutory Accident Benefit Scheduleand in Regulation 664all supported a broad interpretation of the LATs jurisdiction, therefore prohibiting access to the courts. J. Zarnett,, writing for the Court of Appeal, stated:
If the dispute relates to the insurers compliance with obligations to the insured concerning SABS, the timeliness of performance of those obligations and/or the manner in which they were administered, it falls within the broad reach of the dispute resolution provisions, and within the jurisdiction of the LAT. The prohibition on court proceedings will apply.
Having found that the dispute resolution provisions are broad enough to give the LAT jurisdiction, the Court of Appeal considered the Appellant’s argument that because bad faith is a standalone cause of action it could not be captured by the language of s. 280 “in respect of entitlement or amount of benefits”. The Court concluded that “it does not follow that this automatically takes the subject matter of the claim, even when characterized as one for bad faith, outside of s. 280”, noting that it is the nature and subject matter of the dispute that are determinative, not the legal characterization.
Ultimately, the Court held that the facts giving rise to the disputes between the parties allrelated to the Appellant’s entitlement to benefits or the amount of entitlement. These were all disputes captured by the broad language of s. 280(1) of the Insurance Actand the LAT’s jurisdiction under s. 280(2), and therefore fall within the prohibition on court proceedings in s. 280(3).
Lisa has an insurance law practice that has focused exclusively on insurance defence for 15 years. Her practice focuses on complex insurance-related litigation, including accident benefits and bodily injury. Read more ...
Adjudicator Letourneau has held that the LAT does not have jurisdiction to award interim benefits in 18-007113 v Allstate Insurance-007113/AABS, 2019 CanLII 63379 (ON LAT). This follows on the decision of his colleague Adjudicator Hines, in 17-007152 v State Farm Insurance, 2018 CanLII 141015 (ON LAT), who similarly found that LAT lacked the jurisdiction to award interim benefits.
There is now what appears to be a growing body of LAT caselaw confirming that LAT will not award interim benefits.
In the most recent case, there was a lag of over year between the date of the application for accident benefits and the in-person hearing on the issue of attendant care. In that period, the applicant claimed to have incurred more than $18,000 in attendant care. The applicant argued that this financial burden created a risk that he would not be able to receive adequate care before the LAT hearing on the issue of attendant care benefits. The Applicant wanted an order awarding him attendant care benefits until such time as the issue was decided before the LAT.
FSCO made interim awards of benefits all the time, the applicant complained, why can’t the LAT do the same? After all, the SPPA (Statutory Powers Procedure Act) allows for interim orders and the LAT Act says the LAT tribunal has all the powers necessary to carry out its duties. Shouldn’t that be enough to empower the LAT to grant interim orders for benefits?
In response, the LAT adjudicator noted that the Tribunal’s powers to make orders with a view to resolving the applicant’s dispute are limited to what is provided for in the Insurance Act and the SABS. Section 280(4) of the Insurance Act states specifically that, “the dispute shall be resolved in accordance with the Statutory Accident Benefits Schedule”.
The LAT Adjudicator further pointed out that there have been specific changes to the Insurance Act in recent years that clearly show the legislator’s intention to restrain the Tribunal’s jurisdiction. Section 280(6) of the Insurance Act was amended to say that “regulations [under the insurance act] may provide for interim orders to pay amounts to which a party is entitled under the SABS”. Interim benefits are not amounts that a party is entitled to under the SABS, the adjudicator concluded. This omission amounts to be a clear intention to bar the LAT tribunal from reading in power to grant interim orders for benefits.
In its past two decisions regarding orders for interim benefits, at least two LAT adjudicators are harmonizing the edict in the old standby karaoke favorite that you can’t hurry love.
In the decision of English v. Manulife Financial Corporation, the Ontario Court of Appeal has weighed in on when a change in circumstances may allow an employee to revoke a seemingly clear resignation.
For the purposes of this blog, the facts in English are fairly straight forward. Ms. English was a senior customer relationship manager with Standard Life for 9 years. Standard Life was acquired by Manulife Financial Corporation. As part of the acquisition, Manulife planned to implement a new computer system. Ms. English, being in her 60s decided to retire early as she did not want to re-train on the new system. She provided a letter to her supervisor to that effect on September 22, 2016. Her last day of work was to be December 31, 2016. There was some discussion with her supervisor about Ms. English being able to change her mind.
Several weeks later, and while Ms. English was still working, Manulife announced they would not be implementing the new system. Ms. English attempted to take back her resignation. Her immediate supervisor did not immediately raise this as an issue, but approximately one month later Manulife advised Ms. English that they would not recognize the rescission of her resignation.
On a motion for summary judgment, the motion judge found that the resignation was clear and unequivocal, and once accepted by the employer, she could not take it back. In the event he was wrong, the judge found that 12 months would be an appropriate notice period taking into account the usual factors.
The Court of Appeal disagreed. The general rule in employment law is that an employee’s resignation must be clear and unequivocal. The Court found that Ms. English’s resignation was not equivocal given the circumstances in which she presented it to Manulife. The evidence supported that Ms. English was not entirely ready to retire and the impetus was the computer conversion. She was also told she could change her mind. Importantly, when the conversion was cancelled, she immediately spoke to her supervisor who did not indicate this would be a problem.
The Court found that the resignation was equivocal and condoned by Manulife through the actions of her supervisor. Ultimately, the Court agreed with the determination of 12 months.
The facts matter, folks. Proving a clear and unequivocal resignation is always a difficult hurdle for employers. In this case, there were several facts that pointed towards a sympathetic employee who likely felt forced out of her job early by advancing technology. Not least of which was the employer’s representations that she could “take it back” and its failure to raise her revocation as an issue immediately.
Employers who have accepted an employees resignation need to stick to their principles if they want to rely on that resignation. In the present case, the failure of the employee’s supervisor to immediately raise a concern was found to condone the rescinding of the resignation. This case is a good reminder that instructions and position need to be communicated both up and down the chain of command in a consistently applied fashion.
A recent decision by the Alberta Privacy Commissioner has confirmed that in some cases, an organization’s requirement for independent contractors to install GPS tracking devices on their vehicles will not...
A recent decision by the Alberta Privacy Commissioner has confirmed that in some cases, an organization’s requirement for independent contractors to install GPS tracking devices on their vehicles will not violate applicable privacy legislation but does the data collected may be considered “personal information”.
Order P2019-04 involved a complaint by independent contractors retained by NAL Resources Management LTD. NAL required the contractors to install GPS devices on their vehicles, with a default setting of “on”. The devices were intended to “promote good driving behavior” and allow NAL to locate the contractor in the event of a “Safety Line call out.” The independent contractors filed a complaint alleging the data was “personal information” and therefore NAL required their consent for its use, collection, or disclosure.
This decision investigated the difference between the definition of “employee” in Alberta’s Personal Information Protection Act, and whether the information collected by the GPS constituted “personal employee information” versus “personal information”. If information was considered “personal information”, the contractor’s consent would be required for the use, collection, and disclosure of said information. However, if the information was considered “personal employee information” no consent was required.
“Personal information” was defined as “information about an identifiable individual”. The act generally requires the consent of an individual for the use, collection, or disclosure of “personal information”. In contrast, “personal employee information” was defined by the act as personal information reasonably required by the organization for the purposes of establishing, managing, or terminating an employment or volunteer-work relationship, or managing a post-employment or post-volunteer-work relationship between the organization and the individual. This type of information did not require the consent of the employees.
In the present case, the commissioner found that the GPS data had a personal dimension given that the data collected would enable NAL to determine the physical location of the contractor, as an individual, which could be expected to have personal consequences for the contractors as individuals. Accordingly, the GPS tracking data was “personal information.”
However, the commissioner determined that in the present circumstances the GPS data was not “personal information” but rather “personal employee information” because the independent contractors were considered “employees” under the act.
The commissioner noted that s. 1(1)(e) of PIPA goes well beyond the common law definition of employee to include directors, office-holders, volunteers, students, contractors or agents of an organization. Consequently, information about a contractor reasonably required by an organization to manage a contractual relationship would be “personal employee information” under PIPA, regardless of the fact that at common law, independent contractors are not considered employees.
The Take Away
This decision is interesting for employers and privacy professionals alike. It is a solid reminder that words such as “employee” can carry different meanings across different legislation. It is also a reminder that employers need to seriously consider whether any productivity/data tracking services are collecting “personal information” under their province’s specific privacy legislation. While this was a decision of Alberta’s privacy commissioner, the definition of “personal information” is mirrored in the federal privacy legislation PIPEDA that applies to provinces such as Ontario, as they do not have substantially similar legislation.
In March, 2015, in recognition of the growing concern about cyber bullying and more particularly, the increasing number of incidents of “revenge porn”, the federal government made it a criminal offence to share intimate images. The recent case of R. v. JS provided a thorough review of the relevant case law dealing with this offence.
The charges stemmed from the offender’s decision to post a nude photograph of his wife in a men’s chat group at his church. The photo was posted after the couple separated. At issue was the appropriate sentence for the offence following the accused’s guilty plea.
The Court noted although the criminal charge was relatively new, the case law had begun to proliferate. In considering the nature of the offence, the Court cited the decision of R. v. AC (2017 ONCJ 317), which held:
The provision protects privacy. At its core, privacy is about a person’s ability to control access to something, whether it is private information or a private image. As in this case, someone like [the victim] may agree to have private photographs or videos taken that will not be seen by anyone apart from a romantic partner. Where someone shares an intimate image without consent, he violates the depicted person’s privacy because he has gone beyond that limited, consensual use. The more people to whom the image is exposed, the greater the invasion of privacy and the greater the harm caused to the victim.
The Court noted that the majority of the sentences for these types of cases involved a period of incarceration. However, the ultimate goal for the sentencing for this charge was denunciation and deterrence of this type of behaviour.
The Court found that this case was not on the low end of the spectrum as the intimate image was accessible to a chat group; the accused did not voluntarily remove the image; and, the victim was identifiable to viewers. The actions were designed to humiliate and degrade the victim. The most significant mitigating factor was the limited number of people in the group so it was not disseminated more widely. Although the victim had not provided a statement, the Court inferred substantial harm to the victim as a result of the actions. The Court found that an appropriate sentence was a two year suspended sentence.
Privacy rights are strengthening with every privacy case being heard in Canada, and the definition of “appropriate use” continues to be refined on a regular basis. The modern reality is that individuals will use technology for personal, private, and sometimes intimate purposes. The Court’s interpretation and application of privacy principles must continue to clarify the appropriate use of the private information and data. This case, the line is quite clear.
Can the insurer, who is required to waive reliance on the priority rules and pay accident benefits, still pursue indemnification from the priority insurer? A Superior Court judge says “yes”.
In Continental Casualty Company v. Chubb, the claimant was catastrophically injured when he was struck by a motor vehicle as a pedestrian. He ended up applying to Chubb for accident benefits. Chubb insured his personal vehicles and he was a named insured on that policy.
At the time of the accident, the claimant was the owner, President, and CEO of a forest products company. Its vehicles were insured with Continental (CNA). The CNA policy included optional coverage that provided up to an additional $1 million for medical and rehabilitation expenses, thus increasing the total available coverage to $2 million.
The claimant eventually submitted an OCF-1 to Chubb, who initiated a priority dispute against CNA. In a decision, dated April 4, 2018, Arbitrator Kenneth Bialkowski concluded that CNA was the priority insurer, and thus responsible to pay the claimant’s benefits. The arbitrator found that the claimant was a deemed named insured under the CNA policy because his company made its vehicles available for his regular use at the time of the accident. Accordingly, the arbitrator found that the claimant had coverage equally under both policies and that he would have chosen to claim from CNA to take advantage of the optional benefits.
On appeal, Stinson J disagreed with the arbitrator.
Before delving into the decision, some background information is necessary on the interplay between optional benefits and priority disputes.
Why are We Interested in Optional Benefits and Priority Disputes?
The SABS contains various “standard” accident benefits that are part of every motor vehicle liability policy in Ontario. However, insureds can purchase “optional benefits” that enhance the standard coverages.
Meanwhile, section 268 (2) of Ontario’s Insurance Act contains a priority pecking order:
An accident victim first has recourse against any policy that insures her as an insured (named insured, spouse, dependent, listed driver).
If she is not insured under such policy, she next has recourse against the insurer of the vehicle she was in (occupant) or insurer of the vehicle that struck her (non-occupant).
If there is no recourse under #2 (i.e., in the case of an uninsured or unidentified vehicle), she next has recourse against the insurer of any other vehicle involved in the accident.
If there is still no insurer under #3, she finally has recourse against the Motor Vehicle Accident Claims Fund.
Sections 268 (4) – (5.2) of the Act contemplate situations where a claimant might have recourse against more than one insurer for accident benefits under the priority rules. For example, Tim could be a listed driver on one policy and a dependant of a named insured (Fiona) on another. Section 268 (5) would break the tie and would make Fiona’s insurer the priority insurer (named insured, spouse, or dependant trumps listed driver). Likewise, suppose Krista and Mike each have their own vehicles and insurance with different policies. If they were involved in an accident while occupants of Krista’s vehicle, Krista’s insurer would have priority over Mike’s insurer because they were occupants of her vehicle.
But what if Tim and Mike had optional benefits on their respective policies? The priority rules would preclude them (and Krista) from receiving the optional benefits that they had purchased.
To solve this problem, the Superintendent of Insurance approved the OPCF 47 Endorsement called Agreement Not To Rely On Sabs Priority Of Payment Rules. As the endorsement’s title states, the OPCF 47 requires an insurer who has sold a policy with applicable optional benefits to waive the priority rules and pay the claim for standard and optional benefits purchased.
In sum, the OPCF 47 endorsement entitles claimants to receive the optional benefits they have purchased from their insurer, despite any priority rules mandating that they have recourse elsewhere. The insurer that has sold the optional benefits must pay accident benefits (standard and optional) to its insured(s) and cannot rely on the priority rules to defeat coverage.
Does this mean that the actual priority insurer gets a free pass?
Why do We Care about Priority if the OPCF 47 Says we Must Pay?
Having found that the claimant was not a deemed named insured of CNA (more on this below), the appeal judge found that Chubb had priority over CNA for accident benefits because, at best, the claimant was only a listed driver on CNA's policy (recall that named insured trumps listed driver). However, as a listed driver on the CNA policy, the OPCF 47 applied to the claimant and CNA, meaning CNA was precluded from relying on the priority rules to deny the claim.
However, the judge referred to another arbitrator’s decision in Echelon v. Co-operators (2015), wherein the arbitrator found, among other things:
It seems to me that the insurer paying a claim in conjunction with an OPCF-47 endorsement would have the right to reimbursement from a higher ranking insurer, at least to the extent of the mandatory benefits … . Simply put, nothing whatsoever has been done to limit or restrict the optional benefit insurer from pursuing the reimbursement aspect under the priority rules as they exist.
The appeal judge agreed with and adopted the arbitrator’s reasons from Echelon. Accordingly, CNA was required to handle and pay standard/optional benefits for this claim. However, CNA was entitled to reimbursement from Chubb for the cost of all mandatory SABS benefits paid by CNA to the claimant, and reimbursement from Chubb for all expenses associated with administering the mandatory SABS benefits.
It is unknown at this time whether Chubb will be seeking leave to appeal the decision.
What Does this Mean???
The law in Ontario, as it relates to optional benefits and priority is, as follows:
Where a claimant has applicable optional benefits on their policy, they have recourse against their insurer despite the priority rules. The insurer must accept the claim and pay the claimant mandatory and optional benefits, in accordance with the terms, limits, etc. in the SABS.
However, the insurer responsible for paying optional benefits can now seek reimbursement from the priority insurer for any mandatory benefits it has paid on the claim, plus apparently any administration expenses (which could mean surveillance, adjusting fees, etc.).
What Should We Do?
If you are the insurer that receives an application for benefits under a policy with applicable optional benefits (“Optional Benefits Insurer”):
Accept the claim and pay the standard/optional benefits pursuant to the various provision in the SABS.
Investigate priority and give any higher-ranking insurer a priority dispute notice.
Any disputes as to whether the other insurer has priority (under sections 268(2) - 5(1.2) would be resolved in arbitration.
The priority insurer would be obligated to reimburse you for any standard benefits paid, and administration expenses.
If you are the insurer who actually has priority (“Priority Insurer”):
You are required to reimburse the Optional Benefits Insurer for any standard benefits paid, and administration expenses incurred.
There will likely be issues as to whether the Priority Insurer could challenge the way the Optional Benefits Insurer has handled the claim and paid benefits, much like we see in loss transfer disputes.
What Should We Do Now?
If you are the Optional Benefits Insurer, consider bringing a new claim against the Priority Insurer for reimbursement, keeping in mind there might be a 90-day notice issue to overcome (this is a topic for a future blog).
If you are the Priority Insurer, you can expect to receive new notices for reimbursement.
What does the Future Look Like?
Appeal opportunities aside, in my opinion this decision could cause an administrative nightmare for insurers going forward, especially if more consumers continue to purchase optional benefits:
It will be extremely difficult for Priority Insurers to set reserves properly, to capture not only benefits that another insurer is paying (like in loss transfer), but also the cost of insurer assessments and administration expenses (which is not an issue in loss transfer because those expenses are not recoverable).
There is no process in place now governing how the Optional Benefits Insurer could seek reimbursement from the Priority Insurer. Likewise, there is no process in place now governing how the Priority Insurer could dispute the reasonableness of payments made (both benefits and administrative expenses).
There will undoubtedly be a significant increase in reimbursement claims, which will not only lead to significant legal costs but also place a burden on already-busy claims handlers, who will now need to consider a new reimbursement process for ongoing priority dispute claims.
What about reimbursement for legal expenses arising from any LAT disputes between the Optional Benefits Insurer and the claimant? Must the Priority Insurer reimburse the Optional Benefits Insurer for those expenses too?
What was that About Regular Use?
Continental v. Chubb will be forever known as the optional benefits case, but the appeal judge’s decision on regular use is also very noteworthy. The judge wrote:
…[I]n the present case, the evidence is uncontradicted that at no time did Mr. Ekstein make use of any of the company vehicles. Indeed, most of the vehicles insured by the CNA policy were tractor-trailers, although some were smaller trucks used in the business operations of the company. Although, because he was the President, CEO and owner of the company, it was theoretically open to Mr. Ekstein to have access to and choose to drive any of the insured vehicles, he never did so. The only vehicles that he actually drove were expressly insured under his personal Chubb policy.
 Thus, while there was an element of so-called "residual control" over the vehicles covered by the CNA policy, what is missing in this case is any evidence of those vehicles "being made available for [Mr. Ekstein's] regular use".
 In my view, it was unreasonable for the Arbitrator to impute regular usage to Mr. Ekstein when none existed. His decision contains no proper analysis of the evidence before him addressing the regular use provisions of s. 3(7)(f) in relation to the facts of this case. The Arbitrator failed to consider Mr. Ekstein's evidence that he never used a company vehicle prior to or at the time of the accident, or that a company vehicle was not being made available to him at the time of the accident. In so doing, the Arbitrator failed to follow the analytical approach set out in such cases as ACE INA Insurance v. Co-operators General Insurance Co.,  CanLII 13625.
 I conclude that the Arbitrator's decision is unreasonable because he failed to carry out the proper analysis, it is inconsistent with underlying legal principles, and the outcome ignores or cannot be supported by the evidence. To the contrary, the evidence supports the finding that no automobiles that were subject to the CNA policy were made available for Mr. Ekstein's regular use by the company.
It appears the appeal judge imputed into the regular use provisions in the SABS a requirement that there be evidence of actual use of a vehicle.
Does regular use require evidence of actual use? Contact me.