In SABS Priority Disputes 101: Help!, and SABS Priority Disputes 101: Reflection on Deflection, I discussed that the purpose of Ontario’s priority dispute scheme is to ensure an injured claimant receives timely benefits despite any priority disputes between insurers. A priority dispute takes place in the background of a SABS claim, and often the claimant’s direct involvement in the dispute is relatively small.
But the Regulation does allow a claimant to join a priority dispute in some circumstances. It also requires claimants to provide relevant information to the insurers to assist in the priority investigations, and to submit to an examination under oath if the insurer paying benefits requests it.
Section 4 and 5: Notice to Claimant
Section 4 of the Regulation requires the insurer giving a priority dispute notice under section 3 of OReg 283/95 to also send the claimant a notice under section 4:
4.(1) An insurer that gives notice under section 3 shall also give notice to the insured person using a form approved by the Chief Executive Officer.
(2) Despite subsection (1), if the insurer that gives notice under section 3 is the Fund, no notice shall be given to the insured person under subsection (1).
The approved notice form is called a Notice to Applicant of Disputes Between Insurers. In practice, insurers usually send this form to the other insurer as their priority dispute notice under section 3 of the Regulation. This is fine. But the form must be sent to the claimant.
Does the 90-day notice period in section 3 of the Regulation apply to a section 4 notice? In Unifund v Dominion, Unifund argued before the arbitrator that the notice to the claimant must also be given within 90 days, just like a priority dispute notice under section 3. The arbitrator disagreed and refused to read in a 90-day limit to give the claimant notice under section 4.The appeal judge disagreed with the arbitrator and found that the 90-day notice requirement under section 3 applied equally to a notice given to an applicant under section 4.
The Court of Appeal disagreed with the appeal judge and restored the arbitrator’s Award, finding there was no notice deadline under section 4. The Court of Appeal held that accepting Unifund’s position and importing a time limit into section 4 would not advance the objectives or purpose of the Regulation:
Strict compliance with the time limit for notice between insurers is mandated by the provision in s. 3 that, where notice to the other insurer(s) is not given in time, the first insurer is precluded from disputing its obligation to pay benefits. If there is a dispute about whether an extended time limit was required, that issue will be the subject of arbitration: s. 3(3). In this case, the rights of the second insurer, Unifund, in the priority dispute resolution process were protected by its having received timely notice of the SABS claim from the first insurer – giving it time to properly evaluate Mr. Fan’s claim.
Unifund seeks to read into s. 4 not only the time limit for notice between insurers, but also the consequence for the failure to give timely notice — the prohibition of the dispute. Section 4 contains no such time limit or consequence. Whether a claimant is given notice of a priority dispute within 90 days of submitting an application for SABS will have no impact on the rights of the second insurer. While notice to the second insurer serves the important function of permitting it to evaluate the SABS claim, notice to the insured serves no function at all in the determination of the priority dispute or rights between the insurers. Unifund’s preliminary objection based on the lateness of the s. 4 notice is not based on any prejudice to its own position in the priority dispute arising out of late notice to the claimant. Indeed, this interpretation would provide Unifund with a windfall, if, under s. 268(2), it was the proper insurer to respond to Mr. Fan’s SABS claim.
The overriding objective of the regulation is to provide a procedure to determine priority disputes. That objective would not be furthered, and may well be undermined, by importing a requirement that has nothing to do with the determination of the dispute or the rights of the parties.
It follows that there is no time limit to give an applicant a priority dispute notice under section 4 of the Regulation.
However, pursuant to section 5 of the Regulation, any decisions (arbitration awards or settlements) that require a transfer of the claims file from one insurer to the other may not be valid if the claimant never receives the notice under section 4. Let’s look at section 5:
5. (1) An insured person who receives a notice under section 4 shall advise the insurer paying benefits in writing within 14 days whether he or she objects to the transfer of the claim to the insurers referred to in the notice. O. Reg. 283/95, s. 5 (1).
(2) If the insured person does not advise the insurer within 14 days that he or she objects to the transfer of the claim, the insured person is not entitled to object to any subsequent agreement or decision to transfer the claim to the insurers referred to in the notice. O. Reg. 283/95, s. 5 (2).
(3) Subject to subsection 7 (5), an insured person who has given notice of an objection is entitled to participate as a party in any subsequent proceeding to settle the dispute and no agreement between insurers as to which insurer should pay the claim is binding unless the insured person consents to the agreement or 14 days have passed since the insured person was notified in writing of an agreement and the insured person has not initiated an arbitration under the Arbitration Act, 1991.
In a nutshell, section 5 of the Regulation allows a claimant to object to a change in status quo. Where the claimant returns the Notice to Applicant form within 14 days and indicates that they object to the transfer, the claimant is entitled to participate in any proceedings under the Regulation that will determine priority. Of note, no settlement between the insurers is binding if the claimant does not consent to the settlement within 14 days after they are notified of the settlement.
In practice, most claimants do not return an objection after they receive the Notice to Applicant form under section 4 of the Regulation. This is likely because most claimants don’t care who handles their claim, as long as they are receiving benefits. Nevertheless, section 5 allows the claimant to participate in the dispute if they return the form in 14 days indicating an objection.
Section 6: Investigating Priority with an EUO
To help insurers investigate priority, section 6 of the Regulation requires a claimant to provide the insurers with relevant information:
6. (1) The insured person shall provide the insurers with all relevant information needed to determine who is required to pay benefits under section 268 of the Act.
Note that section 6 refers to the insurers, which means the claimant must provide relevant information to any insurer involved in the dispute. This provision likely overcomes any privacy concerns about disclosing the claimant’s information to an insurer that isn’t paying them benefits.
For accidents after September 1, 2010, the Legislature added a valuable tool: The Examination Under Oath. As of September 1, 2010, the insurer paying benefits can schedule an EUO of the claimant to review priority issues:
Doing so does not burn the EUO that is available under section 33 of the Statutory Accident Benefits Schedule. An EUO can be requested during the 90-day notice window or at any time during the dispute. However, the right to request and conduct the examination under oath is limited to the insurer paying benefits. Having said that, in practice most claimant lawyers will allow all insurers in the dispute to participate in an examination under oath for the sake of efficiency and convenience.
Ontario’s priority dispute scheme places disputing insurers front and centre. However, claimants often have an important role in the process.
A claimant that objects to a priority dispute within 14 days of receiving the notice can become a party to the dispute and has standing to initiate arbitration and participate in the hearing. This rarely happens, but sometimes claimants might want to participate if they believe the outcome might affect their claim. For example, a claimant might want to participate if one policy in dispute contains optional accident benefits.
Even where a claimant decides not to participate in the dispute, the claimant is often asked to provide information relevant to determine priority. Many times, the information could be sensitive and personal (such as requests for financial information to determine dependency). Claimants are also frequently asked to attend an examination under oath to provide oral evidence on relevant priority issues.
From experience, claimant lawyers are usually very helpful when asked to provide relevant information. Co-operation between all counsel is usually the key to resolving these disputes in an efficient and timely manner.
Daniel loves coverage. Want to know if the “your work” exclusion applies? Ask Dan. Want to know if a “house” is a “home”? Ask Dan. Want to know the best toppings to cover a pizza? Don’t ask Dan: He can’t eat gluten. But he does digest various insurance policy definitions, wordings, and exclusions without any heartburn.