Denial Of The Status Of Catastrophic Impairment Does Not In Itself Amount To A Denial Of A Benefit

In the recent decision of Machaj v. RBC General Insurance Company, 2016 ONCA 257 (CanLII), the Ontario Court of Appeal confirmed that the denial of the status of catastrophic impairment does not amount to a denial of a benefit.

Machaj v. RBC was an appeal from an order by a Judge of the Superior Court dismissing an action for catastrophic impairment under the Statutory Accident Benefits Schedule on the ground that the claim was statute barred by virtue of s. 281.1(1) of the Insurance Act, R.S.0., 1990, c. I-8.

At first instance, the Motion Judge found that the Applicant's claim was statute barred as a mediation proceeding had not been commenced "within two years after the Insurer's refusal to pay the benefits claimed".

The central issue on the Appeal was whether the motion judge had erred by concluding that the decision of the Divisional Court in Do v. Guarantee Insurance Co., 2015 ONSC 1891 (CanLII), did not apply to the particular facts of the case.

The decision in Do v. Guarantee upheld a consistent line of arbitral decisions that an Insurer's denial of the status of catastrophic impairment did not, in itself, amount to a denial of a benefit and that it was only in situations where a specific benefit was denied that the limitation period commenced running against the Applicant. The Divisional Court in Do accepted the proposition that catastrophic impairment status was not itself a benefit, but rather a designation that entitled an Applicant to request extended medical, rehabilitation and/or attendant care benefits and other expenses.

In Machaj v. RBC, the Applicant had completed an OFC-19 seeking a "catastrophic determination" however no claim was made for a specific benefit.

The Insurer, in response, denied the Applicant's request for catastrophic impairment status.

In the OFC-9 (Explanation of Benefits) the Insurer gave the following reason for the denial: "Please note that the assessors have formed the consensus opinion that you have not sustained a Catastrophic Impairment and therefore you do not qualify for the increased benefits" [Emphasis added].

At first instance, the Insurer submitted, and the motion judge found, that by adding the words "and therefore you do not qualify for the increased benefits", the Insurer did deny benefits within the meaning of s. 281.1(1) of the Insurance Act. As the Insurer's denial in Do did not contain such language, the motion judge concluded that Do was therefore distinguishable from the present...