Income Replacement Benefits Outside of Two Year Limitation Period

December 22, 2008, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Before: Arbitrator Suesan Alves

Decision Date: November 21, 2008

Stephen Grosicki was injured in a motor vehicle accident on August 30, 2002. He applied for and received statutory accident benefits from Non-Marine Underwriters, Mbrs. of Lloyd´s (Lloyd´s).

Lloyd´s alleged that Mr. Grosicki´s claims for income replacement benefits were time barred by section 281(5) of the Insurance Act. Mr. Grosicki submitted that he was entitled to resume receiving income replacement benefits under section 11 of the Schedule and that his claim for those benefits was timely.

Mr. Grosicki was injured in a motor vehicle accident on August 30, 2002. Lloyd´s accepted that he was entitled to receive income replacement benefits and paid those benefits commencing on September 7, 2002 until September 24, 2003.

Lloyd´s put Mr. Grosicki´s income replacement benefits in stoppage on July 11, 2003, based on an insurer´s examination. Lloyd´s informed Mr. Grosicki that he could request a disability DAC, and that if he did so by July 28, 2003, his income replacement benefits would have continued until the report of the DAC was received. As Lloyd´s paid the income replacement benefits until the date it sent him the DAC report, Mr. Grosicki requested the disability DAC by July 28, 2003.

The DAC assessors concluded that Mr. Grosicki did not suffer "a severe inability" to perform the essential tasks of his pre-accident employment. Lloyd´s concluded that Mr. Grosicki was no longer substantially disabled.

In a letter dated September 24, 2003, Lloyd´s informed Mr. Grosicki that his income replacement benefits were terminated. Lloyd´s also informed Mr. Grosicki that he had the right to dispute the termination by mediation and arbitration or a court proceeding; and that there was a two-year time limit for taking such steps. The arbitrator found this to be a clear and unequivocal refusal of Mr. Grosicki´s income replacement benefits.

Mr. Grosicki accepted this termination and on September 29, 2003, five days after his benefits were terminated, he returned to work at his pre-accident employer where he worked for almost 30 months.

As of March 27, 2006, Mr. Grosicki went off work on a disability. He alleged that his disability was due to his injuries from the motor vehicle accident of August 30, 2002. There was a dispute between Mr. Grosicki and Lloyd´s as to the cause of this disability. In December 2006, counsel for Mr. Grosicki asked Lloyd´s to resume payment of Mr. Grosicki´s income replacement benefits as of March 27, 2006, when he went off work.

Lloyd´s took the position that Mr. Grosicki had two years after the refusal of September 24, 2003, or until September 24, 2005, to apply for mediation and arbitration. Lloyd´s submitted that Mr. Grosicki´s claim for further income replacement benefits was time barred. He applied for mediation on July 9, 2007 and for arbitration on February 7, 2008 just shy of four years after Lloyd´s refused his claim for further income replacement benefits.

Mr. Grosicki submitted that at the time he returned to work he agreed with the Insurer´s position. There was no dispute between the parties and no issue which could be mediated or arbitrated. He submitted that any applicable limitation period would have begun to run from the date of Lloyd´s refusal to resume his benefits under section 11 on April 25, 2007. Since he applied for mediation and arbitration within two years of the date of that refusal, his applications for mediation and arbitration was timely and he was entitled to proceed to have an adjudication of his entitlement to further income replacement benefits on the merits.

Mr. Grosicki´s argument, that because he returned to work, a provision in the Schedule gave him two limitation periods, was quite similar to the argument advanced in the case of Haldenby v. Dominion of Canada General Insurance Company. In that case the argument was rejected both at the trial level and by the Ontario Court of Appeal. One of the difficulties the Court of Appeal identified was that Ms. Haldenby´s argument, if accepted, would have allowed a person receiving benefits and who had successfully returned to work to apply for further benefits at any time in an undetermined future. And this would "unreasonably controvert the systemic need for finality, certainty and the principle of diligence."

Based on Haldenby, they do not get the benefit of two limitation periods. By implication they must return to work before a refusal which triggers the limitation period, or commence mediation or a court or arbitration proceeding in relation to a claim for resumed benefits before the limitation period expires.

Although the return to work provisions in the Bill 68 Schedule is somewhat different from those in the Bill 59 Schedule at issue in the case, the arbitrator found the underlying principle expressed in Haldenby applicable.

As stated earlier, Lloyd´s refusal of Mr. Grosicki´s income replacement benefits on September 24, 2003 was clear and equivocal. Lloyd´s informed him of his rights and remedies and the applicable time limits within which he was required to take steps to dispute the refusal. The arbitrator concluded that the refusal of September 24, 2003 triggered the limitation period. For the reasons given by the Court of Appeal in Haldenby, it was found that Mr. Grosicki was precluded, by section 281(5) of the Insurance Act, from proceeding with his claim for further income replacement benefits from March 27, 2006.

Posted under Accident Benefit News, Automobile Accident Benefits, Car Accidents, Disability Insurance

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Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit or call us toll-free at 1-866-414-4878.

It is important that you review your accident benefit file with one of our experienced personal injury / car accident lawyers to ensure that you obtain access to all your benefits which include, but are limited to, things like physiotherapy, income replacement benefits, vocational retraining and home modifications.

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