Insurer's denial did not contain clear information and therefore not valid

June 07, 2014, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Date of Decision: April 28, 2014

Heard Before:  Adjudicator David Evans




1.       The Arbitrator’s order of June 5, 2013 is confirmed and this appeal is dismissed.






Western Assurance Company appeals Arbitrator Kowalski’s order that Mr. Burden may proceed to arbitration regarding the stoppage of weekly benefits. She found that since the notice of stoppage was void, no time limit prevented his proceeding to arbitration.




Mr. Burden was injured in car accident on August 17, 2001, and sought weekly income replacement benefits (IRBs) from Western Assurance Company. Western paid IRBs to August 13, 2004, the stoppage date set out in the Notice of Stoppage of Weekly Benefits and Request for Assessment sent by Western on July 29, 2004. The assessment in the title refers to one at a Designated Assessment Centre (DAC).


Mr. Burden did not seek to mediate this stoppage until 2010, even though Part 4 of the OCF-17 warned him that he had two years from the date of stoppage to dispute it by seeking mediation.


The Arbitrator found that Western’s refusal was rendered void by Part 5 of the OCF-17, in that it made a request for a mandatory DAC assessment in order to mediate the stoppage of weekly benefits. Such a request is optional. She found that the form did not meet the requirement set out in Smith v. Cooperators General Insurance Co., that at a minimum a notice of stoppage should include a description of the most important points of the dispute resolution process, such as the right to seek mediation. As the Arbitrator found the form was confusing regarding this basic information, she found that valid refusal had not been given. Therefore, the two-year time limit had not begun to run, and Mr. Burden could proceed to arbitration.




The request for a DAC assessment was not mandatory. However, the Arbitrator found the OCF-17 made it so. She found that the first 4 parts of the form were “clear and uncontroversial: they told Mr. Burden in straightforward and clear language that his income replacement benefits were going to be stopped, and the reason for the stoppage.” In particular, Part 4 set out the dispute resolution process and warned Mr. Burden of the two-year limitation period to engage it. However, she found the rest of the form then made a request for a DAC a mandatory first step in the process.


The Arbitrator noted that, just before Part 5, entitled “Applicant Request and Signature,” the form states in bold “The rest of this form must be completed by the applicant and returned to the insurance company if the applicant disagrees with the stoppage of benefits.” Part 5 then includes the insured’s disagreement with the stoppage, request for a DAC, and authorization for the DAC to provide personal information regarding eligibility for benefits. The Arbitrator found:


Together with the instructions that precede it (that Part 5 must be completed if an applicant disagrees with the stoppage of benefits), Part 5 contains information that is contrary to s.37 of the Schedule and therefore misleading. Rather than describing the DAC as an option available to the insured person it tells an insured person that, if he or she does not sign the portion of the form requesting an assessment by a DAC, then he or she cannot continue on to mediation or more if she or he disagrees with the stoppage of benefits.


By this time, Mr. Burden had undergone numerous assessments, and might not reasonably have wanted another, albeit at a DAC.


Western submits that the Arbitrator had no basis for her conclusion in the second paragraph that Mr. Burden may not have wanted a DAC, and so it is speculation and an error in law. Arbitrator Evans found that does not vitiate the Arbitrator’s analysis in the first paragraph that the form mandates the request for a DAC when such a request is optional. Western also submits that recent case law in the courts provides that a faulty notice does not prevent the limitation period from running where the insured was represented by counsel. However, Gonthier J. in Smith specifically rejected this argument.


Arbitrator Evans determined that a valid refusal has to set out the dispute resolution process. The form in this case improperly indicates that, to even initiate the dispute resolution process, Mr. Burden had to request a DAC assessment. This failure to properly inform Mr. Burden about the dispute resolution process renders the refusal invalid, so the time limitation did not start to run.

Posted under Accident Benefit News, Car Accidents, Chronic Pain, Disability Insurance, Pain and Suffering

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