Anticipating the Change: the Potential for Modifications to Ontario’s Accident Benefits Regime

09Mar13

Legislative amendments to the Statutory Accident Benefits (SABS) regime have brought changes to each preceding system.  The introduction of the Minor Injury Guidelines (“MIG”), in September 2010, inaugurated amendments that replaced the preceding Pre-Approved Framework (“PAF”), which accompanied Bill 198.  Prior to the introduction of Bill 198 in November 1996, the preceding system was set out by Bill 59.  Aside from amendments to legislation, the courts have the ability to tweak the system and alter how the SABS should be interpreted. 

 

Current circumstances may present a catalyst for changes that will affect the process of how claimants pursue and receive compensation through the SABS.  There is presently an excess of over 25,000 claims awaiting mediation at the Financial Services Commission of Ontario (“FSCO”).  In short, if an insurance company denies benefits available to a claimant under the SABS, the claimant has the option to mediate the disputed benefits.  Mediation must be deemed failed before a claimant can pursue further recourse in order to receive compensation for their injuries – namely through arbitration or commencing litigation in court.

 

A tool that the insurer has been able to leverage in disputes involving compensation under the SABS, to the dismay of claimants, is the delay tactic.  Claimants become frustrated with delay, which can also be accompanied by financial hardship, and they become more likely to accept a lower amount for settlement.  The upshot is that the claimant can bring closure to the dispute, and avoid further delay and uncertainty.  However, as a starting point for Accident Benefits available to a claimant under an insurance contract, the insurer is theoretically under an obligation to operate in the utmost good faith when handling the insured`s claim.  Unfortunately when claims are made, reality can fall short of this theory.  However the Ontario Court of Appeal has specifically denounced the delay tactic, to an extent, in Hurst v. Aviva et al.  The crux of this decision is that (mandatory) mediation is guaranteed to occur within 60 days of filing the application for mediation, or it is deemed failed.  This rule ensures that the system available for claimants to pursue benefits under the SABS will operate in a timely manner.  The court rejects the insurers’ position that the clock begins to run after the application is reviewed by FSCO staff, noting that this scenario would “allow FSCO to accumulate a backlog of any length, [and] ignore the legislative purpose of providing a speedy mediation process.” 

 

There is speculation that this decision could result in increased insurance premiums for motorists.  The court in Hurst points out that filing for mediation costs the insurer $500, while filing for arbitration costs $3,000.  Although insurance companies may need to file for thousands more arbitrations, and this could result in increased premiums, these costs could arguably be offset by insurers modifying their strategy regarding mediation at FSCO.  Insurers could make relatively more favourable offers to claimants at the mediation stage, and thus decrease the likelihood of incurring further costs at the arbitration stage of the dispute.  Making more favourable offers to claimants at the mediation stage provides the opportunity to avoid the $3,000 fee required to file for arbitration, and the additional legal costs that the insurer would incur by hiring counsel for arbitration. 

 

Predictions have been made that given the present backlog of over 25,000 claims awaiting mediation, further changes may occur regarding how claims are pursued through the SABS – be it through legislative amendments or the courts.  These changes could present themselves within the next 6-8 months.  Lawyers who manage motor vehicle accident claims will inevitably have to gauge any changes, and determine how this will affect their practice and their clients’ interests.

 

If you have been involved in a motor vehicle accident, and you want to learn more about the compensation that you may be entitled to, contact Mark Stoiko at (416) 640-2217 or via e-mail to mark@galanlawfirm.ca.  Our legal team would be happy to answer your questions.

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