Note: This article originally appeared on The Lawyer's Daily on January 2nd, 2020.

The Ontario Court of Appeal ruled in a decision released Nov. 8, 2019, that limitation periods under the Statutory Accident Benefits Schedule (SABS) are subject to discoverability and are not to be considered “hard limitation periods.”

The main issue before the court in Tomec v. Economical Mutual Insurance Company 2019 ONCA 882 was whether the two-year limitation periods set out in ss. 281.1(1) of the Insurance Act and 51(1) of the SABS were subject to the doctrine of discoverability. Both sections state that any disputes arising over benefits under the legislation must be brought within two years of the insurer’s refusal to pay the benefits.

The doctrine of discoverability requires that for a limitation period to commence the material facts on which a dispute is based must first have been discovered, or must ought to have been discovered, by the person with the claim.

In Tomec, the insured had sustained various injuries after being struck by a vehicle in October 2008 and applied to her motor vehicle insurer, Economical, for accident benefits. Sotira Tomec received attendant care benefits and housekeeping benefits for 104 weeks after her initial injury. According to ss. 18(2) and 22(3) of the SABS, as it read at the time of Tomec’s collision, attendant care and housekeeping benefits are only payable for the first two years, or 104 weeks, after an individual sustains injuries in a motor vehicle collision unless he or she has sustained a catastrophic impairment. In this case, Tomec had not yet been deemed catastrophically impaired by her insurer and therefore, as based on the SABS, she was not entitled to receive further housekeeping or attendant care benefits as of October 2010.

In 2014, three-and-a-half years later, she developed osteoarthritis in her knee and permanent and untreatable loss of movement in her shoulder. These impairments were directly related to the October 2008 automobile collision.

The next year, her doctor submitted an application for determination of catastrophic impairment (OCF-19) to her insurer. Submitting an OCF-19 form requires that the insurer decide whether the applicant has sustained a catastrophic impairment under the SABS, and in turn, whether he or she is eligible for ongoing attendant care and housekeeping benefits past 104 weeks.

Economical accepted that Tomec was catastrophically impaired but denied paying any past benefits owing and future attendant care and housekeeping benefits. The insurer based its denial on the fact that the benefits were initially denied 104 weeks after the collision and since she did not appeal the
stoppage of benefits within two years of when the benefits stopped being paid, she was past the limitation period and therefore barred from further disputing the denial of those benefits.

Tomec filed an application to the Licence Appeal Tribunal (LAT) to dispute the insurer’s denial of these benefits, arguing that she could not have appealed the initial stoppage of benefits because there was nothing to appeal at the time — she was not entitled to further benefits. 

The LAT held that the doctrine of discoverability should not apply to the limitation periods under the Insurance Act and therefore Tomec was prohibited from disputing Economical’s denial to pay further housekeeping and attendance care benefits. The Divisional Court upheld the LAT’s decision. Tomec
appealed the decision of the Divisional Court to the Ontario Court of Appeal.

The Court of Appeal found that the decisions below would result in a “hard limitation period,” which would effectively bar an applicant from claiming enhanced benefits before he or she was even eligible for those benefits.

The court recognized that an insured in Tomec’s position would be put in an impossible situation that would likely fail, stating: “In [the court’s] view, the hard limitation period puts the appellant [Tomec] in an impossible situation, where the time for claiming a benefit commences when she is ineligible to
make such a claim. This is an absurd result. To choose it, as the LAT did, is unreasonable.”

Justice C. William Hourigan, writing for the court, summarized the decision: “... it is unreasonable to construe the relevant limitation period as a hard limitation. There is a single reasonable interpretation of s. 281.1(1) of the Insurance Act and s. 51(1) of the SABS. The limitation period contained in those sections is subject to the rule of discoverability because it is directly tied to the cause of action that an insured can assert when denied benefits. A hard limitation period is contrary to the purposes of the SABS and the Supreme Court’s guidance in Pioneer. In addition, a hard limitation period in these circumstances would lead to absurd results and is not consistent with the policy rationales that underlie limitation periods.”

The Court of Appeal focused on the purpose of the SABS legislation in its analysis of whether discoverability should apply and found that a hard limitation period would be incompatible with the SABS’ consumer protection purpose and would result in insufficient compensation for accident victims.

A hard limitation period for benefit denials under the SABS would have required insureds to apply for benefits, and appeal the denial of benefits, that they were not yet eligible to receive in order to preserve their right to potentially obtain those benefits at some point in the future if their condition
worsened.

The decision in Tomec represents a significant victory for injured individuals in Ontario. It provides protection for accident victims, allowing them two years to appeal accident benefits denials by their insurer after they first become eligible for the benefits. This result will provide for greater fairness for injured victims in Ontario, particularly for vulnerable individuals who have become catastrophically impaired as a result of their injuries.