2010 ONSC 6868, 2010 ONSC 6868

McLinden et al., minors under the age of eighteen years, by their Litigation Guardian McLinden v. Payne [Indexed as: McLinden (Litigation Guardian of) v. Payne] 104 O.R. (3d) 554 2010 ONSC 6868 Ontario Superior Court of Justice, Eberhard J.

December 13, 2010 Insurance -- Automobile insurance -- Statutory accident benefits -- Plaintiff not disputing denial of catastrophic impairment designationby statutory accident benefits provider within two years -- Plaintiff making second application after expiry of two-year period -- Insurer[page555] denying application -- Plaintiff moving to amend statement of claim to add insurer as defendant and to seek declaration thather injuries were catastrophic -- Motion dismissed -- Plaintiff failing to adduce evidence of change of circumstances -- Second applicationconstituting dispute of original denial -- Dispute statute-barred.

M was injured in a motor vehicle accident. Her application for a determination of catastrophic impairment ("CAT") was denied by thestatutory accident benefits provider in 2006. M did not dispute the denial within two years, as required by ss. 40(4) and 51 of theStatutory Accident Benefits

Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96 ("SABS") and s. 281.1(1) of theInsurance Act, R.S.O. 1990, c. I.8. In 2009, she made a second application for a CAT designation. The insurer took the position that theapplication was statute-barred, while M argued that the application was a new application, independent of the earlier denial, and that thelegislation places no restriction on subsequent applications for a CAT designation. The plaintiffs brought a motion to amend theirstatement of claim to add the insurer as a defendant and to seek a declaration that M's injuries were catastrophic.

Held, the motion should be dismissed. To advance a compelling argument that a deserving plaintiff ought to be able to make a second application, beyond the two- year disputeperiod, there must be evidence of a change in circumstances such that the court is not being asked to consider the same condition whichwas denied and not challenged by the procedure set out in the SABS legislation. In this case, the application was nothing more than anattempt to rehash the evidence that was insufficient in 2006 to justify a CAT designation.

M should have disputed the denial within twoyears and was now statute-barred from doing so. MOTION to amend the statement of claim. Cases referred toWry v. Aviva Canada Inc., [2010] O.F.S.C.D. No. 31 (F.S.C.); Wry v. Aviva Canada Inc., [2009] O.F.S.C.D. No. 50(F.S.C.), consd Other cases referred to Arts (Litigation Guardian of) v. State Farm Insurance Co. (2008), (ON SC),91 O.R. (3d) 394, [2008] O.J. No. 2096, 65 C.C.L.I. (4th) 285, 168 A.C.W.S. (3d) 625 (S.C.J.) [Leave to appeal refused [2008] O.J. No.5740, 72 C.C.L.I. (4th) 249 (S.C.J.)]; Belair Insurance Co. v.

McMichael (2007), (ON SCDC), 86 O.R. (3d) 68,[2007] O.J. No. 1972, 224 O.A.C. 304, 50 C.C.L.I. (4th) 52, 50 M.V.R. (5th) 191, 157 A.C.W.S. (3d) 634 (Div. Ct.); Haldenby v.Dominion of Canada General Insurance Co. (2001), (ON CA), 55 O.R. (3d) 470, [2001] O.J. No. 3317, 204 D.L.R.(4th) 721, 149 O.A.C. 172, 32 C.C.L.I. (3d) 1, 107 A.C.W.S. (3d) 482 (C.A.); Kirkham v. State Farm Mutual Automobile Insurance Co.,[1997] O.I.C.D. No. 18 (Ins. Comm.); Liddiard v. Tarion Warranty Corp. (2009), (ON SCDC), 99 O.R. (3d) 656,[2009] O.J. No. 4912, 88 R.P.R. (4th) 103, 313 D.L.R. (4th) 106, 87 C.L.R. (3d) 248 (Div.

Ct.); Monks v. ING Insurance Co. of Canada(2008), 90 O.R. (3d) 689, [2008] O.J. No. 1371, [2008] I.L.R. I-4694, 235 O.A.C. 1, 2008 ONCA 269, 165 A.C.W.S. (3d) 918, 61C.C.L.I. (4th) 1, 66 M.V.R. (5th) 38; Ontario New Home Warranty Program v. Lukenda (1991), (ON CA), 2 O.R.(3d) 675, [1991] O.J. No. 320, 47 O.A.C. 388, 43 C.L.R. 225, 25 A.C.W.S. (3d) 978 (C.A.); Smith v. Co-operators General InsuranceCo., [2002] 2 S.C.R. 129, [2002] S.C.J. No. 34, 2002 SCC 30, 210 D.L.R. (4th) 443, 286 N.R. 178, J.E. 2002-663, 158 O.A.C. 1, 36C.C.L.I. (3d) 1, [2002] I.L.R.

I- 4071, 112 A.C.W.S. (3d) 950; Wawanesa Mutual Insurance Co. v. Smith (Committee of) (1998), (ON SC), 42 O.R. (3d) 441, [1998] O.J. No. 5058, 168 D.L.R. (4th) 750, 116 O.A.C. 62, 10 C.C.L.I. (3d) 155, [1999]I.L.R. I-3634, 43 M.V.R. (3d) 272, 84 A.C.W.S. (3d) 556 (Div. Ct.); West v. Aviva Canada Inc., [2008] O.F.S.C.D. No. 194 (F.S.C.)[page556] Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, s. 281.1(1) Rules and regulations referred to Statutory AccidentBenefits

Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96, ss. 40, (4), 51 Brian I. Monteiro, for plaintiffs. Bruce Keay, for defendant. [1] EBERHARD J.: -- The plaintiffs bring this motion to amend the Statement of Claim by adding the Co-operator's General InsuranceCompany as a party and defendant. Co-operators is the statutory accident benefits provider. Samantha McLinden was injured in a motorvehicle accident on April 6, 2001. In 2003, she applied for a determination of catastrophic impairment ("CAT"). The application wasdenied in a report dated June 2006. By Statutory Accident Benefits

Schedule -- Accidents on or after November 1, 1996, O. Reg. 403/96[See Note 1 below] ("SABS"), ss. 40(4), 51 and Insurance Act, R.S.O. 1990, c. I.8, s. 281.1(1), the applicant had two years to dispute thedenial. [2] In 2009, Samantha McLinden made a second application for determination of catastrophic impairment. Co-operators argues that theapplication is a statute-barred challenge to the earlier determination beyond the limitation period created by SABS, ss. 40(4), 51 andInsurance Act, ss. 281.1(1). [page557] [3] The plaintiff characterizes the application as a new application independent of the earlier denial and submits that on the basis of

appropriate statutory

interpretation, there is no restriction upon subsequent applications for a CAT designation. [ 4 ] The plaintiff argues by its plain meaning, s. 40(4) does not preclude multiple CAT applications. Rather, it is silent.

Ample case law is cited to support the proposition that the SABS constitute consumer protection legislation and, as such, must be read generously with any limitations construed narrowly. [See Note 2 below] By purposive analysis, [See Note 3 below] it is submitted that the intent of the legislation would be defeated if a deserving plaintiff were denied opportunity to demonstrate catastrophic injury when it matures to that status. The CAT application form inquires whether it is an application or reapplication and requires a reason for a reapplication.

While the approved form cannot be the tail that wags the legislative dog, the inclusion of that inquiry does raise the question of what the drafters had in mind. [See Note 4 below] [ 5 ] Co-operators offers a satisfactory explanation in proposing that an unsuccessful application under one

section of the

definitions for catastrophic determination does not necessarily impede an application under a different

section without going beyond the several limitation periods set out in the legislation, particularly the two-year appeal period of a denial under s. 40(4). [ 6 ] There is little jurisprudence to assist in the analysis of this section. Both counsel cite Wry v. Aviva, Co-operators preferring the appeal decision by the deputy director [See Note 5 below] while the plaintiff quotes the original arbitrator, who stated: The legislation does not expressly forbid such applications and clearly contemplates reapplications.

I therefore find it reasonable to argue that an applicant can reapply for determination of catastrophic impairment under [page558] the same criterion or his condition changes over time. This approach would be consistent with the broad and liberal

interpretation mandated by the consumer protection nature of insurance legislation. [See Note 6 below] [ 7 ] The deputy director's appeal decision emphasizes the need for certainty and finality and gives voice to the consumer protection

interpretation by referencing that a plaintiff has a choice as to when to apply for the catastrophic determination, has a choice of forum and procedure in the event of denial. [ 8 ] The compelling justice issue that draws me towards an

interpretation that permits a second application, notwithstanding expiry of the dispute period for a denial, is in the easily imagined scenario where a subsequently deserving applicant for a catastrophic designation was not catastrophically injured at a time when application for such status is made. The application can occur when the condition is stabilized or, after three years, even if the condition is not yet stabilized. It is easy to suppose that catastrophic status may not be demonstrable at that stage but could develop or appear by a material change in circumstances at some later date.

Unlike the several cases cited by Co-operators [See Note 7 below] which hold that an expired claim cannot be revived by a deterioration or change in circumstances, the CAT designation is not one where fading memories or continuing uncertainty of potential claims resonate with unfairness against the responding party. The need to put claims for IRB benefits or disputes of denials of treatment into a time frame is a valid concern, but unfairness weighs heavily against a claimant whose injuries become catastrophic over time.

The silence of the legislation on whether a late CAT application can be made, though initially denied, may leave room for determination of CAT status under the SABS

schedule s. 40 when such a condition appears. [ 9 ] This was the reasoning of the arbitrator in Wry v. Aviva. He found reapplication possible by statutory

interpretation. Nevertheless, that arbitrator denied the claim on the basis that it was not factually distinct from the earlier claim and did therefore fall within the s. 40(4) restriction. The report makes it clear that there was evidence before the arbitrator upon which such a fact finding could be made. [page559] [ 10 ] This gives rise to a concern. While it may be tempting to interpret silence as leaving open a second application, beyond the dispute period of an earlier denial, where there is a material change in circumstances such that catastrophic designation can now be justified, the

schedule lacks any procedure as to the stage when a finding of change of circumstances might be considered. [ 11 ] In the present case, the plaintiff wishes to amend the Statement of Claim and [seeks] a declaration from the court that the plaintiff's injuries are catastrophic.

If that is permitted without any demonstration that the plaintiff's condition has changed since the earlier denial, then the dispute procedure set out in s. 40(4) is meaningless. [ 12 ] On the other hand, Co-operators simply refused to consider the second application that came its way, so the determination of a change in condition or new condition now catastrophic in status is not available by the procedure for an application under the SABS schedule, s. 40 . [ 13 ] There is clear disadvantage in permitting an application to the court for a declaration of catastrophic injury without first requiring a finding that the condition to be considered is different from that which was denied and not challenged under the dispute procedure set out in s. 40(4).

If a disappointed claimant is permitted to proceed by way of an amended Statement of Claim, or even a new action against the SABS provider, it could well become the norm, an opened floodgate clearly not intended under the SABS

schedule and the s. 40(4) procedure. [ 14 ] Accordingly, to advance the compelling argument that a deserving plaintiff ought to have the

section interpreted to permit a second application, beyond the s. 40(4) dispute period for denial, by way of new Statement of Claim or amended Statement of Claim, I find there must be evidence of a change in circumstances such that the court is not simply being asked to consider the same condition already denied and not challenged by the procedure set out in the SABS legislation. [ 15 ] A report of Omega Medical Associates dated March 12, 2009 was placed before me. It is entitled Catastrophic Impairment Rebuttal Report. The

preamble states: The MDAC Report concluded that Ms. McLinden did not meet the definition of catastrophic impairment under any of the criteria listed under

section 2 of the Statutory Accident Benefit

Schedule ( SABS ). In accordance with your request, we have undertaken a multidisciplinary assessment as a response to the MDAC evaluation. In submitting this report we are disputing the ratings of this

section 42 assessment. [page560]

[16] The report does indeed have the appearance of a critique of the 2006 decision focusing heavily on why these new clinicians disagreewith those who reported in 2006. [17] By way of a demonstration that the application is for new and changed circumstances, the plaintiff argues a demonstration ofdeterioration, at p. 39 of the report, which is part of a discussion of a current evaluation that Ms. McLinden satisfies a DSM-4 criteria forthe diagnosis of opiod dependence.

Argument was not developed before me contrasting any qualitatively different circumstances uponwhich the 2009 application for CAT designation differs from the condition for which such a designation was denied in 2006. [18] Therefore, using the very reasoning urged upon me from the arbitrator in Wry v. Aviva, I do not reject the statutory

interpretationthat would allow a new application for CAT designation where sufficient distinction from the original evidence can be demonstrated tobase a provisional finding that there is something new to consider. In the present case, I have not been persuaded that, in fact, thisapplication is anything other than a rehashing of the evidence that was insufficient in 2006 to justify a CAT designation. I do notforeclose the possibility that by reason of the consumer protection nature of the SABS

schedule that a second application beyond the s.40(4) limitation period may be possible as not prohibited. However, nothing before me persuades me that the present application isanything other than a dispute of the denial and that is not a matter on which the legislation is silent. Rather, by the terms of ss. 40(4), 51and Insurance Act, s. 281.1(1), such a dispute is permissible within two years. Within two years the plaintiff has the choice of a courtaction.

However, by the clear terms of the section, that dispute opportunity does not last beyond two years. [19] The motion to amend is dismissed. [20] The parties may file written submissions as to costs by December 20, 2010, not to exceed two pages, together with a costs outlineand any offers. Motion dismissed.

Notes ---------------- Note 1: 40(4) The determination by the designated assessment centre is binding on the insured person and the insurer, subject to thedetermination of a dispute, in accordance with sections 279 to 283 of the Insurance Act, relating to whether the impairment is acatastrophic impairment. . . . . . 51(1) A mediation proceeding or evaluation under

section 280 or 280.1 of the Insurance Act or a court proceeding or arbitration underclause 281(1)(

a) or (

b) of the Act in respect of a benefit under this Regulation shall be commenced within two years after the insurer'srefusal to pay the amount claimed. . . . . . 281.1(1) A mediation proceeding or evaluation under

section 280 or 280.1 or a court proceeding or arbitration under

section 281 shall becommenced within two years after the insurer's refusal to pay the benefit claimed. Note 2: Smith v. Co-operators General Insurance Co., 2002 SCC 30 , [2002] 2 S.C.R. 129, [2002] S.C.J. No. 34; Ontario NewHome Warranty Program v. Lukenda (1991), (ON CA), 2 O.R. (3d) 675, [1991] O.J. No. 320 (C.A.); Liddiard v.Tarion Warranty Corp. (2009), (ON SCDC), 99 O.R. (3d) 656, [2009] O.J. No. 4912 (Div. Ct.); Monks v. INGInsurance Co. of Canada (2008), 2008 ONCA 269 , 90 O.R. (3d) 689, [2008] O.J. No. 1371, 235 O.A.C. 1 (C.A.); Arts(Litigation Guardian of) v.

State Farm Insurance Co. (2008), (ON SC), 91 O.R. (3d) 394, [2008] O.J. No. 2096(S.C.J.), leave to appeal refused [2008] O.J. No. 5740, 72 C.C.L.I. (4th) 249 (S.C.J.). Note 3: Wawanesa Mutual Insurance Co. v. Smith (Committee of) (1998), (ON SC), 42 O.R. (3d) 441, [1998] O.J.No. 5058 (Div. Ct.); Belair Insurance Co. v. McMichael (2007), (ON SCDC), 86 O.R. (3d) 68, [2007] O.J. No. 1972(Div. Ct.). Note 4: Wry v. Aviva, [2010] O.F.S.C.D. No. 31 (F.S.C.). Note 5: Ibid. Note 6: Wry v. Aviva Canada Inc., [2009] O.F.S.C.D. No. 5 (F.S.C.). Note 7: Haldenby v.

Dominion of Canada General Insurance Co. (2001), (ON CA), 55 O.R. (3d) 470, [2001] O.J.No. 3317 (C.A.); Kirkham v. State Farm Mutual Automobile Insurance Co., [1997] O.I.C.D. No. 18 (Ins. Comm.); West v. AvivaCanada Inc., [2008] O.F.S.C.D. No. 194 (F.S.C.). ----------------