Catastrophic Impairment Denial Not Subject to Limitation Period

Because a catastrophic impairment designation is not a benefit", as defined under the Statutory Accident Benefits Schedule (SABS), there is no time limitation for disputing an insurer's denial. On January 6 2009, Zofia Machaj submitted an Application for Determination of Catastrophic Impairment (OCF-19) to RBC Insurance.  After conducting insurer's examinations, RBC responded on May 25, 2009, stating that, "the assessors have formed the consensus opinion that you have not sustained a catastrophic impairment and therefore you do not qualify for the increased benefits." In order to dispute RBC's denial, an Application for Mediation was submitted by Ms. Machaj on July 18, 2011, which was almost two months beyond the two year limitation period that the Insurance Act stipulates is required.  Section 281.1 of the Insurance Act establishes a limitation period, provides that a mediation proceeding, "...shall be commenced within two years after the insurer's refusal to pay the benefit claimed" (emphasis added). In 2015, Whitten J. issued a decision on a Summary Judgment Motion in the matter of Machaj v RBC General Insurance Company [2015 ONSC 4310], wherein he found in favour of RBC Insurance and ruled that the two-year limitation applied, because the denial, "...flushed out the consequences of the denial of the status of catastrophic impairment; namely, the enhanced benefits were not available." Ms. Machaj appealed.  The Ontario Court of Appeal disagreed with Judge Whitten's decision, noting that, "In our opinion, by adding the words, "and you therefore you do not qualify for the increased benefits", the respondent insurer was doing nothing more than telling the appellant that she lacked status to claim increased benefits. The additional words did not convert what was, in substance, a denial of a catastrophic determination into a denial of the specific benefits that would trigger the commencement of the two year limitation period." RBC Insurance sought leave to appeal to the Supreme Court of Canada, but it was dismissed with costs. As such, under the current legislation, an insured person is not bound to dispute an auto insurance company's denial of catastrophic impairment determination within two years, unlike a denial of an actual "benefit" under the SABS. If you have been injured in an automobile accident and your insurance company has denied anything, it is always best to consult with a lawyer to ensure that your interests and entitlements are protected.