In 2014, the Ontario government introduced the Fighting Fraud and Reducing Insurance Rates Act. It’s purpose was to provide a fair and cost effective way to resolve accident benefits disputes between insurers and insureds. It did so by taking away a person’s right to start a court action in any cases where the dispute involved entitlement to and/or payment of accident benefits. Instead the Act mandated that disputes were to be heard by a tribunal.
Prior to this change, a claimant could choose whether they wanted to apply for arbitration of the dispute through the Financial Services Commission or start a court action. A claimant was also entitled to ask for an award for bad faith damages. “Bad faith” is a legal term for when an insurer denies a claim without a reasonable basis. Under the new Act, the tribunal cannot make an award for bad faith but can award an additional 50% of the benefits if the insurer has denied benefits unreasonably.
After the changes to the Insurance Act were introduced, many lawyers questioned whether it may still be possible to bring independent bad faith claims against insurance companies in the Superior Court of Justice.
In March 2018, the Ontario Superior Court of Justice released it’s decision in Stegenga v. Economical Mutual Insurance Company. In this decision, the Court clarified and closed this option to all accident benefit claimants.
Justice Ramsey, on a motion to strike the Plaintiff’s pleading, held that all claims relating to a person’s entitlement to Statutory Accident Benefits, including those for damages resulting from the alleged bad faith of the insurer are within the exclusive jurisdiction of the Licence Appeal Tribunal and therefore claimants are statute barred from bringing them before the Superior Court of Justice.
With the release of this decision claimants are now limited to seeking no more than 50% of the benefit denied where the tribunal agrees that the insurer has denied benefits unreasonably.
If you are currently dealing with an insurer regarding an accident, or if you require more information about Statutory Accident Benefits, please contact me directly.
Associate with the Personal Injury and Litigation Group
Disclaimer: This article is provided as an information resource. This article should not be relied upon to make decisions and is not intended to replace advice from a qualified legal professional. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. Please note that this information is current only to the date of posting. The law is constantly changing and always evolving