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The New Dispute Resolution System – Bill 15

Yes, Bill 15 was passed, but not yet implemented, resulting with changes being made to the Insurance Act (Part XIV) which will affect the dispute resolution process regarding accident benefits, as we know it today.

The main change is the elimination of the claimant’s ability to litigate accident benefits disputes in the courts. This means that accident benefits claims can no longer be litigated alongside their tort counterparts. The dispute resolution system is being moved from the Financial Services Commission of Ontario (“FSCO”) to the Licence Appeal Tribunal (“LAT”) of Ontario. The FSCO has adjudicated accident benefits disputes since 1990, is exclusively dedicated to adjudicating accident benefits disputes and has developed specialized understanding of the Statutory Accident Benefits Schedule (“SABS”). The LAT, however, consists of part-time public servants who have been appointed on fixed term contracts with no experience with accident benefits matters. There is concern whether accident benefits disputes will be fairly and correctly adjudicated by the LAT members.

There will be considerable changes once Bill 15 amendments come into force (currently waiting for the Lieutenant General’s proclamation). There will no longer be the option to have a neutral evaluation under section 280.1 or a private arbitration under section 281 of the Insurance Act, mandatory mediation will be eliminated, the two-year limitation period for filing disputes will be eliminated, special awards will be eliminated, there will not be the option of proceeding to litigation and disputes will be handled by the LAT rather than FSCO arbitrators. In addition, the Lieutenant Governor in Council will be given broad powers to draft regulations pertaining to this new dispute resolution system.

It would appear the new dispute resolution system, once implemented, will have the following steps:

  1. Insurers will be encouraged, but not required, to conduct an Internal Review upon being advised that a claimant disagrees with a decision to deny a benefit;
  2. Claimant registers the dispute by submitting an Application for a Settlement Meeting and the Registrar will schedule a date with the Arbitrator for the Settlement Meeting;
  3. If the Settlement Meeting fails, then an Application for Arbitration with LAT is filed (who will decide whether by paper review or a full hearing);
  4. Decisions from LAT will only be appealable to the Superior Court of Justice and only on a question of law;
  5. No court action by either the insured against the insurer or the insurer against the insured at any time.

In addition to the above, the prejudgment interest rate will be reduced from 5% to 1.3% with the intent to link prejudgment interest to the current market conditions.