Appeal Court restores ruling by FSCO director’s delegate

Ontario’s Court of Appeal has ruled in favour of Certas Direct Insurance Company in a decade-long dispute over accident benefits, opting to set aside a divisional court order on the interpretation of the limitation period under the Insurance Act.

Gordyukova v. Certas Direct Insurance Company sets aside the court order and restores an earlier order by the director’s delegate of the Financial Services Commission of Ontario (FSCO).

“The respondent was and remains at liberty to have her claim for catastrophic impairment determined as part of the pending Superior Court action,” Justice Paul Rouleau, writing for the Appeal Court, notes in the Aug. 30 ruling.

“The divisional court misapprehended the effect of the delegate’s decision when it held otherwise. In all of the circumstances, the delegates’ decision was reasonable and deserving of deference.”

The case involves Julia Gordyukova. Gordyukova was injured in a motor vehicle accident in November 2001 and filed an action in the Ontario Superior Court on Sept. 16, 2002.

After her medical-rehabilitation benefits ran out, however, she made an application for a catastrophic impairment determination. The insurer rejected this application, prompting the claimant’s response in November 2008 to file for arbitration on that issue before FSCO.

Named as the priority insurer in December 2009, Certas argued in March 2010 that the scheduled arbitration on catastrophic impairment determination should be added to the court action for income replacement benefits (IRB). Gordyukova disagreed, maintaining the arbitration and IRB actions should proceed separately and concurrently.

The FSCO arbitrator agreed the claimant could not proceed in both forums, but refused to stay the proceedings, notes a post in Lexology by Daniel Strigberger, a partner in the Insurance Litigation Group of Miller Thomson LLP’s Waterloo, Ontario office. “Instead, he found that the claimant could add the issues in dispute in the action to the FSCO arbitration if she also discontinued the court action.”

Strigberger notes that although it was found Section 281.1(1) of the Insurance Act allowed the claimant to choose whether to proceed either by arbitration or through the courts, once the two-year limitation period expired, the claimant could not move a matter from one forum to the other.

The Superior Court rejected the FSCO ruling, but the Appeal Court allows the insurer’s appeal and restores the director delegate’s decision.

Strigberger points out that the case highlights some of the “forum shopping” concerns that insurers face, as only the claimants decide the forum that will determine the issues in dispute. The Court of Appeal ruling also affirms that the FSCO director’s delegate’s interpretation is owed deference because, among other things, interpreting the Statutory Accident Benefits Schedule provisions and Section 281.1(1) of the Insurance Act is “at the core of the delegate’s expertise.”

The Appeal Court awarded Certas $6,500 in cost relating to the appeal and the leave motion, as well as $3,500 in costs for the divisional court proceeding.