Accident benefit settlements are at a complete standstill thanks to a recent Financial Services Commission of Ontario arbitration decision invaliding the mandatory settlement documents approved by the superintendent.
For those personal injury lawyers hoping to resolve accident-benefit claims on a full and final basis, feel free to take a holiday.
Multiple insurers have already confirmed that they can’t resolve accident-benefit claims, nor complete nearly resolved ones, until of this is all sorted out.
In Parveen and Aviva Canada Inc., arbitrator Suesan Alves ruled the official settlement disclosure notice, the standardized one approved by the superintendent, is invalid as it doesn’t properly explain the timing of an insured’s right to rescind a settlement.
Section 9.1 of the statutory accident benefits schedule sets out the mandatory process for resolving an accident-benefit claim on a full and final basis.
The section is meant to ensure that claimants are aware of their potential benefit entitlement and aren’t manipulated in any way when deciding whether or not to settle their accident-benefit claims.
Specifically, s. 9.1 sets out a number of items that must be disclosed to claimants before they can settle their accident-benefit claims.
It stipulates that claimants — and insurers, for that matter — must sign a written disclosure notice in a “form approved by the superintendent” that contains some basic information.
The information required includes the right to rescind a settlement “within two business days after the later of the day the insured person signs the disclosure notice and the day the insured person signs the release.”
In Parveen, the arbitrator concluded that the superintendent-approved forms failed to properly explain that the insurer can rescind based on the later of the two dates. Accordingly, she allowed the claimant to renege on the deal. Aviva is appealing the decision.
The decision, if it stands, has the potential to open the door to former claimants wishing to revisit their previously settled accident-benefit claims and create a nightmare scenario for insurers. Even claimants who had counsel throughout, as in the Parveen case, could have the chance to do so.
Notably, the decision shouldn’t impact court-approved accident-benefit settlements as s. 9.1(6) of the schedule confirms that they can’t be rescinded for non-compliance with the disclosure obligations.
The obvious solution is for the superintendent to make slight changes to the documents and then approve a clearly compliant settlement disclosure notice.
But until that happens, insurers can’t just fix the notice themselves because the provision requires it to be in a “form approved by the superintendent.”
While the decision may be technically correct, the consequence is unfavourable to frustrated accident-benefit claimants hoping to part ways with their insurers by settling on a full and final basis.
The result is even more distressing for those on the verge of completing their accident-benefit settlement and who now face delays and uncertainty about the status and timing of it.
Darcy Merkur is a partner at Thomson Rogers in Toronto practising plaintiff’s personal injury litigation.
