The Ontario Court of Appeal has upheld Justice Ramsay's determination that the LAT has exclusive jurisdiction at first instance over all claims in respect of accident benefits, including extra contractual claims such as bad faith conduct.
By way of background, Ms. Stegenga started an action in Superior Court against her accident benefit insurer, Economical, claiming aggravated, exemplary and punitive damages for breach of contract, negligence, misrepresentation, infliction of mental distress and bad faith. Economical brought a motion to strike the claim pursuant to Rule 21 of the Rules of Civil Procedure, on the basis that the LAT had exclusive jurisdiction at first instance, not the court.
Economical took the position that s. 280 of the Insurance Act, which came into effect April 1, 2016, was clear and unambiguous in taking jurisdiction from the courts and giving it to the LAT. They argued that the legislature had made a policy choice to grant exclusive jurisdiction to the LAT and limit the remedies the LAT could grant.
The Plaintiff argued that the language of s. 280 of the Insurance Act was not clear and unambiguous enough to take away the Superior Court's inherent jurisdiction over certain claims, and in particular claims for bad faith. She also argued that the fact that the LAT cannot award aggravated, exemplary or punitive damages supported this conclusion.
Economical was successful and the Plaintiff's claim was struck on the motion, with Justice Ramsay finding:
There is no reason to doubt that the legislature, in enacting the present s. 280 of the Insurance Act, intended to deprive a claimant of resort to the court at first instance whenever the claim is based on a denial of accident benefits, no matter how the denial is characterized in legal terms.
The Plaintiff appealed to the Court of Appeal.
Once again the Plaintiff, now the Appellant, argued that her claim was for bad faith handling of her accident benefit claim and not a claim "in respect of an insured person's entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled". As a result, she took the position that her claim did not fall within the ambit of s. 280 of the Insurance Act, which provides jurisdiction to the LAT and prohibits access to court other than on appeal or judicial review.
To understand the decision it is helpful to review the language of s. 280 of the Insurance Act, which falls under the title" Dispute Resolution-Statutory Accident Benefits":
Resolution of disputes
280 (1) This section applies with respect to the resolution of disputes in respect of an insured person's entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled. 2014, c. 9, Sched. 3, s. 14.
Application to Tribunal
(2) The insured person or the insurer may apply to the Licence Appeal Tribunal to resolve a dispute described in subsection (1). 2014, c. 9, Sched. 3, s. 14.
Limit on court proceedings
(3) No person may bring a proceeding in any court with respect to a dispute described in subsection (1), other than an appeal from a decision of the Licence Appeal Tribunal or an application for judicial review. 2014, c. 9, Sched. 3, s. 14.
Resolution in accordance with Schedule
(4) The dispute shall be resolved in accordance with the Statutory Accident Benefits Schedule. 2014, c. 9, Sched. 3, s. 14.
Orders, powers and duties
(5) The regulations may provide for and govern the orders and interim orders that the Licence Appeal Tribunal may make and may provide for and govern the powers and duties that the Licence Appeal Tribunal shall have for the purposes of conducting the proceeding. 2014, c. 9, Sched. 3, s. 14.
Orders for costs, other amounts
(6) Without limiting what else the regulations may provide for and govern, the regulations may provide for and govern the following:
1. Orders, including interim orders, to pay costs, including orders requiring a person representing a party to pay costs personally.
2. Orders, including interim orders, to pay amounts even if those amounts are not costs or amounts to which a party is entitled under the Statutory Accident Benefits Schedule. 2014, c. 9, Sched. 3, s. 14.
The Court of Appeal dismissed the appeal and upheld the motion judge's decision, finding that the legislative purpose, use of expansive language and the jurisdiction given to the LAT in the Insurance Act, Statutory Accident Benefit Schedule and in Regulation 664all supported a broad interpretation of the LATs jurisdiction, therefore prohibiting access to the courts. J. Zarnett,, writing for the Court of Appeal, stated:
If the dispute relates to the insurers compliance with obligations to the insured concerning SABS, the timeliness of performance of those obligations and/or the manner in which they were administered, it falls within the broad reach of the dispute resolution provisions, and within the jurisdiction of the LAT. The prohibition on court proceedings will apply.
Having found that the dispute resolution provisions are broad enough to give the LAT jurisdiction, the Court of Appeal considered the Appellant's argument that because bad faith is a standalone cause of action it could not be captured by the language of s. 280 "in respect of entitlement or amount of benefits". The Court concluded that "it does not follow that this automatically takes the subject matter of the claim, even when characterized as one for bad faith, outside of s. 280", noting that it is the nature and subject matter of the dispute that are determinative, not the legal characterization.
Ultimately, the Court held that the facts giving rise to the disputes between the parties all related to the Appellant's entitlement to benefits or the amount of entitlement. These were all disputes captured by the broad language of s. 280(1) of the Insurance Act and the LAT's jurisdiction under s. 280(2), and therefore fall within the prohibition on court proceedings in s. 280(3).
See: Stegenga v. Economical Mutual Insurance Company, 2019 ONCA 615,
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