In H.S. and Allstate Insurance (2018 CanLII 132563), the parties held a Preliminary Issue hearing before Adjudicator Deborah Neilson of the Licence Appeal Tribunal (LAT). The Applicant, H.S. was seriously injured in a car accident on August 18, 2016. She submitted an application for Determination of Catastrophic Impairment (catastrophic) to the Respondent, Allstate, her automobile insurer. Allstate rejected the application. It claimed that she had used the form for accidents that occurred before June 1, 2016, whereas her collision occurred after June 1, 2016, when the current version of the Statutory Accident Benefits Schedule (SABS) came into force. The significance of this distinction involved both the criteria for meeting the catastrophic definition and the amount of benefits available if she was successful.
The parties agreed that if the Adjudicator supported Allstate’s position, the Applicant would withdraw her claim for catastrophic, with the option to submit the new form.
The Applicant argued that she had submitted the correct version of the catastrophic application form for three reasons. First, she claimed that since her policy was purchased before June 1, 2016, it was a "transitional" policy to which the old SABS applied. Second, she argued that Allstate had waived its right to rely on the new definition in her case because it had paid her benefits according to the pre-June 2016 rates. Third, she insisted that she had a vested right to rely upon the terms of the SABS that were current when she entered her insurance contract.
Adjudicator Neilson rejected all three of the Applicant’s arguments. There are 4 versions of the SABS that still might apply to accidents based on when they happened. Each of them has transitional provisions for collisions that occur when a new version comes into force during the policy year. Sections 2 and 68 contain transitional rules that apply to the Applicant’s policy. She attempted to rely upon s. 68, which deemed certain benefits from the 1996 SABS to persist under the current SABS for transitional policies. Implicit in this argument was the fact that she had been insured by Allstate at the time the 1996 SABS was replaced by the current version (2010). Adjudicator Neilson stated that s. 68 clearly specifies that the policy must be in force during 2010, the transitional year. The fact that the Applicant was insured by Allstate at the time was not relevant, as auto policies expire annually. Renewal creates a new contract rather than extending the existing one, contrary to the Applicant’s position.
The Adjudicator explained that s. 2 was the relevant transitional rule governing the Applicant’s policy. Section 2(1.1) states that for accidents that occur after September 1, 2010 and before June 1, 2016, the old catastrophic definition still applies. However, under s. 2(1.1)2, this definition was revoked effective June 1, 2016. Since the Applicant’s collision happened after that date, the old definition was not applicable.
Section 2 of the SABS also disqualified the Applicant’s waiver argument. Briefly, she proposed that Allstate was stuck with the pre-amendment catastrophic definition and its ramifications because it had paid her benefits at the pre-amendment rates- thereby acknowledging that the pre-June 2016 SABS applied to her entire claim. Adjudicator Neilson dismissed this argument, explaining that Allstate had paid the benefits as it was required to do under s. 2(1.2), which states that the old policy limits for non-earner benefits, medical, rehabilitation and attendant care benefits before the June 1, 2016 amendments apply to policies like the Applicant’s. There was no inconsistency in Allstate’s application of the transitional rules.
Finally, the Applicant proposed that she had a vested right to the terms of the policy she had purchased, and that the amendments should not impact this right. A vested right is one that crystalizes at the time the parties enter the contract. The Adjudicator explained, "according to this principle, it is presumed that the legislature does not intend to interfere with vested rights, absent a clear indication to the contrary in the legislation". However, in this case:
... The legislation contains a very clear intention to the contrary in s. 2(1.1)2 of the Schedule by stating that the old definition of catastrophic impairment applies to accidents that occur before June 1, 2016 and in s. 3.1(1) of the Schedule by stating that the new definition applies to accidents that occur on or after June 1, 2016. Further, when the applicant renewed her policy of insurance on May 1, 2016, the Schedule had already been amended to state that on June 1, 2016, the Schedule would be amended to add the new s.3.1 definition of catastrophic impairment for accidents that occur on or after June 1, 2016
As a result, the Applicant did not have a vested right to rely upon the old catastrophic definition. Since the Adjudicator supported Allstate’s position, the catastrophic application was ordered withdrawn.
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