In a recent case, Heartland Farm Mutual Inc. refused to pay over $1 million in optional insurance coverage to two people they insured after a serious car accident. Heartland denied the coverage because of a minor administrative error, which they should have known could occur given the circumstances, and later used to their advantage. Despite this, the License Appeal Tribunal (an Ontario tribunal that resolves disputes related to car insurance claims, license issues, and other regulated matters outside of the traditional court system), said it could not step in to provide an equitable remedy, allowing Heartland to benefit from its unfair handling of the claim.

Ms. Yaromich and her partner Mr. Botbyl (“the applicants”) were struck by a careless driver while riding on their motorcycle on June 26, 2020. Mr. Botbyl suffered a skull fracture, nasal bone fracture, brain injury, and a lumbar spine fracture. Ms. Yaromich suffered a brain injury, rib fractures, a thoracic spine fracture, and a fractured right tibia.

While the motorcycle they were travelling on was covered under a “basic” insurance policy through Economical, the couple also had significant “optional benefits” under Heartland. The Economical policy provided the applicants $65,000 in medical, rehabilitation and attendant care benefits and up to $400 per week in income replacement benefits. They were additionally covered under a policy through Heartland for their other automobiles, which would have entitled them to up to $1,000,000 in medical, rehabilitation and attendant care benefits and up to $800 per week in income replacement benefits. At the time of the accident, the applicants had paid their premiums on the Heartland policy in full.

A Procedural Misstep Costs the Applicants Dearly

Since the applicants were hospitalized for their injuries immediately after the accident, their daughter assisted them with accessing their accident benefits. First, the daughter contacted the family’s insurance broker, who advised her that since the motorcycle was not covered under the policy with Heartland, the applicants should apply to Economical. Then, their daughter followed up with a claims adjuster from Economical, who assured her that her parents would still be able to apply for their optional benefits from Heartland after first applying for benefits through Economical.

Before proceeding, Mr. Botbyl spoke with a representative from Heartland. Mr. Botbyl informed Heartland that he fully intended to claim his optional benefits. By this point, the applicants’ insurance broker had also contacted Heartland and informed them of the accident and of the applicants’ coverage under both policies. A Heartland senior adjuster reviewed the file and made notes which clearly indicated she was aware of the potential for the applicants to wrongly apply to Economical first and thus be denied their optional benefits through Heartland. Despite realizing this, the Heartland adjuster did not communicate this promptly to the applicants.

Understandably, the applicants went ahead and applied for their accident benefits through Economical. Shortly after, Heartland informed the applicants they could no longer claim their optional benefits with Heartland as they already submitted an accident benefits application to Economical. Heartland stated that insurance priority rules prevented them from doing so. Interestingly, Heartland referred the applicants’ lawyer at the time to a non-binding private arbitration decision as authority for their position.

The Superior Court Couldn't Help the Victims Get the Compensation they Deserved Due to Insurance Act Changes

The applicants sought relief from forfeiture at the Superior Court of Justice but were unsuccessful.^[1] Justice Turnbull determined he could not grant equitable relief due to the April 1, 2016 amendments to the Insurance Act which granted the Tribunal exclusive jurisdiction over accident benefits disputes. Nonetheless, Justice Turnbull felt compelled to criticize Heartland’s handling of the claim, noting that Heartland’s senior adjuster committed “sharp conduct” by failing to promptly inform the applicants that they risked losing their optional coverage. He also took issue with the private arbitration decision Heartland attempted to rely on, stating that there is no legislation preventing an applicant from simply withdrawing an accident benefits application and submitting a new application to a second insurer.[2] Justice Turnbull even stated that he himself would have had “no hesitation in granting relief against forfeiture.”[3]

The License Appeal Tribunal Declined to Grant the Applicants an Equitable Remedy

The applicants then applied to the Tribunal to seek relief from forfeiture from their administrative oversight which had cost them to lose significant coverage. Adjudicator Brian Norris was alive to the injustice of the case and granted equitable relief.^[4] However, unfortunately for the applicants, Heartland promptly filed for reconsideration.

In Vice Chair Sandeep Johal’s 2024 reconsideration, he rescinded adjudicator Norris’ decision which had held that the Tribunal has jurisdiction to grant equitable remedies such as relief from forfeiture. The Vice Chair cited previous Tribunal jurisprudence which held that the legislature’s use of the word “court” in s. 129 of the Insurance Act (the relief from forfeiture provision) excluded tribunals.^[5]

Vice Chair Johal additionally referenced a decision where the Tribunal ruled that neither the Statutory Powers Procedure Act, the License Appeal Tribunal Act, the Insurance Act nor the Tribunal’s Common Rules of Practice and Procedure give the Tribunal the power to grant equitable remedies.^[6] The Vice Chair stated that adjudicator Norris had attempted to craft a remedy in the Statutory Accident Benefits Schedule where one does not exist.

Curiously, Vice Chair Johal did not address the seeming contradiction with s. 3(2) of the Licence Appeal Tribunal Act, which states that the Tribunal has "all the powers necessary or expedient for carrying out its duties.”^[7]

The Lesson Learned for Those Seeking Accident Benefits

 While the debate over whether the Tribunal may grant equitable remedies persists,[8] what is clear is that those seeking to access accident benefits must exercise caution when filing applications. This is especially true where an accident victim is covered under more than one policy of insurance. Yaromich demonstrates that insurance companies have a duty of good faith towards their clients, and it is important that they be reminded of that. Further, the Tribunal’s reluctance to grant equitable remedies means certain mistakes that applicants make in the accident benefits process may not be forgiven.

What you Need to Do

It is critical to retain experienced counsel to ensure that you and your loved ones’ rights are protected following an accident so that you don’t lose any of the critical benefits owed to you. Contact Campisi today if you need support with your accident benefits claim.

[1] Yaromich and Botbyl v. Heartland, 2021 ONSC 3759 (CanLII)

[2] Ibid at para 50

[3] Ibid at para 52

[4] Yaromich v Heartland Farm Mutual Inc., 2023 CanLII 72600 (ON LAT)

[5] Dooley v. Aviva General Insurance, 2021 CanLII 111189 (ON LAT)

[6] Ko v Wawanesa Mutual Insurance Company, 2023 CanLII 62938 (ON LAT)

[7] License Appeal Tribunals Act, 1999, S.O 1999, c. 12, Sched. G, s. 3 (2)

[8] Yaromich is being appealed to the Ontario Divisional Court