In Sparks v Primmum Insurance Company, the Divisional Court considered what information an insurer must provide when advising an applicant of their right to dispute a denial or reduction of accident benefits and whether the insurer’s notice complied with section 54 of the Statutory Accident Benefits Schedule (“SABS”), thereby triggering the two-year limitation period under section 56 of the SABS.
Section 54 of the SABS applies where an insurer refuses to pay a benefit or reduces the amount of a benefit the person is receiving. It requires the insurer to provide written notice advising the person of their right to dispute the refusal or reduction. Section 56 of the SABS generally requires the insured to commence a LAT application within two years of the refusal.
What happened in Sparks v Primmum?
The partial denial of the OCF-18
The appellant/applicant (the “applicant”) was involved in a motor vehicle accident and submitted an OCF-18 (Treatment and Assessment Plan) to the respondent insurer seeking funding for assessments related to a potential catastrophic-impairment application. The respondent insurer notified the applicant that it had partially denied the benefits claimed under the plan. The notice advised that the applicant had the right to dispute the insurer’s determination by filing an application with the Licence Appeal Tribunal (“LAT”) within two years of the date of the insurer’s reduction or denial of benefits. The notice also provided the steps required to file an application.
The LAT application and limitation dispute
The applicant filed an application with the LAT, disputing the partial denial of benefits, but later withdrew her application without any agreement preserving or suspending the limitation period. More than two years after receiving the insurer’s notice, she commenced a second LAT application disputing the denial of benefits.
The applicant submitted that the insurer’s notice did not comply with section 54 of the SABS because it failed to describe the availability of reconsideration, judicial review and/or appeals, along with the applicable timelines and contact information for the relevant tribunal and courts. She also argued that the notice should have addressed discoverability and section 7 of the Licence Appeal Tribunal Act (LATA), which permits the LAT, in appropriate circumstances, to extend the time for commencing a proceeding.
The applicant appealed and sought judicial review of the adjudicator’s decision that the notice complied with section 54 of the SABS and triggered the limitation period under section 56 of the SABS.
Must a denial notice explain reconsideration, appeals and judicial review?
The Divisional Court agreed with the LAT adjudicator that written notice of the insured’s right to dispute a refusal need not describe every step of the reconsideration, judicial review and appeal process.
Relying on the Superior Court’s decision in Arts (Litigation Guardian of) v State Farm Insurance Co, which was later approved by the Ontario Court of Appeal in Tomec v Economical Mutual Insurance Company, the Divisional Court held that although the SABS is “consumer protection legislation,” its protective purpose could not expand the clear wording of section 54.
How the Court distinguished Smith v Co-operators
The Divisional Court also referred to Smith v Co-operators General Insurance Co, in which the Supreme Court of Canada considered an earlier provision requiring insurers to explain the applicable dispute resolution procedure. Because the insurer in Smith had described only the first step of that process, its notice did not constitute a valid refusal and did not trigger the limitation period. The provision considered in Smith required the insurer to explain the applicable dispute-resolution procedure. By contrast, section 54 of the current SABS uses narrower language, requiring written notice of the insured’s right to dispute the refusal or reduction. Section 54 requires notice of the right to dispute the insurer’s refusal or reduction, not an explanation of the former multi-stage dispute process.
The applicant argued that the former provision considered in Smith confined the notice obligation to the dispute resolution procedure set out in sections 279 to 283 of the Insurance Act, which required mediation before a claimant could proceed to arbitration or litigation. She submitted that, because section 54 is no longer tied to that defined procedure, the “right to dispute” should be interpreted more broadly to encompass the entire dispute resolution process available to an insured, including reconsideration, judicial review and appeal.
The Divisional Court rejected that argument and distinguished between disputing the insurer’s refusal and challenging a later decision made by the LAT or a court. Section 54 requires notice of the former but does not require the insurer to explain every mechanism for pursuing the latter.
Must an insurer explain discoverability and limitation exceptions?
The applicant submitted that the statement in the notice that she “will” lose the right to dispute the insurer’s denial if she does not file an application with the LAT within two years was incorrect and misleading. The insurer disputed that the two-year time limit under section 56 of the SABS is subject to the principle of discoverability as outlined in Tomec. However, the Ontario Court of Appeal settled that issue in The Personal Insurance Company v Tagoe, discoverability applies to the section 56 limitation period in the circumstances before it and that a premature denial cannot start the limitation period before entitlement to the benefit is discoverable.
The two-year limitation period under section 56
Although the Divisional Court acknowledged that discoverability may, in some circumstances, postpone commencement of the limitation period, it stated that an insurer is required under section 54 to communicate in straightforward and clear language that an application to the LAT disputing the refusal must generally be commenced within two years after the insurer’s refusal to pay the amount claimed. The court further stated that “[j]ust as it is not incumbent on the insurer to advise of the complete course of potential reviews and appeals that could be sought from the LAT decision, it is not incumbent on an insurer to brief a claimant on principles of limitations law.” Although advising the insured that the claim “may” be barred, rather than “will” be barred, if the two-year deadline is not met might be more complete and accurate, the court found that such wording could mislead some insureds into believing that the limitation period is generally flexible.
What information must a valid denial notice include?
The adjudicator relied on Turner in finding that the purpose of a denial letter is to provide an applicant with sufficient information to decide whether to accept or dispute the refusal and that section 54 does not impose a standard of perfection. The adjudicator concluded that the Explanation of Benefits provided sufficient information and that Smithdid not require the insurer to include information about discoverability or section 7 of the LATA.
However, the Divisional Court held that the adjudicator relied on the wrong notice standard from Turner. Turnerconcerned whether an insurer had provided sufficient reasons for terminating accident benefits under section 24(8) of the SABS as it then existed. The purpose of notice under section 24(8) may have been to ensure that an insured had enough information to decide whether to dispute the refusal. By contrast, the purpose of notice under section 54 of the SABS is to “completely and clearly provide insured persons with the information needed to enable them to challenge the refusal to pay or the reduction of payment.” A section 54 notice must therefore explain how, where and when an insured may commence a dispute.
Despite the adjudicator’s error in describing the purpose of section 54, the insurer’s notice met the proper section 54 standard. The Divisional Court therefore concluded that it was reasonable for the adjudicator to find that the notice complied with section 54 of the SABS. The appeal and application for judicial review were dismissed.
Key takeaways from Sparks v Primmum
Section 54 of the SABS requires an insurer to provide clear and straightforward information explaining how, where and when an insured may dispute a refusal or reduction of accident benefits. It does not require the insurer to explain every subsequent avenue of reconsideration, judicial review or appeal, nor must the insurer provide a legal explanation concerning discoverability or the LAT’s authority to extend time under section 7 of the LATA. The Divisional Court’s decision confirms that the consumer protection purpose of the SABS requires meaningful notice but not a complete legal roadmap or a standard of perfection.
See Sparks v. Primmum Insurance Company, 2026 ONSC 3803 (CanLII)
