Changing Your Mind About Accident Benefit Settlements And Obtaining More Favourable Results

By Alexander Voudouris | January 5, 2013

Toronto personal injury lawyer Alex Voudouris: On December 18, 2012, Director’s Delegate Blackman issued his appeal decision in Aviva Canada Inc. and Parveen which saw Pace Law Firm prevail in a hard fought case.

Mrs. Parveen was involved in a motor vehicle accident on November 7, 2008, and seemingly settled her claim for Accident Benefits on May 30, 2011. Subsequently, Mrs. Parveen changed her mind and instructed her previous law firm to rescind the settlement agreement. Unfortunately, the notice of rescission was delivered three days after Mrs. Parveen signed a Full and Final Release.

While a regulation to the Insurance Act allows anyone to rescind an Accident Benefit settlement within two business days of it being entered into, as Mrs. Parveen’s rescission was delivered on the third day, Aviva took the position that Mrs. Parveen was out of time and the settlement was binding.

The file was then transferred to me, and I successfully argued before both Arbitrator Alves and, most recently, Director’s Delegate Blackman on appeal. I argued that as the Settlement Disclosure Notice, that every insurer is required to provide their insured’s upon settlement, was deficient, a binding settlement was never reached, and therefore Mrs. Parveen was entitled to rescind the “settlement” and seek additional Accident Benefits.

By way of background, section 9.1 of Regulation 664 made pursuant to the Insurance Act deals with the settlement of Accident Benefits. Therein a settlement is defined as “an agreement between an insurer and an insured person that finally disposes of a Claim or dispute in respect of the insured persons entitlement to one or more benefits under the Statutory Accident Benefits Schedule.”

Section 9.1(2) requires an insurer to provide all insured’s with an SDN in order to effect a settlement. It should be noted that case law establishes that a Release must also be executed in order to effect a settlement of Accident Benefits.

Section 9.1(3) requires the SDN to be approved by the Superintendant of Insurance. It also mandates that the SDN contain certain information, including a statement “that the insured person may, within two business days after the latter of the day the insured person signs the Disclosure Notice and the day the insured person signs the Release rescind the settlement by delivering a written notice” to the insurer and returning any money received by the insured person as consideration for the settlement.

Section 9.1(4) allows for a settlement to be rescinded within two business days of when both the SDN and Release are signed. Section 9.1(5) allows for a rescission beyond the two business days referred to in section 9.1(4) above, if the insurer failed to provide either an SDN or a satisfactory SDN in compliance with section 9.1(3).

In other words, if the SDN does not comply with Regulation 664 an insured can rescind the settlement at any time, as long as they deliver written notice to the insurer and return the settlement funds.

As Aviva took the position that the settlement was binding, I became involved with this file and was tasked with finding a way to rescind the settlement. So out came the Insurance Act, Regulation 664, the SDN, case law, etc. and to my surprise, the SDN stated an insured could rescind after two business days after signing a Release and then an SDN, but not the other way around, as was the case with Mrs. Parveen. As the SDN did not comply with section 9.1(3)3 (rescission can occur within two business days of an insured signing the latter of an SDN and Release), I moved pursuant to section 9.1(5) to rescind after the two day mark.

While this distinction may seem trivial, especially considering the fact that the Superintendant approved the SDN and all insurers were required to use it, it was enough to convince both Arbitrator Alves on a Preliminary Hearing and Director’s Delegate Blackman on Appeal of the correctness of my argument.

In light of our success, the Superintendant of Insurance has now actually changed the SDN to address the deficiencies we relied upon in the Parveen case.

Having said that, I wish to conclude by stating what is perhaps obvious to most, but nevertheless needs repeating. Just because a Form or action is approved or conducted by an official does not mean that there has been compliance with the legislative scheme. Nor, does acceptance of a Form or action in excess of 10 years signal compliance.

As plaintiff lawyers, we have a duty to faithfully and vigorously represent our clients, and usually success can be found in the details of an overlooked Regulation, as was the case with Mrs. Parveen.

What is of particular significance is that based on these decisions, any Accident Benefit settlement in the past 10 years is rescindable, subject to the settlement funds being returned to the insurer. Accordingly, if your medical condition has significantly worsened since you settled, or you believe your settlement was unsatisfactory, please give us a call.

Alex Voudouris is a personal injury lawyer with Pace Law Firm in Toronto. Pace’s personal injury lawyers have been helping accident victims since 1980.