A recent Court of Appeals ruling on ‘failed mediations’ by FSCO may have a significant impact on the number of requests for arbitration received by insurers. Under current legislation FSCO is required to mediate disputes filed for denied statutory accident benefits within 60 days. A severe backlog of requests for mediation has meant that FSCO, in many cases, was taking over a year to complete the mediation process. The Court of Appeals ruling means that any mediation that has not been completed within the required sixty days will be deemed to have failed and the insured will have the right to immediately apply for arbitration or to commence a court action.

The ruling may present a challenge for insurers. Most notably, insurers are often unaware that the request for mediation has been filed with FSCO. When the mediation is deemed to have failed and the request for arbitration is filed insurers will only have 20 days to respond. During that time insurers will need to locate the file, find and assign to available counsel in the right jurisdiction so they can review and prepare the response, and provide counsel with instructions for the matter. In addition, insurers will be required to write a cheque to FSCO for $3,000 for every arbitration request that is filed.

This scenario will be problematic for insurers until FSCO is able to manage the mediation process in the required time frame. Until then, insurers may want to consider offering insured the option of private mediation as an alternative to the FSCO process when they deny coverage. This would help insurers identify files with the potential to reach arbitration and allow them to understand the insured’s reasoning for disputing the coverage denial and to prepare their defence without the pressure 20 day time period.