Executive Summary: Key Legal and Evidentiary Issues

• Application of res judicata to bar a second Licence Appeal Tribunal application on entitlement to accident benefits after an earlier MIG determination.
• Interpretation of the Statutory Accident Benefits Schedule (SABS) notice provisions in s. 38(8), (9) and (11), including whether repeat MIG notices are required for later treatment plans.
• Weight and admissibility of alleged “new” evidence (adjuster’s log notes and an insurer’s psychiatric report) as a basis to waive res judicata.
• Allocation of the evidentiary burden on the insured to prove that injuries fall outside the Minor Injury Guideline despite insurer notice.
• Scope of an administrative tribunal’s discretion to decline applying res judicata in light of fairness and finality of litigation.
• Standard of review on appeal (correctness on questions of law) when challenging a LAT decision limited to legal issues.

Factual background and accident benefits dispute
The case arises from a motor vehicle accident on May 2, 2020, in which the appellant, Akanksha Muddapati, was injured and sought statutory accident benefits from her auto insurer, Primmum Insurance Company. She claimed entitlement to treatment and rehabilitation benefits beyond what is permitted under the Minor Injury Guideline (MIG) under the Statutory Accident Benefits Schedule – Effective September 1, 2010 (SABS), O. Reg. 34/10. Under s. 18(1) of the SABS, if an insured person’s impairment is “predominantly a minor injury,” medical and rehabilitation benefits are capped at $3,500. The insurer took the position that her injuries fell within the MIG, which would limit her benefits to that MIG cap. Ms. Muddapati disputed this characterization and commenced an application before the Licence Appeal Tribunal (LAT) to challenge the insurer’s denial of treatment plans and to seek benefits in excess of the MIG limits.

The first LAT decision on MIG entitlement
In a first decision dated September 26, 2024, the LAT determined that Ms. Muddapati’s injuries were within the MIG and that she was not entitled to treatment and rehabilitation funding beyond the $3,500 cap. In reaching that conclusion, the Tribunal accepted the insurer’s position that her impairment was predominantly a minor injury and rejected her arguments that her condition should be classified as non-MIG. This initial decision resolved, on a final basis between the same parties, the key issue of whether her injuries fell inside or outside the MIG for purposes of SABS benefits.

Subsequent treatment plans and the second LAT application
After the first LAT decision, Ms. Muddapati submitted additional treatment plans seeking further benefits. The insurer denied payment for these new plans, maintaining that her injuries remained within the MIG and that she had already exhausted the MIG limits. She then brought a second LAT application to contest the denial of these subsequent treatment plans. At this stage, Primmum raised a preliminary issue: it argued that the doctrine of res judicata barred the second proceeding because the MIG status of her injuries had already been finally determined in the first LAT decision. The Tribunal held a preliminary issues hearing focused on whether res judicata applied and whether any factors justified waiving the doctrine.

The doctrine of res judicata and the legal test
The Tribunal applied the well-established test for res judicata articulated by the Supreme Court of Canada in Danyluk v. Ainsworth Technologies Inc., which requires: (1) that the same question has been decided; (2) that the prior decision is final; and (3) that the parties (or their privies) are the same in both proceedings. In addition to these technical requirements, an administrative tribunal retains a discretionary power to decline to apply res judicata in the interests of fairness, particularly if new and previously unavailable evidence truly undermines the earlier result or if there are compelling procedural concerns. In Ms. Muddapati’s case, the Tribunal found that all three technical elements were satisfied: the MIG status of her injuries was the same question; the earlier LAT decision was final; and the parties were identical. The adjudicator then considered whether the doctrine should nonetheless be waived but ultimately declined to do so.

Notice requirements under s. 38 of the SABS and the MIG
A central plank of the appeal was the insured’s reliance on the notice regime in s. 38 of the SABS, particularly subsections 38(8), (9), and (11). Section 38(8) sets out an insurer’s obligation, within 10 business days of receiving a treatment and assessment plan, to advise which benefits are approved, which are denied, and the reasons for any denial. Section 38(9) adds a specific requirement that, if the insurer believes the Minor Injury Guideline applies to the insured’s impairment, that belief must be expressly communicated in the notice given under s. 38(8). Section 38(11) prescribes the consequences if an insurer fails to provide a compliant notice under s. 38(8): the insurer is then prohibited from taking the position that the insured’s impairment falls within the MIG and is obliged to pay for the goods, services, assessments, and examinations described in the treatment plan for a defined period until proper notice is provided. On appeal, Ms. Muddapati argued that because the insurer allegedly failed to include an express MIG reference each time it responded to later treatment plans, s. 38(11) should bar Primmum from asserting she was within the MIG for those plans, and that this statutory breach should also justify waiving res judicata.

The Divisional Court’s interpretation of s. 38(9) and repeated notice
The Divisional Court rejected the appellant’s argument that s. 38(9) required the insurer to re-issue MIG notices every time it responded to a new treatment plan once it had already given a compliant MIG notice and maintained that position consistently. The Court accepted that s. 38(9) does oblige an insurer to advise the insured, in its notice under s. 38(8), when it believes the MIG applies. However, the record showed that Primmum had provided such notice on September 27, 2021, explicitly advising that it considered her injuries to fall within the MIG, and it continued to maintain that position in the first LAT proceeding. The Court distinguished the case relied on by the appellant, Zheng v. Aviva Insurance Co. of Canada, noting that Zheng did not address a situation where a valid MIG notice had previously been given and the insurer had not changed its position thereafter. The Court found no authority for the proposition that an insurer must issue repeated MIG notices under s. 38(9) for each subsequent treatment plan when its view on MIG status remains unchanged and when the insured has already been clearly informed of that view. It emphasized that the purpose of the MIG is to provide a framework for prompt treatment for minor injuries, while s. 38 primarily governs the process for obtaining non-MIG benefits. In this case, the appellant had already received MIG-level benefits by the time the treatment plans in issue were submitted, and the insurer obtained an insurer’s examination report to confirm whether her condition warranted non-MIG treatment, ultimately concluding it did not. On these facts, the Court held that s. 38 did not require an additional round of MIG-specific notice before the disputed treatment plans and that the alleged notice deficiency could not support waiving res judicata.

Fresh evidence: adjuster’s log notes and psychiatric report
The appellant also urged the Tribunal—and later the Court—to waive res judicata based on two pieces of evidence she characterized as new: (1) the insurer adjuster’s log notes, and (2) a psychiatric report obtained pursuant to an insurer’s examination diagnosing a chronic somatic symptom disorder. She contended that the log notes showed the insurer internally did not treat her as a MIG claimant, and that the new psychiatric report undermined the earlier MIG finding. The Tribunal was unpersuaded, and the Divisional Court upheld that conclusion. Regarding the adjuster’s log notes, the Tribunal found, and the Court agreed, that they could have been requested and obtained in time for the first LAT hearing. They therefore did not qualify as previously unavailable evidence. The notes also did not conclusively impeach the earlier MIG determination. The record showed that the insurer was initially told the appellant had a fractured leg and, acting on that early information, had approved psychological treatment beyond the MIG limits; after later review of the medical records revealed there was no fracture, the insurer reverted to a MIG position. The brief references in the log notes to her being outside the MIG were thus explained as a temporary response to incorrect initial information, not as a settled rejection of the MIG classification.

The limits on “better” medical evidence after a final decision
As to the psychiatric report, the Tribunal concluded that it did not involve new factual information that had been previously unavailable; rather, it represented a new medical opinion based on information that could have been marshalled before the first hearing. The Divisional Court endorsed this view, invoking the reasoning in Penny v. Royal & Sun Alliance Insurance Co. to the effect that allowing a party to cure an unsatisfactory outcome simply by obtaining a stronger or more favourable expert report after the fact would undermine the finality of litigation. Here, the psychiatrist’s new diagnosis did not address the core MIG classification issue and, notably, the examiner concluded the benefits sought were not reasonable and necessary. The Court accepted that the appellant could have procured her own medical report before the initial LAT hearing and that the insurer-commissioned report in the second proceeding was not the kind of fresh, previously unobtainable evidence that would justify reopening a decided MIG issue.

Standard of review and the Divisional Court’s disposition
On appeal, the Divisional Court’s jurisdiction was confined to questions of law under s. 11(6) of the Licence Appeal Tribunal Act, 1999, and it applied the correctness standard from Canada (Minister of Citizenship and Immigration) v. Vavilov. Within that framework, the Court held that the Tribunal had correctly articulated and applied the test for res judicata, made no error in its interpretation of s. 38(9) and related provisions of the SABS, and exercised its discretion to refuse to waive res judicata in a manner consistent with the principles of finality and fairness. The Court emphasized that the insurer had provided MIG notice, had consistently maintained its MIG position, and had successfully defended that position in the first LAT hearing; the later effort to re-litigate MIG status by relying on evidence that was either available earlier or not truly determinative could not succeed. In the result, the Divisional Court dismissed Ms. Muddapati’s appeal. Primmum Insurance Company emerged as the successful party, and the Court ordered the appellant to pay the respondent costs in the agreed-upon amount of $7,500, which was the total monetary sum awarded in favour of the insurer in this appeal outcome.