The Ontario Court of Appeal has provided renewed guidance on limitation periods in the context of long-term disability benefits in the case of Kumarasamy v Western Life Assurance and Morris National Inc. The appellants in this matter, were Western Life Assurance and Morris National Inc.
The facts of the case, as set out in the Appeal decision, were as follows. The respondent was injured in a car accident on August 25, 2014. He was employed by a trucking company and was covered under their long-term disability (“LTD”) policy with Western Life Assurance Company (“WLAC”). Under the terms of the Policy, the deadline for the respondent, to provide a Notice of Claim to the appellant, and the first day that the LTD benefits would become payable to him, was February 26, 2015.
The respondent, Mr. Kumarasamy, had his sister, who worked at a law firm, send in a Notice of Claim form on March 9, 2015. However, no completed LTD application was submitted. Following receipt of the communication the appellant (WLCA) wrote to the respondent on three occasions seeking completion of the LTD forms. The third and final correspondence indicated the appellant was closing the file as the respondent had not submitted the completed LTD application. The letter was sent on June 2, 2015.
The appellants heard nothing further on the matter until fourteen months later, in October 2016. The respondent had retained lawyers to represent him for his MVA and accident benefits claim, but not on the LTD matter. However, his lawyers wrote to WLCA asking for a copy of the file in the context of the MVA and accident benefits action. The appellant WLCA sent the letters of correspondence, including the letter dated June 2, 2015, indicating closure of the file on November 8, 2016.
Five months later, on February 10, 2017, the respondent retained his MVA and accident benefits lawyers to also represent him for his LTD claim. The lawyers then engaged in a series of communications with the appellants. The appellant WLCA agreed to evaluate the claim but stated they were not waiving their right to rely on any statutory or Policy provision, including any time period limitations. The appellants sent a final correspondence saying the claim was denied on June 28, 2017. Nothing further was heard until June 28, 2019, over two years later, when the respondent submitted his LTD claim.
The appellants took the position that the limitation period had passed, as per s.5 of the Limitation Act, 2002. They argued the date of the loss to the respondent occurred on the date that it would have been required to pay LTD benefits under the Policy, which was February 26, 2015, and a reasonable person, ought to have discovered the claim on June 7, 2015, when he received the letter closing the file.
The respondent argued that he was not aware of the loss until the denial on June 28, 2017.
While the lower court found in favour of the respondent, the ONCA overturned the decision in favour of the appellant WLCA. The court stated that there were three potential start dates for the limitation period to commence and each would be consistent with existing jurisprudence. The first was February 26, 2015, when the respondent should have started to receive LTD payments if he were eligible. The second was June 7, 2015, when the appellant’s letter to the respondent would have been received stating that his claim file was closed and lastly, November 8, 2016, when the respondent’s lawyers received copies of the June 2015 correspondence. The court said it would not decide which of these three dates is the actual start date because the two-year limitation period passed with respect to all of them, therefore the respondent’s claim was statute barred.
The takeaway from this case is that employees must be aware of the terms of their LTD policy. The eligibility time period for a LTD claim is not indefinite. Insurers must be made aware of claims within a certain time period to ensure access to medical documents that will support the payment of benefits and to allow insurers to predict the number and amount of payments owed to those covered resulting in lower predictable rates for all insurance clients.