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Limitation Periods in Long-Term Disability Claims

Applying for short-term or long-term disability benefits can often be a stressful and difficult process. It can also be confusing for a claimant, especially when the claimant is unfamiliar with the claims process. It is, however, extremely important, in all the confusion, to understand limitation dates and how they apply to long-term disability benefits.

A limitation date is the last date that a claim can be filed with a court or tribunal. After this date, the claim is lost forever. In most cases in Ontario, the limitation date is 2 years following the discovery of a claim, and this includes claims for long-term disability benefits.

Most disability policies have different requirements for short-term and long-term benefits. Most short-term policies will pay a prescribed amount for a prescribed period of time (e.g. 2 years) if a claimant can show that she is prevented from performing the essential duties of her regular occupation.

After the prescribed period of time, in order to qualify for long-term benefits, the claimant must show that her disability prevents her from engaging in any commensurate occupation for which she was or became reasonably qualified by education, training, or experience.

The question that comes to many claimants’ minds when considering limitation dates in long-term disability claims is: when does the limitation period start?

  • Is it when the claimant suspects a disability?
  • Is it when the claimant stops working?
  • Is it when the claimant applies for long-term disability benefits?
  • Is it when the claimant receives a letter from her insurer requesting further documents?
  • Is it when the claimant receives a letter from her insurer denying the claim for benefits?

A recent decision from the Ontario Court of Appeal reminds us of the principles surrounding limitation dates and how they apply to long-term disability claims.

The key facts in that 2020 decision, Clarke v Sun Life Assurance Company of Canada, are set out below:

  • The claimant applied for short-term benefits in 2011 due to health problems.
  • In a letter dated March 19, 2012, Sun Life denied her claim but informed her that she had 3 levels of appeal available to her.
  • The claimant appealed.
  • In a letter dated February 24, 2014, Sun Life approved the claimant for short-term disability benefits during the prescribed 2 years. The same letter stated that the evidence did not support the claimant’s position that she was entitled to long-term benefits and that she needs to provide more medical documentation. However, the letter did not clearly and unequivocally deny her claim.
  • In March 2017, after 3 years of inactivity, the claimant provided further documentation to support a claim for long-term benefits.
  • In a letter dated April 24, 2017, Sun Life informed the claimant that her request for review of its decision was being considered.
  • On June 19, 2017, Sun Life wrote to the claimant stating that the information was not sufficient to overturn its previous decision. The letter did not use the word “deny” (similarly to the previous letters), but unlike the previous letters, this one included a statement advising her that any legal action against Sun Life is subject to a limitation period.
  • On August 2, 2018, the claimant issued a claim with the court.
  • Sun Life brought a motion to dismiss the claim on the basis that it was brought past the limitation date. The motions judge dismissed the motion.
  • Sun Life appealed the motions judge’s decision to the Ontario Court of Appeal.The Court of Appeal set out the analysis by which to determine when a limitation period begins to run. Generally, the limitation period begins when the insurer stops paying long-term disability benefits. However, this general rule is subject to the claimant having discovered that a claim exists.

According to the Limitations Act, a claim is discovered on the earlier of:

1. The day on which the claimant first knew,a. That the injury, loss, or damage had occurred,b. That the injury, loss or damage was caused by or contributed to by an act or omission,c. That the act or omission was that of the person against whom the claim is made, andd. That, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

2. The day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). This above analysis is also subject to a presumption that the claimant knew of the matters on the day on which the act or omission on which the claim is based took place, unless the contrary is proved.

In Clarke, the Court of Appeal overturned the motions judge’s decision because the motions judge had not properly considered the test set out in the Limitations Act. However, it was not prepared to dismiss the claimant’s claim as a whole because it was unclear when the claim was discovered.The main takeaway from this decision is that it is very important that a claimant seek legal advice as soon as possible either before or early in the claims process in order to ensure that his or her legal rights are preserved.

The current COVID-19 pandemic has thrown some uncertainty in this area. On March 20, 2020, following the declaration of an emergency, the Ontario government suspended limitation periods for the duration of the emergency. This suspension applies retroactively from March 16, 2020. This suspension presumably applies to claims for long-term disability benefits. Thus, if the limitation date falls on March 16, 2020, or on a date within the duration of the emergency, then a claimant need not issue a Statement of Claim until after the emergency. However, since the risks of missing a limitation date can be enormous, it is often advisable to issue the claim as soon as possible, even within the duration of the emergency.

If you have a long-term disability claim, you should speak with a disability lawyer as soon as possible to ensure that your rights are preserved.

Lorinc Mucsi – Artlicling Student – April 1, 2020

NOTICE: This article is meant to provide general advice only and not intended to provide legal advice. Every case is different, and you should consult an experienced disability law lawyer to obtain advice specific to your case.

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