Earlier this year, the Ontario Divisional Court issued a decision in Western Life Assurance Company v. Penttila, 2019 ONSC 14 (CanLII) addressing when the time limit for filing a claim, known as the limitation period, begins to run for individuals who were denied long-term disability (LTD) benefits. The Court determined that the limitation period starts once the individual receives a final decision from the insurance company. This is after all appeals are finished.
Ms. Pentilla was receiving Long Term Disability benefits from Western Life Assurance Company. In February 2013, Western Life advised her that, effective March 2013, she would no longer meet the definition to qualify for benefits. In their letter, Western Life informed her while she could appeal the decision, they were not waiving their right to rely on any statutory time limit. Ms. Pentilla appealed the decision and provided additional medical information. In November 2013, Western life asked for more medical information, and wrote to Ms. Pentilla that they would complete the review of her appeal once they received the information. Their letter did not include any statement about relying on statutory time limits. In October 2014, Western Life wrote to Ms. Pentilla that they had reviewed the new medical information, but their position remained unchanged. Several months later, Ms. Pentilla told Western Life she had not received a decision letter, and so, in June 2015, Western Life wrote to Ms. Pentilla that she did not meet the definition for Long Term Disability benefits and therefore any further benefits remained denied. Approximately one year later, in June 2016, Ms. Pentilla issued her statement of claim.
The Motion Judge’s Decision
Western Life brought a motion for summary judgment that Ms. Pentilla’s claim should be statute barred because she had not brought her claim within two years of it being discovered. In Ontario, the Limitations Act, 2000 provides a two-year limitation period for most claims, meaning that an individual must start legal proceedings within two years of their claim being discovered. The motion judge dismissed Western Life’s motion for summary judgment, finding that Ms. Pentilla’s claim was discovered in October 2014 or June 2015 because before those dates, a reasonable person would not have understood that a proceeding was an appropriate remedy. Western Life appealed that decision to the Divisional Court.
The Divisional Court’s Decision
On appeal, Western Life argued that Ms. Pentilla should have known that a legal proceeding would be an appropriate means to seek a remedy by March 2013, when she no longer qualified for benefits. Ms. Pentilla argued that, by March 2013, Western Life had not finally determined her appeal, so a legal proceeding would not have been appropriate.
The Divisional Court upheld the motion judge’s decision. The court found that the two-year limitation period started on the date it would be appropriate to begin legal proceedings for payment of Long Term Disability benefits that the insurer refused to pay. A reasonable person in Ms. Pentilla’s situation would have made an internal appeal to Western Life before starting legal proceedings. At all times between receiving her initial denial in February 2013 and receiving her final appeal decision in June 2015, Ms. Pentilla believed that Western Life was considering her appeal. In this case, Western Life’s statement that it was not waiving its right to rely on statutory time limits was not sufficiently clear to show Ms. Pentilla that the limitation period was running before her appeal had been decided.
The Divisional Court’s decision is a positive step for individuals who have been denied Long Term Disability benefits. It reinforces that the statutory time limit for starting a legal proceeding may not begin to run until the insurance company has issued a final decision. The Court also reinforced that it is reasonable for an individual to go through the insurance company’s internal appeal process before starting litigation.
This decision follows the Ontario Court of Appeal’s decision in Kassburg v. Sun Life Assurance Company of Canada, which found that the court must consider when the claim was clearly and unequivocally denied. In Kassburg, the Court also upheld a motion judge’s conclusion that the insured discovered her claim on the date of the letter in which the insurer told her that her final appeal was denied.
These cases suggest that legal proceedings may be premature until the insurance company’s internal appeal process has run its course. This determination, however, will depend on many factors, including the clarity of the language that the insurance company uses to show that the statutory limitation period runs during the time the internal appeal is being considered. See our article, Limitation Periods for Long-Term Disability Claims. If your insurance company has denied you Long Term Disability benefits, contact a lawyer to discuss your legal rights and how limitation periods may apply in your situation.
[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]