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LTD Benefits

Court of Appeal addresses limitation periods in LTD claims, again

 Nov 14, 2017 2:00 PM
by Samis + Company

In the recent decision of Pepper v. Sanmina-Sci Systems (Canada Inc)., the Ontario Court of Appeal dismissed a plaintiff’s long term disability claim as limitation barred, reversing the summary judgment motion judge’s decision. The Court found that the limitations clock began to run once payment of benefits ceased.

The facts of the initial motion were largely uncontested. The plaintiff was receiving long term benefits due to an injury on March 13, 2005. On February 20, 2007 the Insurer advised the plaintiff that effective September 19, 2007, he would no longer qualify for long term disability benefits. The Insurer advised there was no evidence that he had an impairment that prevented him from engaging in “any occupation” that he was reasonably suitable for by training, education, or experience. In good faith, the Insurer agreed to pay benefits until October 31, 2007 to assist the plaintiff with the transition back to work. The Insurer also advised the plaintiff that he could “appeal” the decision by providing more medical documentation. Of importance, the long term disability policy did not contain a specific mechanism or right to appeal. There was also no statutory right to appeal.

The benefits stopped effective November 1, 2007. The plaintiff commenced a claim on February 17, 2010.

The Insurer brought a summary judgment motion to have the plaintiff’s claim dismissed as limitation barred. The plaintiff brought a cross motion for a declaration that he was not limitation barred and to dismiss the Insurer’s limitation defence. The plaintiff’s cross-motion was granted. The Insurer appealed.

On appeal the Insurer was successful. The Court found it was an error in law to not recognize that November 1, 2007 was the date on which the limitation period commenced. Despite the Insurer’s representations that it would continue to review additional documentation if provided, the plaintiff’s claim had been discovered as of November 1, 2007 when the payments stopped. The Court found that once payments had ceased and the Insurer had “closed” the claim, it would have been appropriate to commence an action and accordingly it was “discovered”. The fact that there was no internal appeal process specifically included in the Policy appears to have factored into this. The Court also noted that the plaintiff had retained counsel in January, 2008, suggesting that he did have an appreciation that a lawsuit was appropriate.

As a result, the plaintiff’s claim was dismissed as statute-barred. This decision seems to support my previous comments regarding the efficacy summary judgment motions in long term disability claims, as discussed in blog posts here and here. It appears that in the long term disability setting, barring something exceptional, once an Insurer stops payment and advises that a claim is closed, the clock starts to run.

See Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONCA 730 (CanLII).



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