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...
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.
In a recent decision, the Court of Appeal affirmed that while a Long Term Disability Insurer’s duty of good faith generally includes the duty to act promptly, fairly, and disclose the contents of the policy to their Insured, it does not require the Insurer to take steps to advise their Insured of statutory limitation periods that are exist outside of those within the policy. The decision is Usanovic v. Penncorp Life Insurance Company (La Capitale Financial Security Insurance Company), 2017 ONCA 395.
We previously discussed the details of the summary judgment decision in our post, “LTD Carriers Embrace Hryniak.” At first instance, the Plaintiff argued that because the Insurer never advised him of the statutory two year limitation period, it had breached its duty of good faith and the limitation clock only began to run when the claim was discovered. Justice Broad disagreed and found that there was no duty on the Insurer to advise the Plaintiff of the statutory limitation period and the claim was discovered upon receipt of the termination letter. The Plaintiff appealed. On appeal the Plaintiff focused solely on whether the Insurer’s common law duty of good faith included the duty to advise the Plaintiff of the 2 year limitation period in its termination letter.
The Court of Appeal upheld Broad J.’s decision and provided helpful guidance for LTD insurers. Notably, the Court of Appeal drew a distinction between the duty of good faith in the context of Accident Benefits and LTD Benefits. The Plaintiff attempted to argue that because the Supreme Court of Canada in Smith v. Co-operators General Insurance Co.,  2 S.C.R. 129, had found that Insurer’s in the Accident Benefits context were required to provide their Insured with the relevant time limits that governed the process, a similar duty should apply in the LTD context. Both benefit schemes bear significant similarities as both are first party Insurers, with similar tests for income replacement based on disability. However, the Court of Appeal found that the source of the Accident Benefits Insurer’s duty to advise of the time limits arose from the complex legislative framework that governed them and not the common law. There was no equivalent statutory provision governing LTD Insurers.
The Court found that the Plaintiff was asking the Court impose something beyond the LTD Insurer’s common law duty to disclose the contents of the insurance policy and to go a step further and disclose information outside the policy. The Court noted that no Canadian court had gone so far and in the jurisdictions that require Insurers to disclose limitation periods this obligation had been put in place by the Legislature. Accordingly, the Court commented that while it might be advisable from a practical standpoint to inform an Insured of the statutory limitation period, the role of making this a legal obligation was that of the government of the day, and not the Courts.
Notably, as of July 1, 2016, amendments to the Insurance Act R.S.O. 1990 c. I.8 came into force and requires that all LTD insurers to include the following statement in the policy and certificate:
Every action or proceeding against an insurer for the recovery of insurance money payable under the contract is absolutely barred unless commenced within the time set out in the Limitations Act, 2002.
Overall, this decision is a welcomed one for LTD insurers. The Court has made it clear that the expansion of an Insurer’s duty of good faith beyond the established case law is the responsibility of the Legislature and not the Courts. Although there are significant similarities between Accident Benefits and Long Term Disability claims, the statutory framework is the source of significant differences in the proper termination and handling of benefits. The Court has provided clarity that in the Long Term Disability context, the Insurer’s duty of good faith has not been extended to require informing the claimant of information outside the four corners of the policy. With the amendments to the Insurance Act, the provision of the policy to an Insured will satisfy their good faith obligation to provide information and provide a strong basis for any limitations argument an Insurer may want to raise against out of time claims.
On January 23, 2014, the Supreme Court of Canada released their decision on Hryniak v. Mauldin, 2014 SCC 7, and with it an invitation to the legal profession to utilize summary judgment motions to reduce court costs and promote the efficient resolution of disputes. It certainly seems like long term disability carriers have taken this invitation to heart.
The Supreme Court instructed that summary judgment must be granted where there is no genuine issue requiring a trial. There will be no genuine issue for trial where the motions judge is able to reach a fair and just determination on the merits. Where there is a genuine issue requiring a trial, the judge may invoke new fact finding powers in an effort to come to a just resolution without needing to advance to trial.
In the three years prior to Hyrniak, there were two reported summary judgment motions relating to long term disability claims. In the three years since Hryniak, there have been nine reported summary judgment motions relating specifically to long term disability claims.
With the advent of the Supreme Court’s decision, it is clear that many issues that are presented by LTD claims are amenable to summary judgment motions. It is certainly useful where questions of limitation periods arise. A summary judgment motion allows for these preliminary matters to be addressed without the need of an expensive trial. Of the nine summary judgment motions, seven dealt with the issue of limitation periods. The following three cases demonstrate that the Courts are more than willing to address issues of limitations and policy obligations in a summary manner.
Todd v. Felton Brushes Ltd., 2016 ONSC 5252, was an interesting decision where the Plaintiff was injured in a car accident in 2005 and approved for short term benefits up to a maximum of 17 weeks. The Plaintiff was then subsequently approved for LTD benefits. Eventually, the Plaintiff returned to work on a full time basis. Her LTD carrier informed her they had closed her file. She did not contest this. The Policy was subsequently changed so that only employees working 35 hours per week would receive coverage going forward. At some point after this change the Plaintiff reduced her shifts to 20 hours per week. She was advised in 2007 that she was no longer covered for LTD benefits under the policy. The claimant ceased working for her employer in 2008. She never submitted a subsequent LTD claim. In 2011 she commenced a claim against her LTD carrier and third party administrator for a declaration she was disabled and for damages.
Lofchik J. granted the summary judgment motion and dismissed the Plaintiff’s claim in its entirety. The Plaintiff’s own evidence indicated that her claim was discoverable by March, 2007 at the latest. The Plaintiff was out of time.
Usanovic v. Capitale Life Insurance Co., 2016 ONSC 4624 was a decision of Broad J. dismissing a Plaintiff’s LTD claim as statute barred by a limitation period. The plaintiff was injured in a fall in September 2007 and made a claim for disability benefits. He was approved by the LTD carrier and benefits were paid for a number of years. In early 2012, the LTD carrier made a determination that the Plaintiff no longer met the “any occupation” test based on medical and surveillance evidence. He was given 60 days to appeal the decision and provide new medical evidence. The Plaintiff did not commence an appeal, or subsequent claim, until early 2015. The policy contained a 1 year limitation period on all claims.
Broad J., found that the LTD carrier’s letter of January 12, 2012, was unequivocal and commenced the two year limitation period and therefore the Plaintiff was out of time to bring his claim. More importantly, Broad J. found that there was no obligation in law on the LTD carrier to advise the plaintiff of the applicable limitation period in the Limitations Act. While the LTD carrier has a positive obligation to inform its insured of the nature of the benefits available under the policy, there was a marked difference in advising of the application of law external to the policy such as the Limitations Act.
Although summary judgment motions have proven effective for Insurers to proactively address an otherwise protracted litigation process, they have not been uniformly successful. In Nguyen v. SSQ Life Insurance Co., 2014 ONSC 6405 an Insurer’s summary judgment motion to dismiss the Plaintiff’s action as falling outside various policy or statutory limitation periods was dismissed. The Plaintiff in this case was a Vietnamese man who was largely illiterate and injured in an MVA in late 2009. He was employed at the time of the accident but claimed to be unaware that he had access to a group LTD plan. Perrell J., found that the record supported that Plaintiff was unaware of his entitlement to benefits until 2013 when his lawyer undertook to investigate the availability of an LTD policy through his employer. Given that the Plaintiff was illiterate and his employer had failed to provide the relevant documentation to him as per the Policy, Perrell J. found his claim was not untimely according to his interpretation of Policy. In the event that his claim was untimely, Perrell J. saw fit to grant relief from forfeiture. The motion was dismissed and the issue of the Plaintiff’s substantive entitlement was directed to trial.
Given the proliferation of summary judgment motions since Hryniak, it seems apparent that insurers have been provided an exceptionally useful tool where there are discrete issues that can dispose of an entire claim. Although as Nguyen demonstrates, judges may still be wary to rule in favour of the insurer where there is a sympathetic plaintiff involved and this can have cost consequences. However, overall Insurers have been successful in these motions. While there are risks associated with any motion, Insurers who properly prepare and advance a summary judgment motion will often be rewarded with the resolution of a claim at an early stage without a long and costly trial on all the issues.
 There are significantly more if you include employment law disputes that may involve an LTD component.
Depending on the wording of the policy, the Ontario Court of Appeal has affirmed that Long Term Disability Benefit carriers can receive a deduction for any Non-Earner Benefits received by an Insured.
In the decision of Hamblin v. Standard Life Assurance Co. of Canada, released on November 14, 2016, the Court of Appeal dismissed an Insured’s appeal seeking to overturn a determination that her Non-Earner Benefits could be deducted from her weekly LTD payments.
The Appellant, Ms. Hamblin, was involved in two motor vehicle accidents. After the first, she began to receive Long Term Disability payments through her insurer, Standard Life. The Appellant was then involved in a second accident. As she was not working at the time, she elected to receive Non-Earner Benefits through her automobile policy. She also continued to receive her LTD payments from Standard Life.
For reasons that were never explained, the Accident Benefits Insurer never deducted any of the LTD payments from the weekly $185.00 Non-Earner Benefit, despite s. 12(2) of the Statutory Accident Benefits Schedule 2010 which allowed for a deduction in the weekly benefit, “[in] the total of all other income replacement assistance, if any, for the same week.”
Standard Life, upon being notified the Insured was receiving a Non-Earner Benefit, began to reduce their monthly benefit by a corresponding amount. Standard Life relied on a term of the Insured’s policy that allowed the carrier to reduce the monthly LTD payments “by any disability or retirement benefit…payable…under…a provincial auto insurance law.”
Standard Life took the position that they could do this, as long as the automobile Insurer did not deduct the LTD payments from the Non-Earner Benefit first.
The Insured’s counsel claimed that the Court’s decision in Bannon prohibited this sort of deduction. Bannon has stood for the principle that when assessing the deductibility of benefits paid by other compensation schemes, Courts must only deduct like benefits from like, or “apples to apples”. The Insured’s counsel maintained this was not a case of “apples to apples.” Case law had established that Non-Earner benefits were not “income replacement” benefits similar to LTD benefits and therefore could not be deducted from the LTD benefits.
The Court disagreed. They found that unlike the statutorily mandated deductions discussed in Bannon, the wording in the Insured’s policy was clear and unambiguous. The policy allowed for a deduction of any disability payments under an automobile insurance law and was not restricted to income replacement payments. As Non-Earner Benefits were granted where an Insured suffered a complete inability to carry on a normal life resulting from an accident related impairment, they were correctly a disability benefit payable under a provincial auto insurance law.
The Court found the Application judge’s decision was correct, and dismissed the Appellant’s appeal.
Although a bit of an oddity, this case is an important lesson for both AB and LTD insurers. For Accident Benefit carriers it’s a good reminder that temporary disability benefits being received by the insured person in respect an impairment that occurred before the accident are deductible from IRBs and NEBs. For LTD insurer’s, there is now Court of Appeal support that disability payments under ad automobile insurance law includes non-earner benefits. In both cases, a fulsome investigation into an Insured’s other sources of income will avoid double dipping.