November 14, 2016

USANOVIC V. LA CAPITALE LIFE INSURANCE COMPANY, 2016 ONSC 4624

Written by Susan Dhaliwal / OTLA Case Summaries / August 11, 2016
Court dismisses long-term disability lawsuit commenced three years after denial due to statute of limitations

Released June 22, 2016 | Full Decision [CanLII]

The plaintiff suffered a fall on September 27, 2007 and made a claim for disability benefits through a disability policy issued by the defendant. The defendant approved the claim and paid benefits to plaintiff for a number of years.

However, eventually the defendant made a determination that the plaintiff no longer qualified for the benefits under the policy and on January 12, 2012, counsel for the defendant wrote to the plaintiff a denial letter informing him his benefits would be terminated and if he disagreed he should submit, within 60 days of receipt of the letter, medical reports to support his claim.

On February 27, 2012, the plaintiff called the defendant and left a message expressing his displeasure of the decision. The next day, a representative of the defendant called the plaintiff back and informed him if he wanted to appeal the decision he would need to submit in an appeal in writing and submit new medical evidence.

There was no further communication from the plaintiff until February 25, 2015 when the defendant received a notice of appeal from the plaintiff’s counsel and then a Notice of Claim and Statement of Claim issued April 29, 2015.

The defendant brought a summary judgment motion pursuant to R.20 of the Rules of Civil Procedure dismissing the plaintiff’s action on the basis that it was barred pursuant to the one year period set forth in the policy for an action to be brought or in the alternative by the Limitations Act, 2002.

It was the defendant’s position that the denial letter dated January 12, 2012 represented a clear notice to the plaintiff that his benefits were no longer payable. Counsel further submitted that the invitation to appeal nor the bringing of an appeal stops or delays the limitation period.

On the other hand, it was the plaintiff’s position that because the denial letter invited further information and medicals, the denial letter did not provide a clear and unequivocal denial of his benefits. Counsel submitted that the limitation period did not begin to run until he “discovered” the existence of the claim on March 18, 2015 when counsel for the defendant provided his letter in response to his appeal submitted February 25, 2015.

The court found the defendant’s denial letter explained the steps required for the plaintiff to appeal its decision to terminate his benefits. The letter clearly stated within 60 days of receipt of the denial letter, the plaintiff needed to submit medical records in support of his claim for disability. The plaintiff took no steps to challenge or appeal the denial of benefits in accordance with the procedure required by the defendant.

The court further found the specific direction on the steps the plaintiff must take should he disagree with the decision did not detract from the clarity by which its determination to terminate benefits was communicated.

It was found the two-year limitation period under the Limitations Act commenced upon receipt by the plaintiff of the defendant’s denial letter dated January 12, 2012.

With respect to the argument by the plaintiff that the defendant had an obligation of good faith to advise the plaintiff of the limitation period, it was found that there was a positive obligation on an insurer to inform its insured of the nature of the benefits available under the policy. However, it was found there is no obligation in law on the defendant to advise the plaintiff of the applicable limitation period in the Limitations Act.

The motion of the defendant for summary judgment was granted and the action was dismissed on the basis that it was statute-barred.

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