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Limitation Periods in Long Term Disability Cases (Ontario)

Generally speaking, adults have 2 years from the date of a car accident, or slip and fall to sue. If you wait until after two years from the date of the accident, you’re likely out of time to sue. This is called a “limitation period“. These limitations, are set out by statue. The best place to look when it comes to limitation periods is Ontario’s Limitations Act, 2002, SO 2002, c. 24. or the applicable act for the subject matter you’re dealing with. You’ll likely need a lawyer to help sort these things out, so have a good one to call if you have any questions about this sort of thing. But this isn’t the purpose to today’s instalment of the Toronto Injury Lawyer Blog.

Sometimes, large insurers try to contacts OUT of the limitation periods which are set for in the Limitations Act,  2002, or other statues. Personal injury lawyers often see this in the context of long term disability litigation.

Long Term Disability claims are unique, because unlike a car accident or slip and fall case where the applicable law is generally tort law from our common law system along with other statutes such as the Negligence Act, Occupier’s Liability Act, or Insurance Act; Long Term Disability Claims (LTD) are entirely contractual claims. The insurer and their underwriters draft the contract. The claimant is suing for benefits which are supposed to be provided for under that contract. If the contract doesn’t exist, then there’s no LTD claim. If the benefits don’t exist under the contract, then they won’t exist in your claim.

A trend which Plaintiff side lawyers have been seeing more and more in the context of LTD litigation are instance whereby large LTD insurers, such as Manulife, Great West Life, Sun Life, SSQ, Desjardins, RBC, Equitable Life, Industrial Alliance and others are trying to contract OUT of statutory limitation periods to reduce them. They do this by virtue of tucking in clauses to those lengthy and complicated LTD insurance contracts.

An LTD claimant, or lawyer may assume that they have two years from the date of denial to sue. This would seem entirely reasonable. BUT, the insurer is relying on one of these limitation clauses to have the claim dismissed from Court, so that they don’t have to pay out any benefits on the claim.

Here is an example of one such clause contained from a standard policy of insurance of one of the large LTD insurers out there:

no such action may be brought more than one year after the last
day on which proof of claim would be accepted under the terms of the Policy

Here is another example of a clause from a Sun Life policy of LTD insurance seeking to reduce the length of a limitation period which has been quoted in on of the cases I’ve cited below:

No legal action may be brought by you more than one year after the date we must receive your claim forms or more than one year after we stop paying disability benefits

In order to validly contract out of a statutory limitation period under s. 22(5) and (6) of the Limitations Act, 2002 three requirements must be met.  These were set out in Boyce v. The Co-Operators General Insurance Co.,, at para. 20:

A court faced with a contractual term that purports to shorten a statutory limitation period must consider whether that provision in “clear language” describes a limitation period, identifies the scope of the application of that limitation period, and excludes the operation of other limitation periods.  A term in a contract which meets those requirements will be sufficient for s. 22 purposes, assuming, of course, it meets any of the other requirements specifically identified in s. 22.

In the claim of Kassburg v. Sun Life Assurance Company of Canada, 2014 ONCA 922, the insurer, Sun Life brought a motion for summary judgment seeking to dismiss the Plaintiff’s LTD claim for failing to meet the 1 year limitation period set forth in the policy. The Plaintiff argued that the LTD insurer could NOT contract out of the standard 2 year limitation period set forth in the Limitations Act, 2002.

Believe it or not, the Defendant LTD insurer WON their motion and ordered that the Plaintiff’s claim be dismissed! What a tragedy!

Luckily, the Plaintiff appealed to the Ontario Court of Appeal. The Court of Appeal sided the with Plaintiff on the argument that the defendant LTD insurer could not unilaterally impose a shorter limitation period on a disability claimant:

The clear wording of s. 22(5) permits contracting out of the statutory limitation period, unless the parties to the contract include an individual, and the contract was for “personal, family or household purposes”. There are therefore two requirements for a business agreement to exist: the parties must not include individuals, and the contract must not have been for personal, family or household purposes.

The literal reading of the “parties” aspect of the section that appears to have been accepted by the motion judge, in my view, is inconsistent with the objective of s. 22 of the Limitations Act, 2002, which is to restrict the circumstances in which the statutory limitation periods under the Act can be altered by contract. In my view, the word “parties” in s. 22(6) should be given a broader, purposive reading to accord with the objective of s. 22.462136

In this action, the respondent is asserting a personal claim for LTD benefits provided under a group policy. She is entitled to assert the claim directly against the insurer under s. 318 of the Insurance Act, R.S.O. 1990, c. I.8. Although the group insurance contract under which she is making her claim was entered into between the NBPA and the appellant, the appellant relies on a limitation period contained in that contract to exclude her claim. The respondent is in effect deemed to be a party for the purpose of asserting her claim, and for the purpose of the appellant’s limitations defence.

With respect to the “purposes” requirement, the contract is for personal purposes, and accordingly is not a “business agreement” under s. 22(5).

Accordingly while I would dismiss the cross-appeal as moot, it is my view that the motion judge erred in concluding that the disability policy in this case constituted a business agreement for the purpose of s. 22(5) of the Limitations Act, 2002. Boyce is properly distinguished by the respondent, as the insurance policy in that case was for business purposes.

Lesson: If you’re a business, or the contract of insurance was for business purposes, you will NOT be afforded the protections of the Consumer Protection Act and an insurer can impose a shorter limitation period on you to defeat your claim. This does not mean that just because you’re an individual that an insurer will still not try to dismiss your claim based on the wording of contained in the LTD policy calling for a shorter limitation period to be imposed. The best protection is to get a good personal injury lawyer who understands how long term disability law works.

Enough law talk? Sure. Toronto’s baseball team forced a Game 6 with a gutsy pitching performance from Marco Estrada. Great stuff!


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