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Limitation Periods in Long Term Disability Claims challenged by RBC Life Insurance at Ontario Court of Appeal

Not too long ago, the Toronto Injury Lawyer Blog focused on limitation periods in the context of Long Term Disability Claims, and how insurers will delay, delay, delay such that enough time has passed that they could ask the Court to dismiss your claim. Delay is the enemy of a Plaintiff and the friend of an insurer.

The longer a denied claim goes without litigation, the greater the chance that the delay argument will swing in the favour of the LTD insurer. It’s clear that time is NOT on the claimant’s side when it comes to filing an LTD claim, and then litigating it at Court.

One of the larger LTD Insurers, RBC Life Insurance Company recently brought their delay argument to the Ontario Court of Appeal in the hopes of having a claimant’s case dismissed completely.

The case is Dube v. RBC Life Insurance Company and the initial decision at the Superior Court level can be found in the above noted link.

In this case Mr. Dube was a full time employee of the Windsor Essex Housing Corporation. He began working there in around November 2008. He was entitled to benefits under a group disability policy with RBC. One of those benefits was Long Term Disability Benefits. These benefits were supposed to pay for a percentage of Mr. Dube’s salary, in the event of serious injury, illness and/or disability. Basically, if you’re too hurt to work, RBC will pay you a portion of your salary to help make ends meet. In theory, this sounds like a great thing. Almost too good to be true…

Mr. Dube was involved in a serious car accident on May 24, 2010. He was insured by RBC Life under the LTD Policy at the time. But, he did not notify RBC of his potential claim until March 9, 2012; and did NOT submit a claim to RBC Life under the LTD Policy until June 5, 2013. For all of your mathematicians out there, that means that Mr. Dube did waited 3 years and 12 days from the date of his car accident, until the date he made a claim for LTD benefits under this LTD policy.

Even if Mr. Dube wasn’t totally disabled immediately following the car accident, that’s a very long time if the primary reason for his disability was on account of injuries sustained in the car accident.

The RBC LTD Policy contained very explicit wording with respect to when they need to be notified about a potential LTD claim, and about when an LTD claim ought to be made:

We encourage you to notify us of your claim as soon as possible, so that a claim decision can be made in a timely manner. Written notice of a claim should be sent within 30 days after the date your disability begins.  However, you must send RBC Insurance written proof of your claim no later than 90 days after the date your disability begins.  If it is not possible to give proof within 90 days, it must be given no later than 1 year after the time proof is otherwise required except in the absence of legal incapacity.  [Emphasis added.]

The claim form is available from your Employer, or you can request a claim forms from us.  If you do not receive the form from RBC Insurance within 15 days of your request, send RBC Insurance written proof of claim without waiting for the form. [Emphasis added.]

The Judge agreed that the insurer had no common law duty to inform Mr. Dube of each potential claim for benefits in these cases. The reality here is that the Judge was agreeing with the insurer RBC that these are contract claims, and it’s not up to RBC to tell and insured like Mr. Dube of each and every potential claim for benefits; although it’s certainly a good practice for insurers to do so and it could be argued that failure to do so is bad faith; but that’s the topic for another Toronto Injury Lawyer Blog post.

In order to get around these tight contractual notice provisions in the LTD policy, the Plaintiff had to rely on section 328 of the Insurance Act. This is a provision for a Court to grant relief from foreiture which states:

328.  Where there has been imperfect compliance with a statutory condition as to any matter or thing to be done or omitted by the insured, person insured or claimant with respect to the loss insured against and a consequent forfeiture or avoidance of the insurance in whole or in part, and any court before which a question relating thereto is tried deems it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it deems just.

Relief from forfeiture in favour of a Plaintiff is also granted under section 98 of the Courts of Justice Act which requires that the Court apply a three pronged test:

(a)  the conduct of the applicant;

The Judge found that Mr. Dube’s failure to open and review is benefits booklet along with the letters from RBC was NOT unreasonable

(b)  the gravity of the breach; andgoldfinger-advantage (1)

The Judge found that Mr. Dube was, at best, confused about the need to provide notice and such confusion was exacerbated by the actions of his employer along with his interactions with his Union to access LTD benefits.  The Plaintiff could not be faulted by his employer’s failure to assist him in applying for LTD benefits. The Judge found that Mr. Dube should not have been faulted for the misleading information he received from his employer along with the delays associated with getting his employer to complete the requisite forms to complete the LTD application.

(c)  the disparity between the value of the property forfeited and the damage caused by the breach

The Court found that the LTD benefit owing to Mr. Dube was just $897/month after set offs were applied. Accordingly, the damage caused by the breach and the value of the property forfeited was not overly significant for a company like RBC.

The Judge dismissed RBC summary judgment motion. RBC however appealed to the Ontario Court of Appeal. Mr. Dube won at this level, with the three Judge Ontario Court of Appeal noting that the prejudice, if any to RBC on account of the delay was minimal. Even if RBC incurred some prejudice on account of the delay; that prejudice would be outweighed by the harm to Mr. Dube being unable to pursue his claim.

A win for the Davids vs. the Goliath insurance company. A fantastic decision for Plaintiffs and LTD claimants across Ontario. But, we should all learn from this decision. It’s important to notify your LTD insurer about your claim as soon as possible and not sit on their phone calls, emails or letters. Review your policy with a lawyer so that you know what the notice provisions or limitation clauses provide.

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