Your long-term disability benefits application was denied? The Court of Appeal of Ontario recently released its decision in the Kassburg v. Sunlife Assurance Company of Canada case about denied long-term disability benefits.
The facts of this case are as follows: Sunlife informed Mrs. Kassburg in a letter that her long-term disability benefits application was declined in December 2008. In the same letter, it informed her that she could appeal the decision. Mrs. Kassburg appealed the decision. Her application was declined at the third and final appeal level in February 2011. Mrs. Kassburg issued a statement of claim against Sunlife in February 2012.
Sunlife took the position that since the application was initially denied in December 2008, the statement of claim was issued outside the 1-year limitation period and should be dismissed. The 1-year limitation was listed in the long-term disability policy.
The motion judge decided that the policy would fit within the “business agreement” exception of the Limitations Act. This exception permits the parties to an agreement to contract out of the statutory limitation period of 2 years. However, the motion judge found that the language in the policy to shorten the limitation period from 2 years to 1 year was ambiguous. Therefore, the 1-year limitation in the policy could not be enforced. The motion judge also found that the limitation period was not expired when Mrs. Kassburg commenced her claim because the 2-year limitation began when her claim was finally denied in February 2011.
Sunlife appealed the motion judge’s decision to the Court of Appeal of Ontario. The decision was released on December 29, 2014.
The Court of Appeal dismissed Sunlife’s appeal and confirmed the decision of the motion judge. However, the Court of Appeal decided that the long-term disability policy could not be a “business agreement” as defined by the Limitations Act. Mrs. Kassburg is an individual who is a party to the agreement and the purpose of the policy was to provide personal insurance coverage for loss of income in the event of disability. Since the purpose of the agreement is clearly personal, the policy cannot fall into the exception of being a “business agreement” and therefore, the statutory limitation of 2 years applies.
Here are a few lessons that can be taken from this Court of Appeal decision:
• Group long-term disability insurance policies that shorten the 2-year limitation period are not enforceable.
• The applicant for long-term disability benefits cannot know that it is legally appropriate to start a lawsuit before the application for benefits is clearly denied, which occurs when all the appeal procedures have been exhausted.
If your application for long-term benefits has been denied, contact us today for a free consultation.