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A woman on short term disability was refused long term disability and the insurance company argued that her appeal could not proceed as she had gone beyond the time limits set out in the policy.

March 31, 2014, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Karen Kassburg was working as a Special Constable when she submitted a claim for long-term disability (LTD) on May 1, 2008 stating she had been totally disabled since Oct 22, 2007.

The insurance policy provided for an elimination period of during which she would get short-term disability benefits. On May 15, 2008 Sun Life wrote Ms. Kassburg to advise her that the Short-term disability elimination period would expire Sept 11, 2008 and that LTD would be payable starting on Sept 12, 2008. The letter indicated Ms. Kassburg’s claim was pending. On December 4, 2008 they advised that her claim was declined and that if she wished to appeal the decision she would have to provide further medical information.

Correspondence was exchanged between Ms. Kassburg and Sun Life from that point until Feb 24, 2011 when they advised her that she had exhausted all three levels of appeals and that her case was declined. They advised her that she may wish to obtain a lawyer which she did. The Lawyer commenced action on February 21, 2012. Ms. Kassburg’s representatives repeatedly requested clarification from Sun Life as to the dates that the elimination period for LTD would commence and conclude but Sun Life did not reply to the requests.

Sun Life claims that this action was commenced outside of the limitation period as the limitation period in the contract of December 10, 2009 governs the period of the action, or alternately that the two year statutory limit December 4, 2010  in the Limitations Act applied.

ISSUES

  1. Which limitation period applies:
  2. When the applicable limitation period commenced; and
  3. The extent of the relief that should be granted.

Justice Ellies addressed the question of which limitation period applied. After examining the Act, the Policy contract and the booklet describing the policy that was distributed to Ms. Kassburg, he determined that the definitions of the limitation periods was ambiguous and inconsistent. The language was ambiguous enough to make the contracting out of the statutory limitation set out in the Limitation Act invalid. Justice Ellies concluded that it was not unreasonable to believe that the appeal procedure formed part of application process.

Justice Ellies reviewed the case and the law and determined that if the plain language standard was to be used the statutory limitation period did not begin to run until February 24, 2011, the date of the letter in which Ms. Kassburg was advised that her final appeal had failed.  Therefore, the claim was issued within the limitation period.

Justice Ellies then addressed the extent of the relief that should be granted. Sun Life submits that it put its best foot forward but that Ms. Kassburg failed to file her motion in time. Justice Ellies did not favour this argument as requiring Ms. Kassburg to bring her own motion would be contrary to the clear call to promote proportional, timely and affordable access to justice sounded recently by the Supreme Court of Canada, and would also ignore the doctrine of res judicata, which precludes the re-litigation of issues that have already been judicially determined between the same parties. For this reason Ms. Kassburg should be entitled to the declaration sought.

Justice Ellies concluded that while Sun Life was correct in highlighting the importance of limitation periods. However, he was at a loss as to why even after several requests by Ms. Kassburg and her representatives, and throughout all of its correspondence with her Sun Life failed to communicate or refused to reply to direct questions, its position with respect to the date the limitation period commenced and ended. Justice Ellies dismissed Sun Life’s motion and issued an order declaration Ms. Kassburg’s action commenced within the applicable limitation period

                                              

Posted under Personal Injury, Disability Insurance, Spinal Cord Injury

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Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us toll-free at 1-866-414-4878.

The opinions expressed here, while intended to provide useful information, should not be interpreted as legal recommendations or advice.

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