Avoid having your Disability Claim denied for being Too Late

Disability claims and claim appeals are subject to filing deadlines, and a failure to meet any of these deadlines may prevent a person from obtaining owed benefits.  If your disability claim has been denied, the denial letter from your insurance company will typically specify a date before which you may file an internal appeal of the insurer’s decision, and you may be given up to three chances to appeal your case with a representative of your insurance company.  If you chose to appeal your denied claim via a lawsuit, your case will be decided by a judge or jury and there is a two-year deadline for bringing your lawsuit against the disability insurer.  Many disability insurance policies also specify a deadline for submitting a disability claim application and related documents.

Failing to meet a claim deadline is one of the leading reasons why long-term disability (LTD) claims are sometimes denied.  However, depending on the circumstances of the case, the insurance company may be convinced to accept a claim that is ostensibly past the deadline. If your disability claim is unfairly denied and you are wondering what action is required to overturn the insurance company’s decision, consider getting advice from an experienced disability claims lawyer.

If you submit all required documentation with your disability application, your LTD claim application may be approved within weeks; but sometimes, the claim application process can take years and involve multiple letters and exchanges of information between the claimant and the insurance company as they attempt to resolve the question of whether the claimant is entitled to long-term disability benefits.  Further, the claimant may have been paid disability benefits during some of these years before their disability claim was terminated and it may be unclear whether (or when) there was a final decision to refuse a claim and discontinue payment of disability benefits.  This is what occurred in the below case, and the claimant’s failure to appeal their insurance company’s decision on time may ultimately bar her from claiming disability benefits.

The civil action, Clarke v. Sun Life Assurance Company of Canada was brought to resolve a claim dispute involving a woman who was denied disability benefits by Sun Life Assurance Company (‘Sun Life’).  In this action, Sun Life motioned to have the claimant’s claim summarily dismissed on the grounds that it was submitted too late and is therefore statute-barred.  Under the Limitations Act, a person must submit their claim within two years of the date the claim was discovered and they first became aware an injury, loss or damage had occurred.

The claimant, Ms. Clarke, issued her claim against Sun Life for denial of disability benefits on August 2, 2018 and she asserted that the two-year limitation period began on June 19, 2017, so her claim was made in time.  However, Sun Life denied her claim, arguing that the limitation period actually began on February 24, 2014.  The key questions decided by the motions judge were: on what date did the loss occur; and when did Ms. Clarke know that it was appropriate to bring a proceeding to seek a remedy for her loss.  In the current case, the claimant’s ‘loss’ is the denial of her disability benefits.

To understand the issues in this case, one needs to understand how eligibility for long-term disability benefits is determined:

In order to be eligible for long-term disability benefits within the first two years after becoming disabled, a claimant must provide evidence to show that they are unable to perform their current job or ‘own occupation’.  But after the two-year mark, eligibility for disability benefits requires a claimant to prove that they are unable to perform ‘any occupation’ for which they are suited by way of education, training or experience.

Background and Findings: Clarke v. Sun Life Assurance Company of Canada (2019)

After finding that she was unable to work due to health problems, Ms. Clarke first made a claim for disability benefits in 2012. On March 19, 2012, Sun Life denied her claim for benefits related to her own occupation, but the claimant was told that she could appeal her case. 

Ms. Clarke was successful in her internal appeal and on February 24, 2014, Sun Life wrote the claimant a letter indicating that her claim (based on her own occupation) had been approved and she would receive benefits retroactively from January 24, 2011 until April 25, 2013, which reflects the two-year period after she became disabled.  Sun Life’s letter also stated that, based on previously submitted medical information, Ms. Clark doesn’t meet the threshold of a ‘total disability’ and she is not eligible for benefits related to ‘any occupation’; but if she believes she is disabled from any occupation, she needs to provide further medical information (including physicians’ assessments and treatments) to support this claim.

On February 26, 2014, Ms. Clarke replied to Sun Life to inform them that she would appeal the ‘any occupation’ phase; however, her additional information wasn’t delivered to Sun Life until March 28, 2017 without an explanation for the delay.  Sun Life accepted Ms. Clarke’s new information, but on June 19, 2017, the insurer advised the claimant that her appeal was unsuccessful because the additional medical information was insufficient to reverse their prior decision.  Sun Life’s letter also stated that they would be willing to review any new medical information as part of the final appeal process.

On August 2, 2018, the claimant began a lawsuit against Sun Life for denial of her disability benefits. Ms. Clarke argued that her claim was not discoverable when she received the February 2014 letter from Sun Life because the letter “was not a clear denial of benefits” and no reasonable person could have known that ‘injury, loss or damage” occurred.  Sun Life disagreed and argued that the 2014 letter effectively declined to pay her benefits and, in any case, “no clear or unequivocal denial letter is required” nor is the insurer obliged to advise a claimant about the limitation periods.

On the question of whether the February 2014 letter is the date on which Ms. Clarke’s loss occurred, Justice Leiper found that Sun Life’s letter was ambiguous and invited the claimant to submit more information.  Therefore, it was unclear whether Ms. Clarke’s loss “had ripened” at that point.

The second key question is whether Ms. Clarke was aware that a proceeding would be the appropriate means to seek a remedy when she received the insurer’s February 2014 letter.  At that time, Ms. Clarke’s union representative was helping her with the disability benefits application process and there was no discussion of possible litigation or limitation periods.  Also, correspondence between the insurer and Ms. Clarke reflected the use of Sun Life’s alternative dispute appeal process. 

Justice Leiper concluded that Sun Life failed to establish all the elements of a limitation defence, including whether the claimant knew or should have known that it was legally appropriate to commence a claim within the two-year period beginning with the February 2014 letter.  Accordingly, the motions judge ruled that Ms. Clarke’s action for denied benefits is not too late or statute-barred and further, Justice Leiper held that this issue can be decided in the current action and without the need for a full trial.

On Appeal: in Clarke v. Sun Life Assurance Company of Canada (2020)

Sun Life appealed the motion judge’s decision and the appeal court allowed the appeal in part, and found that the motion judge did not have “an adequate legal and factual foundation” for concluding that Sun Life did not establish the criteria for a limitation defence.  Justice Brown noted that Justice Leiper was not able to, and did not, determine the date when Ms. Clarke first knew a proceeding was an appropriate means to remedy her loss (the denial of her claim).  Further, the motion judge was obligated to assess whether the claimant acted with due diligence in determining if she had grounds to make a claim, but Justice Leiper didn’t make any inferences about Ms. Clarke’s unexplained three-year delay in providing additional medical documents. 

Justice Brown stated that Justice Leiper erred in law by not applying the principal that “an insured has a cause of action for breach of contract against her insurer when the insurer stops paying long-term disability benefits” (per Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017).  Justice Brown asserted that “a reasonable person with the abilities and in the circumstances of Ms. Clarke” should have realized her loss when Sun Life informed her in February 2014 that her ‘own occupation’ benefits had ended and they would not pay her ‘any occupation’ benefits.

For the above reasons, Justice Brown set aside the motion judge’s decision and directed that this action go to trial to decide the remaining issues pertaining to the limitation period defence.  Justice Brown asserted that this is not an appropriate case to be decided in summary judgement and without examinations for discovery or cross-examinations.

If your disability claim was denied for any reason, seek advice from a Kitchener-Waterloo disability claim lawyer at Dietrich Law to ensure that you don’t miss any deadlines in appealing your case and also, that every avenue has been explored in successfully resolving your claim.