It happens all the time: The Insurer denies long term disability benefits and invites an injured person to appeal the denial by providing more medical documentation. The truth is that the policy may not even have a formal appeal process. The Injured person may go back and forth with the Insurer for years trying to convince them through an appeal that she is entitled to Long Term Disability benefits.

Beware, the clock is ticking. The Limitations Act, 2002 imposes a 2-year limitation period for all claims in contract and tort. The discoverability principal, codified by section 5 of the Limitations Act, 2002, governs the commencement of the limitation period. The onus is on the injured person to show that the claim is not statute-barred according to s 5(2) of the Limitations Act.

The worst part is that there is no obligation on an Insurer to advise an injured person about statutes of limitation. It is good practice to commence a claim for long term disability benefits within two years from the date that the Insurer stopped paying you long term disability (LTD) benefits or provided you a first denial of benefits. A recent Court of Appeal case has ruled that appeals and correspondence back and forth between an injured person and the Insurer do not extend the limitation period.

Just released on September 27, 2017 in Pepper v. Sanmina-Sci Systems (Canada) Inc., the Court of Appeal set aside the finding that Mr. Pepper’s LTD benefits claim was not limitation-barred as an action. The Insurer in this case was Standard Life.

On the facts, Mr. Pepper was employed as a punch-press operator at Sanmina-Sci Systems and became disabled on March 13, 2005. Standard Life had initially refused to provide Mr. Pepper with short term disability (STD) benefits, but ultimately paid STD benefits retroactively from March 21, 2005 to September 18, 2005, and then progressively paid STD from September 18, 2005 to May, 2007. In order to obtain STD benefits, there was extensive correspondence between Mr. Pepper and the Insurer. STD was denied with the invitation to appeal, and Mr. Pepper would promptly appeal with more information. In the end, Mr. Pepper received STD benefits, but it was only after appeals.

On May 17, 2006, Standard Life wrote to Mr. Pepper advising that his LTD claim had been approved. About nine months passed, and on February 13, 2007, Standard Life advised Mr. Pepper that it was arranging a return to work program for him. On February 20, 2007, Standard Life wrote to Mr. Pepper and advised that it had not determined whether he would continue to qualify for LTD after September 19, 2007. On April 10, 2007, Standard Life wrote to Mr. Pepper advising that it was still evaluating his claim, but would continue to pay him LTD benefits in the meantime.

Via a letter dated August 15, 2007, Standard Life advised Mr. Pepper that he no longer met the definition of “total disability” under the insurance policy and, therefore, did not qualify for LTD benefits. In that letter, Standard Life stated that it would pay a transitional benefit until October 31, 2007, to assist with Mr. Pepper’s return to work. The letter also informed Mr. Pepper that he had the right to appeal their decision to terminate his benefits by submitting additional medical information.

On August 28, 2007, Standard Life advised Mr. Pepper that it had arranged a meeting with his employer to implement the return to work program. On October 31, 2007, Mr. Pepper appealed the termination of his LTD benefits and provided medical information. On November 19, 2007, Mr. Pepper’s appeal was denied, but by a letter of the same date, Standard Life advised him of a right to appeal the decision. In its letter, Standard Life advised Mr. Pepper that it needed more information to process his claim and advised him that he could provide them with additional information.

On December 11, 2007, Mr. Pepper wrote to Standard Life and enclosed additional medical records. On January 4, 2008, without waiting for a decision, Mr. Pepper retained counsel. On January 29, 2008, counsel wrote to Standard Life to advise that he had been retained with respect to the termination of Mr. Pepper’s application for LTD and asked for a copy of Mr. Pepper’s file. On February 25, 2008, Standard Life sent Mr. Pepper a letter advising him that it had not changed its decision with respect to his LTD benefits claim. The letter did say that "once we have received and reviewed all of the above requested information we will notify you of our decision. In the meantime, your file remains closed."

There was never a clear and unequivocal denial of Mr. Pepper’s LTD claim. In addition, there was extensive history between Mr. Pepper and Standard Life of providing long term disability benefits, denying benefits, considering appeals of the denials, making more denials, inviting further appeals, and progressively and retroactively restoring benefits. In addition, Mr. Pepper and the Standard Life representative both testified at examination for discovery that there had been no final denial of Mr. Pepper’s LTD claim and that Standard Life was continuing to adjudicate it.

Despite these facts, the Court of Appeal found in part as follows:

1. On the facts of this case, the insurer appellant stopped paying long term disability benefits to the respondent claimant on November 1, 2007. At that point, the respondent had a cause of action against the appellant - and ought to have been aware that he did. Indeed he retained litigation counsel in early January, 2008 to deal with his claim for disability benefits. This fact belies any suggestion of a lack of awareness of the appropriateness of commencing a lawsuit at that point in time.
2. As the motion judge noted, this policy of insurance provides no formal appeal process for when a claim is denied, and there is no alternate statutory appeal process as there was in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709.
   There is no obligation on an insurer to advise its insured about statutes of limitation and, in this case, the dealings between the appellant and the respondent in attempting to resolve the claim do not give rise to an estoppel argument.
3. The motion judge in his reasons noted that it would have been “prudent” for the solicitor retained by the respondent to treat November 1, 2007 as the commencement date for the running of the limitation and he ought to have stopped his analysis right there. It was not just a matter of prudence but of legal correctness. The failure on the part of legal counsel and the motion judge to recognize November 1, 2007 as the date on which the limitation period commenced is an error in law.
4. On that date, the respondent had, in the language of the Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218 - a “fully ripened claim.” That was the “appropriate” time to commence litigation. As Sharpe J.A. noted in Markel:   …the word “appropriate” must mean legally appropriate. To give “appropriate” an evaluative gloss, allowing a party to delay the commencement of proceedings for some tactical or other reason beyond two years from the date the claim is fully ripened…would, in my opinion, inject an unacceptable element of uncertainty into the law of limitation of actions.
5. The motion judge recognized that the respondent had a “fully ripened” claim as of November 1, 2007 (see para. 71-72 of the Reasons). His further analysis is, in our view, no more than an “evaluative gloss” on the word “appropriate” and introduces the uncertainty Markel cautions against.

CONCLUSION
The appeal is allowed. The order below is set aside, and, in its place, issues an order dismissing the action with costs.