A common question clients often have is in respect to their rights when denied a long term disability (LTD) claim (under private or employment-related insurance policies) is when must an action be commenced. This has become very important given the 2015 changes in Limitation of Actions Act provisions which eliminated the ability of a court to provide relief if the claim is not advanced in time. The new Act allows a court to extend a limitation period, but only with respect to claims for personal injury damages. That does not apply to LTD benefit claims and whatever the applicable limitation period, it is construed strictly and missing the deadline will in almost all cases be fatal to the claim.
The recent decision in Cameron v. Nova Scotia Association of Health Organizations Long Term Disability (NSAHO LTD) Plan, 2018 NSSC 90 (NSSC) provides important commentary to the operation of the Limitation of Actions Act as it applies to LTD claims. In that case, the claimant (a Registered Nurse) applied for LTD benefits in September of 2015 but was denied benefits under the NSAHO LTD plan on May 4, 2016. She did not file an appeal of the decision and did not commence legal action until November of 2017. The LTD Plan never advised the claimant of the one-year limitation period. Article 11.06(1) of the plan provided that a one-year limitation period began to run “…from the date of the claim decision or subsequent claim review decision if applicable.”
The LTD plan applied and was successful in obtaining summary judgment dismissing the action on the basis that the contractual limitation period of one-year applied, notwithstanding the Limitation of Actions Act provided a two-year limitation period. The Court considered whether the contractual 1-year limitation period or the 2-year Limitation of Actions Act period applied. It was noted that Section 21 of the new Limitation of Actions Act (which became effective on September 1, 2015), provided as follows in respect to contractual limitation periods:
(1) The limitation period established by this Act may be extended, but not shortened, by agreement.
(2) Subsection (1) does not affect an agreement made before the coming into force of this Act.
The NSAHO LTD Plan was an agreement between the Organisation and various unions which was entered prior to the effective date of the Limitation of Actions Act (September 1, 2015). The Court held that the shortened limitation period contained in the Plan agreement was permitted by Section 21, and that contractual 1-year period applied to bar her claim.
The Claimant also attempted to argue that because of her mental state, she was incapable of bringing a claim. She attempted to rely on Section 19 of the Limitation of Actions Act which provides:
19(1) The limitation periods established by this Act do not run while a claimant is incapable of bringing a claim because of the claimant’s physical, mental or psychological condition
The Court found that this provision did not apply to a contractual limitation period – it only applied to limitation periods established under the act. Even if section 19 did apply to a contractual limitation period, there was insufficient evidence provided by the claimant to establish she was “incapable.” The appropriate test was whether the claimant had the ability to understand the information that was contained in the May 4, 2016, letter and appreciate the reasonably foreseeable consequences of her making a decision, or not, in relation thereto? The evidence was clear that she understood the contents of the May letter, was taking care of all her affairs, had not been hospitalised and had only seen her family physician 4 times in the preceding year. As such, she was capable of understanding the contents of the denial letter and of making a decision as to whether to appeal the denial.
In respect to the Plan never advising the claimant as to the applicable limitation period, the Court found that she was represented by a Union representative and had access to materials (such as the LTD Plan pamphlet) that indicated the applicable limitation period.
This decision (and others) provides the following guidance when advancing an LTD claim:
- Many LTD contracts will be deemed to have been entered into prior to September 1, 2015 and it is probable that the contractual limitation period (as opposed to the two-year period stipulated under the Act) will be found to apply. If an LTD policy agreement was “entered into” prior to September 1, 2015, then the contractually provided limitation period (1 year in most cases) will apply. It will, therefore, be important to determine the exact date the LTD agreement was entered. It is unclear from the decision how that is to be determined – presumably, in most insurance contracts it would be the date the contract was first entered into, even if it renewed on a yearly basis, although that is arguable;
- The limitation period starts to run when there has been “clear and unambiguous denial of benefits” – often, there are extended discussions and time periods for provision of additional medical evidence etc. that make the determination of whether there is a final denial of benefits problematic. Best to err on the side of caution and commence an action within the contractual limitation period;
- If the contract was entered prior to September 1, 2015, then a claimant cannot rely on Section 19 (incapable by reason of physical, mental or psychological condition) or many of the other provisions contained in the Limitation of Actions Act. However, the common law Discoverability rule would still be available to possibly postpone the limitation period running in an appropriate situation;
For more information on limitation periods and LTD Claims please contact one of our skilled accident and personal injury lawyers.