Insurance company’s errors allow late LTD claim to proceed

*Note: this blog was current as of its date of publication on April 15, 2020. The decision represented here was overturned on appeal. Find the decision here.

Kumarasamy v. Western Life & Morris National

Individuals generally have two years to file a claim for long-term disability benefits through their insurance company. The clock starts ticking on this time limit the moment someone becomes aware of the potential for a claim.

A two-year time limit also applies to legal claims for compensation filed against an insurance provider when benefits are refused to the individual. This period of time starts when the person’s long-term disability benefits are incorrectly denied or cut off.

These two-year periods are referred to as the limitation period, as set out in the Limitations Act. Your claim will not be considered valid if you attempt to file it past this two-year expiration date.

In its recently published decision for Kumarasamy v. Western Life & Morris National, the Ontario Superior Court of Justice found that despite the fact that a claim had been filed past the limitation period, Mr. Kumarasamy was still entitled to his full benefits in part because the insurance company failed to contact him, provide him with pertinent information and documents, and to deny his claim in a timely manner.

Overview of the Case

In this case, Mr. Kumarasamy’s insurance provider asked the court to dismiss the legal claim against them, on the basis that:

• Mr. Kumarasamy submitted his initial claim for long-term disability benefits to the insurer after the timeframe set out in the policy; and
• His legal claim for compensation, following the denial of his benefits, was filed against the insurance company after the two-year limitation period deadline.

In this case, Mr. Kumarasamy missed the deadline for submitting his claim for benefits to the insurer by about one month. He then did not file his legal claim for compensation until a full three years after he became disabled.

The Court’s Decision

Normally, the fact that the claim was filed more than one year past the limitation period would have been fatal to Mr. Kumarasamy’s claim. However, in this case, his claim against the insurance company was ultimately allowed to proceed because:

1. The insurance provider sent most of its correspondence to the wrong address;
2. Mr. Kumarasamy had not discovered until around two years after his initial disability diagnosis that he had long-term disability benefits through his employer;
3. Mr. Kumarasamy had already been medically examined by another insurance company as part of the personal injury claim that gave rise to his disability;
4. Mr. Kumarasamy wasn’t provided with a copy of his long-term disability insurance policy until around two years after his disability; and
5. The insurance company didn’t officially deny Mr. Kumarasamy’s claim for long-term disability benefits until approximately three years after the initial disability.

In rejecting the insurer’s secondary argument that the long-term disability claim was brought past the limitation date set in the policy, the court relied on the principle of “relief from forfeiture”, which is the right of the court to take action that will protect a person who stands to lose something because they failed to meet a condition of an agreement.

Lessons for individuals

Pay attention to time limits

This case serves to remind individuals that there are important time limits on commencing insurance claims. However, although deadlines with respect to your insurance policy are critical, the courts can remove the requirement for individuals to strictly adhere to those deadlines.

Always seek legal advice

It is important to keep in mind that although there were many aspects that worked in Mr. Kumarasamy’s favour in this case, every case will depend on its own circumstances. Individuals should still use caution and seek legal advice promptly if they have questions about their disability claim, or their request for LTD benefits is denied by the insurance company.

The disability lawyers at Samfiru Tumarkin LLP have years of experience fighting back against insurance companies in Ontario, British Columbia, and Alberta. Get the advice you need, and the compensation you deserve, when your insurance provider denies your legitimate claim for disability benefits.

Update: The decision presented above was overturned on appeal. You can find out more about this case by viewing Kumarasamy v. Western Life Assurance Company, 2021.