The limitation period began to run from the date the insured received a denial letter that his disability benefits were terminated. The fact that the denial letter outlined what steps were required to appeal the decision did not convey an equivocal sense of indeterminacy such that the insured had not discovered the existence of a claim. The insurer was not obligated to inform the insured of the applicable limitation period.
Insurance law – Disability insurance – Proof of disability – Limitation of actions – Running of limitation period – Good faith – Rights and duties of insurer
Usanovic v. Capitale Life Insurance Co. (c.o.b. La Capitale Financial Security Insurance Co.),  O.J. No. 3802, 2016 ONSC 4624, July 15, 2016, D.A. Broad J.
The insured had been a recipient of disability benefits for a number of years. Some years later, the insurer determined, based on medical evidence and surveillance, that the insured was not disabled from engaging in any occupation for which he had reasonable training and experience, as required by the terms of the policy. The insurer wrote to the insured and informed him that his benefits would be terminated as of a certain date. The denial letter went on to state: “if you disagree with this decision, please submit, within sixty days of receipt of this letter, medical records in support of your claim for total disability…” Three years later, the insurer received a notice of appeal along with a notice of civil claim.
The insured argued that the limitation period had not begun to run as of the date of the denial letter because the denial had not been clear and unequivocal, given that it invited the insured to submit further information if he disagreed with the determination. The insured also argued that the duty of good faith imposed an obligation on the insurer to provide him with notice of the limitation period.
The court dismissed the action following a summary trial. The court found that the denial letter did not convey an equivocal sense of indeterminacy. It clearly stated that the decision to terminate benefits remained in effect. The specific direction as to what steps the insured needed to take to appeal the decision did not detract from the clarity of the insurer’s decision. Therefore, the court held that the limitation period had begun to run from the date the insured received the denial letter.
With respect to the good faith argument, the court stated that the position advanced by the plaintiff would represent a substantial shift in the law. The court noted that, at its highest, the duty of good faith arguably carried a positive obligation on insurers to inform an insured as to the nature of benefits available under the policy. According to the court, this is markedly different from a positive obligation to advise the insured with respect the application of the law external to the policy and, therefore, held that there was no obligation to advise the insured of the applicable limitation period.
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