For many people, the thought of losing work due to injury or illness can have significant financial implications. Thankfully, many employers contract for short or long-term disability insurance plans, which are designed to provide their employees with income in the event they become unable to work. However, as any regular reader of our blogs would know, insurance plans don’t always work out as people expect them to, leaving them at risk of not getting the coverage they thought they were entitled to. One of the most important reasons to work with a skilled insurance lawyer from the outset of a claim is to ensure that important dates and steps in the process are not missed.

As we see in a recent decision from the Ontario Superior Court of Justice, a failure to abide by time limits in insurance policies can leave an insured party with little hope, even if insurance litigation is pursued. 

Employee seeks short term and long term disability benefits

The parties in the case involve an employee, her employer, and the insurer. The employee was employed by the employer from August 19, 1997, until February 17, 2017, when she lost her job due to a branch closure. However, she had not been working with the employer as of March 31, 2015, as a result of a disability due to injuries sustained in a motor vehicle accident decades earlier. 

Following her leave due to disability, the employee applied for short-term disability (“STD”) benefits through her employer, though the insurer provided administrative services for an Early Claims Intervention (ECI) plan. The ECI plan was distinct from the STD plan in that it was similar in that it provided for an employee’s salary to be paid for a limited time. In addition to administering the ECI plan, the insurer also administered a long-term disability (“LTD”) plan for the employer. The employee’s ECI application was denied and was under appeal as of September 30, 2015, when the employee’s lawyer wrote to the insurer to inform them that they anticipated commencing an action for LTD benefits, asking who would be responsible for making the payments (the employer, or the insurer). The insurer replied that while the employee had not filed an LTD claim, the insurer was responsible for the administration of ECI claims. 

Ultimately, the employee was unsuccessful in her pursuit of both STD and ECI claims and filed a statement of claim for LTD benefits (for which she had not yet applied) on October 31, 2016. In that statement of claim, she stated that she was not provided with a copy of her insurance policy and did not know of any LTD notice requirements. This is important because the plan states that an insured party must make a claim no later than 90 days after the end of the elimination period. 

The application before the court, in this case, is one in which the employee sought to amend her statement of claim. The original claim is quoted below, with underlines reflecting new language the employee  wished to include,

“The Plaintiff did not submit an application/formal proof of loss claim form for LTD benefits to Sun Life, pending resolution of her STD benefits with her employer. However, the Defendant Sun Life Assurance Company of Canada was put on notice by June 22, 2015 that the Plaintiff was seeking short term and long term disability benefits.”

The employee also asked the court to find that the insurer failed to meet their obligation to provide her with LTD application forms. 

Insurer says employee’s amendments amount to new facts, claims, and causes of action

The insurer took the position that the employee should not be allowed to amend her statement of claim, stating she knew as early as September 30, 2015 that she had not made an application for LTD benefits. Failing that, they stated that their filing of a statement of defence in June 2017 would have been the latest possible date that she would have found out. Even if June 2017 was the date she found out, she would still be statute-barred from making an application for LTD benefits. The question ultimately becomes one of whether the plaintiff’s additions to the claim amount to a withdrawal of the original and submitting a new cause of action (a new factual situation), or whether she is simply requesting an alternative claim for the existing facts. 

The Rules of Civil Procedure state that a court can allow a plaintiff to withdraw an admission, but a 2019 decision from the Ontario Superior Court of Justice states there is a three-part test with respect to granting that leave. The test is as follows:

(1) The proposed amendment raises a triable issue.  The requirement to demonstrate a ‘triable issue’ requires the moving party to demonstrate that the proposed amendments raise an arguable case on the merits.

(2) The admission was inadvertent or resulted from wrong instructions.  … As stated by Saunders J. in Antipas, supra ‘if there is a triable issue, a party should be able to withdraw an admission upon furnishing a reasonable explanation for the change in position’.

(3) The withdrawal will not result in any prejudice that cannot be compensated for in costs. … the onus is on the moving party to show that the opposite party will not be prejudiced, rather than the reverse as is the case under rule 26.01.

The court noted that the plaintiff had previously admitted under cross-examination that she had not previously applied for LTD benefits. The court found that she had not provided a reasonable explanation for her change in position. Therefore the court found that she had not raised a triable issue. While the court did not have to review the second and third aspects of the test, they still found that the plaintiff had failed to provide information on whether the admission was inadvertent or a result of receiving the wrong instructions. Despite the plaintiff not indicating this, the court found the omission was not inadvertent since the plaintiff said she had been waiting for the STD benefit application to process before applying for LTD benefits. 

Finally, the court also found that the plaintiff had not addressed the requirements of the third test.

Ultimately, the court found the plaintiff was trying to introduce new facts, which means she sought to introduce a new cause of action. Since she did not meet the requirements to do so, she was denied that opportunity. 

Contact the experienced insurance litigation lawyers at Campbell Litigation in Kitchener-Waterloo to ensure your claim represents your best chance for success 

If you find yourself in a dispute with your insurance provider, reach out to the experienced insurance litigation lawyers at Campbell Litigation. We work closely with our clients to ensure we are properly prepared to represent them, including preparing documentation that accurately captures the facts of the situation as well as our client’s position. Please don’t hesitate to call us at 519-886-1204 or reach out to us online to see how we can help you today.