Clarke v. Sun Life Assurance Company of Canada

[Indexed as: Clarke v. Sun Life Assurance Co. of Canada]

Ontario Reports Ontario Superior Court of Justice Leiper J. May 14, 2019 147 O.R. (3d) 55 | 2019 ONSC 2942

Case Summary

Limitations — Discoverability — Insurer sending insured letter in February 2014 stating that her long-term disability claim file had been closed as current medical information in file did not support finding that insured was totally disabled — Letter stating that insured could provide additional medical information if she felt that she was totally disabled — Insured presenting additional medical information three years later — Insurer considering it before advising her in June 2017 that her appeal was denied — Limitation period not starting to run in February 2014 as parties were engaged in another process to resolve question of entitlement to benefits and plaintiff was unaware that proceeding would be appropriate means to seek remedy for her loss — Limitation period starting to run in June 2017.

In February 2014, the defendant insurer advised the plaintiff insured by letter that her long-term disability claim file had been closed as current medical information in the file did not support a finding of total disability from any occupation. The letter stated that if the plaintiff felt totally disabled from any occupation, she could provide additional medical information. Three years later, the plaintiff sent additional medical information to the defendant. In a June 2017 letter, the defendant advised the plaintiff that the additional medical information was not enough to overturn the prior decision and that her appeal was denied. The plaintiff commenced an action against the defendant in August 2018. The defendant brought a motion for summary judgment, arguing that there was no genuine issue requiring a trial as the claim was statute-barred, the limitation period having started to run in February 2014.

Held, the motion should be dismissed. [page56]

The defendant's February 2014 letter was equivocal. It was not clear that there was a denial of disability benefits that amounted to "injury, loss or damage" for the purposes of s. 5(1)(a) of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B. However, the letter also stated that the file was closed, which led to an ambiguity. Assuming that the plaintiff's loss was sufficiently identifiable at that point, the plaintiff was not aware at that time that a proceeding would be the appropriate means to seek a remedy for that loss, as the parties were engaged in another process to resolve the question of entitlement to benefits. The three years of inactivity in the file was not a determinative factor in the s. 5(1) analysis, given the defendant's decision to continue to review the claim. The limitation period started to run not in February 2014, but rather in June 2017. The action was not statute-barred.

Kassburg v. Sun Life Assurance Co. of Canada (2014), 124 O.R. (3d) 171, [2014] O.J. No. 6222, 2014 ONCA 922, 379 D.L.R. (4th) 665, 43 C.C.L.I. (5th) 1, 328 O.A.C. 244, 248 A.C.W.S. (3d) 196; Western Life Assurance Co. of Canada v. Penttila (2019), 144 O.R. (3d) 198, [2019] O.J. No. 57, 2019 ONSC 14, [2019] I.L.R. para. I-6119, 2019 CBPG para. 8305 (Div. Ct.), consd

Other cases referred to

Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, 366 D.L.R. (4th) 641, 453 N.R. 51, J.E. 2014-162, 314 O.A.C. 1, 21 B.L.R. (5th) 248, 12 C.C.E.L. (4th) 1, 27 C.L.R. (4th) 1, 46 C.P.C. (7th) 217, 95 E.T.R. (3d) 1, 37 R.P.R. (5th) 1, EYB 2014-231951, 2014EXP-319; Pepper v. Sanmina-Sci Systems (Canada) Inc., [2017] O.J. No. 4870, 2017 ONCA 730, [2018] I.L.R. para. I-5996, 283 A.C.W.S. (3d) 405, 74 C.C.L.I. (5th) 171, revg [2017] O.J. No 1137, 2017 ONSC 1516, 65 C.C.L.I. (5th) 248, [2017] I.L.R. para. I-5957, 276 A.C.W.S. (3d) 920 (S.C.J.) [Leave to appeal to S.C.C. refused [2017] S.C.C.A. No. 444]; Presidential MSH Corp. v. Marr, Foster & Co. LLP (2017), 135 O.R. (3d) 321, [2017] O.J. No. 2059, 2017 ONCA 325, 2017 D.T.C. 5049, [2017] 6 C.T.C. 93, 413 D.L.R. (4th) 391, 277 A.C.W.S. (3d) 852; Richards v. Sun Life Assurance Co. of Canada, [2016] O.J. No. 4574, 2016 ONSC 5492, [2016] I.L.R. I-5911 (S.C.J.); Usanovic v. Penncorp Life Insurance Co. (2017), 138 O.R. (3d) 462, [2017] O.J. No. 2565, 2017 ONCA 395, 68 C.C.L.I. (5th) 17, [2017] I.L.R. para. I-5975, 278 A.C.W.S. (3d) 848 [Leave to appeal to S.C.C. refused [2017] S.C.C.A. No. 295]

Statutes referred to

Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 4, 5(1), (a)(i), (ii), (iv)

MOTION for summary judgment dismissing an action as statute-barred.

Allan Chapnik, for plaintiff. Stephen J. Simpson, for defendants.

LEIPER J.: —

Introduction

[1] Sun Life Assurance Company of Canada ("Sun Life") brought a motion for summary judgment on May 1, 2019. Sun Life argues that there was no genuine issue requiring a trial because the plaintiff, April Clarke's, claim for disability benefits is statute-barred by reason of the Limitations Act, 2002, [page57] S.O. 2002, c. 24, Sch. B (the "Act"). Sun Life claims that the limitation period began as of February 24, 2014.

[2] Ms. Clarke asserts that the two-year limitation period began on June 19, 2017, and that her claim which was issued on August 2, 2018 has been made in time. She asks that the motion for summary judgment be dismissed.

[3] The parties did not dispute the appropriateness of resolving this question on a motion for summary judgment.

[4] The issues on the motion were: what was the date of loss and when did Ms. Clarke know that a proceeding was an appropriate means to seek a remedy, or when ought a reasonable person with the abilities and circumstances of Ms. Clarke ought to have known the date of loss and the appropriateness of bringing a proceeding to seek a remedy? These questions are part of the test for discoverability from s. 5(1) of the Act.

Background Facts

[5] Ms. Clarke was a postal worker insured through a policy with Sun Life. She worked for her employer from 1999 through to 2011 when she stopped working due to health problems.

[6] Ms. Clarke made a claim for disability benefits ("DBs"). On March 19, 2012, Sun Life advised her that her claim for DBs in relation to her own occupation had been "denied" (the "March 2012 letter"). Sun Life provided information in that letter that there were second and third levels of appeal available to Ms. Clarke from the decision. Ms. Clarke appealed it.

[7] On February 24, 2014 (the "February 2014 letter"), Sun Life wrote to Ms. Clarke and approved her claim for DBs related to her own occupation. The decision was retroactive to January 24, 2011 and benefits would be paid until April 25, 2013.

[8] The February 2014 letter considered whether Ms. Clark was eligible for entitlement to benefits on the basis of a total disability from "Any Occupation". On this subject, the February 2014 letter read:

The current medical information in your file does not appear to support Total Disability from Any Occupation. Therefore your last payment date is April 25, 2013 and your LTD file is now closed.

Should you feel Totally Disabled from Any Occupation, you will need to provide medical information for our review. You will need to provided [sic] objective medical information including diagnosis, treatment, complications to date preventing your [sic] from working in any occupation. Kindly note this is your responsibility.

(Emphasis in the original) [page58]

[9] On February 26, 2014, Ms. Clarke and her union representative spoke to Sun Life by telephone. According to Ms. Clarke's notes of the call, the union representative told Sun Life that Ms. Clarke "would appeal the Any Occupation phase". After this call, and having authorized the union to gain access to her file, Ms. Clarke took no further steps until March 31, 2017.

[10] On March 31, 2017, Ms. Clarke's union representative sent additional medical information to Sun Life, under cover of a letter that advised that previous information had been delivered on March 28, 2017. Sun Life's claims manager made an internal inquiry about whether the appeal should be considered given the three-year delay between the February 2014 letter and the medical information delivered in March of 2017.

[11] A senior claims consultant with Sun Life advised the claims manager that although the appeal documentation was received beyond the limitation period, the February letter had "unfortunately fail[ed] to cite the limitation act". The senior claims consultant advised the claims manager that Sun Life had an obligation to review this appeal and asked the claims manager to proceed.

[12] Sun Life evaluated the new medical information. On June 19, 2017, Sun Life wrote to Ms. Clarke (the "June 2017 letter") to advise that her appeal was not successful. The letter said that the additional medical information was not sufficient to overturn the prior decision. The letter said that "Although your file is closed, please be advised that we would be willing to review new and not yet reviewed records or reports that may obtain as part of the final level of appeal process . . . ". The letter provided examples of other such information and advised Ms. Clarke that the cost of such medical information was her responsibility.

[13] The June 2017 letter closed by advising that Sun Life's consideration of an appeal would not constitute a waiver of any rights under the policy, "including with respect to the applicable limitation period. If you decide to take legal action against Sun Life, please be advised that your claim is subject to a limitation period. This limitation is set out in the Limitations Act, 2002 or in the applicable contractual provisions."

[14] On August 2, 2018, Ms. Clarke started an action against Sun Life for denial of her benefits under the policy.

[15] Ms. Clarke's policy defined "Total Disability" as follows:

An Employee is Totally Disabled if he/she is in a continuous state of incapacity due to illness which [page59]

1. During the Elimination Period and the following 24 months: (Totally disabled for Own Occupation)

a) At the time the claim is adjudicated, and while it continues during the Elimination Period and the following 24 months, prevents the Employee from performing the essential duties of his/her regular occupation or Employment.

a. While it continues, does not prevent the Employee from participating in a Rehabilitative Program as soon as possible after becoming Totally Disabled.

b. Beyond the 24 months following the Elimination Period: (Totally Disabled from Any Occupation)

While it continues thereafter, prevents the Employee from engaging in any Commensurate Occupation for which he/she is or becomes reasonably qualified by education, training or experience.

In no event, however, will an Employee be considered Totally Disabled if during any period he/she does not take part or co-operate in a Reasonable and Customary Treatment Program.

(Emphasis in the original)

The Limitations Act, 2002 and the Conditions for Discoverability

[16] Pursuant to s. 4 of the Act, the limitation period is two years. The limitations "clock" starts from the date on which the claim is "discovered". Section 5(1) of the Act lists the conditions to be met for the claim to have been discovered, as follows:

5(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[17] Ms. Clarke argues that at the time of the February 2014 letter, her claim was not discoverable because the letter was not a clear denial of benefits. For that reason, she did not concede that she knew (or that a reasonable person would have known) [page60] that the "injury, loss or damage" had occurred as contemplated by s. 5(1)(a)(i) as of the date of the February 2014 letter. She also argues that as of the February 2014 letter, it was not known that a proceeding was an appropriate means to seek a remedy, as required by s. 5(1)(a)(ii).

[18] Sun Life submits that Ms. Clarke discovered, or ought to have discovered, her claim as of the date of the February 2014 letter. Sun Life argues that it effectively declined to pay the benefits on February 24, 2014. It further points to legal authority that no clear or unequivocal denial letter is required 1 nor must an insurance company advise an insured person about the limitation periods in the Act. 2

[19] There is a tension in the policy positions underlying the two perspectives in this case. Sun Life's position rests on the desirability of certainty and clarity in the application of the law of limitation of actions. It would have the limitation "clock" start running from the first denial, whether or not there was another process available to resolve disputes. Ms. Clarke's position would encourage resort to other less formal means of resolving disputes before "going to court". She asks that s. 5(1)(a)(iv) be assessed with reference to Sun Life's invitation to her to provide more medical information, its willingness to review such information even after the unexplained three year gap, and its later advice to her that a limitation period applied at that point.

[20] The analysis that follows will look at how the courts have grappled with these competing policy aims in some similar cases in applying s. 5(1) of the Act.

Analysis

Issue 1: Was the letter of February 24, 2014 the date on which the loss occurred?

[21] It is appropriate to consider what was communicated to the insured and whether a claim has been clearly and unequivocally denied. 3 Sun Life's February 2014 letter was equivocal; it did not [page61] use the language of refusal or denial. Rather, it pointed to the absence of medical evidence for advising, "The current medical information in your file does not appear to support Total Disability from Any Occupation." Ms. Clarke was invited to provide more information if "[she felt] Totally Disabled from Any Occupation". However, it went on to say her "file was closed". Ms. Clarke and her union representative perceived the letter as a matter that required an "appeal".

[22] The February 2014 letter contrast with the March 2013 letter which used the word "denied" in relation to her claim for her own occupation benefits.

[23] It is not clear that the words used by the Sun Life letter of February 24, 2014 was a denial of disability benefits that amounted to "injury, loss or damage". It used milder language than denial or refusal, and suggested that Ms. Clarke might "feel Totally Disabled from Any Occupation". It invited more information to support her feeling. However, it also said that her file was closed. This leads to an ambiguity, which leaves it unclear whether or not Ms. Clarke's loss had "ripened" at this stage. However, assuming that Ms. Clarke's loss was sufficiently identifiable at this point, a second issue must be addressed, that is whether Ms. Clarke was aware at the time of the February 2014 letter that a proceeding would be the appropriate means to seek a remedy for that loss.

Issue 2: Was Ms. Clarke aware on February 24, 2014 that a proceeding was the appropriate means of relief?

[24] There are a number of cases which have grappled with whether the limitation time period begins to run while the parties are engaged in another process to resolve the question of entitlement to insurance benefits. In Kassburg, a police officer denied benefits was given the opportunity to appeal by providing new material. The officer was advised that the material was not sufficient, and provided additional information. The insurance company made a final decision refusing the claim on February 24, 2011. The Court of Appeal found that the decision of the motion judge that this was the date on which the limitation period began to run was reasonable on the evidence. 4 [page62]

[25] In Western Life Assurance v. Penttila, the Divisional Court considered a disability claim in which the insured accepted an offer of an appeal after her original claim was denied. The court noted that "[a] reasonable person in Ms. Penttila's position would have pursued her right of appeal. Until that process ran its course, it would be premature to commence legal proceedings against the insurer." 5

[26] Sun Life fairly conceded that this aspect of the Western Life Assurance case exists in Ms. Clarke's case. However, it suggests that the facts of this case diverge from the Western Life facts and are similar to the facts in Pepper v. Sanmina-Sci Systems (Canada) Inc. 6 In Pepper, the insurer stopped paying the insured's benefits on November 1, 2007. In early January of 2009, the insured retained litigation counsel. The insurance policy in that case had no formal appeal process. The Court of Appeal found, in these circumstances, that having found there was a "fully ripened" claim on November 1, 2007, this was the date on which the limitation period began to run.

[27] In Western Life Assurance, the court distinguished Pepper stating that unlike that claimant, Ms. Penttila did not retain a lawyer to deal with her claim. This "may be material to the determination of when a claim is discovered". 7 Sun Life argues that the engagement of a union representative is similar: that this indicates an intention to vindicate Ms. Clarke's rights.

[28] I do not agree. The union representative assisted Ms. Clarke with the process designed by Sun Life. There was no discussion of litigation or limitation periods at this stage. It would be an error to compare that role to the role and obligations of litigation counsel on being retained to assist with a claim of a loss as a result of a denial of benefits. The record of correspondence between the parties was consistent with an ongoing use of the alternative dispute mechanism created by Sun Life. I conclude that the three years of "no activity" on the file from either side was not a determinative factor in the s. 5(1) analysis, given Sun Life's decision to continue to review the claim through the alternative to litigation process.

[29] The other features considered by the Divisional Court in Western Life Assurance, at paras. 58-65, and which I have considered in this case include: [page63]

(i) No Need to Review the Tone and Tenor of Discussions: As with Western Life Assurance, in this case, there was a clear start to the process and a final letter of denial, after the materials requested were provided by Ms. Clarke. Sun Life referred to the desirability of being able to ascertain a date by which the process is completed, with reference to Presidential MSH Corp. v. Marr, Foster and Co. LLP. 8 It argues that because Sun Life continued to leave the door open for more documentation, this meant the process was open ended. Ms. Clarke pointed out that this open ended aspect was in the control of Sun Life. I conclude that for Ms. Clarke, the clear denial of June 2017 was a legitimately ascertainable date on which the limitation period could be said to commence. It was clearer and followed efforts to provide additional material; it was also accompanied by a clear assertion of Sun Life's intention to rely on the Limitations Act, 2002.

(ii) No Litigation Counsel Engaged: As noted above, Ms. Clarke did not retain a lawyer, but asked for assistance from her union representative to engage with Sun Life, not the courts.

(iii) The Claimant's Evidence: Ms. Clarke's evidence described and attached the communications recorded between the parties. It is silent as to her knowledge, intentions or assumptions. I treat this as a neutral and do not draw any inferences relative to her evidence.

(iv) No Tactical Delay: Here, there was an unexplained three-year delay between the February 2014 letter and the material provided. Sun Life did not ask for information about the delay, nor did it refuse to consider the material due to delay. I draw no inference as to any tactical reasons behind the delay on this record.

(v) Meets the Policy Objectives: As with Western Life and Kassburg, the participation of the claimant in the appeal processes created by Sun Life speaks to the benefits of encouraging dispute resolution in more expeditious and less costly ways. This interpretation of s. 5(1)(a)(iv) supports that policy objective. [page64]

Conclusion

[30] I conclude that Sun Life has not established all of the elements of the limitation defence in accordance with s. 5(1) of the Act, including the date when the cause of action arose and whether or not Ms. Clarke knew, or a reasonable person with her abilities and in her circumstances ought to have known it was legally appropriate to issue a claim on or before the two-year period beginning with the February 24, 2014 letter.

[31] In keeping with the shift in litigation culture toward making decisions by way of summary judgment where possible and with the principles articulated in Hryniak v. Mauldin, [2014] 1 S.C.R. 87, [2014] S.C.J. No. 7, 2014 SCC 7, I find that the issue of whether or not Ms. Clarke has brought her claim within the limitation period of two years is determinable on this record.

[32] I conclude that the limitation period commenced with the denial communicated to Ms. Clarke by Sun Life on June 19, 2017. I make a declaration that Ms. Clarke's action is not statute-barred and a judgment dismissing Sun Life's limitation period defence.

Costs

[33] The parties have agreed that no costs will be sought on this motion. No costs will be ordered.

Motion dismissed.

Notes

1 Richards v. Sun Life Assurance Co. of Canada, [2016] O.J. No. 4574, 2016 ONSC 5492 (S.C.J.), at paras. 15-22; Pepper v. Sanmina-Sci Systems (Canada) Inc., [2017] O.J. No. 1137, 2017 ONSC 1516 (S.C.J.), at paras. 87 and 88, revd on other grounds [2017] O.J. No. 4870, 2017 ONCA 730, leave to appeal to S.C.C. refused [2017] S.C.C.A. No. 444.

2 Usanovic v. Penncorp Life Insurance Co. (2017), 138 O.R. (3d) 462, [2017] O.J. No. 2565, 2017 ONCA 395, at para. 2, leave to appeal to S.C.C. refused [2017] S.C.C.A. No. 295.

3 Western Life Assurance Co. v. Penttila (2019), 144 O.R. (3d) 198, [2019] O.J. No. 57, 2019 ONSC 14 (Div. Ct.), at para. 35, relying on Kassburg v. Sun Life Assurance Co. of Canada (2014), 124 O.R. (3d) 171, [2014] O.J. No. 6222, 2014 ONCA 922, at para. 42.

4 Kassburg, ibid., at paras. 50-52.

5 Supra, note 3, at paras. 52-57.

6 Supra, note 1.

7 Supra, note 5, at para. 41.

8 (2017), 135 O.R. (3d) 321, [2017] O.J. No. 2059, 2017 ONCA 325, at para. 48.

End of Document