It is important to act expeditiously when filing a lawsuit

By Tony Poland, LegalMatters Staff • A recent Superior Court of Justice decision dismissing a long-term disability (LTD) claim because it fell outside the limitation period is an important reminder to act expeditiously when filing a lawsuit, says Barrie-area litigator M. Steven Rastin.

“The message here is don’t wait to issue a claim. When it comes to meeting the requirements of the limitation period, I submit that cowardice and caution are the better part of valour,” says Rastin, senior counsel at Rastin Gluckstein. “This issue comes up all the time when dealing with a plaintiff’s obligations under the Limitations Act, 2002.

Don’t wait to commence your claim

“Do you sue on the date you get the letter from the insurer saying your claim is denied? Some will wait until the date they stopped getting benefits to file a lawsuit and others will file after learning their appeal has been denied,” he tells LegalMattersCanada.ca. “What plaintiffs and their lawyers should take to heart is that you should commence your claim from the earliest date possible. Don’t wait.”

Rastin points to Hassan v. Sun Life, which examined the issue of whether the plaintiff, Layla Hassan, had commenced a lawsuit against her insurance company within the statutory limitation period.

Sun Life was successful in having Hassan’s claim dismissed, arguing the statement of claim was not served within six months of her being denied LTD benefits.

Rastin, who was not involved in the case but comments generally, says when it comes to litigating LTD claims, timelines are paramount. Noteworthy dates can include when a claim was filed; when payment of benefits commences and ends; when there is a change in classification; when a claim is denied or terminated; or when an appeal has been denied, he says.

Not uncommon to wait until after appeal denial

It is not uncommon for claimants to wait until after their appeal of a denial or termination of benefits is concluded to commence a lawsuit, but that can be a mistake, Rastin says.

“The limitation period does not run from the date that the appeal is denied,” he explains. “The limitation period runs from the date that you first know that you have a cause of action.

“Arguably, that might even be when you are still getting benefits,” adds Rastin. “I see cases where the insurance company writes to somebody about a change of definition. The insurer will send a letter informing the claimant their file has been reviewed and, based on the medical evidence, they are not going to meet the change of definition. That would be the time someone should be commencing a lawsuit.”

He says waiting too long to file a claim has obvious consequences, as Hassan discovered.

“Ms. Hassan argues that the limitation period, at its earliest, commenced on December 13, 2017, when Sun Life finally rejected Ms. Hassan’s appeal and ‘closed its file’. She argues that it was not reasonable within the window of September 26, 2017, and December 13, 2017, for her to have commenced an action because the appeal process had not yet run its course,” writes Justice Spencer Nicholson in his decision.

‘The latter assertion misstates the test’

“Respectfully, the latter assertion misstates the test. The limitation period does not commence simply based on when it is reasonable for a plaintiff to have started an action. The limitation period commences when the claim upon which the action is based was or ought to have been discovered.”

Rastin advises claimants to be leery of an insurer’s appeal process.

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“Many insurance companies will tell the claimant that if they disagree with a denial or termination, they can provide additional information that can be considered during an internal appeal review,” he says. “In my respectful view, those appeal processes are a waste of time. It is like someone grading their own homework. Of course, they are going to say they did it correctly.”

An appeal could take years, with insurance companies asking for more information, Rastin says.

“Lawyers have gotten in trouble waiting for a conclusion to the appeal process,” he says. “You can get so bogged down in the appeal that your prescription period goes by and you lose your right to sue.”

That doesn’t mean a claimant shouldn’t appeal their case internally, Rastin says.

‘Sit on a lawsuit at your own peril’

“You can pursue an appeal but my view is that you sit on a lawsuit at your own peril,” he says. “You can run them concurrently and put the lawsuit on hold if you can get some procedural agreement from the insurer saying that the lawsuit can continue if the appeal is unsuccessful.

“The danger is to do what Ms. Hassan did and that is basically to take the position that the clock didn’t start running until after her denial of appeal letter.”

Rastin says he has noticed some insurance companies are starting to include provisions that prohibit claimants from suing until all their internal appeals have been exhausted.

“To that I say, ‘sue now and let them make an issue of it,’” he says. “And if they turn around and say you sued too early because we haven’t made our appeal decision, give them a deadline to release that decision.

Will put pressure on insurer

“If they refuse, tell them you are going ahead with the lawsuit,” Rastin adds. “If nothing else, proceeding with the litigation is going to put some pressure on them.”

He says insurance companies in the LTD realm “are increasingly trying to use their contracts and their letters to put pressure on people to walk away.”

“Sadly, a high percentage of people who have been denied LTD benefits never even consult with a lawyer,” Rastin says. “They believe that if the insurer says they are not entitled to benefits, then it must be true.”

He says plaintiffs and their lawyers must be proactive when it comes to LTD claims.

“It is an incredibly unfair playing field and the takeaway message is don’t let insurance companies play games with mandatory appeals,” Rastin says. “Don’t let them drag their feet. If you are a lawyer, look for the earliest possible date when your client knew or ought to have known that they might have a cause of action.”