Late Long-Term Disability Applications: What Relief is Available?

Many Ontarians who apply for long-term disability (LTD) benefits from their insurance providers are denied coverage because their applications were not submitted within a prescribed time. When an application is submitted late, the insurer will reference the policy’s time limitations and, usually, deny the benefits. They may do so without even considering the level of disability of the person applying for LTD benefits, which can be a very difficult reality for those in serious need of assistance.   

 There are many credible reasons why an LTD application may be submitted after the deadline imposed by the insurer. Certain parts of the application need to be completed by a doctor, and applicants may have difficulty securing appointments with medical professionals. Some applicants may not be aware of the benefits available to them until later in the process. Some may not understand the steps required to apply for benefits or may be unable to complete the application on time because of their disability.

If your LTD application is submitted late, are you completely out of luck? Absolutely not. In these types of circumstances, as a Plaintiff may seek a Court order granting “relief from forfeiture.”

Per Section 98 of Ontario’s Court of Justice Act, “a Court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just.” Essentially, this means that a Court may protect a person against the loss of an interest or a right because of a failure to perform a condition or covenant in an agreement or contract. This is an equitable remedy, used purely at the Court’s discretion.  So, even if an LTD application is submitted late (as per a contractual agreement), a Court has the discretion to protect the Plaintiff and grant relief.

As seen in Dube v RBC Life Insurance Company, 2015 ONSC 77, and affirmed by the Court of Appeal in Dube v RBC Life Insurance Company, 2015 ONCA 641,  a Court will consider three factors when determining if relief from forfeiture should be granted in the circumstances:

• The conduct of the applicant 
• The gravity of the breach 
• The disparity between the value of the property forfeited and the damage caused by the breach.

In Dube, the Plaintiff was injured in an accident in May 2010. His employer advised him that he was ineligible for LTD benefits. The Plaintiff hired a lawyer who wrote to RBC requesting claim forms. No response was received. A Statement of Claim was issued against RBC. In October 2012, Mr. Dube’s counsel again asked for the application forms. RBC finally provided the forms in April 2013 and Mr. Dube applied for LTD benefits that June. The benefits were denied by RBC because the proof of claim was submitted after their prescribed time limitation, which they argued was 90 days after the date of disability.

Justice Garson of the Superior Court considered the three factors mentioned above when determining if relief from forfeiture should be granted.

Conduct of the Applicant

The Court found that there was nothing unreasonable about the conduct of the Plaintiff.  The Plaintiff was compliant with numerous requests from his employer for medical information. When his employer advised him that he was ineligible for LTD benefits, he experienced understandable confusion as to whether coverage was in place.

Gravity of the Breach 

Justice Garson found the length of the breach to be 6 months and 17 days, while the Court of Appeal found the breach to be 22 months. Whether the length of the breach was the former or the latter, both Courts found that any prejudice to RBC would be minimal. 

Disparity Between the Value of the Property Forfeited and the Damage Caused by the Breach 

Mr. Dube had $2497 in LTD benefits available to him per month, reduced to $897 per month after deducting the income replacement benefits he had been receiving. Both Courts found the value to be significant in comparison to the damage of the breach.

The Court permitted relief from forfeiture.

Relief from Forfeiture in Ontario

Since the Dube decision, there have been plenty of other decisions granting relief from forfeiture in Ontario. In Kumarasamy v. Western Life & Morris National Inc., 2021 ONSC 337, relief from forfeiture was granted after the Plaintiff submitted their LTD application 11 days after the deadline set out in the policy and 2 years, 7 months, and 6 days after the Plaintiff’s disability arose. The Court found that the insurer was not prejudiced in any way by this late submission, whereas the Plaintiff would suffer “significant harm” if he was unable to access his LTD benefits. 

The Court took even a step further in Smith v. Sun Life Assurance Company of Canada, 2021 ONSC 7109. In this case, relief from forfeiture was permitted even when no application was submitted at all. The insurer had argued that relief from forfeiture should not be granted even if it was available to the insured since no formal LTD application was ever received. Because an application was never received at all, the insurer tried to distinguish this case from other relief from forfeiture cases where applications were received late. 

Relying on the three factors mentioned above, the Court considered whether relief from forfeiture was appropriate in these circumstances. The Court understood the Plaintiff’s position. Having already been denied short term disability benefits, it was reasonable for the Plaintiff to conclude that any formal claim for LTD benefits would also have been denied by their insurer. The Court also held that the insured’s non-compliance did not have a significant impact on the insurer, as it had already conducted its own investigation into the merits of the insured’s alleged disability. Finally, the Court found that any alleged prejudice suffered by the insurer was outweighed by the harm to the insured if he was precluded from pursuing his claim to LTD benefits. 

Justice Diamond concluded, “Accordingly, I find it to be in the interests of justice to grant the Plaintiff relief from forfeiture, and I permit him to pursue his claims in this proceeding for allegedly outstanding LTD benefits.”

Conclusion

People who are applying for long-term disability benefits frequently find themselves in vulnerable positions. Although they should always do their best to submit their applications on time, there are many reasons why an LTD application may not be submitted within the time frame set out in the policy. 

As seen above, receiving a denial under these circumstances is not always the end of the road.  If your claim for LTD benefits was denied because of an application submitted after the deadline, it would be prudent to contact Preszler Injury Lawyers to see if relief from forfeiture could be granted in the circumstances.

This article was written by Aaron Stern.