Lanki v. Co-Operators Life Insurance Company,


2007 BCSC 1891

Date: 20071107
Docket: S101378
Registry: Vancouver


Shelley Lanki



Co-Operators Life Insurance Company
Co-Operators Compagnie D’Assurance-Vie


Before: The Honourable Madam Justice Bennett

Oral Reasons for Judgment

In Chambers
November 7, 2007

Counsel for the Plaintiff

E.P. Caissie

Counsel for the Defendant

B.A. Laughton, Q.C.

Place of Hearing:

Vancouver, B.C.


[1]                THE COURT:  This is an application pursuant to Rule 18A of the Supreme Court Rules to strike a limitation defence and declare that the date of the claim commenced to run no earlier than October 18, 2005.  The defendant says that the one-year limitation period should commence at the latest by August 27, 2005.  The action was commenced on September 27, 2006.

[2]                Both counsel for the plaintiff and the defendant agree that this case is appropriate to be heard pursuant to Rule 18A as there is no dispute regarding the facts.  If successful, the plaintiff’s case will go to trial.  If unsuccessful, the plaintiff’s claim will be dismissed.

[3]                The circumstances are as follows: As noted, the plaintiff commenced her action on September 27, 2006.  She seeks to challenge the finding of the defendant insurance company that she is not disabled from working in any occupation. 

[4]                The defendant, Co-Operators, entered into a group policy of insurance with the Trustees of the Office and Professional Employees International Union Local 378 Ltd. Trust.  The plaintiff, who worked for the Insurance Corporation of British Columbia, was covered by that policy.  The policy provided long-term disability coverage to eligible employees.  The plaintiff became disabled from performing the usual and customary duties of her own occupation on July 8, 2003.  From that date until October 21, 2003, she received sick benefits from her employer. 

[5]                On October 21, 2003, Co-Operators began paying benefits to the plaintiff under the terms of the policy.  She would be eligible for own occupation benefits until October 18, 2005. 

[6]                In order to receive benefits beyond October 18, 2005, the plaintiff would need to establish that she was disabled from working in any occupation. 

[7]                By a letter dated May 12, 2005, Co-Operators asked Ms. Lanki to attend an independent medical examination which she did on June 21, 2005.  By letter dated July 27, 2005, which was received by Ms. Lanki on August 2, 2005, Co-Operators advised that as a result of the report from the independent medical examination, which was not enclosed with the letter, she would not receive benefits beyond October 18, 2005.  I set out the relevant parts of this letter, and I quote:

This letter is further to our letter of May 5th, 2005, in which we advised that the end of the own occupation period of your claim is October 18, 2005. 

In order to approve benefits beyond October 18, 2005, our department must receive medical evidence which substantiates an employee is then totally disabled from any and all types of employment.

We have reviewed the report from the Independent Medical Assessment.  The information provides that you would be capable of starting a graduated return to work with a goal of full time return to work.  It is noted that you would require some modifications to your workstation to accommodate your left buttock symptoms. 

We appreciate that you continue to experience symptoms which may result in restrictions and/or limitations for you.  However, we do not find that the clinical evidence substantiates total disability from any and all occupations.  Therefore, in accordance with the terms of Policy G6640 not [sic] benefits can be issued beyond October 18, 2005. 

Therefore, full benefits will be provided up to August 14, 2005, to allow you time to make arrangements with your employer and rehabilitation benefit for the period of August 15 to October 18, 2005.  Your file will then be closed. 

We will be forwarding a copy of your assessment to your family physician for his consideration. 

In the event that your employer cannot accommodate this gradual return to work, you will be provided with full LTD benefits in lieu of rehabilitation benefit up to October 18, 2005, and your file will be closed.

However, if you believe that the evidence on which we have based our decision is incorrect, or if there is further evidence which is not known to us, you may ask for an appeal of your claim.  If you decide to do so, please make such a request in writing, giving medical reasons to support the appeal.  Medical reasons must also be accompanied by supporting medical documentation from your physicians and/or specialists.  This medical information should include but not limited to office notes, consultation and assessment reports, limitation/restrictions, investigative reports, medications, and treatment received, signs and symptoms, any other medical evidence in relation to your medical condition… 

Such an appeal, with the intention of submitting additional medical evidence should be filed within 31 days of the date of this letter.

[8]                On August 3, 2005, a letter was sent to Ms. Lanki’s family physician enclosing a copy of the report from the independent medical examination. 

[9]                On August 5, 2005, Ms. Lanki was sent a letter from her rehabilitation case manager employed by the defendant to follow up with the return-to-work program.

[10]            On August 19, 2005, Ms. Lanki sent a letter to the defendant, which was stamped, “Received on August 25, 2005.”  In this letter, she makes reference to the rehabilitation case manager, and notes that she has a procedure scheduled at Surrey Memorial Hospital on September 22, 2005, with a specialist for injections into the buttock joint with a hope of reducing the pain and inflammation.  She notes that her family physician has advised that until this procedure has been completed she cannot realistically participate in a return-to-work program. 

[11]            In this letter, Ms. Lanki also enclosed a “Request to Access Personal Information” for her entire file.  She also advised of her intent to appeal the decision to discontinue benefits as of October 18, 2005.

[12]            On August 23, 2005, Co-Operators wrote to Ms. Lanki advising her that they had received the additional medical information.  Although her letter of August 19, 2005, is stamped “Received on August 25, 2005,” there is no doubt that this is the letter that is referenced.  The new medical information did not satisfy the defendant that Ms. Lanki could not participate in a return-to-work program.  It further stated that she would receive return-to-work LTD benefits until October 18, 2005, and then her file would be closed as she would not qualify as being totally disabled from any occupation. 

[13]            It further states:

If you believe the evidence on which we have based our decision is incorrect, or if there is other evidence which is not known to us, you may request a formal appeal of our decision.  If you decide to do so, please make such a request in writing giving medical reasons to support the formal appeal as detailed in our letter of July 27, 2005.

Such an appeal with the intention of submitting additional medical evidence should be filed within 31 days of the date of this letter.

[14]            The defendant submits that the limitation period should run from the date of the receipt of this letter.

[15]            On September 15, 2005, the defendant wrote to Ms. Lanki again advising her, amongst other things, that she would need to send them $25 to process her request for the copy of her file. 

[16]            On September 26, 2005, Ms. Lanki sent the defendant a cheque for $25 pointing out that she had requested the information more than 30 days prior and had not received it. 

[17]            On October 18, 2005, notably the date her benefits expired, the defendant purported to send the plaintiff copies of her file.  On October 26, 2005, the plaintiff sent a letter to the defendant complaining about the content of the file she received.  She noted in that letter that when she made a request for her file, she was entitled to response within 30 days as noted on the defendant’s application document.  She stated that she required the documents to pursue her appeal.  She also noted in this letter that she had never received any acknowledgment of her appeal in spite of leaving two voicemail messages.  She said: “Although I was given the opportunity to appeal your decision, it appears that you had no intention of entertaining such an appeal and have not even felt it necessary to address it.”

[18]            She further noted in this letter the further treatment she anticipated receiving in the near future. 

[19]            On November 23, 2005, she finally received an acknowledgment of her appeal. 

[20]            On December 2, 2005, the plaintiff received a letter from the disability claim supervisor in response to the letter she sent to the person who was handling her claim.  In this letter, the writer expressed an apology that Ms. Lanki’s dealings with Co-Operators had not been more positive.  She states, and I quote:

You have valid concerns regarding the delays associated with your “Request to Access Personal Information”.  Unfortunately we did not respond promptly to your request and we apologize for the inconvenience this has caused you. 

[21]            On December 28, 2005, Ms. Lanki forwarded further medical information regarding the injection she received from Dr. Twist.  On the same date, a letter was sent to Ms. Lanki advising receipt and that a review of the file would be conducted.

[22]            On February 6, 2006, a letter was sent to Ms. Lanki advising that the defendant was maintaining the decision to decline her benefits beyond October 18, 2005. 

[23]            At some point after October 18, 2005, Ms. Lanki retained counsel and a further letter was sent to the defendant by counsel on March 10, 2006, requesting a reconsideration.  This was denied by letter on March 29, 2006. 

[24]            The only issue in this application is the date that the limitation period commenced. 

[25]            Turning to the law, I will first review the relevant portions of the policy.  The following is a definition of “total disability”:

“Total Disability” or “Totally Disabled” shall mean disability as a result of Injury or Sickness to the extent that the Employee:

1.      is under the regular care and following the prescribed treatment of a Physician; and

2.      is not engaged in any occupation or performing any work of any sort for wage, remuneration, or profit; and

3.      during the first 24 months from the commencement of the disability following the elimination period is unable to perform the usual and customary duties of the Employee’s occupation; and

4.      thereafter is prevented from engaging in any occupation or performing any work of any sort for wage, remuneration, or profit for which the Employee is able or may reasonably became able by means of education, training, or experience.

[26]            Under C2.1 of the policy it states at page 17:

If an Employee insured under this coverage becomes Totally Disabled and the Total Disability results in a loss of Salary and if satisfactory proof is received by the Insurance Company, the Insurance Company will, subject to the provisions of this coverage, pay to the Employee the amount of Monthly Benefit in force on the date of Total Disability while the Employee remains so disabled.  Notwithstanding the terms of the Recurrent Disability provision, no Monthly Benefit shall be paid beyond:

1.                  24 months from the date of the first benefit payment, or

2.                  the date the Employee ceases to be Totally Disabled.

[27]            Under C2.1 entitled, “For Each Employee,”:

Disability payment shall commence on the later of:

(a)               the day following the end of a period during which any Employer-paid sick leave benefits or payable; or

(b)               the day following the scheduled return to work date

whichever first occurs.

If after the 104th week from the date of the first benefit payment, satisfactory proof is received by the Insurance Company that an Employee is then Totally Disabled in accordance with the terms of this Policy, the Insurance Company will, subject to provisions of this coverage, continue to make payments to the Employee, at the rate of Monthly Benefit the Employee received in accordance with the first paragraph of this provision, while the Employee remains so disabled.  In any event, the benefit shall not be paid beyond:

5.      the date the Insurance Company deems the Employee to have failed to furnish evidence of the continuance of Total Disability satisfactory to the Insurance Company.

[28]            At C6, page 29 of the Policy is the following: “Limitation of Action”:

No action or proceeding at law or in equity shall be brought against the Insurance Company to recover benefits payable under this Policy prior to the expiration of sixty (60) days after Proof of Loss has been filed in accordance with the requirements of this Policy, nor shall such action be brought at all unless brought:

(2)               where benefits have been paid under the provision under which benefits are being claimed-within one year of the date on which the Insurance Company terminates the payment of benefits under the said provision.

[29]            The parties agree that the litigation is governed by s. 22 of the Insurance Act, R.S.B.C. 1996, c. 226 which reads as follows:

(1)        Every action on a contract must be commenced within one year after the furnishing of reasonably sufficient proof of a loss or claim under the contract and not after.

(2)        An action must not be brought for the recovery of money payable under a contract of insurance until the expiration of 60 days after proof, in accordance with the contract

(a)        of the loss, or

(b)        of the happening of the event on which the insurance money is to become payable,

or of such shorter period as may be set by the contract of insurance.

This section of the Act ensures, in part, that a contract of insurance cannot impose a limitation period shorter than that required by statute. 

[30]            However, this provision is confusing and has been the subject of judicial interpretation.

[31]            In Balzer v. Sun Life Assurance Company of Canada, 2003 BCCA 306, the court had to consider the limitation period in s. 22 of the Insurance Act in the context of disability payments.  Ms. Balzer received own occupation disability benefits, but was notified that these benefits were coming to an end as of October 28, 1998, as she was not considered totally disabled from any occupation.  The notice also contained information regarding what was required for a review of the decision.  Her doctor sent a report on November 4, 1994.  On December 2, 1994, the refusal to pay benefits was affirmed.  The letter also indicated that it would consider an up-to-date medical report.  The plaintiff doctor wrote again on January 19, 1995; and on February 8, 1995, the plaintiff received another letter similar to those previously sent from the defendant.  She eventually gave up and then sued in 2000.

[32]            The Court, after a thorough consideration of the law, said the following at paras. 40 - 45:

40        It is at denial of coverage or termination of benefits that an insured would have reason to sue the insurer. That is when a limitation period should begin to run, not while benefits are being received, not on some later date when an insured decides to file a proof of loss or commence an action. This sensible result is at the root of the reasoning in the authorities cited to us.

41        I am persuaded that good sense dictates the solution to the conundrum posed by the entirely inadequate words the Legislature has chosen to incorporate into every group accident and sickness policy by the convoluted provisions of the Insurance Act. Read literally, the words of s. 22(1) create the absurd result that the limitation period in this case would have begun to run while the benefits were being paid, or alternatively, would not begin to run until after a claim is made.

42        But the words, by edict of the Legislature, have become an overriding provision of the Canada Safeway policy. Both parties are bound by them, and this Court must give the insurance contract such business sense as can be made of it.

43        The authorities interpreting marine insurance policies provide the best route to a practical interpretation of the policy as statutorily amended. A clear and unequivocal denial of coverage precludes the need to furnish a claim (where the policy does not require the filing of a proof of claim) and triggers the commencement of the limitation period. This general rule permits a case-by-case application of the one-year limitation period appropriate to the wide variety of factual circumstances that may give rise to disputes about continuing coverage under generic group accident and sickness policies. It avoids the absurd results a literal reading of the words of s. 22(1) would otherwise produce in this and like cases. It leaves room for their application to cases where the policies permit that reading.

44        Here, there was no unequivocal denial, Ms. Balzer had been paid some benefits, and when payment stopped she was left with the impression that her coverage could be reconsidered if additional medical information was supplied. Sun Life never effectively engaged s. 22(1), and as time never commenced to run under it no part of her claim is time-barred.

45        Any ambiguity in the communication of a refusal of benefits, as to whether it is a clear and unequivocal denial, should be resolved in favour of the insured. To avoid any doubt, the preferred course for an insurer intending to deny coverage should be to include an alert in the letter drawing the insured's attention to the one-year limitation in s. 22(1) and informing the insured that the insurer will rely on the denial as starting the running of time. The communications of Sun Life in Watterson are not that explicit but they are sufficiently unambiguous in the circumstances of that case to support Pitfield J.'s conclusion, and that is the essential difference between the two cases.

[33]            The reading of this decision leads me to infer that the limitation period runs from the date of the termination of the benefits, provided there is clear and unequivocal notice that the benefits will be terminated.  The limitation would then run in this case from October 18, 2005, when the “own employment” benefits ceased and the “any occupation” benefits were refused.  A review of decisions subsequent to this decision, in my opinion, supports this conclusion. 

[34]            In Gumpp v. Co-Operators Life Insurance, 2004 BCCA 217, 239 D.L.R. (4th) 638, the notice of the decision to terminate benefits effective November 3, 1998, was provided to the plaintiff on October 8, 1998.  A review of the decision was conducted and the termination of benefits was maintained. 

[35]            After citing the same paragraphs of Balzer as noted about, Southin J.A. writing for the court said at para. 21:

[21]      On that footing, the clear and unequivocal denial of future benefits set the limitation period of one year in s. 22 and the limitation in the policy running on 30th November, 1998, and this action is barred.

[36]            The defendant submitted that the Court did not actually have to pick the date that the limitation ran as it was not necessary to the decision.  To me, this was a clear application of the decision in Balzer, which says that in those cases where clear and unequivocal notice has been given the limitation runs from the date of the denial of the benefits, not the date of the notice.  Indeed, this only makes sense as there is no cause of action until the actual benefit has been denied.

[37]            In Pekarek v. Manufactures Life Insurance Company, 2006 BCCA 250, 55 B.C.L.R. (4th) 1, the plaintiff was notified on June 1, 1994, that her benefits would cease on September 1, 1994.  She submitted further medical information in support of an appeal of the decision.  However, this appeal was declined on October 12, 1994.  Discussion continued between the plaintiff’s counsel and the insurer.  An action was commenced in 2000. 

[38]            The issue was whether the limitation period was not triggered because of the ongoing discussions and offers to review further medical information.  The Court of Appeal interpreted the trial judge’s finding that notice was clear and unequivocal effective June 1, 1994.  The reasons also indicate that the plaintiff knew her benefits were terminated as of September 1, 1994. 

[39]            I do not find anything in this decision that suggests that the limitation period would run from the date of the notice as opposed to the date of the termination.

[40]            Next is the decision of Esau v. Co-Operators Life Insurance Company, 2006 BCCA 249, 55 B.C.L.R. (4th) 11, which was released the same time as Pekarek.  In Esau, the plaintiff was notified on October 21, 1999, that she would not receive any benefits, which she had applied for in June 1999.  There was also an appeal provision.  Ms. Esau was never the recipient of benefits.  Communications continued through March 21, 2002, and on that date, the defendant affirmed the denial of benefits.  A writ was issued in March 2002.  The Court of Appeal distinguished Balzer and Gumpp on the basis that both of those cases were cases where benefits had been paid as is the case at bar.  Notice of a limitation period in those cases would only be achieved by the insurer denying them coverage and providing clear and unequivocal notice of same.  The Court said at para. 33:

The respondent is correct that the cases relied upon by the appellant involved situations where benefits had been paid. The context in which the insureds in Balzer and Gumpp were asked for proof of loss led them reasonably to believe that they were applying to keep existing benefits. They were not on notice that a limitation period was commencing. In such cases notice would only be achieved by the conduct of the insurer in denying them coverage and this notice would only be effective if it was clear and unequivocal.

[41]            In this case, the plaintiff was notified in July that, unless she provided proof of loss, her benefits would terminate on October 18, 2005.  She was not personally provided with the Independent Medical Report.  She immediately notified the defendant that she wished to appeal and would be filing more medical information to prove her loss.  She also requested a copy of her file, which had to be provided within 30 days of the request.  Her request for her file was essentially ignored for over 30 days, when a payment of $25 was requested.  She eventually received some, but it appears not all, of her file on October 18, 2005, the day her benefits expired.  The defendant acknowledged that it did not handle this request properly.

[42]            The case demonstrates, because of the poor wording of s. 22, the decisions are, to a degree, decided on a case-by-case basis.  In this case, the benefits terminated on October 18, 2005.  The limitation in the policy states that the limitation expires within one year on the date on which the insurance company terminates the payment of benefits under the Total Disability provision.  The plaintiff received clear and unequivocal notice that the benefits would terminate.  In Esau, the court held that an appeal of a decision does not prevent the limitation period from running.  Additionally, due to an improper delay by the insurance company in sending her the file, the plaintiff was delayed in her ability to submit a proof of loss to the insurance company.  The defendant did send the report to her family doctor.  However, I do not see that this is sufficient.  In any event, regardless of the delay in sending her file and in sending her the material required, I apply the reasoning in Balzar and find that the limitation period runs from the date of the termination of the benefits and the refusal to pay further benefits, not the date of the notice of termination.  This conclusion is consistent with the existing law in this province. 

[43]            Therefore, the plaintiff is within one year of the time limit as she filed her Writ in September 2006.  The limitation defence, therefore, is defeated and the plaintiff may bring her action on the merits.

[44]            Costs will be in the cause.

“E. Bennett J.”


The Honourable Madam Justice Bennett