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In Bennett v. Ohio Nat’l Life Assur. Corp., 92 Cal.
App. 5th 723, the California Court of Appeal addressed when the
statute of limitations runs for a disability insurance claim. The
Court held that the statute of limitations for a disability claim
did not accrue until every element of the cause of action –
including damages – was complete. Therefore, in
Bennett, the statute of limitations did not begin to run
at the time of the denial, but years later when Ohio National
stopped making disability payments.
In 2006, plaintiff, a 53-year-old maxillofacial surgeon,
suffered injuries after being thrown from a horse. By 2012, he had
chronic pain which hindered his ability to operate. By 2014, he
could no longer operate and he stopped working entirely.
Plaintiff submitted a claim under his Ohio National disability
policy, which Ohio National approved. A year-and-a-half later, in
August 2015, Ohio National wrote to plaintiff and told him that it
determined his condition was due to sickness – degenerative
disc disease – rather than an injury. And because
plaintiff’s disability started after he was 55, he was not
entitled to lifetime benefits. Instead, his benefits would
terminate when he reached 65. In September 2018, Ohio National
stopped paying benefits.
In 2019, plaintiff sued Ohio National for breach of contract and
bad faith. Ohio National moved for summary judgment arguing that
the two-year bad faith and four-year breach of contract statutes of
limitations barred plaintiff’s claims. Plaintiff argued that
the statute of limitations did not begin to run until September
2018, when he suffered actual damage in the form of loss of
benefits. The trial court granted Ohio National’s motion for
summary judgment.
Plaintiff appealed and the Court of Appeal reversed. The Court
held that a cause of action does not accrue until all of the
elements are satisfied. Thus, when damages are an element of the
cause of action, the statute of limitations does not begin to run
until the plaintiff sustains damage. Applying the law to the facts
before it, the Court of Appeal explained that plaintiff’s
causes of action were not complete until Ohio National stopped
paying the monthly disability benefit and it rejected Ohio
National’s argument that the statute of limitations began to
run at the time of the unconditional denial of liability.
The Court of Appeal carefully distinguished the unique facts
before it from other cases involving denials of disability
benefits. The Court pointed out that, unlike other cases where the
cessation of benefits occurs contemporaneously with the denial, in
this case, the benefits didn’t stop until several years later.
Thus, although the facts are different than the typical case, the
holding was not a departure from prior decisions discussing when
the statute of limitations begins to run.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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