The California Court of Appeal recently decided Bennett v. Ohio National Life Assurance Corporation, __ Cal.Rptr.3d. __ 2023 WL 4069794 (2023) that will allow disability claimants with the ability to bring claims in California state courts that disability insurers have asserted to be barred by statutes of limitations. Plaintiff Bennett’s disability policy would pay benefits until he reached age 65 if he became disabled due to a “sickness” after age 55 and would pay benefits for life if he became disabled due to an “injury.” Bennett was thrown from a horse in 2006 at age 53. He sustained significant injuries. He continued to work, with accommodations, until he was 61 in 2014 when he was no longer able to work due to the injuries.

Ohio National approved Bennett’s claim and paid his benefits. Ohio National then sent Bennett a letter in June 2015 informing him that it had determined that his disabling condition was due to degenerative disc disease and was therefore caused by sickness rather than injury. As such, his benefits would not be paid for life, but would cease when he reached age 65 in September 2018. Several times between June 2015 and September 2018, Ohio National requested that Bennett complete statements and provide physician’s statements certifying his disability. In April 2019, Ohio National informed Bennett that its decision was unchanged and he would not receive benefits beyond September 2018.

On August 13, 2019, Bennett sued for breach of contract and breach of the implied covenant of good faith and fair dealing. The trial court granted summary judgment to Ohio National after concluding the claims were barred by the statutes of limitation — four years for breach of contract and two years for breach of the implied covenant of good faith and fair dealing. Both causes of action, the court concluded, accrued when Ohio National issued an unconditional denial of liability on June 8, 2015, not when benefits ceased on September 3, 2018.

Bennett appealed to the Court of Appeal and argued that the trial court erred because the elements of his claims were not complete until he suffered actual damages when his benefits ceased in September 2018.

The Court of Appeals reversed and concluded that the elements of Bennett’s causes of action were not complete until September 2018 when Ohio National ceased making its monthly disability payments. The court relied on Thompson v. Canyon, 198 Cal.App.4th 594, 604 (2011) (“ ‘when the wrongful act does not result in immediate damage, “the cause of action does not accrue prior to the maturation of perceptible harm” ‘ “). For Bennett, the difference between his benefits ending at age 65 on one hand and continuing for life on the other hand was substantial and surely made a significant difference for him.

The takeaway from Bennett is to understand that a cause of action does not accrue until all the elements are satisfied. Therefore, damages are an element in a cause of action, the statute of limitations does not begin to run until actual damages are sustained. Had Ohio National informed Bennett that his benefits were going to cease at age 65, then continued paying his benefits beyond age 65, Bennett would not have a ripe cause of action because he would not have yet sustained actual damages.

If you have a disability claim and have been told that your benefits will end at a given time, it is important to understand that if you intend to bring a cause of action against the insurer, your cause of action for breach of contract will not accrue until you suffer damages, typically when the insurer ceases paying benefits. Understanding the disability policy’s internal contractual limitations clause and the applicable statute of limitations is important to make sure you maintain a viable claim. One way to ensure that you understand whether you have a valid California cause of action against an insurance company is to have your matter reviewed by knowledgeable and experienced disability insurance attorneys, like the lawyers at McKennon Law Group PC.