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.