In a recent decision, of Wilken v. Sunlife, the Ontario Court of Appeal has confirmed that a long-term disability insurer is entitled to enforce the wording of the policy where a participant’s action or inaction would adversely vary an insurer’s interest.
The decision, Wilkens v. Sun Life Assurance Company, addressed the situation of Mr. Wilkens, an individual who was injured resulting from a motor vehicle accident while in the course of his employment. He elected to forgo Workplace Safety and Insurance Board (“WSIB”) benefits in order to pursue a tort claim. The appellant’s long-term disability insurer was considered a second payor under the policy and was entitled to an “offset” for any WSIB benefits the appellant was “eligible” for. The insurer took the position that despite electing to pursue a tort claim, at the time of the onset of disability, the appellant was “eligible” for WSIB benefits. Accordingly, it should be entitled to a credit despite the appellant retroactively electing to pursue a tort claim.
The motion judge, and subsequently the Court of Appeal, agreed.
The Court of Appeal adopted the motion judge’s reasoning that the plaintiff's voluntary decision to make a retroactive election, foregoing WSIB benefits to pursue a tort action, effectively would deny the insurer its contemplated and permitted offset, thereby elevating the insurer's relevant coverage obligation to a "first payor" status that obviously was not intended.
The Court found that the LTD carrier was entitled to deduct or offset the amount of WSIB benefits the appellant could have received had he exercised his entitlement to them, and not the amount of WSIB benefits actually received and retained in the wake of the plaintiff's retroactive election to proceed with his tort claim.
This decision continues to build on the Court’s decision in Richer v. Manulife Financial, 2007 ONCA 214. In the long-term disability context, courts will pay particular attention to the policy to give it its intend effect. This decision is also notable, as it has already been referenced in the recent FSCO decision of Pan v. Allstate, discussed further in our blog post here. In that case we raised the Court of Appeal’s rationale in Wilkins and Arbitrator Smith relied on the decision in support of his finding that the Accident Benefits Insurer was entitled to deduct CPP disability benefits that may have been “available” but not yet applied for by the claimant.
These cases suggest that decision makers are treating the order of payment contemplated by the contract paramount to the individual claimant’s choice to selectively pursue benefits.
The full decision of Wilkens v. Sun Life Assurance Company, 2017 ONCA 975, can be found here.