Long-term disability (“LTD”) coverage is often a key benefit employees derive from their employment. LTD benefits can provide significant security to employees in the form of income continuation when they are disabled due to an illness or injury. I previously talked about some misconceptions that employers may have regarding LTD benefits, here. Today we deal with some common misconceptions that employees may have with LTD benefits.
Misconception #1: An Employer is not entitled to know why I am off work
Generally speaking, if an employee is taking a sick day or two, an employer is not entitled to ask for specifics, such as a diagnosis. In fact, the recent amendments to the Employment Standards Act 2000 brought in by Bill 148 explicitly prohibit the requirement for a doctor’s note when making use of Personal Emergency Leave. However, when employees are off work for an extended period of time, their employers become entitled to obtain further information. Generally this may mean an employee has to provide a diagnosis and details of their general functional abilities for the purposes of determining proper accommodation. In the extreme cases, Ontario’s Divisional Court has ruled that under the Ontario Human Rights Code employers are entitled to request that an employee undergo an independent medical examination as part of the duty to accommodate, provided the medical information required by the employer cannot reasonably be obtained from the employee’s treating practitioner.
Practically speaking, it is in the employee’s best interest to keep the employer in the loop. The employer and the LTD carrier are entitled to updates on an employee’s condition and their ability to return to work, within reasonable limits. A failure to communicate with the employer about an employee’s medical status may lead to an eventual claim for frustration of contract, as we discussed in a previous blog, here.
Misconception #2: The Employer and LTD Carrier have the obligation to obtain updated information
While most employers and LTD carriers will take the initiative to check in with an injured employee, ultimately, it is the employee’s responsibility to ensure they are providing sufficient information to satisfy the policy definition for disability.
LTD carriers require information in order to appropriately adjudicate a file. That information comes from the employee and their treatment team. As a recipient of LTD benefits, an employee has an obligation to provide ongoing information to the LTD carrier. In fact, many disability definitions require that the employee be under the continuous care of a physician in order to qualify for benefits. If an employee fails to provide the required information, the carrier may be entitled to terminate entitlement to benefits on the basis that there is insufficient information to determine their ongoing disability.
Where a medical picture is particularly complex or prolonged, many LTD policies allow the LTD carrier to arrange their own independent medical examination to determine an employee’s ongoing eligibility.
Misconception #3: An employee cannot be terminated while on disability and does not have to return to work unless they are 100% recovered
Just like employers have a duty to accommodate, employees have a duty to participate in reasonable accommodation attempts. If employers can provide modified meaningful work to an injured employee, the employee may be required to attempt a return to work. Many LTD policies will have provisions regarding “rehabilitation programs” which allow for gradual returns. Employees who fail to comply with these provisions may find themselves in violation of the Policy.
Similarly, an employee can be terminated while receiving LTD benefits, so long as their disability did not form part of the basis for the termination. As an example, during a factory shut down. However, it is worth noting that employees in this situation may still be entitled to pay in lieu of notice rather than “working notice.” Additionally, in some cases employees can be terminated on the basis that their disability has made it impossible to complete their contract of employment, resulting in frustration of contract. While each case is unique, an employer who is capable of showing there was no reasonable likelihood of the employee returning to work within the foreseeable future may have a valid claim for frustration, as seen in Roskraft v. RONA Inc. In a valid frustration scenario, employers are entitled to consider the contract at an end and employees will only be entitled to the minimum statutory payments required under the Employment Standards Act, 2000.
Conclusion: Avoiding Disputes Through Collaboration
When dealing with an injured employee, benefit entitlement, accommodation, and potential termination of employment are areas of significant risk and concern for all parties involved. Early, often, and accurate information exchange can bust many of the myths in these complex multi-party disability situations. The overlap of contractual, statutory and common law obligations between the three parties make the management of long-term disability claims particularly complex. If an employee fails to take positive steps to advise their employer of their situation or cooperate with the LTD carrier, they may find themselves on the receiving end of a claim for frustration or abandonment.
Devan Marr’s practice has focused on bodily injury, long term disability, statutory accident benefits, and employment claims.
The Divisional Court has confirmed that the limitation period set out in the Insurance Act and the SABS falls within the category of “hard” limitations periods, which are triggered by a fixed and known event, as opposed to the day a claim was discovered.
The Divisional Court noted that although it may be considered harsh, there are important policy considerations on both sides:
In the case of the Insurance Act, and claims under the SABS, an insurer has no control over when an insured applies for a designation of catastrophic impairment. An insurer would not continually assess a claimant if ongoing expenses are not being submitted. Presumably, the legislature thought it important to provide for a reasonable period, after which an insurer’s obligation would be discharged, whether or not meritorious claims may be discovered later.
The Applicant, Sotira Tomec, sought judicial review of the decision of the Licence Appeal Tribunal in S.T. v. Economical Mutual Insurance Company, 2018 CanLII 61170 (ON LAT).
Ms. Tomec was involved in a pedestrian-motor vehicle accident on September 12, 2008. Economical paid attendant care benefits and housekeeping benefits up to the 104-week mark, at which point Economical sent her a letter and Explanation of Benefits, both dated August 26, 2010, containing a refusal to pay further attendant care benefits and housekeeping benefits beyond September 12, 2010. The Explanation of Benefits contained language regarding the dispute resolution process and a warning of the two-year limitation period to dispute the refusal to pay further benefits. Ms. Tomec did not dispute the refusal to pay further attendant care benefits and housekeeping benefits until more than six years later, on September 20, 2016. In the interim, Ms. Tomec submitted an Application for Determination of Catastrophic Impairment, dated May 13, 2015 and via letter dated November 4, 2015, Economical deemed her catastrophically impaired.
At the Licence Appeal Tribunal, Ms. Tomec argued that the limitation period should not start to run before she was deemed catastrophically impaired, which was when she discovered she had a claim. In response, Economical argued that the limitation period is triggered by the insurer’s refusal to pay a benefit and that, as set out by the Divisional Court in Kirkham v. State Farm,  O.J. No. 6459 (leave to appeal refused), the principle of discoverability does not apply to SABS disputes. The “cause of action approach” was specifically rejected in Kirkham when interpreting the phrase “within two years after the insurer’s refusal to pay the benefit claimed”.
The Tribunal’s Vice-Chair determined that the Applicant was statute barred from proceeding with her claim for attendant care benefits and housekeeping benefits. The Vice Chair found that Economical issued a clear and unequivocal denial of attendant care benefits and housekeeping benefits which met the requirements of Smith v. Cooperators,  2 S.C.R. 129 and, as well, that the principle of discoverability does not apply to accident benefits.
The Divisional Court considered the appropriate standard of review of the Tribunal’s decision, noting that the question of whether the discoverability principle applies is a general question of law that goes beyond the expertise of the Tribunal and is a question that must be answered uniformly for all adjudicators deciding cases under the Insurance Act. However, ultimately, the Court found that it was unnecessary to come to a definitive conclusion on the applicable standard of review since there was no error, even on a correctness standard.
Ultimately, after consideration of its own decision in Kirkham v. State Farm and the Ontario Court of Appeal’s decisions in Levesque v. Crampton Estate, 2017 ONCA 455, Haldenby v. Dominion, 55 O.R. (3d) 470,Turner v. State Farm, (2005) 195 OAC 61 and Sietzema v. Economical, 2014 ONCA 111, the Divisional Court held:
as found by the Tribunal, the insurer had clearly and unequivocally refused to pay those expenses as of September 12, 2010. Pursuant to the clear words of the limitation period, which ties it to a period of two years after the insurer’s refusal to pay the benefit claimed, the claim is time barred.”
Lisa has an insurance law practice that has focused exclusively on insurance defence for 15 years. Her practice focuses on complex insurance-related litigation, including accident benefits and bodily injury. Read more ...
In two recent decisions from FSCO, auto insurers are being reminded of their duties of confidentiality and the dangers of sharing information between the accident benefits and tort departments. First, the Arbitrator in Wang and TTC Insurance Company Limited, FSCO A16-001903, removed in-house counsel for the TTC from the file, suspended the arbitration hearing and required TTC to hire outside counsel to continue the proceedings.
Counsel from TTC's in-house department had hastily submitted materials in response to a late motion by the Applicant's counsel. Upon review of the affidavit submitted by the Insurer, the Arbitrator found that it was evident that any firewall erected between the accident benefits and tort departments had been breached. The Affidavit referred to a review of the file by the tort lawyer including references to medical witnesses and reports.
The Arbitrator referenced IBC General Bulletin #184, which addressed the issue of complaints the IBC was receiving regarding breaches of the firewall between accident benefits and tort departments. The Bulletin reminded members that the All Industry Claims Agreement prohibited insurers from gathering medical information from doctors or their employees, without the written consent of the patient. The Arbitrator held that for this rule to be effective, where the same insurer insures both the tortfeasor for liability coverage and the victim for accident benefits, the insurer should set up a ‘Chinese Wall’ so that information is not available between departments absent explicit permission. The Arbitrator recognized that it did not matter that the insurer would ultimately come into possession of much of what was contained in the AB file during the course of the tort proceedings; the insurer did not have an automatic right to that information.
The second decision, Vadivelu and State Farm Mutual Automobile Insurance Company, FSCO A11-002496, involved the Special Investigations Unit (SIU) for State Farm, on behalf of the accident benefits department, investigating the OCF-2 submitted by the insured. The SIU found that there was a fraudulent employers’ signature on the OCF-2 form. Subsequently, the tort department started an investigation regarding the Applicant’s employment in his role as a Plaintiff in his tort case. Once again, State Farm’s SIU Department was engaged to investigate. In doing so, SIU obtained a statement from the employer that the Applicant had misrepresented his employment information. The outcome of both of these investigations appear to have been shared between departments. The Applicant took issue with this disclosure.
The Insurer argued that both departments conducted their own investigation into the validity of the employment of the Applicant and discovered that the information provided was fraudulent. In support of their position, the insurer relied on section 7(1)(b.1) of the Personal Information Protection and Electronics Documents Act (PIPEDA). This section allows for the collection of personal information without the knowledge or consent of the individual if the information collected is contained in a witness statement and the disclosure is necessary to assess, process or settle an insurance claim. In addition, the insurer relied on the signed OCF-1 authorization which states: “I am also aware that you and persons acting for you may be required or permitted by law to disclose this information to others without my knowledge or consent.”
The Arbitrator held that it was beyond his jurisdiction to widen the scope of the firewall which has been endorsed by the Court. This firewall prevented the sharing of medical information only from the accident benefits department to the tort department. The Arbitrator held that section 7 of PIPEDA and properly executed OCF-1 and OCF-2 allows for information provided to the insurer to be verified by the insurers, at any time by any department and thus there was no breach in this instance.
Bottom-line, accident Benefits departments have a responsibility to their insured, to ensure that medical information gathered during the course of adjusting the AB claim is not to be accessed, shared or otherwise available to the tort department adjusting a claim for the same insured.
Suzanne has represented clients at arbirations and mediations as well as prepared written submissions for accident benefit disputes In addition she has represented clients at CPP tribunal hearings regarding CPP disability benefit applications and appeals. Read more ...
The recent decision of Van Huizen v. Trisura Guarantee Insurance Company, reinforces that Courts have little interest in protracted coverage battles between parties.
The facts of the case are important but straight forward. There were three main entities. Mr. Barkley, Hastings Appraisal Services (“Hastings”), and Mr. Van Huizen. Mr. Barkley was a property appraiser. He was employed by Hastings. Mr. Van Huizen operated Hastings. Both Mr. Barkley and Mr. Van Huizen had their own professional liability insurance certificates.
In 2008, Mr. Barkley was hired to do an appraisal. It was alleged that he was negligent in his appraisal, resulting in an eventual loss for the property’s insurer when the mortgagor defaulted. The insurer commenced a claim against Mr. Barkley and Hastings for negligent appraisal. A second claim was commenced against Mr. Van Huizen alleging that Mr. Barkley was either his employee or agent and was therefore vicariously liable.
Mr. Van Huizen reported the claim to Trisura, which subsequently denied coverage claiming that the “wrongful act” of Mr. Barkley did not trigger coverage under the policy insuring Mr. Van Huizen.
Trisura alleged that Mr. Van Huizen had coverage only for a negligent act or omission committed by him personally. Their position was that because Mr. Barkley who prepared the appraisal, he could have coverage under the certificate of insurance issued to him but not Mr. Van Huizen. Although the policy included coverage for the vicarious liability of an employer, it required that the negligent act or omission be committed by the member to whom the certificate of insurance was issued. Alternatively, Trisura argued that if an employer was entitled to coverage for the vicarious liability that arose out of the professional services rendered by a member other than the one named in the certificate, Mr. Barkley was not an employee of Mr. Van Huizen or Hastings as both had denied same in their respective statements of defence that he was.
Mr. Van Huizen viewed the case in simpler terms. In the main action and the third party claim, he was alleged to have been Mr. Barkley’s employer and therefore vicariously liable for his negligent acts or omissions. He was insured both for legal claims arising from his personal actions and from his status as an employer. The denial that he was Mr. Barkley’s employer in his statement of defence or that he was vicariously liable did not have an impact on the duty to defend because it was the allegations in the statement of claim and third party claim that matter.
The court cited Coast Capital Equipment Finance Ltd v. Old Republic, 2018 ONCA 540, for the following principles of law on the interpretation of insurance contracts:
The court must search for an interpretation from the whole of the contract which promotes the true intent of the parties at the time of entry into the contract.
Where words are capable of two or more meanings, the meaning that is more reasonable in promoting the intention of the parties will be selected.
Ambiguities will be construed against the insurer.
An interpretation which will result in either a windfall to the insurer or an unanticipated recovery to the insured is to be avoided.
Applying these principles and viewing the insurance contract as a whole, the court found Mr. Van Huizen had coverage for a legal claim arising from his own actions and also when it flows from his legal status as an employer of the alleged wrongdoer.
The Court found that under the policy, an insured does not have to be an appraiser; but he or she has to be an employer of someone who is and, if they are, the policy granted them coverage if they were alleged to be vicariously liable for the negligent acts or omissions of that member. As a result, Trisura had a duty to defend Mr. Van Huizen.
In parting, the court left the parties with this comment:
At its core, the liability issue is simple: did Mr. Barkley fall below the standard of care in preparation of the appraisal? Both he and Mr. Van Huizen carried insurance coverage for just this type of claim and yet, 10 years after that appraisal was done, litigation over coverage persists. I make this comment not in criticism of counsel but to affirm why, as the Court of Appeal has opined, these types of disputes need to be resolved expeditiously to avoid unnecessary costs and delay.
It is worth noting that in a perfect world, coverage litigation should be short and to the point. In many cases the issue should be determined solely on the pleadings and the contract of insurance. Courts will look for the reasonable interpretation of the clause that satisfies the contract as a whole. While creative and technical arguments have their place and should always be advanced, Justice Hurley would suggest that the ultimate question will be whether coverage makes sense in the circumstances.
In Miglialo v. Royal Bank of Canada, the Federal Court considered an application where Ms. Miglialo claimed damages between $100,000 to $250,000 based on allegations that RBC, or its staff, accessed and disclosed her personal and financial information without her authorization. The Federal Court found that there was no unauthorized disclosure of Ms. Miglialo’s personal or financial information. She was not entitled to any damages as a result.
In light of the ever-increasing risk of personal information disclosure, it is worthwhile to explore Ms. Miglialo’s claim and the application of the sometimes-complicated Personal Information Protection and Electronic Documents Act (PIPEDA).
PIPEDA Dispute Resolution Procedure
In basic terms, PIPEDA was designed to protect individuals’ personal information when it is collected by a business. In a sense, the legislators sought to protect people’s personal data when it left their control. It does so by holding businesses accountable when they fail to adequately monitor and control the collection, use, and distribution of consumer data.
When organizations breach their statutory obligations, an individual can file a complaint with the Privacy Commissioner of Canada. The Commissioner conducts an investigation and renders a report. The Commissioner has the power to issue recommendations and attempt to settle the dispute between the parties.
Once the report is issued, an individual may apply to the Court for a hearing in respect of any matter in the report. This is exactly what Ms. Miglialo did.
The Court has three remedies available. The Court may 1) order that an organization correct its practices; 2) order that an organization publish a notice of its intention to correct its practices; or 3) award damages to the complainant. Damages may include compensation for any humiliation that the complainant suffered as a result of the organization’s failure to comply with their obligations.
Ms. Miglialo's Claim?
In this case, Ms. Miglialo lived in Calgary and did her banking with RBC. Ms. Miglialo alleged that her brother’s girlfriend, who worked at an RBC branch in Montreal, accessed her account which contained the names of her beneficiaries. According to Ms. Miglialo, this information was disclosed to her mother at some point between 2011 and 2012. Based on a lengthy investigation, the Commissioner concluded that this suspicion was based on – dramatic pause – “increasingly uncomfortable” conversations between Ms. Miglialo and her mother. These conversations occurred in 2012 and consisted of Ms. Miglialo’s mother questioning her financial plans in the event of her death. There was no specific discussion with her mother about her RBC account.
Although the court found that Ms. Maglialo’s brother’s girlfriend did access her account on one occasion, this access occurred around February 24, 2013, which was after the dates that Ms. Miglialo alleged the disclosure occurred. The “suspected” disclosure was not based on any evidence present before the Court.
The Court concluded that there was no malice on the part of RBC and there was no evidence of hardship (including humiliation) on the part of Ms. Miglialo. The court noted that PIPEDA aims to compensate, deter, and vindicate. However, one unauthorized access is unlikely to result in a need to deter. More importantly, Ms. Maglialo did not tender any evidence that she suffered any damages because of the breach, which left the court handcuffed and unable to order an award.
PIPEDA is legislation that protects individual’s information from unauthorized collection, use, and distribution. The Act also prescribes a dispute resolution system that must be engaged to receive compensation when an organization behaves contrary to the principles enunciated in PIPEDA. In Miglialo, the court reminds individuals that a single infraction may not be enough to award damages. The burden of proof remains with the complainant to prove not only that a violation occurred, but that they also suffered damages as a result of the breach. Suspicion is not enough.
Stas practices in insurance-related litigation. He has a broad range of experience including tort claims, accident benefits, subrogation, priority and loss transfer disputes, WSIB matters, and fraudulent claims. Read more...
In S.S. v. Economical, the Licence Appeal Tribunal found the claimant missed the limitation period to dispute the denial of attendant care and housekeeping benefits, which had been denied at 104 weeks, despite the claimant later being deemed catastrophically impaired. The Tribunal also found that subsequent payments of attendant care and housekeeping benefits, made in error by the insurer after the claimant was deemed catastrophically impaired, were irrelevant because the limitation period had expired well before the subsequent payments were made.
The claimant, S.S., was involved in a motor vehicle accident on July 29, 2009. The insurer paid the claimant attendant care and housekeeping benefits until the benefits were terminated pursuant to s. 18(2) and s. 22(2) of the SABS. This refusal to pay further attendant care and housekeeping benefits was communicated via a letter, dated October 4, 2011.
The claimant submitted an initial Application for Determination of Catastrophic Impairment (OCF-19), dated March 23, 2010, claiming impairment under criterion 1(e). The insurer assessed the claimant and found he was not catastrophically impaired under this criterion.
The claimant submitted two further OCF-19s, dated June 17, 2013 and January 8, 2014, under Criterion 8 and Criterion 7, respectively. On September 3, 2014, following the completion of s. 44 examinations, the insurer advised the claimant of their determination that he was catastrophically impaired. The insurer also mistakenly advised the claimant that he was entitled to attendant care and housekeeping benefits and paid him these benefits for approximately six months. Upon identifying the mistake, the insurer advised the claimant that benefits were paid in error and requested a repayment.
The claimant did not dispute the insurer’s denial of attendant care and housekeeping benefits until May 5, 2017.
Adjudicator Johal determined that the denial of October 4, 2011 was clear and unequivocal and complied with the principals set out in Smith v. Cooperators and the SABS. While the Adjudicator agreed that subsequent payments can negate a denial in certain cases, she agreed with the insurer’s position that, in this case, the claimant’s claim for ongoing attendant care and housekeeping benefits was already statue barred at the time of the subsequent payment. In other words, subsequent payments cannot revive a right that has been extinguished.
Lisa has an insurance law practice that has focused exclusively on insurance defence for 15 years. Her practice focuses on complex insurance-related litigation, including accident benefits and bodily injury. Read more ...