On April 19, 2018 the Ontario Court of Appeal reversed the trial decision in MacIvor v Pitney Bowes, finding that the LTD policy in question covers claims that arise during the course of an employee’s employment, even if, as occurred in this case, the employee did not discover the claim for many years and had quit and started employment elsewhere in the meantime.
Mr. MacIvor suffered a severe back injury and a traumatic brain injury while participating in a company event while employed with Pitney Bowes. He was off work for four months post-accident and upon returning to work he struggled to perform at the same level he had pre-accident. Pitney Bowes reduced his work responsibilities overtime but the plaintiff continued to struggle and eventually quit.
Mr. MacIvor subsequently obtained employment with Samsung but, after less than a year there, he was terminated as his work was sub-par due his ongoing disabilities as a result of the accident.
The Court found that Mr. MacIvor only discovered the ongoing and permanent nature of his disabilities after Samsung terminated him. At that point, he made a claim under Pitney Bowes’ LTD policy.
An agreed statement of facts was submitted at the initial trial, with the parties agreeing that Mr. MacIvor was totally disabled from the time of the initial injury.
In rejecting the lower court’s decision that coverage ends when the employee ceased to be actively employed (ie when he resigned), the Court of Appeal held that the termination provisions did not exclude coverage for undiscovered disability claims that originated during the employee’s employment stating:
To so conclude would leave former employees in an untenable position of having no disability coverage from either their former or new employer. Such a result would be contrary to the very purpose of the disability insurance and the plain meaning of the coverage provision.
However, this alone did not resolve the issues between the parties in this case. Entitlement was still subject to the policy requirements to provide timely proof of claim and commencement of the action within the relevant limitation period.
Pursuant to the policy, proof of claim was required “within 90 days of the date benefits would begin”. Despite the passage of more than four years since the accident, and the finding that Mr. MacIvor had discovered his claim in August 2009, the Court held that the “the date benefits would begin” was after Mr. McIvor’s termination package from Samsung ended plus a month, since LTD benefits are paid in arrears. Despite what appears to be a very generous interpretation of when benefits would begin, Mr. MacIvor still did not file proof of claim within 90 days of this date, but did so about 100 days later instead. Although relief from forfeiture was not raised at trial, the Court of Appeal found it was in the interests of justice to grant relief here, citing a long list of factors, including the fact that Mr. MacIvor was injured during his employment, while covered by an LTD policy; that he did not appreciate the significance of his injury; the Insurer conceded his total disability as of the accident, and; that all of these facts had been known to the parties for years.
The Insurer also argued that the policy had a one-year limitation period to commence legal actions. However, the Court found that the provision also prevented any legal actions until 60 days had lapsed from the written proof of loss. In any event the Court concluded it was unlikely that the one-year limitation period would be upheld, referencing obiter from their 2014 decision of Kassberg v Sun Life Assuantce Company of Canada, 2014 ONCA 922 (CanLii), 124 O.R. (3d) 171.
All in all a very interesting decision, in circumstances that are unlikely to occur too often. However, Insurers, it may be time to revisit your policies to ensure they don’t provide for unintended exposure. Please feel free to contact me at firstname.lastname@example.org or 416-679-2781 x 210.
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 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 andArbitrator 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.
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 ...
The recent Superior Court decision of Nemchin v. Green by Corthorn J. is a significant win for auto insurers dealing with the deductibility of collateral benefits from large future loss of income awards. The plaintiff was injured in a motor vehicle accident in 2010. A trial took place in April, 2017. At the time of the trial, the plaintiff continued to receive long-term disability benefits from a third party insurer. At trial the plaintiff was awarded $600,000.00 for future loss of income. This was reduced to $540,000.00 for contributory negligence.
After the trial, two issues arose. First, the defendant sought an assignment of the plaintiff’s ongoing long term disability benefits pursuant to section 267.8(12(a)(ii), of the Insurance Act. Second, despite the finding in the recent El-Khodr and Cobb decisions, the plaintiff sought to have the judge use her discretion to alter the pre-judgment interest rate from 1.3% to 3.5%.
Regarding the assignment, the plaintiff opposed the defendant’s request because she argued it was not possible to match the $540,000.00 lump sum temporally to the ongoing disability benefits. She pointed out that the defendant opposed a jury question requiring the jury to break down any future payments by annual loss and duration. The defendant argued that the statutory provision or case law did not require “temporal matching”. Corthorn J. noted that the law in this area remained unsettled and the Court of Appeal was assembling a five member panel to hear Cadieux v. Saywall, 2016 ONC 7604, where they were expected to address the deduction of collateral benefits. However, the parties required finality in this matter and so she rendered her decision.
Corthorn J. granted the defendant an assignment until the plaintiff turned age 65 (when her LTD coverage ceased), or when the $540,000.00 had been fully paid by the LTD insurer. She also found that there was no basis to utilize her discretion to adjust the pre-judgment interest rate from 1.3% to 3.5%.
In her analysis, Corthorn J. confirmed that the burden of proving an assignment fell to the defendant. She addressed four main issues in determining whether the assignment should be granted. First, she found that it was undisputed that the plaintiff was in receipt of LTD benefits at the time of the jury verdict and would remain in receipt for as long as she met the disability test. Second, Corthorn J. agreed with the defendant that there was no requirement for “temporal matching”. Therefore, it fell to the trial judge to determine the duration of the assignment based on the record. Third, she found a global award for future loss of income did not preclude her from deciding the relevant issues. Finally, she found there was no risk the plaintiff would be undercompensated. The defendant is only entitled to an assignment once the plaintiff was paid the $540,000.00. At which point, the plaintiff would be fully compensated for her future loss of income. Relying on the decision of El-Khodr, Corthorn J. found the Court of Appeal’s commentary on the deductibility of Statutory Accident Benefits payments to be applicable.
This decision should be considered a significant success for defendants. It continues a growing trend in the case law where the deductibility of collateral benefits is addressed in a practical and holistic fashion. Overly technical jury questions requiring awards to be matched, year by year for a specific duration will not be required for a defendant to raise a claim for assignment.
Employers often provide their employees with access to long-term disability benefits through a group benefit plan. These benefits are usually provided and administered by a third party insurer. The insurer’s role is to manage the disability claim and adjust the file according to the available medical evidence. The employer’s role is to hold the employee’s position and accommodate a return to work as necessary. Ideally, the management of an injured employees return to work should be a collaborative process between employer, long-term disability insurer, and employee. Unfortunately, once an employee is injured and in receipt of disability benefits, misconceptions regarding the parties’ respective roles can expose them to increased risk and liability.
Misconception #1: The employer is no longer involved in the disability process
An insurer’s acceptance of a long-term disability claim does not end the employer-employee relationship. The employer has an ongoing obligation to accommodate the employee’s disability. This may be as simple as keeping their position available while benefits are being paid. It can also require the employer to significantly modify the workspace or duties of the employee to assist in a return to work. The employee has a reciprocal obligation to fully participate in any accommodation process. Failure to participate may give grounds for the employer to terminate their employment due to frustration. It may also give grounds for the insurer to discontinue benefits. To determine whether a claim of frustration is appropriate, employers should to obtain updates on their employee’s functional abilities at regular, but not excessive, intervals.
Misconception #2: If the employee receives disability benefits for 2 years, their employment can be terminated
Ontario’s Human Rights Code,prevents employers from terminating employees on the basis of disability. The exception is when an employer can prove that they have accommodated to the point of “undue hardship” and the contract of employment has been “frustrated” by the employee’s disability. Frustration is a legal doctrine that refers to an intervening event that prevents the further performance of a contract. Depending on the wording of the contract of employment, this doctrine may relieve parties from any further obligation to each other, with the exception of statutory minimum entitlements to notice, severance, or pay in lieu of notice under the Employment Standards Act.
Most frustration claims arise at the two year mark. This is in part due to the change of disability tests contained in many long-term disability policies. Usually, after two years, the policy’s disability definition changes to the “any occupation” definition. This is a stringent test requiring the employee to unable to engage in any occupation they are reasonably suited for by age, experience, and training. Employers may believe that if an employee meets this test of being able to unable to perform any job, their contract is frustrated.
However, the courts have found that the two year mark is not definitive in satisfying the employer’s burden. Frustration of contract is a fact driven analysis that will take into account the nature of the worker’s position, disabilities, and the employer’s meaningful steps to accommodate. Where an employer has taken a “hands off” approach due to misconception #1, their claim for frustration may not succeed.
Misconception #3: If the employee no longer meets the policy definition of disability, they must return to work
An employer is required to accommodate its employee even where the insurer has discontinued benefits. A long-term disability insurer’s decision to terminate benefits is not determinative of the employee’s ability to engage in his occupation. Potential accommodation may entail allowing the employee to remain off work without pay. It may also require the employer to accept a gradual return to work, starting with part time hours. However, an insurer’s denial of benefits may be a good time for an employer to seriously consider instituting a formal return to work program with relevant checkpoints and milestones. If an employee is unable, or unwilling, to participate in this program, the employer may have a better case for frustration.
Avoiding Exposure Through Collaboration
When dealing with an injured employee, benefit entitlement, accommodation, and potential termination of employment are areas of significant risk and exposure for both the employer and the long-term disability insurer. 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 employer fails to take positive steps to accommodate an employee or terminates their employment prematurely, the insurer may face an individual with no incentive to return to the work force. This may result in a protracted disability claim. Similarly, an employer who prematurely terminates an employee exposes themselves to wrongful dismissal and human rights claims.
Properly evaluating the employer’s obligations in the context of a long-term disability claim is a necessary step in avoiding these risks. For further information on how to successful avoid these pit falls, contact the long-term disability and employment lawyers at Strigberger Brown Armstrong LLP.
Devan Marr’s practice has focused on bodily injury, long term disability, statutory accident benefits, and employment claims.
In the recent decision of Wiles v. Sun Life, the Ontario Superior Court allowed a summary judgment motion by Sun Life, finding that the conduct of the plaintiff did not justify granting relief from forfeiture.
The plaintiff was an employee of Spaenaur, who was terminated without cause on November 2, 2015. With the assistance of her lawyer, the plaintiff applied for the Salary Continuance Services Program available through the employer, who also had long-term disability benefits program for employees through Sun Life. After the application for the Salary Continuance Services Program was denied, the plaintiff initiated an action for breach of contract against Sun Life only.
Sun Life issued a motion for summary judgment based on the fact that it did not provide the Salary Continuance Services Program and its role was limited to administration only of that program. Prior to the motion the plaintiff requested to amend the Statement of Claim to remedy the deficiencies in the claim, including adding Spaenaur as a defendant; make claims against Spaenaur for damages for wrongful termination of employment; make claims against Spaenaur for damages for breach of the terms of the Salary Continuance Services Program and clarify her claim against Sun Life for damages of breach of the long term disability policy provided by Sun Life to employees of Spaenaur.
After receiving the Amended Statement of Claim, Sun Life issued a Statement of Defence and the plaintiff brought this motion for leave to issue a reply in which she seeks to plead relief from forfeiture. The plaintiff claimed she was not aware of the need to submit a separate application to Sun Life for LTD versus the application for the Salary Continuance Services Program. Sun Life’s policy included a 90-day term after the elimination period to submit a claim for benefits. In addition, there was a one-year limitation period in the policy to initiate legal action. Both of which the plaintiff failed to meet and therefore wished to claim relief against forfeiture.
The Court stated that relief from forfeiture is available for imperfect compliance with a term of the insurance policy but not for non-compliance with a term of the policy.
Referencing the decisions in Falk Bros., the court explained the difference between imperfect compliance and non-compliance. With imperfect compliance being the failure to give notice of claim in timely manner, whereas failure to institute an action within a prescribed time limit would be viewed as non-compliance, or breach of a condition precedent.
Applying the case law to the facts of the matter, the court found that the plaintiff’s failure to give timely notice to Sun Life of her claim for long-term disability benefits could be the subject of relief from forfeiture. However, the plaintiff’s failure to commence the action against Sun Life until more than one year after the end of the time period in which the initial submission of proof of claim was required would be non-compliance with the contract and therefore not subject to relief from forfeiture. Accordingly, the plaintiff’s claim against Sun Life must be dismissed.
In the event he was wrong about the plaintiff’s failure to commence this action within the contractual time period, Justice Taylor provided an analysis of the remedy of relief of forfeiture, referring to the Supreme Court of Canada case, Saskatchewan River Bungalows Ltd. V. Maritime Life Assurance Co., 1994 CanLII 100 (SCC) the test for relief against forfeiture is discretionary and based on three considerations: a) the conduct of the applicant; b) the gravity of the breach; c) the disparity between the value of the property forfeited and the damages caused by the breach.
In Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363, the Ontario Court of Appeal at paragraph 87 held that relief from forfeiture is to be granted sparingly and the party seeking that relief bears the onus of making the case for it.
The Court started with the proposition articulated in Sweda Farmsthat it is assumed that the plaintiff has presented all of the evidence that will be available for trial and conclude that the plaintiff had not discharged the onus to satisfy that Sun Life has not been prejudiced by the delay in giving notice of the claim.
Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 (CanLII), [ 2014] O.J. No. 851 at paragraph 33:
(1) The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;
(2) On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;
(3) If the court cannot grant judgment on the motion, the court should:
(a) Decide those issues that can be decided in accordance with the principles described in 2), above;
(b) Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;
(c) In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.
Finally, the Court stated that if it was to grant the plaintiff relief from forfeiture on the basis of the record before it, it would effectively render meaningless the terms of the insurance policy requiring timely notice of a potential claim and the time within which an action must be commenced.
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 Ontario Court of Appeal has confirmed that disability insurers in Ontario are not required to give insureds notice of the two-year limitation period established by the Limitations Act, 2002 when denying a claim.
Appealing from the insurer’s summary judgment motion, the Appellant argued that the notice requirements within other Ontario regulations, such as the SABS, and within similar legislation from B.C. and Alberta, indicate that insurers are required to give insureds notice as part of their duty to act in good faith. The Court disagreed and refused to impose consumer protection measures on insurers that the Ontario legislature had specifically chosen not to mandate. The Court also noted that imposing a notice requirement on insurers, beyond any parameters set out in the underlying policy, would effectively judicially overrule the Limitations Act, 2002 and bring ambiguity, rather than clarity, to the process. In doing so, the Court confirmed that the discoverability of the underlying claim, rather than the insurer’s notice, triggers the running of the limitation period in disability disputes.
Right before Christmas, the Supreme Court of Canada denied the insured's application for leave to appeal.
This decision provides further clarity to the interplay between the Legislature and Courts when dealing with limitation period disputes.
Shalini defends insurance claims covering all aspects of general insurance liability including motor vehicle accidents, occupiers’ liability, slip and falls, as well as accident benefits litigation and arbitration and priority and loss transfer disputes.