Author: Kris Bonn

Long-term disability benefits. We buy coverage to protect us and our families when we become injured or sick and cannot work. They are “peace of mind” contracts. This past week there were two legal decisions of note in long-term disability cases. One is a reminder for all claimants to not sit back, when benefits are terminated, and rely on your insurer to do what is right. If the insurer denies or terminates your benefits, you need to get in to see a lawyer who practices in long-term disability law without delay. The second case is a reminder for all insurers who improperly deny or terminate an insured’s long-term disability benefits. I will review both cases below.

In the case, Plastino v. Desjardins Financial, 2022 ONSC 37301 , the plaintiff, Daniel Plastino was insured under a group disability insurance plan (the “Policy”) with Desjardins Financial (DF).  On or around February 2, 2008, the plaintiff ceased work and thereafter submitted a claim for long term disability (“LTD”) benefits to DF. After some months of delay, DF approved the plaintiff for monthly LTD benefits effective October 1, 2008.

While DF paid long-term disability benefits to the plaintiff, it continually reviewed the plaintiff’s condition.

In a letter dated February 13, 2013, DFS gave notice to the plaintiff that the medical documentation no longer supported that the plaintiff met the definition of “Total Disability” and informed the plaintiff that “your LTD claim will terminate effective March 14, 2013”. The letter also advised the plaintiff that he could appeal the decision if he disagreed with this decision.

LTD benefits were paid up to March 14, 2013. As of March 15, 2013, no further benefits were paid to the plaintiff by the defendant.

The plaintiff appealed.

DF and the plaintiff exchanged correspondence concerning the plaintiff’s appeals from March 15, 2013, to and including July 9, 2014. In the end DF maintained its position set out in the letter of February 13, 2013 that no further benefits would be paid after March 14, 2013.

The Policy did not have a formal appeal process and there is no end to the appeal process. In other words, there is no limit to the number of appeals that can be made. DF would be required to continue to review and evaluate appeals as and when they are received. This was an important point in the decision.

The plaintiff issued a Statement of Claim on July 4, 2016, more than three years after the benefits were terminated on March 15, 2013. Pursuant to r. 20 of the Rules of Civil Procedure, summary judgment, DF brought a motion to dismiss the claim of the plaintiff as being out of time and beyond the year limitation period in the Limitations Act, and as such, is statute barred.

The plaintiff attempted to argue that there was wording in the Policy that created a 3 year limitation period, however, the judge ruled that the reference to 3 years was for the time from date of disability to submit an application for disability benefits, not to sue the insurer for termination of benefits. The judge next looked at the reasons the plaintiff provided for not being able to sue within 2 years and soundly rejected those reasons. In the end, the plaintiff’s claim was dismissed for not being commenced within the limitation period. A very unfortunate result and one that doesn’t address if the person was disabled and unable to work. The lesson in this case is simple and straight forward; if your insurer terminates your disability benefits, don’t wait, seek a lawyer immediately who practices in this area and file a legal claim as soon as possible.

The second long-term disability case is much, much more favourable for plaintiffs and will hopefully be a wake up call to disability insurers who routinely and unfairly deny or terminate disability benefits. On Friday, June 24, 2022, after a 5 week trial, a jury returned a verdict in favour of the plaintiff, Sara Baker that included $1.5 million in punitive damages against Blue Cross Life Insurance Company of Canada (“Blue Cross”). The jury heard evidence that Blue Cross denied Ms. Baker’s long-term disability claim for more than 6 years. Ms. Baker, a 47 year old woman suffered a brain bleed/stroke in 2013 and was unable to return to her job as a Director at a hospital. As is typical of many insurers, Blue Cross paid Ms. Baker disability benefits for the first two years of her disability as it agreed that she could not return to her own occupation. However, after 2 years, the test changes to whether there is any reasonable occupation that Ms. Baker could do – Blue Cross believe she could return to some other occupation and terminated her benefits. After six long years of denying her benefits and being subjected to 375 hours of surveillance, the jury rejected Blue Cross’s termination. The $1.5 million punitive damages award is the highest punitive damages award in Canada. Punitive damages are designed to punish the defendant for participating in egregious acts that is, for really, really bad and outrageous behaviour. Clearly, the jury felt that Blue Cross had NO justification in denying Ms. Baker disability benefits for 6 plus years and how they treated her was manifestly unfair. Ironically, when the trial was first scheduled to be heard the pandemic would not allow for a jury. The plaintiff brought a motion to strike the jury and proceed before a judge alone. Blue Cross objected to a judge alone trial and argued that it’s right to a jury trial. The motion judge agreed and refused to strike the jury. That backfired on Blue Cross as I don’t believe a judge would have awarded punitive damages or if a judge did award punitive damages it would not have been close to the $1.5 million awarded by the jury. Fantastic result.

If you have any questions about long-term disability insurance or have been denied benefits give us a call or go to the Bonn Law website (www.bonnlaw.ca) to schedule a time to talk. Bonn Law, here for you when you need us most.