An Ontario Court of Appeal decision reversing a lower court ruling on a delayed long-term disability claim will likely send insurers back to the drawing board to revise their policies, say insurance and personal injury lawyers.
An Ontario Court of Appeal decision reversing a lower court ruling on a delayed long-term disability claim will likely send insurers back to the drawing board to revise their policies, say insurance and personal injury lawyers.
In MacIvor v. Pitney Bowes, an employee who was refused long-term disability coverage for which he had paid through his job should get the coverage even though his claim was delayed and he was no longer working for the same company, the appeal court ruled in April.
Lenard MacIvor was considered a star employee at Pitney Bowes when he went to Costa Rica on a company-sponsored event in April 2005, where he had an accident. He suffered a traumatic brain and back injury and was off work for four months. He didn’t recognize the permanence of the brain injury until much later.
When he did go back to work where he had risen through the ranks to achieve the position of division sales vice president, his performance was subpar, his responsibilities were reduced and, in 2008, he quit his job out of frustration. He soon found another job, but he was fired the following year.
In 2010, MacIvor applied for long-term disability benefits, but he was denied because he was no longer working with Pitney Bowes. The Superior Court of Justice came to the same conclusion at trial.
But at the Ontario Court of Appeal, Justice Jean L. MacFarland wrote that MacIvor’s policy did not specify that coverage would be terminated for undiscovered disability claims for injuries that occurred during employment after employment ceases.
“It’s one of the few times the Court of Appeal has overturned a lower court decision on this contractual interpretation issue,” says David Preszler, a personal injury lawyer and partner at Preszler Law Firm LLP in Toronto, who did not act in the case.
“They gave a broad, liberal sort of read to the policy. They were looking for exclusionary language and they didn’t find any. That’s my view on how they were able to overturn it.”
To leave him without any kind of coverage “would be contrary to the very purpose of disability insurance and the plain meaning of the coverage provision,” wrote MacFarland.
The appeal court came to a similar conclusion on the timeliness of the proof of claim, in which the court found to be about 10 days after the allowed 90-day contractual period.
“It would be most unfair, in my view, to permit the imperfect compliance with the 90-day contractual period to defeat the appellant’s claim in the particular circumstances of this case,” the justice wrote.
The third issue was the one-year limitation period set out in the policy. In the unanimous decision, the appeal court panel relied upon the two years allowed through the Limitations Act and found the plaintiff’s action was commenced within two years of the time that he realized his brain injury would prevent him from working in the future.
The appeal court found nothing in the contract specifically stating that coverage wouldn’t be provided if the insured person was no longer working with the company through which he had purchased the plan. If the plan stated that the claim could only go ahead during the period of employment with that particular company even if the injury wasn’t discovered until later, Preszler says, the appeal decision may have been different.
Insurance defence lawyer Lisa Armstrong, a partner with Strigberger Brown Armstrong LLP, points out that while motor vehicle insurance contracts are generally standard, contracts for long-term disability insurance vary. So, the wording of the contract became a major focus of the appeal court.
But, from her perspective, Armstrong says, she is concerned with how the court determined that he hadn’t run out of time in applying for benefits.
“It definitely went beyond what employers and insurers understood they were insuring, which is difficult. They’ve written the premium based on what they understood the coverage to be,” she says, and that is that, once the person left employment, their exposure ended.
“I think they need to look carefully at the language of their contract. The case certainly seems to support the position that it’s the employment status at the time of the injury or illness, when the injury or illness occurs, not the employment status at the time the claim was made that will be relevant assuming the contract has similar language to this one.”
Waterloo disability and personal injury lawyer Robert Deutschmann says the employer dropped the ball in this situation as a star employee injured himself on a work excursion to Costa Rica. Suddenly, his performance drops and the employer doesn’t intervene or extend help.
He says most people don’t read their disability policy booklet. They know they have coverage, but they likely know little else, such as its definition and when it applies.
MacIvor presented a unique fact situation. Deutschmann says he expects that insurance companies will review their policies and perhaps re-write them so they won’t be obliged to pay out should a similar situation present itself.
Preszler, too, says he expects insurance companies will take heed of this decision.
“When you get a decision like this, all the insurance companies scramble to modify all of their policies,” he says.
“I can guarantee you next year, 2019, all the insurance companies, when they renew their policies, they’re going to have new language.”
Preszler says this will make it more difficult for cases such as MacIvor to be successful in the future.
In the interim, he says, this decision will be helpful for existing claims where there are previously undiscovered injuries.
“This is the leading case now to argue discoverability in this context,” he says.
Waterloo insurance defence lawyer James Prior, a partner with Miller Thomson LLP, says the importance the court placed on when the plaintiff discovered his injuries in MacIvor is particularly noteworthy.
“It’s another case which tells us that the cause of action doesn’t necessarily run from the date the injury occurs,” he says. “It can be extended through the principals of discoverability to the day on which the claimant can be said to have realized the severity of their injuries.”
Deutschmann says there’s a lesson for lawyers here.
“The case demonstrates it’s worthwhile for them to review the fact situation, read the contract and see how it applies to facts to see if there might be something there for the client,” he says.
“Some may have dismissed MacIvor’s queries if they simply looked at the work dates and the delay in time before he sought coverage. I think what this identifies is that there may be potentially other claims that get missed when lawyers don’t do their jobs in the early stages.”
Deutschmann says the way the case was pieced together was “impressive.”
“The nice thing about this case is it’s contractual [and focused on] ‘What do the words say, what do the words mean?’ The lawyers took the time to review all of that and understand what the contract said,” he says.
