Ontario Court of Appeal denies disability benefits to employee on leave when accident occurred

The Ontario Court of Appeal has denied disability benefits to a construction site supervisor who was on temporary leave when he was involved in a motor vehicle accident.

In Soave v. Stahle Construction Inc., 2023 ONCA 265, Stahle is a general contractor in the construction industry, and Roberto Soave worked as Stahle's construction site supervisor. Soave participated in Stahle's group benefits plan. Great West Life Insurance provides long-term disability benefits, and Mercon Benefits Services administers the benefits plans. Soave's entitlement to benefits, including long-term disability benefits, was described in a booklet prepared by Mercon.

In 2014, Soave stopped working because he required surgery to address a hernia condition. Stahle indicated in Soave's employment record that he was on temporary leave due to medical illness. Before Soave's hernia surgery, he was involved in a serious motor vehicle accident.

Stahle informed the insurer that the company no longer employed Soave, and consequently, he was not entitled to any medical benefits. Great West Life turned down Soave's application for long-term disability benefits since he was no longer "actively working" on the accident date.

Soave sued Stahle, claiming that he continued to be employed by the company and that the company improperly terminated his benefits. The trial judge found that Soave had taken a "temporary medical leave" and that Stahle still employed him at the time of his motor vehicle accident. The judge further ruled that Soave would have been entitled to long-term disability benefits and ordered Stahle to pay Soave general and special damages.

Stahle appealed, mainly arguing that the trial judge made an error in interpreting the Mercon booklet, which set out Soave's entitlement to long-term disability benefits. Stahle asserted that even if it still employed Soave after he stopped working, the trial judge failed to properly assess whether he met the eligibility requirements for receiving long-term disability benefits. The Ontario Court of Appeal agreed.

The Mercon Booklet

The Mercon Booklet explained how employees could remain eligible for benefits during a temporary interruption in their employment and stated the eligibility criteria for long-term disability benefits. The appeal court found that the trial judge made significant errors in understanding and applying these provisions.

Soave's benefit coverage required that he be "actively at work" when his coverage started. However, under certain circumstances, an employee whose employment was temporarily interrupted may continue to avail of benefits. Further, an employee is only eligible for long-term disability benefits following a qualifying period of 120 days of disability. At the end of this qualifying period, the employee has 180 days to provide notice of all long-term disability claims to Great West Life. The booklet also specified that an employee is not eligible for long-term disability benefits when on a leave of absence.

Palpable and overriding errors by the trial judge

The appeal court ruled that the trial judge made palpable and overriding errors in her interpretation of the eligibility requirements for long-term disability benefits. The court explained that when Soave stopped working on January 27, 2014, he was only entitled to benefits coverage if he met one of the exceptions for continued coverage described in the Mercon Booklet. He also had to meet the eligibility requirements for long-term disability benefits to trigger that coverage.

The appeal court noted that the trial judge found that Soave was on a "temporary medical leave." However, the judge did not consider whether his work was interrupted because he was on a leave of absence or because of disability and whether he met the eligibility requirements for long-term disability coverage. The court emphasized that if the judge correctly interpreted that Mercon Booklet, she would have concluded that Soave could only be entitled to long-term disability if he was disabled on the date he stopped working or became totally disabled during his leave of absence and his employer was required by legislation, regulation, or case law to pay benefits during that period.

The appeal court also said that the trial judge was wrong to focus on the Continuation of Coverage provisions in the Mercon Booklet because these provisions do not relate to disability coverage or a disability that starts after an employee has stopped working. They only address the eligibility for other health benefits coverages that already exist.

The court further pointed out that under the Leave of Absence provision, employees can continue their "benefits," except disability benefits, for up to six months. Similarly, the Disability provision addresses the continuation of an existing benefit. The appeal court said that the trial judge should have looked at the Mercon Booklet's provisions that deal with eligibility for long-term disability benefits instead of just looking at the continuation of coverage provisions to determine if Soave was entitled to such benefits. The court said that Soave would have been entitled to long-term disability benefits if he stopped working due to his disability.

The court said that the terms of Mercon Booklet clearly provide that Soave was only entitled to long-term disability benefits if he met the definition of disability when he stopped working and throughout a 120-day qualifying period. Alternatively, if Soave was not disabled on the date he stopped working, he may be entitled to long-term disability benefits if he became totally disabled during his leave of absence and his employer was required to pay benefits during that period, "as required by legislation, regulation or case law."

The court was satisfied that the trial judge committed an error in finding that Soave was entitled to long-term disability benefits without considering if he was disabled on the date he stopped working or whether there was a requirement in legislation, regulation or care law for making such a finding. The court ultimately granted Stahle's appeal.