This article appeared in Lawyers Daily.
The Ontario Court of Appeal has ruled that a plaintiff can still be entitled to long-term disability (LTD) benefits even though the plaintiff was no longer employed at the time the application was submitted.
In MacIvor v. Pitney Bowes Inc.  O.J. No. 2105, the plaintiff suffered a brain injury and severe back injury while attending a work event in Costa Rica. Following a four-month recovery, the plaintiff returned to work at Pitney Bowes.
Despite accommodations made by the employer, the plaintiff was not able to perform the duties of his job and quit.
He subsequently obtained new employment at Samsung.
Soon after his employment began with Samsung, he was told that he was not meeting the job demands. He was terminated from his employment at Samsung.
He asked HR at Samsung if could make an LTD claim and was told that he would have to make the claim under the policy that was in effect at the time the disability arose. His disability arose while he was employed with his previous employer, Pitney Bowes.
The plaintiff accordingly made a long-term disability claim with Manulife under the LTD policy he had with Pitney Bowes.
Manulife refused to extend coverage and the trial judge accepted the argument that Manulife advanced, namely that coverage under its policy only applies to employees during their employment — and not beyond it.
The trial judge found that the policy “states in clear terms that there is no coverage for persons who are not employed by Pitney Bowes.”
That decision was reversed on appeal, however. During the deliberation, three questions were explored:
- Was the appellant entitled to coverage under the Manulife policy?
- Did the appellant submit a proof of claim in a timely manner?
- Was the appellant barred from pursuing his claim due to the one-year limitation period stipulated in the insurance policy?
In reaching its decision, the Court of Appeal, in interpreting the provisions of the policy, looked to the guiding principles from the Supreme Court of Canada in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co. 2 S.C.R. 23: the primary interpretive principle is that where the language of the insurance policy is unambiguous, effect should be given to the clear language, reading the contract as a whole.
The court concluded that coverage does not extend to the time when an employee begins work with another employer or retires. However, the “termination of coverage” only relates to future claims and not claims that may have arisen during the employee’s employment, such as the plaintiff’s disability while employed at Pitney Bowes.
The court looked to other language in the policy that supported this proposition, namely the language “‘unless continuation coverage is provided under the Extension of Coverage provision,’” as well as the following provision: “‘TOTAL DISABILITY BENEFITS: A Monthly Benefit will be paid if you become Totally Disabled while covered under the Long Term Disability Coverage and are under the continuing care of a physician.’”
The court found that ‟the policy does not contain the type of exclusionary language that terminates coverage for undiscovered disability claims the employee had and that originated during their employment, when their employment ceases.”
As for the second question, despite the plaintiff filing a proof of claim later than the 90-day contractual period, the court found that it would be unfair to allow “imperfect compliance” to defeat the claim, considering the particular circumstances of the case. In computing the time, the court found that the plaintiff was approximately 10 days over the 90-day notice period.
Lastly, the court rejected the respondent’s argument for the enforceability of the one-year limitation period outlined in the contract.
In the end, just because a person is no longer employed with a company doesn’t mean that he or she has no coverage under that employer’s disability policy.
While these types of cases are generally uncommon, they do exist and employers and insurers need to be aware of disability coverage under the circumstances.
Moreover, plaintiff lawyers need to fully understand the nature of their client’s disability and when the disability arose to ensure they are either making a claim under the relevant policy or finding coverage for clients when they thought it otherwise did not exist.
For more information or to speak about a denial of short- or long-term disability benefits, please contact Brad Moscato, Past Chair of the LTD Section, Ontario Trial Lawyers Association, at 416-646-7655 or firstname.lastname@example.org.