The Ontario Court of Appeal has ruled that an employee can access his former employer’s long term disability (LTD) coverage four years after a disabling injury, even though he resigned and was working for a different employer at the time he applied for benefits.
The case is MacIvor v Pitney Bowes, 2018 ONCA 381.
The facts of this important long term disability case are relatively straightforward, albeit somewhat unusual. Mr. MacIvor was an employee of Pitney Bowes and entitled to group benefits, including long term disability benefits provided by Manulife. He sustained a traumatic brain injury in 2005 and was off work for approximately four months. Mr. MacIvor was able to return to work, but his performance suffered and his employer reduced his responsibilities. He became more and more frustrated, and eventually resigned in 2008. He did not submit a long term disability claim while employed at Pitney Bowes.
Shortly after resigning, Mr. MacIvor secured similar employment with Samsung. He continued to struggle with the same performance issues, and was terminated in 2009.
Mr. MacIvor was told he could not submit a long term disability claim to Samsung’s insurer, because his disability arose while employed by Pitney Bowes. He therefore submitted a claim to Manulife, the group benefits insurer of his previous employer.
Manulife denied the claim on the basis that disability coverage only applied to Pitney Bowes employees, and Mr. MacIvor was not an employee at the time of application. It argued LTD coverage ends when employment ends, and relied on a provision in the policy that requires employees to be actively at work in order to be eligible for disability benefits. Manulife also took the position that the claim was filed late, and relied on a policy provision that states it is not required to pay claims that are submitted later than “within 90 days of the date benefits would begin”.
The trial judge agreed with Manulife’s position and dismissed the lawsuit.
Mr. MacIvor, however, successfully appealed. The Ontario Court of Appeal held that the disability arose while employed at Pitney Bowes and insured by Manulife, and that insurance coverage did not end when he quit his job in 2008. It noted there was no exclusion in the policy for “undiscovered disability claims” that arose while insured. In this case, the injury and disability arose while insured, so the actively at work exclusion did not apply. Rather, the policy covered undisclosed disability claims that arose during the employment. The court held:
The “Termination of Coverage” language relates to future claims, not claims that may have arisen during the course of the employee’s employment. In other words, if an employee’s claim arises as the result of an occurrence that takes place during their employment, the policy provides coverage. The additional words “unless continuation of coverage is provided under the Extension of Coverage provision” supports this conclusion.
Ontario’s top court further noted:
The Manulife 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. To so conclude would leave former employees, like the appellant, in the untenable position of having no disability coverage from either their former employer or any new employer. Such a result would be contrary to the very purpose of disability insurance and the plain meaning of the coverage provision.
Regarding Manulife’s late filing defence, the Court of Appeal held it would be unfair to defeat the claim because of “imperfect compliance” with the 90 day time limit, noting that Mr. MacIvor did not initially appreciate the significance of his injury:
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 appellant was injured during his employment when he was covered by a Long Term Disability policy, but did not appreciate the significance of his injury during his employment. The respondent has conceded the appellant’s total disability as of the date of the accident and that he enjoyed coverage under its policy at the time of his injury. The appellant left his employment sometime after he was injured but before he was aware of the extent of his injury.
This is an important long term disability case for a number of reasons:
- It confirms the legal principle that coverage provisions in an insurance policy are to be interpreted broadly, and exclusion clauses that may restrict coverage are to be interpreted narrowly
- Insurance companies may be required to pay claims even after employment has ended, so long as the claim arose while employed and insured
- Deadlines contained in the policy will not always be strictly enforced, especially where there is imperfect compliance and where it would be unfair to deny the claim on that basis alone
Michael Jordan is a Toronto LTD lawyer with offices in London and Ottawa, serving all of Ontario. Contact Michael for fast free advice regarding your disability claim.