In Greig v Desjardins Financial Security Life Assurance Company, the British Columbia Supreme Court recently chastised another long term disability (LTD) provider for wrongfully denying benefits to an injured employee.
Mr. Greig was employed by a B.C. school district and was represented by CUPE Local 382. He was covered by a collective agreement which provided for LTD coverage.
In January, 2014, Mr. Greig became injured. He was unable to return to work. He submitted an LTD claim to the insurer, Desjardins Financial Security Life Assurance Company. It accepted it.
He attended a work hardening program, but struggled. In October, 2014, the program provider issued a discharge report that suggested a graduated return to work, pain strategies and an exercise program.
In April, 2015, Desjardins terminated his coverage. It stated that it was awaiting a medical report from Mr. Greig. Upon receiving it, it would “review” his claim for further benefits.
The parties resolved the issue of his compensation entitlement under the Plan.
The issue before the court was whether, in addition to his benefits, Mr. Greig was entitled to additional damages for financial loss and mental distress as a result of the insurer’s mishandling of his claim.
The insurer had required Mr. Greig to provide objective proof of disability. This was not required by the Plan text.
Once Mr. Greig commenced litigation, Desjardins focused on defending itself in the litigation. It ignored the claim and abandoned any meaningful adjudication of it. The termination of Mr. Greig’s benefits catastrophically changed his and his wife’s financial situation. They could not pay their debts. The couple separated for a period of time.
The Court stated that:
- The contract of insurance between an insurer and its insured is one of utmost good faith. In every insurance contract, an insurer has an implied obligation to deal with claims by its insureds in good faith.
- The duty of good faith also requires an insurer to deal with its insured’s claim fairly. The duty to act fairly applies both to the manner in which the insurer investigates and assesses the claim and to the decision whether or not to pay the claim…. an insurer must assess the merits of the claim in a balanced and reasonable manner. It must not deny coverage or delay payment in order to take advantage of the insured’s economic vulnerability or to gain bargaining leverage in negotiating a settlement.
- The Court considered another case, Godwin v. Desjardins Financial Security Investments Inc. In that case, Desjardins failed to assess the claim in a fair and balanced manner. It repeatedly failed to analyze and weigh the evidence, applied tests for disability beyond those set out in the policy, and made findings that were not supported by the evidence. The court concluded that Desjardins breached its duty of good faith. Punitive damages, and special costs, were awarded.
Yet, in Mr. Greig’s case, the same insurer repeated this conduct.
Upon termination of Mr. Greig’s benefits, Desjardins had overwhelming evidence of mental issues. It failed to take any steps to acknowledge, support, or investigate these issues until late 2016. The insurer also improperly relied on the work hardening discharge report, even though no physician ever endorsed that plan.
Mr. Greig’s counsel’s requests, and letters providing additional medical information, went unanswered.
The court held that Desjardins’ failure to investigate the obvious mental health aspects of the plaintiff’s disability was an egregious breach of the duty of good faith it owed to Mr. Greig.
In the end, the court awarded Mr. Greig $50,000 in aggravated damages and another $200,000 in punitive damages.
The court is sending a strong message to insurers who fail to deal fairly and in good faith with injured people.
If you feel an insurer is mishandling your claim in this manner, be aware that this is not acceptable. Insurers have certain legal obligations, and insureds have certain rights.
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