The Ontario Court of Appeal has overturned a $248,931 judgment against an employer that denied long-term disability benefits to an employee, citing the trial judge’s misinterpretation of eligibility requirements.
“The employee’s position was that he was on temporary medical leave, but he had been working until the day he left and the medical evidence clearly indicated that nothing prevented him from working before that,” says Justin Heimpel, a partner at Sorbara Schumacher McCann LLP who represented the employer, Stahle Construction Inc.
In January 2014, construction site supervisor Roberto Soave took a temporary leave of absence, saying he required surgery to deal with a hernia. About six weeks later and before the hernia operation had been scheduled, Soave suffered serious injuries in a car accident. He applied for long-term disability benefits from Great-West Life Assurance Co. (now known as Canada Life Assurance Co.) through Mercon Benefit Services, Stahle’s group benefits provider. The insurer denied his claim because he wasn’t working when the accident occurred.
Great-West Life relied on Mercon’s booklet, which described the LTD benefits and required that Soave be “actively at work” on the date his coverage started. While employees on a leave of absence were still eligible for benefits coverage generally if they continued to make contributions, the booklet stated those who were “on a leave of absence during which you become totally disabled” were ineligible for LTD benefits.
The trial judge treated Soave’s work interruption as a “temporary medical leave,” meaning he was still employed and eligible for LTD benefits when the accident occurred. As the injuries resulting from the accident rendered Soave permanently disabled, he was entitled to these benefits.
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Stahle appealed the decision. As the Court of Appeal saw it, the trial judge’s reasoning was “a fundamental misreading of the eligibility requirements” in Mercon’s booklet. “Specifically, while the trial judge found that Soave was on ‘a temporary medical leave,’ she did not consider whether his work was interrupted because he was on a leave of absence or because of disability and, more significantly, whether he met the eligibility requirements for long-term disability coverage,” stated the court.
“If she had properly interpreted the booklet, she would have concluded that Soave could only be entitled to long-term disability benefits if he was disabled within the meaning of the booklet 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.”
Therefore, these provisions didn’t “address a disability that commences after an employee stopped working,” but only a disability that caused the employee to stop working in the first instance.
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Natalie MacDonald, an employment lawyer at MacDonald & Associates LLP who wasn’t involved in the case, says the appeal court’s decision represents a “strict contractual reading” of Mercon’s booklet.
“The booklet was very specific in exempting LTD benefits from those benefits that were eligible for continued coverage where employment had been temporarily interrupted. But had Soave’s hernia condition rendered him disabled at the time of the accident, he may have qualified for LTD benefits.”
However, that determination couldn’t be made without further evidence as to Soave’s health status when he took his leave. Although the court allowed the appeal and reversed the judgment against the company, it remitted the case back to the trial judge to determine whether Soave was in fact disabled when he stopped working.
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