In a reminder about the importance of clarity in insurance clauses, the Alberta Court of Queen’s Bench has ruled in favour of a school teacher who sought long-term disability following her diagnosis with a brain tumour three days into her teaching contract despite a policy exclusion for pre-existing conditions.
The May 18 ruling is “the first Canadian case that has directly addressed how the words ‘for which’ in a pre-existing condition clause should be interpreted,” says Jeremy Taylor, a partner at Field LLP who represented the employee, Jenna Tyson. “While there are certainly other reported Canadian decisions interpreting exclusion clauses which use the phrase ‘for which,’ none of those cases really explain in any detail how those words impact on coverage.”
The case, Tyson v. Holloway, hinged on the Alberta School Employee Benefit Plan’s definition of a pre-existing condition.
Tyson, had been suffering from headaches, dizziness and nausea since July 1, 2012, but didn’t learn of the brain tumour until Sept. 13, 2012, as doctors initially suspected she was having migraines. Her official date of coverage under the plan was Sept. 10, 2012, after she started a full-time probationary teaching contract with the Calgary Board of Education on that day.
Treatments for the brain tumour continued until Dec. 31, 2013, with Tyson filing a total disability claim under the plan on Nov. 27, 2013, that sought coverage from the date of surgery and indefinitely onwards. The claim was denied on Dec. 16, 2013, as were subsequent appeals.
The Alberta School Employee Benefit Plan contended the earlier symptoms classified the brain tumour as a pre-existing condition. Tyson, however, argued that because previous medical consultations hadn’t revealed the brain tumour and she only learned of it after coverage had begun, it didn’t qualify as such.
“I would say it was easier [than the average case] because there was really no dispute about any of the background circumstances,” says Taylor. “It was really just an argument about how do you interpret this policy language.”
The relevant clause in the plan defined a pre-existing condition as follows: “Pre-existing Condition means an accidental injury or illness for which an Employee received medical attention, consultation, diagnosis, or treatment during the 12 months before the Employee became covered under This Plan.”
James Ludwar, an Alberta-based disability and injury lawyer, notes the phrasing is different from typical long-term disability clauses. “A lot of them that I tend to come across tend to have, ‘whether diagnosed or undiagnosed.’ So you know if you attend a doctor’s treatment or for complaints or symptoms, whether diagnosed or undiagnosed, that will trigger a pre-existing condition clause,” says Ludwar.
But the Alberta School Employee Benefit Plan argued that since Tyson had sought treatment for symptoms of her illness, it qualified as medical attention in the previous 12 months. Tyson disagreed, arguing that any consultations or attention she had received were general in nature and not specific to a suspected brain tumour.
“I am satisfied that the exclusion clause is ambiguous,” wrote Justice Robert Graesser in the decision. “It is capable of bearing the means ascribed to it by both the insured and the insurer. Both interpretations cannot stand.”
Standard insurance policy interpretation, he added, requires “the ambiguity to be resolved against the drafter of the policy.”
The court awarded Tyson full entitlement to her claim as well as costs of the court proceedings. Tyson is now a substitute teacher at various Calgary schools a couple days a week, according to Taylor.
Taylor suspects the Alberta School Employee Benefit Plan adjuster who rejected the initial claim may have not realized that “the way the clause is worded says that a pre-existing condition doesn’t just mean that you had the condition before, it means that you received treatment for the condition before the coverage.”
Ludwar, too, notes the plan sponsor was in a difficult position. “You’re not gonna get cases like this happening that often,” he says.
While the circumstances of the case were unique, Taylor says other plan sponsors can take some lessons from it. When it comes to the importance of wording, he notes that without an exact definition of a pre-existing condition, the issue comes down to what the policy says. They could, he says, deem that “a pre-existing condition includes any condition which manifested symptoms before the effective date of coverage.”
In addition, he says plan sponsors should be wary of possible ambiguity in claims and coverage. As the ruling illustrated, if there’s any ambiguity in the clause, the judge will often rule against the insurer.
“Look at the words and be conscious of the fact [that] if there’s any doubt, you’re probably going to lose,” says Taylor.