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Courts emphasize consequences for denying disability benefits to deserving employees
Denial of LTD benefits
The expansion of entitlements in the disability benefits area of employment law has been major as of late. It all started with Brito v. Canac Kitchens 2011 ONSC 1011 (CanLII), wherein the Plaintiff, a 34 year employee, had been laid off as a result of restructuring. He was provided with 8 weeks’ pay- the bare minimum- upon dismissal. Four months after he was laid off, the Plaintiff was diagnosed with cancer, and began treatment, which rendered him totally disabled. When the Plaintiff sued his employer for wrongful dismissal and long term disability benefits, he was awarded twenty two (22) months’ notice, $15,000.00 in ancillary damages, damages representing the value of disability benefits unpaid, and the continuation of long-term disability benefits until the age of 65. The ancillary damages were disregarded on appeal but the entitlement to notice and long-term disability benefits was upheld.
Then, in Fernandes v. Peel Educational, 2014 ONSC 6506 ( See more on this case at http://torontoemploymentlawyer.com/2015/01/top-five-employment-cases-2014/) the court held that an employee is entitled to disability benefits during a reasonable notice period, even if the benefits are not activated at the time of, or prior to, termination. The court in Fernandes emphasized that employers should be approaching termination situations with caution, especially in the event of a need for disability benefits. In Fernandes, Peel Educational ended up paying Fernandes’ LTD benefits until the age of 65. It had terminated him for cause, but the court found that Fernandes’ actions did not constitute cause in law, meaning that Peel Educational had wrongfully discontinued his coverage and now had to compensate him for doing so.
The eligibility for disability benefits throughout a reasonable notice period in wrongful dismissal matters was initially outlined in Egan v. Alcatel Canada Inc., O.J. No. 34, wherein the court stated that, “Where an employee would have otherwise have qualified for disability benefits during the reasonable notice period, but the application is denied on the basis that coverage was wrongfully discontinued by the employer, the employer must be liable for the value of the disability benefits that would otherwise have been payable.”
Disability entitlement is not always a clear “yes” or “no”. See our blog post on long term disability benefits.
In Industrial Alliance Insurance and Financial Services Inc. v. Brine, 2014 NSSC 219, the Defendant, a severely depressed police officer, went on disability leave and subsequently applied for LTD. He was successful in his application and received benefits from 1995-1998. In 1998, however, the insurance company took away his benefits, citing that there was an error with his CPP/pension offset, resulting in an overpayment, and the Defendant went into bankruptcy. Even after the bankruptcy was discharged, the insurance company continued to refuse the Defendant’s claim. There were also issues with the benefits being taxed. At trial, the Defendant was awarded $150,000 in aggravated damages, $500,000.00 in punitive damages, and $30,000 in mental distress damages. While the court did not order that benefits be continued until 65, it was only because at the time the judgment was made the Defendant was 65.
Based on these cases, it is clear that employees are eligible for disability benefits, whether terminated with or without cause, and whether the disability arises before or after the end of employment. A denial of these benefits, by employer or insurance company, can result in exposure to significant liability and even punitive damages.
Advice for Employers
Now more than ever, it’s important that you ensure that potentially disabled, or disabled employees receive disability benefits throughout the notice period. If you are unsure as to whether a termination without benefit continuation could lead to further liability down the road, it is important that you consult with an employment lawyer to determine the best course of action. Contact Monkhouse Law today for a free consultation.
Advice for Employees
If you have been wrongfully denied disability benefits by your insurance company, or by your employer, contact Monkhouse Law today to see if a legal remedy is available to you. As the cases outlined in this post show, disability entitlements are not always as simply as your employer or insurance company might have you believe. Call Monkhouse Law today for a free consultation.