Issues in Disability Insurance and

Employment Law

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First, a little case study…inexpensive surveillance

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Recurrent Disability

• June 30/10 A is hired to work for company B; Benefits under Policy with ABC Insurance

• December 16/11 Workplace injury; he applies to and receives WSIB payments

• January 21/12 MRI – diagnosed with avascular necrosis of both hips

• February 15, 2012 WSIB terminates benefits - illness not due to workplace injury

• March 1, 2012 ABC Insurance replaced by XYZ Insurance

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Recurrent Disability • Subject to certain conditions, limitations and exclusions, the Policy

provided for payment of long term disability benefits to Insured Employees who provide proof that they have become continuously “Totally Disabled” in accordance with the following Policy definition:

"Total Disability / Totally Disabled" means, during the Elimination Period and the subsequent Own Occupation Period as stated on the Schedule of Benefits for any Class with an Own Occupation Period, such a continuous state of incapacity resulting from Injury or Sickness that the Insured Employee will be completely unable to perform the essential duties of his own occupation. After the expiration of the Own Occupation Period, it will mean such a continuous state of incapacity resulting from Injury or Sickness that the Insured Employee is completely unable to engage in any gainful occupation or perform any work for remuneration or profit for which he is reasonably fitted by education, training or experience.

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Recurrent Disability • The Policy provides a definition of Employee that contains the

following condition:

“Employee” means a Resident who is directly and permanently employed on a full time basis by the Policyowner…..and ...is regularly scheduled to work a minimum of 30 hours per

week for at least 8 weeks in each calendar year quarter, and is employed on the Effective Date of this Policy…

• The Policy provides that Actively at Work is defined as:

“Actively at Work” will mean, any day an Employee is actively at work performing all the usual and customary duties of his job with the Policyowner for the scheduled number of hours for that day.

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Recurrent Disability • May 15/12 Return to work, modified duties; the return to work

included a significant amount of walking; he couldn’t do it

• August 1/12 Claimant’s Statement of Disability submitted to XYZ; last day worked September 24/12

• February 15/13 XYZ denies the claim on the basis that: The plaintiff returned to work on May 15, 2012 to modified duties and worked until September 24, 2012 at which time he went off again. He was not actively at work when the carrier changed. He returned to work for 132 days and then went off work again for the same condition that he had been off work originally. Therefore, the condition is a recurrent disability and the previous carrier should be paying.

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Recurrent Disability• ABC policy defines recurrent disability as follows:

Recurrent Disability Where an Employee becomes Totally Disabled again from the same or related causes as those for which premiums were waived under this Benefit and such Disability recurs within 6 months of cessation of the Waiver of Premiums, ABC Insurance will waive the qualifying period.All such recurrences will be considered a continuation of the same Disability. The Employee’s amount of insurance on which premiums were previously waived will be Reinstated.

• ABC denies coverage on the basis of late notice.

• The Plaintiff sues ABC, XYZ and the employer

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Pang v. Citadel General Plaintiff was insured under The Citadel General Assurance Company Group Policy

Plaintiff suffered an injury to his back in February of 1985 and subsequently received monthly indemnity benefits for Total Disability under the Citadel Policy.

• Part 4 of the Citadel Policy read as follows:

Recurrent Total DisabilityIf benefits for Total Disability become payable under Part 3 and if the Insured, while the Policy is in effect as to such Insured, suffers a recurrence of Total Disability for which benefits are otherwise payable under Part 3 from the same or related causes, the subsequent period of such Total Disability will be deemed a continuation of the prior period unless between such periods the Insured has performed the duties of his occupation on a full-time basis for a period of at least six consecutive months, in which event such subsequent period of disability shall be deemed a new period of disability and be subject to a new Elimination Period. [emphasis added]

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Pang v. Citadel General Between 1986 and 1995, Plaintiff submitted 11 claims to Citadel for Recurrent Total Disability. Each claim covered a 2 to 3 week period of disability.

The Group Policy was terminated on October 1, 1992. All claims were paid by Citadel until March of 1995.

Plaintiff submitted a further claim for the period from March 10 to 16, 1995. Citadel denied the claim on the basis that the Plaintiff was not Totally Disabled. Citadel denied all subsequent claims for Recurrent Total Disability submitted by the Plaintiff.

Mutual of Omaha had issued an Accident and Sickness Policy effective November 1, 1992. The Policy provided, among other things, for payment of a monthly accident and sickness benefit in the event that the Plaintiff became "Totally Disabled" as this term was defined in the Policy. The monthly benefit became payable after an elimination period of 30 days from the first day of Total Disability.

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Pang v. Citadel General Plaintiff submitted the claim to Mutual of Omaha, which denied on the basis that it was a recurrent disability and that Citadel was liable.

All of the Plaintiff’s claims for Recurrent Total Disability, both before and after the denial letter of May 1, 1995, were made on Citadel’s Claimant’s Statement forms and were submitted to Citadel for adjudication.

One Claimant’s Statement form dated July 21, 1993 was provided to Mutual of Omaha. Mutual of Omaha forwarded the Claimant’s Statement form to Citadel.

Citadel accepted and paid the claim on the basis of the Recurrent Total Disability provisions of the Citadel Policy.

The Mutual of Omaha Policy had an elimination period of 30 days. None of the Plaintiff’s claims involved periods of Total Disability that exceeded 30 days.

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Pang v. Citadel General

Pang brought an action against Citadel and Mutual of Omaha.

The action against Mutual of Omaha was settled after a pretrial. The insured had not satisfied the elimination period in the Policy. None of the claims was for a period of Total Disability that met the 30 day requirement.

The action against Citadel was heard over 9 days in 2001 and the judgment was issued one year after the last day of hearing.

Termination of Employment 101

Termination of Employment

• Relevant law: Contract Employment Standards Act (“ESA”) Common law

Termination of EmploymentEmployment Standards Act• Must give notice of termination or

pay in lieu thereof• Constructive dismissal• Notice period: 1 week for every year,

up to 8 weeks• No notice if an exception applies

(e.g. wilful misconduct, refusing reasonable alternative work, reaching retirement age)

Termination of EmploymentEmployment Standards Act• In addition to notice, severance of 1

week for every year employed is due if: Employed 5 or more years, and Employer has 50 or more employees or

payroll of $2.5 million or more• Further rights and obligations in

relation to termination in the ESA

Termination of EmploymentCommon Law• Notice or pay in lieu also due at

common law, unless contract says otherwise

• Typically much longer than ESA notice

• Length of notice is very fact-specific –factors include: Length of employment Nature of position Age Prospect of finding alternative work

Termination of EmploymentCommon Law• If there is just cause for termination,

no common law notice required• Just cause also context-dependent,

but may include absenteeism, dishonesty, theft and poor performance

• “Just cause” not necessarily same as “wilful misconduct, disobedience or wilful neglect of duty” under ESA

Recent Termination Cases

Betts v. IBM Canada Ltd.

• 15-year employee left work due to depression and anxiety

• Moved from province of employment (N.B.) to Ontario

• Repeatedly failed to submit proper medical information to apply for STD benefits

• Employer sent 5 letters with deadlines to submit information or return to work, failing which he was “considered to have voluntarily resigned”

• Employee claimed he was unable to return

Betts v. IBM Canada Ltd.

• Test for abandonment – high threshold Do the statements or actions of the employee,

viewed objectively by a reasonable person, clearly and unequivocally indicate an intention to no longer be bound by the employment contract?

• Decision 8 months away from job Employee understood STD requirements, but

failed to meet them Many warnings from employer Medical issues not a bar to abandonment Employee abandoned employment

Toronto v. Toronto Professional Fire Fighters’ Association• Firefighter of 2.5 years• Made series of sexist, misogynist, racist,

homophobic, etc. comments and jokes on Twitter

• Profile photo in firefighter gear• Featured in National Post article• Dismissed for reputational damage to

employer and violating policies

Toronto v. Toronto Professional Fire Fighters’ Association• Test re off-duty conduct – must be serious

Would reasonable and fair-minded person think continued employment so damages employer’s reputation as to render employment impossible or untenable?

Need not prove actual harm to reputation• Despite deleting account immediately,

apology letter and sensitivity training, just cause existed

• Nature of firefighting role was significant: “Members of the public must be able to trust their firefighters. They must have confidence that they will act professionally, interact with them appropriately, hold their interactions in confidence, and serve them and their loved ones with dignity.”

Steel v. Coast Capital Savings Credit Union• B.C. case regarding 21-year employee

dismissed for single incident• “Helpdesk Analyst” in bank’s IT

Department• Employee caught accessing manager’s file

to view her place on a list to obtain a parking space

Steel v. Coast Capital Savings Credit Union• Test re dismissal for misconduct – high

threshold Did employee’s dishonesty give rise to a

breakdown in the employment relationship? E.g. violating essential condition of employment, breaching faith inherent to work relationship, or acting fundamentally inconsistent with obligations to employer

• Decision “Position of great trust in an industry in which

trust is of central importance” Able to view confidential documents Protocol for viewing documents was violated Single incident constituted just cause for

dismissal

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Questions?

Thank You

Ava Kanner Kyle Gossen

Davies Howe Partners LLPwww.davieshowe.com