Industrial Alliance Insurance and Financial Services Inc. v
Brine2014 NSSC 219
This recent judgment holds the long-term disability insurer
Industrial Alliance Insurance and Financial Services Inc.
("Industrial") to account for years of unfair treatment
of its insured, Bruce Brine. The court ordered Industrial to pay
$500,000 in punitive damages,
$150,000 in aggravated damages,
$62,036.81 for breach of contract, and
$30,000 for mental distress caused by breach of contract
Bruce Brine was a police officer insured under a long-term
disability policy issued by Industrial. In 1995, Brine made a claim
for disability benefits resulting from severe depression.
Industrial paid for Brine to attend rehabilitation services,
something not covered by the policy, but done at the discretion of
Industrial. Brine was eventually found to be totally disabled
within the terms of the policy.
In 1998, Industrial alleged that over a period of years Brine
had received undisclosed CPP and other disability benefits
resulting in a substantial overpayment of $99.506.49, and
immediately brought ongoing payments to $0. Industrial also halted
Brine's vocational rehabilitation services without explanation.
Brine filed for bankruptcy, and claimed that the $62,036.81 in
overpayments were wiped clean. Industrial disagreed. Brine's
benefits were not resumed until 2003.
These disputes brought Industrial and Brine before the
Industrial's actions were found to be in breach of contract
and in breach of its duty of utmost good faith to Brine for the
Industrial was not entitled to undertake a complete claw-back
of Brine's ongoing disability payments to offset overpayments,
but should have spread repayment in a prorated fashion over future
Industrial refused to acknowledge that Brine's 1999
bankruptcy wiped clean most of the overpayment which Industrial
relied upon in halting payments between 1998 and 2003.
At the outset of the Claim, Industrial's decision to offer
discretionary rehabilitation services meant that, once begun,
Industrial had an obligation to consider the impact of ending
services upon Brine.
Brine was forced to go to the Tax Court of Canada on several
occasions because Industrial persisted in treating his disability
benefits as taxable income, issuing T4 slips to Brine. This caused
Brine unreasonable hardship.
Industrial failed to disclose the results of an Independent
Medical Examination until the week before trial in an attempt to
obtain a better bargaining position.
The Court ordered Industrial to pay $62,000 to Brine for the
overpayment amount which was expunged by his 1999 Bankruptcy.
$30,000 was awarded for the mental distress Industrial caused Brine
by its breach of contract. $150,000 was awarded for aggravated
damages, and $500,000 in punitive damages was awarded by the Court
to reflect what it felt was an enormous violation of
Industrial's duty to act in good faith.
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