Fernandes v. Penncorp Life Insurance Company, 2014 ONCA
Avelino Fernandes owned a brick laying business. As he was not
able to receive EI or Worker's Compensation benefits, Fernandes
bought himself disability insurance from Penncorp Life Insurance
In 2004, Fernandes was injured after he fell from scaffolding.
He began receiving disability benefits from Penncorp and attended
physiotherapy. His doctor said his recovery was slow, but believed
he could return to work in the future.
In the meantime, Penncorp sent him for two medical examinations;
both reports said Fernandes should not return to work. In the face
of those contradicting medical opinions, Penncorp conducted three
days of surveillance on Fernandes in August 2005 which showed him
shoveling and wheeling around a wheelbarrow in his backyard for
approximately an hour-and-a-half. After receiving this
surveillance, Penncorp immediately discontinued benefits despite
having medical evidence that Fernandes was completely disabled.
Fernandes continued to attend medical examinations. Further
surveillance was conducted, with no conclusive results. However,
Penncorp refused to reinstate benefits.
Fernandes eventually sued Penncorp for over $1,000,000,
including damages for mental distress and punitive damages. The
trial judge found that the August 2005 surveillance of Fernandes
did not establish that he was able to work. Instead, the trial
judge stated that there was never any doubt that Fernandes was
disabled from performing any of the important daily duties
pertaining to his work as a brick layer. The trial judge awarded
Fernandes $236,733 for breach of contract, $100,000 for mental
distress, and $200,000 in punitive damages.
Penncorp appealed the punitive damages and mental distress
awards stating they were excessive. The Court of Appeal panel
upheld the $200,000 punitive damages award saying that the trial
judge's factual findings, especially regarding Penncorp's
over-reliance on surveillance, were correct. The mental distress
award was considered excessive and reduced to $25,000.
In the end, Penncorp was stuck paying an extra $225,000 to
Fernandes because it did not properly weigh the value of its
surveillance footage against the medical evidence it received.
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