The recent British Columbia Supreme Court decision in
Feldstein v. 364 Northern Corporation1 provides
a useful reminder to employers that the consequences of providing
incorrect or incomplete information about group insurance benefits
to employees or prospective employees can be costly.
The Plaintiff, Mr. F, developed cystic fibrosis at the age of 9.
F worked as a software engineer for MacDonald, Dettwiler
("MDA") for 6 years and was insured under a group long
term disability policy. Mr. F was not required to undergo any
medical examination or fill out a health questionnaire to qualify
for the group coverage. Instead, qualification was automatic
following 6 months of employment.
Mr. F subsequently decided to apply for employment with the
defendant 364 Northern Development Corporation ("364").
Since Mr. F had a young family and a mortgage, life insurance and
long term disability coverage at least equivalent to what he
enjoyed at MDA were critical to him. Accordingly, Mr. F
specifically inquired about his eligibility under the 364 long term
disability plan. Mr. F. disclosed his cystic fibrosis health
condition and was provided with a benefits brochure from his
prospective employer, which made reference to providing "Proof
of Good Health" for the purposes of qualifying for LTD
coverage. He was told that proof of good health meant completing
the three month probationary period. He understood from this
response from 364 that there were no other requirements in order to
qualify for LTD coverage. This was consistent with his experience
Accordingly Mr. F. accepted the position with 364. Then
approximately 6 months later his health began to drastically
deteriorate such that he was required to apply for LTD coverage.
Upon application for LTD benefits the carrier, Sun Life, advised
that because Mr. F. had not completed a health questionnaire, that
his maximum monthly LTD benefit would be limited to $1000.
Mr. F sued 364 for misrepresentation. The trial judge accepted
that Mr. F. would not have accepted employment with 364 unless he
was certain that he would be entitled to LTD coverage equivalent to
what he had at MDA.
364's representation that Mr. F would automatically qualify
for LTD once he completed his 3 month probation period (and thereby
not advising Mr. F. that he was required to fill in a health
questionnaire) was found to be negligent. Mr. F was awarded an
amount equal to the amount that he would have received from Sun
Life (under the full coverage) for a period of 40 months (after
deduction for CPP benefits) and an award of $10,000 for aggravated
This decision of the BC Supreme Court demonstrates the
importance of providing full and correct information to prospective
employees about benefits coverage. The consequence of getting it
wrong may be that an employer in effect becomes responsible for
insurance benefits. Accordingly it is important that inquiries
about benefits be answered only by a representative of the employer
with expertise in benefits coverage or, better still, responded to
by the insurance provider.
1. 2016 BCSC 108 (BCSC, Power J.)
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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