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LTD Benefits Claims Part Four: Reaffirming the Jurisprudence – A Refresher on Failed Rehabilitation Plans

This is part four in our series discussing Canadian caselaw on long term disability benefits. You can read part three here. This week we are discussing Kandaras v Sun Life Assurance Company of Canada, 2020 ONSC 3925. This case is typical of a failed rehabilitation plan claim and does not advance the jurisprudence in any material way.  It does however provide a useful summary of the proper juristic approach to an LTD claim.   

The Plaintiff was diagnosed with major depressive disorder with anxious features.  She took a medical leave from work at or around the time of her diagnosis.  Her disability insurer approved benefit coverage until she attempted a gradual return to work starting December 2015.  Claim denial came soon after the Plaintiff was moved up to four days of work per week and her treating psychiatrist had advised the insurer that she should be maintained at three-days per week after a worsening of her depressive disorder.  Despite the opinion of the treating physician, Sun Life terminated the Plaintiff’s benefits as of the date that the Plaintiff was originally scheduled for her return to full-time work.  

Like most disability insurance policies, the Plaintiff in this case was insured for disabilities rendering her unable to work her “own occupation” for a given time and then “any occupation” for any period thereafter. The “own occupation” period had passed by the time of trial and the Plaintiff was then within the “any occupation” period of her claim.  The Court considered whether the Plaintiff was disabled as per both definitions in keeping with the policy definitions and jurisprudence.  

With respect to the “own occupation” period, the Court found for the Plaintiff met the definition and was entitled to benefits.  With respect to the “any occupation” period, the Court found that the Plaintiff had maintained the capacity to work at 3 days per week since denial and that this meant that she did not meet the definition of disabled under the “any occupation” period.   In effect, the treating physician’s opinion was a double-edged sword.  The Court found that working at 3 days per week, in keeping with the treating physician’s report, was sufficient to meet the contractual requirement of “any occupation” comparable in status and reward to her occupation prior to her disability. The Court then set-off arrears against the monetary value of the retained capacity, regardless of whether she in fact worked at that capacity since denial.

With respect to aggravated damages, an award that seems to have become somewhat ubiquitous with LTD claims, the Court found several breaches of the insured’s good faith duty and awarded $10,000 for aggravated damages.  In short, the Court found that the insurer failed to approach the issue of the Plaintiff’s condition in an even-handed manner, including the fact that the insurer discontinued benefits when the only medical evidence it had was that the Plaintiff was unable to work more than three days a week.  The Court also criticized the insurer for maintaining its position despite no contrary medical opinion, and despite its ability to get such an opinion.  The Court also criticized the insurer for not having an open mind in reviewing additional medical evidence that had been provided by the Plaintiff. The Court was also critical of the insurer because the Plaintiff had agreed to participate in a gradual return to work program and the insurer used this against the Plaintiff in arguing that the part-time work constituted performing the essential tasks of her own occupation.

by Michael AA Shepherd