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Desjardins Insurance slapped with punitive & aggravated damages due to finding of unfair handling of denial of Long Term Disability Benefits
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Desjardins Insurance slapped with punitive & aggravated damages due to finding of unfair handling of denial of Long Term Disability Benefits

On October 15, 2019 Madam Justice Young of the Supreme Court of British Columbia, issued her judgement in Greig v. Desjardins, awarding punitive damages of $200,000 and aggravated damages of $50,000 against Desjardins for its conduct in denying a claimant's long term disability benefits:

The case involved a claimant who had been denied Long Term Disability Benefits by Desjardins Insurance Company.   There were a number of interesting legal questions, but the discussion of punitive and aggravated damages was one of the most interesting to read about.  

The complaints in this case mirror a lot of the complaints that I hear about from people who I represent in Ontario who have had their long term disability benefits denied. 

 Some of the interesting quotes from the judgement on this issue: 

Improperly Required Objective Evidence of Physical Injury 

[152]     Both Ms. Yee and Mr. Baksh confirmed that they required objective evidence of disability. There is nothing in the Plan Text that creates this standard of proof. Mr. Baksh said there had to be a measure of objectivity in what a plaintiff is claiming. There has to be, he says, something more than the plaintiff saying they are disabled and seeing a physician.  

[153]     Complaints of depression are always subjective and there are rarely objective findings. 

[154]     Both Ms. Yee and Mr. Baksh improperly relied on the CBI work hardening program discharge report, which recommended a GRTW, even though they both acknowledge that no physician ever endorsed that plan.

Improper Focus on Secondary Gains 

[161]     It was unreasonable for Ms. Yee to rely on this unsupported allegation of lack of motivation when there is substantial evidence to contradict it.  Wrongfully Alleging That the Plaintiff Did Not Pursue Appropriate Treatment 

[162]     The evidence strongly supports the plaintiff’s assertion that he followed all the medical recommendations he received. He made his best effort in the work hardening program, including following the recommendation that he undertake self-management strategies for pain and an independent exercise program. He attended counselling and took his medication and remained under the care of his family physician. 

 Failure to Take Basic Mandatory Steps in Adjudicating Mr. Greig’s Eligibility for LTD Benefits 

[166]     Both Ms. Yee and Mr. Baksh confirmed that they had a duty to adjudicate Mr. Greig’s claim, yet they failed to adjudicate upon or even acknowledge the plaintiff’s medical appeal. They failed to take investigative steps in relation to his benefits, such as seeking a medical examination.  

 [167]     On examination for discovery, Mr. Baksh was asked whether it was Desjardins’ position that, as soon as litigation is commenced, the ordinary acceptable reasonable timeline for adjudicating claims and/or appeals may be abandoned. He answered no. He was then asked if there was a policy that indicates that, if a plaintiff commences a Notice of Civil Claim, the accepted practices with respect to reasonable timeliness of appeals and adjudicating claims are abandoned. He answered certainly not. He said when an appeal is made, it is acknowledged, and if new medical information accompanies the appeal, it is looked at. 

 Conclusion on Liability 

[172]     For the reasons set out above, I find there has been an egregious breach of the defendant’s duty of good faith to Mr. Greig. 

Conclusion on Aggravated Damages for Mental Distress 

[220]     I agree with the plaintiff that he suffered damages and humiliation that were more severe than that of Ms. Godwin’s. 

[221]     However, not all of the plaintiff’s mental distress was caused by the termination of his benefits. Some of his mental distress was a result of his injuries and resultant physical and mental symptoms, rather than the defendant’s breach of contract.  

[222]     I award $50,000 in aggravated damages for the plaintiff’s mental distress. This award takes into account the fact that this plaintiff was already vulnerable because of his injuries.  

Conclusion on Punitive Damages 

[251]     I find the conduct of the defendant worse and the harm suffered by the plaintiff more severe than in Godwin. Mr. Greig was financially vulnerable and the defendant was aware of his predicament, yet continued to ignore incoming medical information and requests for appeal.  

 [252]     The plaintiff says that the punitive damages award should be comparable to the one made in Asselstine.  

 [253]     The plaintiff, with reference to Godwin, draws to the court’s attention that this is not the first time that this defendant has been found to have acted in bad faith for similar conduct. There is remarkable similarity between the defendant’s conduct in both of these cases. Successive transgressions give rise to higher punitive damage awards: Industrial Alliance Insurance and Financial Services Inc. v. Brine, 2015 NSCA 104 (CanLII) at paras. 223-224. 

[254]     I agree with the plaintiff’s submissions. I also follow the comments of Justice Saunders in the Godwin Special Costs Decision regarding Smithies Holdings and take into account the cost the plaintiff has incurred in pursuing this claim for punitive damages.  

[255]     After balancing everything, I find that an award of punitive damages in the amount of $200,000 is warranted.

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