On April 8, 2013, The Globe and Mail reported on a ground-breaking recent decision in Saskatchewan where a judge awarded 3 million dollars in punitive damages against two insurance companies for failing to pay disability benefits to a 52 year old welder (Mr. Branco).
In that case, it was reported that the insurance companies denied the plaintiff long term disability benefits and made inappropriate demands in terms of retraining and steps that the plaintiff was required to take. It was reported that the insurers went to great lengths to thwart the plaintiff’s claim and convince him to accept low settlement offers.
The judge seemed to express the hope that this would send a chill through the insurance industry. The decision is almost certain to be appealed by the insurer and it will be interesting to see what the higher court does with the decision. The fact that the plaintiff will have to now wait even longer through an appeal for this to end is unfortunate – he has already spent ten years of his life in litigation.
Punitive damages are not awarded as compensation for any particular loss by the plaintiff; the damages can be awarded in cases that are deemed to have shown shocking and outrageous conduct and breaches of the duty of good faith that an insurer has towards its insureds.
The previous ceiling for punitive damages had been approximately one million dollars awarded to an Ontario plaintiff in the case of whiten and pilot. That case had been appealed all the way up to the Supreme Court of Canada (the highest court in Canada).
In the whiten and pilot case, the court did not say, with certainty, that one million dollars was the absolute ceiling, although that is how it has been interpreted by some people. That being said, an award of 3 million dollars is so far outside of the usual range that it would set a new standard if it was affirmed on appeal.
In my experience, disability insurers in Ontario seem to know that a great number of people will not appeal disability denials, and those who do will settle for lower amounts than what they are entitled to. The math still seems to work for the insurers statistically, even when they have to pay. A large punitive damage “stick” is something that, in my respectful opinion, the court needs, in order to deal with these very large and powerful corporations (in Ontario, we often find ourselves dealing with denials by insurers like Manulife, Desjardins, Great West Life and others). I often find myself shaking my head with anger when I hear the stories that my clients tell me about how their insurer denied their benefits (usually because the insurer says that they do not meet the “total disability” test) and how their life has been after that.
What makes the award in Branco very unusual is that the award was made by a judge, not a jury. Juries are known and recognized to be more prone to high awards that are outside of the usual scope when they are repulsed by an insurer’s conduct. It cannot be ignored that the decision was made by a learned judge
with years of legal knowledge and training. If nothing else, it is a reminder that Judges are not always the cold detached figures people make them out to be by some people – they are human beings with hearts beating inside of them and a sense of morality that can be outraged.
While it may not be obvious to those who do not deal with these cases often, the one word that best describes his Honour’s judgement is “courage”. This case may be picked apart by appeal courts, it will be attacked by defence lawyers and criticized in many boardrooms of billion dollar corporations as an inappropriate departure from the usual range. The Judge must have known that, must have known the criticism he would face but he did it anyway – which is something that he can always look back on and be proud of, and something that we all owe him a debt of gratitude for. He has reminded the insurers they do not tread unattended, there are rules and that our courts will safe-guard its people. We should all remember that an accident or a disability can happen to any one of us, and this plaintiff’s 10 years without income, without respect and with unreasonable treatment, ruining his life, could just as easily be any one of us – there but for the grace of god go I.