Does Long-Term Disability Insurance Protect Me After I am Forced to Leave My Job?

Many Ontarians have long-term disability insurance through their employers. Such policies provide income replacement if the employee is unable to return to work after other short-term disability benefits expire. In some situations, an employee may not immediately recognize to apply for long-term disability. For instance, if the employee suffered a traumatic brain injury, the more severe symptoms — that is to say, the ones that might permanently restrict or prevent an employee from working in the future — may not manifest themselves for several weeks, months, or even years.

Unfortunately, in these type of situations, the insurer may attempt to deny coverage on the grounds that the employee’s claim is untimely. In some cases, the employee may no longer be working for the employer who holds the policy, which will only further muddy the waters as to coverage. By their nature, insurance contracts are complex documents that are not written for the layperson’s understanding. That is why it is important to consult with an experienced Toronto long-term disability lawyer if you find yourself in a dispute over the proper interpretation of an insurance policy.

MacIvor v. Pitney Bowes​: Insurer Denies Coverage for Employee Who Failed to Discover Traumatic Brain Injury Before Switching Jobs

Consider this recent decision by the Court of Appeal for Ontario in a long-term disability case involving a man who switched employers after sustaining a traumatic brain injury. The plaintiff worked for a well-established global technology company in Ontario. During the term of the plaintiff’s employment, the employer held a long-term disability policy. The insurance company is the defendant in this action.

The plaintiff was originally injured in 2005 while on an employer-sponsored trip to Costa Rica. At that time, the plaintiff did not know that he had, in fact, suffered a traumatic brain injury. Nevertheless, the plaintiff said he was a “different man” following the accident. He took off nearly four months from work, and even after he returned he faced numerous difficulties at work, according to court records. This led the employer to progressively reduce the plaintiff’s workload until the plaintiff eventually resigned from the company in August 2008, about three years after the accident.

A couple of days later, the plaintiff started a new job with a different technology company, but this position only lasted about a year. It was during his tenure with the second employer, however, that the plaintiff finally realized the full extent of his traumatic brain injury. When he asked the second employer about the possibility of applying for long-term disability benefits, the company replied that he would have to file a claim with the first employer’s insurer, since his injury occurred while he worked for them.

Of course, the first employer’s insurer — the defendant — denied it was liable for providing any coverage. This led to litigation before the Honourable Justice Pollak of the Ontario Superior Court of Justice, who first had to decide whether or not the disability policy covered the plaintiff after he left the company. The policy itself stated that coverage terminated on the earlier of the “day on which you cease to be Actively Employed” or the last day for which premiums were paid by the employer. So as the defendant saw matters, the plaintiff ceased to be covered in August 2008, when he stopped working for the first employer and started working for the second employer.

Justice Pollak largely agreed with the defendant’s arguments. She held that while the plaintiff could have made a claim for long-term disability benefits while he still worked for the original employer, once he left the company he was no longer covered by the policy. Since he was not covered, he obviously could not receive any benefits.

Court of Appeal: Insurer’s Position Places Employees in Legally “Untenable” Position

The plaintiff appealed Justice Pollak’s decision to the Court of Appeal. In a judgment issued on March 20 of this year, a three-judge panel allowed the appeal and reversed the trial court’s ruling. Writing for the Court of Appeal, Justice Jean L. MacFarland said the language of the insurance policy was clear, but not in the manner suggested by the defendant and Justice Pollak. While the policy did not cover the plaintiff for claims that might arise after he left his job with the first employer, the defendant was still liable for claims arising from events that occurred during his employment there.

As Justice MacFarland put it, the policy “does not contain the type of exclusionary language that terminates coverage for undiscovered disability claims the employee had and that originated during their employment, when their employment ceases.” To rule otherwise would put employees like the plaintiff in an “untenable” position. As noted above, the second employer was clearly not liable for a disability arising from an injury that occurred before the plaintiff’s employment. Therefore, allowing the first employer to avoid responsibility would leave the plaintiff without any disability coverage at all.

The Court of Appeal further rejected the insurance company’s alternative defence — that even if the plaintiff was still covered, he failed to file his claim within the one-year limitation period specified in the policy. Specifically, the policy stated that any “legal action for the recovery of any claim … must be brought within one year after filing written proof of loss.” The insurer maintained that although the plaintiff did file his lawsuit within one year of the denial of submitting his claim, he should have “brought his claim much earlier,” i.e., while he was still working for the first employer.

But as Justice MacFarland explained, the plaintiff did not realize the severity of his traumatic brain injury until he after he left the company. Once the plaintiff realized he had a potential claim for long-term disability benefits, he acted promptly as required by the policy. The Court of Appeal was therefore satisfied the plaintiff’s disability claim was not barred by any limitations period.

Do you need assistance from a Toronto disability lawyer?

Too many seriously injured Toronto-area workers are wrongfully denied disability benefits because they do not understand their rights under the law. If you or a family member is in such a position, you need to speak with a qualified long-term disability lawyer who can help you fight the insurance company. Contact Preszler Injury Lawyers today to schedule a free, no-obligation consultation.