The Court of Appeal for Ontario has upheld a significant award of punitive damages to SB, a former director at Humber River Hospital, from Blue Cross Life Insurance Company of Canada.
The decision highlighted a complex battle over long-term disability benefits following her stroke in 2013.
Editor’s note: HR Law Canada previously covered this case via a press release issued by Thomson Rogers, who represented SB. Here, we break down the full ruling from the court.
At the heart of the case was the definition of “total disability” under Blue Cross’ policy, crucial for SB to access long-term disability benefits. Initially receiving short-term benefits, SB faced repeated discontinuations and reinstatements of her benefits, leading to a strenuous legal battle.
Her case centered on two critical policy definitions — “own occupation” and “any occupation” — determining her eligibility for benefits.
Despite being paid two years of long-term “own occupation” benefits, Blue Cross halted and subsequently denied her “any occupation” benefits. This prompted her to file a lawsuit seeking these benefits, along with aggravated and punitive damages. The trial, lasting 22 days, concluded with a jury verdict in SB’s favour, awarding her more than $1.7 million in retroactive benefits, mental distress damages, and a striking $1.5 million in punitive damages.
Blue Cross challenged only the punitive damages and the cost award. The court dismissed the punitive damages appeal, referencing evidence suggesting Blue Cross’s reckless indifference or possibly deliberate strategy in denying her benefits. The insurer’s decision to call only the final appeals specialist as a witness, who could not clarify actions of her predecessors, was noted as a significant strategic misstep.
In the matter of costs, the appeal was granted, but the court upheld the trial judge’s award. The trial judge had awarded full indemnity costs to SB, justified by Blue Cross’ misconduct and SB’s reasonable settlement offer, which was declined by Blue Cross.
The settlement offer made by SB provided for payment of benefits owing up to Oct. 1, 2018, in the total amount of $86,131.17 and a monthly payment of $4,495 in benefits, less applicable collateral and/or CPP disability benefits. Counsel for Blue Cross argued it was unclear whether that offer was more advantageous to his client than the judgement, given that the payment of benefits under the offer is indeterminate.
The court disagreed.
“It is hard to imagine a scenario where the proposed settlement would be more costly than what was awarded against Blue Cross at trial,” it said. ” The combination of Blue Cross’ conduct and its decision to turn down a generous offer to settle justifies an award of full indemnity costs.”
For more information, see Baker v. Blue Cross Life Insurance Company of Canada, 2023 ONCA 842 (CanLII).
