MacIvor v. Pitney Bowes
The circumstances under which a former employee could still make a long-term disability claim after leaving his or her position have not always been well defined. Specifically, whether an employee who was injured while under the policy, but only discovered the long-term effects of that injury after leaving that position, would still be able to claim LTD benefits has been unclear. The Ontario Court of Appeal provided some guidance for this in its 2018 decision, MacIvor v. Pitney Bowes.
Lenard MacIvor began his employment at Pitney Bowes in 1996 and rose through the ranks, from Junior Sales Representative to Division Sales Vice President, until April 16, 2005, when he suffered a traumatic brain injury and severe back injury at a company-sponsored event in Costa Rica. He was off work for four months following his injury and struggled immensely upon returning. His responsibilities were continuously reduced until he resigned in frustration on August 11, 2008. Just days after, he began employment in a similar role at Samsung, but his difficulties continued and he was ultimately terminated by Samsung in August 2009.
The facts show that MacIvor was unaware of the seriousness of his brain injury for a very long time and believed he would recover fully throughout this period. It was not until his discussions with personnel at Samsung in August 2009 that he became fully aware of the severity of his injury. On September 9, 2010 he applied for LTD benefits from the Manulife Policy he was under while working at Pitney Bowes and provided proof of claim. The application was denied on November 1, 2010. On April 11, 2011 MacIvor began his proceeding against Manulife.
At trial, Manulife argued that “[h]e had access to [Long Term Disability] benefits if he applied while he was employed and, therefore, covered. Once he was outside of this coverage and/or failed to meet the Policy’s terms, he no longer had entitlement to claim”; and that “[t]he policy indicates that coverage ends when employment ends.” The trial judge accepted this argument and denied MacIvor access to Long Term Disability benefits.
The Court of Appeal addressed three main issues. Firstly,
is whether the appellant is entitled to coverage as a former employee of Pitney Bowes under the Manulife Policy. Secondly, whether the appellant submitted a timely proof of claim, and thirdly, whether the one-year contractual limitation in the policy prevents MacIvor from bringing a claim.
With respect to the first issue, the Supreme Court decision in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co. was cited for its summary of governing principles of interpretation applicable to insurance policies. Ledcor states,
“primary interpretive principle is that where the language of the insurance policy is unambiguous, effect should be given to that clear language, reading the contract as a whole.”
It further states that the interpretation
“should not give rise to results that are unrealistic or that the parties would not have contemplated in the commercial atmosphere in which the insurance policy was contracted”
The Manulife policy did not have specific exclusionary language that would terminate coverage for a former employee whose previously undiscovered disability claim originated during the course of employment. To conclude that MacIvor was not covered would have left former employees in a position where they have no disability coverage, which would be contrary to the purpose of the policy. Since ambiguity still remained, the court interpreted the policy very broadly and ruled that MacIvor was entitled to coverage as a former employee.
Regarding the second issue reviewed by the court, the facts show that the proof of claim was filed roughly 10 days after the 90-day period specified in the policy had passed. Interestingly, the court did not allow imperfect compliance with the 90-day contractual period to defeat the appellant’s claim. Because MacIvor did not fully appreciate the significance of his injury during his employment, the judge granted relief from forfeiture pursuant to the provisions of the Insurance Act, R.S.O. 1990, c. I.8, or the Courts of Justice Act, R.S.O. 1990, c. C.43. This relief was granted despite the fact it was not raised at trial.
Finally, the Court of Appeal upheld its prior decision in Kassburg v. Sun Life Assurance Company of Canada, 2014 ONCA 922, 124 O.R. (3d) 171 with respect to the contractual one-year limitation period in the policy. Kassburg says that LTD contracts are not “business agreements” and therefore cannot qualify for the exemption contained in the Limitations Act, 2002. The statutory limitation period of two years was instead favoured.
While at first blush, a disabled applicant may want to look to the current employer’s disability policy for coverage, this case adds a level of complication in that you may have to apply under a previous employer’s contract.