Injured former employee successful in long term disability claim two years after termination
Employers should be aware that termination of employment does not necessarily mean an employee will be barred in all cases from making a long-term disability (LTD) claim for injuries that occurred while they were employed, even if the policy is designed to foreclose the possibility. The recent Ontario Court of Appeal decision in MacIvor v Pitney Bowes provides an interesting insight into this possibility. In MacIvor, the employee was successful in an LTD claim submitted two years after resigning, and five years after the injury itself.
Mr. MacIvor was severely injured in 2005 while attending an event sponsored by his employer in Costa Rica. He was off work for 4 months due to a significant back injury and a traumatic brain injury. In hindsight, while the focus during his recovery was on his back issues, it was the extent of his brain injury that would have greater bearing on his life. Upon his return to work, he struggled to perform at the same level as he had prior to his injury. His employer modified his work duties but he continued to struggle and, three years after incurring his injuries, he resigned. He quickly found similar employment with another company but performance issues related to his brain injury continued and he was terminated by his new employer within a year. He was refused LTD coverage under his new employer’s policy, as the injury occurred prior to his employment.
Eventually, two years after terminating his employment with his first employer, Mr. MacIvor filed a claim under his former employer’s LTD policy (the “LTD Policy”). The insurer denied the claim and Mr. MacIvor commenced an action against them and his former employer.
At trial, the parties submitted an agreed statement of facts, concurring that Mr. MacIvor was totally disabled from the time of the initial injury. The medical evidence would demonstrate that the severity and the permanent nature of Mr. MacIvor’s brain injury was not originally apparent.
The trial judge dismissed Mr. MacIvor’s claim for coverage, finding that that he did not qualify for benefits due to the “Termination of Coverage” language in the LTD Policy. The trial judge held this language provided that there was no coverage for persons who were not employed by the employer. Consequently, Mr. MacIvor could not make a successful claim because he had quit his job and was no longer an employee, and so he was no longer covered by the LTD Policy.
Mr. MacIvor appealed to the Ontario Court of Appeal, with the main issue being whether Mr. MacIvor, as a former employee, was entitled to coverage under the LTD Policy?
The Appeal Court reversed the trial decision, finding that the LTD Policy, when considered in totality, covered claims that arise during the course of an employee’s employment. This included, as in this case, when an employee does not discover the claim, or the severity of their injury, for some time afterwards.
The “Termination of Coverage” language in the LTD Policy is intended to bar future claims arising subsequent to terminating employment, not claims that may have arisen during the course of the employee’s employment. Consequently, as in this case, where an employee’s claim arises as the result of an injury or medical condition that occurred during the employee’s employment, the LTD Policy provides coverage.
In rejecting the lower court’s decision that coverage ended when Mr. MacIvor resigned, the Appeal Court held that the termination provisions did not exclude coverage for undiscovered disability claims that originated during the employee’s employment stating:
To so conclude would leave former employees in an untenable position of having no disability coverage from either their former or new employer. Such a result would be contrary to the very purpose of the disability insurance and the plain meaning of the coverage provision.
The Appeal Court also considered claims that Mr. MacIvor did not meet the deadlines for submitting a claim and proof of claim under the LTD Policy. The Appeal Court did not apply these deadlines, given that he did not appreciate the extent of his brain injuries for a significant amount of time.
While the fact scenario at issue in MacIvor is not a common one, employers and insurers should take note that terminating the employment relationship does not necessarily bar future LTD claims. A terminated employee could be successful in a claim for LTD coverage as a result of injuries that occurred while they were employed. Furthermore, a court may tend to interpret limitation periods and contractual deadlines generously towards an employee who is genuinely injured and is seen to be acting in good faith. LTD insurers and employers should ensure that all aspects of an employee’s injuries are considered, including potential future claims.