Insurance - Long-Term Disability (LTD). Baker v. Blue Cross Life Insurance Company of Canada
In Baker v. Blue Cross Life Insurance Company of Canada (Ont CA, 2023) the Court of Appeal illustrates in these quotes the typical long-term disability contractual and entitlement structure, and the difficulty of advanced litigation when benefits are denied:
 The respondent, Sara Baker, suffered a stroke while exercising in October 2013. At the time of the incident, she was 38 years old and was the Director of Food Services, Environmental, and Porter or Transport Services at Humber River Hospital as an employee of Compass Group Canada. Ms. Baker had a disability insurance policy through her employer. The appellant, Blue Cross Life Insurance Company of Canada (“Blue Cross”), is the insurer under that policy.. Soave v. Stahle Construction Inc.
 After the incident, Ms. Baker was paid short-term disability benefits until January 2014, when she was cut off by Blue Cross. After an internal appeal, Blue Cross reinstated the benefits on March 7, 2014. After 30 weeks, when her eligibility for short-term disability benefits had elapsed, Ms. Baker sought long-term disability benefits.
 In order to obtain long-term disability benefits under Blue Cross’ policy, an insured had to demonstrate that they satisfied the definition of “total disability.” The policy had two provisions defining “total disability.” The first was the “own occupation” provision, which applied for the first two years of receipt of long-term disability benefits. This provision defined “total disability” as “the complete and continuous inability of the Covered Employee to perform the regular duties of his own occupation as a result of illness or injury.”
 After that, the second applicable provision was the “any occupation” provision, which defined a “total disability” as a:
state of continuous incapacity, resulting from illness or injury, which wholly prevents the Covered Employee from performing the regular duties of any occupation for which he: Ms. Baker was paid two years of long-term “own occupation” benefits. During this period, Blue Cross stopped the payment of long-term disability benefits in August 2015 and reinstated it on March 23, 2016, after Ms. Baker went through an internal appeal. Ms. Baker was then denied long-term “any occupation” benefits. She participated in two levels of internal appeals of the decision but was unsuccessful in obtaining these benefits.
. would earn 60% or more of his Pre-disability Earnings and
. is reasonably qualified, or may so become, by training, education, or experience.
 Having exhausted Blue Cross’ appeal process, Ms. Baker commenced this action for “any occupation” benefits, along with aggravated and punitive damages. Blue Cross served a jury notice and successfully resisted a motion to strike it due to the COVID-19 pandemic. The trial took 22 days, and the jury returned a verdict in favour of Ms. Baker as follows: (a) a declaration that she was totally disabled within the meaning of Blue Cross’ long-term disability benefits policy; (b) retroactive benefits to the date of the trial in the amount of $220,604.00; (c) aggravated damages for mental distress of $40,000; and (d) punitive damages in the sum of $1,500,000.00.
In Soave v. Stahle Construction Inc. (Ont CA, 2023) the Court of Appeal considered a group long-term disability (LTD) situation. The case is useful for setting out typical terms and arrangements of such group insurance contracts:
 As one of the terms of his employment contract, Mr. Soave was required to participate in Stahle’s group benefits plan. Great West Life Insurance was the provider of long-term disability benefits. Mercon Benefits Services (“Mercon”) was the administrator of the benefits plan. Mr. Soave’s entitlement to benefits, including long-term disability benefits provided by Great West Life, were described in a booklet prepared by Mercon (the “Mercon Booklet”). Stahle and Mr. Soave were each to contribute 50 percent to the premiums for the benefits plan.
 The Mercon Booklet addressed the circumstances under which an employee whose employment was temporarily interrupted could continue to be eligible for benefits. In addition, the Mercon Booklet set out the specific eligibility requirements for long-term disability benefits. In our view, the trial judge made palpable and overriding errors in her interpretation and application of these provisions.
 In addressing this issue, we start with a review of the relevant provisions in the Mercon Booklet, followed by a discussion of the trial judge’s errors in interpreting and applying those provisions in this case.
Eligibility for long-term disability benefits under the Mercon Booklet
 Under the terms of the Mercon Booklet, Mr. Soave’s benefit coverage only started after the end of any waiting period imposed by Stahle and required that he be “actively at work” on the date his coverage started:
Coverage Effective Dates The Mercon Benefit Booklet then addressed the circumstances under which coverage for an employee whose employment is temporarily interrupted is eligible for continued coverage. This includes circumstances where the employee is on a leave of absence or disabled. But these terms are qualified as follows:
Coverage for you and your dependents starts on the effective date of your employer joining the plan, or on the date that any waiting period ends, provided that you are actively at work on that date. [Emphasis added.]
Continuation of Coverage The Mercon Booklet also sets out the eligibility requirements that apply specifically to long-term disability benefits.
If your employment is temporarily interrupted, under the following circumstances, your benefit coverage may be continued on a contribution basis. Please contact Mercon Benefit Services regarding the continuation of your benefits during any of the following periods of leave.
Leave of Absence: You may continue your benefits under this plan, with the exception of disability benefits, for up to six months during a leave of absence elected by you with your employer’s agreement. Prior to beginning the leave, you and your employer must agree to the scheduled start and finish dates.
Disability: You may continue your benefits while you are unable to work due to disability for up to 24 months from the date you become disabled. To be eligible for the continuation of benefits, you must either be in receipt of Workers’ Compensation or Long Term Disability benefits, or be approved for waiver of premium under the Employee Life Insurance benefit. [Emphasis added.]
 An employee is only eligible for long-term disability benefits following a qualifying period of 120 days of disability. At the end of this qualifying period, the employee has 180 days to provide notice of all long-term disability claims to Great West Life.
 The Mercon Booklet defines “disability” as follows:
In order to be considered disabled, you must be unable to perform the essential duties of your own occupation during the Qualifying Period and during the first two years immediately following the Qualifying Period. Thereafter, you will be considered to be disabled if you are unable to perform the essential duties of: The Mercon Booklet also specifies that an employee is not eligible to receive long-term disability benefits during a period when an employee is on a leave of absence:
. any occupation for which you are qualified or may reasonably become qualified, by training, education or experience;
. any occupation for which you are receiving an income that is equal to or greater than the amount of monthly disability benefit payable under this provision, adjusted annually by the Consumer Price Index.
You are not eligible to receive LTD benefits during any period that you are:
on a leave of absence during which you become totally disabled, unless your employer is required to pay benefits during this period as required by legislation, regulation or case law.