Issues in Disability Insurance and Employment Law, presented by Davies Howe Partners LLP at a Beneplan HR workshop on December 1, 2015.

1. Issues in
Disability Insurance
and Employment Law

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First, a little case
study…inexpensive
surveillance

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9. Recurrent Disability
• June 30/10 A is hired to work for company B; Benefits under
Policy with ABC Insurance
• December 16/11 Workplace injury; he applies to and receives WSIB
payments
• January 21/12 MRI – diagnosed with avascular necrosis of both
hips
• February 15, 2012 WSIB terminates benefits - illness not due to
workplace injury
• March 1, 2012 ABC Insurance replaced by XYZ Insurance
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10. Recurrent Disability
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• Subject to certain conditions, limitations and exclusions, the Policy provided
for payment of long term disability benefits to Insured Employees who
provide proof that they have become continuously “Totally Disabled” in
accordance with the following Policy definition:
 "Total Disability / Totally Disabled" means, during the Elimination
Period and the subsequent Own Occupation Period as stated on the
Schedule of Benefits for any Class with an Own Occupation Period,
such a continuous state of incapacity resulting from Injury or Sickness
that the Insured Employee will be completely unable to perform the
essential duties of his own occupation. After the expiration of the Own
Occupation Period, it will mean such a continuous state of incapacity
resulting from Injury or Sickness that the Insured Employee is
completely unable to engage in any gainful occupation or perform any
work for remuneration or profit for which he is reasonably fitted by
education, training or experience.

11. Recurrent Disability
• The Policy provides a definition of Employee that contains the following
condition:
“Employee” means a Resident who is directly and permanently employed
on a full time basis by the Policyowner…..and
 ...is regularly scheduled to work a minimum of 30 hours per week for at
least 8 weeks in each calendar year quarter, and
 is employed on the Effective Date of this Policy…
• The Policy provides that Actively at Work is defined as:
 “Actively at Work” will mean, any day an Employee is actively at work
performing all the usual and customary duties of his job with the
Policyowner for the scheduled number of hours for that day.
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12. Recurrent Disability
• May 15/12 Return to work, modified duties; the return to work included a
significant amount of walking; he couldn’t do it
• August 1/12 Claimant’s Statement of Disability submitted to XYZ; last day
worked September 24/12
• February 15/13 XYZ denies the claim on the basis that:
The plaintiff returned to work on May 15, 2012 to modified
duties and worked until September 24, 2012 at which time he
went off again.
He was not actively at work when the carrier changed.
He returned to work for 132 days and then went off work
again for the same condition that he had been off work
originally. Therefore, the condition is a recurrent disability
and the previous carrier should be paying.
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13. Recurrent Disability
• ABC policy defines recurrent disability as follows:
Recurrent Disability
Where an Employee becomes Totally Disabled again from the same
or related causes as those for which premiums were waived under this
Benefit and such Disability recurs within 6 months of cessation of the
Waiver of Premiums, ABC Insurance will waive the qualifying period.
All such recurrences will be considered a continuation of the same
Disability. The Employee’s amount of insurance on which premiums
were previously waived will be Reinstated.
• ABC denies coverage on the basis of late notice.
• The Plaintiff sues ABC, XYZ and the employer
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14. Pang v. Citadel General
Plaintiff was insured under The Citadel General Assurance Company Group
Policy
Plaintiff suffered an injury to his back in February of 1985 and subsequently
received monthly indemnity benefits for Total Disability under the Citadel
Policy.
• Part 4 of the Citadel Policy read as follows:
Recurrent Total Disability
If benefits for Total Disability become payable under Part 3 and if the Insured, while
the Policy is in effect as to such Insured, suffers a recurrence of Total Disability for
which benefits are otherwise payable under Part 3 from the same or related causes,
the subsequent period of such Total Disability will be deemed a continuation of the
prior period unless between such periods the Insured has performed the duties of
his occupation on a full-time basis for a period of at least six consecutive months, in
which event such subsequent period of disability shall be deemed a new period of
disability and be subject to a new Elimination Period. [emphasis added]
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15. Pang v. Citadel General
Between 1986 and 1995, Plaintiff submitted 11 claims to Citadel for Recurrent
Total Disability. Each claim covered a 2 to 3 week period of disability.
The Group Policy was terminated on October 1, 1992. All claims were paid by
Citadel until March of 1995.
Plaintiff submitted a further claim for the period from March 10 to 16, 1995.
Citadel denied the claim on the basis that the Plaintiff was not Totally Disabled.
Citadel denied all subsequent claims for Recurrent Total Disability submitted by
the Plaintiff.
Mutual of Omaha had issued an Accident and Sickness Policy effective
November 1, 1992. The Policy provided, among other things, for payment of a
monthly accident and sickness benefit in the event that the Plaintiff became
"Totally Disabled" as this term was defined in the Policy. The monthly benefit
became payable after an elimination period of 30 days from the first day of
Total Disability.
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16. Pang v. Citadel General
Plaintiff submitted the claim to Mutual of Omaha, which denied on the
basis that it was a recurrent disability and that Citadel was liable.
All of the Plaintiff’s claims for Recurrent Total Disability, both before and
after the denial letter of May 1, 1995, were made on Citadel’s Claimant’s
Statement forms and were submitted to Citadel for adjudication.
One Claimant’s Statement form dated July 21, 1993 was provided to
Mutual of Omaha. Mutual of Omaha forwarded the Claimant’s Statement
form to Citadel.
Citadel accepted and paid the claim on the basis of the Recurrent Total
Disability provisions of the Citadel Policy.
The Mutual of Omaha Policy had an elimination period of 30 days. None
of the Plaintiff’s claims involved periods of Total Disability that exceeded 30
days. 16

17. Pang v. Citadel General
Pang brought an action against Citadel and Mutual of Omaha.
The action against Mutual of Omaha was settled after a pretrial. The
insured had not satisfied the elimination period in the Policy. None of the
claims was for a period of Total Disability that met the 30 day requirement.
The action against Citadel was heard over 9 days in 2001 and the
judgment was issued one year after the last day of hearing.
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18. Termination of
Employment 101

19. Termination of Employment
• Relevant law:
 Contract
 Employment Standards Act (“ESA”)
 Common law

20. Termination of Employment
Employment Standards Act
• Must give notice of termination or pay in
lieu thereof
• Constructive dismissal
• Notice period: 1 week for every year, up to
8 weeks
• No notice if an exception applies (e.g.
wilful misconduct, refusing reasonable
alternative work, reaching retirement age)

21. Termination of Employment
Employment Standards Act
• In addition to notice, severance of 1 week
for every year employed is due if:
 Employed 5 or more years, and
 Employer has 50 or more employees or
payroll of $2.5 million or more
• Further rights and obligations in relation to
termination in the ESA

22. Termination of Employment
Common Law
• Notice or pay in lieu also due at common
law, unless contract says otherwise
• Typically much longer than ESA notice
• Length of notice is very fact-specific –
factors include:
 Length of employment
 Nature of position
 Age
 Prospect of finding alternative work

23. Termination of Employment
Common Law
• If there is just cause for termination, no
common law notice required
• Just cause also context-dependent, but
may include absenteeism, dishonesty,
theft and poor performance
• “Just cause” not necessarily same as
“wilful misconduct, disobedience or wilful
neglect of duty” under ESA

24. Recent Termination
Cases

25. Betts v. IBM Canada Ltd.
• 15-year employee left work due to depression
and anxiety
• Moved from province of employment (N.B.) to
Ontario
• Repeatedly failed to submit proper medical
information to apply for STD benefits
• Employer sent 5 letters with deadlines to submit
information or return to work, failing which he
was “considered to have voluntarily resigned”
• Employee claimed he was unable to return

26. Betts v. IBM Canada Ltd.
• Test for abandonment – high threshold
 Do the statements or actions of the employee, viewed
objectively by a reasonable person, clearly and
unequivocally indicate an intention to no longer be
bound by the employment contract?
• Decision
 8 months away from job
 Employee understood STD requirements, but failed to
meet them
 Many warnings from employer
 Medical issues not a bar to abandonment
 Employee abandoned employment

27. Toronto v. Toronto Professional
Fire Fighters’ Association
• Firefighter of 2.5 years
• Made series of sexist, misogynist, racist,
homophobic, etc. comments and jokes on
Twitter
• Profile photo in firefighter gear
• Featured in National Post article
• Dismissed for reputational damage to employer
and violating policies

28. Toronto v. Toronto Professional
Fire Fighters’ Association
• Test re off-duty conduct – must be serious
 Would reasonable and fair-minded person think
continued employment so damages employer’s
reputation as to render employment impossible or
untenable?
 Need not prove actual harm to reputation
• Despite deleting account immediately, apology
letter and sensitivity training, just cause existed
• Nature of firefighting role was significant:
“Members of the public must be able to trust their firefighters.
They must have confidence that they will act professionally,
interact with them appropriately, hold their interactions in
confidence, and serve them and their loved ones with dignity.”

29. Steel v. Coast Capital Savings
Credit Union
• B.C. case regarding 21-year employee
dismissed for single incident
• “Helpdesk Analyst” in bank’s IT Department
• Employee caught accessing manager’s file to
view her place on a list to obtain a parking space

30. Steel v. Coast Capital Savings
Credit Union
• Test re dismissal for misconduct – high threshold
 Did employee’s dishonesty give rise to a breakdown
in the employment relationship? E.g. violating
essential condition of employment, breaching faith
inherent to work relationship, or acting fundamentally
inconsistent with obligations to employer
• Decision
 “Position of great trust in an industry in which trust is
of central importance”
 Able to view confidential documents
 Protocol for viewing documents was violated
 Single incident constituted just cause for dismissal

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Questions?

32. Thank You
Ava Kanner
Kyle Gossen
Davies Howe Partners LLP
www.davieshowe.com