There is no common law duty on a group disability insurer to inform an insured of each potential claim for benefits.
Released August 30, 2016 | Full Decision [CanLII]
The defendants brought the within summary judgment motion to dismiss the plaintiff’s claim against them. The plaintiff was an employee of Felton Brushes Ltd (“Felton”). The Co-operators insured Felton’s employees under a policy that included LTD benefits among others. RWAM Insurance Administrators (“RWAM”) was a third party administrator of employee group insurance benefits.
The plaintiff commenced this action against Felton, Co-Operators and RWAM seeking a declaration that she is entitled to LTD benefits under the group policy issued by the Co-operators, and that the defendants had breached their alleged duty to the plaintiff by failing to inform her of each potential claim for benefits.
The plaintiff was injured in a car accident in 2005 and submitted an application for LTD benefits. Co-Operators approved and paid the LTD benefits until the plaintiff returned to work fulltime in June 2006. Co-Operators then notified the plaintiff that it had closed its LTD file because of her return to full-time employment. The plaintiff did not contest the closing of her file at this time.
During the course of the plaintiff’s LTD benefits, RWAM sent a copy of the “Employee Benefits Plan Booklet” (the “booklet”) to the plaintiff and her lawyer.
The minimum number of hours per week required for benefit coverage under the policies was changed from 24 to 35 hours. RWAM sent updated employee benefit booklets to Felton for distribution on January 10, 2005 to reflect the amendments to the minimum number of hours required for benefit coverage.
On July 24th, 2007, Felton advised RWAM that the plaintiff commenced working part-time on March 3, 2007 and was only working 20 hours per week. As a result, RWAM retroactively terminated the plaintiff’s benefit coverage, and the plaintiff was not eligible to make a new claim for disability benefits under the consolidated policy.
On July 24th, 2007, Felton wrote to the plaintiff advising that because she only works 20 hours per week she will no longer be eligible for benefits.
The plaintiff commenced the within action on May 27, 2011, arguing that she was not informed of a right to make an application for benefits under the policy as of March 3, 2007 when her coverage was terminated, nor was she informed of the repercussions of reducing her work hours. The plaintiff claimed that the insurer and the employer breached a duty by not advising her that reduced hours would make her ineligible for benefits under the policy.
Lofchik J. held that there is no common law duty on a group disability insurer to inform an insured of each potential claim for benefits. Having been provided with the booklet which sets out the summary of the policy terms, the plaintiff was aware of her right to and the requirement to submit a claim for disability benefits when she returned to work after her previous claim for disability benefits. Lofchik J. held that based on the information possessed by the plaintiff, she ought to have known that she was no longer eligible to claim disability benefits under the consolidated policy beyond March 3, 2007.
Lofchik J. granted the defendants’ summary judgment motion and dismissed the plaintiff’s claim against them.
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