Most people obtain Long-Term disability policies as part of their compensation package at work. Typically, every pay check includes partial payment toward a Long Term Disability policy, which is a first party contract. As a result, there is a positive obligation on an insurer to adjudicate Long Term Disability claims in good faith.
The court upheld this obligation in the case of Dube v. RBC Life Insurance Company. (2015 ONCA 641)
In that case, Mr. Dube was injured in a motor vehicle accident and was unable to return to work. His employer provided him with an insurance policy with RBC. Following the accident, Mr. Dube was denied disability benefits for failing to provide notice of his claim to RBC within 30 days of the accident and within the time prescribed by the policy. Mr. Dube commenced a civil action, and RBC brought a motion to dismiss the action. The question for the court was whether Mr. Dube was entitled to relief from forfeiture – an equitable and discretionary remedy that would allow Mr. Dube to continue his claim.
To determine whether Mr. Dube could pursue his claim against RBC, the court considered: 1) the conduct of Mr. Dube and 2) the gravity of the breach.
The court found that Mr. Dube’s conduct was “not unreasonable”. Mr. Dube’s employer had incorrectly advised that he did not have a long-term disability policy. Most importantly, the court found that RBC was not significantly prejudiced by Mr. Dube’s failure to report his claim. RBC argued that it was unable to conduct medical examinations at an early date; however, the court ruled that at 43 years old, Mr. Dube’s long term disability benefits were payable to age 65, thus the harm to Mr. Dube outweighed any prejudice to RBC.
Mr. Dube was entitled to continue his claim against RBC for Long Term Disability benefits.
Michelle Kudlats
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