Blue Cross to pay record punitive damages in disability claims case
Blue Cross to pay record punitive damages in disability claims case | Insurance Business Canada
Insurance News
Blue Cross to pay record punitive damages in disability claims case
Ontario court upholds $1.5 million award, highlights “pattern of misconduct”
Insurance News
By
Mika Pangilinan
Ontario’s highest court has upheld the largest punitive damages ever awarded against an insurer in Canada.
The Court of Appeal for Ontario recently confirmed the decision that required Blue Cross Life Insurance Company of Canada to pay $1.5 million in punitive damages over the alleged mishandling of long-term disability claims.
A jury awarded the record-breaking punitive damages to Sara Baker after a five-week trial in 2022, during which Blue Cross was also directed to cover her legal costs amounting to $1 million.
Court highlights “pattern of misconduct”
In its ruling, the Court of Appeal highlighted concerns about how Blue Cross handled Baker’s case, citing instances when it “ignored information, misinterpreted experts’ reports, and relied on the ill-informed advice of their contracted doctors.”
“This is a pattern of misconduct that, at best, shows reckless indifference to its duty to consider the respondent’s claim in good faith and conduct a good faith investigation, and at worst, demonstrates a deliberate strategy to wrongfully deny her benefits, regardless of the evidence that demonstrated an entitlement,” said Justice William Hourigan, who wrote on behalf of the three-judge panel that ruled on the case.
The Court of Appeal also upheld the earlier decision that Blue Cross must cover Baker’s legal expenses.
“In addition to wrongfully denying the respondent coverage in the manner that it did, Blue Cross engaged in a litigation strategy wherein it shielded its employees from appearing at trial to explain themselves,” Hourigan said in the court’s decision. “This is one of those rare cases where there has been bad faith conduct that warrants costs on this scale.”
Baker took legal action against the insurer in 2017 after she was denied long-term disability payments.
According to the lawsuit, Baker suffered a stroke in 2013 that rendered her incapable of working. She held disability insurance with Blue Cross through her employer, but the insurer had halted her payments on three occasions.
An internal appeal allowed the payments to resume, court documents revealed. However, when it came time for the second stage of long-term disability in 2016, Blue Cross had once again denied Baker’s claim.
“I’m just grateful this is behind me now and that the court recognized it wasn’t right for me to be treated this way,” she said.
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