Bad faith claim leads to broad disclosure obligations.

Shirley Wade suffered injuries as a result of a motor vehicle accident in 2005. In 2008, her insurer, the  Wawanesa Mutual Insurance Company, stopped paying her disability benefits. Wade started  a lawsuit for breach of contract and bad faith against Wawanesa.

During the discovery of Wawanesa’s representative on the bad faith claim, counsel for Wawanesa refused four requests for information, as follows:

1. During the 5 years before Wawanesa terminated Wade’s benefits, provide the number of policy holders who received income replacement benefits like Wade, provide the average length of time income replacement benefits were received, and provide the actual length of time income replacement benefits were received by claimants in New Brunswick;

2. During the 5 years before Wawanesa terminated Wade’s benefits, provide Wawanesa’s net income / net loss for the sale of income replacement policies similar to that which Wade was claiming under;

3. Advise how many times Wawanesa had retained the services of VTL Consulting to evaluate claims made in New Brunswick; and

4. During the last 5 years, advise how many times Wawanesa had referred to Section B income replacement claimants to the Atlantic Pain Clinic for assessments or treatments, and the amount paid to the Atlantic Pain Clinic for these services.

In 2014, a Judge ordered Wawanesa to disclose the (likely extensive) financial and administrative documents requested by Wade’s lawyer.  Wawanesa appealed the Judge’s ruling.

On July 16, 2015, the New Brunswick Court of Appeal confirmed the Judge’s decision. While the Court was prepared to consider whether the requests were proportional to the likely benefit to be received, the Court continued to say that the insurer had not provided evidence of disproportionate costs or efforts required to produce these documents. Further, the documents requested by Wade were relevant to her claim in bad faith.

Following this decision, insurers facing bad faith claims could be forced to expand disclosure extensively.

You can read The Wawanesa Mutual Insurance Company v. Wade, 2015 NBCA 43, here.