Manulife ordered to pay disability benefits to brain injured man.

On April 19, 2018, Ontario’s highest court ordered Manulife to pay long-term disability benefits to a man who suffered a traumatic brain injury and a severe back injury during a company-sponsored event on April 16, 2005. In  MacIvor v. Pitney Bowes Inc., [2018] O.J. No. 2105, 2018 ONCA 381, the Ontario Court of Appeal (“ONCA”), reversed a trial decision and found for Lenard MacIvor.

Mr. MacIvor suffered a traumatic brain injury and a significant musculoskeletal injury during a company-sponsored event in Costa Rica. Mr. MacIvor, who worked at Pitney Bowes at the time, was off work for nearly four months following the incident. He encountered difficulties on the job when he returned; his responsibilities were continuously reduced, prompting him to quit his employment out of frustration.

A few days after he resigned, Mr. MacIvor got a similar job at Samsung, where he experienced the same difficulties; Samsung dismissed him less than a year later. He tried to make a long-term disability claim with Samsung’s insurer, but was told that because his injury occurred during his time with Pitney Bowes, he’d have to apply for the coverage under his former employer’s policy. Pitney Bowes said that under the terms of its Manulife policy, Mr. MacIvor’s coverage ended when he stopped his employment.

Mr. MacIvor initially sued Pitney Bowes, but substituted Manulife as the defendant when he realized that the insurer was the one responsible for covering his long-term disability benefits. Manulife admitted that Mr. MacIvor met the “disability requirements” under the policy at all relevant times. However, it argued that he was not covered by the insurance policy at the time he made his claim, because his claim was made after he voluntarily left employment with Pitney Bowes. Alternatively, Manulife argued that his claim was made after the expiration of the limitation period.

The case was initially heard by Justice Andra Pollak, who accepted Manulife’s argument that coverage ended before the claim was made. However, the ONCA reversed the trial decision on the basis of the principles of interpretation applicable to insurance policies, which were re-affirmed by the Supreme Court of Canada in Ledcor Construction Ltd. Northbridge Indemnity Insurance Co., 2016 SCC 37.

“[W]here the language of the insurance policy is unambiguous, effect should be given to that clear language, reading the contract as a whole,” the Supreme Court said in Ledcor. “[W]here, however, the policy’s language is ambiguous, general rules of contract construction must be employed to resolve that ambiguity.

“[I]f ambiguity still remains after the above principles are applied . . . coverage provisions in insurance policies are [to be] interpreted broadly, and exclusion clauses narrowly,” the top court added.

The ONCA held that the policy’s exclusionary language related to an employee’s future claims, not claims that arise from an occurrence that takes place during their employment. In the ONCA’s view, to conclude otherwise would leave former employees, like MacIvor, in the untenable position of having no disability coverage from either their former employer or any new employer.

Manulife, through it’s in-house counsel, argued that since Mr. MacIvor filed his proof of claim a few days after the window allowed by the policy, which is within 90 days of the date benefits would begin, his claim should be denied. The ONCA exercised its discretion to grant the equitable remedy of relief from forfeiture, even though it was not raised at trial.

In the result, justice prevailed. 15 years after he became disabled, and after years of litigation, a seriously disabled person who had disability insurance at the time he became disabled finally received his benefits.