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Disability Benefits and Wrongful Dismissal

19 May 2016

Employment contracts may contain provisions relating to long-term disability benefits, allowing suffering employees to maintain a certain quality of life while taking the time required to recover with the hope of keeping their employment relationship intact. Canadian employment law has evolved to balance the interests of the employer and the employee concerning accommodations appropriate for suffering employees. As such, much of the litigation in this area of the law centers on determinations of the extent of the employee’s disability as well as the employer’s actions in accommodating the employee.

Of course the issues are never simply black or white and the courts inevitably balance each party’s actions, conditions and intentions against one another all in the context of fairness as set out by the current state of the law. The case below, although not a recent one, serves to exemplify this tension.

Deyonge v. Liberty Mutual Insurance Co. 

Valerie Deyonge ("Deyonge"), the plaintiff, had been employed by Liberty Mutual Insurance Company ("Liberty"), the defendant, since it took over the Ontario Blue Cross operations in 1995 and assumed Deyonge’s contract. The Ontario Blue Cross had employed Deyonge since 1978.

Between 1987 and 1989 Deyonge had been absent from work for considerable time due to her being diagnosed with Fibromyalgia. On December 20, 1999, after experiencing neck pains similar to what she had experienced during 1987 to 1989, Deyonge took a three-week vacation. When she returned she indicated that she was unable to work further as her pains were too intrusive.

The Issue at Trial

The Court affirmed that the evidence proffered by both parties indicated that Deyonge was a faithful employee who enjoyed her job. Deyonge had no history of absences apart from leave for the aforementioned medical issue and had been a productive member of the company generating an "excess of $2,500,000.00 in commissions in 1998" (para 8).

Deyonge did not return to work after her three-week vacation. Liberty continued to pay her in accordance with the company’s disability plan. However, on August 4, 2000, Liberty offered Deyonge an alternative position with the company, one that paid considerably less than her current position, or else offered a lump sum payment to settle the matter completely. "[The] offer was open for acceptance for a period of only seven days" (para 10).

The Court had to consider whether the plaintiff was disabled, whether the plaintiff is disabled, whether the offer of an alternative position amounted to a wrongful dismissal, and whether Liberty owes Deyonge payment in damages.

The Court’s Analysis

The Court referenced The Paul Revere Life Insurance Company v. Gershon David Sucharov1983 CanLII 168 (SCC), [1983] 2 S.C.R. 541 at 546 in providing an explanation of total disability. The Court explained that the test hinges not on whether the disability physically prevents an individual from fulfilling a particular task but whether a reasonable person would conclude that they should not engage in said task. "[I]f the condition of the insured is such that in order to effect a cure or prolongation of life, common care and prudence will require that he cease all work, he is totally disabled within the meaning of health or accident insurance policies" (para 15).

The Court also highlighted that although, typically, the onus is on the plaintiff to prove the existence of a disability or related condition, there is case law providing for a shift of the burden of proof to the insurer in specific circumstances. The Court highlighted Tarrant v.  Manufacturer's Life Insurance Co. (1995), 1995 CanLII 10567 (NL SCTD) as an analogous case. In Tarrant the court found that "where payments are made under a specific disability definition and the insurer subsequently terminates those payments, the burden of proof is on the insurer to disprove continuing disability" (para 16).

Furthermore, the Court confirmed as per Campbell v. Canada Life Assurance Co. (1990), 45 C.C.L.I. 73, that even when the legal burden of proving disability may remain with the insured, once total disability is proven the evidentiary burden may shift to the insurer.

The Court was satisfied with the medical expert evidence presented that Deyonge indeed suffered from total disability. Despite this affirmation the Court did note that the plaintiff had a duty to mitigate her damages by seeking medical attention and examination. The Court found that Deyonge had not done this to an acceptable level of rigor, avoiding seeking psychological help and only seeking medical attention/examination on a handful of occasions. 

The Court made clear that "[a]bsent disability, an employer has the right to terminate on adequate notice" (para 43). In this case the employee, Deyonge, was totally disabled and the letter offering alternative options "constituted a dismissal by way of a non-negotiable offer of settlement" (para 43).

The Court was satisfied that the employee was terminated when she was totally disabled, however, it was not satisfied that the disability would continue indefinitely. The Court determined that the offer of an alternative position would be considered as the date of termination with disability payments payable to that date. The Court also found that the employer is to provide salary in lieu of notice, and that the appropriate notice period in this instance taking into account all specific factors such as age, term of employment, etc., is to be twelve months from December 2000.

Our Thoughts

Employees have protections available to them to ensure that they receive fair compensation in the event that a disability prevents them from being able to work. These provisions work in concert with what the employer has provided for in the employment contract and aim to balance the interests of the employee and the employer. Preserving on one hand a party’s interest in maintaining a certain quality of life when they are unable to work due to disability and on the other hand a party’s interest in lowering expenses and preventing frivolous disability claims that drain a company’s resources without producing value.

Zeilikman Law has the experience and legal acuity necessary for effective legal strategies to achieve a just result for you. Whether you are an employee seeking to claim disability benefits from your employer or insurer or you are an employer looking to effectively handle the support of a disabled employee, you should consider giving us a call.

Zeilikman Law serves clients from all over the GTA. Whether you’re from Vaughan, Richmond Hill, Mississauga, Toronto, Woodbridge, Markham, Stouffville, Oak Ridges, Aurora, or Newmarket, Zeilikman Law has the right lawyers for you.

The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.