[CO-CURE] RES,NOT: Canada's high court rules on CFS/FM

[Guest guest]

Source: Business Insurance

Date:   June 29, 2006

Author: Gloria Gonzalez

URL:    http://www.businessinsurance.com/cgi-bin/news.pl?newsId=7959

 

 

Canada's high court OKs award over LTD denial

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OTTAWA - The Supreme Court of Canada upheld a lower court ruling that found

that aggravated damages can be awarded in the absence of bad faith merely on

a

finding that an insurance company wrongfully denied a claim.

 

The court's ruling in Sun Life Assurance Co. vs. Fidler held that the lower

courts were correct in awarding aggravated damages for mental distress

arising

from a breach of contract.

 

In this case, Connie Fidler's long-term disability benefits were terminated

because her insurer, Toronto-based Sun Life, decided that she was capable of

returning to work in some capacity despite suffering from chronic fatigue

syndrome and fibromyalgia. The trial judge found that Ms. Fidler " genuinely

suffered significant additional distress and discomfort arising out of the

loss

of disability coverage, " a finding upheld on appeal.

 

The Supreme Court, though, overturned a decision by the British Columbia

Court

of Appeal to award Ms. Fidler punitive damages. The trial judge concluded

that

Sun Life did not act in bad faith, which would have allowed punitive damages

to

be awarded. The Court of Appeal overruled the trial judge's decision, but the

 

Supreme Court reinstated it, saying that the trial judge's conclusion was the

 

product of a thorough review of the relevant evidence.

 

The Fidler decision is significant because insurers will face the possibility

 

of paying damages for the foreseeable loss of " peace of mind " whenever they

deny claims, even if they do so in good faith, said Craig Brown, a professor

of

the Faculty of Law at the University of Western Ontario and the co-author of

a

recent report called " The Impact of Recent Legal Developments on Liability

Insurance. "

" This will surely give insurers greater pause than they now exercise when

thinking of denying claims, " he said in an e-mail.

 

Sun Life is studying the court's decision, as likely will other disability

insurers, and will continue to review its practices, a spokesman said in an

e-mailed statement.

 

A rigorous process to validate claims, though, is in the best interests of

all

policyholders, as it helps to manage costs for employers providing benefits

to

employees, according to the statement.

 

" Like many disability claims, this case was complicated and highly

subjective, "

the spokesman said in its statement. " The Court agreed with the trial judge's

 

finding of no improper purpose on the part of Sun Life and dismissed the

claim

for punitive damages. "

 

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© 2006 Business Insurance

 

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