In the case, Swampillai v. RSA and Sun Life Assurance Company, 2018 ONSC 4023, the employer provided for an LTD policy, where the employer, RSA, was the payor and Sun Life was the administrator. The plaintiff was approved for benefits under the own occupation clause, but was denied benefits post two years under the any occupation change of definition. The plaintiff commenced an appeal with Sun Life by providing additional documentation. Sun Life nevertheless maintained its denial of benefits.
Shortly after the termination of his benefits, the employer fired the plaintiff. He did not have an employment lawyer and negotiated his own severance from his employer. Contained in the Release was a clause that the plaintiff was releasing the employer from any future LTD benefits.
The plaintiff sued RSA and Sun Life for breach of contract and specifically pled unconscionability with respect to the Release signed by the plaintiff. The defendants brought a Summary Judgment motion with respect to the enforceability of the signed Release.
Justice Cavanaugh found that the settlement engaged in by the parties was improvident and grossly unfair. Unlike a typical clause in a severance claim regarding future claims such as human rights actions, this was a claim that was squarely in the knowledge of RSA at the time of providing the Release to the plaintiff. The Court found that the plaintiff was not adequately represented to the extent that he received legal advice on the specifics of the Release. He was advised by an assistant at the law firm he hired at the time for his disability matter, that they do not practice employment law and they suggested that he seek legal advice elsewhere on the severance matter.
In dealing with the issue of imbalance of power, Justice Cavanaugh found that RSA took advantage of the plaintiff’s vulnerability. They knew that the plaintiff had a disability that prevented him from working in his own employment for two years and that he had recently been terminated by Sun Life for any future LTD benefits. The Offer to Settle for the severance was time limited and noted that should acceptance not be made by a specific date, the offer would be withdrawn and severance would be paid in accordance with the statutory minimum. He was in a position where he had to make a quick decision that had significant implications on his financial means. It was based on these factors that the Court ruled that the component of the Release with respect to forfeiture of his LTD benefits was not enforceable.
This case demonstrates the importance of reviewing all documents carefully and retaining a lawyer with an understanding of disability benefits in Ontario when dealing with any LTD dispute with your insurer or employer so as to ensure you are treated fairly.
Kaitlyn MacDonell practices exclusively in plaintiff personal injury matters, with a specialization in handling LTD matters. Should you wish to inquire about potential a potential LTD claim, please contact Kaitlyn MacDonell at 647-260-4498 – firstname.lastname@example.org; or Michael J. Henry at 416-361-0889 – email@example.com.