05 May Long Term Disability Benefits: Negligent Misrepresentation
In a recent British Columbia Supreme Court decision, Feldstein v 364 Northern Development Corp., the plaintiff successfully sued his employer for negligently misrepresenting the details of the employer’s LTD policy.
Long Term Disability Benefits – Feldstein v 364 Northern Development Corp.
By way of background, at an early age the employee was diagnosed with cystic fibrosis. As a result, the employee would only accept employment if the overall remuneration package included sufficient Long Term Disability benefits that did not depend on whether the employee had pre-existing health conditions. The employee in this case was terminated from his employment and given six (6) months’ working notice. During this notice period, the employee began actively searching for employment. During an interview for a potential job opportunity, the employee informed the employer of his condition and requested clarification as to the employer’s benefits package. Following the receipt and review of the employee benefits booklet, the employee asked what “Proof of Good Health” meant with respect to LTD benefits. The employer informed the employee that this was related to the three (3) month waiting period required for the plan to come into effect. The employee accepted employment based on this information.
Approximately one (1) year after commencing his employment, the employee’s health condition declined. The employee was ultimately approved for LTD benefits but at a rate less than a quarter of the expected monthly benefit due to the employee failing to fill out a health questionnaire when he initially enrolled in the benefits. This monthly amount was reduced even further on account of the employee receiving CPP benefits, for a net amount of $37.00 per month. The employee commenced a lawsuit against the employer for negligent misrepresentation.
Long Term Disability Benefits – Court Ruling
The Court found that the employee’s claim ought to succeed based on its finding that the employer owed a duty of care to the employee “as an employer making representations to a prospective employee in the court of pre-employment discussions”. The statement regarding the clarification of “Proof of Good Health” was inaccurate and misleading. The Court further found that the employee relied on this clarification to his ultimate detriment and awarded him damages for the loss of LTD benefits and for mental distress.
This case highlights how important it is for employers accurately represent and describe the terms of employment, including those that relate to LTD benefits. Otherwise, an employee, like the one in the aforementioned case, could rely on any statement given detrimentally and be awarded damages as a result. Employees should ensure they seek clarification to any terms that are unsure of and seek independent legal advice in order to ensure there is no misunderstanding.
Long Term Disability Lawyers
We at KCY at LAW have the expertise and experience necessary to help determine issues like the one in the above-noted case, both from an employer’s and employee’s perspective. Call KCY at LAW today at (905) 639-0999 or contact us online to schedule a consultation!