Lawyers’ perspective of Total Disability

Long-term disability claims

Long-Term disability claims are paid when a person is totally disabled. The definition of total disability depends on the insurance contract in question. It does not necessarily mean unable to do anything. Courts look at what is reasonable in the circumstances including level of education obtained, training, prior work experience, prior salary, etc.

In Penney v. Manitoba Public Insurance Corp. (1992) 81 Manitoba Reports (2d) 145 the Court dealt with a plaintiff whose employment career was characterized by manual labour positions. The Court quoted with approval from Campbell and stated:

The words reasonably suited and having regard to skill and ability indicate to me an attempt to make clear that merely because an insured might be able to engage in some kind of occupation or employment, he is not thereby dis-entitled to total disability benefits. Furthermore, the words having regard to a skill and ability must, in my opinion, have reference to the skill and ability to the insured person, prior to the accident in respect of which a claim is made. Otherwise, it would be difficult, if not impossible, for anyone except a person rendered a complete vegetable to obtain payment of total disability benefits.

The Alberta Court of Queen’s Bench in the decision of Flewwelling v. Blue Cross Life Insurance Co. of Canada, 1999 ABQB 258 (CanLII) stated:

[84] The policy provides that “after the elimination period plus 24 months total disability” means that the employee is unable to perform any occupation for which he is reasonably fitted or could so become by training, education or experience.(ex 34, 82) There is little dispute that “any occupation” does not really mean any occupation. The case law seems to suggest that it must be commensurate with the insured’s former occupation in status and remuneration. A rough guideline is that the salary must be at least 2/3 of the previous salary. (Johnston v. Alberta School Employee Benefit Plan 1995 CanLII 9112 (AB Q.B.), (1995) 31 Alta. L.R. (3d) 116; Stutt v. Alberta (Provincial Treasurer) (1988) 34 C.C.L.I. 78; Bacon v. Saskatchewan reflex, (1990) 88 Sask. R. 182)
In the Alberta Court of Queen’s Bench decision of Materi v. Confederation Life Insurance Co. (1999) A.J. No. 528 (affirmed on appeal), Justice Burrows dealt with a female long term disability claimant who claimed she was disabled from irritable bowel syndrome (she was an accounting clerk for a school division). In evaluating the definition of disability and how much proof is required to prove disability, Justice Burrows quoted with approval and adopted the treatment utilized in other disability cases; At paragraph 22 and 23 Justice Burrows stated :

The question is whether Ms. Materi’s condition makes her unable to work in any occupation for which she is or may become suited.
This same question arose in respect of another plaintiff covered by the same plan in Johnston v. Alberta School Employee Benefit Plan (Trustees of) (1995), 31 Alta. L.R. (3d) 116 (Alta. Q.B.). There Mason J. (paragraph 39) adopted the approach described by Baynton J. in Bacon v. Saskatchewan (1990), 88 Sask. R. 182 (Sask. Q.B.)

The onus is always on the plaintiff on a balance of probabilities to establish that she is totally disabled within the definition of the Plan. Once the plaintiff has made out the prima facie case of total disability (i.e. that her medical condition is such that she is likely incapable of substantially performing any reasonable occupation for which her training, education, or experience have fitted her), the onus shifts to the defendant to prove that there is specific occupation that the plaintiff is capable of substantially performing. The plaintiff is not required to prove a negative, (i.e) that she is not capable of performing each and every conceivable occupation that may be reasonable in light of her background.

Justice Burrows evaluated how literal one must be in evaluating disability and quoted with approval at paragraph 24 from the Johnston decision:

“Total disability” defined in terms of “any occupation” or even “any reasonable occupation”interpreted literally or in the strict sense leads to an absurdity. Such interpretation effectively nullifies coverage under the policy unless and insured establishes he or she has been rendered almost helpless. The rules of interpretation and construction of contracts in insurance law require the definition of “total disability” be interpreted within the context of the coverage provided by the insurance plan. Contracts or (sic?) insurance are contracts of utmost good faith on the part of both parties. This imports principles of fairness for both the insured and insurer when interpreting disputed provisions in an insurance policy by having regard to the nature, extent and purpose of the insurance coverage provided.

The Saskatchewan Court of Appeal in Hood v. Metropolitan Life Insurance Co., 1993 CanLII 6747 (SK CA) stated:
“Total Disability” means that, as a result of bodily injury or disease, you are wholly prevented from engaging in any and every gainful occupation for which you are reasonably fitted by education, training or experience commencing at the end of the Waiting Period.

This definition clearly leaves a significant margin of judgment to be exercised by the trial judge.

The usual example of a concert pianist is a useful illustration of the problem this kind of insurance often has to deal with. If she suffers injury to or disease causing incapacity to her hands such that she can no longer perform at the level required to maintain her career, is she permanently disabled when she could be a receptionist or a hostess at a restaurant? I expect that if that were the case and such employment would prevent her from claiming total disability, it would have been a waste of money to get disability insurance. On the other hand, if she was able to obtain employment as a music critic, probably only available in large centres, and thereby use her musical skills and knowledge of the problems involved in performing at concerts, that might be a suitable alternative employment which would prevent a finding of permanent disability. In this case, the trial judge did not find it necessary to make fine distinctions based on the policy definition. When he accepted and acted upon the testimony of Patricia Sampson, he could readily conclude there were no likelihood that reasonably suitable employment would be available. It was not a question of whether this or that job would come within the definition, but rather whether T.H., by reason of his infirmity, was employable by the normal standards of selection employers would generally apply.

In Bacon v. Government of Saskatchewan (1990) 88 Sask. R. 182 (Q.B.) Bacon, the plaintiff MLA participated in the Public Employee’s Disability Income Plan as a condition of her employment. The province was the sponsor of the plan. The 32 year-old MLA suffered from chronic posterior joint dysfunction of the lower lumbar spine. She also suffered from chronic pain in her lower back, radiating at times down the legs and up to the shoulders. The Saskatchewan Court of Queen’s Bench determined and clarified what is meant by the definition of totally disability: Total Disability means that “the participating employee is unable to work at any reasonable occupation as a result disease or accidental bodily injury.”

Reasonable occupation is defined as “any gainful activity for which the Employee is, or may reasonably become, fitted by reason of education, training or experience but excludes any activity that is part of an Approved Rehabilitation Program.”

The Court went on to state at paragraph 40(10) that:

An occupation is not any reasonable occupation for which the insured is fitted by experience, training or education unless that occupation is reasonably comparable to the occupation previously performed by the insured.

In other words, there must be some comparison in terms of responsibility, duties, and remuneration to what the claimant has done in the past. This doesn’t mean that potential jobs have to contain the same pay and responsibilities as the previous occupations of the claimant, but rather these components must be similar. As the Court stated at paragraph 47:

In summary, the plaintiff will be considered under the Plan to be totally disabled if she is unable to substantially perform any occupation that is:

  1. neither inconsequential or trivial; and
  2. similar in nature and remuneration to her former occupation; or
  3. similar in remuneration to her former occupation and of such a nature that she can become capable of performing it substantially within a reasonable time and with a reasonable effort and expense.